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 Quarterly Period Ended May 4, 1996
Commission File Number 0-28410
LOEHMANN'S, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-2341356
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2500 Halsey Street
Bronx, New York 10461
Registrant's telephone number, including area code (718) 409-2000
Indicate by a 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 as
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes [ X ] No
Number of shares outstanding of Registrant's Common Stock and Class B
Common Stock, as of June 10, 1996; 8,312,384 and 469,237, respectively.
--------- -------
<PAGE>
Loehmann's, Inc.
Quarter ended May 4, 1996
CONTENTS
PART I-FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets-May 4, 1996 and February 3, 1996 1
Consolidated Statements of Operations-Quarters ended
May 4, 1996 and April 29, 1995 2
Consolidated Statements of Cash Flows-Quarters ended
May 4, 1996 and April 29, 1995 3
Notes to Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II-OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 13
Signature 14
<PAGE>
Loehmann's, Inc.
Consolidated Balance Sheets (Unaudited)
May 4, February 3,
1996 1996
(IN THOUSANDS, EXCEPT
SHARE AMOUNTS)
ASSETS
Current assets
Cash and cash equivalents $12,086 $12,512
Accounts receivable, net 1,866 804
Merchandise inventory 56,405 43,721
Prepaid expenses and other 1,055 918
---------------------------
Total current assets 71,412 57,955
Property, equipment and leaseholds, net 59,133 60,245
Deferred debt issuance costs and other assets,
net 3,002 3,296
Purchase price in excess of assets acquired,
net 41,791 42,115
---------------------------
Total assets $175,338 $163,611
-----------------------------
-----------------------------
LIABILITIES AND COMMON STOCKHOLDER'S DEFICIT
Current liabilities:
Accounts payable $35,305 $21,474
Accrued expenses 17,343 16,709
Accrued interest 2,990 7,037
Current portion of long-term debt 66 66
-----------------------------
Total current liabilities 55,704 45,286
Long-term debt:
13-3/4% senior subordinated notes payable 77,550 77,550
10-1/2% senior secured notes payable 50,295 51,471
Revenue bonds and notes,less current portion 2,696 2,712
-----------------------------
Total long-term debt 130,541 131,733
Other noncurrent liabilities 393 393
Series A preferred stock, subject to mandatory
redemption, 41,500,000 shares authorized,
37,405,739 shares issued and outstanding at
May 4, 1996 and February 3, 1996 15,865 15,279
Common stockholders' deficit:
Common stock, 25,000,000 shares authorized;
4,740,383 and 4,725,420 shares issued and
outstanding at May 4, 1996 and February 3,
1996, respectively 47 47
Class B convertible common stock, 469,237
shares authorized, issued and outstanding 2,352 2,352
Additional paid-in capital 23,937 23,857
Accumulated deficit (53,501) (55,336)
----------------------------
Total common stockholders' deficit (27,165) (29,080)
----------------------------
Total liabilities and common stockholders'
deficit $175,338 $163,611
-----------------------------
-----------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED
FINANCIAL STATEMENTS.
1
<PAGE>
Loehmann's, Inc.
Consolidated Statements of Operations (Unaudited)
QUARTER ENDED
MAY 4, April 29,
1996 1995
(IN THOUSANDS, EXCEPT
PER SHARE DATA)
Net Sales $104,120 $97,506
Cost of sales 70,386 66,683
------------------------------
Gross profit 33,734 30,823
Store operating expenses 17,850 16,917
Pre-opening costs 376 -
General and administrative expenses 5,659 5,090
Depreciation and amortization 3,147 2,998
------------------------------
Operating income 6,702 5,818
Interest expense, net 4,231 4,422
------------------------------
Income before income taxes 2,471 1,396
Provision for income taxes 50 59
------------------------------
Net income 2,421 1,337
Stock dividends on and accretion of
preferred stock 586 506
------------------------------
Net income applicable to common
stock $1,835 $831
------------------------------
------------------------------
Net income per share applicable to
common stock $ 0.31 $ 0.16
------------------------------
------------------------------
Weighted average number of common
shares and common share equivalents
outstanding 5,914 5,178
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
CONSOLIDATED FINANCIAL STATEMENTS.
2
<PAGE>
Loehmann's, Inc.
Consolidated Statements of Cash Flows (Unaudited)
QUARTER ENDED
MAY 4, April 29,
1996 1995
(IN THOUSANDS)
Cash flows from operating activities
Net income $2,421 $1,337
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization 3,147 2,998
Accretion of 10-1/2% senior secured notes 392 320
Changes in assets and liabilities:
Accounts receivable, net (1,062) (674)
Merchandise inventory (12,684) (10,495)
Prepaid expenses and other (137) (133)
Accounts payable 13,831 9,362
Accrued expenses 634 (1,727)
Accrued interest (4,047) (4,084)
Net change in other assets and liabilities (34) (32)
-------------------------------
Net adjustments 40 (4,465)
-------------------------------
Net cash provided by (used in) operating
activities 2,461 (3,128)
-------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (1,336) (1,209)
Net cash used in investing activities (1,336) (1,209)
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of 10-1/2% senior secured notes (1,568) -
Sale of common stock 33 8
Other financing activities, net (16) (9)
-------------------------------
Net cash used in financing activities (1,551) (1)
-------------------------------
Net decrease in cash and cash equivalents (426) (4,338)
Cash and cash equivalents at beginning
of period 12,512 12,822
-------------------------------
Cash and cash equivalents at end of period $12,086 $8,484
-------------------------------
-------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash interest paid during period $8,158 $8,277
-------------------------------
-------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
CONSOLIDATED FINANCIAL STATEMENTS.
3
<PAGE>
Loehmann's, Inc.
Notes to Financial Statements (Unaudited)
May 4, 1996
1. BASIS OF PRESENTATION
Effective May 7, 1996, the Company's parent, Loehmann's
Holdings, Inc. ("Holdings"), whose only material assets
consisted of all of the outstanding stock of and an
intercompany note issued by Loehmann's, Inc., merged
with and into a new wholly-owned Delaware subsidiary
formed for the purpose of reincorporating Holdings from
Maryland to Delaware. Effective May 8, 1996, the
surviving corporation of such merger merged with and
into the Company, with the Company being the ultimate
surviving corporation (together with the reincorporation
from Maryland to Delaware, the "Holdings Merger"). As a
result of the Holdings Merger, each share of Holdings'
Common Stock, par value $0.008403361 per share, and
Class B Common Stock, par value $0.008403361 per share,
was converted into approximately 0.22 shares of
Loehmann's, Inc. Common Stock, par value $0.01 per share
and 0.22 shares of Class B Common Stock, par value $0.01
per share, respectively, and the number of common shares
authorized was changed to 25,000,000. Accordingly, the
financial information appearing herein (including all
share and per share data) reflects the retroactive
application of the Holdings Merger.
The accompanying consolidated financial statements
include the accounts of Loehmann's, Inc. and its wholly-
owned subsidiaries, collectively referred to hereafter
as the Company. All significant intercompany items have
been eliminated in consolidation.
The consolidated balance sheet at May 4, 1996 and the
consolidated statements of operations and cash flows for
each of the quarters ended May 4, 1996 and April 29,
1995 have been prepared by the Company without audit. In
the opinion of management, all adjustments (consisting
of only normal recurring adjustments) considered
necessary for a fair presentation have been included.
The accompanying consolidated financial statements have
been prepared in accordance with generally accepted
accounting principles for interim financial information.
Certain information and footnote disclosures normally
included in financial statements required by generally
accepted accounting principles have been omitted.
Operating results for the quarter ended May 4, 1996 are
not necessarily indicative of the results that may be
expected for the fiscal year ended February 1, 1997. It
is suggested that these unaudited consolidated financial
statements be read in conjunction with the financial
statements and notes for the fiscal year ended February
3, 1996 included in the Company's Registration Statement
on Form S-1, filed with the Securities and Exchange
Commission (File No.33-97100) and declared effective on
May 7, 1996.
4
<PAGE>
Loehmann's, Inc.
Notes to Financial Statements (Unaudited)
(continued)
1. BASIS OF PRESENTATION (CONTINUED)
Net income per share amounts were determined by dividing
net income (after deducting dividends on and accretion
of preferred stock) by the weighted average number of
common shares and common share equivalents outstanding
during each period.
2. INCOME TAXES
The provision for income taxes primarily represents
alternative minimum tax and state and local taxes for
states that do not allow net operating loss
carryforwards.
3. USE OF ESTIMATES
The preparation of the financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions
that affect the amounts reported in the financial
statements and accompanying notes. Actual amounts could
differ.
4. EQUITY AND DEBT OFFERING
Effective May 10, 1996, the Company sold 3,572,000
shares of Common Stock and $100.0 million principal
amount of 11-7/8% Senior Notes due 2003 (the "Senior
Notes"). The net proceeds received from such offerings
(the "Offerings") were used (i) to redeem in full $52.5
million face amount of the Company's 10-1/2% Senior
Secured Notes due 1997, at a redemption price of 103.5%
of the face amount of such notes plus accrued and unpaid
interest, (ii) to redeem in full $77.6 million face
amount of the Company's 13-3/4% Senior Subordinated
Notes due 1999 at a redemption price of 101.0% of the
face amount of such notes plus accrued and unpaid
interest and (iii) to redeem all issued and outstanding
shares of the Company's Series A Preferred Stock at its
liquidation price of $0.56 per share, totalling $20.9
million. As a result of these transactions, the Company
incurred approximately $4.7 million in losses on the
early extinguishment of debt, $2.0 million in losses
from the write-off of related deferred financing costs
associated with such indebtedness, and a $5.1 million
charge to accumulated deficit from the accelerated
accretion of the Series A Preferred Stock to its
liquidation price of $0.56 per share. These charges
will be reflected in the Company's second quarter
financial statements.
5
<PAGE>
Loehmann's, Inc.
Notes to Financial Statements (Unaudited)
(continued)
4. EQUITY AND DEBT OFFERING (CONTINUED)
Supplemental earnings per share for the quarter ended
May 4, 1996 include approximately 3,572,000 shares
deemed to be sold by the Company in connection with the
Offerings to redeem the Existing Obligations as if such
redemptions had occurred at the beginning of the year.
If such transactions had occurred at the beginning of
that year, net income per share for the quarter ended
May 4, 1996 would have been $0.27.
5. SENIOR NOTES
As part of the Offerings, the Company sold $100.0
million aggregate face amount of
11-7/8% Senior Notes. The Senior Notes mature on May 15,
2003, are limited to $100.0 million aggregate face
amount, and are unsecured senior obligations of the
Company, senior in right of payment to any subordinated
indebtedness of the Company. The Senior Notes bear
interest at a rate of 11-7/8% from May 10, 1996 or from
the most recent interest payment date to which interest
has been paid, payable semiannually on May 15 and
November 15, in each year, commencing November 15, 1996.
The Senior Notes are subject to redemption at any time
on or after May 15, 2000 at the option of the Company,
in whole or in part, on not less than 30 nor more than
60 days' prior notice in amounts of $1,000 or integral
multiples thereof at the following redemption prices
(expressed as percentages of the principal amount), if
redeemed during the 12-month period beginning May 15th
of the years indicated below:
REDEMPTION
PRICE
Year:
2000 105.938%
2001 102.969%
2002 and thereafter 100.000%
in each case, together with accrued and unpaid interest,
if any, to the redemption date (subject to the rights of
holders of record on relevant record dates to receive
interest due on an interest payment date).
The Senior Notes are not entitled to the benefit of any
sinking fund.
6
<PAGE>
Loehmann's, Inc.
Notes to Financial Statements (Unaudited)
(continued)
5. SENIOR NOTES (CONTINUED)
In the event of a Change of Control (as defined in the
Indenture related to the Senior Notes), the Company will
be obligated to make an offer to purchase all
outstanding Senior Notes at a purchase price of 101% of
the principal amount thereof, plus accrued and unpaid
interest to the date of repurchase.
The Senior Notes Indenture contains certain covenants
that, among other things, limit the ability of the
Company or any of its subsidiaries to incur additional
indebtedness, transfer or sell assets, pay dividends or
make certain other restricted payments, incur liens,
enter into certain transactions with affiliates or
consummate certain mergers, consolidations or sales of
all or substantially all of its assets. In addition,
subject to certain conditions, the Company is obligated
to make offers to repurchase the Senior Notes with the
net proceeds of certain asset sales. These covenants are
subject to certain exceptions and qualifications.
6. NEW CREDIT AGREEMENT
Effective June 12, 1996, the Company amended and
restated its credit agreement with Bank-America Business
Credit, Inc. (the "Bank") to provide the Company with a
new credit facility (the "New Credit Facility"). The New
Credit Facility provides for a $35.0 million revolving
line of credit with interest payable, at the Company's
option, on amounts drawn under the facility at either:
(i) the higher of the Bank's published reference rate
plus 0.75%, or .50% per annum above the latest federal
funds rate plus 0.75% or (ii) LIBOR plus 2.2%. The
Company also is required to pay a per annum fee equal to
0.375% on the undrawn portion of the Bank's commitment
in respect of the New Credit Facility. The New Credit
Facility is subject to certain borrowing base
limitations, subjects the Company to certain covenants,
imposes limitations upon investments, dividends and
other restricted payments and capital expenditures. The
New Credit Facility is secured by substantially all of
the Company's assets, including accounts receivable,
inventory, fixtures and equipment and is not subject to
scheduled annual repayments, except upon maturity. The
New Credit Facility has a term of four years.
7
<PAGE>
Loehmann's, Inc.
Notes to Financial Statements (Unaudited)
(continued)
7. CHARGE FOR STORE CLOSINGS
During the second quarter of fiscal 1995, the Company
implemented a plan to close 11 underperforming stores
and, as a result, recorded a $10.35 million charge to
continuing operations. These closures were intended to
improve overall chain profitability and achieve a more
competitive cost structure. The store closures were
completed by the end of August 1995. Reserved amounts at
May 4, 1996 relating to long-term lease commitments are
not material. Net sales and operating income, net of
certain specifically allocated charges, for these stores
were approximately $4.0 million and $200,000,
respectively, in the quarter ended April 29, 1995.
8. CHARGE FOR IMPAIRMENT OF ASSETS
During the second quarter of fiscal 1995, the Company
completed certain market analyses as part of an overall
strategic plan. As a result of those analyses, the
Company shortened the period of time in which it
intended to occupy certain stores and as a consequence,
the undiscounted cash flows estimated to be generated
from the revised intended use was not sufficient to
recover the assets' carrying amount. Based on these
indicators, the primary intangible assets associated
with these locations were determined to be impaired as
defined by Statement of Financial Accounting Standards
No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of"
("FAS No. 121"). Accordingly, the Company recorded a
$4.95 million impairment loss to continuing operations,
representing the excess net book value of these assets
over their fair value. Fair value was based on appraisal
value.
8
<PAGE>
Loehmann's, Inc.
Management's Discussion and Analysis of
Financial Condition
and Results of Operations
This report contains forward looking statements under
the Private Securities Litigation Reform Act of 1995
(the "Reform Act"). The Company's actual results may
differ from the results discussed in the forward looking
statements. Factors that might cause such a difference
include, but are not limited to, those discussed in this
report. See Other Information Item 5.
GENERAL
Effective May 10, 1996, the Company sold 3,572,000
shares of Common Stock and $100.0 million principal
amount of 11-7/8% Senior Notes due 2003 (the "Senior
Notes"). The net proceeds received from such offerings
(the "Offerings") were used (i) to redeem in full $52.5
million face amount of the Company's 10-1/2% Senior
Secured Notes due 1997, at a redemption price of 103.5%
of the face amount of such notes plus accrued and unpaid
interest, (ii) to redeem in full $77.6 million face
amount of the Company's 13-3/4% Senior Subordinated
Notes due 1999 at a redemption price of 101.0% of the
face amount of such notes, plus accrued and unpaid
interest and (iii) to redeem all issued and outstanding
shares of the Company's Series A Preferred Stock at its
liquidation price of $0.56 per share, totalling.$20.9
million. As a result of these transactions, the Company
incurred approximately $4.7 million in losses on the
early extinguishment of debt, $2.0 million in losses
from the write-off of related deferred financing costs
associated with such indebtedness, and a $5.1 million
charge to accumulated deficit from the accelerated
accretion of the Series A Preferred Stock to its
liquidation price of $0.56 per share. These charges will
be reflected in the Company's second quarter financial
statements.
RESULT OF OPERATIONS-COMPARISON OF THE QUARTER ENDED MAY
4, 1996 AND APRIL 29, 1995
Net sales increased by approximately $6.6 million to
$104.1 million, or 6.8% during the first quarter in
fiscal 1996 compared to $97.5 million during the first
quarter of fiscal 1995. Comparable store sales (stores
that were in operation for both periods) increased by
7.1%. The increase in net sales was due to the improved
comparable stores results, plus two new stores (Merrick
and Houston) opened in the first quarter of fiscal 1996
partially offset by the impact of the eleven stores
closed in August 1995.
Gross profit increased by approximately $2.9 million to
$33.7 million, or 9.4% during the first quarter of
fiscal 1996 as compared to $30.8 million during the
first quarter of fiscal 1995. Gross margin increased to
32.4% from 31.6% in the prior year period. The
improvement in margin was primarily a result of a
continuing shift in the Company's sales mix towards
merchandise with higher average gross margin coupled
with a reduction of markdowns and shortage.
9
<PAGE>
Loehmann's, Inc.
Management's Discussion and Analysis of
Financial Condition
and Results of Operations (continued)
Store operating expenses increased approximately $1.0
million to $17.9 million or 5.9% during the first
quarter of fiscal 1996 compared to $16.9 million during
the first quarter during fiscal 1995. As a percentage of
net sales, store operating expenses decreased to 17.1%
from 17.3% in the prior year period. The dollar increase
in store operating expenses was primarily due to an
increase in sales variable expense associated with the
sales increase of $6.5 million and an increase in
advertising and direct mail expense. The increase in
advertising resulted from a change in promotional
calendar (a last year second quarter promotion was
shifted to the first quarter) and growth of the
Company's Insider Club Membership list for direct mail
announcements.
Pre-opening costs were $376,000 during the first quarter
of fiscal 1996 as a result of the opening of two new
stores in Merrick, New York and Houston, Texas. The
Company charges the costs associated with a new store
opening to operations in the fiscal quarter of the
store's opening. The Company anticipates opening five
additional stores in fiscal 1996.
General and administrative expenses increased
approximately $0.6 million to $5.7 million or 11.1%
during the first quarter of fiscal 1996 compared to $5.1
million during the first quarter of fiscal 1995. As a
percentage of net sales, general and administrative
expenses increased to 5.4% from 5.2% in the prior year
period. The increase in general and administrative
expenses was primarily due to the Company's continued
investment in corporate infrastructure to support the
Company's planned new store expansion program.
Depreciation and amortization remained essentially
unchanged during the first quarter of fiscal 1996
compared to fiscal 1995. Increases in depreciation
associated with capital expenditures in fiscal 1995 and
the first quarter of fiscal 1996 were partially offset
by reductions in depreciation and amortization
attributable to the closing of eleven stores in August
1995.
Interest expense, net for the first quarter of fiscal
1996 remained essentially unchanged compared to the
first quarter in fiscal 1995.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $2.5
million during the first quarter of fiscal 1996. Cash
was principally provided through net income and the
excess of an increase in accounts payable over an
increase in merchandise inventory.
10
<PAGE>
Loehmann's, Inc.
Management's Discussion and Analysis of
Financial Condition
and Results of Operations (continued)
Net cash used in investing activities was $1.3 million
during the first quarter of fiscal 1996. Such uses of
cash principally related to capital expenditures for
leasehold improvements and fixtures associated with the
upgrading of existing stores, construction of new
stores, and to a lesser extent the improvement of
corporate infrastructure. The Company anticipates its
capital expenditures for fiscal 1996 will be
approximately $14.0 million, consisting of $10.0 million
to open seven new stores and $4.0 million for other
general capital expenditures.
Net cash used in financing activities was $1.6 million
during the first quarter of fiscal 1996. Such uses of
cash principally related to the repurchase of $1.6
million face amount of 10-1/2% Senior Secured Notes.
The Company has not utilize its existing credit facility
since August 1995. The Company's interest coverage ratio
for the twelve-month period ended May 4, 1996 was 1.92x
compared to 1.73x for the twelve-month period ended
April 29, 1995. The Company was in full compliance with
all of the covenants of its debt agreements at May 4,
1996.
Effective June 12, 1996, the Company amended and
restated its credit agreement with Bank-America Business
Credit, Inc. (the "Bank") to provide the Company with a
new credit facility (the "New Credit Facility"). The New
Credit Facility provides for a $35.0 million revolving
line of credit with interest payable, at the Company's
option, on amounts drawn under the facility at either:
(i) the higher of the Bank's published reference rate
plus 0.75%, or .50% per annum above the latest federal
funds rate plus, 0.75% or (ii) LIBOR plus 2.2%. The
Company also is required to pay a per annum fee equal to
0.375% on the undrawn portion of the Bank's commitment
in respect of the New Credit Facility. The New Credit
Facility is subject to certain borrowing base
limitations, subjects the Company to certain covenants,
imposes limitations upon investments, dividends and
other restricted payments and capital expenditures. The
New Credit Facility is secured by substantially all of
the Company's assets, including accounts receivable,
inventory, fixtures and equipment and is not subject to
scheduled annual repayments, except upon maturity. The
New Credit Facility has a term of four years.
The Company believes that cash generated from
operations, funds available under the New Credit
Facility and funds from Offerings (see Notes 4, 5 and 6)
will be sufficient to satisfy its cash requirements
through fiscal 1996.
11
<PAGE>
Loehmann's, Inc.
Management's Discussion and Analysis of
Financial Condition
and Results of Operations (continued)
PART II-OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
On April 26, 1996, Loehmann's Holdings, Inc., a Maryland
corporation and predecessor to the Company ("Holdings"),
held a special meeting of stockholders. At the meeting,
holders of all of the 16,345,679 shares represented in
person or by proxy at the meeting voted for the merger
of Holdings into a new wholly-owned subsidiary formed
for the purpose of such merger, with the Delaware
corporation being the surviving corporation of such
merger (the "Reincorporation Merger"). In addition,
16,337,163 votes were cast for, and 8,516 votes were
cast against, approval of the Company's New Stock
Incentive Plan. On May 7, 1996, the shareholders of the
surviving corporation of the Reincorporation Merger
approved, by written consent signed by shareholders
representing 11,913,656 shares of such corporation's
Common Stock, the merger of that corporation into the
Company, with the Company being the surviving
corporation.
ITEM 5. OTHER INFORMATION
Certain statements in this quarterly report on Form 10-Q
under the caption "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and
elsewhere in this quarterly report and in future filings
by the Company with the Securities and Exchange
Commission, constitute "forward looking statements" with
the meaning of the Reform Act. 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. Such factors
include, among others, the following: general economic
and business conditions; competition; success of
operating initiatives; development and operating costs;
advertising and promotional efforts; brand awareness;
the existence or adherence to development schedules; the
existence or absence of adverse publicity; availability,
locations and terms of sites for store development;
changes in business strategy or development plans;
quality of management; availability, terms and
deployment of capital; business abilities and judgment
of personnel; availability of qualified personnel; labor
and employee benefit costs; changes in, or the failure
to comply with, government regulations; construction
costs and other factors referenced in this quarterly
report.
12
<PAGE>
Loehmann's, Inc.
Management's Discussion and Analysis of
Financial Condition
and Results of Operations (continued)
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Amended and Restated Certificate of Incorporation of
Loehmann's, Inc., filed as Exhibit 3.1 to Loehmann's,
Inc.'s Registration Statement on Form S-1 (Registration
No. 33-97100) and incorporated herein by reference.
3.2 By-Laws of Loehmann's, Inc., filed as Exhibit 3.2 to
Loehmann's, Inc.'s Registration Statement on Form S-1
(Registration No. 33-97100) and incorporated herein by
reference.
4.1 11-7/8% Senior Note Indenture dated as of May 10,
1996 between Loehmann's, Inc. and United States Trust
Company of New York.
27 Financial Data Schedule (for SEC use only)
(b)No reports on Form 8-K were filed during the quarter
ended May 4, 1996.
13
<PAGE>
Loehmann's, Inc.
Signature
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned thereunto
duly authorized.
Dated: June 21, 1996
Loehmann's, Inc.
By /s/ Philip Kaplan
-------------------------------------------
Philip Kaplan
President, Chief Operating Officer
and Director
14
<PAGE>
LOEHMANN'S INC.
Index to Exhibits
3.1 Amended and Restated Certificate of Incorporation of
Loehmann's, Inc., filed as Exhibit 3.1 to Loehmann's,
Inc.'s Registration Statement on Form S-1 (Registration
No. 33-97100) and incorporated herein by reference.
3.2 By-Laws of Loehmann's, Inc., filed as Exhibit 3.2 to
Loehmann's, Inc.'s Registration Statement on Form S-1
(Registration No. 33-97100) and incorporated herein by
reference.
4.1 11-7/8% Senior Note Indenture dated as of May 10,
1996 between Loehmann's, Inc. and United States Trust
Company of New York.
27 Financial Data Schedule (for SEC use only)
LOEHMANN'S INC.
Exhibit 4.1
LOEHMANN'S, INC., AS ISSUER,
AND
UNITED STATES TRUST COMPANY OF NEW YORK, AS TRUSTEE
INDENTURE
Dated as of May 10, 1996
$100,000,000
11{7/8}% Senior Notes due 2003
<PAGE>
Reconciliation and tie between Trust Indenture Act of 1939
and Indenture, dated as of May 10, 1996
Trust Indenture Indenture
Act Section Section
<section> 310(a)(1) 609
(a)(2) 609
(b) 607, 610
<section> 311(a) 613
<section> 312(a) 701
(c) 702
<section> 313(a) 703
(c) 703, 704
<section> 314(a) 704
(a)(4) 1019
(c)(1) 103
(c)(2) 103
(e) 103
<section> 315(a) 601(b)
(b) 602
(c) 601(a)
(d) 601(c), 603
(e) 514
<section> 316(a)(last sentence) 101 ("Outstanding")
(a)(1)(A) 502, 512
(a)(1)(B) 513
(b) 508
(c) 105
<section> 317(a)(1) 503
(a)(2) 504
(b) 1003
<section> 318(a) 108
Note:This reconciliation and tie shall not, for any purpose, be
deemed to be a part of this Indenture.
<PAGE>
TABLE OF CONTENTS
PAGE
PARTIES 1
RECITALS 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION{1}
Section 101. Definitions 1
Acquired Indebtedness 2
Affiliate 2
Asset Sale 2
Average Life to Stated Maturity 3
Bankruptcy Law 3
Board of Directors 3
Board Resolution 3
Business Day 3
Capital Lease Obligation 3
Capital Stock 4
Change of Control 4
Code 4
Commission 4
Common Stock 5
Company 5
Company Request or Company Order 5
Consolidated Fixed Charge Coverage Ratio 5
Consolidated Income Tax Expense 5
Consolidated Interest Expense 6
Consolidated Net Income (Loss) 6
Note: This table of contents shall not, for any purpose, be
deemed to be a part of this Indenture.
<PAGE>
PAGE
Consolidated Net Worth 6
Consolidated Non-cash Charges 6
Consolidation 7
Corporate Trust Office 7
Credit Facility 7
Currency Hedging Arrangements 7
Depositary 7
Default 7
EBITDA 7
Event of Default 7
Exchange Act 8
Fair Market Value 8
Generally Accepted Accounting Principles or
GAAP 8
Global Security 8
Guaranteed Debt 8
Holder 8
Indebtedness 8
Indenture 9
Indenture Obligations 9
Independent Director 10
Interest Payment Date 10
Interest Rate Agreements 10
Investment 10
Lien 10
Maturity 10
Moody's 10
Net Cash Proceeds 11
Officers' Certificate 11
Opinion of Counsel 11
Opinion of Independent Counsel 12
Outstanding 12
Pari Passu Indebtedness 13
Paying Agent 13
Permitted Holders 13
Permitted Investment 13
Person 13
Preferred Stock 13
Qualified Capital Stock 14
Redeemable Capital Stock 14
Redemption Date 14
(ii)
<PAGE>
PAGE
Redemption Price 14
Regular Record Date 14
Responsible Officer 14
Restricted Payment 14
S&P 14
Sale and Leaseback Transaction 14
Securities 14
Securities Act 15
Senior Debt 15
Security Register and Security Registrar 15
Special Record Date 15
Stated Maturity 15
Subordinated Indebtedness 15
Subsidiary 15
Temporary Cash Investments 15
Trust Indenture Act 16
Trustee 16
Voting Stock 16
Wholly Owned Subsidiary 16
Section 102.Other Definitions. 16
Section 103.Compliance Certificates and Opinions 17
Section 104.Form of Documents Delivered to Trustee 18
Section 105.Acts of Holders 19
Section 106.Notices, etc., to Trustee, the Company. 20
Section 107.Notice to Holders; Waiver.. 20
Section 108.Conflict with Trust Indenture Act 21
Section 109.Effect of Headings and Table of Contents 21
Section 110.Successors and Assigns.. 21
Section 111.Separability Clause.. 21
Section 112.Benefits of Indenture 22
Section 113.Governing Law.. 22
Section 114.Legal Holidays. 22
Section 115.Independence of Covenants 22
Section 116.Schedules and Exhibits.. 22
Section 117.Counterparts 22
(iii)
<PAGE>
PAGE
ARTICLE TWO
SECURITY FORMS
Section 201.Forms Generally 23
Section 202.Form of Face of Security 23
Section 203.Form of Reverse of Securities. 25
Section 204.Form of Trustee's Certificate of Authentication..29
ARTICLE THREE
THE SECURITIES
Section 301.Title and Terms 30
Section 302.Denominations.. 31
Section 303.Execution, Authentication, Delivery and
Dating 31
Section 304.Temporary Securities. 33
Section 305.Registration, Registration of Transfer
and Exchange. 33
Section 306.Mutilated, Destroyed, Lost and Stolen
Securities 36
Section 307.Payment of Interest; Interest Rights
Preserved 36
Section 308.Persons Deemed Owners 38
Section 309.Cancellation 38
Section 310.Computation of Interest. 38
ARTICLE FOUR
DEFEASANCE AND COVENANT DEFEASANCE
Section 401.Company's Option to Effect Defeasance or
Covenant Defeasance 39
Section 402.Defeasance and Discharge 39
Section 403.Covenant Defeasance 39
Section 404.Conditions to Defeasance or Covenant
Defeasance 40
Section 405.Deposited Money and U.S. Government
Obligations to Be Held in Trust;
Other Miscellaneous Provisions 43
Section 406.Reinstatement 43
(iv)
<PAGE>
PAGE
ARTICLE FIVE
REMEDIES
Section 501.Events of Default. 44
Section 502.Acceleration of Maturity; Rescission
and Annulment 46
Section 503.Collection of Indebtedness and Suits
for Enforcement by Trustee. 47
Section 504.Trustee May File Proofs of Claim. 48
Section 505.Trustee May Enforce Claims without
Possession of Securities. 49
Section 506.Application of Money Collected 49
Section 507.Limitation on Suits.. 50
Section 508.Unconditional Right of Holders to
Receive Principal, Premium and Interest 51
Section 509.Restoration of Rights and Remedies.. 51
Section 510.Rights and Remedies Cumulative 51
Section 511.Delay or Omission Not Waiver.. 51
Section 512.Control by Holders 52
Section 513.Waiver of Past Defaults. 52
Section 514.Undertaking for Costs 52
Section 515.Waiver of Stay, Extension or Usury Laws 53
Section 516.Remedies Subject to Applicable Law 53
ARTICLE SIX
THE TRUSTEE
Section 601.Duties of Trustee 53
Section 602.Notice of Defaults 55
Section 603.Certain Rights of Trustee 55
Section 604.Trustee Not Responsible for Recitals,
Dispositions of Securities or
Application of Proceeds Thereof 57
Section 605.Trustee and Agents May Hold Securities;
Collections; etc 57
Section 606.Money Held in Trust 57
Section 607.Compensation and Indemnification of
Trustee and Its Prior Claim 57
Section 608.Conflicting Interests 58
(v)
<PAGE>
PAGE
Section 609.Corporate Trustee Required; Eligibility..58
Section 610.Resignation and Removal; Appointment of
Successor Trustee 59
Section 611.Acceptance of Appointment by Successor 60
Section 612.Merger, Conversion, Consolidation or
Succession to Business.. 61
Section 613.Preferential Collection of Claims
Against Company 62
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY
TRUSTEE AND COMPANY
Section 701.Company to Furnish Trustee Names
and Addresses of Holders 62
Section 702.Disclosure of Names and Addresses
of Holders 63
Section 703.Reports by Trustee 63
Section 704.Reports by Company 63
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE
Section 801.Company May Consolidate, etc.,
Only on Certain Terms 64
Section 802.Successor Substituted 65
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901.Supplemental Indentures and Agreements
without Consent of Holders.. 66
Section 902.Supplemental Indentures and Agreements
with Consent of Holders.. 67
Section 903.Execution of Supplemental Indentures
and Agreements.. 68
(vi)
<PAGE>
PAGE
Section 904.Effect of Supplemental Indentures 69
Section 905.Conformity with Trust Indenture Act. 69
Section 906.Reference in Securities to Supplemental
Indentures.. 69
Section 907.Notice of Supplemental Indentures 69
Section 908.Revocation and Effect of Consents 69
ARTICLE TEN
COVENANTS
Section 1001.Payment of Principal, Premium and
Interest.. 70
Section 1002.Maintenance of Office or Agency.. 70
Section 1003.Money for Security Payments to Be
Held in Trust 70
Section 1004.Corporate Existence.. 72
Section 1005.Payment of Taxes and Other Claims 72
Section 1006.Maintenance of Properties.. 73
Section 1007.Insurance 73
Section 1008.Limitation on Indebtedness. 73
Section 1009.Limitation on Restricted Payments 75
Section 1010.Limitation on Transactions with
Affiliates 79
Section 1011.Limitation on Sale and Leaseback
Transactions 79
Section 1012.Limitation on Liens.. 80
Section 1013.Limitation on Sale of Assets.. 81
Section 1014.Limitation on Issuances of Guarantees
of Indebtedness 86
Section 1015.Purchase of Securities upon a
Change of Control 87
Section 1016.Limitation on Subsidiary Capital Stock 91
Section 1017.Limitation on Dividends and Other
Payment Restrictions Affecting
Subsidiaries 91
Section 1018.Provision of Financial Statements 92
Section 1019.Statement by Officers as to Default. 92
Section 1020.Waiver of Certain Covenants 93
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 1101.Rights of Redemption. 93
Section 1102.Applicability of Article 93
(vii)
<PAGE>
PAGE
Section 1103.Election to Redeem; Notice to Trustee 93
Section 1104.Selection by Trustee of Securities
to Be Redeemed.. 94
Section 1105.Notice of Redemption. 94
Section 1106.Deposit of Redemption Price 95
Section 1107.Securities Payable on Redemption Date.. 95
Section 1108.Securities Redeemed or Purchased in Part96
ARTICLE TWELVE
SATISFACTION AND DISCHARGE
Section 1201.Satisfaction and Discharge of Indenture 96
Section 1202.Application of Trust Money. 97
TESTIMONIUM 98
SIGNATURES AND SEALS 99
(viii)
<PAGE>
ACKNOWLEDGMENTS
SCHEDULE I Existing Indebtedness
SCHEDULE II Existing Liens
EXHIBIT A Form of Intercompany Note
(ix)
<PAGE>
INDENTURE, dated as of May 10, 1996, between LOEHMANN'S,
INC., a Delaware corporation (the "Company"), and UNITED STATES TRUST
COMPANY OF NEW YORK, a New York Corporation, as trustee (the
"Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of
11{7/8}% Senior Notes due 2003 (the "Securities"), of substantially
the tenor and amount hereinafter set forth, and to provide therefor
the Company has duly authorized the execution and delivery of this
Indenture and the Securities;
This Indenture is subject to, and shall be governed by, the
provisions of the Trust Indenture Act that are required to be part of
and to govern indentures qualified under the Trust Indenture Act;
All acts and things necessary have been done to make the
Securities, when duly issued and executed by the Company and
authenticated and delivered hereunder, the valid obligations of the
Company, and this Indenture a valid agreement of the Company, in
accordance with the terms of this Indenture;
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of
the Securities by the Holders thereof, it is mutually covenanted and
agreed, for the equal and proportionate benefit of all Holders of the
Securities, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. DEFINITIONS.
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings
assigned to them in this Article, and include the plural as well as
the singular;
(b) all other terms used herein which are defined in the
Trust Indenture Act, either directly or by reference therein, have
the meanings assigned to them therein;
<PAGE>
(c) all accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with GAAP;
(d) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision;
(e) all references to $, US$, dollars or United States
dollars shall refer to the lawful currency of the United States of
America; and
(f) all references herein to particular Sections or
Articles refer to this Indenture unless otherwise so indicated.
Certain terms used principally in Article Four are defined
in Article Four.
"Acquired Indebtedness" means Indebtedness of a Person
(i) existing at the time such Person becomes a Subsidiary or
(ii) assumed in connection with the acquisition of assets from such
Person, in each case, other than Indebtedness incurred in connection
with, or in contemplation of, such Person becoming a Subsidiary or
such acquisition. Acquired Indebtedness shall be deemed to be
incurred on the date of the related acquisition of assets from any
Person or the date the acquired Person becomes a Subsidiary.
"Affiliate" means, with respect to any specified Person,
(i) any other Person directly or indirectly controlling or controlled
by or under direct or indirect common control with such specified
Person, (ii) any other Person that owns, directly or indirectly, 5%
or more of such specified Person's Capital Stock or any executive
officer or director of any such specified Person or other Person or,
with respect to any natural Person, any person having a relationship
with such Person by blood, marriage or adoption not more remote than
first cousin or (iii) any other Person 5% or more of the Voting Stock
of which is beneficially owned or held directly or indirectly by such
specified Person. For the purposes of this definition, "control"
when used with respect to any specified Person means the power to
direct the management and policies of such Person directly or
indirectly, whether through ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled"
have meanings correlative to the foregoing.
"Asset Sale" means any sale, issuance, conveyance, transfer,
lease or other disposition (including, without limitation, by way of
merger, consolidation or Sale and Leaseback Transaction)
(collectively, a "transfer"), directly or indirectly, in one or a
series of related transactions, of (i) any Capital Stock of any
Subsidiary; (ii) all or
2
<PAGE>
substantially all of the properties and
assets of any division or line of business of the Company or its
Subsidiaries; or (iii) any other properties or assets of the Company
or any Subsidiary, other than in the ordinary course of business.
For the purposes of this definition, the term "Asset Sale" shall not
include any transfer of properties and assets that (A) is governed by
Article Eight, (B) is by the Company to any Wholly Owned Subsidiary,
or by any Subsidiary to the Company or any Wholly Owned Subsidiary in
accordance with the terms of this Indenture, or (C) is of obsolete
equipment in the ordinary course of business.
"Average Life to Stated Maturity" means, as of the date of
determination with respect to any Indebtedness, the quotient obtained
by dividing (i) the sum of the products of (a) the number of years
from the date of determination to the date or dates of each
successive scheduled principal payment of such Indebtedness
multiplied by (b) the amount of each such principal payment by
(ii) the sum of all such principal payments.
"Bankruptcy Law" means Title 11, United States Bankruptcy
Code of 1978, as amended, or any similar United States federal or
state law relating to bankruptcy, insolvency, receivership, winding
up, liquidation, reorganization or relief of debtors or any amendment
to, succession to or change in any such law.
"Board of Directors" means the board of directors of the
Company, as the case may be, or any duly authorized committee of such
board.
"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Company to have been
duly adopted by the Board of Directors and to be in full force and
effect on the date of such certification, and delivered to the
Trustee.
"Business Day" means each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking institutions
or trust companies in The City of New York or the city in which the
Corporate Trust Office of the Trustee is located are authorized or
obligated by law, regulation or executive order to close.
"Capital Lease Obligation" of any Person means any
obligation of such Person and its Subsidiaries on a Consolidated
basis under any capital lease of real or personal property which, in
accordance with GAAP, has been recorded as a capitalized lease
obligation.
"Capital Stock" of any Person means any and all shares,
interests, participations or other equivalents (however designated)
of such Person's capital stock or other equity interests.
3
<PAGE>
"Change of Control" means the occurrence of either of the
following events: (i) any "person" or "group" (as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act), other than
Permitted Holders, is or becomes the "beneficial owner" (as defined
in Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person
shall be deemed to have beneficial ownership of all shares that such
Person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or
indirectly, of more than 50% of the total outstanding Voting Stock of
the Company; (ii) during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board
of Directors of the Company (together with any new directors whose
election to such Board of Directors or whose nomination for election
by the stockholders of the Company, was approved by a vote of 66-2/3%
of the directors then still in office who were either directors at
the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to
constitute a majority of such Board of Directors then in office;
(iii) the Company consolidates with or merges with or into any Person
or conveys, transfers or leases all or substantially all of its
assets to any Person, or any corporation consolidates with or merges
into or with the Company, in any such event pursuant to a transaction
in which the outstanding Voting Stock of the Company is changed into
or exchanged for cash, securities or other property, other than any
such transaction where the outstanding Voting Stock of the Company is
not changed or exchanged at all (except to the extent necessary to
reflect a change in the jurisdiction of incorporation of the Company)
or where (A) the outstanding Voting Stock of the Company is changed
into or exchanged for (x) Voting Stock of the surviving corporation
which is not Redeemable Capital Stock or (y) cash, securities and
other property (other than Capital Stock of the surviving
corporation) in an amount which could be paid by the Company as a
Restricted Payment in accordance with Section 1009 (and such amount
shall be treated as a Restricted Payment subject to the provisions in
this Indenture described under Section 1009) and (B) no "person" or
"group" owns immediately after such transaction, directly or
indirectly, more than 50% of the total outstanding Voting Stock of
the surviving corporation; or (iv) the Company is liquidated or
dissolved or adopts a plan of liquidation or dissolution other than
in a transaction which complies with the provisions described under
Article Eight.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission,
as from time to time constituted, created under the Exchange Act, or
if at any time after the execution of this Indenture such Commission
is not existing and performing the duties now assigned to it under
the Trust Indenture Act then the body performing such duties at such
time.
4
<PAGE>
"Common Stock" means the common stock, par value $0.01 per
share, of the Company.
"Company" means Loehmann's, Inc., a corporation incorporated
under the laws of Delaware, until a successor Person shall have
become such pursuant to the applicable provisions of this Indenture,
and thereafter "Company" shall mean such successor Person. To the
extent necessary to comply with the requirements of the provisions of
the Trust Indenture Act Sections 310 through 317 as they are
applicable to the Company, the term "Company" shall include any other
obligor with respect to the Securities for purposes of complying with
such provisions.
"Company Request" or "Company Order" means a written request
or order signed in the name of the Company by any one of its Chairman
of the Board, its Vice-Chairman, its President, its Chief Executive
Officer, its Chief Operating Officer or a Vice President (regardless
of Vice Presidential designation), and by any one of its Treasurer,
an Assistant Treasurer, its Secretary or an Assistant Secretary, and
delivered to the Trustee.
"Consolidated Fixed Charge Coverage Ratio" of any Person
means, for any period, the ratio of (a) EBITDA to (b) the sum of
Consolidated Interest Expense for such period and cash and non-cash
dividends paid on any Preferred Stock of the Company during such
period; PROVIDED that (i) in making such computation, the
Consolidated Interest Expense attributable to interest on any
Indebtedness computed on a PRO FORMA basis and (A) bearing a floating
interest rate shall be computed as if the rate in effect on the date
of computation had been the applicable rate for the entire period and
(B) which was not outstanding during the period for which the
computation is being made but which bears, at the option of the
Company, a fixed or floating rate of interest, shall be computed by
applying at the option of the Company, either the fixed or floating
rate and (ii) in making such computation, the Consolidated Interest
Expense of the Company attributable to interest on any Indebtedness
under a revolving credit facility computed on a PRO FORMA basis shall
be computed based upon the average daily balance of such Indebtedness
during the applicable period.
"Consolidated Income Tax Expense" of any Person means, for
any period, the provision for federal, state, local and foreign
income taxes of such Person and its Consolidated Subsidiaries for
such period as determined in accordance with GAAP.
"Consolidated Interest Expense" of any Person means, without
duplication, for any period, the sum of (a) the interest expense of
such Person and its Subsidiaries for such period, on a Consolidated
basis, including, without limitation, (i) amortization of debt
discount, (ii) the net cost under Interest Rate Agreements and
Currency Hedging
5
<PAGE>
Arrangements (including amortization of discounts),
(iii) the interest portion of any deferred payment obligation and
(iv) accrued interest, plus (b) (i) the interest component of the
Capital Lease Obligations paid, accrued and/or scheduled to be paid
or accrued by such Person and its Subsidiaries during such period and
(ii) all capitalized interest of such Person and its Subsidiaries, in
each case as determined in accordance with GAAP.
"Consolidated Net Income (Loss)" of any Person means, for
any period, the Consolidated net income (or loss) of the Company and
its Subsidiaries for such period on a Consolidated basis as
determined in accordance with GAAP, adjusted, to the extent included
in calculating such net income (or loss), by excluding, without
duplication, (i) all extraordinary gains or losses (less all fees and
expenses relating thereto), (ii) the portion of net income (or loss)
of the Company and its Subsidiaries on a Consolidated basis allocable
to minority interests in unconsolidated Persons to the extent that
cash dividends or distributions have not actually been received by
the Company or one of its Consolidated Subsidiaries, (iii) net income
(or loss) of any Person combined with the Company or any of its
Subsidiaries on a "pooling of interests" basis attributable to any
period prior to the date of combination, (iv) any gain or loss, net
of taxes, realized upon the termination of any employee pension
benefit plan, (v) net gains (but not losses) (less all fees and
expenses relating thereto) in respect of dispositions of assets other
than in the ordinary course of business, (vi) the net income of any
Subsidiary to the extent that the declaration of dividends or similar
distributions by that Subsidiary of that income is not at the time
permitted, directly or indirectly, by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that
Subsidiary or its stockholders, (vii) any restoration to income of
any contingency reserve, except to the extent provision for such
reserve was made out of income accrued at any time following the date
of the Indenture, or (viii) any gain arising from the acquisition of
any securities, or the extinguishment, under GAAP, of any
Indebtedness of such Person.
"Consolidated Net Worth" of any Person, as of a date, means
the Consolidated stockholders' equity (excluding Redeemable Capital
Stock) of such Person and its Subsidiaries, as of such date, as
determined in accordance with GAAP.
"Consolidated Non-cash Charges" of any Person means, for any
period, the aggregate depreciation, amortization and other non-cash
charges of such Person and its subsidiaries on a Consolidated basis
for such period, as determined in accordance with GAAP (excluding any
non-cash charge which requires an accrual or reserve for cash charges
for any future period).
"Consolidation" means, with respect to any Person, the
consolidation of the accounts of such Person and each of its
subsidiaries if and to the extent the accounts of
6
<PAGE>
such Person and
each of its subsidiaries would normally be consolidated with those of
such Person, all in accordance with GAAP. The term "Consolidated"
shall have a similar meaning.
"Corporate Trust Office" means the office of the Trustee or
an affiliate or agent thereof at which at any particular time the
corporate trust business for the purposes of this Indenture shall be
principally administered, which office at the date of execution of
this Indenture is located at 114 West 47th Street, 15th Floor, New
York, New York 10036.
"Credit Facility" means the Credit Facility, dated as of May
6, 1996, among the Company, the lenders parties thereto, and
BankAmerica Business Credit, Inc., as agent, as such agreement may be
amended, renewed, extended, substituted, refinanced, restructured,
replaced, supplemented or otherwise modified from time to time
(including, without limitation, any successive renewals, extensions,
substitutions, refinancings, restructurings, replacements,
supplementations or other modifications of the foregoing).
"Currency Hedging Arrangements" means one or more of the
following agreements which shall be entered into by one or more
financial institutions: foreign exchange contracts, currency swap
agreements or other similar agreements or arrangements designed to
protect against the fluctuations in currency values.
"Depositary" means, the Person designated to act as
Depositary by the Company in accordance with Section 303 until a
successor Depositary shall have become such pursuant tot he
applicable provisions of this Indenture.
"Default" means any event which is, or after notice or
passage of any time or both would be, an Event of Default.
"EBITDA" means the sum of Consolidated Net Income (Loss),
Consolidated Interest Expense, Consolidated Income Tax Expense and
Consolidated Non-cash Charges deducted in computing Consolidated Net
Income (Loss) in each case, for such period, of the Company and its
Subsidiaries on a Consolidated basis, all determined in accordance
with GAAP.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute.
7
<PAGE>
"Fair Market Value" means, with respect to any asset or
property, the sale value that would be obtained in an arm's-length
transaction between an informed and willing seller under no
compulsion to sell and an informed and willing buyer under no
compulsion to buy.
"Generally Accepted Accounting Principles" or "GAAP" means
generally accepted accounting principles in the United States,
consistently applied, which are in effect on the date of this
Indenture.
"Global Security" means a Security that evidences all or
part of the Securities issued to the Depositary in accordance with
Section 303 and bearing the legends prescribed in Sections 202 and
303.
"Guaranteed Debt" of any Person means, without duplication,
all Indebtedness of any other Person referred to in the definition of
Indebtedness contained in this Section guaranteed directly or
indirectly in any manner by such Person, or in effect guaranteed
directly or indirectly by such Person through an agreement (i) to pay
or purchase such Indebtedness or to advance or supply funds for the
payment or purchase of such Indebtedness, (ii) to purchase, sell or
lease (as lessee or lessor) property, or to purchase or sell
services, primarily for the purpose of enabling the debtor to make
payment of such Indebtedness or to assure the holder of such
Indebtedness against loss, (iii) to supply funds to, or in any other
manner invest in, the debtor (including any agreement to pay for
property or services without requiring that such property be received
or such services be rendered), (iv) to maintain working capital or
equity capital of the debtor, or otherwise to maintain the net worth,
solvency or other financial condition of the debtor or (v) otherwise
to assure a creditor against loss; PROVIDED that the term "guarantee"
shall not include endorsements for collection or deposit, in either
case in the ordinary course of business.
"Holder" means a Person in whose name a Security is
registered in the Security Register.
"Indebtedness" means, with respect to any Person, without
duplication, (i) all indebtedness of such Person for borrowed money
or for the deferred purchase price of property or services, excluding
any trade payables and other accrued current liabilities arising in
the ordinary course of business, but including, without limitation,
all obligations, contingent or otherwise, of such Person in
connection with any letters of credit issued under letter of credit
facilities, acceptance facilities or other similar facilities and in
connection with any agreement to purchase, redeem, exchange, convert
or otherwise acquire for value any Capital Stock of such Person, or
any warrants, rights or options to acquire such Capital Stock, now or
hereafter outstanding, (ii) all obligations of
8
<PAGE>
such Person evidenced
by bonds, notes, debentures or other similar instruments, (iii) all
indebtedness created or arising under any conditional sale or other
title retention agreement with respect to property acquired by such
Person (even if the rights and remedies of the seller or lender under
such agreement in the event of default are limited to repossession or
sale of such property), but excluding trade payables arising in the
ordinary course of business, (iv) all obligations under Interest Rate
Agreements and Currency Hedging Arrangements of such Person, (v) all
Capital Lease Obligations of such Person, (vi) all Indebtedness
referred to in clauses (i) through (v) above of other Persons and all
dividends of other Persons, the payment of which is secured by (or
for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien, upon or with
respect to property (including, without limitation, accounts and
contract rights) owned by such Person, even though such Person has
not assumed or become liable for the payment of such Indebtedness,
(vii) all Guaranteed Debt of such Person, (viii) all Redeemable
Capital Stock valued at the greater of its voluntary or involuntary
maximum fixed repurchase price plus accrued and unpaid dividends, and
(ix) any amendment, supplement, modification, deferral, renewal,
extension, refunding or refinancing of any liability of the types
referred to in clauses (i) through (viii) above. For purposes
hereof, the "maximum fixed repurchase price" of any Redeemable
Capital Stock which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Redeemable Capital
Stock as if such Redeemable Capital Stock were purchased on any date
on which Indebtedness shall be required to be determined pursuant to
this Indenture, and if such price is based upon, or measured by, the
Fair Market Value of such Redeemable Capital Stock, such Fair Market
Value to be determined in good faith by the board of directors of the
issuer of such Redeemable Capital Stock.
"Indenture" means this instrument as originally executed
(including all exhibits and schedules thereto) and as it may from
time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable
provisions hereof.
"Indenture Obligations" means the obligations of the Company
and any other obligor under this Indenture or under the Securities,
to pay principal of, premium, if any, and interest when due and
payable, and all other amounts due or to become due under or in
connection with this Indenture, the Securities and the performance of
all other obligations to the Trustee and the Holders under this
Indenture and the Securities, according to the terms thereof.
"Independent Director" means a director of the Company other
than a director (i) who (apart from being a director of the Company
or any Subsidiary) is an employee, insider, associate or Affiliate of
the Company or a Subsidiary or has held any
9
<PAGE>
such position during the
previous five years or (ii) who is a director, an employee, insider,
associate or Affiliate of another party to the transaction in
question.
"Interest Payment Date" means the Stated Maturity of an
installment of interest on the Securities.
"Interest Rate Agreements" means one or more of the
following agreements which shall be entered into by one or more
financial institutions: interest rate protection agreements
(including, without limitation, interest rate swaps, caps, floors,
collars and similar agreements) and/or other types of interest rate
hedging agreements from time to time.
"Investment" means, with respect to any Person, directly or
indirectly, any advance, loan (including guarantees), or other
extension of credit or capital contribution to (by means of any
transfer of cash or other property to others or any payment for
property or services for the account or use of others), or any
purchase, acquisition or ownership by such Person of any Capital
Stock, bonds, notes, debentures or other securities issued or owned
by any other Person, other than Senior Debt, and all other items that
would be classified as investments on a balance sheet prepared in
accordance with GAAP.
"Lien" means any mortgage or deed of trust, charge, pledge,
lien (statutory or otherwise), privilege, security interest,
assignment, deposit, arrangement, easement, hypothecation, claim,
preference, priority or other encumbrance upon or with respect to any
property of any kind (including any conditional sale, capital lease
or other title retention agreement, any leases in the nature thereof,
and any agreement to give any security interest), real or personal,
movable or immovable, now owned or hereafter acquired.
"Maturity" means, when used with respect to any Security,
the date on which the principal of such Security becomes due and
payable as therein provided or as provided in this Indenture, whether
at Stated Maturity, the Offer Date or the Redemption Date and whether
by declaration of acceleration, Offer in respect of Excess Proceeds,
Change of Control Offer in respect of a Change of Control, call for
redemption or otherwise.
"Moody's" means Moody's Investors Service, Inc. or any
successor rating agency.
"Net Cash Proceeds" means (a) with respect to any Asset Sale
by any Person, the proceeds thereof (without duplication in respect
of all Asset Sales) in the form
10
<PAGE>
of cash or Temporary Cash Investments
including payments in respect of deferred payment obligations when
received in the form of, or stock or other assets when disposed of
for, cash or Temporary Cash Investments (except to the extent that
such obligations are financed or sold with recourse to the Company or
any Subsidiary) net of (i) brokerage commissions and other reasonable
fees and expenses (including fees and expenses of counsel and
investment bankers) related to such Asset Sale, (ii) provisions for
all taxes payable as a result of such Asset Sale, (iii) payments made
to retire Indebtedness where payment of such Indebtedness is secured
by the assets or properties the subject of such Asset Sale,
(iv) amounts required to be paid to any Person (other than the
Company or any Subsidiary) owning a beneficial interest in the assets
subject to the Asset Sale and (v) appropriate amounts to be provided
by the Company or any Subsidiary, as the case may be, as a reserve,
in accordance with GAAP, against any liabilities associated with such
Asset Sale and retained by the Company or any Subsidiary, as the case
may be, after such Asset Sale, including, without limitation, pension
and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale, all as reflected in an
Officers' Certificate delivered to the Trustee and (b) with respect
to any issuance or sale of Capital Stock or options, warrants or
rights to purchase Capital Stock, or debt securities or Capital Stock
that have been converted into or exchanged for Capital Stock, as
referred to in Section 1009, the proceeds of such issuance or sale in
the form of cash or Temporary Cash Investments, including payments in
respect of deferred payment obligations when received in the form of,
or stock or other assets when disposed of for, cash or Temporary Cash
Investments (except to the extent that such obligations are financed
or sold with recourse to the Company or any Subsidiary), net of
attorneys' fees, accountants' fees and brokerage, consultation,
underwriting and other fees and expenses actually incurred in
connection with such issuance or sale and net of taxes paid or
payable as a result thereof.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, Vice Chairman, the President, the Chief
Executive Officer, the Chief Operating Officer or a Vice President
(regardless of Vice Presidential designation), and by the Treasurer,
an Assistant Treasurer, the Secretary or an Assistant Secretary, of
the Company and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who
may be counsel for the Company or the Trustee, unless an Opinion of
Independent Counsel is required pursuant to the terms of this
Indenture, and who shall be acceptable to the Trustee.
11
<PAGE>
"Opinion of Independent Counsel" means a written opinion of
counsel issued by someone who is not an employee or consultant (other
than non-employee legal counsel) of the Company and who shall be
reasonably acceptable to the Trustee.
"Outstanding" when used with respect to Securities means, as
of the date of determination, all Securities theretofore
authenticated and delivered under this Indenture, except:
(a) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(b) Securities, or portions thereof, for whose payment or
redemption money in the necessary amount has been theretofore
deposited with the Trustee or any Paying Agent (other than the
Company) in trust or set aside and segregated in trust by the Company
(if the Company shall act as its own Paying Agent) for the Holders of
such Securities; PROVIDED that if such Securities are to be redeemed,
notice of such redemption has been duly given pursuant to this
Indenture or provision therefor reasonably satisfactory to the
Trustee has been made;
(c) Securities, except to the extent provided in Sections
402 and 403, with respect to which the Company has effected
defeasance or covenant defeasance as provided in Article Four; and
(d) Securities in exchange for or in lieu of which other
Securities have been authenticated and delivered pursuant to this
Indenture, other than any such Securities in respect of which there
shall have been presented to the Trustee and the Company proof
reasonably satisfactory to each of them that such Securities are held
by a bona fide purchaser in whose hands the Securities are valid
obligations of the Company;
PROVIDED, HOWEVER, that in determining whether the Holders of the
requisite principal amount of Outstanding Securities have given any
request, demand, authorization, direction, notice, consent or waiver
hereunder, Securities owned by the Company or any other obligor upon
the Securities or any Affiliate of the Company or such other obligor
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 the Trustee knows to be so owned
shall be so disregarded. Securities so owned which have been pledged
in good faith may be regarded as Outstanding if the pledgee
establishes to the reasonable satisfaction of the Trustee the
pledgee's right so to act with respect to such Securities and that
the pledgee is not the Company or any other obligor upon the
Securities or any Affiliate of the Company or such other obligor.
12
<PAGE>
"Pari Passu Indebtedness" means any Indebtedness of the
Company that is PARI PASSU in right of payment to the Securities.
"Paying Agent" means any Person (including the Company)
authorized by the Company to pay the principal of, premium, if any,
or interest on any Securities on behalf of the Company.
"Permitted Holders" means as of the date of determination:
(i) any of Sefinco, Ltd., Donaldson, Lufkin & Jenrette, Inc., Desai
Capital Management, Incorporated; (ii) general partners, officers,
directors or Affiliates of any of the Persons described in clause
(i); (iii) family members or relatives of the Persons described in
clause (ii); (iv) any trusts created for the benefit of the Persons
described in clause (ii) or (iii); (v) in the event of incompetence
or death of any of the Persons described in clause (ii) or (iii),
such Person's estate, executor, administrator, committee or other
personal representative or beneficiaries.
"Permitted Investment" means (i) Investments in any Wholly
Owned Subsidiary or any Person which, as a result of such Investment,
(a) becomes a Wholly Owned Subsidiary or (b) is merged or
consolidated with or into, or transfers or conveys substantially all
of its assets to, or is liquidated into, the Company or any Wholly
Owned Subsidiary; (ii) Indebtedness of the Company or a Subsidiary
described under clauses (iv) and (v) of the definition of "Permitted
Indebtedness"; (iii) Temporary Cash Investments; (iv) Investments
acquired by the Company or any Subsidiary in connection with an Asset
Sale permitted under Section 1013 to the extent such Investments are
non-cash proceeds as permitted under such covenant; and
(v) Investments in existence on the date of this Indenture.
"Person" means any individual, corporation, limited
liability company, partnership, joint venture, association, joint-
stock company, trust, unincorporated organization or government or
any agency or political subdivision thereof.
"Preferred Stock" means, with respect to any Person, any
Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends or distributions, or as to
the distribution of assets upon any voluntary or involuntary
liquidation or dissolution of such Person, over the Capital Stock of
any other class in such Person.
"Qualified Capital Stock" of any Person means any and all
Capital Stock of such Person other than Redeemable Capital Stock.
13
<PAGE>
"Redeemable Capital Stock" means any Capital Stock that,
either by its terms or by the terms of any security into which it is
convertible or exchangeable or otherwise, is or upon the happening of
an event or passage of time would be, required to be redeemed prior
to any Stated Maturity of the principal of the Securities or is
redeemable at the option of the holder thereof at any time prior to
any such Stated Maturity, or is convertible into or exchangeable for
debt securities at any time prior to any such Stated Maturity at the
option of the holder thereof.
"Redemption Date" when used with respect to any Security to
be redeemed pursuant to any provision in this Indenture means the
date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price" when used with respect to any Security to
be redeemed pursuant to any provision in this Indenture means the
price at which it is to be redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any
Interest Payment Date means the May 1st or November 1st (whether or
not a Business Day) next preceding such Interest Payment Date.
"Responsible Officer" when used with respect to the Trustee
means any officer assigned to the Corporate Trust Office or the agent
of the Trustee appointed hereunder, including any vice president,
assistant vice president, assistant secretary, or any other officer
or assistant officer of the Trustee or the agent of the Trustee
appointed hereunder to whom any corporate trust matter is referred
because of his or her knowledge of and familiarity with the
particular subject.
"Restricted Payment" has the meaning specified in Section
1009.
"S&P" means Standard & Poor's Corporation or any successor
rating agency.
"Sale and Leaseback Transaction" means any transaction or
series of related transactions pursuant to which the Company or a
Subsidiary sells or transfers any property or asset in connection
with the leasing, or the resale against installment payments, of such
property or asset to the seller or transferor.
"Securities" has the meaning specified in the first recital
of this Indenture.
"Securities Act" means the Securities Act of 1933, as
amended, or any successor statute.
14
<PAGE>
"Senior Debt" means all Indebtedness of the Company other
than Subordinated Indebtedness.
"Security Register" and "Security Registrar" have the
respective meanings specified in Section 305.
"Special Record Date" for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to Section 307.
"Stated Maturity" when used with respect to any Indebtedness
or any installment of interest thereon, means the dates specified in
such Indebtedness as the fixed date on which the principal of such
Indebtedness or such installment of interest, as the case may be, is
due and payable.
"Subordinated Indebtedness" means Indebtedness of the
Company subordinated in right of payment to the Securities.
"Subsidiary" means any Person, a majority of the equity
ownership or the Voting Stock of which is at the time owned, directly
or indirectly, by the Company or by one or more other Subsidiaries,
or by the Company and one or more other Subsidiaries.
"Temporary Cash Investments" means (i) any evidence of
Indebtedness, maturing not more than one year after the date of
acquisition, issued by the United States of America, or an
instrumentality or agency thereof and guaranteed fully as to
principal, premium, if any, and interest by the United States of
America or that are subject to a repurchase agreement with an
institution described in clause (ii) below exercisable within 270
days, (ii) any certificate of deposit, maturing not more than one
year after the date of acquisition, issued by, or time deposit of, a
commercial banking institution that is a member of the Federal
Reserve System and that has combined capital and surplus and
undivided profits of not less than $500,000,000, whose debt has a
rating, at the time as of which any investment therein is made, of
"P-1" according to Moody's Investors Service, Inc. ("Moody's") or any
successor rating agency or "A-1" according to Standard & Poor's
Corporation ("S&P") or any successor rating agency, (iii) commercial
paper, maturing not more than one year after the date of acquisition,
issued by a corporation (other than an Affiliate or Subsidiary of the
Company) organized and existing under the laws of the United States
of America with a rating, at the time as of which any investment
therein is made, of "P-1" according to Moody's or "A-1" according to
S&P and (iv) any money market deposit accounts issued or offered by a
domestic commercial bank having capital and surplus in excess of
$500,000,000; PROVIDED that the short term debt of such
15
<PAGE>
commercial bank has a rating, at the time of investment, of "P-1" (or higher)
according to Moody's or "A-1 (or higher) according to S&P.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended, or any successor statute.
"Trustee" means, except as set forth in Section 405 hereof,
the Person named as the "Trustee" in the first paragraph of this
Indenture, until a successor trustee shall have become such pursuant
to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor trustee.
"Voting Stock" means Capital Stock of the class or classes
pursuant to which the holders thereof have the general voting power
under ordinary circumstances to elect at least a majority of the
board of directors, managers or trustees of a corporation
(irrespective of whether or not at the time Capital Stock of any
other class or classes shall have or might have voting power by
reason of the happening of any contingency).
"Wholly Owned Subsidiary" means a Subsidiary all the Capital
Stock of which is owned by the Company or another Wholly Owned
Subsidiary.
Section 102. OTHER DEFINITIONS.
TERM DEFINED IN SECTION
"Act" 105
"Change of Control Offer" 1015
"Change of Control Purchase Date" 1015
"Change of Control Purchase Notice" 1015
"Change of Control Purchase Price" 1015
"covenant defeasance" 403
"Defaulted Interest" 307
"defeasance" 402
"Defeasance Redemption Date" 404
"Defeased Securities" 401
"Deficiency" 1013
"Excess Proceeds" 1013
"incur" 1008
"Offer" 1013
"Offer Date" 1013
"Offered Price" 1013
"Pari Passu Debt Amount" 1013
"Pari Passu Offer" 1013
16
<PAGE>
"Permitted Indebtedness" 1008
"refinancing" 1008, 1009
"Required Filing Dates" 1020
"Security Amount" 1013
"Special Payment Date" 307
"Surviving Entity" 801
"U.S. Government Obligations" 404
Section 103. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company to the
Trustee to take any action under any provision of this Indenture, the
Company and any other obligor on the Securities (if applicable) shall
furnish to the Trustee an Officers' Certificate in a form and
substance reasonably acceptable to the Trustee stating that all
conditions precedent, if any, provided for in this Indenture
(including any covenant compliance with which constitutes a condition
precedent) relating to the proposed action have been complied with,
and an Opinion of Counsel in a form and substance reasonably
acceptable to the Trustee stating that in the opinion of such counsel
all such conditions precedent, if any, have been complied with,
except that, in the case of any such application or request as to
which the furnishing of such certificates or opinions is specifically
required by any provision of this Indenture relating to such
particular application or request, no additional certificate or
opinion need be furnished.
Every certificate or Opinion of Counsel with respect to
compliance with a condition or covenant provided for in this
Indenture shall include:
(a) a statement that each individual signing such
certificate or individual or firm signing such opinion has read such
covenant or condition and the definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of each such
individual or such firm, he or it has made such examination or
investigation as is necessary to enable him or it to express an
informed opinion as to whether or not such covenant or condition has
been complied with; and
(d) a statement as to whether, in the opinion of each such
individual or such firm, such condition or covenant has been complied
with.
17
<PAGE>
<PAGE>
Section 104. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person, it
is not necessary that all such matters be certified by, or covered by
the opinion of, only one such Person, or that they be so certified or
covered by only one document, but one such Person may certify or give
an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give
an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company or
other obligor on the Securities may be based, insofar as it relates
to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know that the certificate or
opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any such certificate
or opinion may be based, insofar as it relates to factual matters,
upon a certificate or opinion of, or representations by, an officer
or officers of the Company or other obligor on the Securities stating
that the information with respect to such factual matters is in the
possession of the Company or other obligor on the Securities, unless
such officer or counsel knows, or in the exercise of reasonable care
should know that the certificate or opinion or representations with
respect to such matters are erroneous. Opinions of Counsel required
to be delivered to the Trustee may have qualifications customary for
opinions of the type required and counsel delivering such Opinions of
Counsel may rely on certificates of the Company or government or
other officials customary for opinions of the type required,
including certificates certifying as to matters of fact, including
that various financial covenants have been complied with.
Any certificate or opinion of an officer of the Company or
other obligor on the Securities may be based, insofar as it relates
to accounting matters, upon a certificate or opinion of or
representations by an accountant or firm of accountants in the employ
of the Company, unless such officer knows or in the exercise of
reasonable care should know that the certificate or opinion or
representations with respect to the accounting matters upon which his
certificate or opinion may be based are erroneous. Any certificate
or opinion of any independent firm of public accountants filed with
the Trustee shall contain a statement that such firm is independent
with respect to the Company.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements,
opinions or other instruments under this Indenture, they may, but
need not, be consolidated and form one instrument.
18
<PAGE>
Section 105. ACTS OF HOLDERS.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be
given or taken by Holders may be embodied in and evidenced by one or
more instruments of substantially similar tenor signed by such
Holders in person or by an agent duly appointed in writing; and,
except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to
the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as
the "Act" of the Holders signing such instrument or instruments.
Proof of execution of any such instrument or of a writing appointing
any such agent shall be sufficient for any purpose of this Indenture
and conclusive in favor of the Trustee and the Company, if made in
the manner provided in this Section 105.
(b) The ownership of Securities shall be proved by the
Security Register.
(c) Any request, demand, authorization, direction, notice,
consent, waiver or other Act by the Holder of any Security shall bind
every future Holder of the same Security or the Holder of every
Security issued upon the transfer thereof or in exchange therefor or
in lieu thereof, in respect of anything done, suffered or omitted to
be done by the Trustee, any Paying Agent or the Company in reliance
thereon, whether or not notation of such action is made upon such
Security.
(d) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a
witness of such execution or by a certificate of a notary public or
other officer authorized by law to take acknowledgments of deeds,
certifying that the individual signing such instrument or writing
acknowledged to him the execution thereof. Where such execution is
by a signer acting in a capacity other than his individual capacity,
such certificate of affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such
instrument or writing, or the authority of the Person executing the
same, may also be proved in any other manner which the Trustee deems
sufficient.
(e) If the Company shall solicit from the Holders any
request, demand, authorization, direction, notice, consent, waiver or
other Act, the Company may, at its option, by or pursuant to a Board
Resolution, fix in advance a record date for the determination of
such Holders entitled to give such request, demand, authorization,
direction, notice, consent, waiver or other Act, but the Company
shall have no obligation to do so. Notwithstanding Trust Indenture
Act Section 316(c), any such record date shall be the record date
specified in or pursuant to such Board Resolution, which shall be a
date
19
<PAGE>
not more than 30 days prior to the first solicitation of Holders
generally in connection therewith and no later than the date such
solicitation is completed.
If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other Act may be
given before or after such record date, but only the Holders of
record at the close of business on such record date shall be deemed
to be Holders for purposes of determining whether Holders of the
requisite proportion of Securities then Outstanding have authorized
or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other Act, and for this purpose
the Securities then Outstanding shall be computed as of such record
date; PROVIDED that no such request, demand, authorization,
direction, notice, consent, waiver or other Act by the Holders on
such record date shall be deemed effective unless it shall become
effective pursuant to the provisions of this Indenture not later than
six months after the record date.
Section 106. NOTICES, ETC., TO THE TRUSTEE, THE COMPANY.
Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document provided or
permitted by this Indenture to be made upon, given or furnished to,
or filed with:
(a) the Trustee by any Holder or by the Company or any
other obligor on the Securities shall be sufficient for every purpose
(except as provided in Section 501(c)) hereunder if in writing and
mailed, first-class postage prepaid, or delivered by recognized
overnight courier, to or with the Trustee at its Corporate Trust
Office, at 114 West 47th Street, 15th Floor, New York, New York
10036, Attention: Corporate Trust Department, or at any other
address previously furnished in writing to the Holders, the Company
or any other obligor on the Securities by the Trustee; or
(b) the Company by the Trustee or any Holder shall be
sufficient for every purpose (except as provided in Section 501(c))
hereunder if in writing and mailed, first-class postage prepaid, or
delivered by recognized overnight courier, to the Company addressed
to it at 2500 Halsey Street, Bronx, New York, 10461, Attention:Philip
Kaplan or at any other address previously furnished in writing to the
Trustee by the Company.
Section 107. NOTICE TO HOLDERS; WAIVER.
Where this Indenture provides for notice to Holders of any
event, such notice shall be sufficiently given (unless otherwise
herein expressly provided) if in writing and mailed, first-class
postage prepaid, or delivered by recognized overnight courier, to
each Holder affected by such event, at his address as it appears in
the Security Register, not later than the latest date, and not
earlier than the earliest date, prescribed for
20
<PAGE>
the giving of such
notice. In any case where notice to Holders is given by mail,
neither the failure to mail such notice, nor any defect in any notice
so mailed, to any particular Holder shall affect the sufficiency of
such notice with respect to other Holders. Any notice when mailed to
a Holder in the aforesaid manner shall be conclusively deemed to have
been received by such Holder whether or not actually received by such
Holder. Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall
be the equivalent of such notice. Waivers of notice by Holders shall
be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such
waiver.
In case by reason of the suspension of regular mail service
or by reason of any other cause, it shall be impracticable to mail
notice of any event as required by any provision of this Indenture,
then any method of giving such notice as shall be reasonably
satisfactory to the Trustee shall be deemed to be a sufficient giving
of such notice.
Section 108. CONFLICT WITH TRUST INDENTURE ACT.
If any provision hereof limits, qualifies or conflicts with
any provision of the Trust Indenture Act or another provision which
is required or deemed to be included in this Indenture by any of the
provisions of the Trust Indenture Act, the provision or requirement
of the Trust Indenture Act shall control. If any provision of this
Indenture modifies or excludes any provision of the Trust Indenture
Act that may be so modified or excluded, the latter provision shall
be deemed to apply to this Indenture as so modified or to be
excluded, as the case may be.
Section 109. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the
construction hereof.
Section 110. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the
Company shall bind its successors and assigns, whether so expressed
or not.
Section 111. 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.
21
<PAGE>
Section 112. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Securities, express or
implied, shall give to any Person (other than the parties hereto and
their successors hereunder, any Paying Agent, the Holders and the
holders of Senior Indebtedness) any benefit or any legal or equitable
right, remedy or claim under this Indenture.
Section 113. GOVERNING LAW.
This Indenture and the Securities shall be governed by, and
construed in accordance with, the laws of the State of New York
(without giving effect to the conflicts of laws principles thereof).
Section 114. LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption
Date, Maturity or Stated Maturity of any Security shall not be a
Business Day, then (notwithstanding any other provision of this
Indenture or of the Securities) payment of interest or principal or
premium, if any, need not be made on such date, but may be made on
the next succeeding Business Day with the same force and effect as if
made on the Interest Payment Date or Redemption Date, or at the
Maturity or Stated Maturity and no interest shall accrue with respect
to such payment for the period from and after such Interest Payment
Date, Redemption Date, Maturity or Stated Maturity, as the case may
be, to the next succeeding Business Day.
Section 115. INDEPENDENCE OF COVENANTS.
All covenants and agreements in this Indenture shall be
given independent effect so that if a particular action or condition
is not permitted by any such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limitations
of, another covenant shall not avoid the occurrence of a Default or
an Event of Default if such action is taken or condition exists.
Section 116. SCHEDULES AND EXHIBITS.
All schedules and exhibits attached hereto are by this
reference made a part hereof with the same effect as if herein set
forth in full.
Section 117. COUNTERPARTS.
This Indenture may be executed in any number of
counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same
instrument.
22
<PAGE>
ARTICLE TWO
SECURITY FORMS
Section 201. FORMS GENERALLY.
The Securities and the Trustee's certificate of
authentication thereon shall be in substantially the forms set forth
in this Article Two, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by
the Indenture and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may
be required to comply with the rules of any securities exchange, any
organizational document or governing instrument or applicable law or
as may, consistently herewith, be determined by the officers
executing such Securities, as evidenced by their execution of the
Securities. Any portion of the text of any Security may be set forth
on the reverse thereof, with an appropriate reference thereto on the
face of the Security.
The definitive Securities shall be printed, lithographed or
engraved or produced by any combination of these methods or may be
produced in any other manner permitted by the rules of any securities
exchange on which the Securities may be listed, all as determined by
the officers executing such Securities, as evidenced by their
execution of such Securities.
Section 202. FORM OF FACE OF SECURITY.
(a) The form of the face of the Securities shall be
substantially as follows:
[If a Global Security to be held by The Depository Trust
Company, then insert --UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE ISSUER 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.
[If a Global Security, then insert -- THIS IS A GLOBAL SECURITY
WITHIN THE MEANING OF THE INDENTURE. UNLESS AND UNTIL IT IS
EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL SECURITIES
23
<PAGE>
REPRESENTED HEREBY, THIS GLOBAL SECURITY SHALL NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR
BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE
OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
LOEHMANN'S, INC.
__________________
11{7/8}% SENIOR NOTE DUE 2003
No. __________ $__________
LOEHMANN'S INC. a Delaware corporation (herein called the
"Company," which term includes any successor Person under the
Indenture hereinafter referred to), for value received, hereby
promises to pay to or registered assigns, the principal
sum of United States dollars on May 15, 2003, at the
office or agency of the Company referred to below, and to pay
interest thereon from May 10, 1996, or from the most recent Interest
Payment Date to which interest has been paid or duly provided for,
semiannually on May 15 and November 15, in each year, commencing
November 15, 1996 at the rate of 11{7/8}% per annum, in United States
dollars, until the principal hereof is paid or duly provided for.
Interest shall be computed on the basis of a 360-day year of twelve
30-day months.
The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in such
Indenture, be paid to the Person in whose name this Security (or one
or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest, which shall be
May 1st or November 1st (whether or not a Business Day), as the case
may be, next preceding such Interest Payment Date. Any such interest
not so punctually paid, or duly provided for, and interest on such
defaulted interest at the interest rate borne by the Securities, to
the extent lawful, shall forthwith cease to be payable to the Holder
on such Regular Record Date, and may be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the
payment of such defaulted interest to be fixed by the Trustee, notice
whereof shall be given to Holders of Securities not less than 10 days
prior to such Special Record Date, or may be paid at any time in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon
such notice as may be required by such exchange, all as more fully
provided in said Indenture.
24
<PAGE>
Payment of the principal of, premium, if any, and interest
on this Security will be made at the office or agency of the Company
maintained for that purpose in the City of New York, or at such other
office or agency as may be maintained for such purpose, in such coin
or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts; PROVIDED,
HOWEVER, that payment of interest may be made at the option of the
Company by check mailed to the address of the Person entitled thereto
as such address shall appear on the Security Register.
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions
shall for all purposes have the same effect as if set forth at this
place.
Unless the certificate of authentication hereon has been
duly executed by the Trustee referred to on the reverse hereof or by
the authenticating agent appointed as provided in the Indenture by
manual signature, this Security shall not be entitled to any benefit
under the Indenture, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument
to be duly executed by the manual or facsimile signature of its
authorized officers and its corporate seal to be affixed or
reproduced hereon.
Dated: LOEHMANN'S, INC.
By:____________________
Title:___________________
Attest:
[SEAL]
____________________________
Authorized Officer
Section 203. FORM OF REVERSE OF SECURITIES.
(a) The form of the reverse of the Securities shall be
substantially as follows:
This Security is one of a duly authorized issue of
Securities of the Company designated as its 11{7/8}%% Senior Notes
due 2003 (herein called the "Securities"), limited
25
<PAGE>
(except as otherwise provided in the Indenture referred to below) in aggregate
principal amount to $100,000,000, issued under and subject to the
terms of an indenture (herein called the "Indenture") dated as of May
10, 1996, among the Company and United States Trust Company of New
York, as trustee (herein called the "Trustee," which term includes
any successor trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties,
obligations and immunities thereunder of the Company, the Trustee and
the Holders of the Securities, and of the terms upon which the
Securities are, and are to be, authenticated and delivered.
The Indenture contains provisions for defeasance at any time
of (a) the entire Indebtedness on the Securities and (b) certain
restrictive covenants and related Defaults and Events of Default, in
each case upon compliance with certain conditions set forth therein.
The Securities are subject to redemption at any time on or
after May 15, 2000, at the option of the Company, in whole or in
part, on not less than 30 nor more than 60 days' prior notice to the
Holders by first-class mail in amounts of $1,000 or an integral
multiple of $1,000 at the following redemption prices (expressed as a
percentage of the principal amount), if redeemed during the 12-month
period beginning May 15th of the years indicated below:
Redemption
YEAR PRICE
2000 105.938%
2001 102.969%
2002 and thereafter 100.000%
in each case, together with accrued and unpaid interest, if any, to
the Redemption Date (subject to the right of Holders of record on
relevant Regular Record Dates or Special Record Dates to receive
interest due on an Interest Payment Date). If less than all of the
Securities are to be redeemed, the Trustee shall select the
Securities or portions thereof to be redeemed in compliance with the
requirements of the principal national securities exchange, if any,
on which the Securities being redeemed are listed, or if the
Securities are not listed on a national securities exchange, pro
rata, by lot or by any other method the Trustee shall deem fair and
reasonable.
If less than all of the Securities are to be redeemed, the
Trustee shall select the Securities or portions thereof to be
redeemed pro rata, by lot or by any other method the Trustee shall
deem fair and reasonable.
26
<PAGE>
Upon the occurrence of a Change of Control, each Holder may
require the Company to repurchase all or a portion of such Holder's
Securities in an amount of $1,000 or integral multiples of $1,000, at
a purchase price in cash equal to 101% of the principal amount
thereof, together with accrued and unpaid interest, if any, to the
date of repurchase.
Under certain circumstances, in the event the Net Cash
Proceeds received by the Company from any Asset Sale, which proceeds
are not used to repay Indebtedness under the Credit Agreement or
invested in properties or assets used in the businesses of the
Company or reasonably related thereto, equals or exceeds a specified
amount the Company will be required to apply such proceeds to the
repayment of the Securities and certain Indebtedness ranking PARI
PASSU to the Securities.
In the case of any redemption or repurchase of Securities in
accordance with the Indenture, interest installments whose Stated
Maturity is on or prior to the Redemption Date will be payable to the
Holders of such Securities of record as of the close of business on
the relevant Regular Record Date or Special Record Date referred to
on the face hereof. Securities (or portions thereof) for whose
redemption and payment provision is made in accordance with the
Indenture shall cease to bear interest from and after the Redemption
Date.
In the event of redemption or repurchase of this Security in
accordance with the Indenture in part only, a new Security or
Securities for the unredeemed portion hereof shall be issued in the
name of the Holder hereof upon the cancellation hereof.
If an Event of Default shall occur and be continuing, the
principal amount of all the Securities may be declared due and
payable in the manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions (including
certain amendments permitted without the consent of any Holders) as
therein provided, the amendment thereof and the modification of the
rights and obligations of the Company and the rights of the Holders
under the Indenture and the Securities and the Securities at any time
by the Company and the Trustee with the consent of the Holders of a
specified percentage in aggregate principal amount of the Securities
at the time Outstanding. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate
principal amount of the Securities at the time Outstanding, on behalf
of the Holders of all the Securities, to waive compliance by the
Company with certain provisions of the Indenture and the Securities
and certain past Defaults under the Indenture and the Securities and
their consequences. Any such consent or waiver by or on behalf of
the Holder of this Security shall be conclusive and binding upon such
Holder
27
<PAGE>
and upon all future Holders of this Security and of any
Security issued upon the registration of transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such
consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of
this Security or of the Indenture shall alter or impair the
obligation of the Company or any other obligor on the Securities (in
the event such other obligor is obligated to make payments in respect
of the Securities), which is absolute and unconditional, to pay the
principal of, premium, if any, and interest on this Security at the
times, place, and rate, and in the coin or currency, herein
prescribed, subject to the subordination provisions of the Indenture.
The Securities are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof.
As provided in the Indenture and subject to certain limitations
therein set forth, the Securities are exchangeable for a like
aggregate principal amount of Securities of a different authorized
denomination, as requested by the Holder surrendering the same.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is
registrable on the Security Register of the Company, upon surrender
of this Security for registration of transfer at the office or agency
of the Company maintained for such purpose in The City of New York or
at such other office or agency of the Company as may be maintained
for such purpose, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new
Securities, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or
transferees.
No service charge shall be made for any registration of
transfer or exchange of Securities, but the Company may require
payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
Prior to and at the time of due presentment of this 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 this
Security is overdue, and neither the Company, the Trustee nor any
agent shall be affected by notice to the contrary.
THIS SECURITY 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.
28
<PAGE>
All terms used in this Security which are defined in the
Indenture and not otherwise defined herein shall have the meanings
assigned to them in the Indenture.
Section 204. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
The Trustee's certificate of authentication shall be
included on the form of the face of the Securities substantially in
the following form:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
This is one of the Securities referred to in the within-
mentioned Indenture.
UNITED STATES TRUST COMPANY OF
NEW YORK, as Trustee
By: _________________________________
Authorized Officer
29
<PAGE>
ARTICLE THREE
THE SECURITIES
Section 301. TITLE AND TERMS.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to
$100,000,000 in principal amount of Securities, except for Securities
authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, other Securities pursuant to Section
303, 304, 305, 306, 906, 1013, 1015 or 1108.
The Securities shall be known and designated as the
"11{7/8}% Senior Notes due 2003" of the Company. The Stated Maturity
of the Securities shall be May 15, 2003, and the Securities shall
each bear interest at the rate of 11{7/8}% from May 10, 1996 or from
the most recent Interest Payment Date to which interest has been
paid, as the case may be, payable on November 15, 1996 and
semiannually thereafter on May 15th and November 15th, in each year,
until the principal thereof is paid or duly provided for. Interest
on any overdue principal, interest (to the extent lawful) or premium,
if any, shall be payable on demand.
The principal of, premium, if any, and interest on the
Securities shall be payable at the office or agency of the Company
maintained for such purpose in The City of New York, or at such other
office or agency of the Company as may be maintained for such
purpose; PROVIDED, HOWEVER, that at the option of the Company
interest may be paid by check mailed to addresses of the Persons
entitled thereto as such addresses shall appear on the Security
Register.
The Securities shall be subject to repurchase by the Company
pursuant to an Offer as provided in Section 1013.
Holders shall have the right to require the Company to
purchase their Securities, in whole or in part, in the event of a
Change of Control pursuant to Section 1015.
The Securities shall be redeemable as provided in Article
Eleven and in the Securities.
At the election of the Company, the entire Indebtedness on
the Securities or certain of the Company's obligations and covenants
and certain Events of Default thereunder may be defeased as provided
in Article Four.
30
<PAGE>
Section 302. DENOMINATIONS.
The Securities shall be issuable only in registered form
without coupons and only in denominations of $1,000 and any integral
multiple thereof.
Section 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Securities shall be executed on behalf of the Company by
one of its Chairman of the Board, its President, its Chief Executive
Officer, its Chief Operating Officer or one of its Vice Presidents
under its corporate seal reproduced thereon attested by its Secretary
or one of its Assistant Secretaries. The signatures 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 such Securities.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities
executed by the Company to the Trustee for authentication, together
with a Company Order for the authentication and delivery of such
Securities; and the Trustee in accordance with such Company Order
shall authenticate and deliver such Securities as provided in this
Indenture and not otherwise.
Each Security shall be dated the date of its authentication.
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 and is entitled to the benefits of this
Indenture.
The Company shall execute and the Trustee shall authenticate
one or more Global Securities that (i) shall represent an aggregate
amount equal to the aggregate principal amount of such of the
Outstanding Securities as the Company shall have directed the Trustee
to authenticate in the form of a Global Security or Global
Securities, (ii) shall be registered in the name of the Depositary or
the nominee of the Depositary, (iii) shall be delivered by the
Trustee to the Depositary or pursuant to the Depositary's
31
<PAGE>
instruction and (iv) shall bear a legend substantially to the following effect
(or in the form required by the Depositary): "THIS IS A GLOBAL
SECURITY WITHIN THE MEANING OF THE INDENTURE. UNLESS AND UNTIL IT IS
EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL SECURITIES
REPRESENTED HEREBY, THIS GLOBAL SECURITY SHALL NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR
BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE
OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY."
The Depositary must, at all times while it serves as such
Depositary, be a clearing agency registered under the Securities
Exchange Act of 1934, as amended, and any other applicable statute or
regulation.
In case the Company, pursuant to Article Eight, shall be
consolidated or merged with or into any other Person or shall sell,
assign, convey, transfer, lease or otherwise dispose of substantially
all of its properties and assets to any Person, and the successor
Person resulting from such consolidation or surviving such merger, or
into which the Company shall have been merged, or the successor
Person which shall have participated in the sale, assignment,
conveyance, transfer, lease or other disposition as aforesaid, shall
have executed an indenture supplemental hereto with the Trustee
pursuant to Article Eight, any of the Securities authenticated or
delivered prior to such consolidation, merger, sale, assignment,
conveyance, transfer, lease or other disposition may, from time to
time, at the request of the successor Person, be exchanged for other
Securities executed in the name of the successor Person with such
changes in phraseology and form as may be appropriate, but otherwise
in substance of like tenor as the Securities surrendered for such
exchange and of like principal amount; and the Trustee, upon Company
Request of the successor Person, shall authenticate and deliver
Securities as specified in such request for the purpose of such
exchange. If Securities shall at any time be authenticated and
delivered in any new name of a successor Person pursuant to this
Section 303 in exchange or substitution for or upon registration of
transfer of any Securities, such successor Person, at the option of
the Holders but without expense to them, shall provide for the
exchange of all Securities at the time Outstanding for Securities
authenticated and delivered in such new name.
The Trustee may appoint an authenticating agent acceptable
to the Company to authenticate Securities on behalf of the Trustee.
Unless limited by the terms of such appointment, an authenticating
agent may authenticate Securities whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee
32
<PAGE>
includes authentication by such agent. An authenticating agent has
the same rights as any Security Registrar or Paying Agent to deal
with the Company and its Affiliates.
Section 304. TEMPORARY SECURITIES.
Pending the preparation of definitive Securities, the
Company may execute, and upon Company Order the Trustee shall
authenticate and deliver, temporary Securities which are printed,
lithographed, typewritten 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 1002 (or in
accordance with Section 303, in the case of initial Securities),
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 deliver 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 305. REGISTRATION, REGISTRATION OF TRANSFER
AND EXCHANGE.
The Company shall cause the Trustee to keep, so long as it
is the Security Registrar, at the Corporate Trust Office of the
Trustee, or such other office as the Trustee may designate, a
register (the register maintained in such office or in any other
office or agency designated pursuant to Section 1002 being herein
sometimes referred to as the "Security Register") in which, subject
to such reasonable regulations as the Security Registrar may
prescribe, the Company shall provide for the registration of
Securities and of transfers of Securities. The Trustee shall
initially be the "Security Registrar" for the purpose of registering
Securities and transfers of Securities as herein provided. The
Company may appoint one or more co-registrars.
Upon surrender for registration of transfer of any Security
at the office or agency of the Company designated pursuant to Section
1002, the Company shall execute, and the Trustee shall authenticate
and deliver, in the name of the designated transferee or transferees,
one or more new Securities of the same series of any authorized
denomination or denominations, of a like aggregate principal amount.
33
<PAGE>
At the option of the Holder, Securities may be exchanged for
other Securities of any authorized denomination or denominations, of
a like aggregate principal amount, upon surrender of the Securities
to be exchanged at such office or agency. Whenever any Securities
are so surrendered for exchange, the Company shall execute, and the
Trustee shall authenticate and deliver, the Securities of the same
series which the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligations of the Company,
evidencing the same Indebtedness, and entitled to the same benefits
under this Indenture, as the Securities surrendered upon such
registration of transfer or exchange.
Every Security presented or surrendered for registration of
transfer, or for exchange or redemption shall (if so required by the
Company or the Trustee) be duly endorsed, or be accompanied by a
written instrument of transfer in form satisfactory to the Company
and the Security Registrar, duly executed by the Holder thereof or
his attorney duly authorized in writing.
No service charge shall be made to a Holder for any
registration of transfer or exchange or redemption of Securities, but
the Company may require payment of a sum sufficient to pay all
documentary, stamp or similar issue or transfer taxes or other
governmental charges that may be imposed in connection with any
registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 303, 304, 305, 306, 906, 1013, 1015 or
1108 not involving any transfer.
The Company shall not be required (a) to issue, register the
transfer of or exchange any Security during a period beginning at the
opening of business 15 days before the mailing of a notice of
redemption of the Securities selected for redemption under Section
1104 and ending at the close of business on the day of such mailing
or (b) to register the transfer of or exchange any Security so
selected for redemption in whole or in part, except the unredeemed
portion of Securities being redeemed in part.
Notwithstanding the foregoing, any Global Security shall be
exchangeable pursuant to this Section 305 for Securities registered
in the names of Persons other than the Depositary for such Security
or its nominee only if (i) such Depositary notifies the Company that
it is unwilling or unable to continue as Depositary for such Global
Security or if at any time such Depositary ceases to be a clearing
agency registered under the Securities Exchange Act of 1934 at a time
when such Depositary is required to be so registered in order to act
as Depositary, (ii) the Company executes and delivers to the Trustee
a Company Order that such Global Security shall be so exchangeable or
(iii) there
34
<PAGE>
shall have occurred and be continuing a Default or an
Event of Default with respect to the Securities. Any Global Security
that is exchangeable pursuant to the preceding sentence shall be
exchangeable for Securities registered in such names as such
Depositary shall direct.
Notwithstanding any other provision of this Section 305,
unless and until it is exchanged in whole or in part for the
individual Securities represented thereby, a Global Security
representing all or a portion of the Securities shall not be
transferred except as a whole by the Depositary to a nominee of such
Depositary or by a nominee of such Depositary to such Depositary or
another nominee of such Depositary or by such Depositary or any such
nominee to a successor Depositary or a nominee of such successor
Depositary. Unless otherwise provided as contemplated by Section 301
with respect to any series of Securities evidenced in whole or in
part by a Global Security, the Depositary may not sell, assign,
transfer or otherwise convey any beneficial interest in a Global
Security evidencing all or part of the Securities or such series
unless such beneficial interest is in an amount equal to an
authorized denomination for Securities of such series.
Upon the exchange of a Global Security for individual
Securities, such Global Security shall be cancelled by the Trustee.
Individual Securities issued in exchange for a Global Security
pursuant to this Section 305 shall be registered in such names and in
such authorized denominations as the Depositary for such Global
Security, pursuant to instructions form its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee
and the Company shall not have any liability for the accuracy of the
instructions received from the Depository. The Trustee shall deliver
such Securities to the Persons in whose names such Securities are so
registered.
Neither the Company nor the Trustee shall have any
responsibility or obligation to any participant in the Depositary,
any Person claiming a beneficial ownership interest in the Securities
under or through the Depositary or any such participant, or any other
Person which is not shown on the Security Register as being a Holder,
with respect to (1) the Securities; (2) the accuracy of any records
maintained by the Depositary or any such participant; (3) the payment
by the Depositary or any such participant of any amount in respect of
the principal of or premium or interest on the Securities; (4) any
notice which is permitted or required to be given to Holders of
Securities under this Indenture; (5) the selection by the Depositary
or any such participant of any Person to receive payment in the event
of a partial redemption of the Securities; or (6) any consent given
or other action taken by the Depositary as Holder of Securities.
Section 306. MUTILATED, DESTROYED, LOST AND STOLEN 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
35
<PAGE>
theft of any Security, and
there is delivered to the Company and the Trustee, such security or
indemnity, in each case, 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 a Company Request the
Trustee shall authenticate and deliver, in exchange for any such
mutilated Security or in lieu of any such destroyed, lost or stolen
Security, a replacement 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, the
Company in its discretion may, instead of issuing a replacement
Security, pay such Security.
Upon the issuance of any replacement Securities under this
Section, the Company may require the payment of a sum sufficient to
pay all documentary, stamp or similar issue or transfer taxes 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 replacement Security issued pursuant to this Section
in lieu of any 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 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 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Interest on any Security which is payable, and is punctually
paid or duly provided for, on the Stated Maturity of such interest
shall be paid to the Person in whose name that Security (or one or
more Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest payment.
Any interest on any Security which is payable, but is not
punctually paid or duly provided for, on the Stated Maturity of such
and interest on such defaulted interest at the then applicable
interest rate borne by the Securities, to the extent lawful (such
defaulted interest and interest thereon herein collectively called
"Defaulted Interest") shall forthwith cease to be payable to the
Holder on the Regular Record Date; and such Defaulted Interest may be
paid by the Company, at its election in each case, as provided in
Subsection (a) or (b) below:
36
<PAGE>
(a) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities (or
the irrespective Predecessor Securities) are registered at
the close of business on a Special Record Date for the
payment of such Defaulted Interest, which shall be fixed in
the following manner. The Company shall notify the Trustee
in writing of the amount of Defaulted Interest proposed to
be paid on each Security and the date (not less than 30 days
after such notice) of the proposed payment (the "Special
Payment Date"), and at the same time the Company shall
deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory
to the Trustee for such deposit prior to the Special Payment
Date, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest
as in this Subsection provided. Thereupon the Trustee shall
fix a Special Record Date for the payment of such Defaulted
Interest which shall be not more than 15 days and not less
than 10 days prior to the date of the Special Payment Date
and not less than 10 days after the receipt by the Trustee
of the notice of the proposed payment. The Trustee shall
promptly notify the Company in writing of such Special
Record Date. In the name and at the expense of the Company,
the Trustee shall cause notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor
to be mailed, first-class postage prepaid, to each Holder at
his address as it appears in the Security Register, not less
than 10 days prior to such Special Record Date. Notice of
the proposed payment of such Defaulted Interest and the
Special Record Date and Special Payment Date therefor having
been so mailed, such Defaulted Interest shall be paid to the
Persons in whose names the Securities are registered on such
Special Record Date and shall no longer be payable pursuant
to the following Subsection (b).
(b) The Company may make payment of any Defaulted Interest
in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the
Securities may be listed, and upon such notice as may be
required by such exchange, if, after written notice given by
the Company to the Trustee of the proposed payment pursuant
to this Subsection, such payment shall be deemed practicable
by the Trustee.
Subject to the foregoing provisions of this Section 307,
each Security delivered under this Indenture upon registration of
transfer of or in exchange for or in lieu of any other Security shall
carry the rights to interest accrued and unpaid, and to accrue, which
were carried by such other Security.
37
<PAGE>
Section 308. 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 any Security is
registered as the owner of such Security for the purpose of receiving
payment of principal of, premium, if any, and (subject to Section
307) interest on such Security and for all other purposes whatsoever,
whether or not such Security is overdue, and neither the Company, the
Trustee nor any agent of the Company or the Trustee shall be affected
by notice to the contrary.
Section 309. CANCELLATION.
All Securities surrendered for payment, purchase,
redemption, registration of transfer or exchange shall be delivered
to the Trustee and, if not already cancelled, 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
cancelled by the Trustee. No Securities shall be authenticated in
lieu of or in exchange for any Securities cancelled as provided in
this Section 309, except as expressly permitted by this Indenture.
All cancelled Securities held by the Trustee shall be destroyed and
certification of their destruction delivered to the Company, unless
by a Company Order received by the Trustee prior to such destruction,
the Company shall direct that the cancelled Securities be returned to
it. The Trustee shall provide the Company a list of all Securities
that have been cancelled from time to time as requested by the
Company.
Section 310. COMPUTATION OF INTEREST.
Interest on the Securities shall be computed on the basis of
a 360-day year of twelve 30-day months.
ARTICLE FOUR
DEFEASANCE AND COVENANT DEFEASANCE
Section 401. COMPANY'S OPTION TO EFFECT DEFEASANCE OR COVENANT
DEFEASANCE.
The Company may, at its option by Board Resolution, at any
time, with respect to the Securities, elect to have either Section
402 or Section 403 be applied to all of the Outstanding Securities
(the "Defeased Securities"), upon compliance with the conditions set
forth below in this Article Four.
38
<PAGE>
Section 402. DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 401 of the option
applicable to this Section 402, the Company and any other obligor
upon the Securities, if any, shall be deemed to have been discharged
from its obligations with respect to the Defeased Securities on the
date the conditions set forth in Section 404 below are satisfied
(hereinafter, "defeasance"). For this purpose, such defeasance means
that the Company and any other obligor upon the Securities shall be
deemed to have paid and discharged the entire Indebtedness
represented by the Defeased Securities, which shall thereafter be
deemed to be "Outstanding" only for the purposes of Section 405 and
the other Sections of this Indenture referred to in (a) and (b)
below, and to have satisfied all its other obligations under such
Securities and this Indenture insofar as such Securities are
concerned (and the Trustee, at the expense of the Company, and, upon
Company Request, shall execute proper instruments acknowledging the
same), except for the following which shall survive until otherwise
terminated or discharged hereunder: (a) the rights of Holders of
Defeased Securities to receive, solely from the trust fund described
in Section 404 and as more fully set forth in such Section, payments
in respect of the principal of, premium, if any, and interest on such
Securities when such payments are due, (b) the Company's obligations
with respect to such Defeased Securities under Sections 304, 305,
306, 1002 and 1003, (c) the rights, powers, trusts, duties and
immunities of the Trustee hereunder, including, without limitation,
the Trustee's rights under Section 606, and (d) this Article Four.
Subject to compliance with this Article Four, the Company may
exercise its option under this Section 402 notwithstanding the prior
exercise of its option under Section 403 with respect to the
Securities.
Section 403. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 401 of the option
applicable to this Section 403, the Company shall be released from
its obligations under any covenant or provision contained or referred
to in Sections 1005 through 1018, inclusive, the provisions of
clauses (iii), (iv) and (v) of Section 801(a) and the provisions of
clauses (c)(i) (as it applies to the provisions of clauses (iii),
(iv) and (v) of Section 801(a)), (d) and (e) of Section 501, with
respect to the Defeased Securities on and after the date the
conditions set forth in Section 404 below are satisfied (hereinafter,
"covenant defeasance"), and the Defeased Securities shall thereafter
be deemed to be not "Outstanding" for the purposes of any direction,
waiver, consent or declaration or Act of Holders (and the
consequences of any thereof) in connection with such covenants, but
shall continue to be deemed "Outstanding" for all other purposes
hereunder. For this purpose, such covenant defeasance means that,
with respect to the Defeased Securities, the Company may omit to
comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such Section or Article,
whether directly or indirectly, by reason of any reference elsewhere
herein to any such Section or Article or
39
<PAGE>
by reason of any reference
in any such Section or Article to any other provision herein or in
any other document and such omission to comply shall not constitute a
Default or an Event of Default under Section 501 but, except as
specified above, the remainder of this Indenture and such Defeased
Securities shall be unaffected thereby.
Section 404. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE.
The following shall be the conditions to application of
either Section 402 or Section 403 to the Defeased Securities:
(1) The Company shall irrevocably have deposited or caused
to be deposited with the Trustee (or another trustee satisfying the
requirements of Section 608 who shall agree to comply with the
provisions of this Article Four applicable to it) as trust funds in
trust for the purpose of making the following payments, specifically
pledged as security for, and dedicated solely to, the benefit of the
Holders of such Securities, (a) United States dollars in an amount,
(b) U.S. Government Obligations which through the scheduled payment
of principal and interest in respect thereof in accordance with their
terms and with no further reinvestment will provide, not later than
one day before the due date of any payment, money in an amount, or
(c) a combination thereof, in such amounts as will be sufficient, in
the opinion of a nationally recognized firm of independent public
accountants or a nationally recognized investment banking firm
expressed in a written certification thereof delivered to the
Trustee, to pay and discharge, and which shall be applied by the
Trustee (or other qualifying trustee) to pay and discharge the
principal of, premium, if any, and interest on the Defeased
Securities on the Stated Maturity of such principal or installment of
principal or interest (or on any date after May 15, 2000 (such date
being referred to as the "Defeasance Redemption Date") if when
exercising under Section 401 either its option applicable to Section
402 or its option applicable to Section 403, the Company shall have
delivered to the Trustee an irrevocable notice to redeem all of the
Outstanding Securities on the Defeasance Redemption Date); PROVIDED
that the Trustee (or such qualifying trustee) shall have been
irrevocably instructed to apply such United States dollars or the
proceeds of such U.S. Government Obligations to said payments with
respect to the Securities. For this purpose, "U.S. Government
Obligations" means securities that are (i) direct obligations of the
United States of America for the timely payment of which its full
faith and credit is pledged or (ii) obligations of a Person
controlled or supervised by and acting as an agency or
instrumentality of the United States of America the timely payment of
which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in either case,
are not callable or redeemable at the option of the issuer thereof,
and shall also include a depository receipt issued by a bank (as
defined in Section 3(a)(2) of the Securities Act), as custodian with
respect to any such U.S. Government Obligation or a specific payment
of principal of or interest on any such U.S. Government Obligation
held by such custodian for the account of the holder of such
depository
40
<PAGE>
receipt, PROVIDED that (except as required by law) such
custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount
received by the custodian in respect of the U.S. Government
Obligation or the specific payment of principal of or interest on the
U.S. Government Obligation evidenced by such depository receipt.
(2) In the case of an election under Section 402, the
Company shall have delivered to the Trustee an Opinion of Independent
Counsel in the United States stating that (A) the Company has
received from, or there has been published by, the Internal Revenue
Service a ruling or (B) since the date of this Indenture, there has
been a change in the applicable federal income tax law, in either
case to the effect that, and based thereon such Opinion of
Independent Counsel in the United States shall confirm that, the
Holders of the Outstanding Securities will not recognize income, gain
or loss for federal income tax purposes as a result of such
defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such defeasance had not occurred.
(3) In the case of an election under Section 403, the
Company shall have delivered to the Trustee an Opinion of Independent
Counsel in the United States to the effect that the Holders of the
Outstanding Securities will not recognize income, gain or loss for
federal income tax purposes as a result of such covenant defeasance
and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such
covenant defeasance had not occurred.
(4) No Default or Event of Default shall have occurred and
be continuing on the date of such deposit or insofar as
subsections 501(h) and (i) are concerned, at any time during the
period ending on the 91st day after the date of deposit (it being
understood that this condition shall not be deemed satisfied until
the expiration of such period).
(5) Such defeasance or covenant defeasance shall not cause
the Trustee for the Securities to have a conflicting interest as
defined in this Indenture and for purposes of the Trust Indenture Act
with respect to any securities of the Company (assuming the
Securities are in default within the meaning of said Act).
(6) Such defeasance or covenant defeasance shall not result
in a breach or violation of, or constitute a default under, this
Indenture or any other material agreement or instrument to which the
Company or any Subsidiary is a party or by which it is bound.
41
<PAGE>
(7) Such defeasance or covenant defeasance shall not result
in the trust arising from such deposit constituting an investment
company within the meaning of the Investment Company Act of 1940, as
amended, unless such trust shall be registered under such Act or
exempt from registration thereunder.
(8) The Company shall have delivered to the Trustee an
Opinion of Independent Counsel to the effect that after the 91st day
following the deposit, the trust funds will not be subject to the
effect of any applicable bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally.
(9) The Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the
Company with the intent of preferring the holders of the Securities
over the other creditors of the Company with the intent of defeating,
hindering, delaying or defrauding creditors of the Company or others.
(10) No event or condition shall exist that would prevent
the Company from making payments of the principal of, premium, if
any, and interest on the Securities on the date of such deposit or at
any time ending on the 91st day after the date of such deposit.
(11) The Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Independent Counsel in the
United States, each stating that all conditions precedent provided
for relating to either the defeasance under Section 402 or the
covenant defeasance under Section 403 (as the case may be) have been
complied with as contemplated by this Section 404.
Opinions of Counsel or Opinions of Independent Counsel
required to be delivered under this Section may have qualifications
customary for opinions of the type required and counsel delivering
such opinions may rely on certificates of the Company or government
or other officials customary for opinions of the type required, which
certificates shall be limited as to matters of fact, including that
various financial covenants have been complied with.
Section 405. DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO
BE HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS.
Subject to the provisions of the last paragraph of Section
1003, all United States dollars and U.S. Government Obligations
(including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee--collectively for purposes of this Section 405,
the "Trustee") pursuant to Section 404 in respect of the Defeased
Securities shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Securities and this Indenture,
to the payment, either directly or through any Paying Agent
42
<PAGE>
(excluding the Company or any of its Affiliates acting as Paying
Agent) as the Trustee may determine, to the Holders of such
Securities of all sums due and to become due thereon in respect of
principal, premium, if any, and interest. The Trustee shall not be
required to invest any moneys received by the Trustee, except in
accordance with the written directions of the Company. Money so held
in trust shall not be subject to the provisions of Article Twelve.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the U.S.
Government Obligations deposited pursuant to Section 404 or the
principal and interest received in respect thereof other than any
such tax, fee or other charge which by law is for the account of the
Holders of the Defeased Securities.
Anything in this Article Four to the contrary
notwithstanding, the Trustee shall deliver or pay to the Company from
time to time upon Company Request any United States dollars or U.S.
Government Obligations held by it as provided in Section 404 which,
in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to
the Trustee, are in excess of the amount thereof which would then be
required to be deposited to effect defeasance or covenant defeasance.
Section 406. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United
States dollars or U.S. Government Obligations in accordance with
Section 402 or 403, as the case may be, by reason of any order or
judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, then the
Company's obligations under this Indenture and the Securities shall
be revived and reinstated as though no deposit had occurred pursuant
to Section 402 or 403, as the case may be, until such time as the
Trustee or Paying Agent is permitted to apply all such United States
dollars or U.S. Government Obligations in accordance with Section 402
or 403, as the case may be; PROVIDED, HOWEVER, that if the Company
makes any payment to the Trustee or Paying Agent of principal,
premium, if any, or interest on any Security following the
reinstatement of its obligations, the Trustee or Paying Agent shall
promptly pay any such amount to the Holders of the Securities and the
Company shall be subrogated to the rights of the Holders of such
Securities to receive such payment from the United States dollars and
U.S. Government Obligations held by the Trustee or Paying Agent.
43
<PAGE>
ARTICLE FIVE
REMEDIES
Section 501. EVENTS OF DEFAULT.
"Event of Default," wherever used herein, means any one of
the following events (whatever the reason for such Event of Default
and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or
governmental body):
(a) there shall be a default in the payment of any interest
on any Security when it becomes due and payable, and such default
shall continue for a period of 30 days;
(b) there shall be a default in the payment of the
principal of (or premium, if any, on) any Security at its Maturity
(upon acceleration, optional or mandatory redemption, required
repurchase or otherwise);
(c) (i) there shall be a default in the performance, or
breach, of any covenant or agreement of the Company under this
Indenture (other than a default in the performance, or breach, of a
covenant or agreement which is specifically dealt with in Subsection
(a) or (b) of this Section 501 or in clauses (ii), (iii) and (iv) of
this clause (c) of this Section 501) and such default or breach shall
continue for a period of 30 days after written notice has been given,
by certified mail, (x) to the Company by the Trustee or (y) to the
Company and the Trustee by the Holders of at least 25% in aggregate
principal amount of the Outstanding Securities, specifying such
default or breach and requiring it to be remedied and stating that
such notice is a "Notice of Default" hereunder; (ii) there shall be a
default in the performance or breach of the provisions of Article
Eight; (iii) the Company shall have failed to make or consummate an
Offer in accordance with the provisions of Section 1013; or (iv) the
Company shall have failed to make or consummate a Change of Control
Offer in accordance with the provisions of Section 1015;
(d) one or more defaults in the payment of the principal,
premium, if any, or interest on any Indebtedness shall have occurred
under any agreements, indentures or instruments under which the
Company or any Subsidiary then has outstanding Indebtedness which
aggregates in excess of $5,000,000 million when the same shall become
due and payable and continuation of such default for any applicable
grace period and, if such Indebtedness has not already matured at its
final maturity in accordance with its terms, the holder of such
Indebtedness shall have the right to accelerate such Indebtedness;
44
<PAGE>
(e) one or more events of default as defined in any of the
agreements, indentures or instruments described in Subsection (d) of
this Section 501 shall have occurred and the Indebtedness thereunder,
if not already matured at its final maturity in accordance with its
terms, shall have been accelerated;
(f) one or more judgments, orders or decrees for the
payment of money in excess of $5,000,000, either individually or in
the aggregate (net of amounts covered by insurance, bond or similar
instrument), shall be rendered against the Company or any Subsidiary
or any of their respective properties and shall not be discharged and
either (a) any creditor shall have commenced an enforcement
proceeding upon such judgment, order or decree or (b) there shall
have been a period of 60 consecutive days during which a stay of
enforcement of such judgment or order, by reason of an appeal or
otherwise, shall not be in effect;
(g) any holder or holders of at least $2,000,000 in
aggregate principal amount of Indebtedness of the Company or any
Subsidiary after a default under such Indebtedness shall notify the
Trustee of the intended sale or disposition of any assets of the
Company or any Subsidiary that have been pledged to or for the
benefit of such holder or holders to secure such Indebtedness or
shall commence proceedings, or take any action (including by way of
set-off), to retain in satisfaction of such Indebtedness or to
collect on, seize, dispose of or apply in satisfaction of
Indebtedness, assets of the Company or any Subsidiary (including
funds on deposit or held pursuant to lock-box and other similar
arrangements);
(h) there shall have been the entry by a court of competent
jurisdiction of (i) a decree or order for relief in respect of the
Company or any Subsidiary in an involuntary case or proceeding under
any applicable Bankruptcy Law or (ii) a decree or order adjudging the
Company or any Subsidiary bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment or composition of or in
respect of the Company or any Subsidiary under any applicable federal
or state law, or appointing a custodian, receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of the
Company or any Subsidiary or of any substantial part of their
respective properties, or ordering the winding up or liquidation of
their affairs, and any such decree or order for relief shall continue
to be in effect, or any such other decree or order shall be unstayed
and in effect, for a period of 60 consecutive days; or
(i) (i) the Company or any Subsidiary commences a voluntary
case or proceeding under any applicable Bankruptcy Law or any other
case or proceeding to be adjudicated bankrupt or insolvent, (ii) the
Company or any Subsidiary consents to the entry of a decree or order
for relief in respect of the Company or such Subsidiary in an
45
<PAGE>
involuntary case or proceeding under any applicable Bankruptcy Law or
to the commencement of any bankruptcy or insolvency case or
proceeding against it, (iii) the Company or any Subsidiary files a
petition or answer or consent seeking reorganization or relief under
any applicable federal or state law, (iv) the Company or any
Subsidiary (1) consents to the filing of such petition or the
appointment of, or taking possession by, a custodian, receiver,
liquidator, assignee, trustee, sequestrator or similar official of
the Company or such Subsidiary or of any substantial part of their
respective properties, (2) makes an assignment for the benefit of
creditors or (3) admits in writing its inability to pay its debts
generally as they become due, or (v) the Company or any Subsidiary
takes any corporate action in furtherance of any such actions in this
paragraph (i).
Section 502. ACCELERATION OF MATURITY; RESCISSION AND
ANNULMENT.
If an Event of Default (other than an Event of Default
specified in Sections 501(h) and (i)) shall occur and be continuing,
the Trustee or the Holders of not less than 25% in aggregate
principal amount of the Securities Outstanding may, and the Trustee
at the request of the Holders of not less than 25% in aggregate
principal amount of the Securities Outstanding shall, declare all
unpaid principal of, premium, if any, and accrued interest on all the
Securities to be due and payable immediately, by a notice in writing
to the Company (and to the Trustee if given by the Holders of the
Securities) and upon any such declaration, such principal, premium,
if any, and interest shall become immediately due and payable. If an
Event of Default specified in clause (h) or (i) of Section 501 occurs
and is continuing, then all the Securities shall IPSO FACTO become
and be immediately due and payable, in an amount equal to the
principal amount of the Securities, together with premium, if any,
and accrued and unpaid interest, if any, to the date the Securities
become due and payable, without any declaration or other act on the
part of the Trustee or any Holder. Thereupon, the Trustee may, at
its discretion, proceed to protect and enforce the rights of the
holders of Securities by appropriate judicial proceedings.
At any time after such declaration of acceleration has been
made, but before a judgment or decree for payment of the money due
has been obtained by the Trustee, as hereinafter in this Article
provided, the Holders of a majority in aggregate principal amount of
the Securities Outstanding, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences
if:
(a) the Company has paid or deposited with the Trustee a
sum sufficient to pay
(i) all sums paid or advanced by the Trustee under Section
606 and the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel,
46
<PAGE>
(ii) all overdue interest on all Securities,
(iii)the principal of and premium, if any, on any Securities
which have become due otherwise than by such declaration of
acceleration and interest thereon at a rate borne by the
Securities, and
(iv) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate borne by the
Securities; and
(b) all Events of Default, other than the non-payment of
principal of the Securities which have become due solely by such
declaration of acceleration, have been cured or waived as provided in
Section 513.
No such rescission shall affect any subsequent Default or
impair any right consequent thereon.
Section 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR
ENFORCEMENT BY TRUSTEE.
The Company covenants that if
(a) default is made in the payment of any interest on any
Security when such interest becomes due and payable and such
default continues for a period of 30 days, or
(b) default is made in the payment of the principal of or
premium, if any, on any Security at the Stated Maturity
thereof,
the Company will, upon demand of the Trustee, pay to it, for the
benefit of the Holders of such Securities the whole amount then due
and payable on such Securities for principal and premium, if any, and
interest, with interest upon the overdue principal and premium, if
any, and, to the extent that payment of such interest shall be
legally enforceable, upon overdue installments of interest, at the
rate borne by the Securities; and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express
trust, may institute a judicial proceeding for the collection of the
sums so due and unpaid and may prosecute such proceeding to judgment
or final decree, and may enforce the same against the Company or any
other obligor upon the Securities and collect the moneys adjudged or
decreed to be
47
<PAGE>
payable in the manner provided by law out of the
property of the Company or any other obligor upon the Securities,
wherever situated.
If an Event of Default occurs and is continuing, the Trustee
may in its discretion proceed to protect and enforce its rights and
the rights of the Holders under this Indenture by such appropriate
private or judicial proceedings as the Trustee shall deem most
effective to protect and enforce such rights. No recovery of any
such judgment upon any property of the Company shall affect or impair
any rights, powers or remedies of the Trustee or the Holders.
Section 504. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment,
composition or other judicial proceeding relative to the Company or
any other obligor, upon the Securities or the property of the Company
or of such other obligor or their creditors, the Trustee
(irrespective of whether the principal of the Securities shall then
be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any
demand on the Company for the payment of overdue principal or
interest) shall be entitled and empowered, by intervention in such
proceeding or otherwise,
(a) to file and prove a claim for the whole amount of
principal, and premium, if any, and interest owing and unpaid in
respect of the Securities and to file such other papers or documents
as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, 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;
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 607.
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
48
<PAGE>
rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim
of any Holder in any such proceeding.
Section 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT
POSSESSION OF SECURITIES.
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the
possession of any of the Securities or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by
the Trustee shall be brought in its own name and as trustee of an
express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Holders of the Securities in respect
of which such judgment has been recovered.
Section 506. APPLICATION OF MONEY COLLECTED.
Any money collected by the Trustee pursuant to this Article
or otherwise on behalf of the Holders or the Trustee pursuant to this
Article or through any proceeding or any arrangement or restructuring
in anticipation or in lieu of any proceeding contemplated by this
Article shall be applied, subject to applicable law, in the following
order, at the date or dates fixed by the Trustee and, in case of the
distribution of such money on account of principal, premium, if any,
or interest, upon presentation of the Securities and the notation
thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 607;
SECOND: To the payment of the amounts then due and unpaid
upon the Securities for principal, premium, if any, and interest, in
respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities for
principal, premium, if any, and interest; and
THIRD: The balance, if any, to the Person or Persons
entitled thereto, including the Company, provided that all sums due
and owing to the Holders and the Trustee have been paid in full as
required by this Indenture.
Section 507. LIMITATION ON SUITS.
No Holder of any Securities shall have any right to
institute any proceeding, judicial or otherwise, with respect to this
Indenture or the Securities, or for the appointment of a receiver or
trustee, or for any other remedy hereunder, unless
49
<PAGE>
(a) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(b) the Holders of not less than 25% in principal amount of
the Outstanding Securities shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default
in its own name as trustee hereunder;
(c) such Holder or Holders have offered to the Trustee an
indemnity satisfactory to the Trustee against the costs, expenses and
liabilities to be incurred in compliance with such request;
(d) the Trustee for 30 days after its receipt of such
notice, request and offer (and if requested, provision) of indemnity
has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has
been given to the Trustee during such 30-day period by the Holders of
a majority in principal amount of the Outstanding Securities;
it being understood and intended that no one or more Holders shall
have any right in any manner whatever by virtue of, or by availing
of, any provision of this Indenture or any Security to affect,
disturb or prejudice the rights of any other Holders, or to obtain or
to seek to obtain priority or preference over any other Holders or to
enforce any right under this Indenture or any Security, except in the
manner provided in this Indenture and for the equal and ratable
benefit of all the Holders.
Section 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE
PRINCIPAL, PREMIUM AND INTEREST.
Notwithstanding any other provision in this Indenture, the
Holder of any Security shall have the right based on the terms stated
herein, which is absolute and unconditional, to receive payment of
the principal of, premium, if any, and (subject to Section 307)
interest on such Security on the respective Stated Maturities
expressed in such Security (or, in the case of redemption or
repurchase, on the Redemption Date or the repurchase date) and to
institute suit for the enforcement of any such payment, and such
rights shall not be impaired without the consent of such Holder.
Section 509. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding
to enforce any right or remedy under this Indenture and such
proceeding has been discontinued or
50
<PAGE>
abandoned for any reason, or has
been determined adversely to the Trustee or to such Holder, then and
in every such case the Company, any other obligor on the Securities,
the Trustee and the Holders shall, subject to any determination in
such proceeding, be restored severally and respectively to their
former positions hereunder, and thereafter all rights and remedies of
the Trustee and the Holders shall continue as though no such
proceeding had been instituted.
Section 510. RIGHTS AND REMEDIES CUMULATIVE.
Except as provided in Section 306, no right or remedy herein
conferred upon or reserved to the Trustee or to the Holders is
intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative
and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment
of any other appropriate right or remedy.
Section 511. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any
Security to exercise any right or remedy accruing upon any Event of
Default shall impair any such right or remedy or constitute a waiver
of any such Event of Default or an acquiescence therein. Every right
and remedy given by this Article or by law to the Trustee or to the
Holders may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the Holders, as the case may
be.
Section 512. CONTROL BY HOLDERS.
The Holders of not less than a majority in aggregate
principal amount of the Outstanding Securities shall have the right
to direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee, or exercising any trust or power
conferred on the Trustee, PROVIDED that
(a) such direction shall not be in conflict with any rule
of law or with this Indenture (including, without limitation, Section
507), expose the Trustee to personal liability, or be unduly
prejudicial to Holders not joining therein; and
(b) subject to the provisions of Section 315 of the Trust
Indenture Act, the Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with such direction.
51
<PAGE>
Section 513. WAIVER OF PAST DEFAULTS.
The Holders of not less than a majority in aggregate
principal amount of the Outstanding Securities may on behalf of the
Holders of all the Securities waive any past Default hereunder and
its consequences, except a Default
(a) in the payment of the principal of, premium, if any, or
interest on any Security; or
(b) in respect of a covenant or a provision hereof which
under Article Nine cannot be modified or amended without the consent
of the Holder of each Security Outstanding affected by such
modification or amendment.
Upon any such waiver, such Default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Indenture; but no such waiver shall
extend to any subsequent or other Default or impair any right
consequent thereon.
Section 514. UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of any
Security by his acceptance thereof shall be deemed to have agreed,
that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any
suit against the Trustee for any action taken, suffered or omitted by
it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due
regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section shall not
apply to any suit instituted by the Trustee, to any suit instituted
by any Holder, or group of Holders, holding in the aggregate more
than 10% in principal amount of the Outstanding Securities, or to any
suit instituted by any Holder for the enforcement of the payment of
the principal of, premium, if any, or interest on any Security on or
after the respective Stated Maturities expressed in such Security
(or, in the case of redemption, on or after the Redemption Date).
Section 515. 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 of, premium,
if any, or interest
52
<PAGE>
on the Securities contemplated herein or in the
Securities or which may affect the covenants or the performance of
this Indenture; and each of the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of
any such law, and covenants that it will not hinder, delay or impede
the execution of any power herein granted to the Trustee, but will
suffer and permit the execution of every such power as though no such
law had been enacted.
Section 516. REMEDIES SUBJECT TO APPLICABLE LAW.
All rights, remedies and powers provided by this Article
Five may be exercised only to the extent that the exercise thereof
does not violate any applicable provision of law in the premises, and
all the provisions of this Indenture are intended to be subject to
all applicable mandatory provisions of law which may be controlling
in the premises and to be limited to the extent necessary so that
they will not render this Indenture invalid, unenforceable or not
entitled to be recorded, registered or filed under the provisions of
any applicable law.
ARTICLE SIX
THE TRUSTEE
Section 601. DUTIES OF TRUSTEE.
Subject to the provisions of Trust Indenture Act Section
315(a) through 315(d):
(a) if a Default or an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers
vested in it by this Indenture and use the same degree of care and
skill in its exercise thereof as a prudent person would exercise or
use under the circumstances in the conduct of his own affairs.
(b) except during the continuance of a Default or an Event
of Default:
(1) the Trustee need perform only those duties as are
specifically set forth in this Indenture and no covenants or
obligations shall be implied in this Indenture that are
adverse to the Trustee; and
(2) in the absence of bad faith or willful misconduct
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
53
<PAGE>
by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall
examine the certificates and opinions to determine whether
or not they conform to the requirements of this Indenture.
(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 Subsection (c) does not limit the effect of
Subsection (b) of this Section 601;
(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless
it is proved that the Trustee was negligent in ascertaining
the pertinent facts; and
(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 of the Holders of a majority in
principal amount of Outstanding Securities relating to the
time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or
power confirmed upon the Trustee under this Indenture.
(d) no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder
or in the exercise of any of its rights or powers if it shall have
reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably
assured to it.
(e) whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is
subject to Subsections (a), (b), (c) and (d) of this Section 601.
(f) the Trustee shall not be liable for interest on any
money or assets received by it except as the Trustee may agree with
the Company. Assets held in trust by the Trustee need not be
segregated from other assets except to the extent required by law.
Section 602. NOTICE OF DEFAULTS.
Within 30 days after a Responsible Officer of the Trustee
receives notice of the occurrence of any Default, the Trustee shall
transmit by mail to all Holders and any other persons entitled to
receive reports pursuant to Section 313(c) of the Trust Indenture
Act, as their names and addresses appear in the Security Register,
notice of such Default hereunder known to the Trustee, unless such
Default shall have been cured or waived;
54
<PAGE>
PROVIDED, HOWEVER, that,
except in the case of a Default in the payment of the principal of,
premium, if any, or interest on any Security, the Trustee shall be
protected in withholding such notice if and so long as a trust
committee of Responsible Officers of the Trustee in good faith
determines that the withholding of such notice is in the interest of
the Holders.
Section 603. CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of Section 601 hereof and Trust
Indenture Act Sections 315(a) through 315(d):
(a) the Trustee may rely and shall be protected in acting
or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of Indebtedness
or other paper or document believed by it to be genuine and to have
been signed or presented by the proper party or parties;
(b) any request or direction of the Company mentioned
herein shall be sufficiently evidenced by a Company Request or
Company Order and any resolution of the Board of Directors may be
sufficiently evidenced by a Board Resolution;
(c) the Trustee may consult with counsel and any written
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon in accordance with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the
request or direction of any of the Holders pursuant to this
Indenture, unless such Holders shall have offered to the Trustee
security or indemnity satisfactory to the Trustee against the costs,
expenses and liabilities which might be incurred therein or thereby
in compliance with such request or direction;
(e) the Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be authorized or
within the discretion, rights or powers conferred upon it by this
Indenture other than any liabilities arising out of the negligence,
bad faith or willful misconduct of the Trustee;
(f) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, approval, appraisal, bond, debenture,
note, coupon, security or other paper or document unless requested in
writing to do so by the Holders of not less than a majority in
aggregate principal amount of the Securities then Outstanding;
PROVIDED that, if the payment within a reasonable time to the Trustee
of the
55
<PAGE>
costs, expenses or liabilities likely to be incurred by it in
the making of such investigation is, in the opinion of the Trustee,
not reasonably assured to the Trustee by the security afforded to it
by the terms of this Indenture, the Trustee may require reasonable
indemnity against such expenses or liabilities as a condition to
proceeding; the reasonable expenses of every such investigation shall
be paid by the Company or, if paid by the Trustee or any predecessor
Trustee, shall be repaid by the Company upon demand; PROVIDED,
FURTHER, the Trustee in its discretion may make such further inquiry
or investigation into such facts or matters as it may deem fit, and,
if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and
premises of the Company, personally or by agent or attorney;
(g) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action
hereunder, the Trustee (unless other evidence be herein specifically
prescribed) may, in the absence of bad faith on its part, rely upon
an Officers' Certificate;
(h) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder; and
(i) no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers.
Section 604. TRUSTEE NOT RESPONSIBLE FOR RECITALS, DISPOSITIONS
OF SECURITIES OR APPLICATION OF PROCEEDS THEREOF.
The recitals contained herein and in the Securities, except
the Trustee's certificates of authentication, shall be taken as the
statements of the Company, and the Trustee assumes no responsibility
for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Indenture or of the Securities,
except that the Trustee represents that it is duly authorized to
execute and deliver this Indenture, authenticate the Securities and
perform its obligations hereunder and that the statements made by it
in a Statement of Eligibility and Qualification on Form T-1 supplied
to the Company are true and accurate subject to the qualifications
set forth therein. The Trustee shall not be accountable for the use
or application by the Company of Securities or the proceeds thereof.
56
<PAGE>
Section 605. TRUSTEE AND AGENTS MAY HOLD SECURITIES;
COLLECTIONS; ETC.
The Trustee, any Paying Agent, Security Registrar or any
other agent of the Company, in its individual or any other capacity,
may become the owner or pledgee of Securities, with the same rights
it would have if it were not the Trustee, Paying Agent, Security
Registrar or such other agent and, subject to Sections 608 and 613
hereof and Trust Indenture Act Sections 310 and 311, may otherwise
deal with the Company and receive, collect, hold and retain
collections from the Company with the same rights it would have if it
were not the Trustee, Paying Agent, Security Registrar or such other
agent.
Section 606. MONEY HELD IN TRUST.
All moneys received by the Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for
which they were received, but need not be segregated from other funds
except to the extent required by mandatory provisions of law. The
Trustee shall not be required to invest any moneys received by the
Trustee, except in accordance with the written directions of the
Company.
Section 607. COMPENSATION AND INDEMNIFICATION OF TRUSTEE AND
ITS PRIOR CLAIM.
The Company covenants and agrees to pay to the Trustee from
time to time, and the Trustee shall be entitled to, reasonable
compensation for all services rendered by it hereunder (which shall
not be limited by any provision of law in regard to the compensation
of a trustee of an express trust) and the Company covenants and
agrees to pay or reimburse the Trustee and each predecessor Trustee
upon its request for all reasonable expenses, disbursements and
advances incurred or made by or on behalf of the Trustee in
accordance with any of the provisions of this Indenture (including
the reasonable compensation and the expenses and disbursements of its
counsel and of all agents and other persons not regularly in its
employ) except any such expense, disbursement or advance as may arise
from its negligence, bad faith or willful misconduct. The Company
also covenants and agrees to indemnify the Trustee and each
predecessor Trustee for, and to hold it harmless against, any claim,
loss, liability, tax, assessment or other governmental charge (other
than taxes applicable to the Trustee's compensation hereunder) or
expense incurred without negligence, bad faith or willful misconduct
on its part, arising out of or in connection with the acceptance or
administration of this Indenture or the trusts hereunder and its
duties hereunder, including enforcement of this Section 607 and the
costs and expenses of defending itself against or investigating any
claim or liability in connection with the exercise or performance of
any of its powers or duties hereunder. The obligations of the
Company under this Section 607 to compensate and indemnify the
Trustee and each predecessor Trustee and to pay or reimburse the
Trustee and each predecessor Trustee for expenses, disbursements and
57
<PAGE>
advances shall constitute an additional obligation hereunder and
shall survive the satisfaction and discharge of this Indenture and
the resignation or removal of the Trustee and each predecessor
Trustee.
As security for the performance of the obligations of the
Company under this Section, the Trustee shall have a lien prior to
the Securities upon all property and funds held or collected by the
Trustee as such, excluding any property or funds which are held in
trust for the holders of Senior Indebtedness and except funds held in
trust for the payment of principal of, premium, if any, or interest
on particular Securities.
Section 608. CONFLICTING INTERESTS.
The Trustee shall comply with the provisions of Section
310(b) of the Trust Indenture Act.
Section 609. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall
be eligible to act as trustee under Trust Indenture Act Section
310(a)(5) and which shall have an office in the City of New York, a
combined capital and surplus of at least $50,000,000, to the extent
there is an institution eligible and willing to serve. If the
Trustee does not have an office in The City of New York, the Trustee
may appoint an agent in The City of New York reasonably acceptable to
the Company to conduct any activities which the Trustee may be
required under this Indenture to conduct in The City of New York. If
such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of federal, state, territorial
or District of Columbia supervising or examining authority, then for
the purposes of this Section 609, the combined capital and surplus of
such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 609, the Trustee shall
resign immediately in the manner and with the effect hereinafter
specified in this Article.
Section 610. RESIGNATION AND REMOVAL; APPOINTMENT OF
SUCCESSOR TRUSTEE.
(a) No resignation or removal of the Trustee and no
appointment of a successor trustee pursuant to this Article shall
become effective until the acceptance of appointment by the successor
trustee under Section 611.
(b) The Trustee, or any trustee or trustees hereafter
appointed, may at any time resign by giving written notice thereof to
the Company. Upon receiving such notice of resignation, the Company
shall promptly appoint a successor trustee by written instrument
executed by authority of the Board of Directors, a copy of which
shall be
58
<PAGE>
delivered to the resigning Trustee and a copy to the
successor trustee. If an instrument of acceptance by a successor
trustee shall not have been delivered to the Trustee within 30 days
after the giving of such notice of resignation, the resigning Trustee
may, or any Holder who has been a bona fide Holder of a Security for
at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for
the appointment of a successor trustee. Such court may thereupon,
after such notice, if any, as it may deem proper, appoint a successor
trustee.
(c) The Trustee may be removed at any time by an Act of the
Holders of not less than a majority in aggregate principal amount of
the Outstanding Securities, delivered to the Trustee and to the
Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the
provisions of Trust Indenture Act Section 310(b) after
written request therefor by the Company or by any Holder who
has been a bona fide Holder of a Security for at least six
months,
(2) the Trustee shall cease to be eligible under
Section 609 and shall fail to resign after written request
therefor by the Company or by any Holder who has been a bona
fide Holder of a Security for at least six months, or
(3) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent, or a receiver of
the Trustee or of its property shall be appointed or any
public officer shall take charge or control of the Trustee
or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any case, (i) the Company by a Board Resolution may remove
the Trustee, or (ii) subject to Section 514, the Holder of any
Security who has been a bona fide Holder of a Security for at least
six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor trustee.
Such court may thereupon, after such notice, if any, as it may deem
proper and prescribe, remove the Trustee and appoint a successor
trustee.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of
Trustee for any cause, the Company, by a Board Resolution, shall
promptly appoint a successor trustee and shall comply with the
59
<PAGE>
applicable requirements of Section 611. If, within one year after
such resignation, removal or incapability, or the occurrence of such
vacancy, the Company has not appointed a successor Trustee, a
successor trustee shall be appointed by the Act of the Holders of a
majority in principal amount of the Outstanding Securities delivered
to the Company and the retiring Trustee. Such successor trustee so
appointed shall forthwith upon its acceptance of such appointment
become the successor trustee and supersede the successor trustee
appointed by the Company. If no successor trustee shall have been so
appointed by the Company or the Holders of the Securities and
accepted appointment in the manner hereinafter provided, the Holder
of any Security who has been a bona fide Holder for at least six
months may, subject to Section 514, on behalf of himself and all
others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor trustee.
(f) The Company shall give notice of each resignation and
each removal of the Trustee and each appointment of a successor
trustee by mailing written notice of such event by first-class mail,
postage prepaid, to the Holders of Securities as their names and
addresses appear in the Security Register. Each notice shall include
the name of the successor trustee and the address of its Corporate
Trust Office or agent hereunder.
Section 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
Every successor trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation
or removal of the retiring Trustee shall become effective and such
successor trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the
retiring Trustee as if originally named as Trustee hereunder; but,
nevertheless, on the written request of the Company or the successor
trustee, upon payment of its charges pursuant to Section 607 then
unpaid, such retiring Trustee shall, pay over to the successor
trustee all moneys at the time held by it hereunder and shall execute
and deliver an instrument transferring to such successor trustee all
such rights, powers, duties and obligations. Upon request of any
such successor trustee, the Company shall execute any and all
instruments for more fully and certainly vesting in and confirming to
such successor trustee all such rights and powers. Any Trustee
ceasing to act shall, nevertheless, retain a prior lien upon all
property or funds held or collected by such Trustee or such successor
trustee to secure any amounts then due such Trustee pursuant to the
provisions of Section 607.
No successor trustee with respect to the Securities shall
accept appointment as provided in this Section 611 unless at the time
of such acceptance such successor trustee shall be eligible to act as
trustee under the provisions of Trust Indenture Act Section 310(a)
and this Article Six and shall have a combined capital and surplus of
at
60
<PAGE>
least $50,000,000 and have a Corporate Trust Office or an agent
selected in accordance with Section 609.
Upon acceptance of appointment by any successor trustee as
provided in this Section 611, the Company shall give notice thereof
to the Holders of the Securities, by mailing such notice to such
Holders at their addresses as they shall appear on the Security
Register. If the acceptance of appointment is substantially
contemporaneous with the resignation, then the notice called for by
the preceding sentence may be combined with the notice called for by
Section 610. If the Company fails to give such notice within 10 days
after acceptance of appointment by the successor trustee, the
successor trustee shall cause such notice to be given at the expense
of the Company.
Section 612. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation succeeding to all or
substantially all of the corporate trust business of the Trustee,
shall be the successor of the Trustee hereunder, provided such
corporation shall be eligible under Trust Indenture Act Section
310(a) and this Article Six and shall have a combined capital and
surplus of at least $50,000,000 and have a Corporate Trust Office or
an agent selected in accordance with Section 609 without the
execution or filing of any paper or any further act on the part of
any of the parties hereto.
In case at the time such successor to the Trustee shall
succeed to the trusts created by this Indenture any of the Securities
shall have been authenticated but not delivered, any such successor
to the Trustee may adopt the certificate of authentication of any
predecessor Trustee and deliver such Securities so authenticated;
and, in case at that time any of the Securities shall not have been
authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the
name of the successor trustee; and in all such cases such certificate
shall have the full force which it is anywhere in the Securities or
in this Indenture provided that the certificate of the Trustee shall
have; PROVIDED that the right to adopt the certificate of
authentication of any predecessor Trustee or to authenticate
Securities in the name of any predecessor Trustee shall apply only to
its successor or successors by merger, amalgamation, conversion or
consolidation.
Section 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
If and when the Trustee shall be or become a creditor of the
Company (or other obligor under the Securities), the Trustee shall be
subject to the provisions of the Trust Indenture Act regarding the
collection of claims against the Company (or any such
61
<PAGE>
other obligor).
A Trustee who has resigned or been removed shall be subject to the
Trust Indenture Act Section 311(a) to the extent indicated therein.
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF
HOLDERS.
The Company will furnish or cause to be furnished to the
Trustee
(a) semiannually, not more than 15 days after each Regular
Record Date, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Holders as of such Regular
Record Date; and
(b) at such other times as the Trustee may request in
writing, within 30 days after receipt by the Company of any such
request, a list of similar form and content as of a date not more
than 15 days prior to the time such list is furnished;
PROVIDED, HOWEVER, that if and so long as the Trustee shall be the
Security Registrar, no such list need be furnished.
Section 702. DISCLOSURE OF NAMES AND ADDRESSES OF HOLDERS.
Every Holder of Securities, by receiving and holding the
same, agrees with the Company and the Trustee that neither the
Company nor the Trustee or any agent of either of them shall be held
accountable by reason of the disclosure of any information as to the
names and addresses of the Holders in accordance with Trust Indenture
Act Section 312, regardless of the source from which such information
was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under Trust
Indenture Act Section 312.
Section 703. REPORTS BY TRUSTEE.
Within 60 days after May 15 of each year commencing with the
first May 15 after the first issuance of Securities, the Trustee
shall transmit by mail to all Holders, as their names and addresses
appear in the Security Register, as provided in Trust Indenture Act
Section 313(c), a brief report dated as of such May 15 in accordance
with and to the extent required by Trust Indenture Act Section
313(a). At the time of its mailing to Holders, a copy of each such
report shall be filed with the Company, the Commission and with each
securities exchange on which the Securities are listed.
62
<PAGE>
The Company shall notify the Trustee when the Securities are listed on any
securities exchange.
Section 704. REPORTS BY COMPANY.
The Company shall:
(a) file with the Trustee, within 30 days after the
Company, is required to file the same with the Commission, copies of
the annual reports and of the information, documents and other
reports (or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations prescribe)
which the Company may be required to file with the Commission
pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if
the Company is not required to file information, documents or reports
pursuant to either of said Sections, then it shall file with the
Trustee and the Commission, in accordance with rules and regulations
prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which
may be required pursuant to Section 13 of the Exchange Act in respect
of a security listed and registered on a national securities exchange
as may be prescribed from time to time in such rules and regulations;
(b) file with the Trustee and the Commission, in accordance
with the rules and regulations prescribed from time to time by the
Commission, such additional information, documents and reports with
respect to compliance by the Company with the conditions and
covenants of this Indenture as may be required from time to time by
such rules and regulations; and
(c) transmit or cause to be transmitted by mail to all
Holders, as their names and addresses appear in the Security
Register, within 30 days after the filing thereof with the Trustee,
in the manner and to the extent provided in Trust Indenture Act
Section 313(c), such summaries of any information, documents and
reports required to by filed by the Company pursuant to Subsections
(a) and (b) of this Section 704 as may be required by rules and
regulations prescribed from time to time by the Commission.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 801. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN
TERMS.
The Company shall not, in a single transaction or through a
series of related transactions, consolidate with or merge with or
into any other Person or sell, assign, convey, transfer, lease or
otherwise dispose of all or substantially all of its properties and
63
<PAGE>
assets to any Person or group of affiliated Persons, or permit any of
its Subsidiaries to enter into any such transaction or transactions
if such transaction or transactions, in the aggregate, would result
in a sale, assignment, conveyance, transfer, lease or disposition of
all or substantially all of the properties and assets of the Company
and its Subsidiaries on a Consolidated basis to any other Person or
group of affiliated Persons, unless at the time and after giving
effect thereto:
(i) either (a) the Company shall be the continuing
corporation or (b) the Person (if other than the Company)
formed by such consolidation or into which the Company is
merged or the Person which acquires by sale, assignment,
conveyance, transfer, lease or disposition all or
substantially all of the properties and assets of the
Company and its Subsidiaries on a Consolidated basis (the
"Surviving Entity") shall be a corporation, partnership,
limited liability company or business trust duly organized
and validly existing under the laws of the United States of
America, any state thereof or the District of Columbia and
such Person expressly assumes, by a supplemental indenture,
executed and delivered to the Trustee, in a form
satisfactory to the Trustee, all the obligations of the
Company under the Securities and this Indenture, and this
Indenture shall remain in full force and effect;
(ii)immediately before and immediately after giving
effect to such transaction on a PRO FORMA basis, no Default
or Event of Default shall have occurred and be continuing;
(iii)except in the case of the consolidation or merger
of any Wholly Owned Subsidiary with or into the Company,
immediately after giving effect to such transaction on a PRO
FORMA basis, the Consolidated Net Worth of the Company (or
the Surviving Entity if the Company is not the continuing
obligor under this Indenture) is equal to or greater than
the Consolidated Net Worth of the Company immediately prior
to such transaction;
(iv)except in the case of the consolidation or merger
of any Wholly Owned Subsidiary with or into the Company,
immediately before and immediately after giving effect to
such transaction on a PRO FORMA basis (on the assumption
that the transaction occurred on the first day of the four-
quarter period immediately prior to the consummation of such
transaction with the appropriate adjustments with respect to
the transaction being included in such PRO FORMA
calculation), the Company (or the Surviving Entity if the
Company is not the continuing obligor under this Indenture)
64
<PAGE>
could incur $1.00 of additional Indebtedness (other than
Permitted Indebtedness) under Section 1008;
(v) at the time of the transaction, if any of the
property or assets of the Company or any of its Subsidiaries
would thereupon become subject to any Lien, the provisions
of Section 1012 are complied with; and
(vi)at the time of the transaction, the Company or the
Surviving Entity shall have delivered, or caused to be
delivered, to the Trustee, in form and substance reasonably
satisfactory to the Trustee, an Officers' Certificate and an
Opinion of Counsel, each to the effect that such
consolidation, merger, transfer, sale, assignment,
conveyance, transfer, lease or other transaction and the
supplemental indenture in respect thereof comply with this
Indenture and that all conditions precedent herein provided
for relating to such transaction have been complied with.
Section 802. SUCCESSOR SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment,
conveyance, transfer, lease or disposition of all or substantially
all of the properties and assets of the Company in accordance with
Section 801, the successor Person formed by such consolidation or
into which the Company is merged or the successor Person to which
such sale, assignment, conveyance, transfer, lease or disposition is
made shall succeed to, and be substituted for, and may exercise every
right and power of, the Company under this Indenture in the
Securities, with the same effect as if such successor had been named
as the Company herein or in the Securities. When a successor (other
than a successor that is an Affiliate of the Company) assumes all the
obligations of its predecessor under this Indenture or the
Securities, as the case may be, the predecessor shall be released
from those obligations; PROVIDED that in the case of a transfer by
lease, the predecessor shall not be released from the payment of
principal and interest on the Securities.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. SUPPLEMENTAL INDENTURES AND AGREEMENTS WITHOUT
CONSENT OF HOLDERS.
Without the consent of any Holders, the Company and any
other obligor upon the Securities when authorized by a Board
Resolution, and the Trustee, at any time and from time to time, may
enter into one or more indentures supplemental hereto, in form and
substance satisfactory to the Trustee, for any of the following
purposes:
65
<PAGE>
(a) to evidence the succession of another Person to the
Company or any other obligor upon the Securities, and the assumption
by any such successor of the covenants of the Company or obligor
herein and in the Securities in accordance with Article Eight;
(b) to add to the covenants of the Company or any other
obligor upon the Securities for the benefit of the Holders, or to
surrender any right or power herein conferred upon the Company or any
other obligor upon the Securities, as applicable, herein or in the
Securities;
(c) to cure any ambiguity, to correct or supplement any
provision herein which may be defective or inconsistent with any
other provision herein or in the Securities or to make any other
provisions with respect to matters or questions arising under this
Indenture or the Securities; PROVIDED that, in each case, such
provisions shall not adversely affect the interests of the Holders;
(d) to comply with the requirements of the Commission in
order to effect or maintain the qualification of this Indenture under
the Trust Indenture Act, as contemplated by Section 905 or otherwise;
(e) to evidence and provide the acceptance of the
appointment of a successor trustee hereunder; or
(f) to mortgage, pledge, hypothecate or grant a security
interest in favor of the Trustee for the benefit of the Holders as
additional security for the payment and performance of the Indenture
Obligations, in any property or assets, including any which are
required to be mortgaged, pledged or hypothecated, or in which a
security interest is required to be granted to the Trustee pursuant
to this Indenture or otherwise.
Section 902. SUPPLEMENTAL INDENTURES AND AGREEMENTS WITH
CONSENT OF HOLDERS.
Except as permitted by Section 901, with the consent of the
Holders of at least a majority in aggregate principal amount of the
Outstanding Securities, by Act of said Holders delivered to the
Company and the Trustee, the Company when authorized by Board
Resolutions, and the Trustee may (i) enter into an indenture or
indentures supplemental hereto in form and substance satisfactory to
the Trustee, for the purpose of adding any provisions to or amending,
modifying or changing in any manner or eliminating any of the
provisions of this Indenture, the Securities (including but not
limited to, for the purpose of modifying in any manner the rights of
the Holders under this Indenture or the Securities) or (ii) waive
compliance with any provision in this Indenture or the Securities
(other than waivers of past Defaults covered by Section 513 and
waivers
66
<PAGE>
of covenants which are covered by Section 1022); PROVIDED,
HOWEVER, that no such supplemental indenture, agreement or instrument
shall, without the consent of the Holder of each Outstanding Security
affected thereby:
(a) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, or reduce the principal
amount thereof or the rate of interest thereon or any premium payable
upon the redemption thereof, or change the coin or currency in which
the principal of any Security or any premium or the interest thereon
is payable, or impair the right to institute suit for the enforcement
of any such payment on or after the Stated Maturity thereof (or, in
the case of redemption, on or after the Redemption Date);
(b) amend, change or modify the obligation of the Company
to make and consummate an Offer with respect to any Asset Sale or
Asset Sales in accordance with Section 1013 or the obligation of the
Company to make and consummate a Change of Control Offer in the event
of a Change of Control in accordance with Section 1015, including
amending, changing or modifying any definitions with respect thereto;
(c) reduce the percentage in principal amount of the
Outstanding Securities, the consent of whose Holders is required for
any such supplemental indenture, or the consent of whose Holders is
required for any waiver of compliance with certain provisions of this
Indenture;
(d) modify any of the provisions of this Section 902 or
Sections 513 or 1020, except to increase the percentage in principal
amount of the Outstanding Securities the consent of whose Holders is
required for any such actions or to provide that certain other
provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each Security affected thereby;
(e) except as otherwise permitted under Article Eight,
consent to the assignment or transfer by the Company of any of its
rights and obligations under this Indenture; or
(f) amend or modify any of the provisions of this Indenture
relating to the subordination of the Securities in any manner adverse
to the Holders.
Upon the written request of the Company accompanied by a
copy of Board Resolutions authorizing the execution of any such
supplemental indenture, and upon the filing with the Trustee of
evidence of the consent of Holders as aforesaid, the Trustee shall
join with the Company in the execution of such supplemental
indenture.
67
<PAGE>
It shall not be necessary for any Act of Holders under this
Section 902 to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such Act shall
approve the substance thereof.
Section 903. EXECUTION OF SUPPLEMENTAL INDENTURES AND
AGREEMENTS.
In executing, or accepting the additional trusts created by,
any supplemental indenture, agreement, instrument or waiver permitted
by this Article Nine or the modifications thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Trust Indenture Act Section 315(a) through 315(d) and
Section 602 hereof) shall be fully protected in relying upon, an
Opinion of Counsel and an Officers' Certificate stating that the
execution of such supplemental indenture, agreement or instrument (a)
is authorized or permitted by this Indenture and (b) does not violate
the provisions of any agreement or instrument evidencing any other
Indebtedness of the Company or any Subsidiary. The Trustee may, but
shall not be obligated to, enter into any such supplemental
indenture, agreement or instrument which affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise.
Section 904. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this
Article, this Indenture and the Securities 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.
Section 905. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this
Article Nine shall conform to the requirements of the Trust Indenture
Act as then in effect.
Section 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL
INDENTURES.
Securities authenticated and delivered after the execution
of any supplemental indenture pursuant to this Article Nine 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.
68
<PAGE>
Section 907.NOTICE OF SUPPLEMENTAL INDENTURES.
Promptly after the execution by the Company and the Trustee
of any supplemental indenture pursuant to the provisions of Section
902, the Company shall give notice thereof to the Holders of each
Outstanding Security affected, in the manner provided for in Section
106, setting forth in general terms the substance of such
supplemental indenture.
Section 908. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment or waiver becomes effective, a consent to
it by a Holder of a Security is a continuing consent by the Holder
and every subsequent Holder of a Security or portion of a Security
that evidences the same Indebtedness as the consenting Holder's
Security, even if a notation of the consent is not made on any
Security. However, any such Holder, or subsequent Holder, may revoke
the consent as to his Security or portion of a Security if the
Trustee receives the notice of revocation before the date the
amendment or waiver becomes effective. An amendment or waiver shall
become effective in accordance with its terms and thereafter bind
every Holder.
ARTICLE TEN
COVENANTS
Section 1001. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.
The Company shall duly and punctually pay the principal of,
premium, if any, and interest on the Securities in accordance with
the terms of the Securities and this Indenture.
Section 1002. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain an office or agency where
Securities may be presented or surrendered for payment. The Company
also will maintain in The City of New York an office or agency where
Securities may be surrendered for registration of transfer,
redemption or exchange and where notices and demands to or upon the
Company in respect of the Securities and this Indenture may be
served. The Company will give prompt written notice to the Trustee
of the location and any change in the location of any such offices or
agencies. If at any time the Company shall fail to maintain any such
required offices or agencies or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the office of the agent of the
Trustee described above and the Company hereby appoints such agent as
its agent to receive all such presentations, surrenders, notices and
demands.
69
<PAGE>
The Company may from time to time designate one or more
other offices or agencies (in or outside of The City of New York)
where the Securities may be presented or surrendered for any or all
such purposes, and may from time to time rescind such designation.
The Company will give prompt written notice to the Trustee of any
such designation or rescission and any change in the location of any
such office or agency.
Section 1003. MONEY FOR SECURITY PAYMENTS TO BE HELD IN TRUST.
If the Company or any of its Affiliates shall at any time
act as Paying Agent, it will, on or before each due date of the
principal of, premium, if any, or interest on any of the Securities,
segregate and hold in trust for the benefit of the Holders entitled
thereto a sum sufficient to pay the principal, premium, if any, or
interest so becoming due until such sums shall be paid to such
Persons or otherwise disposed of as herein provided, and will
promptly notify the Trustee of its action or failure so to act.
If the Company or any of its Affiliates is not acting as
Paying Agent, the Company will, on or before each due date of the
principal of, premium, if any, or interest on, any Securities,
deposit with a Paying Agent a sum in same day funds sufficient to pay
the principal, premium, if any, or interest so becoming due, such sum
to be held in trust for the benefit of the Persons entitled to such
principal, premium or interest, and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee of such action
or any failure so to act.
If the Company is not acting as Paying Agent, the Company
will cause each Paying Agent other than the Trustee to execute and
deliver to the Trustee an instrument in which such Paying Agent shall
agree with the Trustee, subject to the provisions of this Section,
that such Paying Agent will:
(a) hold all sums held by it for the payment of the
principal of, premium, if any, or interest on Securities in trust for
the benefit of the Persons entitled thereto until such sums shall be
paid to such Persons or otherwise disposed of as herein provided;
(b) give the Trustee notice of any Default by the Company
(or any other obligor upon the Securities) in the making of any
payment of principal, premium, if any, or interest;
(c) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Paying Agent; and
70
<PAGE>
(d) acknowledge, accept and agree to comply in all aspects
with the provisions of this Indenture relating to the duties, rights
and disabilities of such Paying Agent.
The Company may at any time, for the purpose of obtaining
the satisfaction and discharge of this Indenture or for any other
purpose, pay, or by Company Order direct any Paying Agent to pay, to
the Trustee all sums held in trust by the Company or such Paying
Agent, such sums to be held by the Trustee upon the same trusts as
those upon which such sums were held by the Company or such Paying
Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with
respect to such money.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal
of, premium, if any, or interest on any Security and remaining
unclaimed for two years after such principal and premium, if any, or
interest has become due and payable shall promptly be paid to the
Company on Company Request, or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Security shall
thereafter, as an unsecured general creditor, look only to the
Company for payment thereof, and all liability of the Trustee or such
Paying Agent with respect to such trust money, and all liability of
the Company as trustee thereof, shall thereupon cease; PROVIDED,
HOWEVER, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Company cause
to be published once, in the NEW YORK TIMES and THE WALL STREET
JOURNAL (national edition), and mail to each such Holder, notice that
such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such
notification, publication and mailing, any unclaimed balance of such
money then remaining will promptly be repaid to the Company.
Section 1004. CORPORATE EXISTENCE.
Subject to Article Eight, the Company shall do or cause to
be done all things necessary to preserve and keep in full force and
effect the corporate existence and related rights and franchises
(charter and statutory) of the Company and each Subsidiary; PROVIDED,
HOWEVER, that the Company shall not be required to preserve any such
right or franchise or the corporate existence of any such Subsidiary
if the Board of Directors of the Company shall determine that the
preservation thereof is no longer desirable in the conduct of the
business of the Company and its Subsidiaries as a whole and that the
loss thereof would not reasonably be expected to have a material
adverse effect on the ability of the Company to perform its
obligations hereunder; and PROVIDED, FURTHER, HOWEVER, that the
foregoing shall not prohibit a sale, transfer or conveyance of a
Subsidiary or any of its assets in compliance with the terms of this
Indenture.
71
<PAGE>
Section 1005. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company shall pay or discharge or cause to be paid or
discharged, on or before the date the same shall become due and
payable, (a) all taxes, assessments and governmental charges levied
or imposed upon the Company or any Subsidiary shown to be due on any
return of the Company or any Subsidiary or otherwise assessed or upon
the income, profits or property of the Company or any Subsidiary if
failure to pay or discharge the same could reasonably be expected to
have a material adverse effect on the ability of the Company to
perform its obligations hereunder and (b) all lawful claims for
labor, materials and supplies, which, if unpaid, would by law become
a Lien upon the property of the Company or any Subsidiary, except for
any Lien permitted to be incurred under Section 1012, if failure to
pay or discharge the same could reasonably be expected to have a
material adverse effect on the ability of the Company to perform its
obligations hereunder; PROVIDED, HOWEVER, that the Company shall not
be required to pay or discharge or cause to be paid or discharged any
such tax, assessment, charge or claim whose amount, applicability or
validity is being contested in good faith by appropriate proceedings
properly instituted and diligently conducted and in respect of which
appropriate reserves (in the good faith judgment of management of the
Company) are being maintained in accordance with GAAP.
Section 1006. MAINTENANCE OF PROPERTIES.
The Company shall cause all material properties owned by the
Company or any Subsidiary or used or held for use in the conduct of
its business or the business of any Subsidiary to be maintained and
kept in good condition, repair and working order (ordinary wear and
tear excepted) 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 reasonable
judgment of the Company may be consistent with sound business
practice and necessary so that the business carried on in connection
therewith may be properly conducted at all times; PROVIDED, HOWEVER,
that nothing in this Section shall prevent the Company from
discontinuing the maintenance of any of such properties if such
discontinuance is, in the reasonable judgment of the Company,
desirable in the conduct of its business or the business of any
Subsidiary and not reasonably expected to have a material adverse
effect on the ability of the Company to perform its obligations
hereunder.
Section 1007. INSURANCE.
The Company shall at all times keep all of its and its
Subsidiaries' properties which are of an insurable nature insured
with insurers, believed by the Company in good faith to be
financially sound and responsible, against loss or damage to the
extent that property of similar character is usually so insured by
corporations similarly
72
<PAGE>
situated and owning like properties in the
same general geographic areas in which the Company and its
Subsidiaries operate, except where the failure to do so could not
reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), earnings, business affairs or
prospects of the Company and its Subsidiaries, taken as a whole.
Section 1008. LIMITATION ON INDEBTEDNESS.
(a) The Company shall not, and shall not permit any of its
Subsidiaries to, create, issue, assume, guarantee, or otherwise in
any manner become directly or indirectly liable for or with respect
to or otherwise incur (collectively, "incur") any Indebtedness
(including any Acquired Indebtedness), except that the Company may
incur Indebtedness (including any Acquired Indebtedness) and any
Subsidiary may incur Acquired Indebtedness if, in each case, the
Consolidated Fixed Charge Coverage Ratio for the Company for the four
full fiscal quarters immediately preceding the incurrence of such
Indebtedness taken as one period (and after giving PRO FORMA effect
to (i) the incurrence of such Indebtedness and (if applicable) the
application of the net proceeds therefrom, including to refinance
other Indebtedness, as if such Indebtedness was incurred, and the
application of such proceeds occurred, at the beginning of such four-
quarter period; (ii) the incurrence, repayment or retirement of any
other Indebtedness by the Company and its Subsidiaries since the
first day of such four-quarter period as if such Indebtedness was
incurred, repaid or retired at the beginning of such four-quarter
period (except that, in making such computation, the amount of
Indebtedness under any revolving credit facility shall be computed
based upon the average daily balance of such Indebtedness during such
four-quarter period); (iii) in the case of Acquired Indebtedness, the
related acquisition, as if such acquisition occurred at the beginning
of such four-quarter period; and (iv) any acquisition or disposition
by the Company and its Subsidiaries of any company or any business or
any assets out of the ordinary course of business, whether by merger,
stock purchase or sale or asset purchase or sale or any related
repayment of Indebtedness, in each case since the first day of such
four-quarter period, assuming such acquisition or disposition had
been consummated on the first day of such four-quarter period) is at
least equal to 2.5:1.0 for any such incurrence from the date hereof
until January 31, 1998, and 3.0:1.0 for any such incurrence
thereafter.
(b) The foregoing limitation will not apply to the
incurrence of any of the following (collectively "Permitted
Indebtedness"):
(i) Indebtedness of the Company under the Credit Facility
in an aggregate principal amount at any one time outstanding not to
exceed (x) the greater of $35,000,000 or 60% of Eligible Inventory
(as defined in the Credit Facility as in effect on the date of this
Indenture) under any revolving credit facility thereunder and
(y) $10,000,000 under any letter of credit facility thereunder;
73
<PAGE>
(ii) Indebtedness of the Company pursuant to the Securities;
(iii)Indebtedness of the Company and any Subsidiary
outstanding on the date of this Indenture and listed on Schedule I
hereto;
(iv) Indebtedness of the Company owing to a Subsidiary;
PROVIDED that any Indebtedness of the Company owing to a Subsidiary
is made pursuant to an intercompany note in the form attached hereto
as Exhibit A and is subordinated in right of payment from and after
such time as the Securities shall become due and payable (whether at
Stated Maturity, acceleration or otherwise) to the payment and
performance of the Company's obligations under the Securities;
PROVIDED, FURTHER, that any disposition, pledge or transfer of any
such Indebtedness to a Person (other than a disposition, pledge or
transfer to a Subsidiary) shall be deemed to be an incurrence of such
Indebtedness by the obligor not permitted by this clause (iv);
(v) Indebtedness of a Wholly Owned Subsidiary owing to the
Company or another Wholly Owned Subsidiary; PROVIDED that any such
Indebtedness is made pursuant to an intercompany note in the form
attached hereto as Exhibit A; PROVIDED, FURTHER, that (a) any
disposition, pledge or transfer of any such Indebtedness to a Person
(other than a disposition, pledge or transfer to the Company or a
Wholly Owned Subsidiary) shall be deemed to be an incurrence of such
Indebtedness by the obligor not permitted by this clause (v), and
(b) any transaction pursuant to which any Wholly Owned Subsidiary,
which has Indebtedness owing to the Company or any other Wholly Owned
Subsidiary, ceases to be a Wholly Owned Subsidiary shall be deemed to
be the incurrence of Indebtedness by such Wholly Owned Subsidiary
that is not permitted by this clause (v);
(vi) guarantees of any Subsidiary made in accordance with
the provisions of Section 1014 of this Indenture;
(vii)obligations of the Company entered into in the ordinary
course of business pursuant to Interest Rate Agreements designed to
protect the Company or any Subsidiary against fluctuations in
interest rates in respect of Indebtedness of the Company or any
Subsidiary as long as such obligations do not exceed the aggregate
principal amount of such Indebtedness then outstanding;
(viii)any renewals, extensions, substitutions, refundings,
refinancings or replacements (collectively, a "refinancing") of any
Indebtedness described in clauses (ii) and (iii) of this definition
of "Permitted Indebtedness," including any successive refinancings so
long as (A) the aggregate principal amount of Indebtedness
represented thereby is not increased by such refinancing plus the
lesser of (I) the stated amount of any premium or other payment
required to be paid in connection with such a refinancing
74
<PAGE>
pursuant to the terms of the Indebtedness being refinanced or (II) the
amount of premium or other payment actually paid at such time to refinance the
Indebtedness, plus, in either case, the amount of expenses of the
Company incurred in connection such refinancing and, (B) in the case
of Subordinated Indebtedness, such refinancing does not reduce the
Average Life to Stated Maturity or the Stated Maturity of such
Indebtedness; and
(ix) Indebtedness of the Company in addition to that
described in clauses (i) through (viii) above, and any renewals,
extensions, substitutions, refinancings or replacements of such
Indebtedness, so long as the aggregate principal amount of all such
Indebtedness shall not exceed $10,000,000 outstanding at any one time
in the aggregate.
Section 1009. LIMITATION ON RESTRICTED PAYMENTS.
(a) The Company shall not, and shall not permit any
Subsidiary to, directly or indirectly:
(i) declare or pay any dividend on, or make any
distribution to holders of, any shares of the Company's
Capital Stock (other than dividends or distributions payable
solely in shares of its Qualified Capital Stock or in
options, warrants or other rights to acquire shares of such
Qualified Capital Stock);
(ii)purchase, redeem or otherwise acquire or retire for
value, directly or indirectly, the Company's Capital Stock
or any Capital Stock of any Affiliate of the Company (other
than any Wholly Owned Subsidiary of the Company) or options,
warrants or other rights to acquire such Capital Stock;
PROVIDED, that the Company may redeem all outstanding shares
of Series A Preferred Stock in the manner contemplated
pursuant to the Company's public offering of the Securities
and shares of the Company's Common Stock, par value $.01 per
share
(iii)make any principal payment on, or repurchase,
redeem, defease, retire or otherwise acquire for value,
prior to any scheduled principal payment, sinking fund
payment or maturity, any Subordinated Indebtedness;
PROVIDED, that the Company may redeem all outstanding
13 3/4 % Senior Subordinated Notes from proceeds of the
Company's public offering of the Securities and shares of
the Company's Common Stock, par value $.01 per share;
(iv)declare or pay any dividend or distribution on any
Capital Stock of any Subsidiary to any Person (other than
the Company or any of its Wholly Owned Subsidiaries) or
purchase, redeem or otherwise acquire or
75
<PAGE>
retire for value
any Capital Stock of any Subsidiary held by any Person
(other than the Company or any of its Wholly Owned
Subsidiaries) other than any such dividend, distribution,
purchase, redemption, acquisition or retirement on a pro
rata basis to all holders of Capital Stock;
(v) incur, create or assume any guarantee of
Indebtedness of any Affiliate (other than Indebtedness of a
Wholly Owned Subsidiary of the Company); or
(vi)make any Investment in any Person (other than any
Permitted Investments)
(any of the foregoing payments described in clauses (i) through (vi),
other than any such action that is a Permitted Payment, collectively,
"Restricted Payments") (the amount of any such Restricted Payment, if
other than cash, as determined by the Board of Directors of the
Company, whose determination shall be conclusive and evidenced by a
Board Resolution), unless (1) immediately before and immediately
after giving effect to such Restricted Payment on a PRO FORMA basis,
no Default or Event of Default shall have occurred and be continuing
and such Restricted Payment shall not be an event which is, or after
notice or lapse of time or both, would be, an "event of default"
under the terms of any Indebtedness of the Company or its
Subsidiaries; (2) immediately before and immediately after giving
effect to such Restricted Payment on a PRO FORMA basis, the Company
could incur $1.00 of additional Indebtedness (other than Permitted
Indebtedness) under the provisions contained in Section 1008(a); and
(3) after giving effect to the proposed Restricted Payment, the
aggregate amount of all such Restricted Payments declared or made
after the date of this Indenture does not exceed the sum of:
(A) 50% of the aggregate Consolidated Net Income of the
Company accrued on a cumulative basis during the period beginning on
the first day of the Company's fiscal quarter commencing after the
date of this Indenture and ending on the last day of the Company's
last fiscal quarter ending prior to the date of the Restricted
Payment (or, if such aggregate cumulative Consolidated Net Income
shall be a loss, minus 100% of such loss);
(B) the aggregate Net Cash Proceeds received after the date
of this Indenture by the Company from the issuance or sale (other
than to any of its Subsidiaries) of Qualified Capital Stock of the
Company or any options, warrants or rights to purchase such Qualified
Capital Stock of the Company (except, in each case, to the extent
such proceeds are used to purchase, redeem or otherwise retire
Capital Stock or Subordinated Indebtedness as set forth in clause
(ii) or (iii) of paragraph (b) below;
76
<PAGE>
(C) the aggregate Net Cash Proceeds received after the date
of this Indenture by the Company (other than from any of its
Subsidiaries) upon the exercise of any options or warrants to
purchase Qualified Capital Stock of the Company; and
(D) the aggregate Net Cash Proceeds received after the date
of this Indenture by the Company from the conversion or exchange, if
any, of debt securities or Redeemable Capital Stock of the Company or
its Subsidiaries into or for Qualified Capital Stock of the Company
plus, to the extent such debt securities or Redeemable Capital Stock
were issued after the date of this Indenture, the aggregate Net Cash
Proceeds from their original issuance.
(b) Notwithstanding the foregoing, and in the case of
clauses (ii) through (iv) below, so long as there is no Default or
Event of Default continuing, the foregoing provisions shall not
prohibit the following actions (clauses (i) through (iv) being
referred to as "Permitted Payments"):
(i) the payment of any dividend within 60 days after
the date of declaration thereof, if at such date of declaration such
payment would be permitted by the provisions of paragraph (a) of this
Section and such payment shall be deemed to have been paid on such
date of declaration for purposes of the calculation required by
paragraph (a) of this Section;
(ii)the repurchase, redemption, or other acquisition or
retirement of any shares of any class of Capital Stock of the Company
in exchange for (including any such exchange pursuant to the exercise
of a conversion right or privilege in connection therewith cash is
paid in lieu of the issuance of fractional shares or scrip), or out
of the Net Cash Proceeds of a substantially concurrent issue and sale
for cash (other than to a Subsidiary) of, other shares of Qualified
Capital Stock of the Company; PROVIDED that the Net Cash Proceeds
from the issuance of such shares of Qualified Capital Stock are
excluded from clause (3)(B) of paragraph (a) of this Section;
(iii)the repurchase, redemption, defeasance, retirement
or acquisition for value or payment of principal of any Subordinated
Indebtedness in exchange for, or in an amount not in excess of the
net proceeds of, a substantially concurrent issuance and sale for
cash (other than to any Subsidiary of the Company) of any Qualified
Capital Stock of the Company, PROVIDED that the Net Cash Proceeds
from the issuance of such shares of Qualified Capital Stock are
excluded from clause (3)(B) of paragraph (a) of this Section;
(iv)the repurchase, redemption, defeasance, retirement,
refinancing or acquisition for value or payment of principal of any
Subordinated
77
<PAGE>
Indebtedness (other than Redeemable Capital Stock) (a
"refinancing") through the issuance of new Subordinated Indebtedness
of the Company, PROVIDED that any such new Subordinated Indebtedness
(1) shall be in a principal amount that does not exceed the principal
amount so refinanced (or, if such Subordinated Indebtedness provides
for an amount less than the principal amount thereof to be due and
payable upon a declaration or acceleration thereof, then such lesser
amount as of the date of determination), plus the lesser of (I) the
stated amount of any premium or other payment required to be paid in
connection with such a refinancing pursuant to the terms of the
Indebtedness being refinanced or (II) the amount of premium or other
payment actually paid at such time to refinance the Indebtedness,
plus, in either case, the amount of expenses of the Company incurred
in connection with such refinancing; (2) has an Average Life to
Stated Maturity greater than the remaining Average Life to Stated
Maturity of the Securities; (3) has a Stated Maturity for its final
scheduled principal payment later than the Stated Maturity for the
final scheduled principal payment of the Securities; and (4) is
expressly subordinated in right of payment to the Securities at least
to the same extent as the Indebtedness to be refinanced; and
(v) the redemption, repurchase or acquisition of Common
Stock or other equity interests from time to time under management
equity subscription agreements or stock option agreements or plans in
existence on the date of this Indenture, so long as such redemptions
(x) do not exceed $5,000,000 in the aggregate and (y) do not
otherwise result in an Event of Default or an event that, after
notice or lapse of time or both, would become an Event of Default;
PROVIDED that amounts expended pursuant to this clause (v) will be
subtracted from the amounts available for Restricted Payments
pursuant to paragraph (a) hereof.
Section 1010. LIMITATION ON TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, enter into or suffer to
exist any transaction or series of related transactions (including,
without limitation, the sale, purchase, exchange or lease of assets,
property or services) with any Affiliate of the Company (other than
the Company or a Wholly Owned Subsidiary) unless (a) such transaction
or series of transactions is in writing on terms that are no less
favorable to the Company or such Subsidiary, as the case may be, than
would be available in a comparable transaction in arm's-length
dealings with an unrelated third party and (b) with respect to any
transaction or series of transactions involving aggregate value in
excess of $1,000,000, the Company delivers an Officers' Certificate
to the Trustee certifying that such transaction or series of related
transactions complies with clause (a) above and such transaction or
series of related transactions has been approved by the Board of
Directors of the Company (and approved by a majority of the
Independent Directors of the Company, or in the event there is only
one Independent Director, by such Independent Director); PROVIDED,
HOWEVER, that this provision shall not
78
<PAGE>
apply to (A) any transaction
with an officer or director of the Company entered into in the
ordinary course of business (including compensation or employee
benefit arrangements with any officer or director of the Company) and
(B) transactions pursuant to agreements in existence on the date of
this Indenture. This limitation shall not apply to (i) transactions
among the Company and its wholly owned Subsidiaries or among wholly
owned Subsidiaries of the Company, (ii) the provision of directors
and officers insurance for the benefit of the directors and officers
of the Company, (iii) indemnification payments to directors and
officers of the Company in accordance with applicable state law and
(iv) payments to all holders of Capital Stock of the Company on a pro
rata basis.
Section 1011. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS.
The Company shall not, and shall not permit any Subsidiary
of the Company to, enter into any Sale and Leaseback Transaction with
respect to any property or assets (whether now owned or hereafter
acquired) unless (i) the sale or transfer of such property or assets
to be leased complies with Section 1013, PROVIDED that the Net Cash
Proceeds therefrom, to the extent not applied to the permanent
repayment or prepayment of any portion of the Credit Facility or used
to purchase Securities pursuant to an Offer (whether or not such
Offer is accepted), shall be used to invest in properties and assets
that will be used in the businesses of the Company or its
Subsidiaries existing on the date of this Indenture or reasonably
related thereto and (ii) the Company or such Subsidiary would be
entitled under Section 1008 to incur any Capital Lease Obligations in
respect of such Sale and Leaseback Transaction.
Section 1012. LIMITATION ON LIENS.
The Company shall not, and shall not permit any Subsidiary
to, directly or indirectly, create, incur, affirm or suffer to exist
any Lien of any kind upon any of its property or assets (including
any intercompany notes), owned at the date of this Indenture or
acquired after the date of this Indenture, or any income or profits
therefrom, except if the Securities are directly secured equally and
ratably with (or prior or senior thereto in the case of Liens with
respect to Subordinated Indebtedness) the obligation or liability
secured by such Lien, excluding, however, from the operation of the
foregoing any of the following:
(a) any Lien existing as of the date of this Indenture and
listed on Schedule II hereto;
(b) any Lien arising by reason of (1) any judgment, decree
or order of any court, so long as such Lien is adequately bonded and
any appropriate legal proceedings which may have been duly initiated
for the review of such judgment, decree or order shall not have been
finally terminated or the period within which such
79
<PAGE>
proceedings may be
initiated shall not have expired; (2) taxes, assessments,
governmental charges or claims not yet delinquent or which are being
contested in good faith; (3) security for payment of workers'
compensation or other insurance related obligations; (4) deposits
made in the ordinary course of business in connection with tenders,
leases, contracts (other than contracts for the payment of money);
(5) zoning restrictions, easements, licenses, reservations,
provisions, covenants, conditions, waivers, restrictions on the use
of property or minor irregularities of title (and with respect to
leasehold interests, mortgages, obligations, liens and other
encumbrances incurred, created, assumed or permitted to exist and
arising by, through or under a landlord or owner of the leased
property, with or without consent of the lessee), none of which
materially impairs the use of any parcel of property material to the
operation of the business of the Company or any Subsidiary or the
value of such property for the purpose of such business; (6) deposits
to secure public or statutory obligations, or in lieu of surety or
appeal bonds; (7) certain surveys, exceptions, title defects,
encumbrances, easements, reservations of, or rights of others for,
rights of way, sewers, electric lines, telegraph or telephone lines
and other similar purposes or zoning or other restrictions as to the
use of real property not interfering with the ordinary conduct of the
business of the Company or any of its Subsidiaries; (8) operation of
law in favor of mechanics, materialmen, laborers, employees or
suppliers, incurred in the ordinary course of business for sums which
are not yet delinquent or are being contested in good faith by
negotiations or by appropriate proceedings which suspend the
collection thereof or (9) contracts to sell assets that are not
otherwise prohibited hereunder;
(c) any Lien now or hereafter existing on property of the
Company or any Subsidiary pursuant to the Credit Facility, PROVIDED
that any Indebtedness so secured by any Lien created after the date
hereof is permitted to be incurred under clause (b)(i) of the
provisions contained in Section 1008;
(d) any Lien securing Acquired Indebtedness created prior
to (and not created in connection with, or in contemplation of) the
incurrence of such Indebtedness by the Company or any Subsidiary, in
each case which Indebtedness is permitted under the provisions of
Section 1008; PROVIDED that any such Lien only extends to the assets
that were subject to such Lien securing such Acquired Indebtedness
prior to the related transaction by the Company or its Subsidiaries;
and
(e) any extension, renewal, refinancing or replacement, in
whole or in part, of any Lien described in the foregoing clauses (a)
through (d) so long as the amount of security is not increased
thereby.
80
<PAGE>
Section 1013. LIMITATION ON SALE OF ASSETS.
(a) The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, consummate an Asset Sale
unless (i) at least 85% of the Net Cash Proceeds from such Asset Sale
are received in cash and (ii) the Company or such Subsidiary receives
consideration at the time of such Asset Sale at least equal to the
Fair Market Value of the shares or assets sold (as determined by the
Board of Directors of the Company and evidenced in a Board
Resolution).
(b) If all or a portion of the Net Cash Proceeds of any
Asset Sale are not required to be applied to repay permanently any
portion of the Credit Facility then outstanding as required by the
terms thereof, or the Company determines not to apply such Net Cash
Proceeds to the permanent prepayment of any portion of the Credit
Facility or if the Credit Facility is not then outstanding, then the
Company or a Subsidiary may within twelve months of the Asset Sale
invest the Net Cash Proceeds in properties and other assets that (as
determined by the Board of Directors of the Company) replace the
properties and assets that were the subject of the Asset Sale or in
properties and assets that will be used in the businesses of the
Company or its Subsidiaries existing on the date of this Indenture or
in businesses reasonably related thereto. The amount of such Net
Cash Proceeds neither used to permanently repay or prepay any portion
of the Credit Facility nor used or invested as set forth in this
paragraph constitutes "Excess Proceeds."
(c) When the aggregate amount of Excess Proceeds equals
$5,000,000 or more, the Company shall apply the Excess Proceeds to
the repayment of the Securities and any Pari Passu Indebtedness
required to be repurchased under the instrument governing such Pari
Passu Indebtedness as follows: (a) the Company will make an offer to
purchase (an "Offer") from all holders of the Securities in
accordance with the procedures set forth in this Indenture in the
maximum principal amount (expressed as a multiple of $1,000) of
Securities that may be purchased out of an amount (the "Security
Amount") equal to the product of such Excess Proceeds multiplied by a
fraction, the numerator of which is the outstanding principal amount
of the Securities, and the denominator of which is the sum of the
outstanding principal amount of the Securities and such Pari Passu
Indebtedness (subject to proration in the event such amount is less
than the aggregate Offered Price (as defined herein) of all
Securities tendered) and (b) to the extent required by such Pari
Passu Indebtedness to permanently reduce the principal amount of such
Pari Passu Indebtedness, the Company will make an offer to purchase
or otherwise repurchase or redeem Pari Passu Indebtedness (a "Pari
Passu Offer") in an amount (the "Pari Passu Debt Amount") equal to
the excess of the Excess Proceeds over the Security Amount; PROVIDED
that in no event will the Company be required to make a Pari Passu
Offer in a Pari Passu Debt Amount exceeding the principal amount of
such Pari Passu Indebtedness plus the amount of any premium required
to be paid to repurchase such Pari Passu Indebtedness. The offer
price will be payable in cash in an
81
<PAGE>
amount equal to 100% of the
principal amount of the Securities plus accrued and unpaid interest,
if any, to the date (the "Offer Date") such Offer is consummated (the
"Offered Price"), in accordance with the procedures set forth in this
Indenture. To the extent that the aggregate Offered Price of the
Securities tendered pursuant to the Offer is less than the Security
Amount relating thereto or the aggregate amount of Pari Passu
Indebtedness that is purchased is less than the Pari Passu Debt
Amount (the amount of such shortfall, if any, constituting a
"Deficiency"), the Company will use such Deficiency in the business
of the Company and its Subsidiaries for general corporate purposes.
Upon completion of the purchase of all the Securities tendered
pursuant to an Offer and repurchase of the Pari Passu Indebtedness
pursuant to a Pari Passu Offer, the amount of Excess Proceeds, if
any, shall be reset at zero.
(d) Whenever the Excess Proceeds received by the Company
exceed $5,000,000, such Excess Proceeds shall, prior to any purchase
of Securities or Pari Passu Indebtedness described in paragraph (c)
above, be set aside by the Company in a separate account pending
(i) deposit with the depositary or a Paying Agent of the amount
required to purchase the Securities or Pari Passu Indebtedness
tendered in an Offer or a Pari Passu Offer, (ii) delivery by the
Company of the Offered Price to the Holders or holders of Pari Passu
Indebtedness tendered in an Offer or a Pari Passu Offer and (iii)
application, as set forth above, of Excess Proceeds in the business
of the Company and its Subsidiaries for general corporate purposes.
Such Excess Proceeds may be invested in Temporary Cash Investments,
PROVIDED that the maturity date of any such investment made after the
amount of Excess Proceeds exceeds $5,000,000 shall not be later than
the Offer Date. The Company shall be entitled to any interest or
dividends accrued, earned or paid on such Temporary Cash Investments,
PROVIDED that the Company shall not withdraw such interest from the
separate account if an Event of Default has occurred and is
continuing.
(e) If the Company becomes obligated to make an Offer
pursuant to clause (c) above, the Securities shall be purchased by
the Company, at the option of the Holder thereof, in whole or in part
in integral multiples of $1,000, on a date that is not earlier than
45 days and not later than 60 days from the date the notice is given
to Holders, or such later date as may be necessary for the Company to
comply with the requirements under the Exchange Act, subject to
proration in the event the Security Amount is less than the aggregate
Offered Price of all Securities tendered.
(f) The Company shall comply with the applicable tender
offer rules, including Rule 14e-1 under the Exchange Act, and any
other applicable securities laws or regulations in connection with an
Offer.
(g) The Company will not, and will not permit any
Subsidiary to, create or permit to exist or become effective any
restriction (other than restrictions existing
82
<PAGE>
under Indebtedness as
in effect on the date of this Indenture and listed on Schedule I
hereto as such Indebtedness may be refinanced from time to time,
PROVIDED that such restrictions are no less favorable to the Holders
than those existing on the date of this Indenture) that would
materially impair the ability of the Company to make an Offer to
purchase the Securities or, if such Offer is made, to pay for the
Securities tendered for purchase.
(h) Subject to paragraph (f) above, within 30 days after
the date on which the amount of Excess Proceeds equals or exceeds
$5,000,000, the Company shall send or cause to be sent by first-class
mail, postage prepaid, to the Trustee and to each Holder, at his
address appearing in the Security Register, a notice stating or
including:
(1) that the Holder has the right to require the
Company to repurchase, subject to proration, such Holder's
Securities at the Offered Price;
(2) the Offer Date;
(3) the instructions a Holder must follow in order to
have his Securities purchased in accordance with paragraph
(c) of this Section; and
(4) (i) the most recently filed Annual Report on Form
10-K (including audited consolidated financial statements)
of the Company, the most recent subsequently filed Quarterly
Report on Form 10-Q, as applicable, and any Current Report
on Form 8-K of the Company filed subsequent to such
Quarterly Report, other than Current Reports describing
Asset Sales otherwise described in the offering materials
(or corresponding successor reports) (or in the event the
Company is not required to prepare any of the foregoing
Forms, the comparable information required pursuant to
Section 1020), (ii) a description of material developments
in the Company's business subsequent to the date of the
latest of such Reports, (iii) if material, appropriate pro
forma financial information, and (iv) such other
information, if any, concerning the business of the Company
which the Company in good faith believes will enable such
Holders to make an informed investment decision regarding
the Offer;
(5) the Offered Price;
(6) the names and addresses of the Paying Agent and the
offices or agencies referred to in Section 1002;
83
<PAGE>
(7) that Securities must be surrendered at least three
Business Days prior to the Offer Date to the Paying Agent to
an office or agency referred to in Section 1002 to collect
payment;
(8) that any Securities not tendered will continue to
accrue interest and that unless the Company defaults in the
payment of the purchase price, any Security accepted for
payment pursuant to the Offer shall cease to accrue interest
on and after the Offer Date; and
(9) the procedures for withdrawing a tender.
(i) Holders electing to have Securities purchased hereunder
will be required to surrender such Securities at the address
specified in the notice at least three Business Days prior to the
Offer Date. Holders will be entitled to withdraw their election to
have their Securities purchased pursuant to this Section 1013 if the
Company receives, not later than the Offer Date, a telegram, telex,
facsimile transmission or letter setting forth (1) the name of the
Holder, (2) the certificate number of the Security in respect of
which such notice of withdrawal is being submitted, (3) the principal
amount of the Security (which shall be $1,000 or an integral multiple
thereof) delivered for purchase by the Holder as to which his
election is to be withdrawn, (4) a statement that such Holder is
withdrawing his election to have such principal amount of such
Security purchased, and (5) the principal amount, if any, of such
Security (which shall be $1,000 or an integral multiple thereof) that
remains subject to the original notice of the Offer and that has been
or will be delivered for purchase by the Company.
(j) The Company shall (i) not later than the Offer Date,
accept for payment Securities or portions thereof tendered pursuant
to the Offer, (ii) not later than 10:00 a.m. (New York time) on the
Offer Date, deposit with the Trustee or with a Paying Agent (or, if
the Company or any of its Affiliates is acting as Paying Agent,
segregate and hold in trust as provided in Section 1003) an amount of
money in same day funds (or New York Clearing House funds if such
deposit is made prior to the Offer Date) sufficient to pay the
aggregate Offered Price of all the Securities or portions thereof
which are to be purchased on that date and (iii) not later than 10:00
a.m. (New York time) on the Offer Date, deliver to the Paying Agent
(if other than the Company) an Officers' Certificate stating the
Securities or portions thereof accepted for payment by the Company.
Subject to applicable escheat laws, as provided in the
Securities, the Trustee and the Paying Agent shall return to the
Company any cash that remains unclaimed, together with interest, if
any, thereon, held by them for the payment of the Offered Price;
PROVIDED, HOWEVER, that (x) to the extent that the aggregate amount
of cash deposited by
84
<PAGE>
the Company with the Trustee in respect of an
Offer exceeds the aggregate Offered Price of the Securities or
portions thereof to be purchased, then the Trustee shall hold such
excess for the Company and (y) unless otherwise directed by the
Company in writing, promptly after the Business Day following the
Offer Date the Trustee shall return any such excess to the Company
together with interest or dividends, if any, thereon.
(k) Securities to be purchased shall, on the Offer Date,
become due and payable at the Offered Price and from and after such
date (unless the Company shall default in the payment of the Offered
Price) such Securities shall cease to bear interest. Such Offered
Price shall be paid to such Holder promptly following the later of
the Offer Date and the time of delivery of such Security to the
relevant Paying Agent at the office of such Paying Agent by the
Holder thereof in the manner required. Upon surrender of any such
Security for purchase in accordance with the foregoing provisions,
such Security shall be paid by the Company at the Offered Price;
PROVIDED, HOWEVER, that installments of interest whose Stated
Maturity is on or prior to the Offer Date shall be payable to the
Holders of such Securities, or one or more Predecessor Securities,
registered as such on the relevant Regular Record Dates according to
the terms and the provisions of Section 307; PROVIDED, FURTHER, that
Securities to be purchased are subject to proration in the event the
Excess Proceeds are less than the aggregate Offered Price of all
Securities tendered for purchase, with such adjustments as may be
appropriate by the Trustee so that only Securities in denominations
of $1,000 or integral multiples thereof, shall be purchased. If any
Security tendered for purchase shall not be so paid upon surrender
thereof by deposit of funds with the Trustee or a Paying Agent in
accordance with paragraph (j) above, the principal thereof (and
premium, if any, thereon) shall, until paid, bear interest from the
Offer Date at the rate borne by such Security. Any Security that is
to be purchased only in part shall be surrendered to a Paying Agent
at the office of such Paying Agent (with, if the Company, the
Security Registrar or the Trustee so requires, due endorsement by, or
a written instrument of transfer in form satisfactory to the Company
and the Security Registrar or 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, one
or more new Securities of any authorized denomination as requested by
such Holder in an aggregate principal amount equal to, and in
exchange for, the portion of the principal amount of the Security so
surrendered that is not purchased. The Company shall publicly
announce the results of the Offer on or as soon as practicable after
the Offer Date.
Section 1014. LIMITATION ON ISSUANCES OF GUARANTEES OF
INDEBTEDNESS.
(a) The Company shall not permit any Subsidiary, directly
or indirectly, to guarantee, assume or in any other manner become
liable with respect to any Indebtedness of the Company (i) unless
such Subsidiary simultaneously executes and delivers a supplemental
indenture to this Indenture providing for a guarantee of the
85
<PAGE>
Securities on the same terms as the guarantee of such Indebtedness
except that (A) such guarantee need not be secured unless required
pursuant to Section 1012, and (B) if such Indebtedness is by its
terms expressly subordinated to the Securities, any such assumption,
guarantee or other liability of such Subsidiary with respect to such
Indebtedness shall be subordinated to such Subsidiary's assumption,
guarantee or other liability with respect to the Securities to the
same extent as such Indebtedness is subordinated to the Securities
and (ii) such Subsidiary waives and will not in any manner whatsoever
claim or take the benefit or advantage of, any rights of
reimbursement, indemnity or subrogation or any other rights against
the Company or any other Subsidiary as a result of any payment by
such Subsidiary under its guarantee.
(b) Notwithstanding the foregoing, any guarantee by a
Subsidiary of the Securities shall provide by its terms that it shall
be automatically and unconditionally released and discharged upon any
sale, exchange or transfer, to any Person not an Affiliate of the
Company, of all of the Company's Capital Stock in, or all or
substantially all the assets of, such Subsidiary, which is in
compliance with the terms of this Indenture.
Section 1015. PURCHASE OF SECURITIES UPON A CHANGE OF CONTROL.
(a) If a Change of Control shall occur at any time, then
each Holder shall have the right to require that the Company purchase
such Holder's Securities in whole or in part in integral multiples of
$1,000, at a purchase price (the "Change of Control Purchase Price")
in cash in an amount equal to 101% of the principal amount of such
Securities, plus accrued and unpaid interest, if any, to the date of
purchase (the "Change of Control Purchase Date"), pursuant to the
offer set forth below in this Section 1015 (the "Change of Control
Offer") and in accordance with the procedures set forth in
Subsections (b), (c), (d) and (e) of this Section 1015.
(b) Within 15 days following any Change of Control, the
Company shall notify the Trustee thereof and give written notice (a
"Change of Control Purchase Notice") of such Change of Control to
each Holder, by first-class mail, postage prepaid, at his address
appearing in the Security Register stating or including:
(1) that a Change of Control has occurred, the date of
such event, and that such Holder has the right to require
the Company to repurchase such Holder's Securities at the
Change of Control Purchase Price;
(2) the circumstances and relevant facts regarding such
Change of Control (including but not limited to information
with respect to PRO FORMA historical income, cash flow and
capitalization after giving effect to such Change of
Control);
86
<PAGE>
(3) (i) the most recently filed Annual Report on
Form 10-K (including audited consolidated financial
statements) of the Company, the most recent subsequently
filed Quarterly Report on Form 10-Q, as applicable, and any
Current Report on Form 8-K of the Company filed subsequent
to such Quarterly Report (or in the event the Company is not
required to prepare any of the foregoing Forms, the
comparable information required to be prepared by the
Company pursuant to Section 1020), (ii) a description of
material developments in the Company's business subsequent
to the date of the latest of such reports and (iii) such
other information, if any, concerning the business of the
Company which the Company in good faith believes will enable
such Holders to make an informed investment decision
regarding the Change of Control Offer;
(4) that the Change of Control Offer is being made
pursuant to this Section 1015(a) and that all Securities
properly tendered pursuant to the Change of Control Offer
will be accepted for payment at the Change of Control
Purchase Price;
(5) the Change of Control Purchase Date which shall be
a Business Day no earlier than 30 days nor later than 60
days from the date such notice is mailed, or such later date
as is necessary to comply with requirements under the
Exchange Act;
(6) the Change of Control Purchase Price;
(7) the names and addresses of the Paying Agent and the
offices or agencies referred to in Section 1002;
(8) that Securities must be surrendered on or prior to
the Change of Control Purchase Date to the Paying Agent at
the office of the Paying Agent or to an office or agency
referred to in Section 1002 to collect payment;
(9) that the Change of Control Purchase Price for any
Security which has been properly tendered and not withdrawn
will be paid promptly following the Change of Control Offer
Purchase Date;
(10)the procedures for withdrawing a tender of
Securities and Change of Control Purchase Notice;
87
<PAGE>
(11)that any Security not tendered will continue to
accrue interest; and
(12)that, unless the Company defaults in the payment of
the Change of Control Purchase Price, any Securities
accepted for payment pursuant to the Change of Control Offer
shall cease to accrue interest after the Change of Control
Purchase Date.
(c) Upon receipt by the Company of the proper tender of
Securities, the Holder of the Security in respect of which such
proper tender was made shall (unless the tender of such Security is
properly withdrawn) thereafter be entitled to receive solely the
Change of Control Purchase Price with respect to such Security. Upon
surrender of any such Security for purchase in accordance with the
foregoing provisions, such Security shall be paid by the Company at
the Change of Control Purchase Price; PROVIDED, HOWEVER, that
installments of interest whose Stated Maturity is on or prior to the
Change of Control Purchase Date shall be payable to the Holders of
such Securities, or one or more Predecessor Securities, registered as
such on the relevant Regular Record Dates according to the terms and
the provisions of Section 307. If any Security tendered for purchase
in accordance with the provisions of this Section 1015 shall not be
so paid upon surrender thereof, the principal thereof (and premium,
if any, thereon) shall, until paid, bear interest from the Change of
Control Purchase Date at the rate borne by such Security. Holders
electing to have Securities purchased will be required to surrender
such Securities to the Paying Agent at the address specified in the
Change of Control Purchase Notice at least one Business Day prior to
the Change of Control Purchase Date. Any Security that is to be
purchased only in part shall be surrendered to a Paying Agent at the
office of such Paying Agent (with, if the Company, the Security
Registrar or the Trustee so requires, due endorsement by, or a
written instrument of transfer in form satisfactory to the Company
and the Security Registrar or the Trustee, as the case may be, 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, one or more new Securities of any authorized
denomination as requested by such Holder in an aggregate principal
amount equal to, and in exchange for, the portion of the principal
amount of the Security so surrendered that is not purchased.
(d) The Company shall (i) not later than the Change of
Control Purchase Date, accept for payment Securities or portions
thereof tendered pursuant to the Change of Control Offer, (ii) not
later than 10:00 a.m. (New York time) on the Change of Control
Purchase Date, deposit with the Paying Agent an amount of cash
sufficient to pay the aggregate Change of Control Purchase Price of
all the Securities or portions thereof which are to be purchased as
of the Change of Control Purchase Date and (iii) not later
88
<PAGE>
than 10:00
a.m. (New York time) on the Change of Control Purchase Date, deliver
to the Paying Agent an Officers' Certificate stating the Securities
or portions thereof accepted for payment by the Company. The Paying
Agent shall promptly mail or deliver to Holders of Securities so
accepted payment in an amount equal to the Change of Control Purchase
Price of the Securities purchased from each such Holder, and the
Company shall execute and the Trustee shall promptly authenticate and
mail or deliver to such Holders a new Security equal in principal
amount to any unpurchased portion of the Security surrendered. Any
Securities not so accepted shall be promptly mailed or delivered by
the Paying Agent at the Company's expense to the Holder thereof. The
Company will publicly announce the results of the Change of Control
Offer on the Change of Control Purchase Date. For purposes of this
Section 1015, the Company shall choose a Paying Agent which shall not
be the Company.
(e) A tender made in response to a Change of Control
Purchase Notice may be withdrawn before or after delivery by the
Holder to the Paying Agent at the office of the Paying Agent of the
Security to which such tender relates, by means of a written notice
of withdrawal delivered by the Holder to the Paying Agent at the
office of the Paying Agent or to the office or agency referred to in
Section 1002 to which the related tender was delivered prior to the
Change of Control Purchase Date specifying, as applicable:
(1) the name of the Holder;
(2) the certificate number of the Security in respect
of which such notice of withdrawal is being submitted;
(3) the principal amount of the Security (which shall
be $1,000 or an integral multiple thereof) delivered for
purchase by the Holder as to which such notice of withdrawal
is being submitted; and
(4) the principal amount, if any, of such Security
(which shall be $1,000 or an integral multiple thereof) that
remains subject to the original Change of Control Purchase
Notice and that has been or will be delivered for purchase
by the Company.
(f) Subject to applicable escheat laws, as provided in the
Securities, the Trustee and the Paying Agent shall return to the
Company any cash that remains unclaimed, together with interest or
dividends, if any, thereon, held by them for the payment of the
Change of Control Purchase Price; PROVIDED, HOWEVER, that, (x) to the
extent that the aggregate amount of cash deposited by the Company
pursuant to clause (ii) of paragraph (d) above exceeds the aggregate
Change of Control Purchase Price of the
89
<PAGE>
Securities or portions
thereof to be purchased, then the Trustee shall hold such excess for
the Company and (y) unless otherwise directed by the Company in
writing, promptly after the Business Day following the Change of
Control Purchase Date the Trustee shall return any such excess to the
Company together with interest, if any, thereon.
The Company shall not be required to make a Change of
Control Offer upon a Change of Control if a third party makes the
Change of Control Offer in the manner, at the times and otherwise in
compliance with the requirements applicable to a Change of Control
Offer made by the Company and purchases all Securities validly
tendered and not withdrawn under such Change of Control Offer.
(g) The Company shall comply with the applicable tender
offer rules, including any such rules with respect to unlawful tender
offer practices, and any other applicable securities laws or
regulations in connection with a Change of Control Offer.
(h) The Company shall not, and shall not permit any
Subsidiary to, create or permit to exist or become effective any
restriction (other than restrictions existing under Indebtedness as
in effect on the date of this Indenture or under any refinancings
thereof no more onerous than the restrictions as in effect on the
date of this Indenture) that would materially impair the ability of
the Company to make a Change of Control Offer to purchase the
Securities or, if such Change of Control Offer is made, to pay for
the Securities tendered for purchase.
Section 1016. LIMITATION ON SUBSIDIARY CAPITAL STOCK.
The Company shall not, and shall not permit any Subsidiary
of the Company to, issue, sell or otherwise transfer any Capital
Stock of any Subsidiary, except for (i) Capital Stock issued to and
held by the Company or a Wholly Owned Subsidiary, and (ii) Capital
Stock issued by a Person prior to the time (A) such Person becomes a
Subsidiary, (B) such Person merges with or into a Subsidiary or (C) a
Subsidiary merges with or into such Person, PROVIDED that such
Capital Stock was not issued or incurred by such Person in
anticipation of the type of transaction contemplated by subclause
(A), (B) or (C).
Section 1017. LIMITATION ON DIVIDENDS AND OTHER PAYMENT
RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any consensual encumbrance or
restriction on the ability of any Subsidiary to (i) pay dividends or
make any other distribution on its Capital Stock, (ii) pay any
Indebtedness owed to the Company or any other Subsidiary, (iii) make
any Investment in the Company
90
<PAGE>
or any other Subsidiary or
(iv) transfer any of its properties or assets to the Company or any
other Subsidiary, except (a) any encumbrance or restriction, with
respect to a Subsidiary that is not a Subsidiary of the Company on
the date of this Indenture, in existence at the time such Person
becomes a Subsidiary of the Company and not incurred in connection
with, or in contemplation of, such Person becoming a Subsidiary; and
(b) any encumbrance or restriction existing under any agreement that
extends, renews, refinances or replaces the agreements containing the
encumbrances or restrictions in the foregoing clause (a), or in this
clause (b), PROVIDED that the terms and conditions of any such
encumbrances or restrictions are no more restrictive in any material
respect than those under or pursuant to the agreement evidencing the
Indebtedness so extended, renewed, refinanced or replaced.
Section 1018. PROVISION OF FINANCIAL STATEMENTS.
Whether or not the Company is subject to Section 13(a) or
15(d) of the Exchange Act, the Company shall, to the extent permitted
under the Exchange Act, file with the Commission the annual reports,
quarterly reports and other documents which the Company would have
been required to file with the Commission pursuant to such Sections
13(a) or 15(d) if the Company were so subject, such documents to be
filed with the Commission on or prior to the respective dates (the
"Required Filing Dates") by which the Company would have been
required so to file such documents if the Company were so subject.
The Company will also in any event (x) within 15 days of each
Required Filing Date (i) transmit by mail to all Holders, as their
names and addresses appear in the Security Register, without cost to
such Holders and (ii) file with the Trustee copies of the annual
reports, quarterly reports and other documents which the Company
would have been required to file with the Commission pursuant to
Section 13(a) or 15(d) of the Exchange Act if the Company were
subject to such Sections and (y) if filing such documents by the
Company with the Commission is not permitted under the Exchange Act,
promptly upon written request and payment of the reasonable cost of
duplication and delivery, supply copies of such documents to any
prospective Holder at the Company's cost.
Section 1019. STATEMENT BY OFFICERS AS TO DEFAULT.
(a) The Company will deliver to the Trustee, on or before a
date not more than 60 days after the end of each fiscal quarter and
not more than 120 days after the end of each fiscal year of the
Company ending after the date hereof, a written statement signed by
two executive officers of the Company, one of whom shall be the
principal executive officer, principal financial officer or principal
accounting officer of the Company, stating whether or not, after a
review of the activities of the Company during such year or such
quarter and of the Company's performance under this Indenture, to the
best knowledge, based on such review, of the signers thereof, the
Company has
91
<PAGE>
fulfilled all of its obligations and is in compliance
with all conditions and covenants under this Indenture throughout
such year or quarter, as the case may be, and, if there has been a
Default specifying each Default and the nature and status thereof and
any actions being taken by the Company with respect thereto.
(b) When any Default or Event of Default has occurred and
is continuing, or if the Trustee or any Holder or the trustee for or
the holder of any other evidence of Indebtedness of the Company or
any Subsidiary gives any notice or takes any other action with
respect to a claimed default, the Company shall deliver to the
Trustee by registered or certified mail or facsimile transmission
followed by hard copy an Officers' Certificate specifying such
Default, Event of Default, notice or other action, the status thereof
and what actions the Company is taking or proposes to take with
respect thereto, within five Business Days of its occurrence.
Section 1020. WAIVER OF CERTAIN COVENANTS.
The Company may omit in any particular instance to comply
with any covenant or condition set forth in Sections 1006 through
1012, 1014 and 1016 through 1018, if, before or after the time for
such compliance, the Holders of not less than a majority in aggregate
principal amount of the Securities at the time Outstanding shall, by
Act of such Holders, waive such compliance in such instance with such
covenant or condition, but no such waiver shall extend to or affect
such covenant or condition except to the extent so expressly waived,
and, until such waiver shall become effective, the obligations of the
Company and the duties of the Trustee in respect of any such covenant
or condition shall remain in full force and effect.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 1101. RIGHTS OF REDEMPTION.
(a) The Securities may be redeemed at the election of the
Company, in whole or in part, at any time on or after May 15, 2000,
subject to the conditions, and at the Redemption Prices, specified in
the form of Security, together with accrued and unpaid interest, if
any, to the Redemption Date (subject to the right of Holders of
record on relevant Regular Record Dates and Special Record Dates to
receive interest due on relevant Interest Payment Dates and Special
Payment Dates).
92
<PAGE>
Section 1102. APPLICABILITY OF ARTICLE.
Redemption of Securities at the election of the Company or
otherwise, as permitted or required by any provision of this
Indenture, shall be made in accordance with such provision and this
Article Eleven.
Section 1103. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Securities
pursuant to Section 1101 shall be evidenced by a Company Order and an
Officers' Certificate. In case of any redemption at the election of
the Company, the Company shall, not less than 45 nor more than 60
days prior to the Redemption Date fixed by the Company (unless a
shorter notice period shall be satisfactory to the Trustee), notify
the Trustee in writing of such Redemption Date and of the principal
amount of Securities to be redeemed.
Section 1104. SELECTION BY TRUSTEE OF SECURITIES TO
BE REDEEMED.
If less than all the Securities are to be redeemed, the
particular Securities or portions thereof to be redeemed shall be
selected not more than 30 days prior to the Redemption Date by the
Trustee, from the Outstanding Securities not previously called for
redemption in compliance with the requirements of the principal
national securities exchange, if any, on which the Securities being
redeemed are listed, or if the Securities are not listed on a
national securities exchange, pro rata, by lot or such other method
as the Trustee shall deem fair and reasonable, and the amounts to be
redeemed may be equal to $1,000 or any integral multiple thereof.
The Trustee shall promptly notify the Company and the
Security Registrar in writing of the Securities selected for
redemption and, in the case of any Securities selected for partial
redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to redemption of
Securities shall relate, in the case of any Security redeemed or to
be redeemed only in part, to the portion of the principal amount of
such Security which has been or is to be redeemed.
Section 1105. NOTICE OF REDEMPTION.
Notice of redemption shall be given by first-class mail,
postage prepaid, mailed not less than 30 nor more than 60 days prior
to the Redemption Date, to each Holder of Securities to be redeemed,
at his address appearing in the Security Register.
All notices of redemption shall state:
93
<PAGE>
(a) the Redemption Date;
(b) the Redemption Price;
(c) if less than all Outstanding Securities are to be
redeemed, the identification of the particular Securities to be
redeemed;
(d) in the case of a Security to be redeemed in part, the
principal amount of such Security to be redeemed and that after the
Redemption Date upon surrender of such Security, new Security or
Securities in the aggregate principal amount equal to the unredeemed
portion thereof will be issued;
(e) that Securities called for redemption must be
surrendered to the Paying Agent to collect the Redemption Price;
(f) that on the Redemption Date the Redemption Price will
become due and payable upon each such Security or portion thereof to
be redeemed, and that (unless the Company shall default in payment of
the Redemption Price) interest thereon shall cease to accrue on and
after said date;
(g) the place or places where such Securities are to be
surrendered for payment of the Redemption Price; and
(h) the CUSIP number, if any, relating to such Securities.
Notice of redemption of Securities to be redeemed at the
election of the Company shall be given by the Company or, at the
Company's written request, by the Trustee in the name and at the
expense of the Company. If the Company elects to give notice of
redemption, it shall provide the Trustee with a certificate stating
that such notice has been given in compliance with the requirements
of this Section 1105.
The notice if mailed in the manner herein provided shall be
conclusively presumed to have been 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.
Section 1106. DEPOSIT OF REDEMPTION PRICE.
On or prior to any Redemption Date, the Company shall
deposit with the Trustee or with a Paying Agent (or, if the Company
or any of its Affiliates is acting as Paying Agent, segregate and
hold in trust as provided in Section 1003) an amount of
94
<PAGE>
money in same
day funds sufficient to pay the Redemption Price of, and (except if
the Redemption Date shall be an Interest Payment Date or Special
Payment Date) accrued interest on, all the Securities or portions
thereof which are to be redeemed on that date. All money earned on
funds held in trust by the Trustee or any Paying Agent shall be
remitted to the Company.
Section 1107. SECURITIES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the
Securities so to be redeemed shall, on the Redemption Date, become
due and payable at the Redemption Price therein specified and from
and after such date (unless the Company shall default in the payment
of the Redemption Price and accrued interest) such Securities shall
cease to bear interest. Upon surrender of any such Security for
redemption in accordance with said notice, such Security shall be
paid by the Company at the Redemption Price together with accrued
interest to the Redemption Date; PROVIDED, HOWEVER, that installments
of interest whose Stated Maturity is on or prior to the Redemption
Date shall be payable to the Holders of such Securities, or one or
more Predecessor Securities, registered as such on the relevant
Regular Record Dates and Special Record Dates according to the terms
and the provisions of Section 307.
If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the principal and premium, if
any, shall, until paid, bear interest from the Redemption Date at the
rate borne by such Security.
Section 1108. SECURITIES REDEEMED OR PURCHASED IN PART.
Any Security which is to be redeemed or purchased only in
part shall be surrendered to the Paying Agent at the office or agency
maintained for such purpose pursuant to Section 1002 (with, if the
Company, the Security Registrar or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form
satisfactory to the Company, the Security Registrar or the Trustee,
as the case may be, 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 unredeemed portion of the principal of the Security so
surrendered that is not redeemed or purchased.
95
<PAGE>
ARTICLE TWELVE
SATISFACTION AND DISCHARGE
Section 1201. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall cease to be of further effect (except
as to surviving rights of registration of transfer or exchange of
Securities herein expressly provided for) and the Trustee, upon
Company Request and at the expense of the Company, shall execute
proper instruments acknowledging satisfaction and discharge of this
Indenture, when
(a) either
(1) all the Securities theretofore authenticated and
delivered (other than (i) Securities which have been
destroyed, lost or stolen and which have been replaced or
paid as provided in Section 306 or (ii) all Securities for
whose payment United States dollars have theretofore been
deposited in trust or segregated and held in trust by the
Company and thereafter repaid to the Company or discharged
from such trust, as provided in Section 1003) have been
delivered to the Trustee for cancellation; or
(2) all such Securities not theretofore delivered to
the Trustee for cancellation (x) have become due and
payable, (y) will become due and payable at their Stated
Maturity within one year or (z) are to be called for
redemption within one year under arrangements satisfactory
to the Trustee for the giving of notice of redemption by the
Trustee in the name, and at the expense, of the Company; and
the Company has irrevocably deposited or caused to be
deposited with the Trustee as trust funds in trust an amount
in United States dollars sufficient to pay and discharge the
entire Indebtedness on the Securities not theretofore
delivered to the Trustee for cancellation, including the
principal of, premium, if any, and accrued interest on such
Securities at such Maturity, Stated Maturity or Redemption
Date;
(b) the Company has paid or caused to be paid all other
sums payable hereunder by the Company; and
(c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Independent Counsel each stating that
(i) all conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture have been complied with
and (ii) such satisfaction and discharge will not result in a breach
or
96
<PAGE>
violation of, or constitute a default under, this Indenture or any
other material agreement or instrument to which the Company or any
Subsidiary is a party or by which the Company or any Subsidiary is
bound.
Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company to the Trustee under
Section 607 and, if United States dollars shall have been deposited
with the Trustee pursuant to subclause (2) of Subsection (a) of this
Section 1201, the obligations of the Trustee under Section 1202 and
the last paragraph of Section 1003 shall survive.
Section 1202. APPLICATION OF TRUST MONEY.
Subject to the provisions of the last paragraph of
Section 1003, all United States dollars deposited with the Trustee
pursuant to Section 1201 shall be held in trust and applied by it, in
accordance with the provisions of the Securities and this Indenture,
to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee
may determine, to the Persons entitled thereto, of the principal of,
premium, if any, and interest on the Securities for whose payment
such United States dollars have been deposited with the Trustee.
97
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, all as of the day and year first above
written.
LOEHMANN'S, INC.
By: /s/ Philip Kaplan
_________________________________
Name:Philip Kaplan
Title:
Attest:/s/ Robert Glass
__________________________
Name:Robert Glass
Title:
UNITED STATES TRUST COMPANY OF
NEW YORK, as Trustee
By: /s/ Margaret M. Ciesmelewski
_________________________________
Name: Margaret M. Ciesmelewski
Title: Assistant Vice President
Attest:/s/ Gerard F. Ganey
__________________________
Name: Gerard F. Ganey
Title: Senior Vice President
<PAGE>
STATE OF NEW YORK)
) ss.:
COUNTY OF NEW YORK)
On the 9th day of May, 1996, before me personally came Philip
Kaplan, to me known, who, being by me duly sworn, did depose and
say that he resides at _________________________________; that he is
President of Loehmann's, Inc., one of the corporations described
in and which executed the foregoing instrument; that he knows the
corporate seal of such corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed pursuant to
authority of the Board of Directors of such corporation; and that he
signed his name thereto pursuant to like authority.
(NOTARIAL
SEAL)
/s/ Mitchell S. Fishman
<PAGE>
STATE OF NEW YORK)
) ss.:
COUNTY OF NEW YORK)
On the 10th day of May, 1996, before me personally came
Margaret Ciesmelewski, to me known, who, being by me duly sworn, did depose and
say that he resides at _________________________________; that he is
AVP of United States Trust Company of New York, one of the
corporations described in and which executed the foregoing
instrument; that he knows the corporate seal of such corporation;
that the seal affixed to said instrument is such corporate seal; that
it was so affixed pursuant to authority of the Board of Directors of
such corporation; and that he signed his name thereto pursuant to
like authority.
(NOTARIAL
SEAL)
/s/ Alexander Rundlet
<PAGE>
EXHIBIT A
INTERCOMPANY NOTE
, 19
Evidences of all loans or advances ("Loans") made hereunder
shall be reflected on the grid attached hereto. FOR VALUE RECEIVED,
, a corporation (the "Maker"), HEREBY
PROMISES TO PAY ON DEMAND to the order of (the
"Holder") the principal sum of the aggregate unpaid principal amount
of all Loans (plus accrued interest thereon) at any time and from
time to time made hereunder which has not been previously paid.
All capitalized terms used herein that are defined in, or by
reference in, the Indenture between LOEHMANN'S, INC., a Delaware
corporation (the "Company"), and UNITED STATES TRUST COMPANY OF NEW
YORK, a New York corporation (the "Trustee"), as trustee, dated as of
May 10, 1996 (the "Indenture"), have the meanings assigned to such
terms therein, or by reference therein, unless otherwise defined.
ARTICLE I
TERMS OF INTERCOMPANY NOTE
Section 1.01 NOTE NOT FORGIVABLE. Unless the Maker of the Loan
hereunder is the Company, the Holder may not forgive any amounts
owing under this intercompany note.
Section 1.02 INTEREST: PREPAYMENT. (a) The interest rate
("Interest Rate") on the Loans shall be a rate per annum reflected on
the grid attached hereto.
(b) The interest, if any, payable on each of the Loans
shall accrue from the date such Loan is made and, subject to Section
2.01, shall be payable upon demand of the Holder.
(c) If the principal or accrued interest, if any, of the
Loans is not paid on the date demand is made, interest on the unpaid
principal and interest will accrue at a rate equal to the Interest
Rate, if any, plus 100 basis points per annum from maturity until the
principal and interest on such Loans are fully paid.
A-1
<PAGE>
(d) Subject to Section 2.01, any amounts hereunder may be
prepaid at any time by the Maker.
Section 1.03 SUBORDINATION. All loans made to the Company
shall be subordinated in right of payment to the payment and
performance of the obligations of the Company and any Subsidiary
under the Indenture, the Securities or any other Indebtedness ranking
senior to or PARI PASSU with the Securities, including, without
limitation, any Indebtedness incurred under the Credit Agreement;
PROVIDED that with respect to a Subsidiary in any specific instance,
such Subsidiary is also an obligor under the Indenture, the
Securities or such other senior or PARI PASSU Indebtedness, as the
case may be, whether as a borrower, guarantor or pledgor of
collateral.
ARTICLE II
EVENTS OF DEFAULT
Section 2.01 EVENTS OF DEFAULT. If after the date of issuance
of this Loan (i) an Event of Default has occurred under the
Indenture, (ii) an "Event of Default" (as defined) has occurred under
the Credit Agreement, or any refinancing of the Credit Agreement or
(iii) an "event of default" (as defined) has occurred on any other
Indebtedness of the Company, then (x) in the event the Maker is not
the Company, all amounts owing under the Loans hereunder shall be
immediately due and payable to the Holder, and (y) in the event the
Maker is the Company, the amounts owing under the Loans hereunder
shall not be due and payable; PROVIDED, HOWEVER, that if such Event
of Default or event of default has been waived, cured or rescinded,
such amounts shall no longer be due and payable in the case of clause
(x), and such amounts may be payable in the case of clause (y). If
the Holder is a Subsidiary, then the Holder hereby agrees that if it
receives any payments or distributions on any Loan from the Company
which is not payable pursuant to clause (y) of the prior sentence
after any Event of Default or event or default described in clauses
(i), (ii) or (iii) above has occurred, is continuing and has not been
waived, cured or rescinded, it will pay over and deliver forthwith to
the Company, as the case may be, all such payments and distributions.
A-2
<PAGE>
ARTICLE III
MISCELLANEOUS
Section 3.01 AMENDMENTS, ETC. No amendment or waiver of any
provision of this intercompany note, or consent to depart herefrom is
permitted at any time for any reason, except with the consent of the
Holders of not less than a majority in aggregate principal amount of
the Outstanding Securities.
Section 3.02 ASSIGNMENT. No party to this Agreement may
assign, in whole or in part, any of its rights and obligations under
this intercompany note, except to its legal successor in interest.
Section 3.03 THIRD PARTY BENEFICIARIES. The holders of the
Securities or any other Indebtedness ranking PARI PASSU with or
senior to, the Securities, including without limitation, any
Indebtedness incurred under the Credit Agreement, shall be third
party beneficiaries to this intercompany note and shall have the
right to enforce this intercompany note against the Company or any of
its Subsidiaries.
Section 3.04 HEADINGS. Article and Section headings in this
intercompany note are included for convenience of reference only and
shall not constitute a part of this intercompany note for any other
purpose.
Section 3.05 ENTIRE AGREEMENT. This intercompany note sets
forth the entire agreement of the parties with respect to its subject
matter and supersedes all previous understandings, written or oral,
in respect thereof.
Section 3.06 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
(WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF).
Section 3.07 WAIVERS. The Maker hereby waives presentment,
demand for payment, notice of protest and all other demands and
notices in connection with the delivery, acceptance, performance or
enforcement hereof.
By:
A-3
<PAGE>
BORROWINGS, MATURITIES, AND PAYMENTS OF PRINCIPAL
Amount of Maturity of Amount
Borrowing/ Borrowing/ Principal Paid Unpaid Principal Notation
Date Principal Principal or Prepaid Balance Made by
- ----- ---------- ---------- -------------- ---------------- ----------
A-4
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial
information extracted from SEC Form 10-Q
and is qualified in its entirety by
reference to such financial statements
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<FISCAL-YEAR-END> FEB-01-1997
<PERIOD-START> FEB-04-1996
<PERIOD-END> MAY-04-1996
<PERIOD-TYPE> 3-MOS
<EXCHANGE-RATE> 1
<CASH> 12,086
<SECURITIES> 0
<RECEIVABLES> 1,866
<ALLOWANCES> 0
<INVENTORY> 56,405
<CURRENT-ASSETS> 71,412
<PP&E> 59,133
<DEPRECIATION> 2,449
<TOTAL-ASSETS> 175,338
<CURRENT-LIABILITIES> 55,704
<BONDS> 130,607
15,865
0
<COMMON> 47
<OTHER-SE> (27,212)
<TOTAL-LIABILITY-AND-EQUITY> 175,338
<SALES> 104,120
<TOTAL-REVENUES> 104,120
<CGS> 70,386
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 27,032
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,231
<INCOME-CONTINUING> 6,702
<INCOME-PRETAX> 2,471
<INCOME-TAX> 50
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,835
<EPS-PRIMARY> .31
<EPS-DILUTED> .31
</TABLE>
