<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 30, 1999
REGISTRATION NO. 333-[ ]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
AMES DEPARTMENT STORES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 5331 04-2269444
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
------------------------
2418 MAIN STREET
ROCKY HILL, CONNECTICUT 06067
(860) 257-2000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
ROLANDO DE AGUIAR,
EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL AND ADMINISTRATIVE OFFICER,
AMES DEPARTMENT STORES, INC.
2418 MAIN STREET
ROCKY HILL, CONNECTICUT 06067
(860) 257-2000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
With a copy to:
STEPHEN H. COOPER, ESQ.
WEIL, GOTSHAL & MANGES LLP
767 FIFTH AVENUE
NEW YORK, NEW YORK 10153
(212) 310-8000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
------------------------
CALCULATION OF REGISTRATION FEE
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===================================================================================================================================
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT OFFERING PRICE(1) REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------------------------
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10% Senior Notes due 2006.................. $200,000,000 100% $200,000,000 $55,600(2)
- ----------------------------------------------------------------------------------------------------------------------------------
Guarantee of Senior Notes.................. -- -- -- None(3)
===================================================================================================================================
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(1) Estimated solely for the purposes of calculating the amount of the
registration fee pursuant to Rule 457(f)(2).
(2) Calculated pursuant to Rule 457(f)(2).
(3) Pursuant to Rule 457(n), no filing fee is required.
------------------------
SEE TABLE OF ADDITIONAL REGISTRANTS BELOW
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
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- --------------------------------------------------------------------------------
<PAGE>
ADDITIONAL REGISTRANTS
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PRIMARY ADDRESS, INCLUDING ZIP CODE
STATE OR OTHER STANDARD AND TELEPHONE NUMBER,
EXACT NAME OF JURISDICTION OF INDUSTRIAL I.R.S. EMPLOYER INCLUDING AREA CODE,
REGISTRANT INCORPORATION OR CLASSIFICATION IDENTIFICATION OF REGISTRANT'S PRINCIPAL REGISTRATION
AS SPECIFIED IN ITS CHARTER ORGANIZATION CODE NUMBER NUMBER EXECUTIVE OFFICE NO. (1)
- ------------------------------------ ---------------- ----------- --------------- --------------------------- ------------
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AMD, Inc............................ Delaware 5311 06-1240252 2418 Main St.
Rocky Hill, CT 06067
(860) 257-2000
Ames FS, Inc........................ Delaware 5311 06-1492785 2418 Main St.
Rocky Hill, CT 06067
(860) 257-2000
Ames Realty II, Inc................. Delaware 5311 06-1255413 2418 Main St.
Rocky Hill, CT 06067
(860) 257-2000
Ames Merchandising Corporation...... Delaware 5311 04-2398476 2418 Main St.
Rocky Hill, CT 06067
(860) 257-2000
Ames Transportation Systems, Inc.... Delaware 4213 06-1073258 2418 Main St.
Rocky Hill, CT 06067
(860) 257-2000
</TABLE>
- ------------------
(1) To be provided by amendment.
<PAGE>
SUBJECT TO COMPLETION, DATED JUNE 30, 1999
PROSPECTUS
EXCHANGE OFFER FOR
$200,000,000 OF 10% SENIOR NOTES DUE 2006
AMES DEPARTMENT STORES, INC. [LOGO]
ISSUER
Material Terms of the Exchange Offer
o Expires 5:00 p.m., New York City time, on , 1999, unless extended.
o All old notes issued on April 27, 1999 that are validly tendered and not
withdrawn will be exchanged for new notes.
o The only conditions to completing the exchange offer are that it does not
violate applicable law or any applicable interpretation of the staff of the
Securities and Exchange Commission and that no injunction, order or decree has
been issued that would prohibit, prevent or materially impair our ability to
proceed with the exchange offer.
o You may withdraw your tender of old notes at any time prior to the expiration
of the exchange offer.
o The exchange will not be a taxable event for U.S. federal income tax purposes.
o The terms of the new notes to be issued in the exchange offer are identical to
those of the old notes, except for certain transfer restrictions, registration
rights and liquidated damages relating to the old notes.
o The old notes are, and the new notes will be, fully and unconditionally
guaranteed, jointly and severally, on a senior unsecured basis by AMD, Inc.,
Ames FS, Inc., Ames Realty II, Inc., Ames Merchandising Corporation and Ames
Transportation Systems, Inc., all of which are subsidiaries of our company.
o Affiliates of our company may not participate in the exchange offer.
- -------------------------------------------------------------------------------
PLEASE REFER TO "RISK FACTORS" BEGINNING ON PAGE 9 OF THIS DOCUMENT
FOR CERTAIN IMPORTANT INFORMATION.
- -------------------------------------------------------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THE NOTES TO BE ISSUED IN THIS EXCHANGE OFFER, NOR HAS
ANY OF THESE ORGANIZATIONS DETERMINED THAT THIS PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The date of this prospectus is , 1999.
The information in this prospectus is not complete and may be changed. These
securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell nor does it seek an offer to buy these securities in any jurisdiction
where the offer or sale is not permitted.
<PAGE>
TABLE OF CONTENTS
PAGE
----
Where You Can Find More Information.............. i
Prospectus Summary............................... 1
Risk Factors..................................... 9
Use of Proceeds.................................. 15
Capitalization................................... 15
Unaudited Pro Forma Financial Data............... 16
Description of Other Indebtedness................ 18
PAGE
----
The Exchange Offer............................... 19
Description of the New Notes..................... 26
Federal Income Tax Considerations................ 57
Plan of Distribution............................. 58
Legal Matters.................................... 59
Experts.......................................... 59
Forward-Looking Statements....................... 59
------------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO
WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS DOCUMENT MAY ONLY BE USED WHERE IT IS LEGAL
TO SELL THESE SECURITIES. THE INFORMATION IN THIS DOCUMENT MAY ONLY BE ACCURATE
ON THE DATE OF THIS DOCUMENT.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Commission a registration statement on Form S-4
under the Securities Act with respect to the new notes to be issued in the
exchange offer. This prospectus, which forms a part of the registration
statement, does not contain all of the information set forth in the registration
statement and the exhibits and schedules thereto, certain parts of which are
omitted in accordance with the Commission's rules and regulations. Any
statements made in this prospectus concerning the provisions of various
documents are not necessarily complete and, in each instance, we refer you to
the copy of such documents filed as an exhibit to the registration statement for
the full text of those provisions. Each such statement is deemed qualified in
its entirety by such reference. Unless otherwise indicated, retail data
contained or incorporated by reference are derived from publicly available
services, including industry trade journals and SEC filings, which we have not
independently verified.
Our common stock is listed on the NASDAQ Stock Market and we file annual,
quarterly and current reports, proxy statements and other documents with the
Commission under the Securities Exchange Act of 1934. You may read and copy any
of those reports, statements or other documents at the SEC public reference room
at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference room. These filings are also available to the public from commercial
document retrieval services and at the SEC's Web site at "http://www.sec.gov."
In addition, our company maintains a Web site at "http://www.amesstores.com"
that contains additional information, including news releases about our business
and operations.
The Commission allows us to "incorporate by reference" in this prospectus
documents that we file with them, which means that we can disclose important
information to you by referring you to those documents. The information so
incorporated by reference is considered to be a part of this prospectus, and
information that we file later with the Commission will automatically update and
supersede this information. We incorporate by reference the documents listed
below and any future filings made by us with the Commission under
Sections 12(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until
the completion of the exchange offer:
o Ames Department Stores, Inc.'s Annual Report on Form 10-K for the year
ended January 30, 1999;
o Ames Department Stores, Inc.'s Quarterly Report on Form 10-Q for the
period ended May 1, 1999; and
o Ames Department Stores, Inc.'s Current Reports on Form 8-K filed with
the Commission on March 16, 1999 and April 2, 1999.
i
<PAGE>
You may request a copy of any filings made by us with the SEC, or any of
the agreements or other documents that constitute exhibits to those filings, at
no cost, by writing or telephoning us at the following address or phone number:
Ames Department Stores, Inc.
2418 Main Street
Rocky Hill, CT 06067
(860) 257-2000
Attention: Investor Relations
So long as we are subject to the periodic reporting requirements of the
Exchange Act, we are required to furnish to the trustee and the holders of the
notes the same information that we are required to file with the Commission. We
have agreed that, even if we cease to be subject to the Exchange Act's reporting
requirements, we will continue to furnish to the trustee and the holders of the
notes the same information that we otherwise would have been required to file
with the Commission under the Exchange Act.
ii
<PAGE>
PROSPECTUS SUMMARY
This summary highlights selected information from this prospectus and may
not contain all information that is important to you. This prospectus includes
specific terms of the exchange offer, as well as information regarding our
business and detailed financial data. We encourage you to read the detailed
information appearing elsewhere in this prospectus as well as the financial
statements included in our Annual Report on Form 10-K for the fiscal year ended
January 30, 1999 and in our Quarterly Report for the period ended May 1, 1999.
Our fiscal year, similar to that of most other retailers, ends on the Saturday
nearest January 31. Our most recent completed fiscal year, which we refer to for
convenience as "fiscal 1998," ended January 30, 1999.
OUR COMPANY
Ames is the largest regional discount retailer in the United States. We
currently operate over 450 stores in 19 contiguous states in the Northeast,
Midwest and Mid-Atlantic regions, as well as the District of Columbia. Our
stores offer a wide range of both brand name and other quality merchandise for
the home and family at prices below those of conventional department stores and
specialty retailers. Ames' stores are situated in rural communities, small
cities and the suburbs of larger metropolitan areas and are smaller and more
customer friendly than the stores of most competing "big box" retailers,
including the national discount department store chains.
On December 31, 1998, we acquired Hills Stores Company, which operated a
chain of 155 discount department stores in twelve states. We are converting all
but four of the acquired Hills stores to Ames stores and have closed two of the
remaining four stores. The conversion process includes the liquidation of Hills'
existing inventory and a total redesign and remerchandising of the stores to
make them consistent with the Ames prototype. Upon completion of its conversion,
each store has a grand opening under the Ames banner. We are implementing the
conversion process in three stages, each entailing approximately 50 stores. The
first stage was completed in late April 1999 and the entire conversion is
scheduled for completion by the end of September 1999.
Our executive offices are located at 2418 Main Street, Rocky Hill,
Connecticut 06067 and our telephone number is (860) 257-2000.
THE EXCHANGE OFFER
On April 27, 1999, we completed the private placement of $200 million
principal amount of our 10% Senior Notes due 2006. Those notes were not
registered under the Securities Act and, therefore, they are subject to
significant restrictions on resale. Accordingly, when we sold those notes, we
entered into a registration rights agreement with the initial purchasers in
which we agreed to deliver to you this prospectus and to permit you to exchange
those old notes for new notes that have identical terms and have been registered
under the Securities Act. We believe that the new notes may be resold by you
without compliance with the registration and prospectus delivery provisions of
the Securities Act, subject to limited conditions. Following the exchange offer,
any old notes that you did not exchange for new notes will continue to be
subject to restrictions on resale and we will have no obligation to you to
register those old notes under the Securities Act.
We issued the old notes under an indenture that grants you certain rights.
The new notes also will be issued under that indenture and you will have the
same rights under the indenture that you had as a holder of old notes. Any
reference to "notes" in this prospectus refers to both old notes and new notes,
unless the context otherwise requires. You should read the discussion under the
headings "The Exchange Offer" and "Description of the New Notes" for further
information regarding the new notes.
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The Exchange Offer........................ We are offering to exchange $1,000 principal amount of 10% Senior
Notes due 2006 that have been registered under the Securities Act for
each $1,000 principal amount of 10% Senior Notes due 2006 that were
issued on April 27, 1999 in a private placement. In order to be
exchanged, an old note must be properly tendered and accepted. All
old notes that are validly tendered and not validly withdrawn will be
exchanged.
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1
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As of this date, there are $200 million aggregate principal amount of
old notes outstanding.
We will issue the new notes promptly after the expiration of the
exchange offer.
Resale.................................... We believe that the new notes that you receive in the exchange offer
may be offered for resale, resold and otherwise transferred by you
without compliance with the registration and prospectus delivery
provisions of the Securities Act if you meet the following
conditions:
(1) you acquire the new notes in the ordinary course of your
business;
(2) you are not engaging in and do not intend to engage in a
distribution of the new notes;
(3) you do not have an arrangement or understanding with any
person to participate in the distribution of the new notes;
and
(4) you are not an affiliate of our company as the term
"affiliate" is defined in Rule 405 under the Securities Act.
If you do not meet the above conditions, you may incur liability
under the Securities Act if you transfer any new note without
delivering a prospectus meeting the requirements of the Securities
Act. We do not assume or indemnify you against that liability.
Each broker-dealer that receives new notes in the exchange offer for
its own account in exchange for old notes that it acquired as a
result of market-making activities or other trading activities must
acknowledge that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of
the new notes. A broker-dealer may use this prospectus for an offer
to resell, resale or other transfer of the new notes.
Expiration Date........................... The exchange offer will expire at 5:00 p.m., New York City time, on
, 1999, unless we decide to extend the exchange offer. We do
not intend to extend the exchange offer, although we reserve the
right to do so. If we determine to extend the exchange offer, we do
not intend to extend it beyond October 24, 1999.
Conditions to the Exchange Offer.......... The only conditions to completing the exchange offer are that it does
not violate applicable law or any applicable interpretation of the
staff of the Commission and that no injunction, order or decree has
been issued which would prohibit, prevent or materially impair our
ability to proceed with the exchange offer. See "The Exchange
Offer--Conditions."
Procedures for Tendering Old Notes Held in
the Form of Book-Entry Interests........ The old notes were issued as global securities in fully registered
form without coupons. Beneficial interests in the old notes that are
held by direct or indirect participants in The Depository Trust
Company through certificateless depositary interests are shown on,
and transfers of the old notes can be made only through, records
maintained in book-entry form by DTC with respect to its
participants.
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2
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If you are a holder of an old note held in the form of a book-entry
interest and you wish to tender your old note for exchange, you must
transmit to The Chase Manhattan Bank, as exchange agent, on or before
the expiration date, either:
o a properly completed and duly executed letter of transmittal,
or a facsimile of the letter of transmittal, together with any
other required documentation; or
o a computer-generated message transmitted by means of DTC's
Automated Tender Offer Program system and forming a part of a
confirmation of book-entry transfer in which you acknowledge
and agree to be bound by the terms of the letter of
transmittal.
The exchange agent must also receive on or before the expiration date
either:
o a timely confirmation of book-entry transfer of your old notes
into the exchange agent's account at DTC, in accordance with
the procedure for book-entry transfers described in this
prospectus under the heading "The Exchange Offer--Book-Entry
Transfer," or
o the documents necessary for compliance with the guaranteed
delivery procedures described below.
A letter of transmittal accompanies this prospectus. By executing the
letter of transmittal or delivering a computer-generated message
through DTC's Automated Tender Offer Program system, you will
represent to us that, among other things:
(1) the new notes to be acquired by you in the exchange offer
are being acquired in the ordinary course of your business;
(2) you are not engaging in and do not intend to engage in a
distribution of the new notes;
(3) you do not have an arrangement or understanding with any
person to participate in the distribution of the new notes;
and
(4) you are not our affiliate.
Procedures for Tendering Certificated Old
Notes................................... If you are a holder of book-entry interests in the old notes, you are
entitled to receive, in limited circumstances, in exchange for your
book-entry interests, certificated notes which are in equal principal
amounts to your book-entry interests. See "Description of the New
Notes--Form of New Notes." No certificated notes are issued and
outstanding as of the date of this prospectus. If you acquire
certificated old notes prior to the expiration of the exchange offer,
you must tender your certificated old notes in accordance with the
procedures described in this prospectus under the heading "The
Exchange Offer--Procedures for Tendering--Certificated Old Notes."
Special Procedures for
Beneficial Owner........................ If you are the beneficial owner of old notes that are registered in
the name of a broker, dealer, commercial bank, trust company or other
nominee and you wish to tender those old notes for exchange, you
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3
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<S> <C>
should promptly contact the registered holder and instruct that
person to tender on your behalf. If you wish to tender those notes
yourself, you must either make appropriate arrangements to register
ownership of the old notes in your name or obtain a properly
completed bond power from the registered holder. The transfer of
registered ownership may take considerable time and you may not be
able to complete the transfer prior to the expiration date. See "The
Exchange Offer--Procedures for Tendering--Procedures Applicable to
All Holders."
Guaranteed Delivery Procedures............ If you wish to tender your old notes and:
(1) they are not immediately available,
(2) time will not permit your old notes or other required
documents to reach the exchange agent before the expiration
of the exchange offer or
(3) you cannot complete the procedure for book-entry transfer on
a timely basis,
you may tender your old notes in accordance with the guaranteed
delivery procedures set forth in "The Exchange Offer--Procedures for
Tendering--Guaranteed Delivery Procedures."
Acceptance of Old Notes and Delivery of
New Notes............................... Subject to the conditions described in "The Exchange Offer" section
of this prospectus under the heading "Conditions," we will accept for
exchange any and all old notes which are properly tendered in the
exchange offer prior to 5:00 p.m. New York City time, on the
expiration date. The new notes to be issued to you in the exchange
offer will be delivered promptly following the expiration date. See
"The Exchange Offer--Terms of the Exchange Offer."
Withdrawal................................ You may withdraw the tender of your old notes at any time prior to
5:00 p.m., New York City time, on the expiration date. We will return
to you any old notes not accepted for exchange for any reason without
expense to you as promptly as we can after the expiration or
termination of the exchange offer.
Exchange Agent............................ The Chase Manhattan Bank is serving as the exchange agent in
connection with the exchange offer.
Consequences of Failure to
Exchange................................ If you do not participate in the exchange offer, upon completion of
the exchange offer, the liquidity of the market for your old notes
could be adversely affected. See "The Exchange Offer--Consequences of
Failure to Exchange."
Federal Income Tax
Consequences............................ The exchange of the old notes will not be a taxable event for federal
income tax purposes. See "Federal Income Tax Considerations."
Use of Proceeds........................... We will not receive any cash proceeds upon completion of the exchange
offer.
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4
<PAGE>
SUMMARY OF THE TERMS OF THE NEW NOTES
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Securities Offered........................ $200,000,000 principal amount of 10% Senior Notes due 2006.
Issuer.................................... Ames Department Stores, Inc.
Maturity.................................. April 15, 2006.
Interest Payment Dates.................... April 15 and October 15 of each year, beginning October 15, 1999.
Interest on the new notes that we will issue will accrue from the
last interest payment date on which interest was paid on the old
notes surrendered in exchange, or, if no interest has been paid on
the old notes, from April 27, 1999, which was the date of original
issuance of the old notes.
Optional Redemption....................... On or after April 15, 2003, we may redeem some or all of the notes at
any time at the redemption prices listed under the heading "Optional
Redemption" in the "Description of the New Notes" section of this
prospectus.
Before April 15, 2002, we may redeem up to 35% of the notes with the
proceeds of certain offerings of equity at 110% of principal amount
of the notes, plus accrued and unpaid interest. See the information
under the heading "Optional Redemption" in the "Description of the
New Notes" section of this prospectus.
Mandatory Offer to Repurchase............. If we sell certain assets or experience specific kinds of changes of
control, we must offer to purchase the notes at the prices listed
under the heading "Repurchase at the Option of Holders" in the
"Description of the New Notes" section of this prospectus.
Guarantees................................ The new notes will be unconditionally guaranteed on a senior
unsecured basis by each of our subsidiaries. The guarantee will be
equal in right of payment with all other senior unsecured
indebtedness and guarantees issued by our subsidiaries.
Ranking................................... The new notes will be:
o senior unsecured obligations of our company and will be equal
in right of payment with all of our other existing and future
senior unsecured debt; and
o effectively junior to all of our secured obligations to the
extent of the collateral securing those obligations, including
obligations under our bank credit facility.
On May 29, 1999, we had approximately $456.3 million of senior indebtedness
outstanding, inclusive of the notes and current maturities, none of which is
subordinate to the notes.
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5
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Basic Covenants of Indenture.............. The indenture contains covenants that, subject to specified
exceptions, restrict our ability and the ability of our restricted
subsidiaries to:
o borrow money;
o pay dividends on or purchase our stock or our restricted
subsidiaries' stock;
o make investments;
o use assets as security in other transactions;
o sell certain assets or merge with or into other companies; and
o enter into transactions with affiliates.
In the future, certain of our subsidiaries that we designate as
unrestricted subsidiaries will not be subject to the covenants in the
indenture. More detailed information with respect to these covenants
is set forth under the heading "Material Covenants" in the
"Description of New Notes" section of this prospectus.
Form of New Notes......................... The new notes will be represented by one or more global securities
deposited with The Chase Manhattan Bank for the benefit of DTC. You
will not receive new notes in certificated form unless one of the
events set forth under the heading "Description of the New
Notes--Form of New Notes" occurs. Instead, beneficial interests in
the new notes will be shown on, and transfers of these interests will
be effected only through, records maintained in book-entry form by
DTC with respect to its participants.
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6
<PAGE>
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL AND OPERATING DATA
Set forth below are summary historical financial, operating and other data
and summary unaudited pro forma financial and other data. The summary historical
statement of operations data for the years ended January 25, 1997, January 31,
1998 and January 30, 1999 and the quarters ended May 2, 1998 and May 1, 1999 and
the summary historical balance sheet data as of January 30, 1999 and May 1, 1999
have been derived from the audited and unaudited consolidated financial
statements of Ames. The summary unaudited pro forma financial data of Ames have
been derived from the audited consolidated financial statements of Ames, which
include the results of Hills for the month of January 1999, and the unaudited
consolidated statement of operations of Hills for the 11 months ended
December 31, 1998. You should read this summary in conjunction with the audited
and unaudited consolidated financial statements of Ames and accompanying notes
as well as with "Management's Discussion and Analysis of Financial Condition and
Results of Operations" included in Ames' Annual Report on Form 10-K for the
fiscal year ended January 30, 1999 and in Ames' Quarterly Report for the period
ended May 1, 1999.
<TABLE>
<CAPTION>
QUARTER ENDED
--------------------
FISCAL YEAR ENDED (UNAUDITED)
--------------------------------------- --------------------
JANUARY 25, JANUARY 31, JANUARY 30, MAY 2, MAY 1,
1997 1998 1999 1998 1999
----------- ----------- ----------- -------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales........................................ $ 2,161.7 $ 2,233.1 $ 2,507.2 $ 497.0 $ 829.1
Cost of merchandise sold......................... 1,565.7 1,603.6 1,786.2 358.6 587.0
Gross profit..................................... 596.0 629.5 721.0 138.4 242.1
Selling, general and administrative expenses..... 564.4 581.7 660.6 145.3 265.5
Operating income (loss).......................... 52.7 66.2 76.1 (2.6) (29.4)
Net income (loss)................................ 17.3(a) 34.5 33.8 (2.9) (26.4)
Ratio of earnings to fixed charges (b)........... 1.8x 2.8x 2.4x NA NA
OTHER FINANCIAL DATA:
EBITDA (c)....................................... $ 57.4 $ 72.9 $ 90.6 $ (0.7) $ (15.0)
EBITDAR (d)...................................... 107.0 128.1 153.9 13.6 10.7
Interest expense................................. 19.0 11.6 15.3 2.1 11.9
Depreciation and amortization expense, net....... 4.7 6.7 14.5 1.9 14.4
Rent expense..................................... 49.6 55.2 63.3 14.3 25.7
Capital expenditures............................. 19.8 32.9 51.6 9.0 34.2
Gross margin..................................... 27.6% 28.2% 28.2%(e) 27.9% 27.9%(f)
Selling, general and administrative expenses as a
percentage of net sales........................ 26.1% 26.0% 25.3%(e) 29.2% 27.4%(f)
PRO FORMA DATA (g):
Net sales........................................ $ 4,131.2
EBITDA (c)....................................... 123.2
SELECTED STORE DATA:
Same-store sales increase........................ 1.0% 2.1% 7.2% 12.9% 9.1%
Average sales per store.......................... $ 7.1 $ 7.5 $ 8.0(h) $ 1.7 $ 1.9(i)
Number of stores at end of period................ 303 298 456 298 454(j)
Total store square footage at end of period
(000s)......................................... 18,487 17,600 31,500 17,600 31,420
</TABLE>
- ------------------
(Footnotes appear on following page.)
7
<PAGE>
<TABLE>
<CAPTION>
AS OF JANUARY 30, 1999
----------------------------- AS OF MAY 1, 1999
PRO FORMA ------------------------------
AS ADJUSTED (k) HISTORICAL AS ADJUSTED (l)
HISTORICAL (UNAUDITED) (UNAUDITED) (UNAUDITED)
---------- --------------- ----------- ---------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash.................................................. $ 35.7 $ 371.3 $ 46.3 $ 150.8
Total assets.......................................... 1,483.4 1,825.6 1,653.8 1,758.3
Total debt, including current maturities.............. 305.5 460.6 536.2 453.6
Stockholders' equity.................................. 324.0 511.1 298.1 485.2
</TABLE>
- ------------------
(a) Includes an extraordinary loss, net of tax, of $1.4 million for the early
extinguishment of debt.
(b) For the purpose of this computation, earnings consist of income before
income taxes plus fixed charges (net of capitalized interest). Fixed charges
consist of interest expense on all indebtness and capitalized interest,
amortized premiums, discounts and capitalized expenses related to
indebtness, and one-third of rent expense on operating leases representing
that portion of rent expense deemed by us to be attributable to interest.
For the fiscal years ended January 28, 1995 and January 27, 1996, the ratio
of earning to fixed charges was 1.6x and 1.0x, respectively. Earnings were
inadequate to cover fixed charges for the quarters ended May 2, 1998 and
May 1, 1999. The amounts of additional earnings that would have been
required to cover fixed charges for such periods are $4.6 million and
$41.2 million, respectively.
(c) EBITDA, an acronym that stands for earnings before interest, taxes,
depreciation and amortization, is a widely accepted indicator of a company's
ability to service its debt. EBITDA is not intended to represent a measure
of financial performance under GAAP and you should not consider it as an
alternative to net income or as an indicator of our operating performance or
cash flows as a measure of liquidity. EBITDA is included because it is a
basis upon which we assess our ability to service our debt. However, other
companies in our industry may present EBITDA differently than we do.
(d) EBITDAR represents EBITDA, as defined above, plus rent expense.
(e) Data for the fiscal year ended January 30, 1999 exclude Hills operations for
the month of January 1999 and various other acquisition related costs and
charges. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" contained in our Annual Report on Form 10-K for
the fiscal year ended January 30, 1999.
(f) Data for the quarter ended May 1, 1999 exclude the results of operations for
the Hills stores that were being operated by Gordon Brothers and The Nassi
Group pursuant to their agreement with us and certain other expenses
associated with converting 50 Hills Stores. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included in our
Quarterly Report on Form 10-Q for the period ended May 1, 1999.
(g) Pro forma for the Hills acquisition as if it had occurred on February 1,
1998.
(h) Average sales per store for the fiscal year ended January 30, 1999 excludes
155 Hills stores acquired in December 1998.
(i) Average sales per store for the quarter ended May 1, 1999 excludes 50 newly
converted Hills stores, 103 additional Hills stores that were being operated
by Gordon Brothers and The Nassi Group and the new Ames store in
Cinnaminson, N.J.
(j) The number of stores as of May 1, 1999 includes 300 existing Ames stores, 50
newly converted Hills stores, 103 additional Hills stores that were being
operated by Gordon Brothers and The Nassi Group and the new Ames store in
Cinnaminson, N.J.
(k) Pro forma for the sale of the old notes and the receipt and application of
the net proceeds and as adjusted for the recent public sale on May 24, 1999
of 5.1 million shares of our common stock and the receipt of approximately
$187.1 million of net proceeds therefrom.
(l) As adjusted for the public sale of 5.1 million shares of our common stock
and the receipt of approximately $187.1 million of net proceeds therefrom.
8
<PAGE>
RISK FACTORS
You should carefully consider the risks described below before making a
decision to tender your old notes for exchange. Any reference to "notes" in this
prospectus refers to both old notes and new notes, unless the context otherwise
requires.
FACTORS RELATING TO OUR COMPANY
OUR HIGH LEVEL OF DEBT MAY ADVERSELY AFFECT OUR FINANCIAL AND OPERATING
FLEXIBILITY.
We will continue to have substantial debt and debt service requirements,
including obligations under our bank credit facility, which permits us to borrow
up to $650.0 million on a revolving basis. For the quarter ended May 1, 1999,
our earnings were insufficient to cover fixed charges by $41.2 million. The
following chart shows basic financial information about us and gives pro forma
effect to our recent public sale of common stock and the application of the net
proceeds therefrom:
PRO FORMA AS OF
MAY 1, 1999
---------------------
(DOLLARS IN MILLIONS,
UNAUDITED)
Total debt............................................ $ 453.6
Stockholders' equity.................................. $ 485.2
Net debt to equity ratio (inclusive of cash and cash
equivalents)........................................ 0.62x
Our highly leveraged financial position has important consequences for us,
including:
o our ability to borrow additional amounts for working capital, debt
service requirements, capital expenditures or acquisitions may be
limited;
o a substantial portion of our cash flow from operations will be required
to make debt service payments;
o our ability to capitalize on significant business opportunities may be
limited and our flexibility to react to changes in competitive pressures
and general economic conditions may be reduced;
o we could be at a competitive disadvantage with respect to less highly
leveraged companies with which we compete; and
o we may be more vulnerable in the event of a downturn in the economy or a
disruption in our business.
We expect to be able to repay the balance of our indebtedness and meet our
other obligations through cash generated from operations. However, we may need
to obtain new credit arrangements and other sources of financing in order to
meet our future obligations and working capital requirements and to fund our
future capital expenditures. You should be aware that our ability to repay or
refinance our outstanding debt and to fund our capital expenditures and other
obligations depends on our successful financial and operating performance,
including the future performance of the 151 former Hills stores that we are
converting to Ames stores. We cannot assure you of our future performance, which
depends upon a number of factors, many of which are beyond our control. These
factors include:
o deteriorating general economic conditions in the United States,
particularly in the regions in which our stores are located;
o decreased consumer spending, particularly among those consumers who
comprise our primary customer base;
o increased competition from other discount retailers, including major
national chains, as well as from merchandise offerings on the Internet;
o severe adverse weather conditions during the winter months, particularly
during the peak Christmas holiday shopping season; and
9
<PAGE>
o failure of our merchandise suppliers to make their computer systems year
2000 compliant in a timely manner.
These and other factors, which are discussed more fully below, could have
an adverse effect on the marketability, price and future value of the notes and
our ability to pay interest on and the principal of the notes.
OUR CONVERSION, INTEGRATION AND OPERATION OF THE FORMER HILLS STORES MAY NOT
SUCCEED.
We are converting 151 of the former Hills stores to Ames stores and closing
the four remaining Hills stores that we acquired. The integration of the
converted Hills stores into the Ames retail chain will require substantial
management, logistical and financial resources which might otherwise be devoted
to our existing operations. The Hills acquisition is larger than any store
acquisition that we have made under our current management and represents a 50%
increase in the total number of our stores and a 50% increase in our employee
work force. Although we believe our management information, merchandise
purchasing and distribution systems are capable of accommodating this growth, a
failure of these systems to effectively accommodate the demands of the
additional stores could have a material adverse effect on our results of
operations. We will have to train approximately 14,800 former Hills employees to
adapt to our own operating procedures and systems. In addition, in the
approximately 94 communities previously served by Hills in which we have not
previously had a retail presence, we will have to establish consumer recognition
of Ames as a distinct and preferred source of value and customer service
superior to that previously associated with the Hills stores.
THE HILLS ACQUISITION WILL ADVERSELY IMPACT OUR NEAR TERM RESULTS.
Shortly after the acquisition of Hills, we began the first of a series of
liquidation sales in the Hills stores and, in February 1999, we began remodeling
50 of the 151 Hills stores that we are converting to Ames stores. An additional
54 Hills stores will be converted by July 1999 and the remaining 47 stores will
be converted by September 1999. A typical store conversion takes seven to eight
weeks, during which the store conducts no customer business. The operation of
the 155 acquired Hills stores prior to their conversion or final closure,
including the liquidation of their inventory, as well as the conversion of all
but four of those stores into Ames stores, will adversely affect our cash flow
and net income at least through the third quarter of fiscal 1999. We expect to
incur approximately $63.0 million of pre-opening expenses with respect to the
151 Hills stores that we are converting to Ames stores. We expect the Hills
acquisition to have a positive impact on our cash flow and earnings beginning in
the fourth quarter of fiscal 1999, but we cannot assure you that our
expectations will prove to have been correct.
WE FACE SIGNIFICANT COMPETITION FROM OTHER DISCOUNT RETAILERS.
We operate in an extremely competitive environment. In recent years, many
large discount retailers, including Hills and Caldor, have succumbed to the
intense effects of competition from both national and regional chains. Although
Ames is the largest regional discount retailer in the United States, we are
still considerably smaller in terms of number of stores, sales and earnings than
the three leading national chains: Wal-Mart, Kmart and Target Stores. Each of
these chains, as well as other regional operators such as Bradlees, currently
operates stores within our regional market and competes with us for customers
and potential store locations. We anticipate a further increase in competition
from those national discount store chains. Our merchandising focus is primarily
directed to consumers who we believe are underserved by the major national
chains and our merchandising strategy and smaller store size are intended to
enable us to compete more effectively with these chains. Nevertheless, we remain
vulnerable to the marketing power and high level of consumer recognition of the
major national discount store chains.
OUR BANK CREDIT AGREEMENT RESTRICTS OUR FLEXIBILITY.
Our bank credit agreement contains a number of significant provisions that,
among other things, restrict our ability to:
o sell assets outside the ordinary course of business;
10
<PAGE>
o incur more indebtedness;
o grant or incur liens on our assets;
o repay certain indebtedness;
o pay dividends;
o make certain investments or acquisitions;
o repurchase or redeem capital stock;
o engage in mergers or consolidations; and
o engage in certain transactions with our affiliates.
These restrictions could hurt our ability to finance our future operations
or capital needs or make acquisitions that may be in our interest. In addition,
our bank credit agreement requires that we achieve a specified minimum level of
consolidated earnings before interest, taxes, depreciation and amortization for
the fiscal quarter ending April 29, 2000, and that for fiscal quarters beginning
after April 30, 2000, we achieve a specified minimum ratio of consolidated
earnings before interest, taxes, depreciation and amortization to fixed charges.
Our ability to comply with these financial requirements may be affected by
events beyond our control, and our inability to comply with them could result in
a default under the bank credit agreement, in which event the lenders could
elect to:
o declare all our outstanding borrowings, as well as accrued interest and
fees, to be due and payable;
o require us to apply all of our available cash to repay those borrowings.
If we were unable to repay those borrowings when due, the lenders under our
bank credit facility could proceed against their collateral, which includes a
first priority lien on substantially all of our assets and a first priority
security interest in the capital stock of our subsidiaries. See "Description of
Other Indebtedness."
WE ARE VULNERABLE TO ADVERSE WINTER WEATHER AND REGIONAL ECONOMIC DOWNTURNS.
Our stores, including those acquired from Hills, are concentrated in a
geographic region that is subject to severe winter weather conditions. Frequent
or unusually heavy snow or ice storms in our markets, particularly during the
important Christmas selling season, could have a material adverse effect on our
sales and earnings and could adversely impact our ability to make scheduled
interest payments on our outstanding indebtedness, including the notes.
In addition, the geographic concentration of our stores increases our
vulnerability to regional economic downturns. Although we believe our emphasis
on low prices and superior customer value makes us better able than most other
large retailers to withstand periods of increased unemployment, we cannot assure
you that we would not be materially impacted by a protracted or severe regional
economic downturn.
THE LOSS OF OUR KEY EXECUTIVES COULD HAVE A SIGNIFICANT IMPACT ON OUR COMPANY.
Our success over the past five years has been the result of a merchandising
and marketing strategy conceived and implemented by our senior management team
and particularly our President and Chief Executive Officer, Joseph R. Ettore,
our Executive Vice President and Chief Operating Officer, Denis T. Lemire, and
our Executive Vice President and Chief Financial and Administrative Officer,
Rolando de Aguiar. The loss of the services of Messrs. Ettore, Lemire and de
Aguiar could have a material adverse effect on our company. We have employment
agreements with these executives that continue until May 2004, May 2003 and May
2003, respectively.
11
<PAGE>
OUR ABILITY TO USE OUR NET OPERATING LOSS CARRYFORWARDS COULD BE LIMITED.
At January 30, 1999, we had net operating loss carryforwards totalling
approximately $444.0 million available to reduce our future federal income tax
liabilities. This amount is exclusive of net operating loss carryforwards of
Hills. Our ability to use these loss carryforwards to reduce our future federal
income tax liabilities could be limited if we were to experience more than a 50%
change in ownership over any three-year period, all as defined and governed by
section 382 of the Internal Revenue Code. For purposes of determining if a 50%
change in ownership occurs within any three-year period, any public stock
offerings during that period (such as the proposed public offering of our common
stock) are taken into account in accordance with applicable regulations. If the
benefits of these loss carryforwards were so limited, our earnings and cash
resources could be materially and adversely affected.
In addition to Ames' loss carryforwards, Hills also has loss and tax credit
carryforwards for federal income tax purposes. However, the Hills carryforwards
are subject to severe limitations on their future utilization as a result of the
recent change in ownership of Hills. See Note 10 to Ames' audited consolidated
financial statements included in our Annual Report on Form 10-K for the fiscal
year ended January 30, 1999.
SOME OF OUR VENDORS' COMPUTER SYSTEMS MAY NOT BE YEAR 2000 COMPLIANT.
In operating our business, we are dependent on information technology and
process control systems that employ computers as well as embedded
microprocessors. We also depend on the proper functioning of the business
systems of third parties, particularly the more than 3,200 vendors from whom we
purchase the merchandise sold in our stores. Many computer systems and
microprocessors can only process dates in which the year is represented by two
digits. As a result, some of these systems and processors may interpret "00"
incorrectly as the year 1900 instead of the year 2000, in which event they could
malfunction or become inoperable after December 31, 1999. Systems and processors
that can properly recognize the year 2000 are referred to as "year 2000
compliant."
We have assessed our own business and management information systems and
believe that those of our systems that are material to our operations are, or
before the end of 1999 will be, year 2000 compliant, although we cannot assure
you that our assessment will prove to be correct. We also have taken steps to
determine whether our principal vendors are or expect to be year 2000 compliant
by the end of this year. Based on our inquiries, we are reasonably comfortable
that our major vendors, whose products collectively account for approximately
80% of our sales, are or will be year 2000 compliant. However, we cannot assure
you of the year 2000 compliance of the remaining vendors who do business with
us, and it is possible that a number of those vendors may encounter problems
with their systems after the end of this year. If, however, one or more of these
vendors is unable to produce or ship merchandise to us as a result of a computer
system malfunction, we believe that there are adequate alternative sources for
similar merchandise.
FACTORS RELATING TO THE NOTES
OUR SECURED LENDERS HAVE A PRIOR CLAIM ON OUR ASSETS.
The old notes are and the new notes will be senior obligations of Ames and
that rank equally with approximately $50.9 million of outstanding 12 1/2% Senior
Notes due 2003 previously issued by Hills and assumed by us as a consequence of
the Hills acquisition. However, the notes are not secured by any of our assets.
The lenders under our bank credit facility, which permits up to $650.0 million
of borrowings from time to time on a revolving basis through June 2002, have
liens on the outstanding shares of our subsidiaries, our inventory, accounts
receivable, headquarters building and other major assets. Therefore, these
lenders, and the holders of any other secured debt that we may incur in the
future, will have claims with respect to our assets that are prior to the claims
of holders of the notes.
OUR HOLDING COMPANY STRUCTURE MAY LIMIT YOUR RECOURSE TO OUR ASSETS.
Substantially all of our operating assets, including our merchandise
inventories and leasehold interests in our stores, are held in subsidiaries and
we will rely principally on cash generated from the operations of those
subsidiaries to pay the principal of and interest on the notes. Your right as a
holder of notes to
12
<PAGE>
participate in the assets of any subsidiary upon its liquidation or
reorganization will be effectively junior to the claims of that subsidiary's own
creditors, including the lenders under our bank credit facility and trade
creditors, whether or not their claims are secured by liens on those assets,
particularly if the guarantees of the notes are voided as described below.
THE GUARANTEES OF THE NOTES BY OUR SUBSIDIARIES MAY BE INADEQUATE.
Although each of our subsidiaries has guaranteed our obligation to pay the
notes, the available assets of those subsidiaries may be insufficient for these
purposes. Those subsidiaries are direct borrowers under, or guarantors of, our
bank credit facility and the lenders under that facility have liens on most of
their assets. Accordingly, as is the case with Ames itself, these lenders will
have claims with respect to the assets of our subsidiaries that are prior to the
claims of holders of the notes.
FEDERAL AND STATE STATUTES PERMIT COURTS, UNDER SPECIFIC CIRCUMSTANCES, TO
VOID GUARANTEES AND REQUIRE THE RETURN OF PAYMENTS RECEIVED FROM GUARANTORS.
Under the U.S. Bankruptcy Code and comparable provisions of state
fraudulent transfer laws, a court has the power to void a guarantee, or to
subordinate claims in respect of a guarantee to all other debts of the
guarantor, if, among other things, at the time the guarantor incurred the
indebtedness evidenced by its guarantee, it received less than reasonably
equivalent value or fair consideration for the incurrence of the guarantee, and
either
o was insolvent or rendered insolvent by reason of that incurrence; or
o was engaged in a business or transaction for which its remaining assets
constituted unreasonably small capital; or
o intended to incur, or believed that it would incur, debts beyond its
ability to pay as those debts mature.
In addition, the court may void any payment by that guarantor pursuant to its
guarantee and require the return of that payment to the guarantor or to a fund
for the benefit of the creditors of the guarantor.
The measures of insolvency for these purposes will vary depending upon the
law applied in any proceeding to determine whether a fraudulent transfer has
occurred. Generally, however, a guarantor would be considered insolvent if:
o the sum of its debts, including contingent liabilities, were greater than
the fair saleable value of all of its assets; or
o the present fair saleable value of its assets were less than the amount
that would be required to pay its probable liability on its existing
debts, including contingent liabilities, as they become absolute and
mature; or
o it could not pay its debts as they become due.
On the basis of our historical financial results, recent operating history
and other factors, we believe that each subsidiary that has guaranteed the
notes, after giving effect to that guarantee, will not be insolvent, will not
have unreasonably small capital for the business in which it is engaged and will
not have incurred debts beyond its ability to pay as those debts mature.
However, we cannot assure you of the particular standard that might be applied
by a court in making its determinations or that a court would agree with our
conclusions in this regard.
WE MAY NOT BE ABLE TO PURCHASE YOUR NOTES UPON A CHANGE OF CONTROL.
Upon the occurrence of specified change of control events, we are required
to offer to purchase each holder's notes at a price of 101% of their principal
amount plus accrued interest. We may not have sufficient financial resources to
purchase all of the notes that holders may tender to us upon a change of
control. The occurrence of a change of control would also constitute an event of
default under our bank credit agreement. Our bank lenders also have the right to
prohibit any such purchase, in which event we would be in default on
13
<PAGE>
the notes. In addition, important corporate events, such as leveraged
recapitalizations that would increase the level of our indebtedness, would not
constitute a "change of control" under the terms of the indenture governing the
notes. See "Description of the New Notes--Repurchase at the Option of Holders."
YOU MAY NOT BE ABLE TO SELL YOUR NOTES EASILY.
There is no established trading market for the notes and we cannot assure
you that an active or liquid trading market will develop for the notes or any
new notes that may be issued in exchange for the notes. Each initial purchaser
has advised us that it currently intends to make a market in the notes and the
new notes that may be issued in exchange for the notes. However, the initial
purchasers are not obligated to do so and may discontinue their market-making
activities at any time without notice. The notes are expected to be eligible for
trading in The PORTALSM Market, a subsidiary of The Nasdaq Stock Market, Inc.
However, we do not intend to apply for listing of the notes, or the new notes
that may be issued in exchange for the notes, on any securities exchange or
automated dealer quotation system. The liquidity of any market for the notes
will depend upon the number of holders of the notes, our own financial
performance, the market for similar securities, the interest of securities
dealers in making a market in the notes and other factors.
MARKET TRADING PRICES FOR THE NOTES MAY BE VOLATILE.
Historically, the market for high-yield debt securities, such as the notes,
has been subject to disruptions that have caused substantial volatility in the
prices of those securities. The trading price of the notes also could fluctuate
in response to such factors as period-to-period variations in our operating
results, developments in the retailing industry in general and the discount
retailing industry in particular, and changes in securities analysts'
recommendations regarding our securities.
LEGAL RESTRICTIONS ON THE TRANSFER OF THE NOTES MAY LIMIT THEIR LIQUIDITY.
The notes have not been registered under the Securities Act or any state
securities laws and, unless so registered, may not be offered or sold except to
qualified institutional buyers in accordance with Rule 144A under the Securities
Act or pursuant to another exemption from, or in a transaction not subject to,
the registration requirements of the Securities Act and applicable state
securities laws. These restrictions on transfer of the notes are described in
greater detail in the "Notice to Investors" section of this prospectus.
14
<PAGE>
USE OF PROCEEDS
This exchange offer does not involve the sale of securities for cash and,
accordingly, we will not receive any proceeds from the issuance of the new notes
in exchange for the old notes. The net proceeds from the sale of old notes were
approximately $193.4 million, after deducting the discount to the initial
purchasers and other offering expenses that were payable by us. We used these
monies to reduce outstanding borrowings under our bank credit facility. We used
a portion of those borrowings to finance the Hills and Caldor acquisitions. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources" included in our Annual Report on
Form 10-K for the fiscal year ended January 30, 1999 and "Description of Other
Indebtedness" included elsewhere in this prospectus.
CAPITALIZATION
The following table sets forth our capitalization as of May 1, 1999. Our
capitalization is presented on a pro forma basis to reflect the recent sale of
5.1 million shares of our common stock and the application of the net proceeds
therefrom. You should read this capitalization table in conjunction with the
unaudited consolidated condensed financial statements and accompanying notes and
the information included in our Quarterly Report on Form 10-Q for the period
ended May 1, 1999.
<TABLE>
<CAPTION>
PRO FORMA
AS OF MAY 1, 1999
(UNAUDITED)
----------------------
(DOLLARS IN MILLIONS)
<S> <C>
Cash and temporary investments............................................................. $ 150.8
--------
--------
Current maturities of long-term debt....................................................... $ 17.8
--------
--------
Long-term debt:
Bank credit facility.................................................................. $ --
12.5% Senior Notes due 2003........................................................... 50.9
10% Senior Notes due 2006............................................................. 200.0
Capital lease and financing obligations............................................... 184.9
--------
Total long-term debt............................................................. 435.8
--------
Stockholders' equity:
Preferred stock--authorized 3,000,000 shares; no shares issued or outstanding......... --
Common stock--authorized 40,000,000 shares; 29,137,949 shares issued and outstanding,
pro forma............................................................................ 0.3
Additional paid-in capital............................................................ 424.2
Treasury stock--at cost--79,495 shares of common stock................................ (0.9)
Retained earnings..................................................................... 61.6
--------
Total stockholders' equity....................................................... 485.2
--------
Total capitalization........................................................... $ 921.0
--------
--------
</TABLE>
15
<PAGE>
UNAUDITED PRO FORMA FINANCIAL DATA
The following unaudited pro forma combined condensed consolidated statement
of operations data have been derived from the audited consolidated financial
statements of Ames for the fiscal year ended January 30, 1999, which include the
results of Hills for the month of January 1999, and from the unaudited
consolidated statement of operations of Hills for the 11 months ended December
31, 1998. The pro forma data give effect to the Hills acquisition as if it had
occurred at the beginning of the fiscal year ended January 30, 1999.
The pro forma data reflect pro forma adjustments that are based upon
available information and certain assumptions that Ames believes are reasonable.
These data are provided for informational purposes only and are not necessarily
indicative of what Ames' actual results of operations would have been had the
Hills acquisition been consummated at the beginning of fiscal 1998, or the
results of operations Ames may obtain in the future. In preparing these pro
forma data, Ames has utilized what it believes are reasonable methods to conform
the bases of presentation of Ames' and Hills' historical financial statements.
The Hills acquisition has been accounted for by the purchase method of
accounting. The purchase price has been allocated to assets acquired and
liabilities assumed based on a preliminary determination of respective fair
market values at the date of acquisition and is subject to adjustment. Ames does
not expect that differences between the preliminary and final allocations will
have a material impact on Ames' pro forma results of operations.
You should read the following table in conjunction with the historical
audited consolidated financial statements and accompanying notes of Ames and
Hills incorporated by reference in this prospectus and with the information
contained in Ames' Annual Report on Form 10-K for the fiscal year ended January
30, 1999.
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FISCAL YEAR ENDED JANUARY 30, 1999
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HILLS
AMES 11 MONTHS ENDED PRO FORMA PRO FORMA
FISCAL YEAR ENDED DECEMBER 31, 1998 ADJUSTMENTS TOTAL
JANUARY 30, 1999 (UNAUDITED) (UNAUDITED) (UNAUDITED)
--------------------- ------------------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales............................... $ 2,507.2 $ 1,624.0 $ -- $ 4,131.2
Cost of merchandise sold................ 1,786.2 1,214.9 (9.6)(a) 2,991.5
Selling, general and administrative
expenses.............................. 660.6 376.5 20.0 (b) 1,057.1
Depreciation and amortization expense,
net................................... 14.5 43.9 7.2 (c)(d) 65.6
Other (income) expense.................. (22.0) -- (10.4)(b) (32.4)(e)
Interest expense, net................... 15.3 49.2 (6.9)(f) 57.6
--------- --------- ----- ---------
Income (loss) before income taxes....... 52.6 (60.5) (0.3) (8.2)
Income tax (provision) benefit.......... (18.8) (49.6) 21.7 (g) (46.7)
--------- --------- ----- ---------
Net income (loss)....................... $ 33.8 $ (110.1) $21.4 $ (54.9)(h)
--------- --------- ----- ---------
--------- --------- ----- ---------
Net loss per common share:
Basic and diluted net loss per common
share.............................. $ (2.39)(h)
---------
---------
Shares outstanding used in basic and
diluted net loss per common share
calculation (000s)................. 23,010
---------
---------
</TABLE>
- ------------------
(Footnotes appear on following page.)
16
<PAGE>
- ------------------
Footnotes:
(a) Approximately $9.6 million of Hills' buying expenses have been reclassified
from cost of merchandise sold to selling, general and administrative
expenses to conform to Ames' presentation. See footnote (b) below.
(b) Certain items of Hills' income have been reclassified from, and certain of
Hills' expenses have been reclassified to, selling, general and
administrative expense to conform to Ames' presentation as follows:
<TABLE>
<CAPTION>
FISCAL YEAR
ENDED
JANUARY 30, 1999
----------------
(IN MILLIONS)
<S> <C>
Leased department income reclassified to
leased department and other income....................
$ 10.4
Buying expenses reclassified from cost of
merchandise sold...................................... 9.6
------
Total adjustments.................................. $ 20.0
------
------
</TABLE>
(c) Depreciation and amortization expense, net has been adjusted to reflect the
fair market revaluation of Hills' capital leases and beneficial lease
rights.
(d) Hills' amortization of reorganization value in excess of revalued assets has
been eliminated and amortization of purchase price in excess of assets
acquired has been added, using a 25 year amortization period.
(e) Other income presented is net of Ames' store closing charges of
$8.2 million.
(f) Interest expense has been adjusted as follows:
<TABLE>
<CAPTION>
FISCAL YEAR
ENDED
JANUARY 30, 1999
----------------
(IN MILLIONS)
<S> <C>
Interest eliminated on the $144.1 million of Hills'
12 1/2% Senior Notes purchased by Ames................ $(16.7)
The elimination of amortized fees on the previous
revolving credit facilities of each of Hills and Ames
offset by the amortization of fees associated with
Ames' new bank credit facility........................ (0.5)
Additional interest costs recorded relating to the
purchase of Hills..................................... 11.1
Change in interest on revalued debt..................... (0.8)
------
Total adjustments.................................. $ (6.9)
------
------
</TABLE>
(g) Income taxes were adjusted to record a benefit on the pro forma combined
loss at Ames' historical rate, offset by a write-down of Hills deferred tax
assets of approximately $49.6 million (which is net of a reversal of
approximately $5.9 million of accrued tax liabilities). This net deferred
tax assets write-down was previously recorded by Hills, as of October 1998,
because Hills' management determined that these tax assets were not
realizable and, accordingly, recorded a write-down of the assets as a
component of the tax provision. The impact of recording the write-down of
these tax assets has not been eliminated for pro forma purposes.
(h) The pro forma net loss reflects the previously recorded write-down of Hills'
net deferred tax assets as discussed in note (g). Excluding the write-down
of the Hills net deferred tax assets recorded as of October 31, 1998, pro
forma net loss and basic and diluted net loss per common share would have
been $5.3 million, and $0.23, respectively.
17
<PAGE>
DESCRIPTION OF OTHER INDEBTEDNESS
BANK CREDIT FACILITY
Ames and three of its principal subsidiaries are parties to a credit
agreement with a syndicate of banks and other financial institutions for which
Bank of America NT&SA acts as administrative agent. The credit agreement
provides for a $650.0 million revolving credit facility, including a
$150 million sub-limit for standby letters of credit, and expires June 30, 2002.
Borrowings bear interest at variable rates based on a margin over the
administrative agent's base rate or LIBOR. Ames also pays commitment fees on the
unused portions of the credit facility. The weighted average interest rate on
Ames' outstanding borrowings for the quarter ended May 1, 1999 was 7.7%.
Ames' obligations under the credit agreement are secured by liens on the
outstanding shares of the stock of its subsidiaries, all of Ames' inventory,
accounts receivable, headquarters building, other real properties and other
major assets. Additionally, Ames and each of Ames' direct and indirect
subsidiaries unconditionally guarantee the obligations of the Ames subsidiaries
that are the borrowers under the credit agreement.
The credit agreement provides for various covenants that are customary for
facilities of this type, including, but not limited to, negative covenants
regarding the incurrence of additional indebtedness, asset sales, dividends and
purchases of stock, transactions with affiliates, the incurrence of liens, the
repayment of certain indebtedness, the making of certain investments or
acquisitions, and mergers and consolidations, as well as the maintenance of
various financial ratios.
Other than a covenant requiring Ames to maintain a minimum availability
level of $100.0 million at all times during 1999 and thereafter, the financial
ratio covenants will not be applicable until the fiscal year beginning
January 30, 2000. These covenants include, but are not limited to, achieving a
specified minimum level of consolidated earnings before interest, taxes,
depreciation and amortization for the fiscal quarter ending April 29, 2000 and
achieving a specified minimum ratio of consolidated earnings before interest,
taxes, depreciation and amortization to fixed charges for fiscal quarters
beginning after April 30, 2000.
As of May 29, 1999, no borrowings (exclusive of letters of credit) were
outstanding under the credit agreement.
12 1/2% SENIOR NOTES DUE 2003
In connection with the Hills acquisition, Ames succeeded to approximately
$50.9 million of 12 1/2% Senior Notes due 2003 that previously were obligations
of Hills. Concurrent with the acquisition, the indenture relating to these notes
was amended to delete all restrictive and financial covenants relating to such
notes. These notes cannot be redeemed by Ames prior to maturity.
18
<PAGE>
THE EXCHANGE OFFER
PURPOSE AND EFFECT
We issued the old notes on April 27, 1999 in a private placement. In
connection with this issuance, we entered into a registration rights agreement
which requires that we file a registration statement under the Securities Act
with respect to the registered notes that we are issuing in the exchange offer
and, upon the effectiveness of the registration statement, offer to you the
opportunity to exchange your notes for a like principal amount of registered
notes. We will issue registered notes without a restrictive legend and, except
as set forth below, they may be reoffered and resold by you without registration
under the Securities Act. After we complete the exchange offer, our obligations
with respect to the registration of the old notes and the registered notes will
terminate, except as provided in the last paragraph of this section. A copy of
the indenture relating to the notes and the registration rights agreement have
been filed as exhibits to the registration statement of which this prospectus is
a part. As a result of the filing and the effectiveness of the registration
statement, of which this prospectus is a part assuming we complete the exchange
offer by October 24, 1999, certain prospective increases in the interest rate on
the old notes provided for in the registration rights agreement will not occur.
Based on an interpretation by the staff of the Commission set forth in
no-action letters issued to third parties, if you are not our "affiliate" within
the meaning of Rule 405 under the Securities Act or a broker-dealer referred to
in the next paragraph, we believe that you may offer for resale, resell or
otherwise transfer the registered notes that we are issuing to you in the
exchange offer, without compliance with the registration and prospectus delivery
provisions of the Securities Act. This interpretation, however, is based on your
representation to us that:
(1) the registered notes that we are issuing to you in the exchange
offer are acquired in the ordinary course of your business;
(2) you are not engaging in and do not intend to engage in a
distribution of the registered notes that we are issuing to you in
the exchange offer; and
(3) you have no arrangement or understanding with any person to
participate in the distribution of the registered notes that we
are issuing to you in the exchange offer.
If you tender in the exchange offer for the purpose of participating in a
distribution of the registered notes that we are issuing to you in the exchange
offer, you cannot rely on this interpretation by the staff of the Commission.
Under those circumstances, you must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with a secondary
resale transaction. Each broker-dealer that receives registered notes in the
exchange offer for its own account in exchange for old notes that were acquired
by the broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resales of those
registered notes. See "Plan of Distribution."
If you will not receive freely tradeable registered notes in the exchange
offer or are not eligible to participate in the exchange offer, you can elect,
by indicating on the letter of transmittal and providing the additional
necessary information, to have your old notes registered in a "shelf"
registration statement on an appropriate form pursuant to Rule 415 under the
Securities Act. In the event that we are obligated to file a shelf registration
statement, we will be required to keep the shelf registration statement
effective for a period of two years or for a shorter period that will terminate
when all of the old notes covered by the shelf registration statement have been
sold pursuant to the shelf registration statement. Other than as set forth in
this paragraph, you will not have the right to require us to register your old
notes under the Securities Act. See "--Procedures for Tendering."
CONSEQUENCES OF FAILURE TO EXCHANGE
After we complete the exchange offer, if you have not tendered your old
notes, you will not have any further registration rights, except as set forth
above. Your old notes will continue to be subject to various restrictions on
transfer. Therefore, the liquidity of the market for your old notes could be
adversely affected upon completion of the exchange offer if you do not
participate in the exchange offer.
19
<PAGE>
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this prospectus
and in the letter of transmittal, we will accept all old notes validly tendered
and not withdrawn prior to 5:00 p.m., New York City time, on the expiration
date. After the trustee authenticates the registered notes, we will issue $1,000
principal amount of registered notes in exchange for each $1,000 principal
amount of old notes we accept in the exchange offer. You may tender some or all
of your old notes pursuant to the exchange offer. However, old notes may be
tendered only in integral multiples of $1,000 in principal amount.
The form and terms of the registered notes are substantially the same as
the form and terms of the old notes, except that the registered notes that we
are issuing in the exchange offer have been registered under the Securities Act
and will not bear legends restricting their transfer. We will issue the
registered notes pursuant to, and they will be entitled to the benefits of, the
indenture. The indenture also governs the old notes. The registered notes and
the old notes will be deemed one issue of notes under the indenture.
As of the date of this prospectus, $200.0 million aggregate principal
amount of the old notes is outstanding. This prospectus, together with the
letter of transmittal, is being sent to all registered holders and to others
believed to have beneficial interests in the old notes. You do not have any
appraisal or dissenters' rights in connection with the exchange offer under the
General Corporation Law of the State of Delaware or the indenture. We intend to
conduct the exchange offer in accordance with the applicable requirements of the
Exchange Act and the rules and regulations of the Commission promulgated under
the Exchange Act.
We will be deemed to have accepted validly tendered old notes when, as, and
if we have given oral or written notice of our acceptance to the exchange agent.
The exchange agent will receive the new notes from us and deliver them to the
tendering holders. If we do not accept any tendered notes because of an invalid
tender, the occurrence of various other events set forth in this prospectus or
otherwise, we will return certificates for any unaccepted old notes of our cost,
to the tendering holder as promptly as practicable after the expiration date.
You will not be required to pay brokerage commissions or fees or, except as
set forth below under "--Transfer Taxes," transfer taxes with respect to the
exchange of your old notes in the exchange offer. We will pay all charges and
expenses, other than specific applicable taxes, in connection with the exchange
offer. See "--Fees and Expenses" below.
EXPIRATION DATE; AMENDMENTS
The exchange offer will expire at 5:00 p.m., New York City time, on
, 1999, unless we determine, in our sole discretion, to
extend the exchange offer, in which case, it will expire at the later date and
time to which it is extended. We do not intend to extend the exchange offer,
although we reserve the right to do so. If we determine to extend the exchange
offer, we do not intend to extend it beyond October 24, 1999. If we extend the
exchange offer, we will give oral or written notice of the extension to the
exchange agent and give each registered holder notice by means of a press
release or other public announcement of any extension prior to 9:00 a.m., New
York City time, on the next business day after the scheduled expiration date.
We also reserve the right, in our sole discretion,
(1) to delay accepting any old notes or, if any of the conditions set
forth below under "--Conditions" have not been satisfied or
waived, to terminate the exchange offer; or
(2) to amend the terms of the exchange offer in any manner, by giving
oral or written notice of such delay or termination to the
exchange agent, and by complying with Rule 14e-l(d) under the
Exchange Act to the extent that rule applies.
We acknowledge and undertake to comply with the provisions of
Rule 14e-l(c) under the Exchange Act, which requires us to pay the consideration
offered, or return the old notes surrendered for exchange, promptly after the
termination or withdrawal of the exchange offer. We will notify you as promptly
as we can of any extension, termination or amendment.
20
<PAGE>
PROCEDURES FOR TENDERING
BOOK-ENTRY INTERESTS
The old notes were issued as global securities in fully registered form
without interest coupons. Beneficial interests in the global securities, held by
direct or indirect participants in DTC, are shown on, and transfers of these
interests are effected only through, records maintained in book-entry form by
DTC with respect to its participants.
If you hold your old notes in the form of book-entry interests and you wish
to tender your old notes for exchange pursuant to the exchange offer, you must
transmit to the exchange agent on or prior to the expiration date either:
(1) a written or facsimile copy of a properly completed and duly
executed letter of transmittal, including all other documents
required by such letter of transmittal, to the exchange agent at
the address set forth on the cover page of the letter of
transmittal; or
(2) a computer-generated message transmitted by means of DTC's
Automated Tender Offer Program system and received by the exchange
agent and forming a part of a confirmation of book-entry transfer,
in which you acknowledge and agree to be bound by the terms of the
letter of transmittal.
In addition, in order to deliver old notes held in the form of book-entry
interests:
(1) a timely confirmation of book-entry transfer of such notes into
the exchange agent's account at DTC pursuant to the procedure for
book-entry transfers described below under "--Book-Entry Transfer"
must be received by the exchange agent prior to the expiration
date; or
(2) you must comply with the guaranteed delivery procedures described
below.
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT YOUR ELECTION AND RISK.
INSTEAD OF DELIVERY BY MAIL, WE RECOMMEND THAT YOU USE AN OVERNIGHT OR HAND
DELIVERY SERVICE. IN ALL CASES, YOU SHOULD ALLOW SUFFICIENT TIME TO ASSURE
DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. YOU SHOULD NOT SEND
THE LETTER OF TRANSMITTAL OR OLD NOTES TO US. YOU MAY REQUEST THAT YOUR BROKER,
DEALER, COMMERCIAL BANK, TRUST COMPANY OR NOMINEE EFFECT THE ABOVE TRANSACTIONS
FOR YOU.
CERTIFICATED OLD NOTES
Only registered holders of certificated old notes may tender those notes in
the exchange offer. If your old notes are certificated notes and you wish to
tender those notes for exchange pursuant to the exchange offer, you must
transmit to the exchange agent on or prior to the expiration date, a written or
facsimile copy of a properly completed and duly executed letter of transmittal,
including all other required documents, to the address set forth below under
"--Exchange Agent." In addition, in order to validly tender your certificated
old notes:
(1) the certificates representing your old notes must be received by
the exchange agent prior to the expiration date; or
(2) you must comply with the guaranteed delivery procedures described
below.
PROCEDURES APPLICABLE TO ALL HOLDERS
If you tender an old note and you do not withdraw the tender prior to the
expiration date, you will have made an agreement with us in accordance with the
terms and subject to the conditions set forth in this prospectus and in the
letter of transmittal.
If your old notes are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee and you wish to tender your
notes, you should contact the registered holder promptly and instruct the
registered holder to tender on your behalf. If you wish to tender on your own
behalf, you must, prior to completing and executing the letter of transmittal
and delivering your old notes, either make appropriate arrangements to register
ownership of the old notes in your name or obtain a properly completed bond
power from the registered holder. The transfer of registered ownership may take
considerable time.
21
<PAGE>
Signatures on a letter of transmittal or a notice of withdrawal must be
guaranteed by an eligible institution unless:
(A) old notes tendered in the exchange offer are tendered either
(1) by a registered holder who has not completed the box entitled
"Special Registration Instructions" or "Special Delivery
Instructions" on the letter of transmittal; or
(2) for the account of an eligible institution; and
(B) the box entitled "Special Registration Instructions" on the letter
of transmittal has not been completed.
If signatures on a letter of transmittal or a notice of withdrawal are
required to be guaranteed, the guarantee must be by an eligible financial
institution, which includes most banks, savings and loan associations and
brokerage houses, that is a participant in the Securities Transfer Agents
Medallion Program, the New York Stock Exchange Medallion Program or the Stock
Exchanges Medallion Program.
If the letter of transmittal is signed by a person other than you, your old
notes must be endorsed or accompanied by a properly completed bond power and
signed by you as your name appears on those old notes.
If the letter of transmittal or any old notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, those
persons should so indicate when signing. Unless we waive this requirement, in
this instance you must submit with the letter of transmittal proper evidence
satisfactory to us of their authority to act on your behalf.
We will determine, in our sole discretion, all questions regarding the
validity, form, eligibility, including time of receipt, acceptance and
withdrawal of tendered old notes. This determination will be final and binding.
We reserve the absolute right to reject any and all old notes not properly
tendered or any old notes our acceptance of which would, in the opinion of our
counsel, be unlawful. We also reserve the right to waive any defects,
irregularities or conditions of tender as to particular old notes. Our
interpretation of the terms and conditions of the exchange offer, including the
instructions in the letter of transmittal, will be final and binding on all
parties.
You must cure any defects or irregularities in connection with tenders of
your old notes within the time period we will determine unless we waive that
defect or irregularity. Although we intend to notify you of defects or
irregularities with respect to your tender of old notes, neither we, the
exchange agent nor any other person will incur any liability for failure to give
this notification. Your tender will not be deemed to have been made and your
notes will be returned to you if:
(1) you improperly tender your old notes;
(2) you have not cured any defects or irregularities in your tender;
and
(3) we have not waived those defects, irregularities or improper
tender.
The exchange agent will return your notes, unless otherwise provided in the
letter of transmittal, as soon as practicable following the expiration of the
exchange offer.
In addition, we reserve the right in our sole discretion to:
(1) purchase or make offers for, or offer registered notes for, any
old notes that remain outstanding subsequent to the expiration of
the exchange offer;
(2) terminate the exchange offer; and
(3) to the extent permitted by applicable law, purchase notes in the
open market, in privately negotiated transactions or otherwise.
The terms of any of these purchases or offers could differ from the terms of the
exchange offer.
By tendering, you will represent to us that, among other things:
(1) the registered notes to be acquired by you in the exchange offer
are being acquired in the ordinary course of your business;
22
<PAGE>
(2) you are not engaging in and do not intend to engage in a
distribution of the registered notes that you are acquiring in the exchange
offer;
(3) you do not have an arrangement or understanding with any person to
participate in the distribution of the registered notes that you are
acquiring in the exchange offer; and
(4) you are not our "affiliate," as defined under Rule 405 of the
Securities Act.
In all cases, we will issue registered notes for old notes that are
accepted for exchange in the exchange offer only after timely receipt of the
following by the exchange agent.
(1) certificates for your old notes or a timely book-entry
confirmation of your old notes into the exchange agent's account at DTC;
(2) a properly completed and duly executed letter of transmittal, or a
computer-generated message instead of the letter of transmittal; and
(3) all other required documents. If we do not accept any tendered old
notes for any reason set forth in the terms and conditions of the exchange
offer or if you submit old notes for a greater principal amount than you
desire to exchange, we will return the unaccepted or non-exchanged old
notes without expense to you. In addition, in the case of old notes
tendered by book-entry transfer into the exchange agent's account at DTC
pursuant to the book-entry transfer procedures described below, we will
credit the non-exchanged old notes to your account maintained with DTC, as
promptly as practicable after the expiration or termination of the exchange
offer.
GUARANTEED DELIVERY PROCEDURES
If you desire to tender your old notes and your old notes are not
immediately available or one of the situations described in the immediately
preceding paragraph occurs, you may tender if:
(1) you tender through an eligible financial institution;
(2) on or prior to 5:00 p.m., New York City time, on the expiration
date, the exchange agent receives from an eligible institution, a
written or facsimile copy of a properly completed and duly
executed letter of transmittal and notice of guaranteed delivery,
substantially in the form provided by us; and
(3) the exchange agent receives the certificates for all certificated
old notes, in proper form for transfer, or a book-entry
confirmation, and all other documents required by the letter of
transmittal, within three NYSE trading days after the date of
execution of the notice of guaranteed delivery.
You may send the notice of guaranteed delivery by facsimile transmission,
mail or hand delivery. The notice of guaranteed delivery must set forth:
(1) your name and address;
(2) the amount of old notes you are tendering; and
(3) a statement that your tender is being made by the notice of
guaranteed delivery and that you guarantee that within three New
York Stock Exchange trading days after the execution of the notice
of guaranteed delivery, the eligible institution will deliver the
following documents to the exchange agent:
(A) the certificates for all certificated old notes being tendered,
in proper form for transfer or a book-entry confirmation of
tender;
(B) a written or facsimile copy of the letter of transmittal, or a
book-entry confirmation instead of the letter of transmittal;
and
(C) any other documents required by the letter of transmittal.
BOOK-ENTRY TRANSFER
The exchange agent will establish an account with respect to the book-entry
interests at DTC for purposes of the exchange offer promptly after the date of
this prospectus. You must deliver your book-entry interest by book-entry
transfer to the account maintained by the exchange agent at DTC. Any financial
institution that is a participant in DTC's systems may make book-entry delivery
of book-entry interests by
23
<PAGE>
causing DTC to transfer the book-entry interests into the exchange agent's
account at DTC in accordance with DTC's procedures for transfer.
If one of the following situations occur:
(1) you cannot deliver a book-entry confirmation of book-entry
delivery of your book-entry interests into the exchange agent's
account at DTC; or
(2) you cannot deliver all other documents required by the letter of
transmittal to the exchange agent prior to the expiration date,
then you must tender your book-entry interests according to the guaranteed
delivery procedures discussed above.
WITHDRAWAL RIGHTS
You may withdraw tenders of your old notes at any time prior to 5:00 p.m.,
New York City time, on the expiration date.
For your withdrawal to be effective, the exchange agent must receive a
written or facsimile transmission notice of withdrawal at its address set forth
below under "--Exchange Agent" prior to 5:00 p.m., New York City time, on the
expiration date.
The notice of withdrawal must:
(1) state your name;
(2) identify the specific old notes to be withdrawn, including the
certificate number or numbers and the principal amount of
withdrawn notes;
(3) be signed by you in the same manner as you signed the letter of
transmittal when you tendered your old notes, including any
required signature guarantees or be accompanied by documents of
transfer sufficient for the exchange agent to register the
transfer of the old notes into your name; and
(4) specify the name in which the old notes are to be registered, if
different from yours.
We will determine all questions regarding the validity, form, and
eligibility, including time of receipt, of withdrawal notices. Our determination
will be final and binding on all parties. Any old notes withdrawn will be deemed
not to have been validly tendered for exchange for purposes of the exchange
offer. Any old notes which have been tendered for exchange but which are not
exchanged for any reason will be returned to you without cost as soon as
practicable after withdrawal, rejection of tender, or termination of the
exchange offer. Properly withdrawn old notes may be retendered by following one
of the procedures described under "--Procedures for Tendering" above at any time
on or prior to 5:00 p.m., New York City time, on the expiration date.
CONDITIONS
Notwithstanding any other provision of the exchange offer and subject to
our obligations under the registration rights agreement, we will not be required
to accept for exchange, or to issue registered notes in exchange for, any old
notes and may terminate or amend the exchange offer, if at any time before the
acceptance of any old notes for exchange any of the following events occur:
(1) any injunction, order or decree is issued by any court or any
governmental agency that prohibits, prevents or otherwise
materially impairs our ability to proceed with the exchange offer;
or
(2) the exchange offer violates any applicable law or any applicable
interpretation of the staff of the Commission.
These conditions are for our sole benefit and we may assert them regardless
of the circumstances giving rise to any condition, subject to applicable law. We
also may waive in whole or in part at any time and from time to time any
particular condition in our sole discretion. If we waive a condition, we may be
required in order to comply with applicable securities laws, to extend the
expiration date of the exchange offer. Our failure at any time to exercise any
of the foregoing rights will not be deemed a waiver of these rights and these
rights will be deemed ongoing rights which may be asserted at any time and from
time to time.
24
<PAGE>
In addition, we will not accept for exchange any old notes tendered, and we
will not register any notes that we will issue in exchange for any of those old
notes, if at the time the notes are tendered any stop order is threatened by the
Commission or in effect with respect to the registration statement of which this
prospectus is a part or the qualification of the indenture under the Trust
Indenture Act of 1939.
The exchange offer is not conditioned on any minimum principal amount of
old notes being tendered for exchange.
EXCHANGE AGENT
We have appointed The Chase Manhattan Bank as exchange agent for the
exchange offer. You should direct questions, requests for assistance and
requests for additional copies of the prospectus, the letter of transmittal and
other related documents to the exchange agent addressed as follows:
By Registered or Certified Mail, by Hand
or by Overnight Courier:
The Chase Manhattan Bank
Attention: Mary Lou Bessey
c/o Chase National Corporate Services, Inc.
Corporate Trust Department
73 Tremont Street
Boston, Massachusetts 02106
By Facsimile: (617) 557-6551 By Telephone: (617) 557-6553
The exchange agent also acts as trustee under the indenture.
FEES AND EXPENSES
We will not pay brokers, dealers, or others soliciting acceptances of the
exchange offer. The principal solicitation is being made by mail. Additional
solicitations, however, may be made in person or by telephone by our officers
and employees.
We will pay the estimated cash expenses to be incurred in connection with
the exchange offer. We estimate that these expenses will be approximately
$250,000 in the aggregate, which includes fees and expenses of the exchange
agent, accounting, legal, printing and related fees and expenses.
TRANSFER TAXES
You will not be obligated to pay any transfer taxes in connection with a
tender of your old notes for exchange unless you instruct us to register
registered notes in the name of, or request that old notes not tendered or not
accepted in the exchange offer be returned to, a person other than the
registered tendering holder, in which event the registered tendering holder will
be responsible for the payment of any applicable transfer tax.
ACCOUNTING TREATMENT
We will not recognize any gain or loss for accounting purposes upon the
consummation of the exchange offer. We will amortize the expense of the exchange
offer over the term of the registered notes under generally accepted accounting
principles.
25
<PAGE>
DESCRIPTION OF THE NEW NOTES
You can find the definitions of certain terms used in this description
under the sudheading "Defined Terms." In this section, the words "we," "our,"
"our company" and "us" refer only to Ames Department Stores, Inc., as a separate
entity, and do not include any of our subsidiaries.
We will issue the new notes under the indenture we entered into with The
Chase Manhattan Bank, as trustee in connection with the issuance of the old
notes. A copy of the indenture has been filed as an exhibit to the registration
statement of which this prospectus is a part. The terms of the new notes include
those stated in the indenture and those made part of the indenture by reference
to the Trust Indenture Act of 1939.
The following description of the new notes is only a summary of the
material provisions of the indenture. We urge you to read the indenture because
that document, and not this description, defines your rights as holders of the
new notes. You may obtain a copy of the indenture by following the procedures
set forth under "Where You Can Find More Information."
Any reference to "notes" in this section refers to both old notes and new
notes, unless the context otherwise requires.
BRIEF DESCRIPTION OF THE NEW NOTES AND THE GUARANTEES
The new notes:
o are our senior unsecured obligations;
o rank equally in right of payment with all of our senior unsecured
debt;
o rank senior in right of payment to all of our subordinated debt;
o are effectively junior to all of our secured obligations, including
obligations under our bank credit facility, to the extent of the
collateral securing those obligations; and
o are unconditionally guaranteed by our existing subsidiaries.
The guarantees:
o are senior unsecured obligations of each guarantor;
o rank equally in right of payment with senior unsecured debt of each
guarantor;
o rank senior in right of payment to subordinated debt of each
guarantor; and
o are effectively junior to the secured obligations of each guarantor,
to the extent of the collateral securing those obligations.
The new notes are guaranteed by each of Ames' existing subsidiaries. Future
subsidiaries of Ames will be required to guarantee the new notes under the
circumstances described below under the caption "--Certain Covenants--Additional
Subsidiary Guarantees."
We will be permitted to designate certain of our subsidiaries as
"Unrestricted Subsidiaries." Our Unrestricted Subsidiaries will not be subject
to the restrictive covenants in the indenture and will not guarantee the new
notes. See "--Certain Covenants--Designation of Restricted and Unrestricted
Subsidiaries." In the event of a bankruptcy, liquidation or reorganization of
any subsidiary that is not a guarantor of the new notes, that subsidiary will
pay the holders of its debts and its trade creditors before it will be able to
distribute any of its assets to us.
PRINCIPAL, MATURITY AND INTEREST
We will issue new notes with a maximum aggregate principal amount of
$200 million in denominations of $1,000 and integral multiples of $1,000. The
Notes will mature on April 15, 2006.
Interest on the new notes will accrue at the rate of 10% per annum and will
be payable semi-annually in arrears on April 15 and October 15, commencing on
October 15, 1999. We will make each interest payment to those holders of the new
notes who were holders of record on the immediately preceding April 1 and
October 1.
Interest on the new notes will accrue from April 27, 1999 or, if interest
has already been paid, from the date it was most recently paid. If you tender
your old notes and they are accepted for exchange, you will
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receive accrued interest on your old notes to, but not including, the date of
issuance of the new notes. This interest will be payable with the first interest
payment on the new notes and you will not receive any payment in respect of
interest on your old notes accrued after the issuance of such new notes.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months.
We are permitted by the indenture to issue, on one or more occasions,
additional notes having substantially identical terms and conditions to the old
notes and new notes. However, the maximum aggregate principal amount of these
additional notes may not exceed $75.0 million. Any issuance of additional notes
will be subject to the covenant described below under the caption "--Certain
Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock." The old
notes, new notes and any additional notes will be treated as a single class for
all purposes under the indenture, including, without limitation, waivers,
amendments, redemptions and offers to purchase. Unless the context otherwise
requires, in this description of the new notes, reference to the notes includes
any additional notes that we may issue.
FORM OF NEW NOTES
The certificates representing the new notes will be issued in fully
registered form, without coupons. Except as described in the next paragraph, the
new notes will be deposited with, or on behalf of, DTC, and registered in the
name of Cede & Co., as DTC's nominee, in the form of a global note. Holders of
the new notes will own book-entry interests in the global note evidenced by
records maintained by DTC.
Book-entry interests may be exchanged for certificated notes of like tenor
and equal aggregate principal amount, if:
(1) DTC notifies us that it is unwilling or unable to continue as
depositary for the global securities or DTC at any time ceases to be a
clearing agency registered under the Exchange Act;
(2) we determine that the book-entry interests will no longer be
represented by global notes and we execute and deliver to the trustee
instructions to that effect; or
(3) a default has occurred that entitles the holders of the notes to
accelerate their maturity and that default is continuing.
As of the date of this prospectus, no certificated notes are issued and
outstanding.
METHODS OF RECEIVING PAYMENTS ON THE NEW NOTES
If a registered holder of the new notes gives us wire transfer
instructions, we will make all principal, premium, if any, and interest payments
on those notes in accordance with those instructions. All other payments on the
new notes will be made at the office or agency of the paying agent and registrar
within the City and State of New York unless we elect to make interest payments
by check mailed to the holders at their address set forth in the register of
holders.
PAYING AGENT AND REGISTRAR FOR THE NEW NOTES
The trustee will initially act as paying agent and registrar. We may change
the paying agent or registrar without prior notice to you.
TRANSFER AND EXCHANGE
You may transfer or exchange your notes in accordance with the indenture.
The registrar and the trustee may require you to furnish, among other things,
appropriate endorsements and transfer documents and we may require you to pay
any taxes and fees required by law or permitted by the Indenture. We are not
required to transfer or exchange any note selected for redemption. We also are
not required to transfer or exchange any note for a period of 15 days before a
selection of notes to be redeemed.
The registered holder of a new note will be treated as the owner of the new
note for all purposes.
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SUBSIDIARY GUARANTEES
The Guarantors will jointly and severally guarantee our obligations under
the new notes. Each Subsidiary Guarantee will rank equally in right of payment
with all existing and future senior indebtedness of that Guarantor, including
under the Credit Agreement. Each Subsidiary Guarantee will also be senior in
right of payment to any future subordinated indebtedness of that Guarantor. The
obligations of each Guarantor under its Subsidiary Guarantee will be limited as
necessary to prevent that Subsidiary Guarantee from constituting a fraudulent
conveyance under applicable law. For information with respect to the meaning and
consequences of a fraudulent conveyance, we refer to you to the discussion under
the heading "Factors Relating to the Notes" in the "Risk Factors" section of
this prospectus.
A Guarantor may not sell or otherwise dispose of all or substantially all
of its assets to, or consolidate with or merge with or into (whether or not that
Guarantor is the surviving person), another person, other than our company or
another Guarantor, unless:
(1) immediately after giving effect to that transaction, no default or
event of default under the indenture exists; and
(2) either:
(a) the person acquiring the Guarantor's assets in that transaction
or the person formed by or surviving the consolidation or merger with
the Guarantor assumes all the obligations of that Guarantor under the
indenture, its Subsidiary Guarantee and the Registration Rights
Agreement pursuant to a supplemental indenture satisfactory to the
trustee; or
(b) the Net Proceeds of that transaction are applied in accordance
with the "Asset Sale" provisions of the indenture.
The Subsidiary Guarantee of a Guarantor will be released:
(1) in connection with any sale or other disposition of all or
substantially all of the assets of that Guarantor to a person that is not
(either before or after giving effect to that transaction) our subsidiary,
if the Guarantor applies the Net Proceeds of that sale or other disposition
in accordance with the "Asset Sale" provisions of the indenture;
(2) in connection with any sale of all of the Capital Stock of a
Guarantor to a person that is not (either before or after giving effect to
that transaction) our subsidiary, if we apply the Net Proceeds of that sale
in accordance with the "Asset Sale" provisions of the indenture;
(3) upon legal defeasance or covenant defeasance; or
(4) if we properly designate any Restricted Subsidiary that is a
Guarantor as an Unrestricted Subsidiary.
OPTIONAL REDEMPTION
On any one or more occasions prior to April 15, 2002, we may redeem notes
at a redemption price of 110% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if any, to the redemption date, with the
net cash proceeds of one or more Public Equity Offerings; provided that:
(1) no more than 35% of the aggregate principal amount of the notes
issued under the indenture may be redeemed during this period;
(2) at least 65% of the aggregate principal amount of notes issued
under the indenture remains outstanding immediately after the occurrence of
each redemption, excluding notes held by us and our subsidiaries; and
(3) each redemption, if any, must occur within 60 days of the date of
the closing of the related Public Equity Offering.
Except as noted in the preceding paragraph, we will not have the right to
redeem the notes prior to April 15, 2003.
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After April 15, 2003, we may redeem all or any portion of the notes upon
not less than 30 nor more than 60 days' notice, at the following redemption
prices (expressed as percentages of principal amount) if redeemed during the
twelve-month period beginning on April 15 of the years indicated below:
YEAR PERCENTAGE
- -------------------------------------------------------------- ----------
2003.......................................................... 105.00%
2004.......................................................... 102.50%
2005.......................................................... 100.00%
together in each case with accrued and unpaid interest if any, to the applicable
redemption date.
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
If a Change of Control occurs, you will have the right to require us to
purchase all or any part, equal to $1,000 or an integral multiple of $1,000, of
your notes on the date specified in the Change of Control notice, which may not
be earlier than 30 days nor later than 60 days from the date the Change of
Control notice is mailed. In the Change of Control offer, we will offer cash
equal to 101% of the aggregate principal amount of the notes purchased plus
accrued and unpaid interest and Liquidated Damages, if any, to the payment date.
Within ten days following any Change of Control, we will mail a notice to you
describing the transaction or transactions that constitute the Change of Control
and offering to repurchase your notes on the payment date specified in the
Change of Control notice.
We will comply with the requirements of Rule 14e-1 under the Exchange Act
and all other applicable securities laws and regulations in connection with the
repurchase of the notes as a result of a Change of Control. If the provisions of
any securities laws or regulations conflict with the Change of Control
provisions of the indenture, we will comply with the applicable securities laws
and regulations and by so doing will not be deemed to have breached our
obligations under the Change of Control provisions of the indenture.
On the Change of Control payment date, we will, to the extent lawful:
(1) accept for payment all notes or portions thereof properly tendered
pursuant to the Change of Control offer;
(2) deposit with the paying agent an amount equal to the purchase
price for all notes or portions thereof so tendered; and
(3) deliver or cause to be delivered to the trustee the notes to be
repurchased together with an Officers' Certificate stating the aggregate
principal amount of notes or portions thereof being repurchased by us.
The paying agent will promptly mail to each holder of tendered notes the
Change of Control payment for those notes, and the trustee will promptly
authenticate and mail (or cause to be transferred by book-entry) to each holder
a new note equal in principal amount to any unpurchased portion of the notes
surrendered, if any; provided that each new note will be in a principal amount
of $1,000 or an integral multiple thereof.
We will publicly announce the results of the Change of Control offer on or
as soon as practicable after the Change of Control payment date.
The provisions described above that require us to make a Change of Control
offer will be applicable regardless of whether or not any other provisions of
the indenture are applicable. The indenture does not contain provisions that
permit the holders of the notes to require us to repurchase or redeem the notes
in the event of a takeover, recapitalization or similar transaction that does
not involve a Change of Control.
The Credit Agreement currently prohibits us from purchasing any notes, and
also provides that certain change of control events with respect to our company
would constitute a default under the Credit Agreement. Any future credit
agreements or other agreements relating to indebtedness to which we become a
party may contain similar provisions. If a Change of Control occurs at a time
when we are prohibited from purchasing notes, we could seek the consent of our
senior lenders to the purchase of notes or could attempt to refinance the
borrowings under the agreement containing the prohibition. If we do not obtain
that consent or repay
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those borrowings we will continue to be prohibited from purchasing notes. Our
failure to purchase tendered notes because of that prohibition would constitute
an event of default under the indenture, which in turn, would constitute a
default under the Credit Agreement.
We will not be required to make a Change of Control offer upon a Change of
Control if a third party offers to purchase the notes in the manner, at the
times and otherwise in compliance with the requirements set forth in the
indenture applicable to a Change of Control offer by us and that third party
purchases all notes validly tendered to it in response to that offer.
The definition of Change of Control includes a phrase relating to the
direct or indirect sale, lease, transfer, conveyance or other disposition of
"all or substantially all" of the properties or assets of our company and its
subsidiaries taken as a whole. Although there is a limited body of case law
interpreting the phrase "substantially all," there is no precise established
definition of the phrase under applicable law. Accordingly, your ability to
require us to purchase your notes as a result of a sale, lease, transfer,
conveyance or other disposition of less than all of the assets of our company
and its subsidiaries taken as a whole to another person or group may be
uncertain.
ASSET SALES
The indenture provides that we will not, and will not permit any of our
Restricted Subsidiaries to, consummate an Asset Sale unless:
(1) we or a Restricted Subsidiary receive consideration at the time of
the Asset Sale at least equal to the fair market value of the assets or
Equity Interests issued or sold or otherwise disposed of;
(2) the fair market value is determined by our company's Board of
Directors and evidenced by a resolution of the Board of Directors set forth
in an Officers' Certificate delivered to the trustee; and
(3) at least 75% of the consideration therefor received by us or a
Restricted Subsidiary is in the form of cash or Cash Equivalents.
For purposes of this provision, each of the following shall be deemed to be
cash:
(1) any liabilities of our company or a Restricted Subsidiary, as
shown on its most recent balance sheet (other than contingent liabilities
and liabilities that are by their terms subordinated to the notes or any
Subsidiary Guarantee) that are assumed by the transferee of the assets
pursuant to a customary novation agreement that releases the transferor
from further liability;
(2) any securities, notes or other obligations received from the
transferee that are contemporaneously, subject to ordinary settlement
periods, converted by us or a Restricted Subsidiary into cash, to the
extent of that cash; and
(3) Additional Assets received in an exchange-of-assets transaction.
Within 360 days after the receipt by us or a Restricted Subsidiary of any
Net Proceeds from an Asset Sale, we may apply those Net Proceeds at our option:
(1) to repay permanently Indebtedness that ranks equally with the
notes in right of payment and, if the Indebtedness repaid is revolving
credit Indebtedness, to correspondingly reduce the lenders' commitments
with respect thereto;
(2) to acquire all or substantially all of the assets or a majority of
the Voting Stock of another company that is engaged in a Permitted
Business;
(3) to make a capital expenditure in a Permitted Business; or
(4) to acquire Additional Assets; provided that we will have complied
with this clause (4) if, within 360 days of the Asset Sale, we have entered
into an agreement covering the acquisition which is thereafter completed
within 180 days after the date of the agreement.
Pending the final application of the Net Proceeds, we may temporarily
reduce revolving credit borrowings or otherwise invest the Net Proceeds in any
manner that is not prohibited by the indenture.
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Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the preceding paragraph will constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $10.0 million, we will make an Asset
Sale offer to you, as well as all holders of other Indebtedness that ranks
equally with the notes in right of payment and that has the benefit of
provisions requiring us to make a similar offer, to purchase the maximum
principal amount of notes and the other Indebtedness that may be purchased out
of the Excess Proceeds. The offer price will be equal to 100% of the principal
amount of notes and other Indebtedness to be purchased, plus accrued and unpaid
interest and Liquidated Damages, if any, to the date of purchase. We may use any
Excess Proceeds remaining after consummation of an Asset Sale offer for any
purpose not otherwise prohibited by the indenture. If the aggregate principal
amount of notes and other Indebtedness tendered into an Asset Sale offer exceeds
the amount of Excess Proceeds, the trustee shall select the notes and other
Indebtedness to be purchased on a pro rata basis based on the principal amount
of notes and other Indebtedness so tendered. Upon completion of each Asset Sale
offer, the amount of Excess Proceeds shall be reset at zero.
We will comply with the requirements of Rule 14e-1 under the Exchange Act
and all other applicable securities laws and regulations in connection with each
purchase of notes pursuant to an Asset Sale offer. If the provisions of any
securities laws or regulations conflict with the Asset Sales provisions of the
indenture, we will comply with the applicable securities laws and regulations
and by so doing will not be deemed to have breached our obligations under the
Asset Sale provisions of the indenture.
SELECTION AND NOTICE
If less than all of the notes are to be redeemed at any time, the trustee
will select notes for redemption as follows:
(1) if the notes are listed, in compliance with the requirements of
the principal national securities exchange on which the notes are listed;
or
(2) if the notes are not so listed, on a pro rata basis, by lot or by
any other method that the trustee deems fair and appropriate.
We will only redeem notes of $1,000 or whole multiples thereof. We will
mail a notice of redemption by first class mail at least 30 but not more than
60 days before the redemption date to each holder of notes to be redeemed at its
registered address.
If only a portion of the principal amount of a note is to be redeemed, we
will state the portion to be redeemed in the notice of redemption and we will
issue to the holder a new note in principal amount equal to the unredeemed
portion of the original note upon cancellation of the original note. Notes
called for redemption become due on the date fixed for redemption. On and after
the redemption date, interest will no longer accrue on notes or portions of them
called for redemption.
MATERIAL COVENANTS
RESTRICTED PAYMENTS
The indenture provides that we will not, and will not permit any of our
Restricted Subsidiaries to, directly or indirectly:
(1) declare or pay any dividend or make any other payment or
distribution on account of our or any Restricted Subsidiaries' Equity
Interests (including, without limitation, any distribution, dividend or
payment in connection with any merger or consolidation involving our
company or any Restricted Subsidiaries) or to the direct or indirect
holders of our or any Restricted Subsidiaries' Equity Interests in their
capacity as such, except for dividends or distributions that are payable in
Equity Interests (other than Disqualified Stock) of our company or payable
to us or our Restricted Subsidiary; or
(2) purchase, redeem or otherwise acquire or retire for value
(including, without limitation, in connection with any merger or
consolidation involving our company) any Equity Interests of our company,
any of our Restricted Subsidiaries or any direct or indirect parent of our
company; or
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(3) make any payment on or with respect to, or purchase, redeem,
defease or otherwise acquire or retire for value any Indebtedness that is
subordinated to the notes or the Subsidiary Guarantees, except the
scheduled payment of interest and Liquidated Damages, if any, or principal
and premium, if any, at the Stated Maturity thereof; or
(4) make any Restricted Investment;
(all payments and other actions set forth in clauses (1) through (4) above being
collectively referred to as "Restricted Payments"), unless, at the time of and
after giving effect to that Restricted Payment:
(1) no default or event of default under the indenture shall have
occurred and be continuing or would occur as a consequence thereof; and
(2) at the date of that Restricted Payment and after giving pro forma
effect thereto as if that Restricted Payment had been made at the beginning
of the applicable four-quarter period, we would have been permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Fixed
Charge Coverage Ratio test set forth in the first paragraph of the
"Incurrence of Indebtedness and Issuance of Preferred Stock" covenant; and
(3) the aggregate amount of that Restricted Payment and all other
Restricted Payments made since the date of the indenture (excluding
Restricted Payments permitted by clauses (2), (3), (4) and (6) of the next
succeeding paragraph) is less than the sum, without duplication, of
(a) 50% of our Consolidated Net Income for the period (taken as one
accounting period) from the beginning of the first fiscal quarter
commencing after the date of the indenture through our last full fiscal
quarter for which internal financial statements are available at the
time of that Restricted Payment (or, if the Consolidated Net Income for
that period is a deficit, minus 100% of the deficit), plus
(b) 100% of the aggregate net cash proceeds received by us since
the date of the indenture as a contribution to our common equity capital
or from the issue or sale of Equity Interests of our company (other than
Disqualified Stock) or from the issue or sale of Disqualified Stock or
debt securities of our company that have been converted into or
exchanged for those Equity Interests (other than Equity Interests (or
Disqualified Stock or convertible debt securities) sold to a Restricted
Subsidiary), plus
(c) if any Restricted Investment that was made by us or any
Restricted Subsidiary of our company after the date of the indenture is
sold for cash or otherwise liquidated or repaid for cash, the lesser of
(i) the cash return of capital with respect to that Restricted
Investment (less the cost of disposition, if any) and (ii) the initial
amount of that Restricted Investment unless already included in our
Consolidated Net Income for that period; plus
(d) if any Unrestricted Subsidiary is redesignated by us as a
Restricted Subsidiary of our company after the date of the indenture, an
amount equal to the lesser of (1) the net book value of our Investment
in the Unrestricted Subsidiary at the time of the redesignation and
(2) the fair market value of our Investment in the Unrestricted
Subsidiary at the time of the redesignation.
The preceding provisions will not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration of that dividend, if at that date of declaration, the dividend
would have complied with the provisions of the indenture;
(2) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness of our company or any
Guarantor or of any Equity Interests of our company or any of our
Restricted Subsidiaries in exchange for, or out of the net cash proceeds of
the substantially concurrent sale (other than to a Restricted Subsidiary of
our company) of, Equity Interests of our company (other than Disqualified
Stock); provided that the amount of any net cash proceeds that are utilized
for any redemption, repurchase, retirement, defeasance or other acquisition
shall be excluded from clause (3) (b) of the preceding paragraph;
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(3) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness of our company or any Guarantor with the net cash
proceeds from an incurrence of Permitted Refinancing Indebtedness;
(4) the payment of any dividend or distribution by any of our
Restricted Subsidiaries to the holders of that Restricted Subsidiary's
common Equity Interests so long as we or that Restricted Subsidiary receive
at least a pro rata share (and in like form) of the dividend or
distribution in accordance with its common Equity Interests;
(5) the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of our company or any of our Restricted
Subsidiaries held by any member of our (or any of our Restricted
Subsidiaries') management pursuant to any management equity subscription
agreement or stock option agreement; provided that the price paid for all
repurchased, redeemed, acquired or retired Equity Interests does not exceed
$1.0 million per individual member of management or $2.5 million in the
aggregate in any twelve-month period;
(6) the deemed repurchase of Capital Stock by us on the exercise of
stock options; and
(7) Restricted Payments in an aggregate principal amount not to exceed
$15.0 million;
provided that we will not and will not permit any of our Restricted Subsidiaries
to make any Restricted Payment contemplated by clauses (3) through (7) above so
long as a default or an event of default under the indenture has occurred and is
continuing.
The amount of all Restricted Payments, other than cash, shall be the fair
market value of the asset(s) or securities proposed to be transferred or issued
to or by us or our Restricted Subsidiary, as the case may be, pursuant to the
Restricted Payment on the date of that Restricted Payment. The fair market value
of any assets or securities that are required to be valued by this covenant
shall be determined in good faith by us and set forth in an Officers'
Certificate delivered to the trustee. Our determination must be based upon an
opinion or appraisal issued by an accounting, appraisal or investment banking
firm of national standing if the fair market value exceeds $25.0 million. Not
later than the date of making any Restricted Payment, we will deliver to the
trustee an Officers' Certificate stating that the Restricted Payment is
permitted and setting forth the basis upon which the calculations required by
this "Restricted Payments" covenant were computed, together with a copy of any
fairness opinion or appraisal required by the indenture.
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK
The indenture provides that we will not, and will not permit any of our
subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur") any Indebtedness, including Acquired
Debt, and we will not issue any Disqualified Stock and will not permit any of
our subsidiaries to issue any shares of Preferred Stock; provided, however, that
we may incur Indebtedness, including Acquired Debt, or issue Disqualified Stock,
and our Restricted Subsidiaries that are Guarantors may incur Indebtedness or
issue Preferred Stock, if the Fixed Charge Coverage Ratio for our most recently
ended four full fiscal quarters for which internal financial statements are
available immediately preceding the date on which the additional Indebtedness is
incurred or the Disqualified Stock is issued would have been at least 2.25 to 1,
determined on a pro forma basis, including a pro forma application of the net
proceeds therefrom, as if the additional Indebtedness had been incurred or the
Preferred Stock or Disqualified Stock had been issued, as the case may be, at
the beginning of that four-quarter period.
The first paragraph of this covenant will not prohibit any of the following
(collectively, "Permitted Debt"):
(1) the incurrence by us and any Restricted Subsidiary of our company
that is a Guarantor of additional Indebtedness and letters of credit under
Credit Facilities in an aggregate principal amount at any one time
outstanding under this clause (1) (with letters of credit being deemed to
have a principal amount equal to the maximum potential liability of our
company and our Restricted Subsidiaries thereunder) not to exceed an amount
equal to the greater of (x) the Borrowing Base; and (y) $700.0 million as
of the date of incurrence minus (a) the aggregate amount of all Net
Proceeds of
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Asset Sales required to be applied that are in fact applied by us or any of
our Restricted Subsidiaries to repay permanently Indebtedness outstanding
under one or more Credit Facilities (and to reduce commitments with respect
thereto if the Indebtedness being repaid is revolving Indebtedness)
pursuant to the "Repurchase at the Option of Holders--Asset Sales" covenant
and (b) the aggregate amount of all repayments, optional or mandatory, of
the principal of any additional term Indebtedness (other than repayments
that are concurrently reborrowed) that have actually been made since the
date of the indenture;
(2) the incurrence by us and our Restricted Subsidiaries of Existing
Indebtedness;
(3) the incurrence by us and the Guarantors of Indebtedness
represented by the old notes, the new notes and any additional notes issued
under the indenture (including, in each case, the Subsidiary Guarantees);
(4) the incurrence by us or any of our Restricted Subsidiaries of
Indebtedness represented by Capital Lease Obligations, mortgage financings
or purchase money obligations, in each case, incurred for the purpose of
financing all or any part of the purchase price or cost of construction or
improvement of property, plant or equipment used in the business of our
company or that Restricted Subsidiary, in an aggregate principal amount,
including all Permitted Refinancing Indebtedness incurred to refund,
refinance or replace any Indebtedness incurred pursuant to this clause (4),
not to exceed, in aggregate principal amount at any one time outstanding,
5% of Total Assets on a pro forma basis (including a pro forma application
of the net proceeds of that Indebtedness), as if that Indebtedness had been
incurred on the date of calculation;
(5) the incurrence by us or any of our Restricted Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to refund, refinance or replace Indebtedness (other than
intercompany Indebtedness) that was permitted by the indenture to be
incurred under the first paragraph of this covenant or clauses (2), (3),
(4), (5) or (13) of this paragraph in a substantially concurrent
transaction (which incurrence shall be no earlier than 30 days prior to the
refunding, refinancing or replacing of the Indebtedness being refunded,
refinanced or replaced and the proceeds of the Permitted Refinancing
Indebtedness shall be deposited in escrow pending application);
(6) the incurrence by us or any of our Restricted Subsidiaries of
intercompany Indebtedness between or among our company and any of our
Wholly Owned Subsidiaries that are Guarantors; provided that:
(a) the Indebtedness must be expressly subordinated to the prior
payment in full in cash of all Obligations with respect to the notes and
the indenture, in the case of our company, or the Subsidiary Guarantee,
in the case of a Guarantor; and
(b) (i) any subsequent issuance or transfer of Equity Interests
that results in that Indebtedness being held by a person other than our
company or any of our Wholly Owned Subsidiaries that are Guarantors and
(ii) any sale or other transfer of that Indebtedness to a person that is
not either our company or any of our Wholly Owned Subsidiaries that are
Guarantors shall be deemed, in each case, to constitute an incurrence of
that Indebtedness by us or our Restricted Subsidiary, as the case may
be, that was not permitted by this clause (6);
(7) the incurrence by us or any of our Restricted Subsidiaries of
Hedging Obligations that are incurred for the purpose of (a) fixing or
hedging interest rate risk with respect to any floating rate Indebtedness
that is permitted to be outstanding by the terms of the indenture or
(b) hedging exposure to foreign currency fluctuations;
(8) the guarantee by us or any of the Guarantors of Indebtedness of
our company or any of our Restricted Subsidiaries that was permitted to be
incurred by another provision of this covenant;
(9) the incurrence of Non-Recourse Debt by Unrestricted Subsidiaries,
provided, however, that if that Indebtedness ceases to be Non-Recourse Debt
of an Unrestricted Subsidiary, that event shall be deemed to constitute an
incurrence of Indebtedness by a Restricted Subsidiary of our company that
was not permitted by this clause (9);
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(10) the accrual of interest, the accretion or amortization of
original issue discount, the payment of interest on any Indebtedness in the
form of additional Indebtedness with the same terms, and the payment of
dividends on Disqualified Stock or Preferred Stock in the form of
additional shares of the same class of Disqualified Stock or Preferred
Stock, as the case may be, which will not be deemed to be an incurrence of
Indebtedness or an issuance of Disqualified Stock or Preferred Stock, as
the case may be, for purposes of this covenant; provided, in each case,
that the amount thereof is included in Fixed Charges of our company as
accrued;
(11) the incurrence by us or any of our Restricted Subsidiaries of
Indebtedness in respect of performance and surety bonds provided in the
ordinary course of business;
(12) the incurrence by a Receivables Subsidiary of Indebtedness that
is not recourse to us or any of our other Restricted Subsidiaries (other
than with respect to Standard Securitization Undertakings) in connection
with a Qualified Receivables Transaction; and
(13) the incurrence by us or any of our Restricted Subsidiaries of
additional Indebtedness in an aggregate principal amount (or accreted
value, as applicable) at any time outstanding, including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (13), not to exceed
$50.0 million.
For purposes of determining compliance with this "Incurrence of
Indebtedness and Issuance of Preferred Stock" covenant, in the event that an
item of proposed Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (1) through (13) above, or is
entitled to be incurred pursuant to the first paragraph of this covenant, we
will be permitted to classify that item of Indebtedness on the date of its
incurrence, or reclassify all or a portion of that item of Indebtedness, in any
manner that complies with this covenant. Indebtedness under Credit Facilities
that were in existence on the date on which notes were first issued and
authenticated under the indenture shall be deemed to have been incurred on that
date in reliance on the exception provided by clause (1) of the definition of
Permitted Debt.
LIENS
The indenture provides that we will not, and will not permit any of our
Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
suffer to exist any Lien of any kind securing Indebtedness, Attributable Debt or
trade payables on any asset now owned or hereafter acquired, except Permitted
Liens.
SALE AND LEASEBACK TRANSACTIONS
The indenture provides that we will not, and will not permit any of our
Restricted Subsidiaries to, enter into any sale and leaseback transaction;
provided that we or any Restricted Subsidiary that is a Domestic Subsidiary may
enter into a sale and leaseback transaction if:
(1) we or that Restricted Subsidiary, as applicable, could have
incurred Indebtedness in an amount equal to the Attributable Debt relating
to that sale and leaseback transaction under the Fixed Charge Coverage
Ratio Test in the first paragraph of the "Incurrence of Indebtedness and
Issuance of Preferred Stock" covenant;
(2) the gross cash proceeds of that sale and leaseback transaction are
at least equal to the fair market value, as determined in good faith by us
and set forth in an Officers' Certificate delivered to the trustee, of the
property that is the subject of that sale and leaseback transaction; and
(3) the transfer of assets in that sale and leaseback transaction is
permitted by, and we or that Restricted Subsidiary apply the proceeds of
that transaction in compliance with, the "Repurchase at the Option of
Holders--Asset Sales" covenant.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES
The indenture provides that we will not, and will not permit any of our
Restricted Subsidiaries to, directly or indirectly, create or permit to exist or
become effective any consensual encumbrance or restriction on the ability of any
of our Restricted Subsidiaries to:
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(1) pay dividends or make any other distributions on its Capital Stock
to us or any of our Restricted Subsidiaries, or with respect to any other
interest or participation in, or measured by, its profits, or pay any
indebtedness owed to us or any of our Restricted Subsidiaries;
(2) make loans or advances to us or any of our Restricted
Subsidiaries; or
(3) transfer any of its properties or assets to us or any of our
Restricted Subsidiaries.
However, the preceding restrictions will not apply to encumbrances or
restrictions existing under or by reason of:
(1) Existing Indebtedness as in effect on the date of the indenture
and any amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings thereof, provided
that those amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacement or refinancings are no more
restrictive, taken as a whole, with respect to dividend and other payment
restrictions than those contained in that Existing Indebtedness, as in
effect on the date of the indenture;
(2) the Credit Agreement as in effect on the date of the indenture and
any amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings thereof or any other
Credit Facility, provided that those amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings, and any other Credit Facility, are no more restrictive, taken
as a whole, with respect to dividend and other payment restrictions than
those contained in the Credit Agreement, as in effect on the date of the
indenture;
(3) the indenture and the notes or any other indenture governing debt
securities that are no more restrictive, taken as a whole, with respect to
dividend and other payment restrictions than those contained in the
indenture and the notes;
(4) applicable law;
(5) any instrument governing Indebtedness or Capital Stock of a person
acquired by us or any of our Restricted Subsidiaries as in effect at the
time of that acquisition (except to the extent that Indebtedness was
incurred in connection with or in contemplation of that acquisition), which
encumbrance or restriction is not applicable to any person, or the
properties or assets of any person, other than the person, or the property
or assets of the person, so acquired, provided that, in the case of
Indebtedness, that Indebtedness was permitted to be incurred by the terms
of the indenture;
(6) customary non-assignment provisions in leases entered into in the
ordinary course of business and consistent with past practices;
(7) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions on the property so acquired of
the nature described in clause (3) of the preceding paragraph;
(8) any agreement for the sale or other disposition of a Restricted
Subsidiary of our company that restricts distributions by that Restricted
Subsidiary pending its sale or other disposition;
(9) Permitted Refinancing Indebtedness, provided that the restrictions
contained in the agreements governing that Permitted Refinancing
Indebtedness are no more restrictive, taken as a whole, than those
contained in the agreements governing the Indebtedness being refinanced;
(10) Liens securing Indebtedness that limit the right of the debtor to
dispose of the assets subject to that Lien;
(11) provisions with respect to the disposition or distribution of
assets or property in joint venture agreements, asset sale agreements,
stock sale agreements and other similar agreements entered into in the
ordinary course of business;
(12) any Purchase Money Note or other Indebtedness or contractual
requirements incurred with respect to a Qualified Receivables Transaction
relating to a Receivables Subsidiary; and
(13) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of business.
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MERGER, CONSOLIDATION, OR SALE OF ASSETS
The indenture provides that we will not, directly or indirectly:
(1) consolidate or merge with or into another person, whether or not we are the
surviving corporation; or (2) sell, assign, transfer, convey, lease or otherwise
dispose of all or substantially all of the properties or assets of our company
and its Restricted Subsidiaries taken as a whole, in one or more related
transactions, to another person; unless:
(1) either:
(a) we are the surviving corporation, limited liability company,
business trust or limited partnership; or
(b) the person formed by or surviving that consolidation or merger,
if other than our company, or to which that sale, assignment, transfer,
conveyance, lease or other disposition has been made is a corporation,
limited liability company, business trust or limited partnership
organized or existing under the laws of the United States, any state
thereof or the District of Columbia;
provided that in the case of (a) or (b) above, if the surviving person is a
limited liability company, business trust or limited partnership, a corporation
which is a Wholly Owned Subsidiary of the surviving person shall act as joint
and several obligor with respect to the notes;
(2) the person formed by or surviving that consolidation or merger, if
other than our company, or the person to which that sale, assignment,
transfer, conveyance, lease or other disposition has been made assumes all
the obligations of our company under the notes, the indenture and the
Registration Rights Agreement pursuant to agreements reasonably
satisfactory to the trustee;
(3) immediately after the transaction no default or event of default
under the indenture exists; and
(4) we or the person formed by or surviving that consolidation or
merger, if other than our company, or to which that sale, assignment,
transfer, conveyance, lease or other disposition has been made:
(a) will have a Consolidated Net Worth immediately after the
transaction equal to or greater than the Consolidated Net Worth of our
company immediately preceding the transaction; and
(b) on the date of the transaction and after giving pro forma
effect to the transaction and any related financing transactions as if
they had occurred at the beginning of the applicable four-quarter
period, will be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth
in the first paragraph of the "Incurrence of Indebtedness and Issuance
of Preferred Stock" covenant.
This "Merger, Consolidation, or Sale of Assets" covenant will not apply to
a sale, assignment, transfer, conveyance, lease or other disposition of assets
between or among our company and any of its Wholly Owned Subsidiaries that are
not Unrestricted Subsidiaries.
DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES
Our Board of Directors may designate any of our Restricted Subsidiaries to
be an Unrestricted Subsidiary if that designation would not cause a default
under the indenture. If a Restricted Subsidiary our company is designated as an
Unrestricted Subsidiary, the aggregate fair market value of all outstanding
Investments owned by us and our Restricted Subsidiaries in the newly designated
Unrestricted Subsidiary will be deemed to be an Investment made as of the time
of that designation and will either reduce the amount available for Restricted
Payments under the first paragraph of the "Restricted Payments" covenant or
reduce the amount available for future Investments under one or more clauses of
the definition of Permitted Investments, as we shall determine. That designation
will only be permitted if that Investment would be permitted at that time and if
that Restricted Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary. Our Board of Directors may redesignate any Unrestricted Subsidiary
to be our Restricted Subsidiary if the redesignation would not cause a default
under the indenture.
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TRANSACTIONS WITH AFFILIATES
The indenture provides that we will not, and will not permit any of our
Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate (each, an "Affiliate Transaction"), unless:
(1) the Affiliate Transaction is on terms that are no less favorable
to us or the relevant Restricted Subsidiary than terms that would have been
obtained in a comparable transaction by us or that Restricted Subsidiary
with an unrelated person; and
(2) we deliver to the trustee:
(a) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of
$5.0 million, a resolution of our Board of Directors set forth in an
Officers' Certificate certifying that the Affiliate Transaction complies
with this covenant and that the Affiliate Transaction has been approved
by a majority of the disinterested members of our Board of Directors;
and
(b) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of
$10.0 million, an opinion as to the fairness to the holders of that
Affiliate Transaction from a financial point of view issued by an
accounting, appraisal or investment banking firm of national standing.
The following items shall not be deemed to be Affiliate Transactions and,
therefore, will not be subject to the provisions of the prior paragraph:
(1) any employment agreement entered into by our company or any of its
Restricted Subsidiaries in the ordinary course of business and consistent
with the past practice of our company or the Restricted Subsidiary, as the
case may be;
(2) transactions between or among us and/or our Restricted
Subsidiaries;
(3) any sale or other issuance of Equity Interests (other than
Disqualified Stock) of our company;
(4) payment of reasonable directors fees to persons who are not
otherwise Affiliates of our company;
(5) any sale, conveyance or other transfer of accounts receivable and
other related assets customarily transferred in an asset securitization
transaction involving accounts receivable to a Receivables Subsidiary in a
Qualified Receivables Transaction; and
(6) Restricted Payments that are permitted by the "Restricted
Payments" covenant.
ADDITIONAL SUBSIDIARY GUARANTEES
The indenture provides that we will not permit any of our Restricted
Subsidiaries, directly or indirectly, to guarantee or pledge any assets to
secure the payment of any other Indebtedness of our company or any of our
Restricted Subsidiaries unless that Restricted Subsidiary simultaneously
executes and delivers to the Trustee an Opinion of Counsel and a supplemental
indenture providing for a Subsidiary Guarantee of the payment of the notes by
that Restricted Subsidiary, which Subsidiary Guarantee shall be senior to that
Restricted Subsidiary's Guarantee of or pledge to secure the other Indebtedness
if the other Indebtedness is subordinated, and shall be rank equally if the
other Indebtedness is senior; provided that this covenant shall not apply to any
subsidiary that has been properly designated as an Unrestricted Subsidiary or as
a Receivables Subsidiary.
Notwithstanding the preceding paragraph, any Subsidiary Guarantee of the
notes will provide by its terms that it will automatically and unconditionally
be released and discharged under the circumstances described above under the
caption "--Subsidiary Guarantees."
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LIMITATIONS ON ISSUANCES AND SALES OF EQUITY INTERESTS IN WHOLLY OWNED
SUBSIDIARIES
The indenture provides that we will not, and will not permit any of our
subsidiaries to, transfer, convey, sell, lease or otherwise dispose of any
Equity Interests in any of our Wholly Owned Subsidiaries to any person (other
than our company or a Wholly Owned Subsidiary of our company), unless:
(1) the transfer, conveyance, sale, lease or other disposition is of
all the Equity Interests in that Wholly Owned Subsidiary; and
(2) the cash Net Proceeds from that transfer, conveyance, sale, lease
or other disposition are applied in accordance with the "Repurchase at the
Option of Holders--Asset Sales" covenant.
BUSINESS ACTIVITIES
The indenture provides that we will not, and will not permit any of
our Restricted Subsidiaries to, engage in any business other than Permitted
Businesses, except to an extent that would not be material to our company
and its Restricted Subsidiaries taken as a whole.
PAYMENTS FOR CONSENT
The indenture provides that we will not, and will not permit any of
its Restricted Subsidiaries to, directly or indirectly, pay or cause to be
paid any consideration to or for the benefit of any holder of notes for or
as an inducement to any consent, waiver or amendment of any of the terms or
provisions of the indenture or the notes unless that consideration is
offered to be paid and is paid to all holders of the notes that consent,
waive or agree to amend in the time frame set forth in the solicitation
documents relating to that consent, waiver or agreement.
REPORTS
So long as any notes are outstanding, we will furnish to the holders of
notes, within the time periods specified in the Commission's rules and
regulations:
(1) all quarterly and annual financial information that would be
required to be contained in a filing with the Commission on Forms 10-Q and
10-K (or any successor forms) if we were required to file those forms,
including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and, with respect to the annual information
only, a report on the annual financial statements by our certified
independent accountants; and
(2) all current reports that would be required to be filed with the
Commission on Form 8-K (or any successor form) if we were required to file
those reports.
If we have designated any of our subsidiaries as Unrestricted Subsidiaries,
then the quarterly and annual financial information required by the preceding
paragraph shall include a reasonably detailed presentation, either on the face
of the financial statements or in the footnotes, and in Management's Discussion
and Analysis of Financial Condition and Results of Operations, of the financial
condition and results of operations of our company and its Restricted
Subsidiaries separate from the financial condition and results of operations of
our Unrestricted Subsidiaries.
In addition, we will file a copy of all information and reports referred to
in clauses (1) and (2) above with the Commission for public availability within
the time periods specified in the Commission's rules and regulations, unless the
Commission will not accept that filing, and make that information available to
securities analysts and prospective investors upon request. We and the
Subsidiary Guarantors have also agreed that, for so long as any notes remain
outstanding, we will furnish to the holders and to securities analysts and
prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
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EVENTS OF DEFAULT AND REMEDIES
An event of default will occur under the indenture if:
(1) we fail to pay interest on, or Liquidated Damages with respect to,
any notes;
(2) we fail to pay the principal of, or premium, if any, on the notes
when the same becomes due and payable;
(3) we or any of our Restricted Subsidiaries fail to comply with the
provisions described under the captions "--Repurchase at the Option of
Holders--Change of Control," "--Repurchase at the Option of Holders--Asset
Sales," or "--Certain Covenants--Merger, Consolidation or Sale of Assets";
(4) we or any of our Restricted Subsidiaries fail to comply with the
provisions described under the captions "--Certain Covenants--Restricted
Payments" and "--Certain Covenants--Incurrence of Indebtedness and Issuance
of Preferred Stock" for 30 days after notice of that failure has been
given;
(5) we or any of our Restricted Subsidiaries fail to comply with any
of the other agreements in the indenture for 60 days after notice of that
failure has been given;
(6) a default occurs under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by us or any of our Restricted Subsidiaries
(or the payment of which is guaranteed by us or any of our Restricted
Subsidiaries) whether that Indebtedness or guarantee now exists, or is
created after the date of the Indenture, if that default:
(a) is caused by a failure to pay principal of, or interest or
premium, if any, on that Indebtedness prior to the expiration of the
grace period provided in that Indebtedness on the date of that default
(a "Payment Default"); or
(b) results in the acceleration of that Indebtedness prior to its
express maturity,
and, in each case, the principal amount of that Indebtedness, together with
the principal amount of any other Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated,
aggregates $20.0 million or more;
(7) failure by Ames or any of its Subsidiaries to pay final judgments
aggregating in excess of $20.0 million, which judgments are not paid,
discharged or stayed for a period of 60 days;
(8) except as permitted by the indenture, any Subsidiary Guarantee
shall be held in any judicial proceeding to be unenforceable or invalid or
shall cease for any reason to be in full force and effect or any Guarantor,
or any person acting on behalf of any Guarantor, shall deny or disaffirm
its obligations under its Subsidiary Guarantee; and
(9) certain events of bankruptcy or insolvency with respect to our
company or any of its subsidiaries.
In the case of an event of default arising from certain events of
bankruptcy or insolvency, with respect to our company, any subsidiary that is a
Significant Subsidiary or any group of subsidiaries that, taken together, would
constitute a Significant Subsidiary, all outstanding notes will become due and
payable immediately without further action or notice. If any other event of
default occurs and is continuing, the trustee or the holders of at least 25% in
principal amount of the then outstanding notes may declare all the notes to be
due and payable immediately.
Holders of the notes may not enforce the indenture or the notes except as
provided in the indenture. Subject to certain limitations, holders of a majority
in principal amount of the then outstanding notes may direct the trustee in its
exercise of any trust or power. The trustee may withhold notice of any
continuing default or event of default (except a default or event of default
relating to the payment of principal or interest or Liquidated Damages) from
holders of the notes if it determines that withholding notice is in their
interest.
The holders of a majority in aggregate principal amount of the notes then
outstanding may, on behalf of the holders of all of the notes, by notice to the
trustee, waive any existing default or event of default and its
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consequences under the indenture except a continuing default or event of default
in the payment of interest or Liquidated Damages on, or the principal of, the
notes.
In the case of any event of default occurring by reason of any willful
action or inaction taken or not taken by or on behalf of our company with the
intention of avoiding payment of the premium that we would have had to pay upon
an Optional Redemption, an equivalent premium shall also become and be
immediately due and payable to the extent permitted by law upon the acceleration
of the notes. If an event of default occurs prior to April 15, 2003 by reason of
any willful action or inaction taken or not taken by or on behalf of our company
with the intention of avoiding the prohibition on redemption of the notes prior
to April 15, 2003 then the premium specified in the indenture shall also become
immediately due and payable to the extent permitted by law upon the acceleration
of the notes.
We are required to deliver to the trustee an annual statement regarding
compliance with the indenture. Upon becoming aware of any default or event of
default, we are required to deliver to the trustee a statement specifying that
default or event of default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of our company
or any Guarantor, as such, shall have any liability for any obligations of our
company or the Guarantors under the notes, the indenture, the Subsidiary
Guarantees, or for any claim based on, in respect of, or by reason of, those
obligations or their creation. Each holder of notes by accepting a note waives
and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. The waiver may not be effective to
waive liabilities under the federal securities laws.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
We may, at our option and at any time, elect to have all of our obligations
discharged with respect to the outstanding notes and all obligations of the
Guarantors discharged with respect to their Subsidiary Guarantees except for
certain obligations. This is known as "legal defeasance." We may not exercise
our legal defeasance option with respect to:
(1) the rights of holders of outstanding notes to receive payments in
respect of the principal of, premium, if any, or interest and Liquidated
Damages, if any, on those notes when these payments are due from the trust
referred to below;
(2) Our obligations with respect to the notes concerning the issuance
of temporary notes, registration of notes, mutilated, destroyed, lost or
stolen notes and the maintenance of an office or agency for payment and
money for security payments held in trust;
(3) the rights, powers, trusts, duties and immunities of the trustee,
and our obligations in connection therewith; and
(4) the legal defeasance provisions of the indenture.
In addition, we may, at our option and at any time, elect to have the
obligations of our company and the Guarantors released with respect to certain
covenants that are specified in the indenture. This is known as "covenant
defeasance." If we exercise our covenant defeasance option, any failure to
comply with those covenants shall not constitute a default or event of default
with respect to the notes. In the event covenant defeasance occurs, certain
events (not including non-payment, bankruptcy, receivership, rehabilitation and
insolvency events) described under "Events of Default" will no longer constitute
an event of default with respect to the notes.
In order to exercise either legal defeasance or covenant defeasance:
(1) we must irrevocably deposit with the trustee, in trust, for the
benefit of the holders of the notes, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in amounts that will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of, or interest and premium and
Liquidated Damages, if any, on the outstanding notes on
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the stated maturity or on the applicable redemption date, as the case may
be, and we must specify whether the notes are being defeased to maturity or
to a particular redemption date;
(2) in the case of legal defeasance, we shall have delivered to the
trustee an Opinion of Counsel reasonably acceptable to the trustee
confirming that (a) we have received from, or there has been published by,
the Internal Revenue Service a ruling or (b) since the date of the
indenture, there has been a change in the applicable federal income tax
law, in either case to the effect that, and based thereon, that Opinion of
Counsel shall confirm that, the holders of the outstanding notes will not
recognize income, gain or loss for federal income tax purposes as a result
of legal defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the
case if legal defeasance had not occurred;
(3) in the case of covenant defeasance, we shall have delivered to the
trustee an Opinion of Counsel reasonably acceptable to the trustee
confirming that the holders of the outstanding notes will not recognize
income, gain or loss for federal income tax purposes as a result of
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 covenant defeasance had not occurred;
(4) no default or event of default under the indenture shall have
occurred and be continuing either:
(a) on the date of that deposit (other than a default or event of
default resulting from the borrowing of funds to be applied to that
deposit); or
(b) insofar as Events of Default from bankruptcy or insolvency
events are concerned, at any time in the period ending on the 91st day
after the date of deposit;
(5) that legal defeasance or covenant defeasance will not result in a
breach or violation of, or constitute a default under any material
agreement or instrument (other than the Indenture) to which we or any of
our subsidiaries is a party or by which we or any of our subsidiaries are
bound;
(6) we must deliver to the trustee an Opinion of Counsel to the effect
that, assuming no intervening bankruptcy of our company or any Guarantor
between the date of deposit and the 91st day following the deposit and
assuming that no holder is an "insider" of our company under applicable
bankruptcy law, 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;
(7) we must deliver to the trustee an Officers' Certificate stating
that the deposit was not made by us with the intent of preferring the
holders of notes over our other creditors with the intent of defeating,
hindering, delaying or defrauding creditors of our company or others; and
(8) we must deliver to the trustee an Officers' Certificate and an
Opinion of Counsel, each stating that all conditions precedent relating to
the legal defeasance or the covenant defeasance have been complied with.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the indenture or
the notes may be amended or supplemented with the consent of the holders of at
least a majority in principal amount of the notes then outstanding (including,
without limitation, consents obtained in connection with a purchase of, or
tender offer or exchange offer for, notes), and any existing default or
compliance with any provision of the indenture or the notes may be waived with
the consent of those holders.
Without the consent of each holder affected, an amendment or waiver may not
(with respect to any notes held by a non-consenting holder):
(1) reduce the principal amount of notes whose holders must consent to
an amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of any note
or alter the provisions with respect to the redemption of the notes (other
than provisions relating to the covenants described above under the caption
"--Repurchase at the Option of Holders");
(3) reduce the rate of or change the time for payment of interest on
any note;
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(4) waive a default or event of default in the payment of principal
of, or interest or premium, or Liquidated Damages, if any, on the notes,
except a rescission of acceleration of the notes by the holders of at least
a majority in aggregate principal amount of the notes and a waiver of the
payment default that resulted from that acceleration;
(5) make any note payable in money other than that stated in the
notes;
(6) make any change in the provisions of the indenture relating to
waivers of past defaults or the rights of holders of notes to receive
payments of principal of, or interest or premium or Liquidated Damages, if
any, on the notes;
(7) waive a redemption payment with respect to any note, other than a
payment required by one of the covenants described above under the caption
"--Repurchase at the Option of Holders";
(8) release any Guarantor from any of its obligations under its
Subsidiary Guarantee or the indenture, except in accordance with the terms
of the indenture; or
(9) make any change in this provision.
Notwithstanding the preceding, without the consent of any holder of notes,
we, the Guarantors and the trustee may amend or supplement the indenture or the
notes:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated notes in addition to or in place of
certificated notes;
(3) to provide for the assumption of our obligations to holders of
notes in the case of a merger or consolidation or sale of all or
substantially all of our assets;
(4) to make any change that would provide any additional rights or
benefits to the holders of notes or that does not adversely affect the
legal rights under the Indenture of any holder of notes;
(5) to provide for the issuance of additional notes in accordance with
the provisions set forth in the indenture; or
(6) to comply with requirements of the Commission in order to effect
or maintain the qualification of the indenture under the Trust Indenture
Act.
CONCERNING THE TRUSTEE
If the trustee becomes a creditor of our company or any Guarantor, the
indenture limits its right to obtain payment of claims in certain cases, or to
realize on certain property received in respect of any claim as security or
otherwise. The trustee will be permitted to engage in other transactions;
however, if it acquires any conflicting interest it must eliminate that conflict
within 90 days, apply to the Commission for permission to continue or resign.
The holders of a majority in principal amount of the then outstanding notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the trustee, subject to
certain exceptions. The indenture provides that in case an event of default
shall occur and be continuing, the trustee will be required, in the exercise of
its power, to use the degree of care of a prudent man in the conduct of his own
affairs. Subject to these provisions, the trustee will be under no obligation to
exercise any of its rights or powers under the indenture at the request of any
holder of notes, unless that holder shall have offered to the trustee security
and indemnity satisfactory to it against any loss, liability or expense.
ADDITIONAL INFORMATION
Anyone who receives this prospectus may obtain a copy of the indenture and
Registration Rights Agreement without charge by writing to: Ames Department
Stores, Inc., 2418 Main Street, Rocky Hill, Connecticut 06067, Attention:
Investor Relations.
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DEFINED TERMS
Some of the defined terms used in the indenture are set forth below.
Reference is made to the indenture for a full disclosure of those terms, as well
as any other capitalized terms used in this section for which no definition is
provided.
"Acquired Debt" means, with respect to any specified person:
(1) Indebtedness of any other person existing at the time that other
person is merged with or into or became a Restricted Subsidiary of
the specified person, whether or not that Indebtedness is incurred
in connection with, or in contemplation of, that other person
merging with or into, or becoming a Restricted Subsidiary of, the
specified person; and
(2) Indebtedness secured by a Lien encumbering any asset acquired by
the specified person.
"Additional Assets" means any property or assets (other than Capital Stock,
Indebtedness or rights to receive payments over a period greater than 180 days)
that are used or useful by us or a Restricted Subsidiary of our company in a
Permitted Business.
"Affiliate" of any specified person means any other person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the specified person. For purposes of this definition, "control,"
as used with respect to any person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of that person, whether through the ownership of voting securities, by
agreement or otherwise; provided that beneficial ownership of 10% or more of the
Voting Stock of a person shall be deemed to be control. For purposes of this
definition, the terms "controlling," "controlled by" and "under common control
with" shall have correlative meanings.
"Asset Sale" means:
(1) the sale, lease, conveyance or other disposition of any assets or
rights, other than sales of inventory in the ordinary course of
business consistent with past practices; provided that the sale,
lease, conveyance or other disposition of all or substantially all
of the assets of our company and its Restricted Subsidiaries taken
as a whole will be governed by the covenant described above under
the caption "--Repurchase at the Option of Holders--Change of
Control" and/or the covenant described above under the caption
"--Certain Covenants--Merger, Consolidation or Sale of Assets" and
not by the covenant described above under the caption
"--Repurchase at the Option of Holders--Asset Sales;" and
(2) the issuance of Equity Interests in any of the Restricted
Subsidiaries of our company or the sale of Equity Interests in any
of those Restricted Subsidiaries.
Notwithstanding the preceding, the following items shall not be deemed to be
Asset Sales:
(1) any single transaction or series of related transactions that:
(a) involves assets having a fair market value of less than
$2.0 million; or
(b) results in net proceeds to our company and its Restricted
Subsidiaries of less than $2.0 million;
(2) a transfer of assets between or among our company and its
Restricted Subsidiaries,
(3) an issuance of Equity Interests by a Restricted Subsidiary of our
company to us or to another of our Restricted Subsidiaries;
(4) the sale or lease of equipment, inventory, accounts receivable or
other assets in the ordinary course of business, including from
time to time the closing of one or more stores, the disposition or
transfer of store leases, the clearance or liquidation of
inventory in connection with the closing of one or more stores or
the conversion of one or more acquired stores to Ames stores, and
the disposition of related fixtures, equipment or other property;
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(5) the sale or other disposition of cash or Cash Equivalents;
(6) the sale, conveyance or other transfer of accounts receivable and
related assets customarily transferred in an asset securitization
transaction involving accounts receivable to a Receivables
Subsidiary or by a Receivables Subsidiary, in connection with a
Qualified Receivables Transaction; and
(7) a Restricted Payment permitted by or a Permitted Investment that
is not prohibited by the "Restricted Payments" covenant.
"Attributable Debt" in respect of a sale and leaseback transaction means,
at the time of determination, the present value of the obligation of the lessee
for net rental payments during the remaining term of the lease included in that
transaction including any period for which that lease has been extended or may,
at the option of the lessor, be extended. The present value shall be calculated
using a discount rate equal to the rate of interest implicit in the transaction,
determined in accordance with GAAP.
"Beneficial Owner" has the meaning assigned to that term in Rule 13d-3 and
Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section
13(d)(3) of the Exchange Act), that "person" shall be deemed to have beneficial
ownership of all securities that the "person" has the right to acquire by
conversion or exercise of other securities, whether the right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition. The terms "Beneficially Owns" and "Beneficially Owned" shall have a
corresponding meaning.
"Board of Directors" means:
(1) with respect to a corporation, the board of directors of the
corporation or any committee thereof duly authorized to act on
behalf of the board;
(2) with respect to a partnership, the board of directors of the
general partner of the partnership; and
(3) with respect to any other person, the board or committee of that
person serving a similar function.
"Board Resolution" means, with respect to any person, a copy of a
resolution certified by the Secretary or Assistant Secretary of that person to
have been duly adopted by the Board of Directors of that person and to be in
full force and effect on the date of certification, and delivered to the
trustee.
"Borrowing Base" means, as of any date, an amount equal to 75% of the book
value of all inventory owned by Ames and its Restricted Subsidiaries as of that
date, calculated on a consolidated basis and in accordance with GAAP. To the
extent that information is not available as to the amount of inventory as of a
specific date, we may utilize the most recent available information for purposes
of calculating the Borrowing Base.
"Capital Lease Obligation" means, at the time any determination is to be
made, the amount of the liability in respect of a capital lease that would at
that time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents
(however designated) of corporate stock;
(3) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited);
and
(4) any other interest or participation that confers on a person the
right to receive a share of the profits and losses of, or
distributions of assets of, the issuing person.
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"Cash Equivalents" means:
(1) United States dollars;
(2) securities issued or directly and fully guaranteed or insured by
the United States government or any agency or instrumentality
thereof (provided that the full faith and credit of the United
States is pledged in support thereof) having maturities of not
more than six months from the date of acquisition;
(3) certificates of deposit and eurodollar time deposits with
maturities of six months or less from the date of acquisition,
bankers' acceptances with maturities not exceeding six months and
overnight bank deposits, in each case, with any lender party to
any Credit Facility or with any domestic commercial bank having
capital and surplus in excess of $500.0 million and a Thomson
Financial BankWatch Rating of "B" or better;
(4) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (2) and
(3) above entered into with any financial institution meeting the
qualifications specified in clause (3) above;
(5) commercial paper having the highest rating obtainable from Moody's
Investors Service or Standard & Poor's Ratings Services and in
each case maturing within six months after the date of
acquisition; and
(6) money market funds at least 95% of the assets of which constitute
Cash Equivalents of the kinds described in clauses (1) through
(5) of this definition.
"Change of Control" means the occurrence of any of the following:
(1) the direct or indirect sale, lease, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in one
or a series of related transactions, of all or substantially all
of the properties or assets of our company and its Restricted
Subsidiaries taken as a whole to any "person" (as that term is
used in Section 13(d)(3) of the Exchange Act);
(2) the adoption of a plan relating to the liquidation or dissolution
of our company;
(3) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is
that any "person" (as defined above) becomes the Beneficial Owner,
directly or indirectly, of more than 40% of the Voting Stock of
our company, measured by voting power rather than number of
shares;
(4) the first day on which a majority of the members of our Board of
Directors are not Continuing Directors; or
(5) the consolidation or merger of our company with or into, any
person, or the consolidation or merger of any person with or into,
our company, pursuant to a transaction in which any of the
outstanding Voting Stock of our company or the other person is
converted into or exchanged for cash, securities or other
property, other than any transaction where our Voting Stock
outstanding immediately prior to that transaction is converted
into or exchanged for Voting Stock (other than Disqualified Stock)
constituting a majority of the outstanding shares of the Voting
Stock of the surviving or transferee person (immediately after
giving effect to the issuance).
For the purpose of this definition of "Change of Control," any transfer of
any equity of an entity that was formed for the purpose of acquiring our Voting
Stock will be deemed to be a transfer of equity interest in our company.
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"Consolidated Cash Flow" means, with respect to any specified person for
any period, the Consolidated Net Income of that person for that period plus:
(1) an amount equal to any extraordinary loss plus any net loss
realized by that person or any of its Restricted Subsidiaries in
connection with an Asset Sale, to the extent the losses were
deducted in computing that person's Consolidated Net Income; plus
(2) provision for taxes based on income or profits of that person and
its Restricted Subsidiaries for that period, to the extent that
the provision for taxes was deducted in computing that person's
Consolidated Net Income; plus
(3) consolidated interest expense of that person and its Restricted
Subsidiaries for that period, whether paid or accrued and whether
or not capitalized (including, without limitation, amortization of
debt issuance costs and original issue discount, non-cash interest
payments, the interest component of any deferred payment
obligations, the interest component of all payments associated
with Capital Lease Obligations, imputed interest with respect to
Attributable Debt, commissions, discounts and other fees and
charges incurred in respect of letter of credit or bankers'
acceptance financings, and net of the effect of all payments made
or received pursuant to Hedging Obligations), to the extent that
the expense was deducted in computing that person's Consolidated
Net Income; plus
(4) depreciation, amortization (including amortization of goodwill and
other intangibles but excluding amortization of prepaid cash
expenses that were paid in a prior period) and other non-cash
expenses (excluding any non-cash expense to the extent that it
represents an accrual of or reserve for cash expenses in any
future period or amortization of a prepaid cash expense that was
paid in a prior period) of that person and its Restricted
Subsidiaries for that period to the extent that the depreciation,
amortization and other non-cash expenses were deducted in
computing that person's Consolidated Net Income; minus
(5) non-cash items increasing that person's Consolidated Net Income
for that period, other than the accrual of revenue in the ordinary
course of business, in each case, on a consolidated basis and
determined in accordance with GAAP.
Notwithstanding the preceding, the provision for taxes based on the income
or profits of, and the depreciation and amortization and other non-cash expenses
of, our subsidiaries shall be added to Consolidated Net Income to compute our
Consolidated Cash Flow only to the extent that a corresponding amount would be
permitted at the date of determination to be dividended to us by that subsidiary
without prior governmental approval (that has not been obtained), and without
direct or indirect restriction pursuant to the terms of its charter and all
agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any specified person for
any period, the aggregate of the Net Income of that person and its Restricted
Subsidiaries for that period, on a consolidated basis, determined in accordance
with GAAP; provided that:
(1) (a) the Net Income (but not loss) of any person that is not a
Restricted Subsidiary or that is accounted for by the equity
method of accounting shall be included only to the extent of the
amount of dividends or distributions paid in cash to the specified
person or a Restricted Subsidiary of that person and (b) the Net
Income (but not loss) of any Unrestricted Subsidiary shall be
excluded, whether or not distributed to the specified person or
one of its Subsidiaries;
(2) the Net Income of any Restricted Subsidiary shall be excluded to
the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is
not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, 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 Restricted Subsidiary
or its stockholders;
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(3) the Net Income of any person acquired in a pooling of interests
transaction for any period prior to the date of acquisition shall
be excluded; and
(4) the cumulative effect of a change in accounting principles shall
be excluded.
"Consolidated Net Worth" means, with respect to any specified person as of
any date, the sum of:
(1) the consolidated equity of the common stockholders of that person
and its consolidated subsidiaries as of that date; plus
(2) the respective amounts reported on that person's balance sheet as
of that date with respect to any series of preferred stock (other
than Disqualified Stock) that by its terms is not entitled to the
payment of dividends unless those dividends may be declared and
paid only out of net earnings in respect of the year of that
declaration and payment, but only to the extent of any cash
received by that person upon issuance of that preferred stock.
"Continuing Director" means, as of any date of determination, any member of
our Board of Directors who:
(1) was a member of that Board of Directors on the date of the
indenture; or
(2) was nominated for election or elected to our Board of Directors
with the approval of a majority of the Continuing Directors who
were members of that Board at the time of the nomination or
election.
"Credit Agreement" means the Credit Agreement, dated as of December 31,
1998, by and among Ames, the lenders named in the agreement and Bank of America
NT&SA, as Administrative Agent, providing for revolving credit borrowings and
letters of credit, including any related notes, guarantees, collateral
documents, instruments and agreements executed in connection therewith, in each
case as amended, restated, modified, renewed, refunded, replaced or refinanced
from time to time.
"Credit Facilities" means, one or more debt facilities, including the
Credit Agreement, or commercial paper facilities, in each case with banks or
other institutional lenders providing for revolving credit loans, term loans,
receivables financing or letters of credit, in each case as amended, restated,
modified, renewed, refunded, replaced or refinanced in whole or in part from
time to time.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or is redeemable at the option of the
holder thereof, in whole or in part, on or prior to the date that is 91 days
after the date on which the notes mature. Notwithstanding the preceding
sentence, any Capital Stock that would constitute Disqualified Stock solely
because the holders thereof have the right to require us to repurchase that
Capital Stock upon the occurrence of a change of control or an asset sale shall
not constitute Disqualified Stock if the terms of that Capital Stock provide
that we may not repurchase or redeem that Capital Stock pursuant to those
provisions unless the repurchase or redemption complies with the "Restricted
Payments" covenant.
"Domestic Subsidiary" means any subsidiary of our company that was formed
under the laws of the United States or any state thereof or the District of
Columbia or that guarantees or otherwise provides direct credit support for any
of our Indebtedness.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Existing Indebtedness" means Indebtedness of our company and its
subsidiaries (other than Indebtedness under the Credit Agreement) in existence
on the date of the indenture, until those amounts are repaid.
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"Fixed Charges" means, with respect to any specified person or any of its
Restricted Subsidiaries for any period, the sum, without duplication, of:
(1) the consolidated interest expense of that person and its
Restricted Subsidiaries for that period, whether paid or accrued,
including, without limitation, amortization of debt issuance costs
and original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease
Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and
net of the effect of all payments made or received pursuant to
Hedging Obligations; plus
(2) the consolidated interest of that person and its Restricted
Subsidiaries that was capitalized during that period; plus
(3) any interest expense on Indebtedness of another person that is
guaranteed by the specified person or one of its Restricted
Subsidiaries or secured by a Lien on assets of that person or one
of its Restricted Subsidiaries, whether or not that Guarantee or
Lien is called upon; plus
(4) the product of (a) all dividends, whether paid or accrued, whether
or not in cash, on any series of preferred stock of that person or
any of its Restricted Subsidiaries, other than dividends on Equity
Interests payable solely in Equity Interests of our company (other
than Disqualified Stock) or to us or a Restricted Subsidiary of
our company, times (b) a fraction, the numerator of which is one
and the denominator of which is one minus the then current
combined federal, state and local statutory tax rate of that
person, expressed as a decimal,
in each case, on a consolidated basis and in accordance with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any specified person
and its Restricted Subsidiaries for any period, the ratio of the Consolidated
Cash Flow of that person and its Restricted Subsidiaries for that period to the
Fixed Charges of that person and its Restricted Subsidiaries for that period. In
the event that the specified person or any of its Restricted Subsidiaries
incurs, assumes, guarantees, repays, repurchases or redeems any Indebtedness
(other than ordinary working capital borrowings) or issues, repurchases or
redeems preferred stock subsequent to the commencement of the period for which
the Fixed Charge Coverage Ratio is being calculated and on or prior to the date
on which the event for which the calculation of the Fixed Charge Coverage Ratio
is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be
calculated giving pro forma effect to that incurrence, assumption, Guarantee,
repayment, repurchase or redemption of Indebtedness, or that issuance,
repurchase or redemption of preferred stock, and the use of the proceeds
therefrom as if the same had occurred at the beginning of the applicable
four-quarter reference period.
In addition, for purposes of calculating the Fixed Charge Coverage Ratio:
(1) acquisitions that have been made by the specified person or any of
its subsidiaries, including through mergers or consolidations and
including any related financing transactions, during the
four-quarter reference period or subsequent to the reference
period and on or prior to the Calculation Date shall be given pro
forma effect as if they had occurred on the first day of the
four-quarter reference period and Consolidated Cash Flow for that
reference period shall be calculated on a pro forma basis in
accordance with Regulation S-X under the Securities Act, but
without giving effect to clause (3) of the proviso set forth in
the definition of Consolidated Net Income;
(2) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, shall be
excluded; and
(3) the Fixed Charges attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded, but
only to the extent that the obligations giving rise to those Fixed
Charges will not
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be obligations of the specified person or any of its Restricted
Subsidiaries following the Calculation Date.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in other statements by any other
entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of the Indenture.
"Guarantee" means a guarantee, other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness.
"Guarantors" means each of:
(1) our Domestic Subsidiaries in existence on the date of the
indenture; and
(2) any other subsidiary that executes a Subsidiary Guarantee in
accordance with the provisions of the indenture;
and their respective successors and assigns.
"Hedging Obligations" means, with respect to any specified person, the
obligations of that person under:
(1) interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements;
(2) foreign exchange contracts and currency swap agreements; and
(3) other agreements or arrangements entered into in the ordinary
course of business and consistent with past practices designed to
protect that person against fluctuations in interest rates or
currency exchange rates.
"Hills Indenture" means the indenture dated as of April 19, 1996 between
Hills Stores Company and Fleet National Bank, as trustee, pursuant to which
$195,000,000 of 12.5% Senior Notes due 2003 were originally issued.
"Indebtedness" means, with respect to any specified person, any
indebtedness of that person, whether or not contingent, in respect of:
(1) borrowed money;
(2) evidenced by bonds, notes, debentures or similar instruments or
letters of credit (or reimbursement agreements in respect thereof);
(3) banker's acceptances;
(4) representing Capital Lease Obligations;
(5) the balance deferred and unpaid of the purchase price of any
property, except any balance that constitutes an accrued expense or trade
payable; or
(6) representing any Hedging Obligations,
if and to the extent any of the preceding items (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of the
specified person prepared in accordance with GAAP. In addition, the term
"Indebtedness" includes all Indebtedness of others secured by a Lien on any
asset of the specified person (whether or not that Indebtedness is assumed by
the specified person) and, to the extent not otherwise included, the Guarantee
by the specified person of any Indebtedness of any other person.
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The amount of any Indebtedness outstanding as of any date shall be:
(1) the accreted value thereof, in the case of any Indebtedness issued
with original issue discount; and
(2) the principal amount thereof, together with any interest thereon
that is more than 30 days past due, in the case of any other Indebtedness.
"Investments" means, with respect to any person, all investments by that
person in other persons (including Affiliates) in the forms of direct or
indirect loans (including Guarantees or other obligations), advances or capital
contributions (excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business), purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If we or any of
our Restricted Subsidiaries sell or otherwise dispose of any Equity Interests of
any direct or indirect Restricted Subsidiary of our company such that, after
giving effect to any sale or disposition, that person is no longer our
Restricted Subsidiary, we shall be deemed to have made an Investment on the date
of that sale or disposition equal to the fair market value of the Equity
Interests of that Restricted Subsidiary not sold or disposed of in an amount
determined as provided in the final paragraph of the "Restricted Payments"
covenant.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of that asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.
"Net Income" means, with respect to any specified person, the net income
(loss) of that person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however:
(1) any gain (but not loss), together with any related provision for
taxes on the gain (but not loss), realized in connection with:
(a) any Asset Sale; or
(b) the disposition of any securities by that person or any of its
Restricted Subsidiaries or the extinguishment of any Indebtedness of
that person or any of its Restricted Subsidiaries; and
(2) any extraordinary gain (but not loss), together with any related
provision for taxes on that extraordinary gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by us or any of
our Restricted Subsidiaries in respect of any Asset Sale, including any cash
received upon the sale or other disposition of any non-cash consideration
received in any Asset Sale, net of the direct costs relating to that Asset Sale,
including legal, accounting and investment banking fees, and sales commissions,
and any relocation expenses incurred as a result thereof, taxes paid or payable
as a result thereof, in each case, after taking into account any available tax
credits or deductions and any tax sharing arrangements, and amounts required to
be applied to the repayment of Indebtedness (other than Indebtedness under any
one or more Credit Facilities), secured by a Lien on the asset or assets that
were the subject of that Asset Sale and any reserve for adjustment in respect of
the sale price of that asset or those assets established in accordance with
GAAP.
"Non-Recourse Debt" means Indebtedness:
(1) as to which neither we nor any of our Restricted Subsidiaries
(a) provides credit support of any kind (including any undertaking,
agreement or instrument that would constitute Indebtedness),
(b) is directly or indirectly liable as a guarantor or otherwise,
or
(c) constitutes the lender;
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(2) no default with respect to which (including any rights that the
holders thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit upon notice, lapse of time or both any holder of
any other Indebtedness (other than the notes) of our company or any of its
Restricted Subsidiaries to declare a default on the other Indebtedness or
cause the payment thereof to be accelerated or payable prior to its stated
maturity; and
(3) the incurrence of which will not result in any recourse to the
stock or assets of our company or any of its Restricted Subsidiaries.
"Obligations" means any principal, premium, if any, interest, penalties,
fees, indemnifications, guarantees, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.
"Permitted Business" means the business conducted (or proposed to be
conducted, including activities referred to as being contemplated by Ames, as
described or referred to in this prospectus) by us and our Restricted
Subsidiaries as of the date of the indenture and any and all businesses that in
the good faith judgment of our Board of Directors are reasonably related
businesses, including reasonably related extensions or expansions thereof.
"Permitted Investments" means:
(1) any Investment in our company or in a Restricted Subsidiary of our
company that is a Guarantor;
(2) any Investment in Cash Equivalents;
(3) any Investment by us or any of our Restricted Subsidiaries in a
person engaged in a Permitted Business, if as a result of that Investment:
(a) that person becomes our Restricted Subsidiary and a Guarantor;
or
(b) that person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets to, or is
liquidated into, our company or a Restricted Subsidiary of our company
that is a Guarantor;
(4) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in
compliance with the covenant described above under the caption
"--Repurchase at the Option of Holders--Asset Sales;"
(5) any acquisition of assets solely in exchange for the issuance of
Equity Interests (other than Disqualified Stock) of our company;
(6) Hedging Obligations;
(7) loans and advances to employees and officers of our company and
its Restricted Subsidiaries in the ordinary course of business for bona
fide business purposes not to exceed an aggregate of $5.0 million at any
one time outstanding;
(8) any Investment by us or a Restricted Subsidiary of our company in
a Receivables Subsidiary or any Investment by a Receivables Subsidiary in
any other person, in each case, in connection with a Qualified Receivables
Transaction, provided, that the Investment in any person is in the form of
a Purchase Money Note, an equity interest or an interest in accounts
receivable generated by us or our Restricted Subsidiary and transferred to
any person in connection with a Qualified Receivables Transaction or any
person owning those accounts receivable; and
(9) other Investments in any person having an aggregate fair market
value (measured on the date each Investment was made and without giving
effect to subsequent changes in value), when taken together with all other
Investments made pursuant to this clause (9) that are at the time
outstanding not to exceed $50.0 million.
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"Permitted Liens" means:
(1) Liens on assets of our company and any Guarantor securing
Indebtedness and other Obligations under Credit Facilities that were
permitted by the terms of the Indenture to be incurred;
(2) Liens in favor of our company or the Guarantors;
(3) Liens on property of a person existing at the time that person is
merged with or into or consolidated with us or any of our Restricted
Subsidiaries; provided that those Liens were in existence prior to the
contemplation of the merger or consolidation and do not extend to any
assets other than those of the person merged into or consolidated with us
or the Restricted Subsidiary;
(4) Liens on property existing at the time of acquisition thereof by
our company or any of our Restricted Subsidiaries, provided that those
Liens were in existence prior to the contemplation of the acquisition;
(5) Liens to secure the performance of statutory obligations, surety
or appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business;
(6) Liens to secure Indebtedness (including Capital Lease Obligations)
permitted by clause (5) of the second paragraph of the "Incurrence of
Indebtedness and Issuance of Preferred Stock" covenant covering only the
assets acquired with that Indebtedness;
(7) Liens existing on the date of the indenture;
(8) Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded,
provided that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefor;
(9) Liens on assets of Unrestricted Subsidiaries that secure
Non-Recourse Debt of Unrestricted Subsidiaries;
(10) Liens on accounts receivable and related assets of a Receivables
Subsidiary arising in connection with a Qualified Receivables Transaction;
and
(11) Liens incurred in the ordinary course of business of our company
or any of our subsidiaries with respect to obligations that do not exceed
$35.0 million at any one time outstanding.
"Permitted Refinancing Indebtedness" means any Indebtedness of our company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of our company or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); provided that:
(1) the principal amount (or accreted value, if applicable) of the
Permitted Refinancing Indebtedness does not exceed the principal amount (or
accreted value, if applicable), of the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded (plus all accrued
interest thereon and the amount of all expenses and premiums incurred in
connection therewith);
(2) the Permitted Refinancing Indebtedness has a final maturity date
later than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of,
the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded;
(3) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the notes, the
Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and is subordinated in right of payment to, the
notes on terms at least as favorable to the holders of notes as those
contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and
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(4) the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is incurred either by us or by our Restricted
Subsidiary who is the obligor on the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded.
"Public Equity Offering" means any underwritten public offering of our
common stock in which the gross proceeds to us are at least $50.0 million.
"Purchase Money Note" means a promissory note evidencing a line of credit,
or evidencing other Indebtedness owed to us or any of our Restricted
Subsidiaries in connection with a Qualified Receivables Transaction, which note
shall be repaid from cash available to the maker of that note, other than
amounts required to be established as reserves pursuant to agreement, amounts
paid to investors in respect of interest, principal and other amounts owing to
those investors and amounts paid in connection with the purchase of newly
generated accounts receivable.
"Qualified Receivables Transaction" means any transaction or series of
transactions that may be entered into by us or any of our Restricted
Subsidiaries pursuant to which we or any Restricted Subsidiary of our company
may sell, convey or otherwise transfer to (a) a Receivables Subsidiary (in the
case of a transfer by us or any of our Restricted Subsidiaries) and (b) any
other person (in the case of a transfer by a Receivables Subsidiary), or may
grant a security interest in, any accounts receivable (whether now existing or
arising in the future) of our company or any Restricted Subsidiary of our
company and any asset related thereto including all collateral securing the
accounts receivable, all contracts and all guarantees or other obligations in
respect of the accounts receivable, proceeds of the accounts receivable and
other assets which are customarily transferred, or in respect of which security
interests are customarily granted, in connection with asset securitization
transactions involving accounts receivable.
"Receivables Subsidiary" means a Wholly Owned Subsidiary of our company
(other than a Guarantor) which engages in no activities other than in connection
with the financing of accounts receivables and which is designated by our Board
of Directors (as provided below) as a Receivables Subsidiary:
(1) no portion of the Indebtedness or any other Obligations
(contingent or otherwise) of which
(a) is guaranteed by us or any other Restricted Subsidiary of our
company (excluding guarantees of Obligations (other than the principal
of, and interest on, Indebtedness) pursuant to Standard Securitization
Undertakings),
(b) is recourse to or obligates us or any other Restricted
Subsidiary of our company in any way other than pursuant to Standard
Securitization Undertakings, or
(c) subjects any property or asset of our company or any of its
other Restricted Subsidiaries, directly or indirectly, contingently or
otherwise, to the satisfaction thereof, other than pursuant to Standard
Securitization Undertakings;
(2) with which neither we nor any of our other Restricted Subsidiaries
have any material contract, agreement, arrangement or understanding (except
in connection with a Purchase Money Note or Qualified Receivables
Transaction) other than on terms no less favorable to us or the other
Restricted Subsidiary than those that might be obtained at the time from
persons that are not Affiliates of our company, other than fees payable in
the ordinary course of business in connection with servicing accounts
receivable; and
(3) as to which neither we nor any other Restricted Subsidiary of our
company have any obligation to maintain or preserve the entity's financial
condition or cause the entity to achieve certain levels of operating
results.
Any designation of a subsidiary of our company as a Receivables Subsidiary
shall be evidenced to the trustee by filing with the trustee a certified copy of
the Board Resolution of our Board of Directors giving effect to the designation
and an Officers' Certificate certifying that the designation complied with the
preceding conditions and was permitted by the Indenture.
"Restricted Investment" means an Investment other than a Permitted
Investment.
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"Restricted Subsidiary" of a person means any subsidiary of the referent
person that is not an Unrestricted Subsidiary.
"Significant Subsidiary" means any subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Act, as that Regulation is in effect on the date hereof.
"Standard Securitization Undertakings" means representations, warranties,
covenants and indemnities entered into by us or any Restricted Subsidiary of our
company which are reasonably customary in an accounts receivable transaction.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which the payment of
interest or principal was scheduled to be paid in the original documentation
governing that Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any specified person:
(1) any corporation, association or other business entity of which
more than 50% of the total voting power of shares of Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that person or one or more of the
other subsidiaries of that person (or a combination thereof); and
(2) any partnership (a) the sole general partner or the managing
general partner of which is that person or a Subsidiary of that person or
(b) the only general partners of which are that person or one or more
subsidiaries of that person (or any combination thereof).
"Total Assets" means, as of any date, our total consolidated assets as of
that date, as determined in accordance with GAAP. To the extent that information
is not available as to the amount of total consolidated assets as of a specific
date, we may utilize the most recent available information for purposes of
calculating Total Assets.
"Unrestricted Subsidiary" means any subsidiary of our company that is
designated by our Board of Directors as an Unrestricted Subsidiary pursuant to a
Board Resolution, but only to the extent that the subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt;
(2) is not party to any agreement, contract, arrangement or
understanding with us or any of our Restricted Subsidiaries unless the
terms of that agreement, contract, arrangement or understanding are no less
favorable to our company or its Restricted Subsidiary than those that might
be obtained at the time from persons who are not Affiliates of our company:
(3) is a person with respect to which neither we nor any of our
Restricted Subsidiaries have any direct or indirect obligation
(a) to subscribe for additional Equity Interests or
(b) to maintain or preserve that person's financial condition or to
cause that person to achieve any specified levels of operating results;
(4) has not guaranteed or otherwise directly or indirectly provided
credit support for any Indebtedness of our company or any of its Restricted
Subsidiaries; and
(5) has at least one director on its Board of Directors that is not a
director or executive officer of our company or any of its Restricted
Subsidiaries and has at least one executive officer that is not a director
or executive officer of our company or any of its Restricted Subsidiaries.
Any designation of a subsidiary of our company as an Unrestricted
Subsidiary shall be evidenced to the trustee by filing with the trustee a
certified copy of the Board Resolution of our Board of Directors giving effect
to the designation and an Officers' Certificate certifying that the designation
complied with the preceding conditions and was permitted by the "Restricted
Payments" covenant. If, at any time, any
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Unrestricted Subsidiary would fail to meet the preceding requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of the indenture and any Indebtedness of that subsidiary
shall be deemed to be incurred by a Restricted Subsidiary of our company as of
that date and, if that Indebtedness is not permitted to be incurred as of that
date under the "Incurrence of Indebtedness and Issuance of Preferred Stock"
covenant, we shall be in default of that covenant. Our Board of Directors may at
any time designate any Unrestricted Subsidiary to be our Restricted Subsidiary;
provided that this designation shall be deemed to be an incurrence of
Indebtedness by the Restricted Subsidiary of any outstanding Indebtedness of the
Unrestricted Subsidiary and this designation shall only be permitted if
(1) that Indebtedness is permitted under the covenant described under the
caption "--Certain Covenants--Incurrence of Indebtedness and Issuance of
Preferred Stock," calculated on a pro forma basis as if this designation had
occurred at the beginning of the four-quarter reference period; and (2) no
default or event of default under the indenture would be in existence following
this designation.
"Voting Stock" of any person as of any date means the Capital Stock of that
person that is at the time entitled to vote in the election of the Board of
Directors of that person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing:
(1) the sum of the products obtained by multiplying (a) the amount of
each then remaining installment, sinking fund, serial maturity or other
required payments of principal, including payment at final maturity, in
respect thereof, by (b) the number of years (calculated to the nearest
one-twelfth) that will elapse between that date and the making of the
payment; by
(2) the then outstanding principal amount of that Indebtedness.
"Wholly Owned Subsidiary" of any specified person means a subsidiary of
that person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares or shares or interests required
to be held by foreign nationals, in each case, to the extent mandated by
applicable law) shall at the time be owned by that person and/or by one or more
Wholly Owned Subsidiaries of that person.
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FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the material United States federal income tax
consequences generally applicable to the exchange offer. The statements of
United States tax law set forth below are based on the laws, regulations and
administrative and judicial decisions applicable as of the date of this
prospectus, and are subject to any changes in relevant United States authorities
occurring after that date. Any of these changes, which could be retroactive,
could affect the continuing validity of this discussion.
The exchange of old notes for new notes in the exchange offer will not be a
taxable exchange for U.S. federal income tax purposes. As a result, there will
be no federal income tax consequences to a holder exchanging an old unregistered
note for a new registered note in the exchange offer. A holder should have the
same adjusted basis and holding period in the new note as it had in the old note
immediately before the exchange.
The preceding paragraph summarizes some of the material U.S. federal income
tax consequences associated with the exchange of the old notes for registered
notes in the exchange offer. This summary applies only to those persons who are
the initial holders of old notes, who acquired old notes for cash and who hold
old notes as capital assets, and assumes that the old notes were not issued with
"original issue discount," as defined in the Internal Revenue Code of 1986. This
summary also does not address the U.S. federal income tax consequences of the
exchange of notes not held as capital assets within the meaning of Section 1221
of the Code, or the U.S. federal income tax consequences to investors subject to
special treatment under the U.S. federal income tax laws, such as dealers in
securities or foreign currency, tax-exempt entities, banks, thrifts, insurance
companies, persons that hold the notes as part of a "straddle," a "hedge"
against currency risk or a "conversion transaction," persons that have a
"functional currency" other than the U.S. dollar and investors in pass-through
entities. It also does not address any consequences arising under U.S. federal
gift and estate taxes or under the tax laws of any state, local or foreign
jurisdiction.
PERSONS CONSIDERING THE EXCHANGE OF OLD NOTES FOR REGISTERED NOTES IN THE
EXCHANGE OFFER SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE APPLICATION
OF UNITED STATES FEDERAL INCOME TAX LAWS, AS WELL AS THE LAWS OF ANY STATE,
LOCAL, OR OTHER TAXING JURISDICTION APPLICABLE TO THEIR PARTICULAR SITUATIONS.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives new notes for its own account pursuant to
the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of those notes. This prospectus, as it may be amended
or supplemented from time to time, may be used by a broker-dealer in connection
with resales of new notes received in exchange for old notes that had been
acquired as a result of market-making or other trading activities. We have
agreed that, for a period of 180 days after the expiration date of the exchange
offer, we will make this prospectus, as it may be amended or supplemented,
available to any broker-dealer for use in connection with any such resale.
We will not receive any proceeds from any sales of notes by broker-dealers.
New notes received by broker-dealers for their own account pursuant to the
exchange offer may be sold from time to time in one or more transactions in the
over-the-counter market, in negotiated transactions, through the writing of
options on those notes or a combination of those methods, at market prices
prevailing at the time of resale, at prices related to prevailing market prices
or at negotiated prices. These resales may be made directly to purchasers or to
or through brokers or dealers who may receive compensation in the form of
commissions or concessions from the selling broker-dealer or the purchasers of
the new notes. Any broker-dealer that resells registered notes that it received
for its own account pursuant to the exchange offer and any broker or dealer that
participates in a distribution of those notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of those notes and any commission or concessions received by any
participating broker or dealer may be deemed to be underwriting compensation
under the Securities Act. The letter of transmittal states that, by
acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
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LEGAL MATTERS
The validity of the new notes offered hereby will be passed upon for us by
Weil, Gotshal & Manges LLP, New York, New York.
EXPERTS
The financial statements incorporated in this prospectus by reference from
Ames Department Stores, Inc.'s Annual Report on Form 10-K for the fiscal year
ended January 30, 1999 have been audited by Arthur Andersen LLP, independent
auditors, as stated in their report, which also is incorporated herein by
reference, and have been so incorporated in reliance upon the report of that
firm given upon their authority as experts in accounting and auditing.
The consolidated balance sheets of Hills Stores Company and subsidiaries as
of January 31, 1998 and February 1, 1997 and the related consolidated statements
of operations, common shareholders' equity and cash flows for the fiscal years
ended January 31, 1998, February 1, 1997 and February 3, 1996 incorporated in
this prospectus by reference from Ames Department Stores, Inc.'s Form 8-KA
Amendment No. 1 dated March 16, 1999 have been audited by Deloitte & Touche LLP,
independent public auditors, as stated in their report which is incorporated
herein by reference and has been so incorporated in reliance upon the report of
such firm given upon their authority as experts in accounting and auditing.
FORWARD-LOOKING STATEMENTS
This prospectus contains both historical and forward-looking statements.
All statements other than statements of historical fact are, or may be deemed to
be, forward-looking statements within the meaning of section 27A of the
Securities Act and section 21E of the Securities Exchange Act of 1934. These
forward-looking statements are only predictions and generally can be identified
by use of statements that include phrases such as "believe," "expect,"
"anticipate," "intend," "plan," "foresee" or other similar words or phrases.
Similarly, statements that describe our objectives, plans or goals also are
forward-looking statements. Our operations are subject to certain risks and
uncertainties that could cause actual results to differ materially from those
contemplated by the relevant forward-looking statement. You are urged to
consider these factors carefully in evaluating the forward-looking statements,
including the factors described under "Risk Factors." The forward-looking
statements included in this prospectus are made only as of the date of this
prospectus and we undertake no obligation to publicly update any forward-looking
statements to reflect subsequent events or circumstances. We cannot assure you
that projected results or events will be achieved.
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[LOGO]
AMES DEPARTMENT STORES, INC.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Ames Department Stores, Inc. (the "Registrant") is a Delaware corporation.
Subsection (b)(7) of Section 102 of the Delaware General Corporation Law (the
"DGCL") enables a corporation in its original certificate of incorporation or an
amendment thereto to eliminate or limit the personal liability of a director to
the corporation or its stockholders for monetary damages for violations of the
director's fiduciary duty, except (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) pursuant to Section 174 of the DGCL (providing for liability of
directors for unlawful payment of dividends or unlawful stock purchases or
redemptions) or (iv) for any transaction from which a director derived an
improper personal benefit. Article Fifth of the Amended and Restated Certificate
of Incorporation of the Registrant provides that, to the fullest extent
permitted by the DGCL, no director of the Registrant shall be personally liable
to the corporation or any of its stockholders for monetary damages for breach of
fiduciary duty as a director.
The bylaws of the Registrant provide for the indemnification of directors
and officers to the extent permitted by the DGCL. Subsection (a) of Section 145
of the DGCL empowers a corporation to indemnify any director or officer, or
former director or officer, who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation) by reason of the fact that such person is
or was a director or officer of the corporation or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred in connection with such action, suit
or proceeding provided that such director or officer acted in good faith in a
manner reasonably believed to be in, or not opposed to, the best interests of
the corporation, and, with respect to any criminal action or proceeding,
provided further that such director or officer has no reasonable cause to
believe his conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any
director or officer, or former director or officer, who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that such person acted in any of the capacities set forth
above, against expenses (including attorneys' fees) actually and reasonably
incurred in connection with the defense or settlement of such action or suit
provided that such director or officer acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
corporation, except that no indemnification may be made in respect of any claim,
issue or matter as to which such director or officer shall have been adjudged to
be liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that despite the adjudication of liability but in view of all
of the circumstances of the case, such director or officer is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.
Section 145 further provides that (i) to the extent a director or officer
of a corporation has been successful in the defense of any action, suit or
proceeding referred to in subsections (a) and (b) or in the defense of any
claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith; and (ii) indemnification and advancement of expenses
provided for, by, or granted pursuant to, Section 145 shall not be deemed
exclusive of any other rights to which the indemnified party may be entitled. In
addition, Section 145 empowers the corporation to purchase and maintain
insurance on behalf of any person who is or was a director or officer of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him or
incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liabilities under Section 145.
II-1
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ITEM 20. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ---------- -------------------
<S> <C>
*4.1 -- Indenture, dated as of April 27, 1999, relating to Ames Department Stores, Inc.'s 10% Senior Notes
due 2006.
4.2 -- Indenture, dated as of April 19, 1996 relating to Hills Stores Company's 12 1/2% Senior Notes due
2003 (incorporated herein by reference to Exhibit 4.10 of Hills Stores Company's Quarterly Report
on Form 10-Q for the quarter ended May 4, 1996 filed with the Commission on June 6, 1996).
4.3 -- First Supplemental Indenture, dated as of December 24, 1998, to Indenture dated as of April 19,
1996, among Hills Stores Company, as issuer, the guarantors named therein and State Street Bank
and Trust Company, as trustee (incorporated herein by reference to Exhibit 4.6 to Amendment No. 1
to the Registrant's Registration Statement on Form S-3, as filed with the Commission on April 28,
1999).
4.4 -- Second Supplemental Indenture, dated as of April 15, 1999, to Indenture dated as of April 19,
1996, among Ames Department Stores, Inc., Hills Stores Company, the guarantors named therein and
State Street Bank and Trust Company, as trustee (incorporated herein by reference to Exhibit 4.7
to Amendment No. 1 to the Registrant's Registration Statement on Form S-3, as filed with the
Commission on April 28, 1999).
*5 -- Opinion of Weil, Gotshal & Manges LLP.
*12 -- Computation of Ratio of Earnings to Fixed Charges.
21 -- Subsidiaries of Ames Department Stores, Inc. (incorporated herein by reference to Exhibit 7 to
Amendment No. 1 to the Registrant's Registration Statement on Form S-3, as filed with the
Commission on April 28, 1999).
*23.1 -- Consent of Weil, Gotshal & Manges, LLP (included in Exhibit 5).
*23.2 -- Consent of Arthur Andersen LLP.
*23.3 -- Consent of Deloitte & Touche LLP.
24 -- Power of Attorney (included on the signature page of this Registration Statement).
*25 -- Statement of Eligibility on Form T-1 of The Chase Manhattan Bank.
*99.1 -- Form of Letter of Transmittal.
*99.2 -- Form of Notice of Guaranteed Delivery.
</TABLE>
- ------------------
* Filed herewith.
(B) SCHEDULES
All Schedules are omitted as the required information is presented in Ames'
consolidated financial statements or related notes or such schedules are not
applicable.
II-2
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ITEM 22. UNDERTAKINGS
(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrants pursuant to the foregoing provisions, or otherwise, the
registrants have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by a registrant of expenses
incurred or paid by a director, officer or controlling person of that registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrants will, unless in the opinion of their counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(b) Each of the undersigned registrants hereby undertakes to respond to
requests for information that is incorporated by reference into the Prospectus
pursuant to Item 4, 10(b), 11 or 13 of this form, within one business day of
receipt of such request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the Registration Statement
through the date of responding to the request.
(c) Each of the undersigned registrants hereby undertakes to supply by
means of a post-effective amendment all information concerning a transaction,
and the company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Ames Department
Stores, Inc. has duly caused this Amendment to the Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Rocky Hill, State of Connecticut, on June 30, 1999.
AMES DEPARTMENT STORES, INC.
By: /s/ ROLANDO DE AGUIAR
---------------------------------------
Name: Rolando de Aguiar
Title: Executive Vice President and
Chief Financial and
Administrative Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated. Each person whose name appears below hereby constitutes and
appoints each of Joseph R. Ettore, Rolando de Aguiar and David H. Lissy, or any
of them, each acting alone, such person's true and lawful attorney-in-fact, with
full power of substitution to sign for such person and in such person's name and
capacity indicated below, in connection with this Registrant's Registration
Statement on Form S-4, including to sign this Registration Statement and any and
all amendments to this Registration Statement, including Post-Effective
Amendments, and to file the same with the Securities and Exchange Commission,
hereby ratifying and confirming such person's signature as it may be signed by
said attorney-in-fact to any and all amendments.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- -------------------------------------------- -------------------------------------------- --------------
<S> <C> <C>
/s/ JOSEPH R. ETTORE President, Chief Executive Officer June 30, 1999
- -------------------------------------------- and Director
Joseph R. Ettore
/s/ ROLANDO DE AGUIAR Executive Vice President June 30, 1999
- -------------------------------------------- and Chief Financial and Administrative
Rolando de Aguiar Officer
/s/ FRANCIS X. BASILE Director June 30, 1999
- --------------------------------------------
Francis X. Basile
/s/ PAUL BUXBAUM Chairman of the Board June 30, 1999
- --------------------------------------------
Paul Buxbaum
/s/ ALAN COHEN Director June 30, 1999
- --------------------------------------------
Alan Cohen
/s/ RICHARD M. FELNER Director June 30, 1999
- --------------------------------------------
Richard M. Felner
/s/ SIDNEY S. PEARLMAN Director June 30, 1999
- --------------------------------------------
Sidney S. Pearlman
</TABLE>
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, AMD, Inc.,
Ames FS, Inc., Ames Realty II, Inc., Ames Merchandising Corporation and Ames
Transportation Systems, Inc. have duly caused this Registration Statement to be
signed on their behalf by the undersigned, thereunto duly authorized, in the
City of Rocky Hill, State of Connecticut, on June 30, 1999.
AMD, INC.
AMES FS, INC.
AMES REALTY II, INC.
AMES MERCHANDISING CORPORATION
AMES TRANSPORTATION SYSTEMS, INC.
By: /s/ ROLANDO DE AGUIAR
----------------------------------
Name: Rolando de Aguiar
Title: Vice President
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated. Each person whose name appears below hereby constitutes and
appoints each of Joseph R. Ettore, Rolando de Aguiar and David H. Lissy, or any
of them, each acting alone, such person's true and lawful attorney-in-fact, with
full power of substitution to sign for such person and in such person's name and
capacity indicated below, in connection with this Registrant's Registration
Statement on Form S-4, including to sign this Registration Statement and any and
all amendments to this Registration Statement, including Post-Effective
Amendments, and to file the same with the Securities and Exchange Commission,
hereby ratifying and confirming such person's signature as it may be signed by
said attorney-in-fact to any and all amendments.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- -------------------------------------------- -------------------------------------------- --------------
<S> <C> <C>
/s/ JOSEPH R. ETTORE President and Director (Principal Executive June 30, 1999
- -------------------------------------------- Officer)
Joseph R. Ettore
/s/ ROLANDO DE AGUIAR Vice President and Director June 30, 1999
- -------------------------------------------- (Principal Financial Officer)
Rolando de Aguiar
/s/ MARK VON MAYRHAUSER Assistant Treasurer (Principal Accounting June 30, 1999
- -------------------------------------------- Officer)
Mark von Mayrhauser
/s/ DAVID H. LISSY Director June 30, 1999
- --------------------------------------------
David H. Lissy
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ---------- -------------------
<S> <C>
*4.1 -- Indenture, dated as of April 27, 1999, relating to Ames Department Stores, Inc.'s 10% Senior Notes
due 2006.
4.2 -- Indenture, dated as of April 19, 1996 relating to Hills Stores Company's 12 1/2% Senior Notes due
2003 (incorporated herein by reference to Exhibit 4.10 of Hills Stores Company's Quarterly Report
on Form 10-Q for the quarter ended May 4, 1996 filed with the Commission on June 6, 1996).
4.3 -- First Supplemental Indenture, dated as of December 24, 1998, to Indenture dated as of April 19,
1996, among Hills Stores Company, as issuer, the guarantors named therein and State Street Bank
and Trust Company, as trustee (incorporated herein by reference to Exhibit 4.6 to Amendment No. 1
to the Registrant's Registration Statement on Form S-3, as filed with the Commission on April 28,
1999).
4.4 -- Second Supplemental Indenture, dated as of April 15, 1999, to Indenture dated as of April 19,
1996, among Ames Department Stores, Inc., Hills Stores Company, the guarantors named therein and
State Street Bank and Trust Company, as trustee (incorporated herein by reference to Exhibit 4.7
to Amendment No. 1 to the Registrant's Registration Statement on Form S-3, as filed with the
Commission on April 28, 1999).
*5 -- Opinion of Weil, Gotshal & Manges LLP.
*12 -- Computation of Ratio of Earnings to Fixed Charges.
21 -- Subsidiaries of Ames Department Stores, Inc. (incorporated herein by reference to Exhibit 21 to
Amendment No. 1 to the Registrant's Registration Statement on Form S-3, as filed with the
Commission on April 28, 1999).
*23.1 -- Consent of Weil, Gotshal & Manges, LLP (included in Exhibit 5).
*23.2 -- Consent of Arthur Andersen LLP.
*23.3 -- Consent of Deloitte & Touche LLP.
24 -- Power of Attorney (included on the signature page of this Registration Statement).
*25 -- Statement of Eligibility on Form T-1 of The Chase Manhattan Bank.
*99.1 -- Form of Letter of Transmittal.
*99.2 -- Form of Notice of Guaranteed Delivery.
</TABLE>
- ------------------
* Filed herewith.
<PAGE>
================================================================================
AMES DEPARTMENT STORES, INC.,
As Issuer
$275,000,000
10% SENIOR NOTES DUE 2006
--------------------------
INDENTURE
Dated as of April 27, 1999
--------------------------
-------------------------
The Chase Manhattan Bank,
As Trustee
-------------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE.............................................................1
SECTION 1.01. DEFINITIONS.....................................................................................1
SECTION 1.02. OTHER DEFINITIONS..............................................................................18
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT..............................................18
SECTION 1.04. RULES OF CONSTRUCTION..........................................................................19
ARTICLE 2. THE NOTES.............................................................................................19
SECTION 2.01. FORM AND DATING................................................................................19
SECTION 2.02. EXECUTION AND AUTHENTICATION...................................................................20
SECTION 2.03. REGISTRAR AND PAYING AGENT.....................................................................21
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST............................................................21
SECTION 2.05. HOLDER LISTS...................................................................................21
SECTION 2.06. TRANSFER AND EXCHANGE..........................................................................22
SECTION 2.07. REPLACEMENT NOTES..............................................................................35
SECTION 2.08. OUTSTANDING NOTES..............................................................................35
SECTION 2.09. TREASURY NOTES.................................................................................36
SECTION 2.10. TEMPORARY NOTES................................................................................36
SECTION 2.11. CANCELLATION...................................................................................36
SECTION 2.12. DEFAULTED INTEREST.............................................................................36
SECTION 2.13. CusipNUMBERS...................................................................................37
ARTICLE 3. REDEMPTION AND PREPAYMENT.............................................................................37
SECTION 3.01. NOTICES TO TRUSTEE.............................................................................37
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED..............................................................37
SECTION 3.03. NOTICE OF REDEMPTION...........................................................................38
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.................................................................38
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE....................................................................39
SECTION 3.06. NOTES REDEEMED IN PART.........................................................................39
SECTION 3.07. OPTIONAL REDEMPTION............................................................................39
SECTION 3.08. MANDATORY REDEMPTION...........................................................................40
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS............................................40
ARTICLE 4. COVENANTS.............................................................................................42
SECTION 4.01. PAYMENT OF NOTES...............................................................................42
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY................................................................42
SECTION 4.03. REPORTS........................................................................................42
SECTION 4.04. COMPLIANCE CERTIFICATE.........................................................................43
SECTION 4.05. TAXES..........................................................................................44
SECTION 4.06. SALE AND LEASEBACK TRANSACTIONS................................................................44
SECTION 4.07. RESTRICTED PAYMENTS............................................................................44
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.................................47
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.....................................48
SECTION 4.10. ASSET SALES....................................................................................50
SECTION 4.11. TRANSACTIONS WITH AFFILIATES...................................................................52
SECTION 4.12. LIENS..........................................................................................52
SECTION 4.13. ADDITIONAL SUBSIDIARY GUARANTEES...............................................................52
SECTION 4.14. CORPORATE EXISTENCE............................................................................53
SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.....................................................53
SECTION 4.16. PAYMENTS FOR CONSENT...........................................................................54
SECTION 4.17. LIMITATIONS ON ISSUANCES AND SALES OF EQUITY INTERESTS IN WHOLLY OWNED SUBSIDIARIES............54
SECTION 4.18 BUSINESS ACTIVITIES............................................................................55
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
ARTICLE 5. SUCCESSORS............................................................................................55
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.......................................................55
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED..............................................................55
ARTICLE 6. DEFAULTS AND REMEDIES.................................................................................56
SECTION 6.01. EVENTS OF DEFAULT..............................................................................56
SECTION 6.02. ACCELERATION...................................................................................58
SECTION 6.03. OTHER REMEDIES.................................................................................58
SECTION 6.04. WAIVER OF PAST DEFAULTS........................................................................59
SECTION 6.05. CONTROL BY MAJORITY............................................................................59
SECTION 6.06. LIMITATION ON SUITS............................................................................59
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT..................................................60
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.....................................................................60
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM...............................................................60
SECTION 6.10. PRIORITIES.....................................................................................60
SECTION 6.11. UNDERTAKING FOR COSTS..........................................................................61
ARTICLE 7. TRUSTEE...............................................................................................61
SECTION 7.01. DUTIES OF TRUSTEE..............................................................................61
SECTION 7.02. RIGHTS OF TRUSTEE..............................................................................62
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE...................................................................63
SECTION 7.04. TRUSTEE'S DISCLAIMERS..........................................................................63
SECTION 7.05. NOTICE OF DEFAULTS.............................................................................64
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.....................................................64
SECTION 7.07. COMPENSATION AND INDEMNITY.....................................................................64
SECTION 7.08. REPLACEMENT OF TRUSTEE.........................................................................65
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC...............................................................66
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION..................................................................66
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY..............................................66
ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE..............................................................66
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.......................................66
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.................................................................66
SECTION 8.03. COVENANT DEFEASANCE............................................................................67
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.....................................................67
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST; OTHER MISCELLANEOUS
PROVISIONS.....................................................................................69
SECTION 8.06. REPAYMENT TO COMPANY...........................................................................69
SECTION 8.07. REINSTATEMENT..................................................................................70
ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER.....................................................................70
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES............................................................70
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES...............................................................71
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT............................................................72
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS..............................................................72
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES...............................................................73
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC................................................................73
ARTICLE 10 SUBSIDIARY GUARANTEES.................................................................................73
SECTION 10.01. SUBSIDIARY GUARANTEES..........................................................................73
SECTION 10.02. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEE.................................................74
SECTION 10.03. GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.............................................75
SECTION 10.04. RELEASES OF SUBSIDIARY GUARANTEES..............................................................75
SECTION 10.05. LIMITATION ON GUARANTOR LIABILITY; CONTRIBUTION................................................76
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
ARTICLE 11. MISCELLANEOUS........................................................................................76
SECTION 11.01. TRUST INDENTURE ACT CONTROLS...................................................................76
SECTION 11.02. NOTICES........................................................................................77
SECTION 11.03. COMMUNICATIONS BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.................................78
SECTION 11.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.............................................78
SECTION 11.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION..................................................78
SECTION 11.06. RULE BY TRUSTEE AND AGENTS.....................................................................78
SECTION 11.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS.......................79
SECTION 11.08. GOVERNING LAW..................................................................................79
SECTION 11.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS..................................................79
SECTION 11.10. SUCCESSORS.....................................................................................79
SECTION 11.11. SEVERABILITY...................................................................................79
SECTION 11.12. COUNTERPART ORIGINALS..........................................................................79
SECTION 11.13. TABLE OF CONTENTS, HEADINGS, ETC...............................................................79
</TABLE>
iii
<PAGE>
EXHIBITS
EXHIBIT A FORM OF NOTE
EXHIBIT B FORM OF CERTIFICATE OF TRANSFER
EXHIBIT C FORM OF CERTIFICATE OF EXCHANGE
EXHIBIT D FORM OF CERTIFICATE FROM ACQUIRING INSTITUTIONAL ACCREDITED
INVESTORS
EXHIBIT E FORM OF SUBSIDIARY GUARANTEE
EXHIBIT F FORM OF SUPPLEMENTAL INDENTURE
iv
<PAGE>
Cross-Reference Table*
Trust Indenture Act Section Indenture Section
310 (a)(1)..................................................... 7.10
(a)(2)..................................................... 7.10
(a)(3)..................................................... N.A.
(a)(4)..................................................... N.A.
(a)(5)..................................................... 7.10
(b)........................................................ 7.10
(c)........................................................ N.A.
311 (a)........................................................ 7.11
(b)........................................................ 7.11
(c)........................................................ N.A.
312 (a)........................................................ 2.05
(b)........................................................ 11.03
(c)........................................................ 11.03
313 (a)........................................................ 7.06
(b)(1)..................................................... N.A.
(b)(2)..................................................... 7.07
(c)........................................................7.06;11.02
(d)........................................................ 7.06
314 (a)........................................................4.03;11.02
(b)........................................................ N.A.
(c)(1)..................................................... 11.04
(c)(2)..................................................... 11.04
(c)(3)..................................................... N.A.
(d)........................................................ N.A.
(e)........................................................ 11.05
(f)........................................................ N.A.
315 (a)........................................................ 7.01
(b)........................................................7.05, 11.02
(c)........................................................ 7.01
(d)........................................................ 7.01
(e)........................................................ 6.11
316 (a)(last sentence)......................................... 2.09
(a)(1)(A).................................................. 6.05
(a)(1)(B).................................................. 6.04
(a)(2)..................................................... N.A.
(b)........................................................ 6.07
(c)........................................................ 2.12
317 (a)(1)..................................................... 6.08
(a)(2)..................................................... 6.09
(b)........................................................ 2.04
318 (a)........................................................ 11.01
(b)........................................................ N.A.
(c)........................................................ 11.01
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
v
<PAGE>
This INDENTURE dated as of April 27, 1999, is among Ames
Department Stores, Inc., a Delaware corporation ("Ames" or the "Company"), Ames
Realty II, Inc., a Delaware corporation, Ames FS, Inc., a Delaware corporation,
Ames Transportation Systems, Inc., a Delaware corporation, AMD, Inc., a Delaware
corporation, and Ames Merchandising Corporation, a Delaware corporation
(collectively, the "Guarantors"), and The Chase Manhattan Bank, as trustee (the
"Trustee").
The Company, the Guarantors and the Trustee agree as follows
for the benefit of each other and for the equal and ratable benefit of the
Holders of the 10% Senior Notes due 2006 (the "Initial Notes") and the 10%
Senior Notes due 2006 (the "Exchange Notes" and, together with the Initial Notes
and any Additional Notes, the "Notes"):
ARTICLE 1.
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01. DEFINITIONS.
"144A Global Note" means the global note in the form of
Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend
and deposited with and registered in the name of the Depositary or its nominee
that will be issued in a denomination equal to the outstanding principal amount
of the Notes sold in reliance on Rule 144A.
"Additional Notes" means up to $75,000,000 in aggregate
principal amount of Notes (other than the Initial Notes or Exchange Notes)
issued under this Indenture in accordance with Sections 2.02 and 4.09 hereof.
"Acquired Debt" means, with respect to any specified Person,
(i) Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Restricted Subsidiary of such specified Person,
including, without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Restricted Subsidiary of such specified Person, and (ii) Indebtedness secured by
a Lien encumbering any asset acquired by such specified Person.
"Additional Assets" means any property or assets (other than
Capital Stock, Indebtedness or rights to receive payments over a period greater
than 180 days) that are used or useful by the Company or a Restricted Subsidiary
of the Company in a Permitted Business.
"Adjusted Net Assets" of a Guarantor at any date means the
lesser of the amount by which (i) the fair value of the property of such
Guarantor exceeds the total amount of liabilities, including, without
limitation, contingent liabilities (after giving effect to all other fixed and
contingent liabilities incurred or assumed on such date), but excluding
liabilities under its Subsidiary Guarantee, of such Guarantor at such date and
(ii) the present fair salable value of the assets of such Guarantor at such date
exceeds the amount that will be required to pay the probable liability of such
Guarantor on its debts (after giving effect to all other fixed and contingent
liabilities incurred or assumed on such date and after giving effect to any
collection from any
<PAGE>
Subsidiary of such Guarantor in respect of the obligations of such Subsidiary
under such Subsidiary Guarantee), excluding debt in respect of such Subsidiary
Guarantee, as they become absolute and matured.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control," as used with respect to any Person, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of such Person, whether through the ownership of voting
securities, by agreement or otherwise; provided that beneficial ownership of 10%
or more of the Voting Stock of a Person shall be deemed to be control. For
purposes of this definition, the terms "controlling," "controlled by" and "under
common control with" shall have correlative meanings.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary, Euroclear and Cedel that apply to such transfer or
exchange.
"Asset Sale" means (i) the sale, lease, conveyance or other
disposition of any assets or rights other than sales of inventory in the
ordinary course of business consistent with past practices; provided that the
sale, lease, conveyance or other disposition of all or substantially all of the
assets of the Company and its Restricted Subsidiaries taken as a whole shall be
governed by Section 4.15 hereof and/or Section 5.01 hereof and not by Section
4.10 hereof, and (ii) the issuance or sale of Equity Interests in any of the
Company's Restricted Subsidiaries. Notwithstanding the foregoing, the following
shall not be deemed to be Asset Sales: (i) any single transaction or series of
related transactions that (A) involves assets having a fair market value of less
than $2,000,000 or (B) results in net proceeds to the Company and its Restricted
Subsidiaries of less than $2,000,000; (ii) a transfer of assets by the Company
to one of its Restricted Subsidiaries or by a Restricted Subsidiary of the
Company to the Company or to another Restricted Subsidiary of the Company; (iii)
an issuance of Equity Interests by a Restricted Subsidiary of the Company to the
Company or to another Restricted Subsidiary of the Company; (iv) the sale or
lease of equipment, inventory, accounts receivable or other assets in the
ordinary course of business, including from time to time the closing of one or
more stores, the disposition or transfer of store leases, the clearance or
liquidation of inventory in connection with the closing of one or more stores or
the conversion of one or more acquired stores to Ames stores, and the
disposition of related fixtures, equipment or other property; (v) the sale or
other disposition of cash or Cash Equivalents; (vi) the sale, conveyance or
other transfer of accounts receivable and related assets customarily transferred
in an asset securitization transaction involving accounts receivable to a
Receivables Subsidiary or by a Receivables Subsidiary, in connection with a
Qualified Receivables Transaction; and (vii) a Restricted Payment permitted by
or a Permitted Investment that is not prohibited by Section 4.07 hereof.
"Attributable Debt" in respect of a sale and leaseback
transaction means, at the time of determination, the present value of the
obligation of the lessee for net rental payments during the remaining term of
the lease included in such sale and leaseback transaction including any period
for which such lease has been extended or may, at the option of the lessor, be
2
<PAGE>
extended. The present value shall be calculated using a discount rate equal to
the rate of interest implicit in such transaction, determined in accordance with
GAAP.
"Bankruptcy Law" means Title 11, U.S. Code or any similar
federal or state law for the relief of debtors.
"Beneficial Owner" has the meaning assigned to such term in
Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the
beneficial ownership of any particular "person" (as that term is used in Section
13(d)(3) of the Exchange Act), that "person" shall be deemed to have beneficial
ownership of all securities that the "person" has the right to acquire by
conversion or exercise of other securities, whether the right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition. The terms "Beneficially Owns" and "Beneficially Owned" shall have a
corresponding meaning.
"Board of Directors" means: (i) with respect to a corporation,
the board of directors of the corporation or any committee thereof duly
authorized to act on behalf of the board; (ii) with respect to a partnership,
the board of directors of the general partner of the partnership; and (iii) with
respect to any other Person, the board or committee of that Person serving a
similar function.
"Board Resolution" means, with respect to any Person, a copy
of a resolution certified by the Secretary or Assistant Secretary of that Person
to have been duly adopted by the Board of Directors of that Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"Borrowing Base" means, as of any date, an amount equal to 75%
of the book value of all inventory owned by the Company and its Restricted
Subsidiaries as of that date, calculated on a consolidated basis and in
accordance with GAAP. To the extent that information is not available as to the
amount of inventory as of a specific date, the Company may utilize the most
recent available information for purposes of calculating the Borrowing Base.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any
determination thereof is to be made, the amount of the liability in respect of a
capital lease that would at such time be required to be capitalized on a balance
sheet in accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation,
corporate stock, (ii) in the case of an association or business entity, any and
all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited), and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii)
securities issued or directly and fully guaranteed or insured by the United
States government or any agency or instrumentality thereof (provided that the
full faith and credit of the United States is pledged in support thereof) having
maturities of not more than six months from the date of acquisition, (iii)
3
<PAGE>
certificates of deposit and eurodollar time deposits with maturities of six
months or less from the date of acquisition, bankers' acceptances with
maturities not exceeding six months and overnight bank deposits, in each case,
with any lender party to any Credit Facility or with any domestic commercial
bank having capital and surplus in excess of $500,000,000 and a Thomson
Financial BankWatch Rating of "B" or better, (iv) repurchase obligations with a
term of not more than seven days for underlying securities of the types
described in clauses (ii) and (iii) above entered into with any financial
institution meeting the qualifications specified in clause (iii) above, (v)
commercial paper having the highest rating obtainable from Moody's or S&P and in
each case maturing within six months after the date of acquisition, and (vi)
money market funds at least 95% of the assets of which constitute Cash
Equivalents of the kinds described in clauses (i) through (v) of this
definition.
"Cedel" means Cedel Bank, societe anonyme.
"Change of Control" means the occurrence of any of the
following: (i) the direct or indirect sale, lease, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in one or a series
of related transactions, of all or substantially all of the properties or assets
of the Company and its Restricted Subsidiaries taken as a whole to any "person"
(as such term is used in Section 13(d)(3) of the Exchange Act); (ii) the
adoption of a plan relating to the liquidation or dissolution of the Company;
(iii) the consummation of any transaction (including, without limitation, any
merger or consolidation) the result of which is that any "person" (as defined
above) becomes the Beneficial Owner, directly or indirectly, of more than 40% of
the Voting Stock of the Company (measured by voting power rather than number of
shares); (iv) the first day on which a majority of the members of the Board of
Directors of the Company are not Continuing Directors; or (v) the consolidation
or merger of the Company with or into, any Person, or the consolidation or
merger of any Person with or into, the Company, pursuant to a transaction in
which any of the outstanding Voting Stock of the Company or the other Person is
converted into or exchanged for cash, securities or other property, other than
any transaction where the Voting Stock of the Company outstanding immediately
prior to that transaction is converted into or exchanged for Voting Stock (other
than Disqualified Stock) constituting a majority of the outstanding shares of
the Voting Stock of the surviving or transferee Person (immediately after giving
effect to the issuance). For the purposes of this definition, any transfer of
any equity of any entity that was formed for the purpose of acquiring Voting
Stock of the Company will be deemed to be a transfer of equity interest in the
Company.
"Consolidated Cash Flow" means, with respect to any specified
Person for any period, the Consolidated Net Income of such Person for such
period plus (i) an amount equal to any extraordinary loss plus any net loss
realized by such Person or any of its Restricted Subsidiaries in connection with
an Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes based on income or
profits of such Person and its Restricted Subsidiaries for such period, to the
extent that such provision for taxes was deducted in computing such Consolidated
Net Income, plus (iii) consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued and whether or
not capitalized (including, without limitation, amortization of debt issuance
costs and original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component of all
payments associated with Capital Lease Obligations, imputed interest with
respect to Attributable Debt,
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commissions, discounts and other fees and charges incurred in respect of letter
of credit or bankers' acceptance financings, and net of the effect of all
payments made or received pursuant to Hedging Obligations), to the extent that
any such expense was deducted in computing such Consolidated Net Income, plus
(iv) depreciation, amortization (including amortization of goodwill and other
intangibles but excluding amortization of prepaid cash expenses that were paid
in a prior period) and other non-cash expenses (excluding any non-cash expense
to the extent that it represents an accrual of or reserve for cash expenses in
any future period or amortization of a prepaid cash expense that was paid in a
prior period) of such Person and its Restricted Subsidiaries for such period to
the extent that such depreciation, amortization and other non-cash expenses were
deducted in computing such Consolidated Net Income, minus (v) non-cash items
increasing such Consolidated Net Income for such period, other than the accrual
of revenue in the ordinary course of business, in each case, on a consolidated
basis and determined in accordance with GAAP.
"Consolidated Net Income" means, with respect to any specified
Person for any period, the aggregate of the Net Income of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP; provided that (i) (A) the Net Income (but not loss) of any
Person that is not a Restricted Subsidiary or that is accounted for by the
equity method of accounting shall be included only to the extent of the amount
of dividends or distributions paid in cash to the referent Person or a
Restricted Subsidiary thereof and (B) the Net Income (but not loss) of any
Unrestricted Subsidiary shall be excluded, whether or not distributed to the
specified Person or one of its Subsidiaries, (ii) the Net Income of any
Restricted Subsidiary shall be excluded to the extent that the declaration or
payment of dividends or similar distributions by that Restricted Subsidiary of
that Net Income is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, 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
Restricted Subsidiary or its stockholders, (iii) the Net Income of any Person
acquired in a pooling of interests transaction for any period prior to the date
of such acquisition shall be excluded, and (iv) the cumulative effect of a
change in accounting principles shall be excluded.
"Consolidated Net Worth" means, with respect to any specified
Person as of any date, the sum of: (i) the consolidated equity of the common
stockholders of that Person and its consolidated Subsidiaries as of that date;
plus (ii) the respective amounts reported on that Person's balance sheet as of
that date with respect to any series of preferred stock (other than Disqualified
Stock) that by its terms is not entitled to the payment of dividends unless
those dividends may be declared and paid only out of net earnings in respect of
the year of such declaration and payment, but only to the extent of any cash
received by the Person upon issuance of such preferred stock.
"Continuing Directors" means, as of any date of determination,
any member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the Date hereof or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
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"Corporate Trust Office of the Trustee" shall be located at 55
Water Street, New York, New York 10041, or such other address as to which the
Trustee may give notice to the Company.
"Credit Agreement" means the Credit Agreement, dated as of
December 31, 1998, by and among the Company, the lenders named in the agreement
and Bank of America NT&SA, as Administrative Agent, providing for revolving
credit borrowings and letters of credit, including any related notes,
guarantees, collateral documents, instruments and agreements executed in
connection therewith, in each case as amended, restated, modified, renewed,
refunded, replaced or refinanced from time to time.
"Credit Facilities" means one or more debt facilities
(including, without limitation, the Credit Agreement) or commercial paper
facilities, in each case with banks or other institutional lenders providing for
revolving credit loans, term loans, receivables financing or letters of credit,
in each case, as amended, restated, modified, renewed, refunded, replaced or
refinanced in whole or in part from time to time.
"Default" means any event that is, or with the passage of time
or the giving of notice or both would be, an Event of Default.
"Definitive Note" means a certificated Note registered in the
name of the Holder thereof and issued in accordance with Article 2 hereof,
substantially in the form of Exhibit A hereto, except that such Note shall not
bear the Global Note Legend and shall not have the "Schedule of Exchanges of
Interests in the Global Note" attached thereto.
"Depositary" means, with respect to the Notes issuable or
issued in whole or in part in global form, the Person specified in Section 2.03
hereof as the Depositary with respect to the Notes, until a successor shall have
been appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depositary" shall mean or include such successor.
"Disqualified Stock" means any Capital Stock that, by its
terms (or by the terms of any security into which it is convertible, or for
which it is exchangeable, at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or is redeemable at the option of the
Holder thereof, in whole or in part, on or prior to the date that is 91 days
after the date on which the Notes mature; provided, however, that any Capital
Stock that would constitute Disqualified Stock solely because the holders
thereof have the right to require the Company to repurchase such Capital Stock
upon the occurrence of a Change of Control or an Asset Sale shall not constitute
Disqualified Stock if the terms of such Capital Stock provide that the Company
may not repurchase or redeem any such Capital Stock pursuant to such provisions
unless such repurchase or redemption complies with Section 4.07 hereof.
"Distribution Compliance Period" means the 40-day distribution
compliance period as defined in Regulation S.
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"Domestic Subsidiary" means any Subsidiary of the Company that
was formed under the laws of the United States or any state thereof or the
District of Columbia or that guarantees or otherwise provides direct credit
support for any Indebtedness of the Company.
"Equity Interests" means Capital Stock and all warrants,
options or other rights to acquire Capital Stock (but excluding any debt
security that is convertible into, or exchangeable for, Capital Stock).
"Euroclear" means Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Notes" means the Notes issued in the Exchange Offer
pursuant to Section 2.06(f) hereof.
"Exchange Offer" has the meaning set forth in the Registration
Rights Agreement.
"Existing Indebtedness" means any Indebtedness of the Company
and its Subsidiaries (other than Indebtedness under the Credit Agreement) in
existence on the date of this Indenture, until such amounts are repaid.
"Fixed Charges" means, with respect to any specified Person or
any of its Restricted Subsidiaries for any period, the sum, without duplication,
of (i) the consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued (including, without
limitation, amortization of debt issuance costs and original issue discount,
non-cash interest payments, the interest component of any deferred payment
obligations, the interest component of all payments associated with Capital
Lease Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect of letter
of credit or bankers' acceptance financings, and net of the effect of all
payments made or received pursuant to Hedging Obligations, plus (ii) the
consolidated interest of such Person and its Restricted Subsidiaries that was
capitalized during such period, plus (iii) any interest expense on Indebtedness
of another Person that is guaranteed by such Person or one of its Restricted
Subsidiaries or secured by a Lien on assets of such Person or one of its
Restricted Subsidiaries (whether or not such Guarantee or Lien is called upon)
plus (iv) the product of (A) all dividend payments, whether paid or accrued,
whether or not in cash, on any series of preferred stock of such Person or any
of its Restricted Subsidiaries, other than dividends on Equity Interests payable
solely in Equity Interests of the Company (other than Disqualified Stock) or to
the Company or a Restricted Subsidiary of the Company, times (B) a fraction, the
numerator of which is one and the denominator of which is one minus the then
current combined federal, state and local statutory tax rate of such Person,
expressed as a decimal, in each case, on a consolidated basis and in accordance
with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any
specified Person and its Restricted Subsidiaries for any period, the ratio of
the Consolidated Cash Flow of such Person and its Restricted Subsidiaries for
such period to the Fixed Charges of such Person and its Restricted Subsidiaries
for such period. In the event that the specified Person or any of its Restricted
Subsidiaries incurs, assumes, guarantees, repays, repurchases or redeems any
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<PAGE>
Indebtedness (other than ordinary working capital borrowings) or issues,
repurchases or redeems preferred stock subsequent to the commencement of the
period for which the Fixed Charge Coverage Ratio is being calculated and on or
prior to the date on which the event for which the calculation of the Fixed
Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge
Coverage Ratio shall be calculated giving pro forma effect to such incurrence,
assumption, Guarantee, repayment, repurchase or redemption of Indebtedness, or
such issuance, repurchase or redemption of preferred stock, and the use of
proceeds therefrom as if the same had occurred at the beginning of the
applicable four-quarter reference period. In addition, for purposes of
calculating the Fixed Charge Coverage Ratio, (i) acquisitions that have been
made by the specified Person or any of its Subsidiaries, including through
mergers or consolidations and including any related financing transactions,
during the four-quarter reference period or subsequent to such reference period
and on or prior to the Calculation Date shall be given pro forma effect as if
they had occurred on the first day of the four-quarter reference period and
Consolidated Cash Flow for such reference period shall be calculated on a pro
forma basis in accordance with Regulations S-X under the Securities Act, but
without giving effect to clause (iii) of the proviso set forth in the definition
of Consolidated Net Income, (ii) the Consolidated Cash Flow attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, shall be excluded, and
(iii) the Fixed Charges attributable to discontinued operations, as determined
in accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, but only to the extent that the obligations
giving rise to such Fixed Charges will not be obligations of the referent Person
or any of its Restricted Subsidiaries following the Calculation Date.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which were in effect on the date hereof.
"Global Notes" means, individually and collectively, each of
the Restricted Global Notes and the Unrestricted Global Notes, substantially in
the form of Exhibit A hereto issued in accordance with Article 2 hereof.
"Global Note Legend" means the legend set forth in Section
2.06(g)(ii) hereof to be placed on all Global Notes issued under this Indenture.
"Government Securities" means direct obligations of, or
obligations guaranteed by, the United States of America for the payment of which
guarantee or obligations the full faith and credit of the United States is
pledged.
"Guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, by way of a
pledge of assets or through letters of credit and reimbursement agreements in
respect thereof), of all or any part of any Indebtedness.
"Guarantors" means each of the Company's Domestic Subsidiaries
in existence on the date hereof and any other Subsidiary of the Company that
executes a Subsidiary
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<PAGE>
Guarantee in accordance with the provisions of this Indenture, and their
respective successors and assigns.
"Hedging Obligations" means, with respect to any specified
Person, the obligations of such Person under (i) interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements; (ii) foreign
exchange contracts and currency swap agreements; and (iii) other agreements or
arrangements entered into in the ordinary course of business and consistent with
past practices designed to protect such Person against fluctuations in interest
rates or currency exchange rates.
"Hills Indenture" means the Indenture dated as of April 19,
1996 between Hills Stores Company and Fleet National Bank, as trustee, pursuant
to which $195,000,000 of 12.5% Senior Notes due 2003 were originally issued, as
amended or supplemented from time to time.
"Holder" means a Person in whose name a Note is registered.
"IAI Global Note" means the global Note in the form of Exhibit
A hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with and registered in the name of the Depositary or its nominee that
will be issued in a denomination equal to the outstanding principal amount of
the Notes sold to Institutional Accredited Investors.
"Indebtedness" means, with respect to any specified Person,
any indebtedness of such Person, whether or not contingent, in respect of (i)
borrowed money, (ii) evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in respect
thereof), (iii) banker's acceptances, (iv) representing Capital Lease
Obligations, (v) the balance deferred and unpaid of the purchase price of any
property, except any such balance that constitutes an accrued expense or trade
payable, or (vi) representing any Hedging Obligations, if and to the extent any
of the foregoing indebtedness (other than letters of credit and Hedging
Obligations) would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, as well as all Indebtedness of others secured
by a Lien on any asset of such Person (whether or not such Indebtedness is
assumed by such Person) and, to the extent not otherwise included, the Guarantee
by such Person of any indebtedness of any other Person. The amount of any
Indebtedness outstanding as of any date shall be (i) the accreted value thereof,
in the case of any Indebtedness issued with original issue discount, and (ii)
the principal amount thereof, together with any interest thereon that is more
than 30 days past due, in the case of any other Indebtedness.
"Indenture" means this Indenture, as amended or supplemented
from time to time.
"Indirect Participant" means a Person who holds a beneficial
interest in a Global Note through a Participant.
"Initial Notes" means $200,000,000 in aggregate principal
amount of Notes issued under this Indenture on the date hereof.
"Institutional Accredited Investor" means an institution that
is an "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under
the Securities Act.
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<PAGE>
"Investments" means, with respect to any Person, all
investments by such Person in other Persons (including Affiliates) in the forms
of direct or indirect loans (including Guarantees or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If the Company or any Restricted Subsidiary of the Company sells or otherwise
disposes of any Equity Interests of any direct or indirect Restricted Subsidiary
of the Company such that, after giving effect to any such sale or disposition,
such Person is no longer a Restricted Subsidiary of the Company, the Company
shall be deemed to have made an Investment on the date of any such sale or
disposition equal to the fair market value of the Equity Interests of such
Restricted Subsidiary not sold or disposed of in an amount determined as
provided in the last paragraph of Section 4.07 hereof.
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions in The City of New York or at a place of payment are
authorized by law, regulation or executive order to remain closed. If a payment
date is a Legal Holiday at a place of payment, payment may be made at that place
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period.
"Letter of Transmittal" means the letter of transmittal to be
prepared by the Company and sent to all Holders of the Initial Notes for use by
such Holders in connection with the Exchange Offer.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law, including any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to sell or give a
security interest in and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction.
"Liquidated Damages" means all liquidated damages then owing
pursuant to Section 5 of the Registration Rights Agreement.
"Moody's" means Moody's Investors Service.
"Net Income" means, with respect to any specified Person, the
net income (loss) of such Person, determined in accordance with GAAP and before
any reduction in respect of preferred stock dividends, excluding, however, (i)
any gain (but not loss), together with any related provision for taxes on such
gain (but not loss), realized in connection with (A) any Asset Sale or (B) the
disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries and (ii) any extraordinary gain (but not loss),
together with any related provision for taxes on such extraordinary gain (but
not loss).
"Net Proceeds" means the aggregate cash proceeds received by
the Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any
10
<PAGE>
cash received upon the sale or other disposition of any non-cash consideration
received in any Asset Sale), net of the direct costs relating to such Asset Sale
(including, without limitation, legal, accounting and investment banking fees,
and sales commissions) and any relocation expenses incurred as a result thereof,
taxes paid or payable as a result thereof (after taking into account any
available tax credits or deductions and any tax sharing arrangements) and
amounts required to be applied to the repayment of Indebtedness (other than
Indebtedness under any one or more Credit Facilities), secured by a Lien on the
asset or assets that were the subject of such Asset Sale and any reserve for
adjustment in respect of the sale price of such asset or assets established in
accordance with GAAP.
"Non-Recourse Debt" means Indebtedness (i) as to which neither
the Company nor any of its Restricted Subsidiaries (A) provides credit support
of any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (B) is directly or indirectly liable (as a guarantor
or otherwise), or (C) constitutes the lender; (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness (other than
the Notes) of the Company or any of its Restricted Subsidiaries to declare a
default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity; and (iii) the incurrence of
which will not result in any recourse to the stock or assets of the Company or
any of its Restricted Subsidiaries.
"Non-U.S. Person" means a person who is not a U.S. Person.
"Note Custodian" means the Trustee, as custodian with respect
to the Notes in global form, or any successor entity thereto.
"Obligations" means any principal, premium (if any), interest,
penalties, fees, indemnifications, guarantees, reimbursement, damages and other
liabilities payable under the documentation governing any Indebtedness.
"Offering Memorandum" means the Offering Memorandum of the
Company dated April 20, 1999 with respect to the Notes.
"Officer" means, with respect to any Person, the Chairman of
the Board, the Chief Executive Officer, the President, the Chief Operating
Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer,
the Controller, the Secretary, any Assistant Secretary or any Vice-President of
such Person.
"Officers' Certificate" means a certificate signed on behalf
of the Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 11.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who
is reasonably acceptable to the Trustee, that meets the requirements of Section
11.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
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"Participant" means, with respect to DTC, Euroclear or Cedel,
a Person who has an account with DTC, Euroclear or Cedel, respectively (and,
with respect to DTC, shall include Euroclear and Cedel).
"Permitted Business" means the business conducted (or proposed
to be conducted, including activities referred to as being contemplated by the
Company, as described or referred to in the Offering Memorandum) by the Company
and its Restricted Subsidiaries as of the date hereof and any and all businesses
that in the good faith judgment of the Board of Directors of the Company are
reasonably related businesses, including reasonably related extensions or
expansions thereof.
"Permitted Investments" means (i) any Investment in the
Company or in a Restricted Subsidiary of the Company that is a Guarantor; (ii)
any Investment in Cash Equivalents; (iii) any Investment by the Company or any
Restricted Subsidiary of the Company in a Person engaged in a Permitted
Business, if as a result of such Investment (A) such Person becomes a Restricted
Subsidiary of the Company and a Guarantor or (B) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, the Company or a Restricted
Subsidiary of the Company that is a Guarantor; (iv) any Investment made as a
result of the receipt of non-cash consideration from an Asset Sale that was made
pursuant to and in compliance with Section 4.10 hereof; (v) any acquisition of
assets solely in exchange for the issuance of Equity Interests (other than
Disqualified Stock) of the Company; (vi) Hedging Obligations; (vii) loans and
advances to employees and officers of the Company and its Restricted
Subsidiaries in the ordinary course of business for bona fide business purposes
not to exceed an aggregate of $5,000,000 at any one time outstanding; (viii) any
Investment by the Company or a Restricted Subsidiary in a Receivables Subsidiary
or any Investment by a Receivables Subsidiary in any other Person, in each case,
in connection with a Qualified Receivables Transaction, provided, that the
Investment in any Person is in the form of a Purchase Money Note, an equity
interest or an interest in accounts receivable generated by the Company or a
Restricted Subsidiary and transferred to any Person in connection with a
Qualified Receivables Transaction or any Person owning those accounts
receivable; and (ix) other Investments in any Person having an aggregate fair
market value (measured on the date each such Investment was made and without
giving effect to subsequent changes in value), when taken together with all
other Investments made pursuant to this clause (ix) that are at the time
outstanding, not to exceed $50,000,000.
"Permitted Liens" means (i) Liens on assets of the Company and
any Guarantor securing Indebtedness and other Obligations under Credit
Facilities that were permitted by the terms of this Indenture to be incurred;
(ii) Liens in favor of the Company or any Guarantor; (iii) Liens on property of
a Person existing at the time such Person is merged with or into or consolidated
with the Company or any Restricted Subsidiary of the Company, provided that such
Liens were in existence prior to the contemplation of such merger or
consolidation and do not extend to any assets other than those of the Person
merged with or into or consolidated with the Company or such Restricted
Subsidiary; (iv) Liens on property existing at the time of acquisition thereof
by the Company or any Restricted Subsidiary of the Company, provided that such
Liens were in existence prior to the contemplation of such acquisition; (v)
Liens to secure the performance of statutory obligations, surety or appeal
bonds, performance bonds or other obligations of a like nature incurred in the
ordinary course of business; (vi) Liens to secure
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Indebtedness (including Capital Lease Obligations) permitted by clause (v) of
the second paragraph of Section 4.09 hereof covering only the assets acquired
with such Indebtedness; (vii) Liens existing on the date hereof; (viii) Liens
for taxes, assessments or governmental charges or claims that are not yet
delinquent or that are being contested in good faith by appropriate proceedings
promptly instituted and diligently concluded, provided that any reserve or other
appropriate provision as shall be required in conformity with GAAP shall have
been made therefor; (ix) Liens on assets of Unrestricted Subsidiaries that
secure Non-Recourse Debt of Unrestricted Subsidiaries; (x) Liens on accounts
receivable and related assets of a Receivables Subsidiary arising in connection
with a Qualified Receivables Transaction; and (xi) Liens incurred in the
ordinary course of business of the Company or any Subsidiary of the Company with
respect to obligations that do not exceed $35,000,000 at any one time
outstanding.
"Permitted Refinancing Indebtedness" means any Indebtedness of
the Company or any of its Restricted Subsidiaries issued in exchange for, or the
net proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); provided that: (i) the principal amount
(or accreted value, if applicable) of such Permitted Refinancing Indebtedness
does not exceed the principal amount of (or accreted value, if applicable) of
the Indebtedness so extended, refinanced, renewed, replaced, defeased or
refunded (plus all accrued interest thereon and the amount of all expenses and
premiums incurred in connection therewith); (ii) such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity date of,
and has a Weighted Average Life to Maturity equal to or greater than the
Weighted Average Life to Maturity of, the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded is
subordinated in right of payment to the Notes, such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity date of,
and is subordinated in right of payment to, the Notes on terms at least as
favorable to the Holders of Notes as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; and (iv) such Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded is incurred either by the Company or by
the Restricted Subsidiary of the Company who is the obligor on the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded.
"Person" means any individual, partnership, corporation,
limited liability company, unincorporated organization, association, joint-stock
company, trust, joint venture, government, or any agency or political
subdivision thereof or any other entity.
"Private Placement Legend" means the legend set forth in
Section 2.06(g)(i) hereof to be placed on all Notes issued under this Indenture
except as otherwise permitted by the provisions of this Indenture.
"Public Equity Offering" means any underwritten public
offering of common stock of the Company in which the gross proceeds to the
Company are at least $50,000,000.
"Purchase Money Note" means a promissory note evidencing a
line of credit, or evidencing other Indebtedness owed to the Company or any
Restricted Subsidiary of the Company in connection with a Qualified Receivables
Transaction, which note shall be repaid
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<PAGE>
from cash available to the maker of such note, other than amounts required to be
established as reserves pursuant to agreement, amounts paid to investors in
respect of interest, principal and other amounts owing to such investors and
amounts paid in connection with the purchase of newly generated accounts
receivable.
"QIB" means a "qualified institutional buyer" as defined in
Rule 144A.
"Qualified Receivables Transaction" means any transaction or
series of transactions that may be entered into by the Company or any Restricted
Subsidiary of the Company pursuant to which the Company or any Restricted
Subsidiary of the Company may sell, convey or otherwise transfer to (i) a
Receivables Subsidiary (in the case of a transfer by the Company or any
Restricted Subsidiary of the Company) and (ii) any other Person (in the case of
a transfer by a Receivables Subsidiary), or may grant a security interest in,
any accounts receivable (whether now existing or arising in the future) of the
Company or any Restricted Subsidiary of the Company and any asset related
thereto including, without limitation, all collateral securing the accounts
receivable, all contracts and all guarantees or other obligations in respect of
the accounts receivable, proceeds of the accounts receivable and other assets
which are customarily transferred, or in respect of which security interests are
customarily granted in connection with asset securitization transactions
involving accounts receivable.
"Receivables Subsidiary" means a Wholly Owned Subsidiary of
the Company (other than a Guarantor) which engages in no activities other than
in connection with the financing of accounts receivables and which is designated
by the Board of Directors of the Company (as provided below) as a Receivables
Subsidiary: (i) no portion of the Indebtedness or any other Obligations
(contingent or otherwise) of which (A) is guaranteed by the Company or any other
Restricted Subsidiary of the Company (excluding guarantees of Obligations (other
than the principal of, and interest on, Indebtedness) pursuant to Standard
Securitization Undertakings), (B) is recourse to or obligates the Company or any
other Restricted Subsidiary of the Company in any way other than pursuant to
Standard Securitization Undertakings, or (C) subjects any property or asset of
the Company or any other Restricted Subsidiary of the Company, directly or
indirectly, contingently or otherwise, to the satisfaction thereof, other than
pursuant to Standard Securitization Undertakings; (ii) with which neither the
Company nor any other Restricted Subsidiary of the Company has any material
contract, agreement, arrangement or understanding (except in connection with a
Purchase Money Note or Qualified Receivables Transaction) other than on terms no
less favorable to the Company or such other Restricted Subsidiary than those
that might be obtained at the time from persons that are not Affiliates of the
Company, other than fees payable in the ordinary course of business in
connection with servicing accounts receivable; and (iii) to which neither the
Company nor any other Restricted Subsidiary of the Company has any obligation to
maintain or preserve such entity's financial condition or cause such entity to
achieve certain levels of operating results. Any designation of a Subsidiary of
the Company as a Receivables Subsidiary shall be evidenced to the Trustee by
filing with the Trustee a certified copy of the Board Resolution of the Board of
Directors of the Company giving effect to such designation and an Officers'
Certificate certifying that the designation complied with the preceding
conditions and was permitted by this Indenture.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of April 27, 1999, by and among the Company, the Guarantors,
Lehman Brothers Inc. and
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NationsBanc Montgomery Securities LLC, as such agreement may be amended,
modified or supplemented from time to time and, with respect to any Additional
Notes, one or more registration rights agreements between the Company and the
other parties thereto, as such agreement(s) may be amended, modified or
supplemented from time to time, relating to rights given by the Company to the
purchasers of Additional Notes to register such Additional Notes under the
Securities Act.
"Regulation S" means Regulation S promulgated under the
Securities Act.
"Regulation S Global Note" means a global Note bearing the
Private Placement Legend and deposited with and registered in the name of the
Depositary or its nominee that will be issued in a denomination equal to the
outstanding principal amount of the Notes sold in reliance on Regulation S.
"Responsible Officer" when used with respect to the Trustee,
means any officer within the Corporate Trust Administration of the Trustee (or
any successor group of the Trustee) or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
"Restricted Definitive Note" means a Definitive Note bearing
the Private Placement Legend.
"Restricted Global Notes" means the 144A Global Note, the IAI
Global Note and the Regulation S Global Note, each of which shall bear the
Private Placement Legend.
"Restricted Investment" means an Investment other than a
Permitted Investment.
"Restricted Subsidiary" means, with respect to any Person, any
Subsidiary of such Person that is not an Unrestricted Subsidiary.
"Rule 144" means Rule 144 under the Securities Act.
"Rule 144A" means Rule 144A under the Securities Act.
"Rule 903" means Rule 903 under the Securities Act.
"Rule 904" means Rule 904 under the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Shelf Registration Statement" means the Shelf Registration
Statement as defined in the Registration Rights Agreement.
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"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
"Standard Securitization Undertakings" means representations,
warranties, covenants and indemnities entered into by the Company or any of its
Restricted Subsidiaries which are reasonably customary in an accounts receivable
transaction.
"Stated Maturity" means, with respect to any installment of
interest or principal on any series of Indebtedness, the date on which such
payment of interest or principal was scheduled to be paid in the original
documentation governing such Indebtedness, and shall not include any contingent
obligations to repay, redeem or repurchase any such interest or principal prior
to the date originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any specified Person, (i)
any corporation, association or other business entity of which more than 50% of
the total voting power of shares of Capital Stock entitled (without regard to
the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of that
Person (or a combination thereof) and (ii) any partnership (A) the sole general
partner or the managing general partner of which is such Person or a Subsidiary
of such Person or (B) the only general partners of which are such Person or of
one or more Subsidiaries of such Person (or any combination thereof).
"Subsidiary Guarantee" means the Guarantee of the Notes by
each of the Guarantors pursuant to Article 10 hereof and in the form of
guarantee attached as Exhibit E hereto on the form of Note attached as Exhibit A
hereto and any additional Guarantee of the Notes to be executed by any
Restricted Subsidiary of the Company pursuant to Section 4.13 hereof.
"S&P" means Standard and Poor's Ratings Services.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb) as in effect on the date on which this Indenture is
qualified under the TIA.
"Total Assets" means, as of any date, the Company's total
consolidated assets as of that date, as determined in accordance with GAAP. To
the extent that information is not available as to the amount of total
consolidated assets as of a specific date, the Company may utilize the most
recent available information for purposes of calculating Total Assets.
"Transfer Restricted Securities" means securities that bear or
are required to bear the Private Placement Legend set forth in Section
2.06(g)(i) hereof.
"Trustee" means the party named as such above until a
successor replaces it in accordance with the applicable provisions of this
Indenture and thereafter means the successor serving hereunder.
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"Unrestricted Global Note" means one or more global Notes, in
the form of Exhibit A attached hereto, that do not and are not required to bear
the Private Placement Legend and are deposited with and registered in the name
of the Depositary or its nominee.
"Unrestricted Definitive Note" means one or more Definitive
Notes that do not and are not required to bear the Private Placement Legend.
"Unrestricted Subsidiary" means any Subsidiary of the Company
that is designated by the Board of Directors of the Company as an Unrestricted
Subsidiary pursuant to a Board Resolution, but only to the extent that such
Subsidiary: (i) has no Indebtedness other than Non-Recourse Debt; (ii) is not
party to any agreement, contract, arrangement or understanding with the Company
or any Restricted Subsidiary of the Company unless the terms of any such
agreement, contract, arrangement or understanding are no less favorable to the
Company or such Restricted Subsidiary than those that might be obtained at the
time from Persons who are not Affiliates of the Company; (iii) is a Person with
respect to which neither the Company nor any of its Restricted Subsidiaries has
any direct or indirect obligation (A) to subscribe for additional Equity
Interests or (B) to maintain or preserve such Person's financial condition or to
cause such Person to achieve any specified levels of operating results; (iv) has
not guaranteed or otherwise directly or indirectly provided credit support for
any Indebtedness of the Company or any of its Restricted Subsidiaries; and (v)
has at least one director on its Board of Directors that is not a director or
executive officer of the Company or any of its Restricted Subsidiaries and has
at least one executive officer that is not a director or executive officer of
the Company or any of its Restricted Subsidiaries. Any designation of a
Subsidiary of the Company as an Unrestricted Subsidiary shall be evidenced to
the Trustee by filing with the Trustee a certified copy of the Board Resolution
of the Board of Directors of the Company giving effect to such designation and
an Officers' Certificate certifying that such designation complied with the
foregoing conditions and was permitted by Section 4.07 hereof. If, at any time,
any Unrestricted Subsidiary would fail to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Indenture and any Indebtedness of such
Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date (and, if such Indebtedness is not permitted to be
incurred as of such date under Section 4.09 hereof, the Company shall be in
default of such covenant). The Board of Directors of the Company may at any time
designate any Unrestricted Subsidiary to be a Restricted Subsidiary of the
Company; provided that such designation shall be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (i) such Indebtedness is permitted under Section 4.09 hereof,
calculated on a pro forma basis as if such designation had occurred at the
beginning of the four-quarter reference period, and (ii) no Default or Event of
Default would be in existence following such designation.
"U.S. Person" means a U.S. person as defined in Rule 902(o)
under the Securities Act.
"Voting Stock" of any Person as of any date means the Capital
Stock of such Person that is at the time entitled to vote in the election of the
Board of Directors of such Person.
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"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (A) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (B) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Subsidiary" of any specified Person means a
Subsidiary of such Person, all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares or shares
or interests required to be held by foreign nationals, in each case, to the
extent mandated by applicable law), shall at the time be owned by such Person
and/or by one or more Wholly Owned Subsidiaries of such Person.
SECTION 1.02. OTHER DEFINITIONS.
Defined in
Term Section
"Affiliate Transaction"..................................4.11
"Asset Sale Offer".......................................4.10
"Change of Control Offer"................................4.15
"Change of Control Payment"..............................4.15
"Change of Control Payment Date".........................4.15
"Covenant Defeasance"....................................8.03
"DTC"....................................................2.03
"Event of Default".......................................6.01
"Funding Guarantor".....................................10.05
"Global Note Legend".....................................2.06
"Excess Proceeds"........................................4.10
"incur"..................................................4.09
"Legal Defeasance".......................................8.02
"Offer Amount"...........................................3.09
"Offer Period"...........................................3.09
"Paying Agent"...........................................2.03
"Purchase Date"..........................................3.09
"Permitted Debt..........................................4.09
"Registrar"..............................................2.03
"Restricted Payments"....................................4.07
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the
following meanings:
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"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee;
"obligor" on the Notes means the Company and any successor
obligor upon the Notes.
All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule under
the TIA have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular;
(5) provisions apply to successive events and
transactions; and
(6) references to sections of or rules under the
Securities Act shall be deemed to include substitute, replacement or
successor sections or rules adopted by the SEC from time to time.
ARTICLE 2.
THE NOTES
SECTION 2.01. FORM AND DATING.
The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication. The Notes shall
be in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall
constitute, and are hereby expressly made, a part of this Indenture, and the
Company and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound
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thereby. However, to the extent any provision of any Note conflicts with the
express provisions of this Indenture, the provisions of this Indenture shall
govern and be controlling.
Notes issued in global form shall be substantially in the form
of Exhibit A attached hereto (including the Global Note Legend and the "Schedule
of Exchanges in the Global Note" attached thereto). Notes issued in definitive
form shall be substantially in the form of Exhibit A attached hereto (but
without the Global Note Legend and without the "Schedule of Exchanges of
Interests in the Global Note" attached thereto). Each Global Note shall
represent such of the outstanding Notes as shall be specified therein and each
shall provide that it shall represent the aggregate principal amount of
outstanding Notes from time to time endorsed thereon and that the aggregate
principal amount of outstanding Notes represented thereby may from time to time
be reduced or increased, as appropriate, to reflect exchanges and redemptions.
Any endorsement of a Global Note to reflect the amount of any increase or
decrease in the aggregate principal amount of outstanding Notes represented
thereby shall be made by the Trustee or the Note Custodian, at the direction of
the Trustee, in accordance with instructions given by the Holder thereof as
required by Section 2.06 hereof.
The provisions of the "Operating Procedures of the Euroclear
System" and "Terms and Conditions Governing Use of Euroclear" and the "General
Terms and Conditions of Cedel Bank" and "Customer Handbook" of Cedel shall be
applicable to interests in the Regulation S Global Notes that are held by
Participants through Euroclear or Cedel.
SECTION 2.02. EXECUTION AND AUTHENTICATION
Two Officers shall sign the Notes for the Company by manual or
facsimile signature. The Company's seal shall be reproduced on the Notes and may
be in facsimile form.
If an Officer whose signature is on a Note no longer holds
that office at the time a Note is authenticated, the Note shall nevertheless be
valid.
A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Note has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed
by two Officers, authenticate Notes for original issue up to the aggregate
principal amount stated in paragraph 4 of the Notes. The aggregate principal
amount of Notes outstanding at any time may not exceed such amount except as
provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Notes. An authenticating agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.
The Notes will be limited in aggregate principal amount to
$275,000,000, of which $200,000,000 will be issued on the date hereof. The
Company may issue Additional Notes from time to time after the offering of the
Initial Notes. Any offering of Additional Notes
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is subject to Section 4.09 hereof. The Initial Notes and any Additional Notes
subsequently issued under this Indenture shall be treated as a single class for
all purposes under this Indenture, including, without limitation, waivers,
amendments, redemptions and offers to purchase.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Notes may
be presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall notify
the Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company
("DTC") to act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the
Registrar and Paying Agent and to act as Note Custodian with respect to the
Global Notes.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of Holders or the Trustee all money held by the Paying Agent for the
payment of principal, premium or Liquidated Damages, if any, or interest on the
Notes, and will notify the Trustee of any default by the Company in making any
such payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Notes.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of all Holders and shall otherwise comply with TIA ss. 312(a). If the
Trustee is not the Registrar, the Company shall furnish to the Trustee at least
five Business Days before each interest payment date and at such other times as
the Trustee may request in writing, a list in such form and as of such date as
the Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Company shall otherwise comply with TIA ss. 312(a).
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SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Notes. A Global Note
may not be transferred as a whole except by the Depositary to a nominee of the
Depositary, by a nominee of the Depositary to the Depositary or to another
nominee of the Depositary, or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary. All Global Notes
will be exchanged by the Company for Definitive Notes if (i) the Company
delivers to the Trustee notice from the Depositary that it is unwilling or
unable to continue to act as Depositary or that it is no longer a clearing
agency registered under the Exchange Act and, in either case, a successor
Depositary is not appointed by the Company within 120 days after the date of
such notice from the Depositary or (ii) the Company in its sole discretion
determines that the Global Notes (in whole but not in part) should be exchanged
for Definitive Notes and delivers a written notice to such effect to the
Trustee. Upon the occurrence of either of the preceding events in (i) or (ii)
above, Definitive Notes shall be issued in such names as the Depositary shall
instruct the Trustee. Global Notes also may be exchanged or replaced, in whole
or in part, as provided in Sections 2.06, 2.07 and 2.10 hereof. Every Note
authenticated and made available for delivery in exchange for, or in lieu of, a
Global Note or any portion thereof, pursuant to Section 2.06, 2.07 or 2.10
hereof, shall be authenticated and made available for delivery in the form of,
and shall be, a Global Note. A Global Note may not be exchanged for another Note
other than as provided in this Section 2.06(a); however beneficial interests in
a Global Note may be transferred and exchanged as provided in Section 2.06(b),
(c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the
Global Notes. The transfer and exchange of beneficial interests in the Global
Notes shall be effected through the Depositary, in accordance with the
provisions of this Indenture and the Applicable Procedures. Beneficial interests
in the Restricted Global Notes shall be subject to restrictions on transfer
comparable to those set forth herein to the extent required by the Securities
Act. The Trustee shall have no obligation to ascertain the Depositary's
compliance with any such restrictions on transfer. Transfers of beneficial
interests in the Global Notes also shall require compliance with either
subparagraph (i) or (ii) below, as applicable, as well as one or more of the
other following subparagraphs as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred
to Persons who take delivery thereof in the form of a beneficial
interest in the same Restricted Global Note in accordance with the
transfer restrictions set forth in the Private Placement Legend;
provided, however, that prior to the expiration of the Distribution
Compliance Period, transfers of beneficial interests in the Regulation
S Global Note may not be made to a U.S. Person or for the account or
benefit of a U.S. Person (other than an Initial Purchaser). Beneficial
interests in any Unrestricted Global Note may be transferred only to
Persons who take delivery thereof in the form of a beneficial interest
in an Unrestricted Global Note. No written orders or instructions shall
be required to be delivered to the Registrar to effect the transfers
described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests
in Global Notes. In connection with all transfers and exchanges of
beneficial interests (other than transfers of beneficial interests in a
Global Note to Persons who take delivery thereof in
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the form of a beneficial interest in the same Global Note), the
transferor of such beneficial interest must deliver to the Registrar
either (A)(1) a written order from a Participant or an Indirect
Participant given to the Depositary in accordance with the Applicable
Procedures directing the Depositary to credit or cause to be credited a
beneficial interest in the specified Global Note in an amount equal to
the beneficial interest to be transferred or exchanged and (2)
instructions given in accordance with the Applicable Procedures
containing information regarding the Participant account to be credited
with such increase or (B)(1) a written order from a Participant or an
Indirect Participant given to the Depositary in accordance with the
Applicable Procedures directing the Depositary to cause to be issued a
Definitive Note in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given by the Depositary
to the Registrar containing information regarding the Person in whose
name such Definitive Note shall be registered to effect the transfer or
exchange referred to in (B)(1) above. Upon an Exchange Offer by the
Company in accordance with Section 2.06(f) hereof, the requirements of
this Section 2.06(b)(ii) shall be deemed to have been satisfied upon
receipt by the Registrar of the instructions contained in the Letter of
Transmittal delivered by the Holder of such beneficial interests in the
Restricted Global Notes. Upon satisfaction of all of the requirements
for transfer or exchange of beneficial interests in Global Notes
contained in this Indenture, the Notes and otherwise applicable under
the Securities Act, the Trustee shall adjust the principal amount of
the relevant Global Note(s) pursuant to Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted
Global Note. Beneficial interests in any Restricted Global Note may be
transferred to Persons who take delivery thereof in the form of a
beneficial interest in another Restricted Global Note if the transfer
complies with the requirements of Section 2.06(b)(ii) above and the
Registrar receives the following:
(A) if the transferee will take delivery in the form
of a beneficial interest in the 144A Global Note, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (1) thereof;
(B) if the transferee will take delivery in the form
of a beneficial interest in the Regulation S Global Note, then
the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in item (2)
thereof; and
(C) if the transferee will take delivery in the form
of a beneficial interest in the IAI Global Note, then the
transferor must deliver (x) a certificate in the form of
Exhibit B hereto, including the certifications in item (3)
thereof, (y) to the extent required by item 3(d) of Exhibit B
hereto, an Opinion of Counsel in form reasonably acceptable to
the Company to the effect that such transfer is in compliance
with the Securities Act and such beneficial interest is being
transferred in compliance with any applicable blue sky
securities laws of any State of the United States and (z) if
the transfer is being made to an Institutional Accredited
Investor and effected pursuant to an exemption from the
registration requirements of the Securities Act other than
Rule 144A under the Securities Act,
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Rule 144 under the Securities Act or Rule 904 under the
Securities Act, a certificate from the transferee in the form
of Exhibit D hereto.
(iv) Transfer and Exchange of Beneficial Interests in a
Restricted Global Note for Beneficial Interests in the Unrestricted
Global Note. Beneficial interests in any Restricted Global Note may be
exchanged by any holder thereof for a beneficial interest in the
Unrestricted Global Note or transferred to Persons who take delivery
thereof in the form of a beneficial interest in the Unrestricted Global
Note if the exchange or transfer complies with the requirements of
Section 2.06(b)(ii) above and:
(A) such exchange or transfer is effected pursuant to
the Exchange Offer in accordance with the Registration Rights
Agreement and the holder, in the case of an exchange, or the
transferee, in the case of a transfer, is not (1) a
broker-dealer, (2) a Person participating in the distribution
of the Exchange Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the
Shelf Registration Statement in accordance with the
Registration Rights Agreement;
(C) any such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights
Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial
interest in a Restricted Global Note proposes to exchange such
beneficial interest for a beneficial interest in the
Unrestricted Global Note, a certificate from such holder in
the form of Exhibit C hereto, including the certifications in
item (1)(a) thereof; or
(2) if the holder of such beneficial
interest in a Restricted Global Note proposes to transfer such
beneficial interest to a Person who shall take delivery
thereof in the form of a beneficial interest in the
Unrestricted Global Note, a certificate from such holder in
the form of Exhibit B hereto, including the certifications in
item (4) thereof; and
(3) in each such case set forth in this
subparagraph (D), an Opinion of Counsel in form reasonably
acceptable to the Registrar to the effect that such exchange
or transfer is in compliance with the Securities Act, that the
restrictions on transfer contained herein and in the Private
Placement Legend are not required in order to maintain
compliance with the Securities Act, and such beneficial
interest is being exchanged or transferred in compliance with
any applicable blue sky securities laws of any State of the
United States.
If any such transfer is effected pursuant to subparagraph (B)
or (D) above at a time when an Unrestricted Global Note has not yet been issued,
the Company shall issue and, upon receipt of an authentication order in
accordance with Section 2.02 hereof, the Trustee shall
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authenticate one or more Unrestricted Global Notes in an aggregate principal
amount equal to the principal amount of beneficial interests transferred
pursuant to subparagraph (B) or (D) above.
(v) Transfer or Exchange of Beneficial Interests in
Unrestricted Global Notes for Beneficial Interests in Restricted Global
Notes Prohibited. Beneficial interests in an Unrestricted Global Note
cannot be exchanged for, or transferred to Persons who take delivery
thereof in the form of, a beneficial interest in any Restricted Global
Note.
(c) Transfer or Exchange of Beneficial Interests for
Definitive Notes.
(i) Beneficial Interests in Restricted Global Notes to
Restricted Definitive Notes. If any holder of a beneficial interest in
a Restricted Global Note proposes to exchange such beneficial interest
for a Restricted Definitive Note or to transfer such beneficial
interest to a Person who takes delivery thereof in the form of a
Restricted Definitive Note, then, upon receipt by the Registrar of the
following documentation (all of which may be submitted by facsimile):
(A) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a Restricted Definitive Note, a certificate from
such holder in the form of Exhibit C hereto, including the
certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred
to a QIB in accordance with Rule 144A under the Securities
Act, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (1) thereof;
(C) if such beneficial interest is being transferred
to a Non-U.S. Person in an offshore transaction in accordance
with Rule 903 or Rule 904 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (2) thereof;
(D) if such beneficial interest is being transferred
pursuant to an exemption from the registration requirements of
the Securities Act in accordance with Rule 144 under the
Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (3)(a)
thereof;
(E) if such beneficial interest is being transferred
to an Institutional Accredited Investor in reliance on an
exemption from the registration requirements of the Securities
Act other than those listed in subparagraphs (B) through (D)
above, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (3)(d) thereof, a
certificate from the transferee to the effect set forth in
Exhibit D hereof and, to the extent required by item 3(d) of
Exhibit B, an Opinion of Counsel from the transferee or the
transferor reasonably acceptable to the Company to the effect
that such transfer is in compliance with the Securities Act
and such beneficial interest is being transferred in
compliance with any applicable blue sky securities laws of any
State of the United States;
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(F) if such beneficial interest is being transferred
to the Company or any of its Subsidiaries, a certificate to
the effect set forth in Exhibit B hereto, including the
certifications in item (3)(b) thereof; or
(G) if such beneficial interest is being transferred
pursuant to an effective registration statement under the
Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (3)(c)
thereof, the Trustee shall cause the aggregate principal
amount of the applicable Global Note to be reduced accordingly
pursuant to Section 2.06(h) hereof, and the Company shall
execute and the Trustee shall authenticate and deliver to the
Person designated in the instructions a Definitive Note in the
appropriate principal amount. Definitive Notes issued in
exchange for beneficial interests in a Restricted Global Note
pursuant to this Section 2.06(c) shall be registered in such
names and in such authorized denominations as the holder shall
instruct the Registrar through instructions from the
Depositary and the Participant or Indirect Participant. The
Trustee shall deliver such Definitive Notes to the Persons in
whose names such Notes are so registered. Definitive Notes
issued in exchange for a beneficial interest in a Restricted
Global Note pursuant to this Section 2.06(c)(i) shall bear the
Private Placement Legend and shall be subject to all
restrictions on transfer contained therein.
(ii) Beneficial Interests in Restricted Global Notes to
Unrestricted Definitive Notes. Notwithstanding Section 2.06(c)(i)
hereof, a holder of a beneficial interest in a Restricted Global Note
may exchange such beneficial interest for an Unrestricted Definitive
Note or may transfer such beneficial interest to a Person who takes
delivery thereof in the form of an Unrestricted Definitive Note only
if:
(A) such exchange or transfer is effected pursuant to
the Exchange Offer in accordance with the Registration Rights
Agreement and the holder, in the case of an exchange, or the
transferee, in the case of a transfer, is not (1) a
broker-dealer, (2) a Person participating in the distribution
of the Exchange Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the
Shelf Registration Statement in accordance with the
Registration Rights Agreement;
(C) any such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights
Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in
a Restricted Global Note proposes to exchange such beneficial
interest for a Definitive Note that does not bear the Private
Placement Legend, a certificate from such holder in the form
of Exhibit C hereto, including the certifications in item
(1)(b) thereof; or
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(2) if the holder of such beneficial interest in
a Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the
form of a Definitive Note that does not bear the Private
Placement Legend, a certificate from such holder in the form
of Exhibit B hereto, including the certifications in item (4)
thereof; and
(3) in each such case set forth in this
subparagraph (D), an Opinion of Counsel in form reasonably
acceptable to the Company, to the effect that such exchange or
transfer is in compliance with the Securities Act, that the
restrictions on transfer contained herein and in the Private
Placement Legend are not required in order to maintain
compliance with the Securities Act, and such beneficial
interest in a Restricted Global Note is being exchanged or
transferred in compliance with any applicable blue sky
securities laws of any State of the United States.
(iii) Beneficial Interests in Unrestricted Global Notes to
Unrestricted Definitive Notes. If any holder of a beneficial interest
in an Unrestricted Global Note proposes to exchange such beneficial
interest for a Definitive Note or to transfer such beneficial interest
to a Person who takes delivery thereof in the form of a Definitive
Note, then, upon satisfaction of the conditions set forth in Section
2.06(b)(ii) hereof, the Trustee shall cause the aggregate principal
amount of the applicable Global Note to be reduced accordingly pursuant
to Section 2.06(h) hereof, and the Company shall execute and the
Trustee shall authenticate and deliver to the Person designated in the
instructions a Definitive Note in the appropriate principal amount.
Definitive Notes issued in exchange for a beneficial interest pursuant
to this Section 2.06(c)(iii) shall be registered in such names and in
such authorized denominations as the holder shall instruct the
Registrar through instructions from the Depositary and the Participant
or Indirect Participant. The Trustee shall deliver such Definitive
Notes to the Persons in whose names such Notes are so registered.
Definitive Notes issued in exchange for a beneficial interest pursuant
to this Section 2.06(c)(iii) shall not bear the Private Placement
Legend.
(iv) Transfer or Exchange of Beneficial Interests in
Unrestricted Global Notes to Restricted Definitive Notes Prohibited.
Beneficial interests in an Unrestricted Global Note cannot be exchanged
for a Definitive Note bearing the Private Placement Legend or
transferred to a Person who takes delivery thereof in the form of a
Definitive Note bearing the Private Placement Legend.
(d) Transfer or Exchange of Definitive Notes for
Beneficial Interests.
(i) Restricted Definitive Notes to Beneficial Interests in
Restricted Global Notes. If any Holder of Restricted Definitive Notes
proposes to exchange such Notes for a beneficial interest in a
Restricted Global Note or to transfer such Restricted Definitive Notes
to a Person who takes delivery thereof in the form of a beneficial
interest in a Restricted Global Note, then, upon receipt by the
Registrar of the following documentation (all of which may be submitted
by facsimile):
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(A) if the Holder of such Restricted Definitive Notes
proposes to exchange such Notes for a beneficial interest in a
Restricted Global Note, a certificate from such Holder in the
form of Exhibit C hereto, including the certifications in item
(2)(b) thereof;
(B) if such Restricted Definitive Notes are being
transferred to a QIB in accordance with Rule 144A under the
Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (1)
thereof;
(C) if such Restricted Definitive Notes are being
transferred to a Non-U.S. Person in an offshore transaction in
accordance with Rule 903 or Rule 904 under the Securities Act,
a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (2) thereof;
(D) if such Restricted Definitive Notes are being
transferred pursuant to an exemption from the registration
requirements of the Securities Act in accordance with Rule 144
under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in
item (3)(a) thereof;
(E) if such Restricted Definitive Notes are being
transferred to an Institutional Accredited Investor in
reliance on an exemption from the registration requirements of
the Securities Act other than those listed in subparagraphs
(B) through (D) above, a certificate to the effect set forth
in Exhibit B hereto, including the certifications in item
(3)(d) thereof, a certificate from the transferee to the
effect set forth in Exhibit D hereof and, to the extent
required by item 3(d) of Exhibit B, an Opinion of Counsel from
the transferee or the transferor reasonably acceptable to the
Company to the effect that such transfer is in compliance with
the Securities Act and such Definitive Notes are being
transferred in compliance with any applicable blue sky
securities laws of any State of the United States;
(F) if such Restricted Definitive Notes are being
transferred to the Company or any of its Subsidiaries, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(b) thereof; or
(G) if such Restricted Definitive Notes are being
transferred pursuant to an effective registration statement
under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in
item (3)(c) thereof,
the Trustee shall cancel the Definitive Notes, increase or cause to be
increased the aggregate principal amount of, in the case of clause (A)
above, the appropriate Restricted Global Note, in the case of clause
(B) above, the 144A Global Note, in the case of clause (C) above, the
Regulation S Global Note, and in all other cases, the IAI Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of Restricted Definitive Notes may
exchange such Notes for a beneficial interest in the Unrestricted
Global Note or transfer such Restricted Definitive
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Notes to a Person who takes delivery thereof in the form of a
beneficial interest in the Unrestricted Global Note only if:
(A) such exchange or transfer is effected pursuant to
the Exchange Offer in accordance with the Registration Rights
Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, is not (1) a
broker-dealer, (2) a Person participating in the distribution
of the Exchange Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the
Shelf Registration Statement in accordance with the
Registration Rights Agreement;
(C) any such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights
Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive Notes
proposes to exchange such Notes for a beneficial interest in
the Unrestricted Global Note, a certificate from such Holder
in the form of Exhibit C hereto, including the certifications
in item (1)(c) thereof; or
(2) if the Holder of such Definitive Notes
proposes to transfer such Notes to a Person who shall take
delivery thereof in the form of a beneficial interest in the
Unrestricted Global Note, a certificate from such Holder in
the form of Exhibit B hereto, including the certifications in
item (4) thereof; and
(3) in each such case set forth in this
subparagraph (D), an Opinion of Counsel in form reasonably
acceptable to the Company to the effect that such exchange or
transfer is in compliance with the Securities Act, that the
restrictions on transfer contained herein and in the Private
Placement Legend are not required in order to maintain
compliance with the Securities Act, and such Definitive Notes
are being exchanged or transferred in compliance with any
applicable blue sky securities laws of any State of the United
States.
Upon satisfaction of the conditions of any of the
subparagraphs in this Section 2.06(d)(ii), the Trustee shall cancel the
Definitive Notes and increase or cause to be increased the aggregate
principal amount of the Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of Unrestricted Definitive Notes
may exchange such Notes for a beneficial interest in the Unrestricted
Global Note or transfer such Definitive Notes to a Person who takes
delivery thereof in the form of a beneficial interest in the
Unrestricted Global Note. Upon receipt of a request for such an
exchange or transfer, the Trustee shall cancel the Unrestricted
Definitive Notes and increase or cause to be increased the aggregate
principal amount of the Unrestricted Global Note.
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(iv) Transfer or Exchange of Unrestricted Definitive Notes
to Beneficial Interests in Restricted Global Notes Prohibited. An Unrestricted
Definitive Note cannot be exchanged for, or transferred to Persons who take
delivery thereof in the form of, beneficial interests in a Restricted Global
Note.
(v) Issuance of Unrestricted Global Notes. If any such
exchange or transfer from a Definitive Note to a beneficial interest is effected
pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) above at a time when an
Unrestricted Global Note has not yet been issued, the Company shall issue and,
upon receipt of an authentication order in accordance with Section 2.02 hereof,
the Trustee shall authenticate one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of beneficial interests
transferred pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) above.
(e) Transfer and Exchange of Definitive Notes. Upon
request by a Holder of Definitive Notes and such Holder's compliance with the
provisions of this Section 2.06(e), the Registrar shall register the transfer or
exchange of Definitive Notes. Prior to such registration of transfer or
exchange, the requesting Holder shall present or surrender to the Registrar the
Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by his attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, pursuant to the provisions of this Section 2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive
Notes. Restricted Definitive Notes may be transferred to and registered
in the name of Persons who take delivery thereof in the form of a
Restricted Definitive Note if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule
144A under the Securities Act, then the transferor must
deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903
or Rule 904 under the Securities Act, then the transferor must
deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (2) thereof; and
(C) if the transfer will be made pursuant to any
other exemption from the registration requirements of the
Securities Act, then the transferor must deliver (x) a
certificate in the form of Exhibit B hereto, including the
certifications in item (3) thereof, (y) to the extent required
by item 3(d) of Exhibit B hereto, an Opinion of Counsel in
form reasonably acceptable to the Company to the effect that
such transfer is in compliance with the Securities Act and
such beneficial interest is being transferred in compliance
with any applicable blue sky securities laws of any State of
the United States and (z) if the transfer is being made to an
Institutional Accredited Investor and effected pursuant to an
exemption from the registration requirements of the Securities
Act other than Rule 144A under the Securities Act, Rule 144
under the Securities Act or Rule 904 under the Securities Act,
a certificate from the transferee in the form of Exhibit D
hereto.
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(ii) Restricted Definitive Notes to Unrestricted Definitive
Notes. Restricted Definitive Notes may be exchanged by any Holder
thereof for an Unrestricted Definitive Note or transferred to Persons
who take delivery thereof in the form of an Unrestricted Definitive
Note if:
(A) such exchange or transfer is effected pursuant to
the Exchange Offer in accordance with the Registration Rights
Agreement and the holder, in the case of an exchange, or the
transferee, in the case of a transfer, is not (1) a
broker-dealer, (2) a Person participating in the distribution
of the Exchange Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the
Shelf Registration Statement in accordance with the
Registration Rights Agreement;
(C) any such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights
Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted
Definitive Notes proposes to exchange such Notes for an
Unrestricted Definitive Note, a certificate from such Holder
in the form of Exhibit C hereto, including the certifications
in item (1)(a) thereof; or
(2) if the Holder of such Restricted
Definitive Notes proposes to transfer such Notes to a Person
who shall take delivery thereof in the form of an Unrestricted
Definitive Note, a certificate from such Holder in the form of
Exhibit B hereto, including the certifications in item (4)
thereof; and
(3) in each such case set forth in this
subparagraph (D), an Opinion of Counsel in form reasonably
acceptable to the Company to the effect that such exchange or
transfer is in compliance with the Securities Act, that the
restrictions on transfer contained herein and in the Private
Placement Legend are not required in order to maintain
compliance with the Securities Act, and such Restricted
Definitive Note is being exchanged or transferred in
compliance with any applicable blue sky securities laws of any
State of the United States.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive
Notes. A Holder of Unrestricted Definitive Notes may transfer such
Notes to a Person who takes delivery thereof in the form of an
Unrestricted Definitive Note. Upon receipt of a request for such a
transfer, the Registrar shall register the Unrestricted Definitive
Notes pursuant to the instructions from the Holder thereof.
Unrestricted Definitive Notes cannot be exchanged for or transferred to
Persons who take delivery thereof in the form of a Restricted
Definitive Note.
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(iv) Transfer or Exchange of Unrestricted Definitive Notes
to Restricted Definitive Notes Prohibited. An Unrestricted Definitive Note
cannot be exchanged for, or transferred to Persons who take delivery thereof in
the form of a Restricted Definitive Note.
(f) Exchange Offer. Upon the occurrence of the Exchange
Offer in accordance with the Registration Rights Agreement, the Company shall
issue and, upon receipt of an authentication order in accordance with Section
2.02 hereof, the Trustee shall authenticate (i) one or more Unrestricted Global
Notes in an aggregate principal amount equal to the principal amount of the
beneficial interests in the Restricted Global Notes tendered for acceptance by
persons that are not (x) broker-dealers, (y) Persons participating in the
distribution of the Exchange Notes or (z) Persons who are affiliates (as defined
in Rule 144) of the Company and accepted for exchange in the Exchange Offer and
(ii) Definitive Notes in an aggregate principal amount equal to the principal
amount of the Restricted Definitive Notes accepted for exchange in the Exchange
Offer. Concurrent with the issuance of such Notes, the Trustee shall cause the
aggregate principal amount of the applicable Restricted Global Notes to be
reduced accordingly, and the Company shall execute and the Trustee shall
authenticate and make available for delivery to the Persons designated by the
Holders of Definitive Notes so accepted Definitive Notes in the appropriate
principal amount.
(g) Legends. The following legends shall appear on the
face of all Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (b) below,
each Global Note and each Definitive Note (and all Notes
issued in exchange therefor or substitution thereof) shall
bear the legend in substantially the following form:
"THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR OTHER
SECURITIES LAWS. NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION
UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS
SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING ITS
NOTE IN AN "OFFSHORE TRANSACTION" PURSUANT TO RULE 904 OF REGULATION S
UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT PRIOR TO (X) THE
DATE WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY
RULE 144(k) UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION
THEREUNDER) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR OF
ANY PREDECESSOR OF THIS NOTE) OR THE LAST DAY ON WHICH AMES OR ANY
AFFILIATE OF AMES
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WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF THIS NOTE) AND (Y)
SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW (THE
"RESALE RESTRICTION TERMINATION DATE"), OFFER, SELL OR OTHERWISE
TRANSFER THIS NOTE EXCEPT (A) TO AMES, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT,
(C) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT
THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A INSIDE THE UNITED STATES, (D) PURSUANT TO
OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED
STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT OR
(E) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO
EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND; PROVIDED THAT AMES, THE TRUSTEE, AND THE
REGISTRAR SHALL HAVE THE RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER (I) PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF
AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND (II) IN EACH OF THE FOREGOING CASES,
TO REQUIRE THAT A CERTIFICATION OF TRANSFER IN THE FORM PROVIDED IN THE
INDENTURE GOVERNING THIS NOTE IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST
OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S.
PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE
SECURITIES ACT."
(B) Notwithstanding the foregoing, any Global Note or
Definitive Note issued pursuant to subparagraphs (b)(iv),
(c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f)
of this Section 2.06 (and all Notes issued in exchange
therefor or substitution thereof) shall not bear the Private
Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend
in substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY
PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE
SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06 OF
THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT
IN PART
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PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL
NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO
SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE
TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF
AMES."
(h) Cancellation and/or Adjustment of Global Notes. At
such time as all beneficial interests in a particular Global Note have been
exchanged for Definitive Notes or a particular Global Note has been redeemed,
repurchased or canceled in whole and not in part, each such Global Note shall be
returned to or retained and canceled by the Trustee in accordance with Section
2.11 hereof. At any time prior to such cancellation, if any beneficial interest
in a Global Note is exchanged for or transferred to a Person who will take
delivery thereof in the form of a beneficial interest in another Global Note or
for Definitive Notes, the principal amount of Notes represented by such Global
Note shall be reduced accordingly and an endorsement shall be made on such
Global Note, by the Trustee or by the Depositary at the direction of the
Trustee, to reflect such reduction; and if the beneficial interest is being
exchanged for or transferred to a Person who will take delivery thereof in the
form of a beneficial interest in another Global Note, such other Global Note
shall be increased accordingly and an endorsement shall be made on such Global
Note, by the Trustee or by the Depositary at the direction of the Trustee, to
reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Global Notes
and Definitive Notes upon the Company's order or at the Registrar's
request.
(ii) No service charge shall be made to a holder of a
beneficial interest in a Global Note or to a Holder of a Definitive
Note for any registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith (other than
any such transfer taxes or similar governmental charge payable upon
exchange or transfer pursuant to Sections 2.10, 3.06, 4.10, 4.15 and
9.05 hereof).
(iii) The Registrar shall not be required to register the
transfer of or exchange any Note selected for redemption in whole or in
part, except the unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive
Notes shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as
the Global Notes or Definitive Notes surrendered upon such registration
of transfer or exchange.
(v) The Company shall not be required (A) to issue, to
register the transfer of or to exchange Notes during a period beginning
at the opening of business 15 days before the day of any selection of
Notes for redemption under Section 3.02 hereof and ending at
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the close of business on the day of selection, (B) to register the
transfer of or to exchange any Note so selected for redemption in whole
or in part, except the unredeemed portion of any Note being redeemed in
part or (C) to register the transfer of or to exchange a Note between a
record date and the next succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of a
transfer of any Note, the Trustee, any Agent and the Company may deem
and treat the Person in whose name any Note is registered as the
absolute owner of such Note for the purpose of receiving payment of
principal of and interest on such Notes and for all other purposes, and
none of the Trustee, any Agent or the Company shall be affected by
notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and
Definitive Notes in accordance with the provisions of Section 2.02
hereof.
SECTION 2.07. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee or the
Company and the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Note, the Company shall issue and the Trustee,
upon the written order of the Company signed by two Officers of the Company,
shall authenticate a replacement Note if the Trustee's requirements are met. If
required by the Trustee or the Company, an indemnity bond must be supplied by
the Holder that is sufficient in the judgment of the Trustee and the Company to
protect the Company, the Trustee, any Agent and any authenticating agent from
any loss that any of them may suffer if a Note is replaced. The Company may
charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the
Company and shall be entitled to all of the benefits of this Indenture equally
and proportionately with all other Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes
authenticated by the Trustee except for those canceled by it, those delivered to
it for cancellation, those reductions in the interest in a Global Note effected
by the Trustee in accordance with the provisions hereof, and those described in
this Section 2.08 as not outstanding. Except as set forth in Section 2.09
hereof, a Note does not cease to be outstanding because the Company or an
Affiliate of the Company holds the Note.
If a Note is replaced pursuant to Section 2.07 hereof, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under
Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to
accrue.
If the Paying Agent (other than the Company, a Subsidiary or
an Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on
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that date, then on and after that date such Notes shall be deemed to be no
longer outstanding and shall cease to accrue interest.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver or consent, Notes owned
by the Company, or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company, shall
be considered as though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Notes that a Trustee knows are so owned shall
be so disregarded.
SECTION 2.10. TEMPORARY NOTES.
Until Definitive Notes are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Notes upon a written order
of the Company signed by two Officers of the Company. Temporary Notes shall be
substantially in the form of Definitive Notes but may have variations that the
Company considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Company shall prepare
and the Trustee shall authenticate Definitive Notes in exchange for temporary
Notes.
Holders of temporary Notes shall be entitled to all of the
benefits of this Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
canceled Notes (subject to the record retention requirements of the Exchange
Act). Certification of the destruction of all canceled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes,
it shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee in
writing of the amount of defaulted interest proposed to be paid on each Note and
the date of the proposed payment. The Company shall fix or cause to be fixed
each such special record date and payment date, provided that no such special
record date shall be less than 10 days prior to the related payment date for
such defaulted interest. At least 15 days before the special record date, the
Company (or, upon the written request of the Company, the Trustee in the name
and at the expense of the Company) shall mail or cause to be mailed to Holders a
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notice that states the special record date, the related payment date and the
amount of such interest to be paid.
SECTION 2.13. Cusip NUMBERS.
The Company in issuing the Notes may use "CUSIP," "CINS," and
"ISIN" numbers (if then generally in use), and, if so, the Trustee shall use
CUSIP, CINS or ISIN numbers as applicable, in notices of redemption as a
convenience to Holders; provided that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Notes or as contained in any notice of a redemption and that reliance may
be placed only on the other identification numbers printed on the Notes, and any
such redemption shall not be affected by any defect in or omission of such
numbers. The Company will promptly notify the Trustee of any change in the
CUSIP, CINS or ISIN numbers.
ARTICLE 3.
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 30 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed and (iv) the redemption price.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed at any time,
selection of Notes for redemption shall be made by the Trustee in compliance
with the requirements of the principal national securities exchange, if any, on
which the Notes are listed, or, if the Notes are not so listed, on a pro rata
basis, by lot or by such method as the Trustee shall deem fair and appropriate;
provided that no Notes of less than $1,000 shall be redeemed in part. Notices of
redemption shall be mailed by first class mail at least 30 but not more than 60
days before the redemption date to each Holder of Notes to be redeemed at its
registered address. If any Note is to be redeemed in part only, the notice of
redemption that relates to such Note shall state the portion of the principal
amount thereof to be redeemed. A new Note in principal amount equal to the
unredeemed portion thereof shall be issued in the name of the Holder thereof
upon cancellation of the original Note. Notes called for redemption become due
on the date fixed for redemption. On and after the redemption date, interest
ceases to accrue on Notes or portions of them called for redemption.
The Trustee shall promptly notify the Company in writing of
the Notes selected for redemption and, in the case of any Note selected for
partial redemption, the principal amount thereof to be redeemed. Notes and
portions of Notes selected shall be in amounts of $1,000 or whole multiples of
$1,000; except that if all of the Notes of a Holder are to be redeemed, the
entire outstanding amount of Notes held by such Holder, even if not a multiple
of $1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
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As of the date hereof, the Notes are not listed on any
national securities exchange. The Company shall give notice to the Trustee of
any such listing promptly after it becomes effective.
SECTION 3.03. NOTICE OF REDEMPTION.
Subject to the provisions of Section 3.09 hereof, at least 30
days but not more than 60 days before a redemption date, the Company shall mail
or cause to be mailed, by first class mail, a notice of redemption to each
Holder whose Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed (including
CUSIP, CINS or ISIN numbers, if any) and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of
the principal amount of such Note to be redeemed and that, after the redemption
date upon surrender of such Note, a new Note or Notes in principal amount equal
to the unredeemed portion shall be issued upon cancellation of the original
Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such
redemption payment, interest on Notes called for redemption ceases to accrue on
and after the redemption date;
(g) the paragraph of the Notes and/or Section of this
Indenture pursuant to which the Notes called for redemption are being redeemed;
and
(h) that no representation is made as to the correctness or
accuracy of the CUSIP, CINS or ISIN number, if any, listed in such notice or
printed on the Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section
3.03 hereof, Notes called for redemption become irrevocably due and payable on
the redemption date at the redemption price.
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SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
Prior to 11:00 a.m. on the Business Day prior to the
redemption date, the Company shall deposit with the Trustee or with the Paying
Agent money sufficient to pay the redemption price of and accrued interest on
all Notes to be redeemed on that date. The Trustee or the Paying Agent shall
promptly return to the Company any money deposited with the Trustee or the
Paying Agent by the Company in excess of the amounts necessary to pay the
redemption price of, and accrued interest on, all Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be paid to the Person
in whose name such Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption
date until such principal is paid, and to the extent lawful on any interest not
paid on such unpaid principal, in each case at the rate provided in the Notes
and in Section 4.01 hereof.
SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company
shall issue and, upon the Company's written request, the Trustee shall
authenticate for the Holder at the expense of the Company a new Note equal in
principal amount to the unredeemed portion of the Note surrendered. SECTION
3.07. OPTIONAL REDEMPTION.
(a) Except as set forth in clause (b) of this Section 3.07,
the Notes shall not be redeemable at the Company's option prior to April 15,
2003. Thereafter, the Notes shall be subject to redemption at any time at the
option of the Company, in whole or in part, upon not less than 30 nor more than
60 days' notice, at the redemption prices (expressed as percentages of principal
amount) set forth below plus accrued and unpaid interest, if any, to the
applicable redemption date, if redeemed during the twelve-month period beginning
on April 15 of the years indicated below:
Year Percentage
2003............................105.00%
2004............................102.50%
2005............................100.00%
(b) Notwithstanding the foregoing clause (a), on or prior to
April 15, 2002, the Company may on any one or more occasions redeem up to an
aggregate of 35% of the Notes originally issued at a redemption price of 110% of
the principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages thereon, if any, to the redemption date, with the net cash proceeds of
one or more Public Equity Offerings; provided that at least 65% of the Notes
originally issued remain outstanding immediately after the occurrence of each
such redemption;
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and provided, further, that any such redemption must occur within 60 days of the
date of the closing of such Public Equity Offering.
SECTION 3.08. MANDATORY REDEMPTION.
Except as set forth under Sections 4.10 and 4.15 hereof, the
Company is not required to make mandatory redemption or sinking fund payments
with respect to the Notes.
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
In the event that, pursuant to Section 4.10 hereof, the
Company shall be required to commence an Asset Sale Offer to all Holders to
purchase Notes, it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20
Business Days following its commencement and no longer, except to the extent
that a longer period is required by applicable law (the "Offer Period"). No
later than five Business Days after the termination of the Offer Period (the
"Purchase Date"), the Company shall purchase the principal amount of Notes
required to be purchased pursuant to Section 4.10 hereof (the "Offer Amount")
or, if less than the Offer Amount has been tendered, all Notes tendered in
response to the Asset Sale Offer. Payment for any Notes so purchased shall be
made in the same manner as interest payments are made.
If the Purchase Date is on or after an interest record date
and on or before the related interest payment date, any accrued and unpaid
interest shall be paid to the Person in whose name a Note is registered at the
close of business on such record date, and no additional interest shall be
payable to Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company
shall send, by first class mail, a notice to the Trustee and each of the
Holders, with a copy to the Trustee. The notice shall contain all instructions
and materials necessary to enable such Holders to tender Notes pursuant to the
Asset Sale Offer. The Asset Sale Offer shall be made to all Holders. The notice,
which shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this
Section 3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer
shall remain open;
(b) the Offer Amount, the purchase price and the Purchase
Date;
(c) that any Note not tendered or accepted for payment shall
continue to accrete or accrue interest;
(d) that, unless the Company defaults in making such
payment, any Note accepted for payment pursuant to the Asset Sale Offer shall
cease to accrue interest after the Purchase Date;
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(e) that Holders electing to have a Note purchased pursuant
to an Asset Sale Offer may only elect to have all of such Note purchased and may
not elect to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant
to any Asset Sale Offer shall be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, or transfer by book-entry transfer, to the Company, a depositary, if
appointed by the Company, or a Paying Agent at the address specified in the
notice at least three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their
election if the Company, the depositary or the Paying Agent, as the case may be,
receives, not later than the expiration of the Offer Period, a facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes
surrendered by Holders exceeds the Offer Amount, the Company shall select the
Notes to be purchased on a pro rata basis (with such adjustments as may be
deemed appropriate by the Company so that only Notes in denominations of $1,000,
or integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part
shall be issued new Notes equal in principal amount to the unpurchased portion
of the Notes surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the
extent lawful, accept for payment, on a pro rata basis to the extent necessary,
the Offer Amount of Notes or portions thereof tendered pursuant to the Asset
Sale Offer, or if less than the Offer Amount has been tendered, all Notes
tendered, and shall deliver to the Trustee an Officers' Certificate stating that
such Notes or portions thereof were accepted for payment by the Company in
accordance with the terms of this Section 3.09. The Company, the Depositary or
the Paying Agent, as the case may be, shall promptly (but in any case not later
than five days after the Purchase Date) mail or deliver to each tendering Holder
an amount equal to the purchase price of the Notes tendered by such Holder and
accepted by the Company for purchase, and the Company shall promptly issue a new
Note, and the Trustee, upon written request from the Company shall authenticate
and mail or deliver such new Note to such Holder, in a principal amount equal to
any unpurchased portion of the Note surrendered. Any Note not so accepted shall
be promptly mailed or delivered by the Company to the Holder thereof. The
Company shall publicly announce the results of the Asset Sale Offer on the
Purchase Date.
Other than as specifically provided in this Section 3.09, any
purchase pursuant to this Section 3.09 shall be made pursuant to the provisions
of Sections 3.01 through 3.06 hereof.
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ARTICLE 4.
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal of,
premium, if any, and interest on the Notes on the dates and in the manner
provided in the Notes. Principal, premium, if any, and interest shall be
considered paid on the date due if the Paying Agent, if other than the Company
or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due date,
money deposited by the Company in immediately available funds and designated for
and sufficient to pay all principal, premium, if any, and interest then due. The
Company shall pay all Liquidated Damages, if any, in the same manner on the
dates and in the amounts set forth in the Registration Rights Agreement.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, The
City of New York, an office or agency (which may be an office of the Trustee or
an affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
The Company may also from time to time designate one or more
other offices or agencies where the Notes may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York for such purposes. The Company shall
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of
the Trustee as one such office or agency of the Company in accordance with
Section 2.03 hereof.
SECTION 4.03. REPORTS.
So long as any Notes are outstanding, the Company will furnish
to the holders of Notes, within the time periods specified in the SEC's rules
and regulations: (a) all quarterly and annual financial information that would
be required to be contained in a filing with the SEC on Forms 10-Q and 10-K (or
any successor forms) if the Company were required to file those forms, including
a "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and, with respect to the annual information only, a report on the
annual financial statement by the Company's certified independent accountants;
and (b) all current reports that would be required to be filed with the SEC on
Form 8-K (or any successor form) if the Company were required to file such
reports.
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If the Company has designated any of its Subsidiaries as
Unrestricted Subsidiaries, then the quarterly and annual financial information
required by the foregoing shall include a reasonably detailed presentation,
either on the face of the financial statements or in the footnotes, and in
Management's Discussion and Analysis of Financial Condition and Results of
Operations, of the financial condition and results of operations of the Company
and its Restricted Subsidiaries separate from the financial condition and
results of operations of the Unrestricted Subsidiaries of the Company.
In addition, the Company will file a copy of all information
and reports referred to above with the SEC for public availability within the
time periods specified in the SEC's rules and regulations (unless the SEC will
not accept that filing) and make that information available to securities
analysts and prospective investors upon request. The Company and the Subsidiary
Guarantors have also agreed that, for so long as any Notes remain outstanding,
they will furnish to the Holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act.
Subject to the provisions of Article 7 hereof, delivery of
such reports, information and documents to the Trustee is for informational
purposes only and the Trustee's receipt of such shall not constitute
constructive notice of any information contained therein or determinable from
information contained therein, including the Company's compliance with any of
its covenants hereunder (as to which the Trustee is entitled to rely exclusively
on Officers' Certificates).
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company shall deliver to the Trustee, within 90 days
after the end of each fiscal year, an Officers' Certificate stating that a
review of the activities of the Company and its Subsidiaries during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company has kept, observed,
performed and fulfilled its obligations under this Indenture, and further
stating, as to each such Officer signing such certificate, that to the best of
his or her knowledge the Company has kept, observed, performed and fulfilled
each and every covenant contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and conditions of this
Indenture (or, if a Default or Event of Default shall have occurred, describing
all such Defaults or Events of Default of which he or she may have knowledge and
what action the Company is taking or proposes to take with respect thereto) and
that to the best of his or her knowledge no event has occurred and remains in
existence by reason of which payments on account of the principal of or
interest, if any, on the Notes is prohibited or if such event has occurred, a
description of the event and what action the Company is taking or proposes to
take with respect thereto.
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
year-end financial statements delivered pursuant to Section 4.03 hereof shall be
accompanied by a written statement of the Company's independent public
accountants (who shall be a firm of established national reputation) that in
making the examination necessary for certification of such financial statements,
nothing has come to their attention that would lead them to believe that the
Company has violated any provisions of Article 4 or Article 5 hereof or, if any
such violation has occurred, specifying the
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nature and period of existence thereof, it being understood that such
accountants shall not be liable directly or indirectly to any Person for any
failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are
outstanding, deliver to the Trustee, as soon as possible and in any event within
five Business Days after any Officer becomes aware of any Default or Event of
Default, an Officers' Certificate specifying such Default or Event of Default
and what action the Company is taking or proposes to take with respect thereto.
SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its
Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and
governmental levies except such as are contested in good faith and by
appropriate proceedings or where the failure to effect such payment is not
adverse in any material respect to the Holders of the Notes.
SECTION 4.06. SALE AND LEASEBACK TRANSACTIONS.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, enter into any sale and leaseback transaction;
provided that the Company or any Restricted Subsidiary that is a Domestic
Subsidiary may enter into a sale and leaseback transaction if: (i) the Company
or such Restricted Subsidiary, as applicable, could have incurred Indebtedness
in an amount equal to the Attributable Debt relating to such sale and leaseback
transaction under the Fixed Charge Coverage Ratio test in the first paragraph of
Section 4.09 hereof; (ii) the gross cash proceeds of such sale and leaseback
transaction are at least equal to the fair market value, as determined in good
faith by the Company and set forth in an Officers' Certificate delivered to the
Trustee, of the property that is the subject of such sale and leaseback
transaction; and (iii) the transfer of assets in such sale and leaseback
transaction is permitted by, and the Company or such Restricted Subsidiary
applies the proceeds of such transaction in compliance with, Section 4.10
hereof.
SECTION 4.07. RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any
dividend or make any other payment or distribution on account of the Company's
or any of its Restricted Subsidiaries' Equity Interests (including, without
limitation, any distribution, dividend or payment in connection with any merger
or consolidation involving the Company or any of its Restricted Subsidiaries) or
to the direct or indirect holders of the Company's or any of its Restricted
Subsidiaries' Equity Interests in their capacity as such (except for dividends
or distributions payable in Equity Interests (other than Disqualified Stock) of
the Company or payable to the Company or a Restricted Subsidiary of the
Company); (ii) purchase, redeem or otherwise acquire or retire for value
(including without limitation, in connection with any merger or consolidation
involving the Company) any Equity Interests of the Company, any Restricted
Subsidiary of the Company or any direct or indirect parent of the Company; (iii)
make any payment on or with respect to, or purchase, redeem, defease or
otherwise acquire or retire for value any Indebtedness that is subordinated to
the
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Notes or the Subsidiary Guarantees, except the scheduled payment of interest
and Liquidated Damages, if any, or principal and premium, if any, at the Stated
Maturity thereof; or (iv) make any Restricted Investment (all such payments and
other actions set forth in clauses (i) through (iv) above being collectively
referred to as "Restricted Payments"), unless, at the time of and after giving
effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(b) at the date of such Restricted Payment and after giving
pro forma effect thereto as if such Restricted Payment had been made at
the beginning of the applicable four-quarter period, the Company would
have been permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in the first
paragraph of Section 4.09 hereof; and
(c) the aggregate amount of such Restricted Payment and all
other Restricted Payments made since the date hereof (excluding
Restricted Payments permitted by clauses (ii), (iii), (iv) and (vi) of
the next succeeding paragraph), is less than the sum, without
duplication, of (i) 50% of the Consolidated Net Income of the Company
for the period (taken as one accounting period) from the beginning of
the first fiscal quarter commencing after the date of this Indenture
through the last full fiscal quarter of the Company for which internal
financial statements are available at the time of that Restricted
Payment (or, if the Consolidated Net Income for that period is a
deficit, minus 100% of the deficit), plus (ii) 100% of the aggregate
net cash proceeds received by the Company since the date hereof as a
contribution to its common equity capital or from the issue or sale of
Equity Interests of the Company (other than Disqualified Stock) or from
the issue or sale of Disqualified Stock or debt securities of the
Company that have been converted into or exchanged for such Equity
Interests (other than Equity Interests (or Disqualified Stock or
convertible debt securities) sold to a Restricted Subsidiary of the
Company), plus (iii) to the extent that any Restricted Investment that
was made after the date hereof is sold for cash or otherwise liquidated
or repaid for cash, the lesser of (A) the cash return of capital with
respect to such Restricted Investment (less the cost of disposition, if
any) and (B) the initial amount of such Restricted Investment unless
already included in Consolidated Net Income of the Company for that
period; plus (iv) if any Unrestricted Subsidiary is redesignated by the
Company as a Restricted Subsidiary of the Company after the date
hereof, an amount equal to the lesser of (A) the net book value of the
Company's Investment in the Unrestricted Subsidiary at the time of the
redesignation and (B) the fair market value of the Company's Investment
in the Unrestricted Subsidiary at the time of the redesignation.
The foregoing provisions shall not prohibit: (i) the payment
of any dividend within 60 days after the date of declaration thereof, if at said
date of declaration such payment would have complied with the provisions of this
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness of the Company or any Guarantor or
of any Equity Interests of the Company or any Restricted Subsidiary of the
Company in exchange for, or out of the net cash proceeds of the substantially
concurrent sale (other than to a Restricted Subsidiary of the Company) of,
Equity Interests of the Company
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(other than Disqualified Stock); provided that the amount of any such net cash
proceeds that are utilized for any such redemption, repurchase, retirement,
defeasance or other acquisition shall be excluded from clause (c) (ii) of the
preceding paragraph; (iii) the defeasance, redemption, repurchase or other
acquisition of subordinated Indebtedness of the Company or any Guarantor with
the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness;
(iv) the payment of any dividend or distribution by a Restricted Subsidiary of
the Company to the holders of such Restricted Subsidiary's common Equity
Interests so long as the Company or such Restricted Subsidiary receives at least
its pro rata share (and in like form) of the dividend or distribution in
accordance with its common Equity Interests; (v) the repurchase, redemption or
other acquisition or retirement for value of any Equity Interests of the Company
or any Restricted Subsidiary of the Company held by any member of the Company's
(or any of its Restricted Subsidiaries') management pursuant to any management
equity subscription agreement or stock option agreement; provided that the price
paid for all repurchased, redeemed, acquired or retired Equity Interests does
not exceed $1,000,000 per individual member of management or $2,500,000 in the
aggregate in any twelve-month period; (vi) the deemed repurchase of Capital
Stock by the Company on the exercise of stock options; and (vii) Restricted
Payments in an aggregate principal amount not to exceed $15,000,000;
provided that the Company will not and will not permit any of its Restricted
Subsidiaries to make any Restricted Payment contemplated by clauses (iii)
through (vii) above so long as a Default or an Event of Default has occurred and
is continuing.
The Board of Directors of the Company may designate any
Restricted Subsidiary of the Company to be an Unrestricted Subsidiary if such
designation would not cause a Default. The aggregate fair market value of all
outstanding Investments owned by the Company and its Restricted Subsidiaries in
the newly designated Unrestricted Subsidiary shall be deemed to be an Investment
made as of the time of such designation and will either reduce the amount
available for Restricted Payments under this Section 4.07 or reduce the amount
available for future Investments under one or more clauses of the definition of
Permitted Investments, as the Company shall determine. Such designation shall
only be permitted if such investment would be permitted at such time and if such
Restricted Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary. The Board of Directors of the Company may redesignate any
Unrestricted Subsidiary to be a Restricted Subsidiary of the Company if the
redesignation would not cause a Default.
The amount of all Restricted Payments (other than cash) shall
be the fair market value of the asset(s) or securities proposed to be
transferred or issued to or by the Company or such Restricted Subsidiary, as the
case may be, pursuant to the Restricted Payment on the date of such Restricted
Payment. The fair market value of any assets or securities that are required to
be valued by this Section 4.07 shall be determined in good faith by the Company
and set forth in an Officers' Certificate delivered to the Trustee. The
Company's determination must be based upon an opinion or appraisal issued by an
accounting, appraisal or investment banking firm of national standing if the
fair market value exceeds $25,000,000. Not later than the date of making any
Restricted Payment, the Company shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by this Section 4.07 were
computed, together with a copy of any fairness opinion or appraisal required by
this Indenture.
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SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create or permit to exist or
become effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary of the Company to (i) pay dividends or make any other
distributions on its Capital Stock to the Company or any of its Restricted
Subsidiaries, or with respect to any other interest or participation in, or
measured by, its profits, or pay any indebtedness owed to the Company or any of
its Restricted Subsidiaries, (ii) make loans or advances to the Company or any
of its Restricted Subsidiaries, or (iii) transfer any of its properties or
assets to the Company or any of its Restricted Subsidiaries.
However, the foregoing will not apply to encumbrances or
restrictions existing under or by reason of: (i) Existing Indebtedness as in
effect on the date hereof and any amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or refinancings
thereof, provided that those amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacement or refinancings are no more
restrictive, taken as a whole, with respect to such dividend and other payment
restrictions than those contained in that Existing Indebtedness, as in effect on
the date hereof; (ii) the Credit Agreement as in effect on the date hereof and
any amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings thereof or any other Credit Facility,
provided that those amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings, and such other
Credit Facility, are no more restrictive, taken as a whole, with respect to such
dividend and other payment restrictions than those contained in the Credit
Agreement, as in effect on the date hereof; (iii) this Indenture and the Notes
or any other indenture governing debt securities that are no more restrictive,
taken as a whole, with respect to dividend and other payment restrictions than
those contained in this Indenture and those debt securities; (iv) applicable
law; (v) any instrument governing Indebtedness or Capital Stock of a Person
acquired by the Company or any of its Restricted Subsidiaries as in effect at
the time of such acquisition (except to the extent that Indebtedness was
incurred in connection with or in contemplation of that acquisition), which
encumbrance or restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person, or the property or assets of the
Person, so acquired, provided that, in the case of Indebtedness, such
Indebtedness was permitted to be incurred by the terms of this Indenture; (vi)
customary non-assignment provisions in leases entered into in the ordinary
course of business and consistent with past practices; (vii) purchase money
obligations for property acquired in the ordinary course of business that impose
restrictions on the property so acquired of the nature described in clause (iii)
of the preceding paragraph; (viii) any agreement for the sale or other
disposition of a Restricted Subsidiary of the Company that restricts
distributions by such Restricted Subsidiary pending its sale or other
disposition; (ix) Permitted Refinancing Indebtedness, provided that the
restrictions contained in the agreements governing that Permitted Refinancing
Indebtedness are no more restrictive, taken as a whole, than those contained in
the agreements governing the Indebtedness being refinanced; (x) Liens securing
Indebtedness that limit the right of the debtor to dispose of the assets subject
to that Lien; (xi) provisions with respect to the disposition or distribution of
assets or property in joint venture agreements, asset sale agreements, stock
sale agreements and other similar agreements entered into in the ordinary course
of business; (xii) any Purchase Money Note or other Indebtedness or contractual
requirements incurred with respect to a Qualified Receivables Transaction
relating to a
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Receivables Subsidiary; and (xiii) restrictions on cash or other deposits or net
worth imposed by customers under contracts entered into in the ordinary course
of business.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.
The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur") any Indebtedness (including Acquired
Debt), and the Company shall not issue any Disqualified Stock and will not
permit any of its Subsidiaries to issue any shares of Preferred Stock; provided,
however, that the Company may incur Indebtedness (including Acquired Debt) or
issue Disqualified Stock, and Restricted Subsidiaries of the Company that are
Guarantors may incur Indebtedness or issue Preferred Stock, if the Fixed Charge
Coverage Ratio for the Company's most recently ended four full fiscal quarters
for which internal financial statements are available immediately preceding the
date on which such additional Indebtedness is incurred or such Disqualified
Stock is issued would have been at least 2.25 to 1.0, determined on a pro forma
basis (including a pro forma application of the net proceeds therefrom), as if
such additional Indebtedness had been incurred, or such Preferred Stock or
Disqualified Stock had been issued, as the case may be, at the beginning of such
four-quarter period.
The provisions of the first paragraph of this Section 4.09
shall not prohibit the following (collectively, "Permitted Debt"):
(i) the incurrence by the Company and any Restricted
Subsidiary that is a Guarantor of additional Indebtedness and letters
of credit under Credit Facilities in an aggregate principal amount at
any one time outstanding pursuant to this clause (i) (with letters of
credit being deemed to have a principal amount equal to the maximum
potential liability of the Company and its Restricted Subsidiaries
thereunder) not to exceed an amount equal to the greater of (A) the
Borrowing Base; and (B) $700,000,000 as of the date of incurrence minus
(1) the aggregate amount of all Net Proceeds of Asset Sales required to
be applied that are in fact applied by the Company or any of its
Restricted Subsidiaries to repay permanently Indebtedness outstanding
under one or more Credit Facilities (and to reduce commitments with
respect thereto if the Indebtedness being repaid is revolving
Indebtedness) pursuant to Section 4.10 hereof and (2) the aggregate
amount of all repayments, optional or mandatory, of the principal of
any such additional term Indebtedness (other than repayments that are
concurrently reborrowed) that have actually been made since the date
hereof;
(ii) the incurrence by the Company and its Restricted
Subsidiaries of Existing Indebtedness;
(iii) the incurrence by the Company and the Guarantors of
Indebtedness represented by the Notes to be issued on the date hereof
and the Exchange Notes to be issued pursuant to the Registration Rights
Agreement (including, in each case, the Subsidiary Guarantees);
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(iv) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations,
mortgage financings or purchase money obligations, in each case,
incurred for the purpose of financing all or any part of the purchase
price or cost of construction or improvement of property, plant or
equipment used in the business of the Company or such Restricted
Subsidiary, in an aggregate principal amount, including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (iv), not to exceed, in
aggregate principal amount at any one time outstanding, 5% of Total
Assets on a pro forma basis (including a pro forma application of the
net proceeds of that Indebtedness), as if that Indebtedness had been
incurred on the date of calculation;
(v) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or
the net proceeds of which are used to refund, refinance or replace
Indebtedness (other than intercompany Indebtedness) that was permitted
by this Indenture to be incurred under the first paragraph of this
Section 4.09 or clauses (ii), (iii), (iv), (v) or (xiii) of this
paragraph in a substantially concurrent transaction (which incurrence
shall be no earlier than 30 days prior to the refunding, refinancing or
replacing of the Indebtedness being refunded, refinanced or replaced
and the proceeds of the Permitted Refinancing Indebtedness shall be
deposited in escrow pending application);
(vi) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company
and any of its Wholly Owned Subsidiaries that are Guarantors; provided,
however, that (A) such Indebtedness is expressly subordinated to the
prior payment in full in cash of all Obligations with respect to the
Notes and this Indenture, in the case of the Company, or the Subsidiary
Guarantee, in the case of a Guarantor and (B)(1) any subsequent
issuance or transfer of Equity Interests that results in any such
Indebtedness being held by a Person other than the Company or any of
its Wholly Owned Subsidiaries that are Guarantors and (2) any sale or
other transfer of any such Indebtedness to a Person that is not either
the Company or any of its Wholly Owned Subsidiaries that are Guarantors
shall be deemed, in each case, to constitute an incurrence of such
Indebtedness by the Company or such Restricted Subsidiary, as the case
may be, that was not permitted by this clause (vi);
(vii) the incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred for the purpose
of (A) fixing or hedging interest rate risk with respect to any
floating rate Indebtedness that is permitted by the terms of this
Indenture to be outstanding or (B) hedging exposure to foreign currency
fluctuations;
(viii) the guarantee by the Company or any of the Guarantors
of Indebtedness of the Company or a Restricted Subsidiary of the
Company that was permitted to be incurred by another provision of this
Section 4.09;
(ix) the incurrence of Non-Recourse Debt by the Company's
Unrestricted Subsidiaries, provided, however, that if any such
Indebtedness ceases to be Non-Recourse Debt of an Unrestricted
Subsidiary, such event shall be deemed to constitute an
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incurrence of Indebtedness by a Restricted Subsidiary of the Company
that was not permitted by this clause (ix);
(x) the accrual of interest, the accretion or amortization
of original issue discount, the payment of interest on any Indebtedness
in the form of additional Indebtedness with the same terms, and the
payment of dividends on Disqualified Stock or Preferred Stock in the
form of additional shares of the same class of Disqualified Stock or
Preferred Stock, as the case may be, which will not be deemed to be an
incurrence of Indebtedness or an issuance of Disqualified Stock or
Preferred Stock, as the case may be, for purposes of this Section 4.09;
provided, in each case, that the amount thereof is included in Fixed
Charges of the Company as accrued;
(xi) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness in respect of performance and surety bonds
in the ordinary course of business;
(xii) the incurrence by a Receivables Subsidiary of
Indebtedness that is not recourse to the Company or any other
Restricted Subsidiary of the Company (other than with respect to
Standard Securitization Undertakings) in connection with a Qualified
Receivables Transaction; and
(xiii) the incurrence by the Company or any of its Restricted
Subsidiaries of additional Indebtedness in an aggregate principal
amount (or accreted value, as applicable) at any time outstanding,
including all Permitted Refinancing Indebtedness incurred to refund,
refinance or replace any other Indebtedness incurred pursuant to this
clause (xiii), not to exceed $50,000,000.
For purposes of determining compliance with this Section 4.09,
in the event that an item of proposed Indebtedness meets the criteria of more
than one of the categories of Permitted Debt described in clauses (i) through
(xiii) above, or is entitled to be incurred pursuant to the first paragraph of
this Section 4.09, the Company shall be permitted to classify that item of
Indebtedness on the date of its incurrence, or reclassify all or a portion of
such item of Indebtedness in any manner that complies with this Section 4.09.
Indebtedness under Credit Facilities that are in existence on the date on which
Notes are first issued and authenticated under this Indenture shall be deemed to
have been incurred on that date in reliance on the exception provided by clause
(i) of the definition of Permitted Debt.
SECTION 4.10. ASSET SALES.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, consummate an Asset Sale unless (i) the Company (or
the Restricted Subsidiary of the Company, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value of the assets or Equity Interests issued or sold or otherwise disposed of,
(ii) the fair market value is determined by the Board of Directors of the
Company and evidenced by a resolution of that Board of Directors set forth in an
Officers' Certificate delivered to the Trustee; and (iii) at least 75% of the
consideration therefor received by the Company or such Restricted Subsidiary, as
the case may be, consists of cash or Cash Equivalents; provided, however, that
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(A) any liabilities of the Company (or the Restricted Subsidiary of the Company,
as the case may be), as shown on its most recent balance sheet (other than
contingent liabilities and liabilities that are by their terms subordinated to
the Notes or any Subsidiary Guarantee) that are assumed by the transferee of the
assets pursuant to a customary novation agreement that releases the transferor
from further liability, (B) any securities, notes or other obligations received
from the transferee that are contemporaneously (subject to ordinary settlement
periods) converted by the Company or the Restricted Subsidiary into cash (to the
extent of that cash), and (C) Additional Assets received in an
exchange-of-assets transaction shall all be deemed to be cash for purposes of
this provision.
Within 360 days after the receipt by the Company or any of its
Restricted Subsidiaries of any Net Proceeds from an Asset Sale, the Company may
apply such Net Proceeds, at its option, (i) to repay permanently Indebtedness
that is pari passu with the Notes and, if the Indebtedness repaid is revolving
credit Indebtedness, to correspondingly reduce the lenders' commitments with
respect thereto; (ii) to acquire all or substantially all of the assets or a
majority of the Voting Stock of another company that is engaged in a Permitted
Business; (iii) to make a capital expenditure in a Permitted Business; or (iv)
to acquire Additional Assets; provided that the Company will have complied with
this clause (iv) if, within 360 days of the Asset Sale, the Company has entered
into an agreement covering the acquisition which is thereafter completed within
180 days after the date of the agreement. Pending the final application of any
such Net Proceeds, the Company may temporarily reduce revolving credit
borrowings or otherwise invest such Net Proceeds in any manner that is not
prohibited by this Indenture. Any Net Proceeds from Asset Sales that are not
applied or invested as provided in the first sentence of this paragraph shall be
deemed to constitute "Excess Proceeds." Within five days of each date on which
the aggregate amount of Excess Proceeds exceeds $10,000,000, the Company shall
make an offer to all Holders of Notes, as well as all holders of other
Indebtedness that is pari passu with the Notes and that has the benefit of
provisions requiring the Company to make a similar offer (an "Asset Sale
Offer"), to purchase the maximum principal amount of Notes and such other pari
passu Indebtedness that may be purchased out of the Excess Proceeds. The offer
price will be equal to 100% of the principal amount of Notes and other
Indebtedness to be purchased, plus accrued and unpaid interest and Liquidated
Damages, if any, to the date of purchase. The Company may use any Excess
Proceeds remaining after consummation of an Asset Sale Offer for any purpose not
otherwise prohibited by this Indenture. If the aggregate principal amount of
Notes and other pari passu Indebtedness tendered into such Asset Sale Offer
exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and
other pari passu Indebtedness to be purchased on a pro rata basis based on the
principal amount of Notes and other pari passu Indebtedness so tendered. Upon
completion of each Asset Sale Offer, the amount of Excess Proceeds shall be
reset at zero.
The Company will comply with the requirements of Rule 14e-1
under the Exchange Act and all other applicable securities laws and regulations
in connection with each purchase of Notes pursuant to an Asset Sale Offer. If
the provisions of any securities laws or regulations conflict with this Section
4.10, the Company will comply with the applicable securities laws and
regulations and by so doing will not be deemed to have breached its obligations
under this Section 4.10.
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SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"),
unless (i) such Affiliate Transaction is on terms that are no less favorable to
the Company or the relevant Restricted Subsidiary than those that would have
been obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee
(A) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $5,000,000, a
resolution of its Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (i) above and
that such Affiliate Transaction has been approved by a majority of the
disinterested members of its Board of Directors and (B) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $10,000,000, an opinion as to the fairness
to the Holders of such Affiliate Transaction from a financial point of view
issued by an accounting, appraisal or investment banking firm of national
standing.
The following items shall not be deemed to be Affiliate
Transactions and, therefore, will not be subject to the provisions of the prior
paragraph: (i) any employment agreement entered into by the Company or any of
its Restricted Subsidiaries in the ordinary course of business and consistent
with the past practice of the Company or such Restricted Subsidiary, as the case
may be; (ii) transactions between or among the Company and/or its Restricted
Subsidiaries; (iii) any sale or other issuance of Equity Interests (other than
Disqualified Stock) of the Company; (iv) payment of reasonable directors fees to
persons who are not otherwise Affiliates of the Company; (v) any sale,
conveyance or other transfer of accounts receivable and other related assets
customarily transferred in an asset securitization transaction involving
accounts receivable to a Receivables Subsidiary in a Qualified Receivables
Transaction; and (vi) Restricted Payments that are permitted by Section 4.07
hereof.
SECTION 4.12. LIENS.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
suffer to exist any Lien of any kind securing Indebtedness, Attributable Debt or
trade payables on any asset now owned or hereafter acquired, except Permitted
Liens.
SECTION 4.13. ADDITIONAL SUBSIDIARY GUARANTEES.
The Company shall not permit any of its Restricted
Subsidiaries, directly or indirectly, to guarantee or pledge any assets to
secure the payment of any other Indebtedness of the Company or any Restricted
Subsidiary of the Company unless that Restricted Subsidiary simultaneously
executes and delivers to the Trustee an Opinion of Counsel and a supplemental
indenture providing for a Subsidiary Guarantee of the payment of the Notes by
such Restricted Subsidiary, which Subsidiary Guarantee shall be senior to such
Restricted Subsidiary's
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Guarantee of or pledge to secure the other Indebtedness if the other
Indebtedness is subordinated, and shall be pari passu to such Restricted
Subsidiary's Guarantee of or pledge to secure the other Indebtedness if the
other Indebtedness is senior; provided that this Section 4.13 shall not apply to
any Subsidiary that has been properly designated as an Unrestricted Subsidiary
or as a Receivables Subsidiary.
SECTION 4.14. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to
be done all things necessary to preserve and keep in full force and effect (i)
its corporate existence, and the corporate, partnership or other existence of
each of its Restricted Subsidiaries, in accordance with the respective
organizational documents (as the same may be amended from time to time) of the
Company or any such Restricted Subsidiary and (ii) the rights (charter and
statutory), licenses and franchises of the Company and its Restricted
Subsidiaries; provided, however, that the Company shall not be required to
preserve any such right, license or franchise, or the corporate, partnership or
other existence of any of its Restricted Subsidiaries, 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 Restricted
Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any
material respect to the Holders of the Notes.
SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, each Holder of
Notes shall have the right to require the Company to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of such Holder's Notes
pursuant to the offer described below (the "Change of Control Offer") at an
offer price in cash equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the date
of purchase (the "Change of Control Payment"). Within ten days following any
Change of Control, the Company shall mail a notice to each Holder describing the
transaction or transactions that constitute the Change of Control and offering
to repurchase Notes on the date specified in such notice, which date shall be no
earlier than 30 days and no later than 60 days from the date such notice is
mailed (the "Change of Control Payment Date"). Such notice, which shall govern
the terms of the Change of Control offer, shall state: (i) that the Change of
Control Offer is being made pursuant to this Section 4.15 and that all Notes
tendered will be accepted for payment; (ii) the purchase price and the purchase
date; (iii) that any Note not tendered will continue to accrue interest; (iv)
that, unless the Company defaults in the payment of the Change of Control
Payment, all Notes accepted for payment pursuant to the Change of Control Offer
shall cease to accrue interest after the Change of Control Payment Date; (v)
that Holders electing to have any Notes purchased pursuant to a Change of
Control Offer will be required to surrender the Notes, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes completed, to
the Paying Agent at the address specified in the notice prior to the close of
business on the third Business Day preceding the Change of Control Payment Date;
(vi) that Holders will be entitled to withdraw their election if the Paying
Agent receives, not later than the close of business on the second Business Day
preceding the Change of Control Payment Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of Notes delivered for purchase, and a statement that such Holder is
withdrawing his election to have the Notes purchased; and (vii) that Holders
whose Notes are being purchased
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only in part will be issued new Notes equal in principal amount to the
unpurchased portion of the Notes surrendered, which unpurchased portion must be
equal to $1,000 in principal amount or an integral multiple thereof.
The Change of Control provisions described above shall be
applicable whether or not any other provisions of this Indenture are applicable.
The Company shall comply with the requirements of Rule 14e-1 under the Exchange
Act and all other applicable securities laws and regulations in connection with
the repurchase of Notes as a result of a Change of Control. If the provisions of
any securities laws or regulations conflict with this Section 4.15, the Company
will comply with the applicable securities laws and regulations and by so doing
will not be deemed to have breached its obligations under this Section 4.15.
(b) On the Change of Control Payment Date, the Company shall,
to the extent lawful, (i) accept for payment all Notes or portions thereof
properly tendered pursuant to the Change of Control Offer, (ii) deposit with the
Paying Agent an amount equal to the Change of Control Payment in respect of all
Notes or portions thereof so tendered and (iii) deliver or cause to be delivered
to the Trustee the Notes so accepted together with an Officers' Certificate
stating the aggregate principal amount of Notes or portions thereof being
purchased by the Company. The Paying Agent shall promptly mail to each Holder of
Notes so tendered the Change of Control Payment for such Notes, and the Trustee
shall promptly authenticate and mail (or cause to be transferred by book entry)
to each Holder a new Note equal in principal amount to any unpurchased portion
of the Notes surrendered, if any; provided that each such new Note shall be in a
principal amount of $1,000 or an integral multiple thereof. The Company shall
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
(c) Notwithstanding anything to the contrary in this Section
4.15, the Company shall not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in this Section 4.15 and all other provisions of this Indenture applicable to a
Change of Control Offer made by the Company and purchases all Notes validly
tendered and not withdrawn under such Change of Control Offer.
SECTION 4.16. PAYMENTS FOR CONSENT.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, pay or cause to be paid any
consideration to or for the benefit of any Holder of Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of this Indenture or the Notes unless such consideration is offered to be paid
or is paid to all Holders of the Notes that consent, waive or agree to amend in
the time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
SECTION 4.17. LIMITATIONS ON ISSUANCES AND SALES OF EQUITY INTERESTS IN
WHOLLY OWNED SUBSIDIARIES.
The Company shall not, and shall not permit any of its
Subsidiaries to, transfer, convey, sell, lease or otherwise dispose of any
Equity Interests in any Wholly Owned Subsidiary of the Company to any Person
(other than the Company or a Wholly Owned Subsidiary of the Company), unless (i)
the transfer, conveyance, sale, lease or other disposition is of all the Equity
Interests in such Wholly Owned Subsidiary; and (ii) the cash Net Proceeds from
the transfer, conveyance, sale, lease or other disposition are applied in
accordance with Section 4.10 hereof.
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SECTION 4.18 BUSINESS ACTIVITIES.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, engage in any business other than Permitted
Businesses, except to such extent as would not be material to the Company or its
Restricted Subsidiaries taken as a whole.
ARTICLE 5.
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company shall not, directly or indirectly, consolidate or
merge with or into another Person (whether or not the Company is the surviving
corporation), or sell, assign, transfer, convey, lease or otherwise dispose of
all or substantially all of the properties or assets of the Company and its
Restricted Subsidiaries taken as a whole, in one or more related transactions,
to another Person unless (i) (A) the Company is the surviving corporation,
limited liability company, business trust or limited partnership; or (B) the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation, limited liability
company, business trust or limited partnership organized or existing under the
laws of the United States, any state thereof or the District of Columbia;
provided that in the case of (A) or (B) above, if the surviving Person is a
limited liability company, business trust or limited partnership, a corporation
which is Wholly Owned Subsidiary of the surviving Person shall act as joint and
several obligor with respect to the Notes; (ii) the Person formed by or
surviving any such consolidation or merger (if other than the Company) or the
Person to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made assumes all the obligations of the Company
under the Notes, this Indenture and the Registration Rights Agreement pursuant
to agreements reasonably satisfactory to the Trustee; (iii) immediately after
such transaction no Default or Event of Default exists; and (iv) the Company or
the Person formed by or surviving any such consolidation or merger (if other
than the Company), or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made: (A) will have a
Consolidated Net Worth immediately after the transaction equal to or greater
than the Consolidated Net Worth of the Company immediately preceding the
transaction; and (B) on the date of the transaction and after giving pro forma
effect to the transaction and any related financing transactions as if they had
occurred at the beginning of the applicable four-quarter period, will be
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the first paragraph of Section
4.09 hereof.
This Section 5.01 will not apply to a sale, assignment,
transfer, conveyance, lease or other disposition of assets between or among the
Company and any of its Wholly Owned Subsidiaries that are not Unrestricted
Subsidiary.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment,
transfer, lease, conveyance or other disposition of all or substantially all of
the assets of the Company in accordance with Section 5.01 hereof, the successor
corporation formed by such consolidation or
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into or with which the Company is merged or to which such sale, assignment,
transfer, lease, conveyance or other disposition is made shall succeed to, and
be substituted for (so that from and after the date of such consolidation,
merger, sale, lease, conveyance or other disposition, the provisions of this
Indenture referring to the "Company" or "Ames" shall refer instead to the
successor corporation and not to the Company), and may exercise every right and
power of the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; provided, however, that
the predecessor Company shall not be relieved from the obligation to pay the
principal of and interest on the Notes except in the case of a sale of all of
the Company's assets that meets the requirements of Section 5.01 hereof.
ARTICLE 6.
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(a) the Company defaults in the payment when due of interest
on, or Liquidated Damages, if any, with respect to, the Notes and such default
continues for a period of 30 days;
(b) the Company defaults in the payment when due of the
principal of or premium, if any, on the Notes;
(c) the Company fails to comply with any of the provisions of
Sections 4.10, 4.15, or 5.01 hereof;
(d) the Company or any of its Restricted Subsidiaries fails to
comply with the provisions of Sections 4.07 and 4.09 hereof for 30 days after
notice of such failure has been given;
(e) the Company fails to observe or perform any other
agreements in this Indenture or the Notes for 60 days after notice of such
failure has been given;
(f) a default occurs under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of its
Restricted Subsidiaries (or the payment of which is guaranteed by the Company or
any of its Restricted Subsidiaries), whether such Indebtedness or guarantee now
exists, or is created after the date of this Indenture, which default is caused
by a failure to pay principal of, or interest or premium, if any, on such
Indebtedness prior to the expiration of the grace period provided in such
Indebtedness on the date of such default (a "Payment Default"), or results in
the acceleration of such Indebtedness prior to its express maturity and, in each
case, the principal amount of such Indebtedness, together with the principal
amount of any other such Indebtedness under which there has been a Payment
Default or the maturity of which has been so accelerated, aggregates $20,000,000
or more;
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(g) the Company or any of its Subsidiaries fails to pay final
judgments aggregating in excess of $20,000,000, which judgments are not paid,
discharged or stayed for a period of 60 days;
(h) any Subsidiary Guarantee is held in any judicial
proceeding to be unenforceable or invalid or shall cease for any reason to be in
full force and effect or any Guarantor, or any Person acting on behalf of any
Guarantor, shall deny or disaffirm its obligations under its Subsidiary
Guarantee, except as permitted by this Indenture;
(i) the Company or any of its Significant Subsidiaries or any
group of Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary pursuant to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it
in an involuntary case,
(iii) consents to the appointment of a custodian of it or for
all or substantially all of its property,
(iv) makes a general assignment for the benefit of its
creditors, or
(v) generally is not paying its debts as they become due; or
(j) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(i) is for relief against the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary in an involuntary
case;
(ii) appoints a custodian of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary or for all or
substantially all of the property of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary; or
(iii) orders the liquidation of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60 consecutive days.
The Holders of a majority in aggregate principal amount of the
Notes then outstanding by notice to the Trustee may on behalf of the Holders of
all of the Notes waive any existing Default or Event of Default and its
consequences under this Indenture except a continuing Default or Event of
Default in the payment of interest or Liquidated Damages on, or the principal
of, the Notes.
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SECTION 6.02. ACCELERATION.
If any Event of Default occurs and is continuing, the Trustee
or the Holders of at least 25% in principal amount of the then outstanding Notes
may declare all the Notes to be due and payable immediately. Notwithstanding the
foregoing, in the case of an Event of Default specified in Section 6.01(i) or
(j) hereof, with respect to the Company, any Subsidiary that is a Significant
Subsidiary or any group of Subsidiaries that, taken together, would constitute a
Significant Subsidiary, all outstanding Notes will become due and payable
immediately without further action or notice. Holders of the Notes may not
enforce this Indenture or the Notes except as provided in this Indenture.
Subject to certain limitations, Holders of a majority in principal amount of the
then outstanding Notes may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders of the Notes notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest or Liquidated Damages) if it
determines that withholding notice is in their interest.
In the case of any Event of Default occurring by reason of any
willful action (or inaction) taken (or not taken) by or on behalf of the Company
with the intention of avoiding payment of the premium that the Company would
have had to pay upon an Optional Redemption, an equivalent premium shall also
become and be immediately due and payable to the extent permitted by law upon
the acceleration of the Notes. If an Event of Default occurs prior to April 15,
2003 by reason of any willful action (or inaction) taken (or not taken) by or on
behalf of the Company with the intention of avoiding the prohibition on
redemption of the Notes prior to April 15, 2003, then the premium specified
below shall also become immediately due and payable to the extent permitted by
law upon the acceleration of the Notes during the twelve-month period ending on
April 15 of the years indicated below:
Year Percentage
2000.........................................115.00%
2001.........................................112.50%
2002.........................................110.00%
2003.........................................107.50%
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy to collect the payment of principal, premium, if
any, and interest on the Notes or to enforce the performance of any provision of
the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Holder of a Note in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
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SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal
amount of the then outstanding Notes by notice to the Trustee may on behalf of
the Holders of all of the Notes waive an existing Default or Event of Default
and its consequences hereunder, except a continuing Default or Event of Default
in the payment of the principal of, premium and Liquidated Damages, if any, or
interest on, the Notes (including in connection with an offer to purchase)
(provided, however, that the Holders of a majority in aggregate principal amount
at maturity of the then outstanding Notes may rescind an acceleration and its
consequences, including any related payment default that resulted from such
acceleration). 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 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then
outstanding Notes may direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee or exercising any
trust or power conferred on it. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture that the Trustee determines
may be unduly prejudicial to the rights of other Holders of Notes or that may
involve the Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this
Indenture or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice
of a continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the
then outstanding Notes make a written request to the Trustee to pursue the
remedy;
(c) such Holder of a Note or Holders of Notes offer and, if
requested, provide to the Trustee indemnity satisfactory to the Trustee against
any loss, liability or expense;
(d) the Trustee does not comply with the request within 60
days after receipt of the request and the offer and, if requested, the provision
of indemnity; and
(e) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Notes do not give the Trustee a
direction inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights of another
Holder of a Note or to obtain a preference or priority over another Holder of a
Note.
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SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Note to receive payment of principal, premium and
Liquidated Damages, if any, and interest on the Note, on or after the respective
due dates expressed in the Note (including in connection with an offer to
purchase), or to bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent of
such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b)
hereof occurs and is continuing, the Trustee is authorized to recover judgment
in its own name and as trustee of an express trust against the Company for the
whole amount of principal of, premium and Liquidated Damages, if any, and
interest remaining unpaid on the Notes and interest on overdue principal and, to
the extent lawful, interest and such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel) and
the Holders of the Notes allowed in any judicial proceedings relative to the
Company (or any other obligor upon the Notes), its creditors or its property and
shall be entitled and empowered to collect, receive and distribute any money or
other property payable or deliverable on any such claims and any custodian in
any such judicial proceeding is hereby authorized by each Holder to make such
payments to the Trustee, and in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.07 hereof. To the extent that the payment of any such
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07 hereof out
of the estate in any such proceeding, shall be denied for any reason, payment of
the same shall be secured by a Lien on, and shall be paid out of, any and all
distributions, dividends, money, securities and other properties that the
Holders may be entitled to receive in such proceeding whether in liquidation or
under any plan of reorganization or arrangement or otherwise. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of any Holder, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article, it
shall pay out the money in the following order:
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First: to the Trustee, its agents and attorneys for amounts
due under Section 7.07 hereof, including payment of all compensation, expense
and liabilities incurred, and all advances made, by the Trustee and the costs
and expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the
Notes for principal, premium and Liquidated Damages, if any, and interest,
ratably, without preference or priority of any kind, according to the amounts
due and payable on the Notes for principal, premium and Liquidated Damages, if
any and interest, respectively; and
Third: to the Company or to such party as a court of
competent jurisdiction shall direct.
The Trustee may fix a record date and payment date for any
payment to Holders of Notes pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as a Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a
Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more
than 10% in principal amount of the then outstanding Notes.
ARTICLE 7.
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by
the express provisions of this Indenture and the Trustee need perform
only those duties that are specifically set forth in this Indenture and
no others, and no implied covenants or obligations shall be read into
this Indenture against the Trustee; and
(ii) in the absence of bad faith or negligence on its part,
the Trustee may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture. However, the Trustee shall examine the
certificates and opinions to determine whether or not they conform to
the requirements of this
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Indenture (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein).
(c) The Trustee may not be relieved from liabilities for its
own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph
(b) of this Section 7.01;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or incur any liability. The Trustee shall be
under no obligation to exercise any of its rights and powers under this
Indenture at the request of any Holders, unless such Holder shall have offered
to the Trustee security and indemnity satisfactory to it against any loss,
liability or expense.
(f) The Trustee shall not be liable for interest on any
money received by it except as the Trustee may agree in writing with the
Company. Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document
believed by it to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter stated in such
document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may
consult with counsel and the written advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection from liability
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent appointed
with due care.
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(d) The Trustee shall not be liable for any action it takes
or omits to take in good faith that it believes to be authorized or within the
rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this
Indenture, any demand, request, direction or notice from the Company shall be
sufficient if signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders unless such Holders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities that might be incurred by it in compliance with such request or
direction.
(g) 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.
(h) The Trustee shall not be deemed to have notice of any
Default or Event of Default unless a Responsible Officer of the Trustee has
actual knowledge thereof or unless written notice of any event which is in fact
such a default is received by a Responsible Officer of the Trustee at the
Corporate Trust Office of the Trustee, and such notice references the specific
Default or Event of Default, the Notes and this Indenture.
(i) Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The Trustee
shall be under no liability for interest on any money received by it hereunder
except as otherwise agreed in writing with the Company.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with like
rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMERS.
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the Notes, it
shall not be accountable for the Company's use of the proceeds from the Notes or
any money paid to the Company or upon the Company's direction under any
provision of this Indenture, it shall not be responsible for the use or
application of any money received by any Paying Agent other than the Trustee,
and it shall not be responsible for any statement or recital herein or any
statement in the Notes or any other document in connection with the sale of the
Notes or pursuant to this Indenture other than its certificate of
authentication.
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SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and
if it is known to the Trustee, the Trustee shall mail to Holders of Notes a
notice of the Default or Event of Default within 90 days after it occurs. Except
in the case of a Default or Event of Default in payment of principal of,
premium, if any, or interest on any Note, the Trustee may withhold the notice if
and so long as a committee of its Responsible Officers in good faith determines
that withholding the notice is in the interests of the Holders of the Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each May 15 beginning with the May 15
following the date of this Indenture, and for so long as Notes remain
outstanding, the Trustee shall mail to the Holders of the Notes a brief report
dated as of such reporting date that complies with TIA ss.313(a) (but if no
event described in TIA ss.313(a) has occurred within the twelve months preceding
the reporting date, no report need be transmitted). The Trustee also shall
comply with TIA ss.313(b)(2). The Trustee shall also transmit by mail all
reports as required by TIA ss.313(c).
A copy of each report at the time of its mailing to the
Holders of Notes shall be mailed to the Company and filed with the SEC and each
stock exchange on which the Notes are listed in accordance with TIA ss.313(d).
The Company shall promptly notify the Trustee when the Notes are listed on any
stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time such
compensation as the Company and the Trustee shall from time to time agree in
writing for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services. Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel.
The Company shall indemnify the Trustee or any predecessor
Trustee against any and all losses, claims, damages, penalties, fines,
liabilities or expenses, including incidental and out-of-pocket expenses and
reasonable attorneys fees ("losses") incurred by it arising out of or in
connection with the acceptance or administration of its duties under this
Indenture, including the costs and expenses of enforcing this Indenture against
the Company (including this Section 7.07) and defending itself against any claim
(whether asserted by the Company or any Holder or any other person) or liability
in connection with the exercise or performance of any of its powers or duties
hereunder, except to the extent any such losses may be attributable to its
negligence or bad faith. The Trustee shall notify the Company promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify the
Company shall not relieve the Company of its obligations hereunder. The Company
shall defend the claim and the Trustee shall cooperate in the defense. The
Trustee may have separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.
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The obligations of the Company under this Section 7.07 shall
survive the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(i) or (j) hereof occurs, the expenses
and the compensation for the services (including the fees and expenses of its
agents and counsel) are intended to constitute expenses of administration under
any Bankruptcy Law.
The Trustee shall comply with the provisions of TIA
ss.313(b)(2) to the extent applicable.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign in writing at any time and be
discharged from the trust hereby created by so notifying the Company. The
Holders of Notes of a majority in principal amount of the then outstanding Notes
may remove the Trustee by so notifying the Trustee and the Company in writing.
The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any Bankruptcy
Law;
(c) a custodian or public officer takes charge of the
Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office, the
Holders of a majority in principal amount of the then outstanding Notes may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company.
If a successor Trustee does not take office within 30 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company, or the Holders of Notes of at least 10% in principal amount of the then
outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Note
who has been a Holder of a Note for at least six months, fails to comply with
Section 7.10, such Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
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A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.08, the Company's obligations under Section 7.07 hereof shall
continue for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a
corporation organized and doing business under the laws of the United States of
America or of any state thereof that is authorized under such laws to exercise
corporate trustee power, that is subject to supervision or examination by
federal or state authorities and that has a combined capital and surplus of at
least $150,000,000 as set forth in its most recent published annual report of
condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss.310(a)(1), (2) and (5). The Trustee is subject to TIA
ss.310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA ss.311(a), excluding any
creditor relationship listed in TIA ss.311(b). A Trustee who has resigned or
been removed shall be subject to TIA ss.311(a) to the extent indicated therein.
ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at its option and at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Notes and all
obligations of the Guarantors with respect to their Subsidiary Guarantees upon
compliance with the conditions set forth below in this Article 8.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.02, the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to
have been discharged from its obligations with respect to all
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outstanding Notes and all obligations of the Guarantors with respect to their
Subsidiary Guarantees on the date the conditions set forth below are satisfied
(hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance means that
the Company shall be deemed to have paid and discharged the entire Indebtedness
represented by the outstanding Notes and Subsidiary Guarantees, which shall
thereafter be deemed to be "outstanding" only for the purposes of Section 8.05
hereof and the other Sections of this Indenture referred to in (a) and (b)
below, and to have satisfied all its other obligations under such Notes and this
Indenture (and the Trustee, on demand of and at the expense of the Company,
shall execute proper instruments acknowledging the same), except for the
following provisions which shall survive until otherwise terminated or
discharged hereunder: (a) the rights of Holders of outstanding Notes to receive
payments in respect of the principal of, premium, if any, or interest and
Liquidated Damages, if any, on such Notes when such payments are due solely from
the trust fund described in Section 8.04 hereof, (b) the Company's obligations
with respect to such Notes under Sections 2.06, 2.07, 2.10 and 4.02 hereof, (c)
the rights, powers, trusts, duties and immunities of the Trustee hereunder and
the Company's obligations in connection therewith and (d) this Article 8.
Subject to compliance with this Article 8, the Company may exercise its option
under this Section 8.02 notwithstanding the prior exercise of its option under
Section 8.03 hereof.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.03, the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be released
from its obligations under Sections 4.03, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11,
4.12, 4.13, 4.15, 4.16, 4.17 and 4.18 and Articles 5 and 10 hereof with respect
to the outstanding Notes on and after the date the conditions set forth below
are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall
thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Notes shall not be deemed outstanding for accounting purposes). For this
purpose, Covenant Defeasance means that, with respect to the outstanding Notes,
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 covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any such
covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to comply shall not
constitute a Default or an Event of Default under Section 6.01 hereof, but,
except as specified above, the remainder of this Indenture and such Notes shall
be unaffected thereby. In addition, upon the Company's exercise under Section
8.01 hereof of the option applicable to this Section 8.03 hereof, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, Sections
6.01(c) through 6.01(h) hereof shall not constitute Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of
either Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant
Defeasance:
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(a) the Company must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders, cash in United States dollars,
non-callable Government Securities, or a combination thereof, in such amounts as
will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, premium and Liquidated
Damages, if any, and interest on the outstanding Notes on the stated date for
payment thereof or on the applicable redemption date, as the case may be, and
the Company must specify whether the Notes are being defeased to maturity or to
a particular redemption date;
(b) in the case of an election under Section 8.02 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel reasonably
acceptable to the Trustee confirming that (A) the Company has received from, or
there has been published by, the Internal Revenue Service a ruling or (B) since
the date of this Indenture, there has been a change in the applicable federal
income tax law, in either case to the effect that, and based thereon such
Opinion of Counsel shall confirm that, the Holders of the outstanding Notes will
not recognize income, gain or loss for federal income tax purposes as a result
of such Legal Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel reasonably
acceptable to the Trustee confirming that the Holders of the outstanding Notes
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;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of Default
resulting from the borrowing of funds to be applied to that deposit) or insofar
as Sections 6.01(i) or 6.01(j) hereof is concerned, at any time in the period
ending on the 91st day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under, any material
agreement or instrument (other than this Indenture) to which the Company or any
of its Restricted Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an Opinion
of Counsel to the effect that, assuming no intervening bankruptcy of the Company
or any Guarantor between the date of deposit and the 91st day following the
deposit and assuming that no Holder is an "insider" of the Company under
applicable Bankruptcy Law, 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;
(g) 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 over any other creditors of the Company or
with the intent of defeating, hindering, delaying or defrauding any other
creditors of the Company; and
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(h) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for or relating to the Legal Defeasance or the
Covenant Defeasance have been complied with.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN
TRUST; OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable
Government Securities (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the
outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as
Paying Agent) as the Trustee may determine, to the Holders of such Notes of all
sums due and to become due thereon in respect of principal, premium, if any, and
interest, but such money need not be segregated from other funds except to the
extent required by law.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 hereof 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 outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon the
request of the Company any money or non-callable Government Securities held by
it as provided in Section 8.04 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.04(a) hereof), are in excess of the amount thereof
that would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance.
SECTION 8.06. REPAYMENT TO COMPANY.
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 Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter, as a
secured 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), notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
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SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United
States dollars or non-callable Government Securities in accordance with Section
8.02 or 8.03 hereof, 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 Notes shall be revived and reinstated as though no deposit had
occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee
or Paying Agent is permitted to apply all such money in accordance with Section
8.02 or 8.03 hereof, as the case may be; provided, however, that, if the Company
makes any payment of principal of, premium, if any, or interest on any Note
following the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Notes to receive such payment from the
money held by the Trustee or Paying Agent.
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 hereof, the Company and the
Trustee may amend or supplement this Indenture or the Notes without the consent
of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or
in place of certificated Notes;
(c) to provide for the assumption of the Company's
obligations to the Holders of the Notes in the case of a merger or consolidation
or sale of all or substantially all of the Company's assets;
(d) to make any change that would provide any additional
rights or benefits to the Holders of the Notes;
(e) to provide for the issuance of Additional Notes in
accordance with the provisions set forth in this Indenture;
(f) to comply with requirements of the SEC in order to effect
or maintain the qualification of this Indenture under the TIA; or
(g) to make any other change, provided that such other change
does not adversely affect the legal rights hereunder of any Holder of the Notes.
Upon the request of the Company accompanied by a resolution of
its Board of Directors authorizing the execution of any such amended or
supplemental Indenture, and upon receipt by the Trustee of the documents
described in Section 7.02(b) hereof, the Trustee shall join with the Company in
the execution of any amended or supplemental Indenture authorized or permitted
by the terms of this Indenture and to make any further appropriate agreements
and
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stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental Indenture that, by its
express terms, affects its own rights, duties or immunities under this Indenture
or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, the Company and
the Trustee may amend or supplement this Indenture (including Section 3.09, 4.10
and 4.15 hereof) and the Notes may be amended or supplemented with the consent
of the Holders of at least a majority in principal amount of the Notes then
outstanding (including consents obtained in connection with a tender offer or
exchange offer for the Notes), and, subject to Sections 6.04 and 6.07 hereof,
any existing Default or Event of Default (other than a Default or Event of
Default in the payment of the principal of, premium, if any, or interest on the
Notes, except a payment default resulting from an acceleration that has been
rescinded) or compliance with any provision of this Indenture or the Notes may
be waived with the consent of the Holders of a majority in principal amount of
the then outstanding Notes (including consents obtained in connection with a
tender offer or exchange offer for the Notes).
Upon the request of the Company accompanied by a resolution of
its Board of Directors authorizing the execution of any such amended or
supplemental Indenture, and upon the filing with the Trustee of evidence
satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid,
and upon receipt by the Trustee of the documents described in Section 7.02(b)
hereof, the Trustee shall join with the Company in the execution of such amended
or supplemental Indenture unless such amended or supplemental Indenture, by its
express terms, affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such amended or supplemental Indenture.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Persons entitled to consent to any
indenture supplemental hereto. If a record date is fixed, the Holders on such
record date, or their duly designated proxies, and only such Persons, shall be
entitled to consent to such supplemental indenture, whether or not such Holders
remain Holders after such record date; provided, that unless such consent shall
have become effective by virtue of the requisite percentage having been obtained
prior to the date which is 180 days after such record date, any such consent
previously given shall automatically and without further action by any Holder be
canceled and of no further effect.
It shall not be necessary for the consent of the Holders of
Notes under this Section 9.02 to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section
becomes effective, the Company shall mail to the Holders of Notes affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the
Holders of a majority in aggregate principal amount of the Notes then
outstanding may waive compliance in a
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particular instance by the Company with any provision of this Indenture or the
Notes. However, without the consent of each Holder affected, an amendment or
waiver may not (with respect to any Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must
consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of
any Note or alter the provisions with respect to the redemption of the Notes
except as provided above with respect to Sections 4.10 and 4.15 hereof;
(c) reduce the rate of or change the time for payment of
interest, including default interest, on any Note;
(d) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest or Liquidated Damages, if any, on
the Notes (except a rescission of acceleration of the Notes by the Holders of at
least a majority in aggregate principal amount of the then outstanding Notes and
a waiver of the payment default that resulted from such acceleration);
(e) make any Note payable in money other than that stated in
the Notes;
(f) make any change in the provisions of this Indenture
relating to waivers of past Defaults or the rights of Holders of Notes to
receive payments of principal of, or interest or premium or Liquidated Damages
on the Notes;
(g) waive a redemption payment with respect to any Note
(other than a payment required by Sections 4.10 and 4.15 hereof);
(h) release any Guarantor from any of its obligations under
its Subsidiary Guarantee or this Indenture, except in accordance with the terms
of this Indenture; or
(i) make any change in the foregoing amendment and waiver
provisions.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes
shall be set forth in a amended or supplemental Indenture that complies with the
TIA as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder of a Note is a continuing consent by the Holder of a
Note and every subsequent Holder of a Note or portion of a Note that evidences
the same debt as the consenting Holder's Note, even if notation of the consent
is not made on any Note. However, any such Holder of a Note or subsequent Holder
of a Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An
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amendment, supplement or waiver becomes effective in accordance with its terms
and thereafter binds every Holder.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an
amendment, supplement or waiver on any Note thereafter authenticated. The
Company in exchange for all Notes may issue and the Trustee shall authenticate
new Notes that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note
shall not affect the validity and effect of such amendment, supplement or
waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article 9 if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Company may not sign an amendment or supplemental Indenture until the Board
of Directors approves it. In executing any amended or supplemental indenture,
the Trustee shall be entitled to receive and (subject to Section 7.01 hereof)
shall be fully protected in relying upon, an Officer's Certificate and an
Opinion of Counsel stating that the execution of such amended or supplemental
indenture is authorized or permitted by this Indenture.
ARTICLE 10
SUBSIDIARY GUARANTEES
SECTION 10.01. SUBSIDIARY GUARANTEES.
Subject to Section 10.05 hereof, each of the Guarantors
hereby, jointly and severally, unconditionally guarantees to each Holder of a
Note authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, the Notes and the Obligations of the Company hereunder
and thereunder, that: (a) the principal of, premium, if any, interest and
Liquidated Damages, if any, on the Notes will be promptly paid in full when due,
subject to any applicable grace period, whether at maturity, by acceleration,
redemption or otherwise, and interest on the overdue principal, premium, if any
(to the extent permitted by law), interest on any interest, if any, and
Liquidated Damages, if any, on the Notes, and all other payment Obligations of
the Company to the Holders or the Trustee hereunder or thereunder will be
promptly paid in full and performed, all in accordance with the terms hereof and
thereof; and (b) in case of any extension of time of payment or renewal of any
Notes or any of such other Obligations, the same will be promptly paid in full
when due or performed in accordance with the terms of the extension or renewal,
subject to any applicable grace period, whether at stated maturity, by
acceleration, redemption or otherwise. Failing payment when so due of any amount
so guaranteed or any performance so guaranteed for whatever reason the
Guarantors will be jointly and severally obligated to pay the same immediately.
An Event of Default under this Indenture or the Notes shall constitute an event
of default under the Subsidiary Guarantees, and shall entitle the Holders to
accelerate the obligations of the Guarantors hereunder in the same manner and to
the same extent as the Obligations of the Company. The Guarantors hereby agree
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that their obligations hereunder shall be unconditional, irrespective of the
validity or enforceability of the Notes or this Indenture, the absence of any
action to enforce the same, any waiver or consent by any Holder with respect to
any provisions hereof or thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a Guarantor.
Each Guarantor hereby waives diligence, presentment, demand of payment, filing
of claims with a court in the event of insolvency or bankruptcy of the Company,
any right to require a proceeding first against the Company, protest, notice and
all demands whatsoever and covenants that its Subsidiary Guarantee will not be
discharged except by complete performance of the Obligations contained in the
Notes and this Indenture. If any Holder or the Trustee is required by any court
or otherwise to return to the Company, the Guarantors, or any Note Custodian,
Trustee, liquidator or other similar official acting in relation to either the
Company or the Guarantors, any amount paid by the Company or any Guarantor to
the Trustee or such Holder, the Subsidiary Guarantees, to the extent theretofore
discharged, shall be reinstated in full force and effect. Each Guarantor agrees
that it shall not be entitled to, and hereby waives, any right of subrogation in
relation to the Holders in respect of any Obligations guaranteed hereby. Each
Guarantor further agrees that, as between the Guarantors, on the one hand, and
the Holders and the Trustee, on the other hand, (x) the maturity of the
Obligations guaranteed hereby may be accelerated as provided in Article 6 hereof
for the purposes of its Subsidiary Guarantee, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
Obligations guaranteed thereby, and (y) in the event of any declaration of
acceleration of such Obligations as provided in Article 6 hereof, such
Obligations (whether or not due and payable) shall forthwith become due and
payable by the Guarantor for the purpose of its Subsidiary Guarantee. The
Guarantors shall have the right to seek contribution from any non-paying
Guarantor as provided in Section 10.05 hereof so long as the exercise of such
right does not impair the rights of the Holders or the Trustee under the
Subsidiary Guarantees or this Indenture.
SECTION 10.02. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEE.
(a) To evidence its Subsidiary Guarantee set forth in Section
10.01 hereof, each Guarantor hereby agrees that a notation of such Subsidiary
Guarantee substantially in the form of Exhibit E hereto shall be endorsed by
manual or facsimile signature by an Officer of such Guarantor on each Note
authenticated and delivered by the Trustee and that this Indenture shall be
executed on behalf of such Guarantor, by manual or facsimile signature, by an
Officer of such Guarantor.
(b) Each Guarantor hereby agrees that its Subsidiary Guarantee
set forth in Section 10.01 hereof shall remain in full force and effect
notwithstanding any failure to endorse on each Note a notation of such
Subsidiary Guarantee.
(c) If an officer whose signature is on this Indenture or on
any Subsidiary Guarantee no longer holds that office at the time the Trustee
authenticates the Note on which such Subsidiary Guarantee is endorsed, such
Subsidiary Guarantee shall be valid nevertheless.
(d) The delivery of any Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the
Subsidiary Guarantees set forth in this Indenture on behalf of the Guarantors.
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SECTION 10.03. GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
(a) Except as set forth in Articles 4 and 5 hereof, nothing
contained in this Indenture shall prohibit a merger between a Guarantor and
another Guarantor or a merger between a Guarantor and the Company.
(b) No Guarantor shall consolidate with or merge with or into
(whether or not such Guarantor is the surviving Person) or sell or otherwise
dispose of all or substantially all of its assets to, another Person (other than
the Company or another Guarantor) unless (i) immediately after giving effect to
such transaction, no Default or Event of Default exists and (ii) either (x) the
Person formed by or surviving any such merger or consolidation, or to which such
sale of assets shall have been made (if other than such Guarantor) assumes all
the obligations of such Guarantor under this Indenture, pursuant to a
supplemental indenture substantially in the form of Exhibit F hereto, or (y) the
Net Proceeds of such transaction are applied in accordance with Section 4.10
hereof.
(c) In the case of any such consolidation, merger, sale or
conveyance and upon the assumption by the successor Person, by supplemental
indenture, executed and delivered to the Trustee and substantially in the form
of Exhibit F hereto, of the Subsidiary Guarantees endorsed upon the Notes and
the due and punctual performance of all of the covenants and conditions of this
Indenture to be performed by the Guarantor, such successor Person shall succeed
to and be substituted for the Guarantor with the same effect as if it had been
named herein as a Guarantor. Such successor Person thereupon may cause to be
signed any or all of the Subsidiary Guarantees to be endorsed upon all of the
Notes issuable hereunder which theretofore shall not have been signed by the
Company and delivered to the Trustee. All of the Subsidiary Guarantees so issued
shall in all respects have the same legal rank and benefit under this Indenture
as the Subsidiary Guarantees theretofore and thereafter issued in accordance
with the terms of this Indenture as though all of such Subsidiary Guarantees had
been issued at the date of the execution hereof.
SECTION 10.04. RELEASES OF SUBSIDIARY GUARANTEES.
(a) In the event of (i) a sale or other disposition of all or
substantially all of the assets of any Guarantor, or (ii) a sale or other
disposition of all of the Capital Stock of any Guarantor, in each case to a
Person that is not (either before or after giving effect to such transaction) a
Subsidiary of the Company, then such Guarantor shall be released and relieved of
any obligations under this Indenture and its Subsidiary Guarantee; provided that
(i) the Net Proceeds from such sale or other disposition are treated in
accordance with the provisions of Section 4.10 hereof and (ii) the Company is in
compliance with all other provisions of this Indenture applicable to such
disposition.
(b) Upon the designation of a Guarantor as an Unrestricted
Subsidiary or a Receivables Subsidiary in accordance with the terms of this
Indenture, such Guarantor shall be released and relieved of any obligations
under this Indenture and its Subsidiary Guarantee.
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(c) In the event of the Company's exercise of its option under
Section 8.01 hereof, each Guarantor shall be released and relieved of any
obligations under this Indenture and its Subsidiary Guarantee.
(d) Upon delivery by the Company to the Trustee of an
Officers' Certificate to the effect of any of the foregoing, the Trustee shall
execute any documents reasonably required in order to evidence the release of
any Guarantor from its obligations under its Subsidiary Guarantee. Any Guarantor
not released from its obligations under its Subsidiary Guarantee shall remain
liable for the full amount of principal of, premium, if any, interest and
Liquidated Damages, if any, on the Notes and for the other obligations of such
Guarantor under this Indenture as provided in this Article 10.
SECTION 10.05. LIMITATION ON GUARANTOR LIABILITY; CONTRIBUTION.
(a) For purposes hereof, each Guarantor's liability shall be
limited to the lesser of (i) the aggregate amount of the Obligations of the
Company under the Notes and this Indenture and (ii) the maximum amount that will
result in the obligations of such Guarantor under its Subsidiary Guarantee not
constituting a fraudulent transfer or conveyance under applicable law of any
relevant jurisdiction; provided that, it will be a presumption in any lawsuit or
other proceeding in which a Guarantor is a party that the amount guaranteed
pursuant to its Subsidiary Guarantee is the amount set forth in clause (i) above
unless any creditor, or representative of creditors of such Guarantor, or debtor
in possession or trustee in bankruptcy of the Guarantor, otherwise proves in
such a lawsuit that the aggregate liability of the Guarantor is the amount set
forth in clause (ii) above. In making any determination as to solvency or
sufficiency of capital of a Guarantor in accordance with the previous sentence,
the right of such Guarantor to contribution from other Guarantors as set forth
below, and any other rights such Guarantor may have, contractual or otherwise,
shall be taken into account.
(b) In order to provide for just and equitable contribution
among the Guarantors, the Guarantors agree, inter se, that in the event any
payment or distribution is made by any Guarantor (a "Funding Guarantor") under
its Subsidiary Guarantee, such Funding Guarantor shall be entitled to a
contribution from all other Guarantors in a pro rata amount based on the
Adjusted Net Assets of each Guarantor (including the Funding Guarantor) for all
payments, damages and expenses incurred by that Funding Guarantor in discharging
the Company's Obligations with respect to the Notes or any other Guarantor's
obligations with respect to its Subsidiary Guarantee.
ARTICLE 11.
MISCELLANEOUS
SECTION 11.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by TIA ss.318(c), the imposed duties shall
control.
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SECTION 11.02. NOTICES.
Any notice or communication by the Company or the Trustee to
the others is duly given if in writing and delivered in Person or mailed by
first class mail (registered or certified, return receipt requested), telecopier
or overnight air courier guaranteeing next day delivery, to the others' address:
If to the Company or any Guarantor:
Ames Department Stores, Inc.
2418 Main Street
Rocky Hill, CT 06067
Attention: David H. Lissy (Fax: 860-257-7806)
With a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10053
Attention: Stephen A. Cooper (Fax: 212-310-8007)
If to the Trustee:
The Chase Manhattan Bank
c/o Chase National Corporate Services, Inc.
73 Tremont Street
Boston, MA 02106
Attention: Corporate Trust Department (Fax: 617-557-6551)
The Company or the Trustee, by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to
Holders) shall take effect at the time of receipt thereof.
Any notice or communication to a Holder shall be mailed by
first class mail, certified or registered, return receipt requested, or by
overnight air courier guaranteeing next day delivery to its address shown on the
register kept by the Registrar. Any notice or communication shall also be so
mailed to any Person described in TIA ss.313(c), to the extent required by the
TIA. Failure to mail a notice or communication to a Holder or any defect in it
shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it
shall mail a copy to the Trustee and each Agent at the same time.
77
<PAGE>
SECTION 11.03. COMMUNICATIONS BY HOLDERS OF NOTES WITH OTHER HOLDERS OF
NOTES.
Holders may communicate pursuant to TIA ss.312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA ss.312(c).
SECTION 11.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee
to take any action under this Indenture, the Company shall furnish to the
Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 11.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 11.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent have been satisfied.
SECTION 11.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA ss.314(a)(4)) shall comply with the provisions of TIA
ss.314(e) and shall include:
(a) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she
has made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition has
been satisfied; and
(d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been satisfied.
SECTION 11.06. RULE BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Registrar or Paying Agent may make reasonable rules and
set reasonable requirements for its functions.
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<PAGE>
SECTION 11.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES
AND STOCKHOLDERS.
No director, officer, employee, incorporator or stockholder of
the Company or any Guarantor, as such, shall have any liability for any
obligations of the Company or the Guarantors under the Notes, this Indenture,
the Subsidiary Guarantees or for any claim based on, in respect of, or by reason
of, such obligations or their creation. Each Holder of Notes by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes.
SECTION 11.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE
USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES.
SECTION 11.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other
indenture, loan or debt agreement of the Company or its Subsidiaries or of any
other Person. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
SECTION 11.10. SUCCESSORS.
All agreements of the Company in this Indenture and the Notes
shall bind its successors. All agreements of the Trustee in this Indenture shall
bind its successors.
SECTION 11.11. SEVERABILITY.
In case any provision in this Indenture or in the Notes shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
SECTION 11.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.
SECTION 11.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part of this Indenture and shall
in no way modify or restrict any of the terms or provisions hereof.
[Signatures on following pages]
79
<PAGE>
SIGNATURES
Dated as of April 27, 1999
AMES DEPARTMENT STORES, INC.
By: /s/ Rolando de Aguiar
------------------------------
Name: Rolando de Aguiar
Title: Executive Vice President
AMES REALTY II, INC.
By: /s/ Rolando de Aguiar
------------------------------
Name: Rolando de Aguiar
Title: Executive Vice President
AMES FS, INC.
By: /s/ Rolando de Aguiar
------------------------------
Name: Rolando de Aguiar
Title: Executive Vice President
AMES TRANSPORTATION SYSTEMS, INC.
By: /s/ Rolando de Aguiar
------------------------------
Name: Rolando de Aguiar
Title: Executive Vice President
AMD, INC.
By: /s/ Rolando de Aguiar
------------------------------
Name: Rolando de Aguiar
Title: Executive Vice President
AMES MERCHANDISING CORPORATION
By: /s/ Rolando de Aguiar
------------------------------
Name: Rolando de Aguiar
Title: Executive Vice President
S-1
<PAGE>
THE CHASE MANHATTAN BANK,
as Trustee
By: /s/ L. O'Brien
---------------------------
Name: L. O'Brien
Title: Vice President
S-2
<PAGE>
EXHIBIT A
(Face of Note)
================================================================================
CUSIP/CINS __________
10% Senior Notes due 2006
No. ___ $_________
AMES DEPARTMENT STORES, INC.
promises to pay to__________________________________________
or registered assigns,
the principal sum of________________________________________
Dollars on [______________].
Interest Payment Dates: April 15 and October 15.
Record Dates: April 1 and October 1.
Dated: [______________]
Ames Department Stores, Inc.
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
This is one of the [Global]
Notes referred to in the
within-mentioned Indenture:
Dated: ______________
THE CHASE MANHATTAN BANK,
as Trustee
By:
-----------------------------
Name:
Title:
================================================================================
A-1
<PAGE>
(Back of Note)
10% Senior Notes due 2006
[THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.06 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO
A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.]1
THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR OTHER SECURITIES LAWS. NEITHER THIS
NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY
ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS NOT A
U.S. PERSON AND IS ACQUIRING ITS NOTE IN AN "OFFSHORE TRANSACTION" PURSUANT TO
RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT
PRIOR TO (X) THE DATE WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD OF TIME AS
PERMITTED BY RULE 144(k) UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION
THEREUNDER) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR OF ANY
PREDECESSOR OF THIS NOTE) OR THE LAST DAY ON WHICH AMES OR ANY AFFILIATE OF AMES
WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF THIS NOTE) AND (Y) SUCH LATER
DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW (THE "RESALE RESTRICTION
TERMINATION DATE"), OFFER, SELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO
AMES, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A INSIDE THE UNITED STATES, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S.
PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
- ----------
(1) This paragraph should be included only if the Note is issued in global form.
A-2
<PAGE>
REGULATION S UNDER THE SECURITIES ACT OR (E) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3)
AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT AMES, THE
TRUSTEE, AND THE REGISTRAR SHALL HAVE THE RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER (I) PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION
OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM,
AND (II) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATION OF
TRANSFER IN THE FORM PROVIDED IN THE INDENTURE GOVERNING THIS NOTE IS COMPLETED
AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON
THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE
THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
Capitalized terms used herein shall have the meanings assigned
to them in the Indenture referred to below unless otherwise indicated.
A-3
<PAGE>
1. INTEREST. Ames Department Stores, Inc., a Delaware corporation
("Ames" or the "Company"), promises to pay interest on the principal amount of
this Note at 10% per annum from April 27, 1999 until maturity and shall pay the
Liquidated Damages payable pursuant to Section 5 of the Registration Rights
Agreement referred to below. The Company will pay interest and Liquidated
Damages, if any, semi-annually on April 15 and October 15 of each year, or if
any such day is not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date"), with the same force and effect as if made on the date
for such payment. Interest on the Notes will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from the date of
issuance; provided that if there is no existing Default in the payment of
interest, and if this Note is authenticated between a record date referred to on
the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be October 15, 1999. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes
(except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders of Notes at the close of business on the April 1 or October 1
next (whether or not a Business Day) preceding the Interest Payment Date, even
if such Notes are canceled after such record date and on or before such Interest
Payment Date. The Notes will be payable as to principal, premium and Liquidated
Damages, if any, and interest at the office or agency of the Company maintained
for such purpose within The City and State of New York, or, at the option of the
Company, payment of interest and Liquidated Damages may be made by check mailed
to the Holders at their addresses set forth in the register of Holders; provided
that payment by wire transfer of immediately available funds will be required
with respect to principal of and interest, premium and Liquidated Damages, if
any, on, all Global Notes and all other Notes the Holders of which shall have
provided wire transfer instructions to the Company or the Paying Agent. Such
payment shall be 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.
3. PAYING AGENT AND REGISTRAR. Initially, The Chase Manhattan Bank, the
Trustee under the Indenture, will act as Paying Agent and Registrar. The Company
may change any Paying Agent or Registrar without notice to any Holder. The
Company or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture dated as
of April 27, 1999 (the "Indenture") among the Company, the Guarantors named
therein and the Trustee. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbbb). The Notes
are subject to all such terms, and Holders are referred to the Indenture and the
TIA for a statement of such terms. To the extent any provision of this Note
conflicts with the express provisions of the Indenture, the provisions of the
Indenture shall govern and be controlling. The Notes issuable under the
Indenture are obligations of the Company limited to $275,000,000 in aggregate
principal amount, plus amounts, if any, issued to pay Liquidated Damages on
outstanding Notes as set forth in Paragraph 2 hereof.
A-4
<PAGE>
5. OPTIONAL REDEMPTION.
(a) Except as set forth in clause (b) of this paragraph 5, the
Notes shall not be redeemable at the Company's option prior to April 15, 2003.
Thereafter, the Notes shall be subject to redemption at any time at the option
of the Company, in whole or in part, upon not less than 30 nor more than 60
days' notice, at the redemption prices (expressed as percentages of principal
amount) set forth below plus accrued and unpaid interest and Liquidated Damages
thereon, if any, to the applicable redemption date, if redeemed during the
twelve-month period beginning on April 15 of the years indicated below:
Year Percentage
2003.......................................... 105.00%
2004.......................................... 102.50%
2005.......................................... 100.00%
(b) Notwithstanding the foregoing, on or prior to April 15,
2002, the Company may on any one or more occasions redeem up to an aggregate of
35% of the Notes originally issued at a redemption price of 110% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages thereon, if any, to the redemption date, with the net cash proceeds of
one or more Public Equity Offerings by the Company; provided that at least 65%
of the Notes originally issued remain outstanding immediately after the
occurrence of each such redemption; and provided, further, that any such
redemption must occur within 60 days of the date of the closing of such Public
Equity Offering.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall
not be required to make mandatory redemption payments with respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) If there is a Change of Control, the Company shall be
required to make an offer (a "Change of Control Offer") to repurchase all or any
part (equal to $1,000 or an integral multiple thereof) of each Holder's Notes at
a purchase price equal to 101% of aggregate principal amount thereof plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the date
of purchase (in either case, the "Change of Control Payment"). Within 10 days
following any Change of Control, the Company shall mail a notice to each Holder
setting forth the procedures governing the Change of Control Offer as required
by the Indenture.
(b) If the Company or any of its Restricted Subsidiaries
consummates any Asset Sales, within five Business Days of each date on which the
aggregate amount of Excess Proceeds exceeds $10,000,000, the Company will be
required to make an offer to all Holders of Notes and any other Indebtedness
that ranks pari passu with the Notes that, by its terms, requires the Company to
offer to repurchase such Indebtedness with such Excess Proceeds (an "Asset Sale
Offer") to purchase the maximum principal amount of Notes and such other pari
passu Indebtedness that may be purchased out of the Excess Proceeds, at an offer
price in cash in an amount equal to 100% of the principal amount thereof plus
accrued and unpaid interest and
A-5
<PAGE>
Liquidated Damages, if any, to the date of purchase, in accordance with the
procedures set forth in the Indenture. To the extent that the aggregate amount
of Notes or pari passu Indebtedness tendered pursuant to an Asset Sale Offer is
less than the Excess Proceeds, the Company may use any Excess Proceeds for any
purpose not prohibited by the Indenture. If the aggregate principal amount of
Notes or pari passu Indebtedness surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Notes to be purchased on
a pro rata basis. Holders of Notes that are the subject of an offer to purchase
will receive an Asset Sale Offer from the Company prior to any related purchase
date and may elect to have such Notes purchased by completing the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least
30 days but not more than 60 days before the redemption date to each Holder
whose Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest ceases to accrue on Notes or portions thereof
called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, it need not
exchange or register the transfer of any Notes for a period of 15 days before a
selection of Notes to be redeemed or during the period between a record date and
the corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Notes, and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes. Without the consent
of any Holder of a Note, the Indenture or the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to Holders of the Notes
in case of a merger or consolidation or sale of all or substantially all of the
Company's assets, to make any change that would provide any additional rights or
benefits to the Holders of the Notes or any other change that does not adversely
affect the legal rights under the Indenture of any such Holder, to provide for
the issuance of Additional Notes in accordance with the Indenture, or to comply
with the requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act.
12. DEFAULTS AND REMEDIES. An "Event of Default" occurs if:
(i) the Company defaults in the payment when due of interest on, or Liquidated
Damages, if any, with
A-6
<PAGE>
respect to, the Notes and such default continues for a period of 30 days; (ii)
the Company defaults in the payment when due of the principal of or premium, if
any, on the Notes; (iii) the Company fails to comply with any of the provisions
of Sections 4.10, 4.15, or 5.01 of the Indenture; (iv) the Company or any of its
Restricted Subsidiaries fails to comply with the provisions of Sections 4.07 and
4.09 for 30 days after notice of such failure has been given; (v) the Company
fails to observe or perform any other agreements in the Indenture or the Notes
for 60 days after notice of such failure has been given; (vi) a default occurs
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any Indebtedness for money borrowed
by the Company or any of its Restricted Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Restricted Subsidiaries), whether such
Indebtedness or guarantee now exists, or is created after the date of the
Indenture, which default is caused by a failure to pay principal of, or interest
or premium, if any, on such Indebtedness prior to the expiration of the grace
period provided in such Indebtedness on the date of such default (a "Payment
Default"), results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of such Indebtedness, together
with the principal amount of any other such Indebtedness under which there has
been a Payment Default or the maturity of which has been so accelerated,
aggregates $20,000,000 or more; (vii) the Company or any of its Subsidiaries
fails to pay final judgments aggregating in excess of $20,000,000, which
judgments are not paid, discharged or stayed for a period of 60 days; (viii) any
Subsidiary Guarantee is held in any judicial proceeding to be unenforceable or
invalid or shall cease for any reason to be in full force and effect or any
Guarantor, or any Person acting on behalf of any Guarantor, shall deny or
disaffirm its obligations under its Subsidiary Guarantee, except as permitted by
this Indenture; and (ix) certain events of bankruptcy or insolvency with respect
to the Company or any of its Significant Subsidiaries.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to the Company or any Restricted
Subsidiary, all outstanding Notes will become due and payable without further
action or notice. Holders of the Notes may not enforce the Indenture or the
Notes except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Notes notice of any continuing Default or Event of
Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have had
to pay if the Company then had elected to redeem the Notes pursuant to the
optional redemption provisions of the Indenture, an equivalent premium shall
also become and be immediately due and payable to the extent permitted by law
upon the acceleration of the Notes. If an Event of Default occurs prior to April
15, 2003 by reason of any willful action (or inaction) taken (or not taken) by
or on behalf of the Company with the intention of avoiding the prohibition on
redemption of the Notes prior to April 15, 2003,
A-7
<PAGE>
then the premium specified in the Indenture shall also become immediately due
and payable to the extent permitted by law upon the acceleration of the Notes.
The Holders of a majority in aggregate principal amount of the Notes
then outstanding by notice to the Trustee may on behalf of the Holders of all of
the Notes waive any existing Default or Event of Default and its consequences
under the Indenture except a continuing Default or Event of Default in the
payment of interest on, or the principal of, the Notes.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
15. AUTHENTICATION. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES. In
addition to the rights provided to Holders of Notes under the Indenture, Holders
of Transferred Restricted Securities shall have all the rights set forth in the
Registration Rights Agreement dated as of April 27, 1999 between the Company and
the parties named on the signature pages thereof (the "Registration Rights
Agreement").
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP, CINS and/or ISIN numbers to be printed on the Notes and the Trustee may
use CUSIP, CINS and/or ISIN numbers in notices of redemption as a convenience to
Holders. No representation is made as to the accuracy of such numbers either as
printed on the Notes or as contained in any notice of redemption and reliance
may be placed only on the other identification numbers placed thereon.
19. GOVERNING LAW. The internal law of the State of New York shall
govern and be used to construe this Note.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Ames Department Stores, Inc.
2418 Main Street
Rocky Hill, CT 06067
Attention: David H. Lissy (Fax: 860-257-7806)
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<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date:________________________
Your Signature:
---------------------------
(Sign exactly as your name
appears on the face of this
Note)
Signature Guarantee.
A-9
<PAGE>
Option of Holder to Elect Purchase
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
/ / Section 4.10 / / Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $______________
Date:_________________ Your Signature:
---------------------------------
(Sign exactly as your name
appears on the Note)
Tax Identification No.:
-------------------------
Signature Guarantee.
A-10
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an interest
in another Global Note or for a Definitive Note, or exchanges of a part of
another Global Note or Definitive Note for an interest in this Global Note, have
been made:
<TABLE>
<CAPTION>
Principal Amount of
this Global Note Signature of
Amount of decrease Amount of increase in following such authorized officer
in Principal Amount Principal Amount of decrease of Trustee or Note
Date of Exchange of this Global Note this Global Note (or increase) Custodian
- ------------------------- ------------------- --------------------- ------------------- ------------------
<S> <C> <C> <C> <C>
</TABLE>
- ----------
(2) This should be included only if the Note is issued in global form.
A-11
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Ames Department Stores, Inc.
2418 Main Street
Rocky Hill, CT 06067
Attention: David H. Lissy (Fax: 860-257-7806)
The Chase Manhattan Bank
73 Tremont Street
Boston, MA 02106
Attention: Corporate Trust Department (Fax: 617-557-6551)
Re: 10% Senior Notes due 2006.
Reference is hereby made to the Indenture, dated as of April 27, 1999
(the "Indenture"), among Ames Department Stores, Inc., as issuer (the
"Company"), the Guarantors named therein and The Chase Manhattan Bank, as
trustee. Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.
________________, (the "Transferor") owns and proposes to transfer the
Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "Transfer"),
to ___________ (the "Transferee"), as further specified in Annex A hereto. In
connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. / / Check if Transferee will take delivery of Beneficial Interests in the
144A Global Note or Definitive Notes Pursuant to Rule 144A. The Transfer is
being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor hereby further certifies that the Beneficial
Interests or Definitive Note(s) are being transferred to a Person that the
Transferor reasonably believes is purchasing the Beneficial Interests or
Definitive Note(s) for its own account, or for one or more accounts with respect
to which such Person exercises sole investment discretion, and such Person and
each such account is a "qualified institutional buyer" within the meaning of
Rule 144A in a transaction meeting the requirements of Rule 144A and such
Transfer is in compliance with any applicable blue sky securities laws of any
state of the United States. Upon consummation of the proposed Transfer in
accordance with the terms of the Indenture, the transferred Beneficial Interest
or Definitive Note(s) will be subject to the restrictions on transfer enumerated
in the Private Placement Legend printed on the 144A Global Note and/or the
Definitive Note(s) and in the Indenture and the Securities Act.
2. / / Check if Transferee will take delivery of Beneficial Interests in the
Regulation S Global Note or Definitive Notes pursuant to Regulation S. The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and, accordingly, the Transferor hereby further
certifies that (i) the Transfer is not being made to a person in the United
States and (x) at the time the buy order was originated, the Transferee was
B-1
<PAGE>
outside the United States or such Transferor and any Person acting on its behalf
reasonably believed and believes that the Transferee was outside the United
States or (y) the transaction was executed in, on or through the facilities of a
designated offshore securities market and neither such Transferor nor any Person
acting on its behalf knows that the transaction was prearranged with a buyer in
the United States, (ii) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S
under the Securities Act and (iii) the transaction is not part of a plan or
scheme to evade the registration requirements of the Securities Act and (iv) if
the proposed transfer is being made prior to the expiration of the Distribution
Compliance Period, the transfer is not being made to a U.S. Person or for the
account or benefit of a U.S. Person (other than an Initial Purchaser). Upon
consummation of the proposed transfer in accordance with the terms of the
Indenture, the transferred Beneficial Interest or Definitive Note(s) will be
subject to the restrictions on Transfer enumerated in the Private Placement
Legend printed on the Regulation S Global Note and/or the Definitive Note(s) and
in the Indenture and the Securities Act.
3. / / Check and complete if Transferee will take delivery of Beneficial
Interests in the IAI Global Note or Definitive Notes pursuant to any provision
of the Securities Act other than Rule 144A or Regulation S. The Transfer is
being effected in compliance with the transfer restrictions applicable to
Beneficial Interests in Restricted Global Notes and Definitive Notes bearing the
Private Placement Legend and pursuant to and in accordance with the Securities
Act and any applicable blue sky securities laws of any State of the United
States, and accordingly the Transferor hereby further certifies that (check
one):
(a) / / such Transfer is being effected pursuant to and in accordance
with Rule 144 under the Securities Act;
OR
(b) / / such Transfer is being effected to the Company or a subsidiary
thereof,
OR
(c) / / such Transfer is being effected pursuant to an effective
registration statement under the Securities Act;
OR
(d) / / such Transfer is being effected to an Institutional Accredited
Investor and pursuant to an available exemption from the registration
requirements of the Securities Act other than Rule 144A, Rule 144 or Rule 904,
and the Transferor hereby further certifies that the Transfer complies with the
transfer restrictions applicable to Beneficial Interests in a Restricted Global
Note or Definitive Notes bearing the Private Placement Legend and the
requirements of the exemption claimed, which certification is supported by (x)
if such Transfer is in respect of a principal amount of Notes at the time of
Transfer of $250,000 or more, a certificate executed by the Transferee in the
form of Exhibit D to the Indenture, or (y) if such Transfer is in respect of a
principal amount of Notes at the time of transfer of less than $250,000, (1) a
certificate executed by the Transferee in the form of Exhibit D to the Indenture
and (2) an Opinion of Counsel provided by the Transferor or the Transferee (a
copy of which the Transferor has attached to this certification), to the effect
that (1) such Transfer is in compliance with the Securities Act and (2) such
Transfer complies with any applicable blue sky securities laws of any state of
the United
B-2
<PAGE>
States. Upon consummation of the proposed transfer in accordance with
the terms of the Indenture, the transferred Beneficial Interest or Definitive
Note(s) will be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the IAI Global Note and/or the Definitive
Note(s) and in the Indenture and the Securities Act.
4. / / Check if Transferee will take delivery of Beneficial Interests in the
Unrestricted Global Note or in Unrestricted Definitive Notes.
(a) / / Check if Transfer is pursuant to Rule 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the Securities
Act and in compliance with the transfer restrictions contained in the Indenture
and any applicable blue sky securities laws of any state of the United States
and (ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred Beneficial Interests or Definitive
Note(s) will no longer be subject to the restrictions on transfer enumerated in
the Private Placement Legend printed on the Restricted Global Notes, on
Definitive Notes bearing the Private Placement Legend and in the Indenture.
(b) / / Check if Transfer is Pursuant to Regulation S. (i) The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and in compliance with the transfer restrictions
contained in the Indenture and any applicable blue sky securities laws of any
state of the United States and (ii) the restrictions on transfer contained in
the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred
Beneficial Interests or Definitive Note(s) will no longer be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the Restricted Global Notes, on Definitive Notes bearing the Private Placement
Legend and in the Indenture.
(c) / / Check if Transfer is Pursuant to Other Exemption. (i) The
Transfer is being effected pursuant to and in compliance with an exemption from
the registration requirements of the Securities Act other than Rule 144, Rule
903 or Rule 904 and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred Beneficial
Interests or Definitive Note(s) will not be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Global Notes, on Definitive Notes bearing the Private Placement Legend and in
the Indenture.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
------------------------------------------
[Insert Name of Transferor]
By:
---------------------------------------
Name:
Title:
Dated: ____________, ____
B-3
<PAGE>
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (A) OR (B)]
(a) / / Beneficial Interests in the:
(i) / / 144A Global Note (CUSIP _______), or
(ii) / / Regulation S Global Note (CUSIP ______), or
(iii) / / IAI Global Note (CUSIP ________); or
(b) / / Restricted Definitive Notes.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) / / Beneficial Interests in the:
(i) / / 144A Global Note (CUSIP _____), or
(ii) / / Regulation S Global Note (CUSIP _____), or
(iii) / / IAI Global Note (CUSIP ______); or
(iv) / / Unrestricted Global Note (CUSIP ______); or
(b) / / Restricted Definitive Notes; or
(c) / / Definitive Notes that do not bear the Private Placement
Legend, in accordance with the terms of the Indenture.
B-4
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Ames Department Stores, Inc.
2418 Main Street
Rocky Hill, CT 06067
Attention: David H. Lissy (Fax: 860-257-7806)
The Chase Manhattan Bank
73 Tremont Street
Boston, MA 02106
Attention: Corporate Trust Department (Fax: 617-557-6551)
Re: 10% Senior Notes due 2006
(CUSIP ____________)
Reference is hereby made to the Indenture, dated as of April
27, 1999 (the "Indenture"), among Ames Department Stores, Inc., as issuer (the
"Company"), the Guarantors named therein and The Chase Manhattan Bank, as
trustee. Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.
______________, (the "Holder") owns and proposes to exchange
the Note[s] or interest in such Note[s] specified herein, in the principal
amount of $______________ in such Note[s] or interests (the "Exchange"). In
connection with the Exchange, the Holder hereby certifies that:
1. Exchange of Restricted Definitive Notes or Restricted Beneficial
Interests for Unrestricted Definitive Notes or Unrestricted Beneficial Interests
(a) / / Check if Exchange is from Restricted Beneficial Interest to
Unrestricted Beneficial Interest. In connection with the Exchange of the
Holder's Restricted Beneficial Interest for Unrestricted Beneficial Interests in
an equal principal amount, the Holder hereby certifies (i) the Unrestricted
Beneficial Interests are being acquired for the Holder's own account without
transfer, (ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to the Global Notes and pursuant to and in accordance
with the United States Securities Act of 1933, as amended (the "Securities
Act"), (iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act and (iv) the Unrestricted Beneficial Interests are being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(b) / / Check if Exchange is from Restricted Beneficial Interest to
Unrestricted Definitive Notes. In connection with the Exchange of the Holder's
Restricted Beneficial Interests for Unrestricted Definitive Notes, the Holder
hereby certifies (i) the Definitive Notes are being acquired for the Holder's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to the Restricted Global Notes
C-1
<PAGE>
and pursuant to and in accordance with the Securities Act, (iii) the
restrictions on transfer contained in the Indenture and the Private Placement
Legend are not required in order to maintain compliance with the Securities Act
and (iv) the Definitive Notes are being acquired in compliance with any
applicable blue sky securities laws of any state of the United States.
(c) / / Check if Exchange is from Restricted Definitive Notes to
Unrestricted Beneficial Interests. In connection with the Holder's Exchange of
Restricted Definitive Notes for Unrestricted Beneficial Interests, (i) the
Unrestricted Beneficial Interests are being acquired for the Holder's own
account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Beneficial Interests are being acquired in compliance with any
applicable blue sky securities laws of any state of the United States.
(d) / / Check if Exchange is from Restricted Definitive Notes to
Unrestricted Definitive Notes. In connection with the Holder's Exchange of a
Restricted Definitive Note for Unrestricted Definitive Notes, the Holder hereby
certifies (i) the Unrestricted Definitive Notes are being acquired for the
Holder's own account without transfer, (ii) such Exchange has been effected in
compliance with the transfer restrictions applicable to Restricted Definitive
Notes and pursuant to and in accordance with the Securities Act , (iii) the
restrictions on transfer contained in the Indenture and the Private Placement
Legend are not required in order to maintain compliance with the Securities Act
and (iv) the Notes are being acquired in compliance with any applicable blue sky
securities laws of any state of the United States.
2. Exchange of Restricted Definitive Notes or Restricted Beneficial
Interests for Restricted Definitive Notes or Restricted Beneficial Interests
(a) / / Check if Exchange is from Restricted Beneficial Interests to
Restricted Definitive Note. In connection with the Exchange of the Holder's
Restricted Beneficial Interest for Restricted Definitive Notes with an equal
principal amount, (i) the Restricted Definitive Notes are being acquired for the
Holder's own account without transfer and (ii) such Exchange has been effected
in compliance with the transfer restrictions applicable to the Restricted Global
Notes and pursuant to and in accordance with the Securities Act, and in
compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Exchange in accordance with the
terms of the Indenture, the Restricted Definitive Notes issued will be subject
to the restrictions on transfer enumerated in the Private Placement Legend
printed on the Restricted Definitive Notes and in the Indenture and the
Securities Act.
(b) / / Check if Exchange is from Restricted Definitive Notes to
Restricted Beneficial Interests. In connection with the Exchange of the Holder's
Restricted Definitive Note for Restricted Beneficial Interests in the [CHECK
ONE] / / 144A Global Note, / / Regulation S Global Note, / / IAI Global Note
with an equal principal amount, (i) the Definitive Notes are being acquired for
the Holder's own account without transfer and (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to the
Restricted Definitive Note and pursuant to and in accordance with the Securities
Act, and in compliance with any applicable blue sky securities laws of any state
of the United States. Upon consummation of the proposed Exchange in accordance
with the terms of the Indenture, the Beneficial Interests issued will be subject
to the restrictions on transfer enumerated in the Private
C-2
<PAGE>
Placement Legend printed on the relevant Restricted Global Note and in the
Indenture and the Securities Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
--------------------------------------------
[Insert Name of Transferor]
By:
-----------------------------------------
Name:
Title:
Dated: ____________, ____
C-3
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Ames Department Stores, Inc.
2418 Main Street
Rocky Hill, CT 06067
Attention: David H. Lissy (Fax: 860-257-7806)
The Chase Manhattan Bank
73 Tremont Street
Boston, MA 02106
Attention: Corporate Trust Department
Re: 10% Senior Notes due 2006
Reference is hereby made to the Indenture, dated as of April
27, 1999 (the "Indenture"), among Ames Department Stores, Inc., as issuer (the
"Company"), the Guarantors named therein and The Chase Manhattan Bank, as
trustee. Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.
In connection with our proposed purchase of $____________
aggregate principal amount at maturity of:
(a) / / Beneficial Interests, or
(b) / / Definitive Notes,
we confirm that:
1. we are an "accredited investor" within the meaning of Rule 501(a)(1),
(2), (3) or (7) under the Securities Act of 1933, as amended (the
"Securities Act"), or an entity in which all of the equity owners are
accredited investors within the meaning of Rule (501)(a)(1), (2), (3)
or (7) under the Securities Act (an "institutional accredited
investor");
2. (A) any purchase of the Notes by us will be for our own account or for
the account of one or more other institutional accredited investors or
as fiduciary for the account of one or more trusts, each of which is an
"accredited investor" within the meaning of Rule 501(a)(7) under the
Securities Act and for each of which we exercise sole investment
discretion or (B) we are a "bank," within the meaning of Section
3(a)(2) of the Securities Act, or a "savings and loan association" or
other institution described in Section 3(a)(5)(A) of the Securities Act
that is acquiring Notes as fiduciary for the account of one or more
institutions for which we exercise sole investment discretion;
3. we have such knowledge and experience in financial and business matters
that we are capable of evaluating the merits and risks of purchasing
Notes;
D-1
<PAGE>
4. we are not acquiring the Notes with a view to any distribution thereof
in a transaction that would violate the Securities Act or the
securities laws of any state of the United States or any other
applicable jurisdictions, provided that the disposition of our property
and the property of any accounts for which we are acting as fiduciary
shall remain at all times within our control; and
5. we acknowledge that we have had access to such financial and other
information, and have been afforded the opportunity to ask such
questions of representatives of the Company and receive answers
thereto, as we deem necessary in connection with our decision to
purchase the Notes.
We understand that the Notes are being offered in a
transaction not involving any public offering within the United States within
the meaning of the Securities Act and that the Notes have not been registered
under the Securities Act. We agree on our own behalf and on behalf of any
investor account for which we are purchasing the Notes, to offer, sell or
otherwise transfer such Notes prior to (x) the date which is two years (or such
shorter period of time as permitted by Rule 144(k) under the Securities Act or
any successor provision thereunder) after the later of the date of the original
issue of the Notes and the last date on which Ames or any affiliate of Ames was
the owner of such Notes (or any predecessor thereto) or (y) such later date, if
any, as may be required by applicable law (the "Resale Restriction Termination
Date") only (a) to Ames, (b) pursuant to a registration statement which has been
declared effective under the Securities Act, (c) for so long as the Notes are
eligible for resale pursuant to Rule 144A, to a person we reasonably believe is
a QIB, that purchases for its own account or for the account of a QIB to whom
notice is given that the transfer is being made in reliance on Rule 144A, (d)
pursuant to offers and sales to non-U.S. persons that occur outside the United
States within the meaning of Regulation S under the Securities Act or (e)
pursuant to any other available exemption from the registration requirements of
the Securities Act, subject in each of the foregoing cases to any requirements
of law that the disposition of our property or the property of such investor
account or accounts be at all times within our control and in compliance with
any applicable state securities laws. We further agree to provide any person
purchasing any of the Notes other than pursuant to clause (b) above from us a
notice advising such purchaser that resales of such securities are restricted as
stated herein. We understand that the Trustee and the Registrar for the Notes
will not be required to accept for registration of transfer any Notes, except
upon presentation of evidence satisfactory to the Company that the foregoing
restrictions on transfer have been complied with.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK.
D-2
<PAGE>
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
-------------------------------------
[Insert Name of Accredited Investor]
By:
----------------------------------
Name:
Title:
Dated: ____________, ____
D-3
<PAGE>
EXHIBIT E
FORM OF SUBSIDIARY GUARANTEE
Subject to Section 10.05 of the Indenture, each Guarantor hereby,
jointly and severally, unconditionally guarantees on a senior basis to each
Holder of a Note authenticated and delivered by the Trustee and to the Trustee
and its successors and assigns, the Notes and the Obligations of the Company
under the Notes or under the Indenture, that: (a) the principal of, premium, if
any, interest and Liquidated Damages, if any, on the Notes will be promptly paid
in full when due, subject to any applicable grace period, whether at maturity,
by acceleration, redemption or otherwise, and interest on overdue principal,
premium, if any, (to the extent permitted by law) interest on any interest, if
any, and Liquidated Damages, if any, on the Notes and all other payment
Obligations of the Company to the Holders or the Trustee under the Indenture or
under the Notes will be promptly paid in full and performed, all in accordance
with the terms thereof; and (b) in case of any extension of time of payment or
renewal of any Notes or any of such other payment Obligations, the same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, subject to any applicable grace period, whether at stated
maturity, by acceleration, redemption or otherwise. Failing payment when so due
of any amount so guaranteed or any performance so guaranteed for whatever
reason, the Guarantors will be jointly and severally obligated to pay the same
immediately.
The obligations of the Guarantors to the Holders and to the Trustee
pursuant to this Subsidiary Guarantee and the Indenture are expressly set forth
in Article 10 of the Indenture, and reference is hereby made to such Indenture
for the precise terms of this Subsidiary Guarantee. The terms of Article 10 of
the Indenture are incorporated herein by reference. This Subsidiary Guarantee is
subject to release as and to the extent provided in Section 10.04 of the
Indenture.
This is a continuing Guarantee and shall remain in full force and
effect and shall be binding upon each Guarantor and its respective successors
and assigns to the extent set forth in the Indenture until full and final
payment of all of the Company's Obligations under the Notes and the Indenture
and shall inure to the benefit of the successors and assigns of the Trustee and
the Holders and, in the event of any transfer or assignment of rights by any
Holder or the Trustee, the rights and privileges herein conferred upon that
party shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions hereof. This is a Guarantee of
payment and not a guarantee of collection.
Each Guarantor hereby waives diligence, presentment, demand of payment,
filing of claims with a court in the event of insolvency or bankruptcy of the
Company, any right to require a proceeding first against the Company, protest,
notice and all demands whatsoever and covenants that this Subsidiary Guarantee
will not be discharged except by complete performance of the Obligations
contained in the Notes and the Indenture.
This Subsidiary Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Note upon which this
Subsidiary Guarantee is noted shall have been executed by the Trustee under the
Indenture by the manual signature of one of its authorized officers.
E-1
<PAGE>
For purposes hereof, each Guarantor's liability shall be limited to the
lesser of (i) the aggregate amount of the Obligations of the Company under the
Notes and the Indenture and (ii) the maximum amount that will result in the
obligations of such Guarantor under its Subsidiary Guarantee not constituting a
fraudulent transfer or conveyance under applicable law of any relevant
jurisdiction.
Capitalized terms used herein have the same meanings given in the
Indenture unless otherwise indicated.
Dated: AMES REALTY II, INC.
By:
------------------------------------
Name:
Title:
AMES FS, INC.
By:
------------------------------------
Name:
Title:
AMES TRANSPORTATION SYSTEMS, INC.
By:
------------------------------------
Name:
Title:
AMD, INC.
By:
-----------------------------------
Name:
Title:
AMES MERCHANDISING CORPORATION
By:
----------------------------------
Name:
Title:
E-2
<PAGE>
EXHIBIT F
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
______________, ______ among Ames Department Stores, Inc., a Delaware
corporation (the "Company"), Ames Realty II, Inc., a Delaware corporation, Ames
FS, Inc., a Delaware corporation, Ames Transportation Systems, Inc., a Delaware
corporation, AMD, Inc., a Delaware corporation and Ames Merchandising
Corporation, a Delaware corporation (collectively, the "Guarantors") and The
Chase Manhattan Bank, as trustee under the indenture referred to below (the
"Trustee"). Capitalized terms used herein and not defined herein shall have the
meaning ascribed to them in the Indenture (as defined below).
W I T N E S S E T H
WHEREAS, the Company and the Guarantors have heretofore executed and
delivered to the Trustee an indenture (the "Indenture"), dated as of April 27,
1999, providing for the issuance of an aggregate principal amount of
$275,000,000 of 10% Senior Notes due 2006 (the "Notes");
WHEREAS, Section 4.13 and Article 10 of the Indenture provides that
under certain circumstances the Company may or must cause certain of its
Subsidiaries to execute and deliver to the Trustee a supplemental indenture
pursuant to which such Subsidiaries shall unconditionally guarantee all of the
Company's Obligations under the Notes pursuant to a Subsidiary Guarantee on the
terms and conditions set forth herein; and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Company, the New Guarantor and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
2. AGREEMENT TO GUARANTEE. The New Guarantor hereby agrees, jointly and
severally with all other Guarantors, to guarantee the Company's Obligations
under the Notes and the Indenture on the terms and subject to the conditions set
forth in Article 10 of the Indenture and to be bound by all other applicable
provisions of the Indenture.
3. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator, partner, member, shareholder or agent of any
Guarantor, as such, shall have any liability for any obligations of the Company
or any Guarantor under the Notes, any Subsidiary Guarantees, the Indenture or
this Supplemental Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder by accepting a Note
F-1
<PAGE>
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes.
4. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE.
5. COUNTERPARTS. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
6. EFFECT OF HEADINGS. The Section headings herein are for convenience
only and shall not affect the construction hereof.
7. THE TRUSTEE. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the correctness of the recitals of fact
contained herein, all of which recitals are made solely by the New Guarantor.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated: ______________, ______ [GUARANTEEING SUBSIDIARY]
By:
------------------------------------
Name:
Title:
AMES DEPARTMENT STORES, INC.
By:
------------------------------------
Name:
Title:
AMES REALTY II, INC.
By:
------------------------------------
Name:
Title:
AMES FS, INC.
By:
------------------------------------
Name:
Title:
AMES TRANSPORTATION SYSTEMS, INC.
By:
-----------------------------------
Name:
Title:
AMD, INC.
By:
----------------------------------
Name:
Title:
F-3
<PAGE>
AMES MERCHANDISING CORPORATION
By:
----------------------------------
Name:
Title:
Dated: ______________, ______ THE CHASE MANHATTAN BANK,
as Trustee
By:
----------------------------------
Name:
Title:
F-4
<PAGE>
June 30, 1999
Ames Department Stores, Inc.
Ames Realty II, Inc.
Ames FS, Inc.
Ames Transportation Systems, Inc.
AMD, Inc.
Ames Merchandising Corporation
2418 Main Street
Rocky Hill, CT 06067-2598
Ladies and Gentlemen:
We have acted as counsel to each of Ames Department Stores, Inc., a
Delaware corporation ("Ames"), and its subsidiaries, Ames Realty II, Inc., Ames
FS, Inc., Ames Transportation Systems, Inc., AMD, Inc. and Ames Merchandising
Corporation, each a Delaware corporation (collectively, the "Guarantors") in
connection with the filing with the Securities and Exchange Commission pursuant
to the Securities Act of 1933, as amended, of a Registration Statement on Form
S-4 with respect to $200,000,000 aggregate principal amount of Ames's 10% Senior
Notes due 2006 (the "Notes") to be issued under an Indenture, dated as of April
27, 1999 (the "Indenture"), by and among Ames, the Guarantors and The Chase
Manhattan Bank, as trustee (the "Trustee"). The Notes will be unconditionally
guaranteed on a senior basis by the Guarantors pursuant to a guarantee contained
in the Indenture (the "Guarantee").
In so acting, we have examined originals or copies, certified or otherwise
identified to our satisfaction, of the Registration Statement, the Indenture,
the Guarantee, the form of Note set forth in the Indenture, and such corporate
records, agreements, documents and other instruments, and such certificates or
comparable documents of public officials and of officers and representatives of
Ames and each of the several Guarantors, and have made such inquiries of those
officers and representatives as we have deemed relevant and necessary as a basis
forth the opinions hereinafter set forth.
In such examination, we have assumed the genuineness of all signatures, the
legal capacity of natural persons, the authenticity of all documents submitted
to us as
<PAGE>
Ames Department Stores, Inc.
Ames Realty II, Inc.
Ames FS, Inc.
Ames Transportation Systems, Inc.
AMD, Inc.
Ames Merchandising Corporation
June 30, 1999
Page 2
originals, the conformity to original documents of all documents submitted to us
as certified, conformed or photostatic copies and the authenticity of the
originals of such latter documents. As to all questions of fact material to this
opinion that have not been independently established, we have relied upon
certificates or comparable documents of officers and representatives of Ames and
each of the several Guarantors. In addition, we have assumed that the Notes will
be executed and delivered substantially in the form examined by us.
Based on the foregoing, and subject to the qualifications stated herein, we
are of the opinion that:
1. The Notes have been duly authorized and, when duly executed by Ames,
authenticated by the Trustee pursuant to the terms of the Indenture and
delivered in exchange for securities of like tenor and principal amount in
accordance with the terms of the Indenture and as contemplated by the
Registration Statement, will be validly issued and will constitute the legally
binding obligations of Ames entitled to the benefits of the Indenture,
enforceable against Ames in accordance with their terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and subject, as
to enforceability, to general principals of equity.
2. The Guarantee has been duly authorized by the Guarantors and, when
executed and appended to the Notes in accordance with the terms of the
Indenture, will constitute the legally binding obligation of each of the
Guarantors entitled to the benefits of the Indenture, enforceable against each
of the Guarantors in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and subject, as
to enforceability, to general principles of equity.
The opinions expressed herein are limited to the laws of the State of New
York and the corporate laws of the State of Delaware, and we express no opinion
as to the effect on the matters covered by this opinion of the laws of any other
jurisdiction.
<PAGE>
Ames Department Stores, Inc.
Ames Realty II, Inc.
Ames FS, Inc.
Ames Transportation Systems, Inc.
AMD, Inc.
Ames Merchandising Corporation
June 30, 1999
Page 3
We hereby consent to the filing of a copy of this opinion letter as an
exhibit to the Registration Statement. We also consent to any and all references
to our firm under the caption "Legal Matters" in the Prospectus that is part of
the Registration Statement.
Very truly yours,
WEIL, GOTSHAL & MANGES LLP
<PAGE>
Exhibit 12
AMES DEPARTMENT STORES, INC.
RATIO OF EARNINGS TO FIXED CHARGES
(Unaudited)
(Thousands, except ratio data)
<TABLE>
<CAPTION>
Fiscal Year Ended For the Quarter Ended
January 25, January 31, January 30, May 2, May 1,
1997 1998 1999 1998 1999
------------------------------------- ---------------------
<S> <C> <C> <C> <C> <C>
Income (loss) before income taxes 26,804 53,633 52,605 (4,627) (41,230)
Add:
Interest expense 19,043 11,600 15,253 2,054 11,922
Interest component of rental expense 16,541 18,409 21,121 4,757 8,578
------------------------------------- ---------------------
Earnings available for fixed charges 62,388 83,642 88,979 2,184 (20,730)
Fixed Charges:
Interest expense 19,043 11,600 15,253 2,054 11,922
Interest component of rental expense 16,541 18,409 21,121 4,757 8,578
------------------------------------- ---------------------
Total fixed charges 35,584 30,009 36,374 6,811 20,500
Ratio of earnings to fixed charges 1.8x 2.8x 2.4x NA NA
</TABLE>
For the purpose of calculating the ratio of earnings to fixed charges, earnings
consist of income before income taxes plus fixed charges (net of capitalized
interest). Fixed charges consist of interest expense on all indebtedness and
capitalized interest, amortized premiums, discounts and capitalized expenses
related to indebtedness, and one-third of rent expense on operating leases
representing that portion of rent expense deemed by us to be attributable to
interest. Earnings were inadequate to cover fixed charges for the quarters ended
May 2, 1998 and May 1, 1999. The amounts of additional earnings that would have
been required to cover fixed charges for such periods are $4.6 million and $41.2
million, respectively.
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated March 15, 1999
included in Ames Department Stores, Inc.'s Form 10-K for the year ended January
30, 1999 and to all references to our Firm included in this registration
statement.
Arthur Andersen LLP
New York, New York
June 25, 1999
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Ames Department Stores, Inc. on Form S-4 of our report dated March 11, 1998 on
Hills Stores Company and subsidiaries' consolidated financial statements
included in Ames Department Stores, Inc. Form 8-KA Amendment No. 1 dated
March 16, 1999. We also consent to the reference to us under the heading
"Experts" in this prospectus which is part of this Registration Statement.
Boston, Massachusetts
June 25, 1999
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
-------------------------------------------------------
DELAWARE AMES DEPARTMENT STORES, INC. 04-2269444
AND ITS GUARANTORS
DELAWARE AMD, INC. 06-1240252
DELAWARE AMES FS, INC. 06-1492785
DELAWARE AMES REALTY II, INC. 06-1255413
DELAWARE AMES MERCHANDISING CORPORATION 04-2398476
DELAWARE AMES TRANSPORTATION SYSTEMS, INC. 06-1073258
(Exact name of obligor as specified in its charter)
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
2418 MAIN STREET
ROCKY HILL, CONNECTICUT 06067
(Address of principal executive offices) (Zip Code)
-----------------------------------------
10% SENIOR NOTES DUE 2006
(Title of the indenture securities)
-----------------------------------------
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, State House, Albany,
New York 12110.
Board of Governors of the Federal Reserve System,
Washington, D.C., 20551
Federal Reserve Bank of New York, District No. 2,
33 Liberty Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor and Guarantors.
If the obligor or any Guarantor is an affiliate of the trustee,
describe each such affiliation.
None.
- 2 -
<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to
Form T-1 filed in connection with Registration Statement No. 333-76439, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 21st day of June, 1999.
THE CHASE MANHATTAN BANK
By /s/ T.J. Foley
---------------------------
T.J. Foley
Vice President
- 3 -
<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business March 31, 1999, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
DOLLAR AMOUNTS
ASSETS IN MILLIONS
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ..................................... $ 15,364
Interest-bearing balances ............................. 3,811
Securities:
Held to maturity securities ................................ 1,084
Available for sale securities .............................. 49,894
Federal funds sold and securities purchased under
agreements to resell .................................. 27,638
Loans and lease financing receivables:
Loans and leases, net of unearned income .............. $131,839
Less: Allowance for loan and lease losses ............. 2,642
Less: Allocated transfer risk reserve ................. 0
--------
Loans and leases, net of unearned income,
allowance, and reserve ................................ 129,197
Trading Assets ............................................. 45,483
Premises and fixed assets (including capitalized
leases) ............................................... 3,124
Other real estate owned .................................... 242
Investments in unconsolidated subsidiaries and
associated companies .................................. 171
Customers' liability to this bank on acceptances
outstanding ........................................... 974
Intangible assets .......................................... 2,017
Other assets ............................................... 12,477
--------
TOTAL ASSETS ............................................... $291,476
========
- 4 -
<PAGE>
LIABILITIES
Deposits
In domestic offices ................................... $ 102,273
Noninterest-bearing ................................... $ 39,135
Interest-bearing ...................................... 63,138
---------
In foreign offices, Edge and Agreement,
subsidiaries and IBF's ................................ 74,586
Noninterest-bearing ................................... $ 4,221
Interest-bearing ...................................... 70,365
Federal funds purchased and securities sold under
agreements to repurchase .............................. 41,039
Demand notes issued to the U.S. Treasury ................... 1,000
Trading liabilities ........................................ 32,929
Other borrowed money (includes mortgage indebtedness and
obligations under capitalized leases):
With a remaining maturity of one year or less ............ 4,353
With a remaining maturity of more than one year
through three years ................................... 14
With a remaining maturity of more than three years ....... 92
Bank's liability on acceptances executed and outstanding ... 974
Subordinated notes and debentures .......................... 5,427
Other liabilities .......................................... 9,684
TOTAL LIABILITIES .......................................... 272,371
---------
EQUITY CAPITAL
Perpetual preferred stock and related surplus .............. 0
Common stock ............................................... 1,211
Surplus (exclude all surplus related to preferred stock) ... 11,016
Undivided profits and capital reserves ..................... 7,040
Net unrealized holding gains (losses)
on available-for-sale securities ........................... (179)
Accumulated net gains (losses) on cash flow hedges ......... 0
Cumulative foreign currency translation adjustments ........ 17
TOTAL EQUITY CAPITAL ....................................... 19,105
---------
TOTAL LIABILITIES AND EQUITY CAPITAL ....................... $ 291,476
=========
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR.)
-5-
<PAGE>
LETTER OF TRANSMITTAL
AMES DEPARTMENT STORES, INC.
OFFER TO EXCHANGE ITS 10% SENIOR NOTES DUE 2006, WHICH ARE FULLY AND
UNCONDITIONALLY GUARANTEED BY AMES REALTY II, INC., AMES FS, INC., AMES
TRANSPORTATION SYSTEMS, INC., AMD, INC. AND AMES MERCHANDISING
CORPORATION AND HAVE BEEN REGISTERED UNDER THE SECURITIES ACT, FOR
ITS 10% SENIOR NOTES DUE 2006, WHICH ARE FULLY AND UNCONDITIONALLY
GUARANTEED BY AMES REALTY II, INC., AMES FS, INC., AMES
TRANSPORTATION SYSTEMS, INC., AMD, INC. AND AMES
MERCHANDISING CORPORATION AND HAVE NOT
BEEN SO REGISTERED.
PURSUANT TO THE PROSPECTUS, DATED , 1999
- -------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 1999,
UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN PRIOR TO
5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
- -------------------------------------------------------------------------------
THE CHASE MANHATTAN BANK, Exchange Agent
<TABLE>
<S> <C> <C>
By Mail or Overnight Courier: By Hand Delivery: By Facsimile:
The Chase Manhattan Bank The Chase Manhattan Bank (617) 557-6551
Attention: Mary Lou Bessey Attention: Mary Lou Bessey
c/o Chase National Corporate Services, Inc. c/o Chase National Corporate Services, Inc. Confirm by Telephone:
Corporate Trust Department Corporate Trust Department (617) 557-6553
73 Tremont Street 73 Tremont Street
Boston, Massachusetts 02106 Boston, Massachusetts 02106
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF INSTRUCTIONS BY ELIGIBLE INSTITUTIONS VIA FACSIMILE OTHER THAN
AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
The undersigned acknowledges receipt of the Prospectus, dated 1999
(the "Prospectus"), of Ames Department Stores, Inc., a Delaware corporation (the
"Company"), and this Letter of Transmittal (the "Letter"), which together
constitute our offer (the "Exchange Offer") to exchange an aggregate principal
amount at maturity of up to $200,000,000 of our new 10% Senior Notes due 2006
(the "Registered Notes") which have been registered under the Securities Act of
1933 for a like principal amount at maturity of our issued and outstanding 10%
Senior Notes due 2006 (the "Old Notes") which have not been so registered.
For each Old Note accepted for exchange, you will receive a Registered Note
having a principal amount at maturity equal to that of the surrendered Old Note.
Holders whose Old Notes are accepted for exchange will receive accrued interest
thereon to, but not including, the date of issuance of such Registered Notes,
such interest to be payable with the first interest payment on the Registered
Notes. Interest on the Registered Notes will accrue from their respective dates
of issuance. Holders of Old Notes accepted for exchange will be deemed to have
waived the right to receive any other payments or interest on the Old Notes. We
reserve the right, at any time or from time to time, to extend the Exchange
Offer at our discretion, in which event the term "Expiration Date" shall mean
the latest time and date to which the Exchange Offer is extended. We shall
notify the holders of the Old Notes of any extension by means of a press release
or other public announcement prior to 9:00 A.M., New York City time, on the next
business day after the previously scheduled Expiration Date.
A holder of Old Notes must complete this Letter (except those holders
delivering an Agent's Message in lieu thereof) either if certificates are to be
forwarded herewith or if a tender of certificates for Old Notes, if available,
is to be made by book-entry transfer to the account maintained by The Chase
Manhattan Bank (the "Exchange Agent") at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in "The
Exchange Offer--Book-Entry Transfer" section of the Prospectus. Holders of Old
Notes whose certificates are not immediately available, or who are unable to
deliver their certificates or confirmation of the book-entry tender of their Old
Notes into the Exchange Agent's account at the Book-Entry Transfer Facility (a
"Book-Entry Confirmation") and all other documents required by this Letter to
the Exchange Agent on or prior to the Expiration Date, must tender their Old
Notes according to the guaranteed delivery procedures set forth in "The Exchange
Offer--Procedures for Tendering--Guaranteed Delivery Procedures" section of the
Prospectus. See Instruction 1. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER
FACILITY DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
In lieu of delivering this Letter, an Agent's Message will constitute valid
delivery. The term "Agent's Message" means a message, transmitted by the
Book-Entry Transfer Facility and received by the Exchange Agent and forming a
part of a Book-Entry Confirmation, which states that the Book-Entry Transfer
Facility has received an express acknowledgement from a participant tendering
Old Notes that are the subject of such Book-Entry Confirmation that such
participant has received and agrees to be bound by this Letter and that we may
enforce such agreement against such participant.
The undersigned has completed the appropriate boxes below and signed this
Letter to indicate the action the undersigned desires to take with respect to
the Exchange Offer.
<PAGE>
List below the Old Notes to which this Letter relates. If the space
provided below is inadequate, the certificate numbers and principal amount at
maturity of Old Notes should be listed on a separate signed schedule affixed
hereto.
<TABLE>
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OLD NOTES 1 2 3
- -----------------------------------------------------------------------------------------------------------------------------------
Aggregate
Name(s) and Address(es) of Registered Holder(s) Principal Amount Principal Amount
(Please fill in, if blank) Certificate at Maturity at Maturity
Number(s)* of Old Note(s) Tendered**
- -----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
Total
- -----------------------------------------------------------------------------------------------------------------------------------
* Need not be completed if Old Notes are being tendered by
book-entry transfer.
** Unless otherwise indicated in this column, a holder will
be deemed to have tendered ALL of the Old Notes
represented by the Old Notes indicated in column 2. See
Instruction 2. Old Notes tendered hereby must be in
denominations of principal amount of $1,000 and any
integral multiple thereof. See Instruction 1.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution ____________________________________________
Account Number ___________________________________________________________
Transaction Code Number __________________________________________________
/ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s) __________________________________________
Window Ticket No. (if any) _______________________________________________
Date of Execution of Notice of Guaranteed Delivery _______________________
Name of Institution which Guaranteed Delivery ____________________________
If delivered by Book-Entry Transfer, complete the following:
Account Number ___________________________________________________________
Transaction Code Number __________________________________________________
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name _____________________________________________________________________
Address __________________________________________________________________
2
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
1. Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the aggregate principal amount of Old
Notes indicated above. Subject to, and effective upon, the acceptance for
exchange of the Old Notes tendered hereby, the undersigned hereby sells, assigns
and transfers to, or upon the order of, the Company all right, title and
interest in and to such Old Notes as are being tendered hereby.
2. The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Old Notes
tendered hereby and that the Company will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim when the Old Notes are accepted by the Company.
The undersigned hereby further represents that: (i) any Registered Notes
acquired in exchange for Old Notes tendered hereby will have been acquired in
the ordinary course of business of the person receiving such Registered Notes,
whether or not such person is the undersigned, (ii) that neither the holder of
such Old Notes nor any such other person is engaging in or intends to engage in
a distribution of such Registered Notes, (iii) that neither the holder of such
Old Notes nor any such other person has an arrangement or understanding with any
person to participate in the distribution of such Registered Notes and
(iv) that neither the holder of such Old Notes nor any such other person is an
"affiliate," as defined in Rule 405 under the Securities Act of 1933, as amended
(the "Securities Act"), of the Company.
3. The undersigned also acknowledges that the Exchange Offer is being made
in reliance on an interpretation by the staff of the Securities and Exchange
Commission (the "SEC") set forth in no-action letters issued to third parties,
that the Registered Notes issued in exchange for the Old Notes pursuant to the
Exchange Offer may be offered for resale, resold and otherwise transferred by
holders thereof (other than any such holder that is our "affiliate" within the
meaning of Rule 405 under the Securities Act), without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that (i) such Registered Notes are acquired in the ordinary course of such
holders' business, (ii) such holders are not engaging in and do not intend to
engage in the distribution of such Registered Notes and (iii) such holders have
no arrangements or understandings with any person to participate in the
distribution of such Registered Notes. If the undersigned is not a
broker-dealer, the undersigned represents that it is not engaged in, and does
not intend to engage in, a distribution of Registered Notes. If the undersigned
is a broker-dealer that will receive Registered Notes for its own account in
exchange for Old Notes that were acquired as a result of market-making
activities or other trading activities, it acknowledges that it will deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resales of such Registered Notes. However, by so acknowledging and by delivering
a prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
4. The undersigned may, if, and only if, it would not receive freely
tradeable Registered Notes in the Exchange Offer or is not eligible to
participate in the Exchange Offer, elect to have its Old Notes registered in the
shelf registration described in the Registration Rights Agreement, dated as of
April 27, 1999, among the Company and Lehman Brothers Inc. and NationsBanc
Montgomery Securities LLC (each an "Initial Purchaser") (the "Registration
Agreement") in the form filed as Exhibit 10.12 to the Registration Statement of
the Company, Registration No. 333- . Capitalized terms used in this
paragraph 4 and not otherwise defined herein shall have the meanings given them
in the Registration Agreement. Such election may be made by checking the box
under "Special Registration Instructions" below. By making such election, the
undersigned agrees, as a holder of Old Notes participating in a Shelf
Registration, to comply with the Registration Agreement and to indemnify and
hold harmless each Initial Purchaser and each person, if any, who controls any
Initial Purchaser within the meaning of either Section 15 of the Securities Act
or Section 20 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the Company, each director and officer of the Company and each
person, if any, who controls the Company within the meaning of either such
Section, from and against any losses, claims, damages and liabilities or any
actions in respect thereof, to which such Initial Purchaser or any controlling
person of such Initial Purchaser, and the Company or any of its directors,
officers or controlling persons may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities
or actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or
prospectus or in any amendment or supplement thereto or in any preliminary
prospectus relating to a Shelf Registration, or arise out of or are based upon
any omission or alleged omission to state therein a material fact
3
<PAGE>
necessary to make the statements therein (in the case of the prospectus, in
light of the circumstances under which they were made) not misleading, but in
each case only to the extent that the untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to us by or on behalf of the
undersigned specifically for inclusion therein; and shall reimburse us, as
incurred, for any legal or other expenses reasonably incurred by the Company or
any director, officer or controlling person thereof in connection with the
investigation or defending or preparing to defend against or appearing as a
third-party witness in connection with any loss, claim, damage, liability or
action in respect thereof. Any such indemnification shall be governed by the
terms and subject to the conditions set forth in the Registration Agreement,
including, without limitation, the provisions regarding notice, retention of
counsel, contribution and payment of expenses set forth therein. The above
summary of the indemnification provisions of the Registration Agreement is not
intended to be exhaustive and is qualified in its entirety by the Registration
Agreement.
5. The undersigned will, upon request, execute and deliver any additional
documents deemed by us to be necessary or desirable to complete the sale,
assignment and transfer of the Old Notes tendered hereby. All authority
conferred or agreed to be conferred in this Letter and every obligation of the
undersigned hereunder shall be binding upon the successors, assigns, heirs,
executors, administrators, trustees in bankruptcy and legal representatives of
the undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned. This tender may be withdrawn only in accordance
with the procedures set forth in "The Exchange Offer--Withdrawal Rights" section
of the Prospectus. See Instruction 9.
6. Unless otherwise indicated in the box entitled "Special Issuance
Instructions" below, please issue the Registered Notes (and, if applicable,
substitute certificates representing Old Notes for any Old Notes not exchanged)
in the name of the undersigned or, in the case of a book-entry delivery of Old
Notes, please credit the account indicated above maintained at the Book-Entry
Transfer Facility. Similarly, unless otherwise indicated under the box entitled
"Special Delivery Instructions" below, please send the Registered Notes (and, if
applicable, substitute certificates representing Old Notes for any Old Notes not
exchanged) to the undersigned at the address shown above in the box entitled
"Description of Old Notes."
4
<PAGE>
THE UNDERSIGNED ACKNOWLEDGES THAT THE EXCHANGE OFFER IS SUBJECT TO THE MORE
DETAILED TERMS SET FORTH IN THE PROSPECTUS AND, IN CASE OF ANY CONFLICT BETWEEN
THE TERMS OF THE PROSPECTUS AND THIS LETTER, THE PROSPECTUS SHALL PREVAIL.
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF OLD NOTES"
ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE OLD NOTES AS
SET FORTH IN SUCH BOX ABOVE.
<TABLE>
<S> <C>
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4) (SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY IF certificates for Old Notes To be completed ONLY IF certificates for Old Notes not
not exchanged and/or Registered Notes are to be issued in exchanged and/or Registered Notes are to be sent to
the name of someone other than the person or persons someone other than the person or persons whose
whose signature(s) appear(s) on this Letter below, or if signature(s) appear(s) on this Letter below or to such
Old Notes delivered by book-entry transfer which are not person or persons at an address other than shown in the
accepted for exchange are to be returned by credit to an box entitled "Description of Old Notes" on this Letter
account maintained at the Book-Entry Transfer Facility above.
other than the account indicated above.
Issue: / / Registered Notes and/or / / Old Notes to: Mail: / / Registered Notes and/or / / Old Notes to:
Name(s): ______________________________________________ Name(s): ______________________________________________
(Please Type or Print) (Please Type or Print)
_______________________________________________________ _______________________________________________________
(Please Type or Print) (Please Type or Print)
Address: ______________________________________________ Address: ______________________________________________
_______________________________________________________ _______________________________________________________
(ZIP CODE) (ZIP CODE)
(COMPLETE SUBSTITUTE FORM W-9)
/ / Credit unexchanged Old Notes delivered by
book-entry transfer to the Book-Entry
Transfer Facility account set forth below:
_______________________________________________________
(BOOK-ENTRY TRANSFER FACILITY
ACCOUNT NUMBER, IF APPLICABLE)
</TABLE>
5
<PAGE>
SPECIAL REGISTRATION INSTRUCTIONS
(SEE PARAGRAPH 4 ABOVE)
To be completed ONLY IF (i) the undersigned satisfies the conditions set forth
in paragraph 4 above, (ii) the undersigned elects to register its Old Notes in
the shelf registration described in the Registration Agreement, and (iii) the
undersigned agrees to comply with the Registration Agreement and to indemnify
certain entities and individuals as set forth in paragraph 4 above.
/ / By checking this box the undersigned hereby (i) represents that it is
entitled to have its Old Notes registered in a shelf registration in accordance
with the Registration Agreement, (ii) elects to have its Old Notes registered
pursuant to the shelf registration described in the Registration Agreement, and
(iii) agrees to comply with the Registration Agreement and to indemnify certain
entities and individuals identified in, and to the extent provided in, paragraph
4 above.
________________________________________________________________________________
IMPORTANT: THIS LETTER (OR AN AGENT'S MESSAGE IN LIEU THEREOF) OR A FACSIMILE
HEREOF (TOGETHER WITH THE CERTIFICATES FOR OLD NOTES OR A BOOK-ENTRY
CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED
DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK
CITY TIME, ON THE EXPIRATION DATE.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.
________________________________________________________________________________
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
X______________________________________________________________ _________1999
X______________________________________________________________ _________1999
X______________________________________________________________ _________1999
Signature(s) of Owner Date
Area Code and Telephone Number ________________________________________________
If a holder is tendering any Old Notes, this Letter must be signed by the
registered holder(s) exactly as the name(s) appear(s) on the certificate(s) for
the Old Notes or, if tendered by a participant in the Book-Entry Transfer
Facility, exactly as such name appears on a security position listing as the
owner of the Old Notes, or by any person(s) authorized to become registered
holder(s) by endorsements and documents transmitted herewith. If signature is by
a trustee, executor, administrator, guardian, officer or other person acting in
a fiduciary or representative capacity, please set forth full title. See
Instruction 3.
Name(s): _______________________________________________________________________
________________________________________________________________________________
(Please Type or Print)
Capacity: ______________________________________________________________________
Address: _______________________________________________________________________
________________________________________________________________________________
(Including Zip Code)
Employer Identification or Social Security Number_______________________________
(Please complete substitute
form W-9, If applicable. See
"Important Tax Information"
below)
SIGNATURE GUARANTEE
(IF REQUIRED BY INSTRUCTION 3)
Signature(s) Guaranteed by
an Eligible Institution: _______________________________________________________
(AUTHORIZED SIGNATURE)
________________________________________________________________________________
(TITLE)
________________________________________________________________________________
(NAME AND FIRM)
6
<PAGE>
INSTRUCTIONS
1. Delivery of This Letter and Notes; Guaranteed Delivery
Procedures. Holders of Old Notes must complete this Letter (except those
holders delivering an Agent's Message in lieu thereof) either if certificates
are to be forwarded herewith or if tenders are to be made pursuant to the
procedures for delivery by book-entry transfer set forth in "The Exchange
Offer--Book-Entry Transfer" section of the Prospectus. Certificates for all
physically tendered Old Notes, or Book-Entry Confirmation, as the case may be,
as well as a properly completed and duly executed Letter (or manually signed
facsimile thereof), with any required signature guarantees (unless an Agent's
Message is transmitted in lieu thereof), and any other documents required by
this Letter, must be received by the Exchange Agent at the address set forth
herein on or prior to the Expiration Date, or the tendering holder must comply
with the guaranteed delivery procedures set forth below. Old Notes tendered
hereby must be in denominations of principal amount at maturity of $1,000 or any
integral multiple thereof.
Noteholders whose certificates for Old Notes are not immediately available
or who cannot deliver their certificates and all other required documents to the
Exchange Agent on or prior to the Expiration Date, or who cannot complete the
procedure for book-entry transfer on a timely basis, may tender their Old Notes
pursuant to the guaranteed delivery procedures set forth in "The Exchange
Offer--Procedures for Tendering--Guaranteed Delivery Procedures" section of the
Prospectus. Pursuant to such procedures, (i) such tender must be made through an
Eligible Institution (as defined below); (ii) on or prior to 5:00 P.M., New York
City time, on the Expiration Date, the Exchange Agent must receive from such
Eligible Institution a properly completed and duly executed Letter (or a
facsimile thereof or an Agent's Message in lieu thereof) and Notice of
Guaranteed Delivery (or an Agent's Message with respect to guaranteed delivery
in lieu thereof), substantially in the form provided by us (by facsimile
transmission (if available to such holder), mail or hand delivery). The Notice
of Guaranteed Delivery must set forth the name and address of the holder of Old
Notes and the amount of Old Notes tendered, state that the tender is being made
thereby and guarantee that within three New York Stock Exchange ("NYSE") trading
days after the date of execution of the Notice of Guaranteed Delivery, the
certificates for all physically tendered Old Notes, in proper form for transfer,
or a Book-Entry Confirmation (including by means of an Agent's Message), as the
case may be, together with this Letter (or a facsimile hereof or an Agent's
Message in lieu thereof) and any other documents required by this Letter will be
deposited by the Eligible Institution with the Exchange Agent; and (iii) the
certificates for all physically tendered Old Notes, in proper form for transfer,
or Book-Entry Confirmation, as the case may be, and all other documents required
by this Letter, must be received by the Exchange Agent within three NYSE trading
days after the date of execution of the Notice of Guaranteed Delivery.
THE METHOD OF DELIVERY OF THIS LETTER, THE OLD NOTES AND ALL OTHER REQUIRED
DOCUMENTS IS AT THE ELECTION AND RISK OF THE TENDERING HOLDERS, BUT THE DELIVERY
WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED OR CONFIRMED BY THE EXCHANGE
AGENT. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIMES SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK
CITY TIME, ON THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD
BE SENT TO THE COMPANY.
See "The Exchange Offer" section in the Prospectus.
2. Partial Tenders. If less than all of the Old Notes evidenced by a
submitted certificate are to be tendered, the tendering holder(s) should fill in
the aggregate principal amount at maturity of Old Notes to be tendered in the
box above entitled "Description of Old Notes--Principal Amount at Maturity
Tendered." A reissued certificate representing the balance of nontendered Old
Notes of a tendering holder who physically delivered Old Notes will be sent to
such tendering holder, unless otherwise provided in the appropriate box on this
Letter, promptly after the Expiration Date. All of the Old Notes delivered to
the Exchange Agent will be deemed to have been tendered unless otherwise
indicated.
3. Signatures on This Letter; Bond Powers and Endorsements; Guarantee of
Signatures. If this Letter is signed by the registered holder of the Old Notes
tendered hereby, the signature must correspond exactly with the name as written
on the face of the certificates without any change whatsoever.
7
<PAGE>
If any tendered Old Notes are owned of record by two or more joint owners,
all such owners must sign this Letter.
If any tendered Old Notes are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
copies of this Letter as there are different registrations of certificates.
When this Letter is signed by the registered holder or holders of the Old
Notes specified herein and tendered hereby, no endorsements of certificates or
separate bond powers are required. If, however, the Registered Notes are to be
issued, or any untendered Old Notes are to be reissued, to a person other than
the registered holder, then endorsements of any certificates transmitted hereby
or separate bond powers are required. Signatures on such certificate(s) or bond
powers must be guaranteed by an Eligible Institution.
If this Letter is signed by a person other than the registered holder or
holders of any certificate(s) specified herein, such certificates must be
endorsed or accompanied by appropriate bond powers, in either case signed
exactly as the name or names of the registered holder or holders appear(s) on
the certificate(s) and signatures on such certificate(s) or bond powers must be
guaranteed by an Eligible Institution.
If this Letter or any certificates or bond powers are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing. Unless we waive the condition, in such
an instance you must submit with this Letter evidence satisfactory to us of
their authority to so act.
Endorsements on certificates for Old Notes or signatures on bond powers
required by this Instruction 3 must be guaranteed by a financial institution
(including most banks, savings and loan associations and brokerage houses) that
is a participant in the Securities Transfer Agents Medallion Program, the New
York Stock Exchange Medallion Program or the Stock Exchanges Medallion Program
(each an "Eligible Institution" and collectively, "Eligible Institutions").
Signatures on the Letter need not be guaranteed by an Eligible Institution
if (A) the Old Notes are tendered (i) by a registered holder of Old Notes (which
term, for purposes of the Exchange Offer, includes any participant in the
Book-Entry Transfer Facility system whose name appears on a security position
listing as the holder of such Old Notes) who has not completed the box entitled
"Special Issuance Instructions" or "Special Delivery Instructions" on this
Letter, or (ii) for the account of an Eligible Institution and (B) the box
entitled "Special Registration Instructions" on this Letter has not been
completed.
4. Special Issuance and Delivery Instructions. Tendering holders of Old
Notes should indicate in the applicable box the name and address to which
Registered Notes issued pursuant to the Exchange Offer and/or substitute
certificates evidencing Old Notes not exchanged are to be issued or sent, if
different from the name or address of the person signing this Letter. In the
case of issuance in a different name, the employer identification or social
security number of the person named must also be indicated. Noteholders
tendering Old Notes by book-entry transfer may request that Old Notes not
exchanged be credited to such account maintained at the Book-Entry Transfer
Facility as such noteholder may designate hereon. If no such instructions are
given, such Old Notes not exchanged will be returned to the name and address of
the person signing this Letter.
5. Transfer Taxes. We will pay all transfer taxes, if any, applicable to
the transfer of Old Notes to us or our order pursuant to the Exchange Offer. If,
however, Registered Notes and/or substitute Old Notes not exchanged are to be
delivered to, or are to be registered or issued in the name of, any person other
than the registered holder of the Old Notes tendered hereby, or if tendered Old
Notes are registered in the name of any person other than the person signing
this Letter, the amount of any such transfer taxes (whether imposed on the
registered holder or any other persons) will be payable by the tendering holder.
If satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted herewith, the amount of such transfer taxes will be billed directly to
such tendering holder.
Except as provided in this Instruction 5, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes specified in this Letter.
6. Waiver of Conditions. We reserve the absolute right to waive
satisfaction of any or all conditions enumerated in the Prospectus.
8
<PAGE>
7. No Conditional Tenders. We will not accept any alternative,
conditional, irregular or contingent tenders. All tendering holders of Old
Notes, by execution of this Letter, shall waive any right to receive notice of
the acceptance of their Old Notes for exchange.
Although we intend to notify holders of defects or irregularities with
respect to tenders of Old Notes, neither the Company, the Exchange Agent nor any
other person shall incur any liability for failure to give any such notice.
8. Mutilated, Lost, Stolen or Destroyed Old Notes. Any holder whose Old
Notes have been mutilated, lost, stolen or destroyed should contact the Exchange
Agent at the address indicated above for further instructions.
9. Withdrawal of Tenders. Tenders of Old Notes may be withdrawn at any
time prior to 5:00 P.M., New York City time, on the Expiration Date.
For a withdrawal of a tender of Old Notes to be effective, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth above prior to 5:00 P.M., New York City time, on
the Expiration Date. Any such notice of withdrawal must (i) specify the name of
the person having deposited the Old Notes to be withdrawn (the "Depositor"),
(ii) identify the Old Notes to be withdrawn (including the certificate number or
numbers and principal amount of such Old Notes), (iii) be signed by the holder
in the same manner as the original signature on this Letter by which such Old
Notes were tendered (including any required signature guarantees) or be
accompanied by documents of transfer sufficient to have the trustee under the
Indenture pursuant to which the Old Notes were issued register the transfer of
such Old Notes into the name of the person withdrawing the tender, and
(iv) specify the name in which any such Old Notes are to be registered, if
different from that of the Depositor. Any Old Notes so properly withdrawn will
be deemed not to have been validly tendered for exchange for purposes of the
Exchange Offer. Any Old Notes which have been tendered for exchange but which
are not exchanged for any reason will be returned to the holder thereof without
cost to such holder as soon as practicable after withdrawal, rejection of
tender, or termination of the Exchange Offer. Properly withdrawn Old Notes may
be retendered by following the procedures described above at any time on or
prior to 5:00 P.M., New York City time, on the Expiration Date.
We will determine all questions as to the validity, form, eligibility
(including time of receipt), acceptance and withdrawal of tendered Old Notes in
our sole discretion, and our determination will be final and binding on all
parties. We reserve the absolute right to reject any and all Old Notes not
properly tendered or any Old Notes our acceptance of which would, in the opinion
of our counsel, be unlawful. We also reserve the right to waive any defects,
irregularities, or conditions of tender as to particular Old Notes. Our
interpretation of the terms and conditions of the Exchange Offer (including the
instructions of this Letter) will be final and binding on all parties.
10. Requests for Assistance or Additional Copies. Questions relating to
the procedure for tendering, as well as requests for additional copies of the
Prospectus, this Letter and other related documents may be directed to the
Exchange Agent, at the address and telephone number indicated above.
9
<PAGE>
IMPORTANT TAX INFORMATION
Under current federal income tax law to prevent backup withholding on any
Registered Notes delivered pursuant to the Exchange Offer and any payments made
in respect of the Registered Notes, a holder of Registered Notes generally is
required to provide us (as payor) with such holder's correct taxpayer
identification number ("TIN") on Substitute Form W-9 or otherwise to establish a
basis for exemption from backup withholding. If a holder of Registered Notes is
an individual, the TIN is such holder's social security number. If a holder
required to do so fails to provide us with the correct taxpayer identification
number, the holder may be subject to a $50 penalty imposed by the Internal
Revenue Service. Accordingly, each prospective holder of Registered Notes to be
issued pursuant to Special Issuance Instructions should complete the attached
Substitute Form W-9. The Substitute Form W-9 need not be completed if the box
entitled Special Issuance Instructions has not been completed.
Certain holders of Registered Notes (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding and reporting requirements. Exempt prospective holders of Registered
Notes should indicate their exempt status on Substitute Form W-9. A foreign
individual may qualify as an exempt recipient by submitting to us, through the
Exchange Agent, a properly completed Internal Revenue Service Form W-8 (which
the Exchange Agent will provide upon request) signed under penalty of perjury,
attesting to the holder's exempt status. See the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
If backup withholding applies, we are required to withhold 31% of any
payment made to the holder of Registered Notes or other payee. Backup
withholding is not an additional federal income tax. Rather, the federal income
tax liability of persons subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on any Registered Notes delivered pursuant to
the Exchange Offer and any payments received in respect of the Registered Notes,
each prospective holder of Registered Notes to be issued pursuant to Special
Issuance Instructions should provide us, through the Exchange Agent, with
either: (i) such prospective holder's correct TIN by completing the form below,
certifying that the TIN provided on Substitute Form W-9 is correct (or that such
prospective holder is awaiting a TIN) and that (A) such prospective holder has
not been notified by the Internal Revenue Service that he or she is subject to
backup withholding as a result of a failure to report all interest or dividends
or (B) the Internal Revenue Service has notified such prospective holder that he
or she is no longer subject to backup withholding; or (ii) an adequate basis for
exemption.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
The prospective holder of Registered Notes to be issued pursuant to Special
Issuance Instructions is required to give the Exchange Agent the TIN (e.g.,
social security number or employer identification number) of the prospective
record owner of the Registered Notes. If the Registered Notes will be held in
more than one name or are not held in the name of the actual owner, consult the
enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 for additional guidance regarding which number to report.
10
<PAGE>
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
PAYOR'S NAME: THE CHASE MANHATTAN BANK
- ------------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND
FORM W-9 CERTIFY BY SIGNING AND DATING BELOW.
--------------------------------
DEPARTMENT OF THE TREASURY Social Security Number(s)
INTERNAL REVENUE SERVICE OR
--------------------------------
Employer Identification Number(s)
PAYOR'S REQUEST FOR --------------------------------------------------------------------------------------------------
TAXPAYER PART 2 -- CERTIFICATION-- Under penalties of perjury, I PART 3
IDENTIFICATION certify that: Awaiting TIN
NUMBER ("TIN") (1) The number shown on this form is my current taxpayer ------------------------
identification number (or I am waiting for a number to be
issued to me), and
(2) I am not subject to backup withholding because: (a) I am
an exempt holder, (b) I have not been notified by the
Internal Revenue Service (the "IRS") that I am subject
to backup withholding as a result of a failure to report
all interest or dividends, or (c) the IRS has notified
me that I am no longer subject to backup withholding.
--------------------------------------------------------------------------------------------------
CERTIFICATE INSTRUCTIONS -- You must cross out item (2) in Part 2 above if you have been
notified by the IRS that you are subject to backup withholding because of underreporting
interest or dividends on your tax return. However, if after being notified by the IRS that
you are subject to backup withholding you receive another notification from the IRS stating
that you are no longer subject to backup withholding, do not cross out such item (2).
- ------------------------------------------------------------------------------------------------------------------------------
SIGNATURE ________________________________________________ DATE ______________________________, 1999
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE BY A PROSPECTIVE HOLDER OF REGISTERED NOTES TO BE ISSUED PURSUANT
TO THE SPECIAL ISSUANCE INSTRUCTIONS ABOVE TO COMPLETE AND RETURN THIS
FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF THE REGISTERED NOTES
DELIVERED TO YOU PURSUANT TO THE EXCHANGE OFFER AND ANY PAYMENTS RECEIVED
BY YOU IN RESPECT OF THE REGISTERED NOTES. PLEASE REVIEW THE ENCLOSED
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATION IF YOU CHECKED
THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (b) I intend to mail
or deliver such an application in the near future. I understand that if I do not
provide a taxpayer identification number within sixty (60) days, 31% of all
reportable payments made to me thereafter will be withheld until I provide such
a number.
SIGNATURE ___________________________________ DATE ____________________, 1999
11
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF
10% SENIOR NOTES DUE 2006
(INCLUDING THOSE IN BOOK-ENTRY FORM)
OF
AMES DEPARTMENT STORES, INC.
This form or one substantially equivalent hereto must be used to accept the
Exchange Offer relating to the tender of 10% Senior Notes due 2006 (the "Old
Notes") of (the "Company") made pursuant to the Prospectus, dated
(the "Prospectus"), if certificates for Old Notes of the
Company are not immediately available or if the procedure for book-entry
transfer cannot be completed on a timely basis or time will not permit all
required documents to reach The Chase Manhattan Bank (the "Exchange Agent")
prior to 5:00 p.m., New York City time, on (the "Expiration
Date"). Such form may be delivered or transmitted by facsimile transmission (if
available to such holder), mail or hand delivery to the Exchange Agent as set
forth below. In addition, in order to utilize the guaranteed delivery procedure
to tender Old Notes pursuant to the Exchange Offer, the Exchange Agent must
receive from a financial institution (including most banks, savings and loan
associations and brokerage houses) that is a participant in the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Program or the Stock Exchanges Medallion Program (each an "Eligible
Institution") prior to 5:00 p.m., New York City time, on the Expiration Date, a
completed, signed and dated Letter of Transmittal relating to the Old Notes (or
facsimile thereof or an Agent's Message (as defined in the Letter of Transmittal
accompanying the Prospectus) in lieu thereof).
THE CHASE MANHATTAN BANK, Exchange Agent
<TABLE>
<S> <C> <C>
By Mail or Overnight Courier: By Hand Delivery: By Facsimile:
The Chase Manhattan Bank The Chase Manhattan Bank (617) 557-6551
Attention: Mary Lou Bessey Attention: Mary Lou Bessey
c/o Chase National Corporate c/o Chase National Corporate Confirm by Telephone:
Services, Inc. Services, Inc.
Corporate Trust Department Corporate Trust Department (617) 557-6553
73 Tremont Street 73 Tremont Street
Boston, Massachusetts 02106 Boston, Massachusetts 02106
</TABLE>
------------------------
DELIVERY OF THIS NOTICE TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF THIS NOTICE VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL
NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible Institution
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Ames Department Stores, Inc., a Delaware
corporation (the "Company"), in accordance with the Company's offer, upon the
terms and subject to the conditions set forth in the Prospectus dated
(the "Prospectus"), and in the accompanying Letter of
Transmittal, receipt of which is hereby acknowledged, $ in
aggregate principal amount of Old Notes pursuant to the guaranteed delivery
procedures described in the Prospectus.
Name(s) of Record Holder(s) ____________________________________________________
(Please Type or Print)
Address ________________________________________________________________________
________________________________________________________________________
Area Code & Telephone No._______________________________________________________
Certificate Number(s) for Old Notes (if available) _____________________________
Total Principal Amount Represented by Certificate(s): $_________________________
________________________________________________________________________________
ALL AUTHORITY HEREIN CONFERRED OR AGREED TO BE CONFERRED SHALL SURVIVE THE
DEATH OR INCAPACITY OF THE UNDERSIGNED AND EVERY OBLIGATION OF THE UNDERSIGNED
HEREUNDER SHALL BE BINDING UPON THE HEIRS, PERSONAL REPRESENTATIVES, SUCCESSORS
AND ASSIGNS OF THE UNDERSIGNED.
________________________________________________________________________________
PLEASE SIGN HERE
X _____________________________ ____________
X _____________________________ ____________
Signature(s) of Holder(s) Date
Must be signed by the holder(s) of Old Notes as their name(s) appear(s) on
certificates for Old Notes or on a security position listing, or by person(s)
authorized to become registered holder(s) by endorsement and documents
transmitted with this Notice of Guaranteed Delivery. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or other
person acting in a fiduciary or representative capacity, such person must set
forth his or her full title below.
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s): __________________________________________________________________
__________________________________________________________________
__________________________________________________________________
Capacity: __________________________________________________________________
Address(es): __________________________________________________________________
__________________________________________________________________
__________________________________________________________________
/ / The Depository Trust Company
(Check if Old Notes will be tendered by book-entry transfer)
Account Number _________________________________________________________________
THE GUARANTEE ON THE FOLLOWING PAGE MUST BE COMPLETED
2
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a financial institution (including most banks, savings and
loan associations and brokerage houses) that is a participant in the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Program or the Stock Exchanges Medallion Program, hereby guarantees
that the undersigned will deliver to the Exchange Agent the certificates
representing the Old Notes being tendered hereby, in proper form for transfer,
or confirmation of book-entry transfer of such Old Notes into the Exchange
Agent's account at The Depository Trust Company, in proper form for transfer,
together with the Letter of Transmittal (or a facsimile thereof or an Agent's
Message in lieu thereof) and any other documents required by the Letter of
Transmittal within three New York Stock Exchange trading days after the date of
execution hereof.
___________________________________ __________________________________
Name of Firm Authorized Signature
___________________________________ __________________________________
Address Title
___________________________________ Name: ____________________________
Zip Code (Please Type or Print)
___________________________________ Date: ____________________________
Area Code and Tel. No.
NOTE: DO NOT SEND CERTIFICATES OF OLD NOTES WITH THIS FORM. CERTIFICATES OF OLD
NOTES SHOULD BE SENT ONLY WITH A COPY OF THE PREVIOUSLY EXECUTED LETTER OF
TRANSMITTAL.
3
