<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM 10-Q/A
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended July 31, 1999
-------------
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
--------------------- ---------------------
Commission file number 1-8344
------
THE LIMITED, INC.
------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 31-1029810
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Three Limited Parkway, P.O. Box 16000, Columbus, OH 43216
---------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (614) 415-7000
-----------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $.50 Par Value Outstanding at March 24, 2000
- ---------------------------- -------------------------------
215,184,743 Shares
<PAGE>
THE LIMITED, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Information Regarding Filing of Form 10-Q/A 3
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Income
Thirteen and Twenty-six Weeks Ended
July 31, 1999 and August 1, 1998 ................... 4
Consolidated Balance Sheets
July 31, 1999, January 30, 1999 and August 1, 1998.. 5
Consolidated Statements of Cash Flows
Twenty-six Weeks Ended
July 31, 1999 and August 1, 1998 ................... 6
Notes to Consolidated Financial Statements .................. 7
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition ...... 14
Part II. Other Information
Item 1. Legal Proceedings ...................................... 25
Item 6. Exhibits and Reports on Form 8-K ....................... 26
</TABLE>
2
<PAGE>
INFORMATION REGARDING FILING OF FORM 10-Q/A
Change in Accounting for Gift Certificates, Store Credits and Layaway Sales
The Company sells gift certificates in exchange for cash and issues store
credits in exchange for the value of returned merchandise. These gift
certificates and store credits do not expire and both can be redeemed toward the
purchase of merchandise in the future. The Company also offers a layaway sales
program, which allows customers to make payments over a period of time toward
the purchase of merchandise.
As discussed in Note 2 to the Consolidated Financial Statements, the Company has
changed its accounting for gift certificates, store credits and layaway sales.
The Company had historically recognized net receipts/(redemptions) from gift
certificates and store credits as a reduction/(increase) to general,
administrative and store operating expenses. Layaway sales were recognized upon
receipt of the initial payment. The Company now defers the recognition of income
on these transactions until the merchandise is delivered to the customer.
The Company has given retroactive effect to this accounting change by restating
its previously issued financial statements, including the Consolidated
Statements of Operations for the thirteen and twenty-six weeks ended July 31,
1999 and August 1, 1998. In addition, the restatement resulted in changes to the
Consolidated Balance Sheets as of July 31, 1999, January 30, 1999 and August 1,
1998 and to Notes 6 and 8 to the Consolidated Financial Statements. Although the
restatement has no impact on the cash flows of the Company, certain
classifications within the Consolidated Statements of Cash Flows for the twenty-
six weeks ended July 31, 1999 and August 1, 1998 were adjusted to reflect the
restatement.
3
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
THE LIMITED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-six Weeks Ended
--------------------------------- -------------------------------
July 31, August 1, July 31, August 1,
1999 1998 1999 1998
--------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Net sales $2,267,821 $2,083,101 $4,372,619 $4,091,178
Costs of goods sold and buying and
occupancy costs (1,540,174) (1,473,517) (2,991,604) (2,899,939)
--------------- -------------- -------------- -------------
Gross income 727,647 609,584 1,381,015 1,191,239
General, administrative and store
operating expenses (587,371) (526,106) (1,150,409) (1,033,314)
Special & nonrecurring items, net (13,075) 1,651,397 (13,075) 1,740,030
--------------- -------------- -------------- -------------
Operating income 127,201 1,734,875 217,531 1,897,955
Interest expense (20,159) (16,414) (36,949) (32,155)
Other income 12,509 15,595 27,840 31,748
Minority interest (14,069) (12,988) (22,489) (21,821)
--------------- -------------- -------------- -------------
Income before income taxes 105,482 1,721,068 185,933 1,875,727
Provision for income taxes 48,000 33,000 83,000 98,000
--------------- -------------- -------------- -------------
Net income $57,482 $1,688,068 $102,933 $1,777,727
=============== ============== ============== =============
Net income per share:
Basic $0.26 $7.15 $0.46 $6.97
=============== ============== ============== =============
Diluted $0.24 $6.94 $0.43 $6.80
=============== ============== ============== =============
Dividends per share $0.15 $0.13 $0.30 $0.26
=============== ============== ============== =============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
THE LIMITED, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Thousands)
<TABLE>
<CAPTION>
July 31, January 30, August 1,
1999 1999 1998
------------- ------------- -------------
(Unaudited) (Unaudited)
ASSETS
------
Current assets:
<S> <C> <C> <C>
Cash and equivalents $490,322 $870,317 $498,862
Accounts receivable 72,824 77,715 81,131
Inventories 1,238,404 1,119,670 1,144,545
Store supplies 102,901 98,797 91,187
Other 157,138 140,380 92,818
------------- ------------- -------------
Total current assets 2,061,589 2,306,879 1,908,543
Property and equipment, net 1,400,539 1,361,761 1,375,489
Restricted cash - 351,600 351,600
Deferred income taxes 97,271 48,782 65,613
Other assets 468,297 480,686 454,896
------------- ------------- -------------
Total assets $4,027,696 $4,549,708 $4,156,141
============= ============= =============
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
<S> <C> <C> <C>
Accounts payable $305,780 $289,947 $264,864
Current portion of long-term debt 200,000 100,000 -
Accrued expenses 683,343 661,784 646,268
Income taxes 6,875 128,273 -
------------- ------------- -------------
Total current liabilities 1,195,998 1,180,004 911,132
Long-term debt 750,000 550,000 650,000
Other long-term liabilities 192,820 195,641 191,684
Minority interest 50,513 105,504 96,130
Contingent stock redemption agreement - 351,600 351,600
Shareholders' equity:
Common stock 189,727 180,352 180,352
Paid-in capital 164,588 157,214 151,002
Retained earnings 5,840,298 5,470,689 5,260,906
------------- ------------- -------------
6,194,613 5,808,255 5,592,260
Less: treasury stock, at average cost (4,356,248) (3,641,296) (3,636,665)
------------- ------------- -------------
Total shareholders' equity 1,838,365 2,166,959 1,955,595
------------- ------------- -------------
Total liabilities and shareholders' equity $4,027,696 $4,549,708 $4,156,141
============= ============= =============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
THE LIMITED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Twenty-six Weeks Ended
------------------------------------
July 31, August 1,
1999 1998
--------------- ---------------
<S> <C> <C>
Operating activities:
Net income $102,933 $1,777,727
Impact of other operating activities on cash flows:
Depreciation and amortization 143,751 144,362
Special and nonrecurring items, net 7,845 (1,705,030)
Minority interest, net of dividends paid 12,128 9,000
Changes in assets and liabilities:
Accounts receivable 4,891 1,288
Inventories (118,734) (178,542)
Accounts payable and accrued expenses 23,697 4,980
Income taxes (164,657) (138,405)
Other assets and liabilities 11,284 (50,569)
--------------- ---------------
Net cash provided from (used for) operating activities 23,138 (135,189)
--------------- ---------------
Investing activities:
Net proceeds (expenditures) related to Easton real estate (13,348) 7,756
investment
Capital expenditures (191,752) (122,932)
Decrease in restricted cash 351,600 --
Proceeds from sale of interest in investee -- 131,262
--------------- ---------------
Net cash provided from investing activities 146,500 16,086
--------------- ---------------
Financing activities:
Proceeds from floating rate notes 300,000 --
Repurchase of common stock, including transaction costs (751,482) --
Repurchase of subsidiary common stock (62,639) (47,485)
Dividends paid (66,401) (65,219)
Settlement of Abercrombie & Fitch intercompany account -- (47,649)
Stock options and other 30,889 31,923
--------------- ---------------
Net cash used for financing activities (549,633) (128,430)
--------------- ---------------
Net decrease in cash and equivalents (379,995) (247,533)
Cash and equivalents, beginning of year 870,317 746,395
--------------- ---------------
Cash and equivalents, end of period $490,322 $498,862
=============== ===============
</TABLE>
In 1998, noncash financing activities include the addition of $1.766 billion
treasury stock as a result of the exchange of 40.5 million common shares of
Abercrombie & Fitch ("A&F") previously owned by the Company for 47.1 million
shares of common stock of the Company. Additional noncash financing activities
include a $5.6 million dividend effected by a pro rata spin-off of the Company's
remaining shares of A&F (see Note 9).
The accompanying notes are an integral part of these consolidated financial
statements.
6
<PAGE>
THE LIMITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. Basis of Presentation
The consolidated financial statements include the accounts of The
Limited, Inc. (the "Company") and all significant subsidiaries which
are more than 50 percent owned and controlled. All significant
intercompany balances and transactions have been eliminated in
consolidation. The consolidated financial statements include the
results of Abercrombie & Fitch ("A&F") through May 19, 1998, when it
was established as an independent company.
Investments in other entities (including joint ventures) where the
Company has the ability to significantly influence operating and
financial policies are accounted for on the equity method.
Certain amounts on previously reported financial statement captions
have been reclassified to conform with current period presentation.
The consolidated financial statements as of and for the thirteen and
twenty-six week periods ended July 31, 1999 and August 1, 1998 are
unaudited and are presented pursuant to the rules and regulations of
the Securities and Exchange Commission. Accordingly, these consolidated
financial statements should be read in conjunction with the
consolidated financial statements and notes thereto contained in the
Company's 1998 Annual Report on Form 10-K, as amended. In the opinion
of management, the accompanying consolidated financial statements
reflect all adjustments (which are of a normal recurring nature except
as discussed in Note 9) necessary to present fairly the financial
position and results of operations and cash flows for the interim
periods, but are not necessarily indicative of the results of
operations for a full fiscal year.
The consolidated financial statements as of and for the thirteen and
twenty-six week periods ended July 31, 1999 and August 1, 1998 included
herein have been reviewed by the independent public accounting firm of
PricewaterhouseCoopers LLP and the report of such firm follows the
Notes to Consolidated Financial Statements.
2. Change in Accounting
The Company sells gift certificates in exchange for cash and issues
store credits in exchange for the value of returned merchandise. These
gift certificates and store credits do not expire and both can be
redeemed toward the purchase of merchandise in the future. The Company
also offers a layaway sales program, which allows customers to make
payments over a period of time toward the purchase of merchandise.
The Company has changed its accounting for gift certificates, store
credits and layaway sales. The Company had historically recognized net
receipts/(redemptions) from gift certificates and store credits as a
reduction/(increase) to general, administrative and store operating
expenses. Layaway sales were recognized upon receipt of the initial
payment. The Company now defers the recognition of income on these
transactions until the merchandise is delivered to the customer.
The Company has given retroactive effect to this accounting change by
restating its previously issued financial statements beginning with
fiscal 1996. The impact of the restatement on the Consolidated
Statements of Operations relates principally to gift certificates and
store credits. The impact for the thirteen and twenty-six weeks ended
July 31, 1999 and August 1, 1998 is as follows (in thousands, except
per share amounts):
<TABLE>
<CAPTION>
Thirteen Weeks Ended
------------------------------------------------------------------------------
July 31, 1999 August 1, 1998
---------------------------------- ----------------------------------
As Previously As As Previously As
Reported Restated Reported Restated
--------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
General, administrative and store
operating expenses $ (602,051) $ (587,371) $ (538,336) $ (526,106)
Operating income 118,601 127,201 1,727,775 1,734,875
Minority interest (13,586) (14,069) (12,618) (12,988)
Income before income taxes 97,365 105,482 1,714,338 1,721,068
Provision for income taxes 45,000 48,000 30,000 33,000
Net income $ 52,365 $ 57,482 $ 1,684,338 $ 1,688,068
=============== =============== =============== ===============
Basic earnings per share $ 0.24 $ 0.26 $ 7.13 $ 7.15
Diluted earnings per share $ 0.22 $ 0.24 $ 6.93 $ 6.94
<CAPTION>
Twenty-six Weeks Ended
------------------------------------------------------------------------------
July 31, 1999 August 1, 1998
---------------------------------- ----------------------------------
As Previously As As Previously As
Reported Restated Reported Restated
--------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
General, administrative and store
operating expenses $ (1,192,824) $ (1,150,409) $ (1,068,659) $ (1,033,314)
Operating income 188,031 217,531 1,872,755 1,897,955
Minority interest (21,011) (22,489) (20,541) (21,821)
Income before income taxes 157,911 185,933 1,851,807 1,875,727
Provision for income taxes 72,000 83,000 88,000 98,000
Net income $ 85,911 $ 102,933 $ 1,763,807 $ 1,777,727
=============== =============== =============== ===============
Basic earnings per share $ 0.38 $ 0.46 $ 6.92 $ 6.97
Diluted earnings per share $ 0.36 $ 0.43 $ 6.75 $ 6.80
</TABLE>
In addition, the restatement resulted in changes to the Consolidated
Balance Sheets as of July 31, 1999, January 30, 1999 and August 1, 1998.
Although the restatement has no impact on the cash flows of the Company,
certain classifications within the Consolidated Statements of Cash Flows
for the twenty-six weeks ended July 31, 1999 and August 1, 1998 were
adjusted to reflect the restatement.
In addition to the above, the Company reclassified certain distribution
costs related to Bath and Body Works from general, administrative and
store operating expense to buying and occupancy expense, consistent with
the Company's other businesses. Such amounts were $6.1 million and $5.1
million for the thirteen weeks ended July 31, 1999 and August 1, 1998
and $12.9 million and $10.1 million for the twenty-six weeks ended July
31, 1999 and August 1, 1998.
3. Shareholders' Equity and Earnings Per Share
On June 3, 1999, the Company completed an issuer tender offer by
purchasing 15 million shares of its common stock at $50 per share.
Additionally, on May 3, 1999, the Contingent Stock Redemption Agreement
("the Agreement") was rescinded, making the $351.6 million in
restricted cash available for general corporate purposes. This cash and
other available funds were used to purchase shares under the issuer
tender offer.
Weighted average common shares outstanding (thousands):
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-six Weeks Ended
---------------------------------- ----------------------------------
July 31, August 1, July 31, August 1,
1999 1998 1999 1998
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Common shares issued 379,454 379,454 379,454 379,454
Treasury shares (158,425) (143,322) (155,073) (124,469)
---------------- ---------------- ---------------- ----------------
Basic shares 221,029 236,132 224,381 254,985
Dilutive effect of stock options
and restricted shares 9,197 6,947 8,506 6,236
---------------- ---------------- ---------------- ----------------
Diluted shares 230,226 243,079 232,887 261,221
================ ================ ================ ================
</TABLE>
The computation of earnings per diluted share excludes options to
purchase 0.1 million shares of common stock that were outstanding at
quarter-end for 1999 and 1998, because the options' exercise price was
greater than the average market price of the common shares.
7
<PAGE>
4. Inventories
The fiscal year of the Company and its subsidiaries is comprised of two
principal selling seasons: Spring (the first and second quarters) and
Fall (the third and fourth quarters). Valuation of finished goods
inventories is based principally upon the lower of average cost or
market determined on a first-in, first-out basis, using the retail
method. Inventory valuation at the end of the first and third quarters
reflects adjustments for inventory markdowns and shrinkage estimates
for the total selling season.
5. Property and Equipment, Net
Property and equipment, net, consisted of (thousands):
<TABLE>
<CAPTION>
July 31, January 30, August 1,
1999 1999 1998
-------------- -------------- --------------
<S> <C> <C> <C>
Property and equipment, at cost $3,116,234 $3,014,084 $2,971,075
Accumulated depreciation and
amortization (1,715,695) (1,652,323) (1,595,586)
-------------- -------------- --------------
Property and equipment, net $1,400,539 $1,361,761 $1,375,489
============== ============== ==============
</TABLE>
6. Income Taxes
The provision for income taxes is based on the current estimate of the
annual effective tax rate. Income taxes paid during the twenty-six
weeks ended July 31, 1999 and August 1, 1998 approximated $252.9
million and $199.0 million. Income tax assets of $19.2 million were
included in other current assets at August 1, 1998.
The Internal Revenue Service (IRS) has assessed the Company for
additional taxes for the years 1992 to 1994 relating to the
undistributed earnings of foreign affiliates for which the Company has
provided deferred taxes. On September 7, 1999, the United States Tax
Court sustained the position of the IRS with respect to the 1992 tax
year. In connection with an appeal of the Tax Court judgment, the
Company plans to make a $50 million payment of taxes and interest that
will reduce deferred tax liabilities. If the position of the IRS on
this same issue is sustained for the 1993 and 1994 tax years, an
additional $56 million payment would be required that would further
reduce deferred tax liabilities. Management believes resolution of this
matter will not have a material adverse effect on the Company's results
of operations or financial condition.
7. Financing Arrangements
Unsecured long-term debt consisted of (thousands):
<TABLE>
<CAPTION>
July 31, January 30, August 1,
1999 1999 1998
-------------- -------------- --------------
<S> <C> <C> <C>
7 1/2% Debentures due March 2023 $250,000 $250,000 $250,000
7 4/5% notes due May 2002 150,000 150,000 150,000
9 1/8% notes due February 2001 150,000 150,000 150,000
8 7/8% notes due August 1999 100,000 100,000 100,000
Floating rate notes 300,000 - -
-------------- -------------- --------------
950,000 650,000 650,000
Less: current portion of long-term debt 200,000 100,000 -
-------------- -------------- --------------
$750,000 $550,000 $650,000
============== ============== ==============
</TABLE>
8
<PAGE>
In May, 1999, the Company issued $300 million of floating rate notes,
consisting of three individual series of $100 million each. The notes
are senior, unsecured obligations and are repayable as follows: $100
million due May 2000, $100 million due November 2000 and $100 million
due May 2001. Interest is based on LIBOR and is payable quarterly in
arrears. The Company, at its option, may redeem any series of notes (in
its entirety) on any interest payment date.
The Company maintains a $1 billion unsecured revolving credit agreement
(the "Agreement"), established on September 29,1997 (the "Effective
Date"). Borrowings outstanding under the Agreement are due September
28, 2002. However, the revolving term of the Agreement may be extended
an additional two years upon notification by the Company on the second
and fourth anniversaries of the Effective Date, subject to the approval
of the lending banks. The Agreement has several borrowing options,
including interest rates which are based on either the lender's "Base
Rate," as defined, LIBOR, CD-based options or at a rate submitted under
a bidding process. Facilities fees payable under the Agreement are
based on the Company's long-term credit ratings, and currently
approximate 0.1% of the committed amount per annum.
The Agreement contains covenants relating to the Company's working
capital, debt and net worth. No amounts were outstanding under the
Agreement at July 31, 1999.
The Agreement supports the Company's commercial paper program which is
used from time to time to fund working capital and other general
corporate requirements. No commercial paper was outstanding at July 31,
1999.
Up to $250 million of debt securities and warrants to purchase debt
securities may be issued under the Company's shelf registration
statement.
The Company periodically enters into interest rate swap agreements with
the intent to manage interest rate exposure. At July 31, 1999 the
Company has an interest rate swap position of $100 million notional
principal amount outstanding. This contract effectively changed the
Company's interest rate exposure on $100 million of variable rate debt
to a fixed rate of 8.09% through July 2000.
Interest paid during the twenty-six weeks ended July 31, 1999 and
August 1, 1998 approximated $34.0 million and $32.4 million.
8. Segment Information
The Company identifies operating segments based on a business'
operating characteristics. Reportable segments were determined based on
similar economic characteristics, the nature of products and services,
and the method of distribution. The apparel segment derives its
revenues from sales of women's, men's, and children's apparel. The
Intimate Brands segment derives its revenues from sales of women's
intimate and other apparel, and personal care products and accessories.
Sales outside the United States were immaterial.
The Company and Intimate Brands Inc. ("IBI") have entered into
intercompany agreements for services that include merchandise
purchases, capital expenditures, real estate management and leasing,
inbound and outbound transportation and corporate services. These
agreements specify that identifiable costs be passed through to IBI and
that other services-related costs be allocated in accordance with the
intercompany agreement. Costs are passed through and allocated to the
apparel businesses in a similar manner.
9
<PAGE>
Segment information for the thirteen weeks ended July 31, 1999 and August 1,
1998 follows (in thousands):
<TABLE>
<CAPTION>
Apparel Intimate Reconciling
1999 Businesses Brands Other (a) Items Total
- ---------------------------- ----------------- ---------------- ------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Net sales $1,164,568 $1,017,109 $86,144 - $2,267,821
Intersegment sales 129,547 - - $(129,547) (b) -
Operating income (loss) (10,680) 155,938 (4,982) (13,075) (c) 127,201
Total assets 1,277,476 1,166,083 1,760,503 (176,366) (e) 4,027,696
<CAPTION>
Apparel Intimate Reconciling
1998 Businesses Brands Other (a) Items Total
- ---------------------------- ----------------- ---------------- ------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Net sales $1,132,266 $874,708 $76,127 - $2,083,101
Intersegment sales 81,440 - - $(81,440) (b) -
Operating income (loss) (50,390) 128,817 5,051 1,651,397 (d) 1,734,875
Total assets 1,350,024 1,217,889 1,780,578 (192,350) (e) 4,156,141
</TABLE>
(a) Included in the "Other" category are Galyan's Trading Co., Henri Bendel,
A&F (through May 19, 1998), non-core real estate, and corporate, none of
which are significant operating segments.
(b) Represents intersegment sales elimination.
(c) 1999 special and nonrecurring item: a $13.1 million second quarter charge
for transaction costs related to the Limited Too spin-off, which relates to
the "Other" category.
(d) 1998 special and nonrecurring items: 1) a $1.651 billion second quarter
tax-free gain on the split-off of A&F; 2) a $93.7 million first quarter
gain from the sale of the Company's remaining interest in Brylane; and 3) a
$5.1 million first quarter charge for severance and other associate
termination costs related to the closing of Henri Bendel stores. These
special items relate to the "Other" category.
(e) Represents intersegment receivable/payable elimination.
10
<PAGE>
Segment information for the twenty-six weeks ended July 31, 1999 and August 1,
1998 follows (in thousands):
<TABLE>
<CAPTION>
Apparel Intimate Reconciling
1999 Businesses Brands Other (a) Items Total
- ---------------------------- ---------------- ---------------- ------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Net sales $2,322,844 $1,894,930 $154,845 - $4,372,619
Intersegment sales 235,864 - - $ (235,864) (b) -
Operating income (loss) (8,280) 250,632 (11,746) (13,075) (c) 217,531
<CAPTION>
Apparel Intimate Reconciling
1998 Businesses Brands Other (a) Items Total
- ---------------------------- ----------------- ---------------- ------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Net sales $2,187,567 $1,645,576 $258,035 - $4,091,178
Intersegment sales 178,161 - - $ (178,161) (b) -
Operating income (loss) (69,373) 209,835 17,463 1,740,030 (d) 1,897,955
</TABLE>
(a)-(d) See description under table on previous page.
9. Special and Nonrecurring Items
During the second quarter of 1999, the Company recognized a $13.1
million special and nonrecurring charge for transaction costs related
to the Limited Too spin-off (see Note 10).
On May 19, 1998, the Company completed a tax-free exchange offer to
establish A&F as an independent company. A total of 47.1 million shares
of the Company's common stock were exchanged at a ratio of .86 of a
share of A&F common stock for each Limited share tendered. In
connection with the exchange, the Company recorded a $1.651 billion
tax-free gain. This gain was measured based on the $43 5/8 per share
market value of the A&F common stock at the expiration date of the
exchange offer. In addition, on June 1, 1998 a $5.6 million dividend
was effected through a pro rata spin-off to shareholders of the
Company's remaining 3.1 million A&F shares. Limited shareholders of
record as of the close of trading on May 29, 1998 received .013673 of a
share of A&F for each Limited share owned at that time.
During the first quarter of 1998, the Company recognized a pretax gain
of $93.7 million from the sale of 2.57 million shares at $51 per share,
representing its remaining interest in Brylane, Inc. This gain was
partially offset by a $5.1 million pretax charge for severance and
other associate termination costs related to the closing of five of six
Henri Bendel stores. The severance charge was paid in 1998.
As a result of a plan adopted in connection with a 1997 review of the
Company's retail businesses and investments as well as implementation
of initiatives intended to promote and strengthen the Company's various
retail brands (including closing businesses, identification and
disposal of non-core assets and identification of store locations not
consistent with a particular brand), the Company recognized special and
nonrecurring charges of $276 million during the fourth quarter of 1997,
which included store closing and lease termination liabilities of $107
million, of which $32 million were paid in 1998 and $11 million of
which were paid in 1999, leaving a $64 million liability at July 31,
1999.
11
<PAGE>
The $64 million liability relates principally to future payments and
estimated settlement amounts for store closings and downsizings and
will continue until final payments to landlords are made, currently
scheduled through the year 2016. Unless settlements with landlords
occur before the end of such lease periods, completion will run the
full lease term. In determining the provision for lease obligations,
the Company considered the amount of time remaining on each store's
lease and estimated the amount necessary for either buying out the
lease or continuing rent payments through lease expiration.
No accruals related to these charges were reversed or recorded in
operating income during the first half of 1999 or fiscal year 1998.
10. Subsequent Events
Effective August 31, 1999, an affiliate of Freeman, Spogli & Co.
(together with Galyan's Trading Co. management) purchased a 60%
interest in Galyan's Trading Co., with the Company retaining a 40%
interest. In addition, the Company sold certain property for $59
million to a third party, which then leased the property to Galyan's
under operating leases. The Company received total cash proceeds from
these transactions of approximately $170 million, as well as
subordinated debt and warrants of $20 million from Galyan's.
On July 15, 1999, the Company's Board of Directors approved a formal
plan to spin-off Limited Too. The record date for the spin-off was
August 11, 1999, with The Limited, Inc. shareholders receiving one
share of Too, Inc. (successor company to Limited Too) common stock for
every seven shares of The Limited common stock held on that date. The
spin-off was completed on August 23, 1999. As part of the transaction,
the Company received a $50 million dividend from Too, Inc.
12
<PAGE>
Report of Independent Accountants
To the Audit Committee of
The Board of Directors of
The Limited, Inc.
We have reviewed the accompanying condensed consolidated balance sheets of The
Limited, Inc. and Subsidiaries (the "Company") as of July 31, 1999 and August 1,
1998, and the related condensed consolidated statements of income for each of
the thirteen and twenty-six week periods ended July 31, 1999 and August 1, 1998
and the condensed consolidated statements of cash flows for the twenty-six week
periods ended July 31, 1999 and August 1, 1998. These financial statements are
the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying condensed consolidated interim financial statements
for them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of January 30, 1999, and the
related consolidated statements of income, shareholders' equity, and cash flows
for the year then ended (not presented herein); and in our report dated February
23, 1999, except for the information in Note 2 as to which the date is February
16, 2000, we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet as of January 30, 1999, is fairly stated
in all material respects in relation to the consolidated balance sheet from
which it has been derived.
The condensed consolidated financial statements as of July 31, 1999 and August
1, 1998 and for each of the thirteen and twenty-six week periods ended July 31,
1999 and August 1, 1998 have been restated as described in Note 2.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Columbus, Ohio
September 8, 1999, except for the information in Note 2 as to which the date is
February 16, 2000.
13
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
CHANGE IN ACCOUNTING FOR GIFT CERTIFICATES, STORE CREDITS AND LAYAWAY SALES
The Company sells gift certificates in exchange for cash and issues store
credits in exchange for the value of returned merchandise. These gift
certificates and store credits do not expire and both can be redeemed toward the
purchase of merchandise in the future. The Company also offers a layaway sales
program, which allows customers to make payments over a period of time toward
the purchase of merchandise.
As discussed in Note 2 to the Consolidated Financial Statements, the Company has
changed its accounting for gift certificates, store credits and layaway sales.
The Company had historically recognized net receipts/(redemptions) from gift
certificates and store credits as a reduction/(increase) to general,
administrative and store operating expenses. Layaway sales were recognized upon
receipt of the initial payment. The Company now defers the recognition of income
on these transactions until the merchandise is delivered to the customer.
The Company has given retroactive effect to this accounting change by restating
its previously issued financial statements beginning with fiscal 1996.
The change in accounting results in a shift in the pattern of quarterly earnings
from the fourth quarter (when receipts exceed redemptions) to the first and
second quarters (when redemptions exceed receipts). Accordingly, net income for
the thirteen weeks ended July 31, 1999 and August 1, 1998 was increased from the
previously reported amounts by $5.1 million, or $0.02 per share, and $3.7
million, or $0.01 per share. Net income for the twenty-six weeks ended July 31,
1999 and August 1, 1998 was increased from the previously reported amounts by
$17.0 million, or $0.07 per share, and $13.9 million, or $0.05 per share.
RESULTS OF OPERATIONS
Net sales for the second quarter of 1999 increased 9% to $2.268 billion from
$2.083 billion in 1998. Operating income was $127.2 million in 1999 and $1.735
billion in 1998. Net income was $57.5 million in 1999 and $1.688 billion in
1998, and earnings per share was $0.24 in 1999 and $6.94 in 1998. In the second
quarter of 1999, the Company recognized a $13.1 million charge for transaction
costs related to the Limited Too spin-off. In the second quarter of 1998, the
Company recognized a $1.651 billion tax-free gain from the split-off of
Abercrombie & Fitch ("A&F"). See the "Special and Nonrecurring Items" and "Other
Data" sections that follow for further discussion of these items and their
impact on second quarter earnings.
Second quarter business highlights include the following:
. Intimate Brands, Inc. ("IBI"), led by strong performances at Victoria's
Secret Stores and Bath & Body Works, reported earnings per share of $0.35,
compared to $0.28 in 1998. These results have been adjusted for the 5%
stock dividend declared June 22, 1999. Operating income increased 21% and
net income increased 17%.
. Victoria's Secret Stores' sales increased 18% to $485.0 million, driven by
comparable store sales growth of 13%. Second quarter performance was driven
by a successful June semi-annual sale, the "never-out-of-stock" on basics
inventory program and three new product launches backed by national
television advertising.
. Bath & Body Works' sales increased 19% to $302.7 million, driven by a
comparable store sales increase of 9% and the net addition of 126 new
stores. The brand realized consistent performance in all product categories
with new introductions in fragrance, body care products, "Art Stuff" and
home fragrance.
. Express' comparable store sales increased 9%. Improved merchandise margins
and buying and occupancy expense leverage led to a significant improvement
in Express' operating income rate.
. The remaining apparel businesses continued their first quarter improvement.
Merchandise margins were up significantly and buying and occupancy expenses
were leveraged by strong sales growth and closing of low productivity
stores. Comparable store sales increases of 7% at Lerner, 9% at Lane
Bryant, and 8% at Limited Too, also contributed to the $39.7 million
improvement in operating income for the quarter.
. The Company completed its "Dutch Auction" tender offer on June 3, 1999, by
repurchasing 15,000,000 shares at $50 per share.
Net sales for the twenty-six weeks ended July 31, 1999 were $4.373 billion, an
increase of 7% from $4.091 billion in 1998. Operating income was $217.5 million
in 1999 and $1.898 billion in 1998. Net income was $102.9 million in 1999 and
$1.778 billion in 1998, and earnings per share was $0.43 in 1999 and $6.80 in
1998. In the first half of 1999, the Company recognized a $13.1 million charge
for transaction costs related to the Limited Too spin-off. In the first half of
1998, the Company recognized a $1.651 billion tax-free gain from the split-off
of A&F, a $93.7 million gain from the sale of the Company's remaining interest
in Brylane, Inc., and a $5.1 million charge for severance and other associate
termination costs at Henri Bendel. See the "Special and Nonrecurring Items" and
"Other Data" sections that follow for further discussion of these items and
their impact on year-to-date earnings.
14
<PAGE>
Financial Summary
- -----------------
The following summarized financial and statistical data compares the thirteen
week and twenty-six week periods ended July 31, 1999 to the comparable 1998
periods:
<TABLE>
<CAPTION>
Second Quarter Year - to - Date
------------------------------------------ -------------------------------------------
Change Change
From From
Prior Prior
1999 1998 Year 1999 1998 Year
---------- --------- ---------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net Sales (millions):
Express $302 $284 6% $604 $553 9%
Lerner New York 220 216 2% 456 418 9%
Lane Bryant 237 230 3% 460 441 4%
The Limited 166 169 (2%) 331 340 (3%)
Structure 139 131 6% 262 252 4%
Limited Too 87 75 16% 182 157 16%
Other (principally Mast) 14 27 N/M 28 27 N/M
---------- --------- ---------- --------- --------- -----------
Total apparel businesses $1,165 $1,132 3% $2,323 $2,188 6%
---------- --------- ---------- --------- --------- -----------
Victoria's Secret Stores $485 $413 18% $908 $775 17%
Victoria's Secret Catalogue 225 202 11% 419 401 4%
Bath & Body Works 303 254 19% 561 459 22%
Other 4 6 N/M 7 11 N/M
---------- --------- ---------- --------- --------- -----------
Total Intimate Brands $1,017 $875 16% $1,895 $1,646 15%
---------- --------- ---------- --------- --------- -----------
Henri Bendel 8 8 0% 17 20 (15%)
Galyan's Trading Co. 78 46 70% 138 81 70%
Abercrombie & Fitch (a) - 22 (100%) - 156 (100%)
---------- --------- ---------- --------- --------- -----------
Total net sales $2,268 $2,083 9% $4,373 $4,091 7%
========== ========= ========== ========= ========= ===========
Operating Income (millions):
Apparel businesses $(11) $(50) 78% $(8) $(69) 88%
Intimate Brands 156 129 21% 251 210 20%
Other (5) 5 (199%) (12) 17 (171%)
---------- --------- ---------- --------- --------- -----------
Sub-total 140 84 67% 231 158 46%
Special and nonrecurring items (13) (b) 1,651 (c) (101%) (13) (b) 1,740 (c) (101%)
---------- --------- ---------- --------- --------- -----------
Total operating income $127 $1,735 (93%) $218 $1,898 (89%)
========== ========= ========== ========= ========= ===========
</TABLE>
(a) The Abercrombie & Fitch business was split-off effective May 19, 1998 via a
tax-free exchange offer. Results up to this date are included in the
consolidated financial statements.
(b) 1999 special and nonrecurring item: a $13.1 million second quarter charge
for Limited Too spin-off transaction costs, which relates to the "Other"
category.
(c) 1998 special and nonrecurring items: 1) a $1.651 billion second quarter
tax-free gain on the split-off of A&F; 2) a $93.7 million first quarter
gain from the sale of the Company's remaining interest in Brylane; and 3) a
$5.1 million first quarter charge for severance and other associate
termination costs related to the closing of Henri Bendel stores. These
special items relate to the "Other" category.
N/M Not meaningful
15
<PAGE>
<TABLE>
<CAPTION>
Second Quarter Year - to - Date
-------------------------------------- ---------------------------------------
1999 1998 Change 1999 1998 Change
--------- ---------- ----------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in Comparable
Store Sales:
Express 9% 17% 12% 18%
Lerner New York 7% 13% 15% 11%
Lane Bryant 9% 8% 9% 7%
The Limited 10% 0% 7% (1%)
Structure 8% (14%) 6% (10%)
Limited Too 8% 20% 9% 21%
--------- ---------- --------- ----------
Total apparel businesses 9% 10% 10% 9%
--------- ---------- --------- ----------
Victoria's Secret Stores 13% 2% 13% 4%
Bath & Body Works 9% 3% 11% 1%
--------- ---------- --------- ----------
Total Intimate Brands 12% 2% 12% 3%
--------- ---------- --------- ----------
Henri Bendel 6% (10%) 7% (21%)
Galyan's Trading Co. 9% 6% 9% 2%
Abercrombie & Fitch (a) - N/M - 48%
--------- ---------- --------- ----------
Total other businesses 8% (3%) 9% 0%
--------- ---------- --------- ----------
Total comparable store sales
increase 10% 6% 11% 7%
========= ========== ========= ==========
Store Data:
Retail sales increase (decrease)
attributable to net new and remodeled
(closed) stores:
Apparel businesses (4%) (2%) (3%) (2%)
Intimate Brands 7% 9% 8% 9%
Retail sales per average selling square foot:
Apparel businesses $61 $54 13% $120 $104 15%
Intimate Brands $131 $121 8% $248 $227 9%
Retail sales per average store (thousands):
Apparel businesses $341 $303 13% $672 $585 15%
Intimate Brands $401 $375 7% $759 $703 8%
Average store size at end of quarter
(selling square feet):
Apparel businesses 5,600 5,606 0%
Intimate Brands 3,047 3,084 (1%)
Retail selling square feet at end of
quarter (thousands):
Apparel businesses 18,789 20,339 (8%)
Intimate Brands 6,048 5,549 9%
Number of Stores:
Beginning of period 5,358 5,599 5,382 5,640
Opened 59 59 143 123
Disposal of A&F (a) - (159) - (159)
Closed (59) (58) (167) (163)
========= ========== ========= ==========
End of period 5,358 5,441 5,358 5,441
========= ========== ========= ==========
</TABLE>
(a) The Abercrombie & Fitch business was split-off effective May 19, 1998 via a
tax-free exchange offer. Results up to this date are included in the
consolidated financial statements.
N/M Not meaningful
16
<PAGE>
<TABLE>
<CAPTION>
Number of Stores Selling Sq. Ft. (thousands)
----------------------------------------- -----------------------------------------
Change Change
July 31, Aug. 1, From July 31, Aug. 1, From
1999 1998 Prior Year 1999 1998 Prior Year
---------- ---------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Express 690 724 (34) 4,430 4,608 (178)
Lerner New York 625 687 (62) 4,831 5,289 (458)
Lane Bryant 699 770 (71) 3,398 3,719 (321)
The Limited 491 599 (108) 3,022 3,615 (593)
Structure 518 537 (19) 2,054 2,129 (75)
Limited Too 332 311 21 1,054 979 75
---------- ---------- ------------ ---------- ---------- ------------
Total apparel businesses 3,355 3,628 (273) 18,789 20,339 (1,550)
---------- ---------- ------------ ---------- ---------- ------------
Victoria's Secret Stores 859 799 60 3,810 3,595 215
Bath & Body Works 1,126 1,000 126 2,238 1,954 284
---------- ---------- ------------ ---------- ---------- ------------
Total Intimate Brands 1,985 1,799 186 6,048 5,549 499
---------- ---------- ------------ ---------- ---------- ------------
Henri Bendel 1 1 0 35 35 0
Galyan's Trading Co. 17 13 4 1,196 811 385
---------- ---------- ------------ ---------- ---------- ------------
Total stores and selling
square feet 5,358 5,441 (83) 26,068 26,734 (666)
========== ========== ============ ========== ========== ============
</TABLE>
Net Sales
- ---------
Net sales for the second quarter of 1999 increased 9% to $2.268 billion from
$2.083 billion in 1998, primarily due to a 10% comparable store sales increase.
At IBI, net sales for the second quarter of 1999 increased 16% to $1.017 billion
from $874.7 million in 1998, primarily due to a 12% comparable store sales
increase. The balance of the increase was due to the net addition of 186 new
stores and an increase in catalogue sales.
At the apparel businesses, net sales for the second quarter of 1999 increased 3%
to $1.165 billion from $1.132 billion in 1998. The overall 9% increase in
comparable store sales at the apparel businesses was partially offset by a net
closure of 273 stores. Each of the apparel businesses reported a comparable
store sales increase of between 7% and 10%.
Year-to-date net sales increased 7% to $4.373 billion from $4.091 billion in
1998. An 11% comparable store sales increase was partially offset by the loss of
A&F sales following the May 19, 1998 split-off, and by a net closure of 83
stores (primarily in the Apparel segment).
Gross Income
- ------------
The second quarter gross income rate (expressed as a percentage of sales)
increased to 32.1% in 1999 from 29.3% in 1998. The gross income rate increased
significantly at the apparel businesses, primarily due to an increase in
merchandise margin rate and positive buying and occupancy expense leverage. The
increased merchandise margin rate resulted from higher initial markups and
reduced markdowns. The positive buying and occupancy expense leverage resulted
from increased sales and the benefit of closed stores. IBI's gross income rate
increased to 38.7% from 37.8%, primarily due to a decrease in the buying and
occupancy rate, particularly at Victoria's Secret Stores.
The 1999 year-to-date gross income rate increased 2.5% to 31.6% in 1999 from
29.1% in 1998, attributable to positive buying and occupancy expense leverage
and an increase in merchandise margin rate at both the IBI and apparel
businesses.
17
<PAGE>
General, Administrative and Store Operating Expenses
- ----------------------------------------------------
The second quarter general, administrative and store operating expense rate
(expressed as a percentage of sales) increased to 25.9% in 1999 from 25.3% in
1998. The rate increased at IBI primarily due to relocation costs and higher
operating expenses associated with moving Victoria's Secret's beauty business to
New York City, as well as an increase in base infrastructure costs for the
beauty business. These factors were partially offset by improved expense
leverage from a 13% comparable store sales increase at Victoria's Secret Stores.
The rate also increased at the apparel businesses, primarily due to investment
in brand building activities, including merchandise process redesign.
The 1999 year-to-date general, administrative and store operating expense rate
increased to 26.3% from 25.3% in 1998. In addition to the reasons discussed
above, the rate increase was driven by a shift in the mix of IBI's net sales to
Bath & Body Works, which has higher general, administrative and store operating
expense rates due to significantly smaller stores.
Special and Nonrecurring Items
- ------------------------------
During the second quarter of 1999, the Company recognized a $13.1 million
special and nonrecurring charge for transaction costs related to the Limited Too
spin-off (see Note 10 to the Consolidated Financial Statements).
On May 19, 1998, the Company completed a tax-free exchange offer to establish
A&F as an independent company. A total of 47.1 million shares of the Company's
common stock were exchanged at a ratio of .86 of a share of A&F common stock for
each Limited share tendered. In connection with the exchange, the Company
recorded a $1.651 billion tax-free gain. This gain was measured based on the $43
5/8 per share market value of the A&F common stock at the expiration date of the
exchange offer. The remaining 3.1 million A&F shares were distributed through a
pro rata spin-off to Limited shareholders.
During the first quarter of 1998, the Company recognized a pretax gain of $93.7
million from the sale of 2.57 million shares at $51 per share, representing its
remaining interest in Brylane, Inc. This gain was partially offset by a $5.1
million pretax charge for severance and other associate termination costs
related to the closing of five of six Henri Bendel stores. The severance charge
was paid in 1998.
As a result of a plan adopted in connection with a 1997 review of the Company's
retail businesses and investments as well as implementation of initiatives
intended to promote and strengthen the Company's various retail brands
(including closing businesses, identification and disposal of non-core assets
and identification of store locations not consistent with a particular brand),
the Company recognized special and nonrecurring charges of $276 million during
the fourth quarter of 1997. These charges included store closing and lease
termination liabilities of $107 million, of which $32 million were paid in 1998
and $11 million of which have been paid in 1999, leaving a $64 million liability
at July 31, 1999.
The $64 million liability relates principally to future payments and estimated
settlement amounts for store closings and downsizings and will continue until
final payments to landlords are made, currently scheduled through the year 2016.
Unless settlements with landlords occur before the end of such lease periods,
completion will run the full lease term. In determining the provision for lease
obligations, the Company considered the amount of time remaining on each store's
lease and estimated the amount necessary for either buying out the lease or
continuing rent payments through lease expiration.
No accruals related to these charges were reversed or recorded in operating
income during the first half of 1999 or fiscal year 1998.
The $276 million charge also included $86 million of impairment charges, which
reduced depreciation by approximately $18 million in fiscal year 1998 and will
have a similar impact in fiscal year 1999.
18
<PAGE>
Operating Income
- ----------------
The second quarter operating income rate (expressed as a percentage of sales)
was 5.6% in 1999, including $(13.1) million, or (0.6)%, in special and
nonrecurring expense. The second quarter operating income rate was 83.3% in
1998, including $1.651 billion, or 79.3%, in special and nonrecurring income.
The improvement in the operating income rate other than the special and
nonrecurring items from 4.0% to 6.2% was driven by the gross income rate
increase of 2.8% more than offsetting the increase in general, administrative
and store operating expense rate of 0.6%.
Year-to-date, the improvement in the operating income rate other than the
special and nonrecurring items from 3.9% in 1998 to 5.3% in 1999 was driven by
the gross income rate increase of 2.5% more than offsetting the increase in
general, administrative and store operating expense rate of 1.0%.
Interest Expense
- ----------------
<TABLE>
<CAPTION>
Second Quarter Year-to-Date
------------------------ ------------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Average borrowings (millions) $1,025 $753 $914 $744
Average effective interest rate 7.87% 8.72% 8.08% 8.65%
</TABLE>
Compared to 1998, interest expense increased $3.7 million in the second quarter
and $4.8 million year-to-date. The increases were due primarily to increased
borrowings, partially offset by a lower average effective interest rate.
Other Income
- ------------
Compared to 1998, other income decreased $3.1 million in the second quarter and
$3.9 million in the year-to-date. The decreases were due to lower average
invested cash balances, principally due to the $750 million share repurchase,
and lower interest rates on those balances in 1999.
Other Data
- ----------
The Company recorded special items in 1999 and 1998 that impacted the
comparability of the Company's earnings per share data and are more fully
described in the "Special and Nonrecurring Items" section herein and Note 9 to
the Consolidated Financial Statements.
The information included in this section is not intended to be presented in
accordance with sec guidelines for pro forma financial information but is
provided to assist in investors' understanding of the Company's results of
operations.
Excluding special and nonrecurring items in both years, second quarter net
income increased 79% to $65.6 million from $36.7 million in 1998, and earnings
per share doubled to $0.28 from $0.15. For the twenty-six weeks ended July 31,
1999 and August 1, 1998, net income increased 53% to $111.0 million from $72.7
million in 1998 and earnings per share increased to $0.47 from $0.28. Special
and nonrecurring items were as follows:
. In 1999, a $13.1 million second quarter charge for transaction costs
related to the Limited Too spin-off to shareholders of record on August 11,
1999.
. In 1998, a $1.651 billion second quarter tax-free gain on the split-off of
A&F, a $93.7 million first quarter gain from the sale of the Company's
remaining interest in Brylane and a $5.1 million first quarter charge for
severance and other associate termination costs related to the closing of
Henri Bendel stores.
19
<PAGE>
FINANCIAL CONDITION
The Company's consolidated balance sheet as of July 31, 1999 provides evidence
of financial strength and flexibility. A more detailed discussion of liquidity,
capital resources and capital requirements follows.
Liquidity and Capital Resources
- -------------------------------
Cash provided from operating activities, commercial paper backed by funds
available under the committed long-term credit agreement and the Company's
capital structure continue to provide the capital resources to support
operations, including projected growth, seasonal requirements and capital
expenditures. A summary of the Company's working capital position and
capitalization follows (thousands):
July 31, January 30, August 1,
1999 1999 1998
---------- ---------- ----------
Working capital $ 865,591 $1,126,875 $ 997,411
========== ========== ==========
Capitalization:
Long-term debt $ 750,000 $ 550,000 $ 650,000
Shareholders' equity 1,838,365 2,166,959 1,955,595
---------- ---------- ----------
Total capitalization $2,588,365 $2,716,959 $2,605,595
========== ========== ==========
Additional amounts available under
long-term credit agreements $1,000,000 $1,000,000 $1,000,000
========== ========== ==========
In addition, the Company may offer up to $250 million of debt securities and
warrants to purchase debt securities under its shelf registration statement.
Net cash provided from operating activities was $23.1 million for the twenty-six
weeks ended July 31, 1999 versus $135.2 million used for operating activities
last year. Significant uses of cash in both years relate to the growth of
inventories for the Fall selling seasons and the timing of tax payments related
to the fourth quarter of the prior year.
Investing activities in 1999 and 1998 included capital expenditures, primarily
for new and remodeled stores, and in 1999, the rescission of the Contingent
Stock Redemption Agreement. In 1998, investing activities included proceeds from
the sale of the Company's remaining investment in Brylane, Inc.
Financing activities in 1999 included $300 million proceeds from floating rate
notes issued in May 1999. Additionally, the rescission of the Contingent Stock
Redemption Agreement made $351.6 million in restricted cash available for
general corporate purposes. This cash and other available funds were used to
repurchase shares under the self-tender, which was funded June 14, 1999. A total
of 15 million shares of the Company's common stock were repurchased at $50 per
share, resulting in a cash outflow of $750 million. Cash used for financing
activities in 1999 also reflected the IBI stock repurchase initiated during
January 1999. During 1999, IBI repurchased 1.6 million shares from its public
shareholders for $62.6 million. Additionally, IBI repurchased 8.6 million shares
from The Limited at the same weighted average per share price, which had no net
cash flow impact to The Limited. Financing activities also reflected an increase
in the quarterly dividend from $0.13 per share to $0.15 per share, which was
offset by a lower number of outstanding shares.
20
<PAGE>
Future Cash Flows
- -----------------
Effective August 31, 1999, an affiliate of Freeman, Spogli & Co. (together with
Galyan's Trading Co. management) purchased a 60% interest in Galyan's Trading
Co., with the Company retaining a 40% interest. In addition, the Company sold
certain property for $59 million to a third party, which then leased the
property to Galyan's under operating leases. The Company received total cash
proceeds from these transactions of approximately $170 million, as well as
subordinated debt and warrants of $20 million from Galyan's.
Capital Expenditures
- --------------------
Capital expenditures totaled $191.8 million for the twenty-six weeks ended July
31, 1999, compared to $122.9 million for the same period in 1998. The Company
anticipates spending $400 to $420 million for capital expenditures in 1999, of
which $300 to $320 million will be for new stores and for remodeling of and
improvements to existing stores. These amounts include capital expenditures
related to Galyan's and Limited Too prior to their divestiture.
The Company expects that 1999 capital expenditures will be funded primarily by
net cash provided by operating activities.
21
<PAGE>
INFORMATION SYSTEMS AND "YEAR 2000" COMPLIANCE
The Year 2000 issue arises primarily from computer programs, commercial systems
and embedded chips that will be unable to properly interpret dates beyond the
year 1999. The Company utilizes a variety of proprietary and third party
computer technologies - both hardware and software - directly in its businesses.
The Company also relies on numerous third parties and their systems' ability to
address the Year 2000 issue. The Company's critical information technology (IT)
functions include point-of-sale equipment, merchandise distribution, merchandise
and non-merchandise procurement, credit card and banking services,
transportation, and business and accounting management systems. The Company is
using both internal and external resources to complete its Year 2000
initiatives.
Readiness
- ---------
In order to address the Year 2000 issue, the Company established a program
management office to oversee, monitor and coordinate the company-wide Year 2000
effort. This office has developed and is implementing a Year 2000 plan. The
implementation includes five stages:
. awareness, which includes identifying risks and conducting an education
program regarding Year 2000 issues
. assessment, which primarily includes establishing project resources,
developing a Year 2000 renovation strategy, completing a company-wide
inventory of information technology and determining the necessary training
and testing facility requirements
. renovation/development, which includes the analysis of existing information
systems, the design of remediation activities and the coding of necessary
remedies
. validation, which primarily includes system testing
. implementation, which includes the placement of renovated systems "in
production" and training end users
There are four areas of focus:
. Renovation of legacy systems. The Company's twelve operating businesses
have completed all five stages of Year 2000 implementation for renovation
of legacy systems.
. Installation of new software packages to replace selected legacy systems at
five of the Company's twelve operating businesses. Replacement of
significant legacy systems with new software packages is complete.
. Assessment of Year 2000 readiness at key vendors and suppliers. A vast
network of vendors, suppliers and service providers located both within and
outside the United States provide the Company with merchandise for resale,
supplies for operational purposes and services. The Company has identified
key vendors, suppliers and service providers, and is making efforts to
determine their Year 2000 status. As a result, the Company obtained
completed Year 2000 surveys from approximately 360 of its third-party
vendors to determine an estimated compliance date. Of the 360 third-party
vendors surveyed, approximately half have indicated that they are Year 2000
compliant. The majority of the remaining vendors have indicated they will
be compliant prior to year-end. Based upon the results of the surveys, the
Company selected twenty-one vendors for on-site visits to further assess
the vendors' progress and estimated compliance dates. The Company will
continue to monitor the status of the vendors' estimated compliance dates
in order to identify potential delays.
. Evaluating facilities and distribution equipment with embedded computer
technology. The Company uses various facilities and distribution equipment
with embedded computer technology, such as conveyors, elevators, and
security systems, fire protection systems and energy management systems.
All our remediation efforts are complete.
22
<PAGE>
Cost to Address the Year 2000 Issue
- -----------------------------------
Total expenditures incurred through July 31, 1999 related to remediation,
testing, conversion, replacement and upgrading system applications were $79
million. Incremental expenses totaled $14 million in the first half of 1999.
Total costs included expenditures associated with the development of an internal
testing center, which has enabled the Company to perform comprehensive testing
of newly renovated systems by processing transactions as if they had occurred in
the Year 2000. This internal testing process was used to develop the risk and
cost estimates described in the "Year 2000 Readiness" section of the Form 10-Q.
In addition to the previously described costs, significant internal payroll
costs (not separately identified) were incurred relating to the Company's Year
2000 initiatives. These payroll costs include the efforts by approximately 500
employees of the Company's information technology division, representing
approximately three-fourths of the total information technology budgeted hours
for the Year 2000 project. In addition, the Company engaged external consultants
to assist it with program management and new software package implementation,
which represent the remaining hours. The Company has allocated approximately 15%
of its information technology budget for the period from Fall 1997 through Fall
1999 toward Year 2000 remediation efforts.
Total remaining expenditures are expected to range from $6 to $11 million during
1999 and 2000. Total incremental expenses, including depreciation and
amortization of new package systems, remediation to bring current systems into
compliance, and writing off legacy systems are not expected to have a material
impact on the Company's financial condition during 1999 and 2000.
Reasonably Likely Worst Case Scenario and Contingency Plans
- -----------------------------------------------------------
The Company believes that the reasonably likely worst case scenario would
involve short-term disruption of systems affecting its supply and distribution
channels. The Company is in the process of developing contingency plans, such as
alternative sourcing and accelerated delivery of merchandise from foreign
suppliers, and identifying the actions needed if critical systems or service
providers were not Year 2000 compliant. The Company expects to finalize these
contingency plans in the second half of 1999.
At the present time, the Company is not aware of any Year 2000 issues that are
expected to affect materially its products, services, competitive position or
financial performance. Additionally, the Company has not postponed any
significant information technology projects due to the Year 2000 project. Thus,
the Company does not believe that the delay of any projects has had a material
impact on its financial condition and results of operations. However, despite
the Company's significant efforts to make its systems, facilities and equipment
Year 2000 compliant, the compliance of third party service providers and vendors
(including, for instance, governmental entities and utility companies) is beyond
the Company's control. Accordingly, the Company can give no assurances that the
failure of technology infrastructure of the United States, foreign nations or
other companies on which the Company's systems rely, or the failure of key
suppliers or other third parties to comply with Year 2000 requirements, will not
have a material adverse effect on the Company.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION ACT OF 1995
- -------------------------------------------------------------------------
The Company cautions that any forward-looking statements (as such term is
defined in the Private Securities Litigation Reform Act of 1995) contained in
this Form 10-Q/A or made by management of the Company involve risks and
uncertainties and are subject to change based on various important factors, many
of which may be beyond the Company's control. Accordingly, the Company's future
performance and financial results may differ materially from those expressed or
implied in any such forward-looking statements. Among other things, certain of
the foregoing statements as to costs and dates relating to the Year 2000 effort
are forward-looking and are based on the Company's current best estimates that
may be proven incorrect as additional information becomes available. The
Company's Year 2000-related forward-looking statements are also based on
assumptions about many
23
<PAGE>
important factors, including the technical skills of employees and independent
contractors, the representations and preparedness of third parties, the ability
of vendors to deliver merchandise or perform services required by the Company
and the collateral effects of the Year 2000 issues on the Company's business
partners and customers. While the Company believes its assumptions are
reasonable, it cautions that it is impossible to predict factors that could
cause actual costs or timetables to differ materially from the expected results.
In addition to Year 2000 issues, the following factors, among others, in some
cases have affected and in the future could affect the Company's financial
performance and actual results and could cause actual results for 1999 and
beyond to differ materially from those expressed or implied in any
forward-looking statements included in this Form 10-Q/A or otherwise made by
management: changes in consumer spending patterns, consumer preferences and
overall economic conditions, the impact of competition and pricing, changes in
weather patterns, political stability, currency and exchange risks and changes
in existing or potential duties, tariffs or quotas, availability of suitable
store locations at appropriate terms, ability to develop new merchandise and
ability to hire and train associates.
24
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The Company is a defendant in a variety of lawsuits arising in the
ordinary course of business.
On November 13, 1997, the United States District Court for the Southern
District of Ohio, Eastern Division, dismissed with prejudice an amended
complaint that had been filed against the Company and certain of its
subsidiaries by the American Textile Manufacturers Institute ("ATMI"),
a textile industry trade association. The amended complaint alleged
that the defendants violated the federal False Claims Act by submitting
false country of origin declarations to the U.S. Customs Service. On
November 26, 1997, ATMI served a motion to alter or amend judgment and
a motion to disqualify the presiding judge and to vacate the order of
dismissal. The motion to disqualify was denied on December 22, 1997,
but as a matter of his personal discretion, the presiding judge elected
to recuse himself from further proceedings and this matter was
transferred to a judge of the United States District Court for the
Southern District of Ohio, Western Division. On May 21, 1998, this
judge denied all pending motions seeking to alter, amend or vacate the
judgment that had been entered in favor of the Company. On June 5,
1998, ATMI appealed to the United States Court of Appeals for the Sixth
Circuit (the "Sixth Circuit"). On August 12, 1999, the Sixth Circuit
heard arguments from both sides, and the matter remains pending.
On January 13, 1999, two complaints were filed against the Company and
its subsidiary, Lane Bryant, Inc., as well as other defendants,
including many national retailers. Both complaints relate to labor
practices allegedly employed on the island of Saipan, Commonwealth of
the Northern Mariana Islands, by apparel manufacturers unrelated to the
Company (some of which have sold goods to the Company) and seek
injunctions, unspecified monetary damages, and other relief. One
complaint, on behalf of a class of unnamed garment workers, filed in
the United States District Court for the Central District of
California, Western Division, alleges violations of federal statutes,
the United States Constitution, and international law. On March 29,
1999, a motion was filed to transfer this action to the United States
District Court located on Saipan, and on April 12, 1999, a motion to
dismiss the complaint for failure to state a claim upon which relief
can be granted was filed. Both motions remain pending. The second
complaint, filed by a national labor union and other organizations in
the Superior Court of the State of California, San Francisco County,
alleges unfair business practices under California law. On March 29,
1999, a motion seeking dismissal of this complaint was filed. That
motion also remains pending.
In May and June 1999, alleged shareholders of the Company filed three
purported derivative actions in the Court of Chancery of the State of
Delaware, naming the members of the Company's board of directors as
defendants and the Company as nominal defendant. The three actions have
been consolidated. The operative complaint in the consolidated action
generally alleges that the rescission of the Contingent Stock
Redemption Agreement constituted a waste of corporate assets and a
breach of the board members' fiduciary duties, and that the issuer
tender offer completed on June 3, 1999 was a "wasteful transaction in
its own right." The complaint seeks monetary damages in an unspecified
amount from the members of the Company's board of directors. On July
30, 1999, the defendants moved to dismiss the complaint. Plaintiffs
have not yet responded to that motion.
Although it is not possible to predict with certainty the eventual
outcome of any litigation, in the opinion of management, the foregoing
proceedings are not expected to have a material adverse effect on the
Company's financial position or results of operations.
25
<PAGE>
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
--------
4.1 Indenture and Global Security representing the Company's Series A
Floating Rate Note due May 2000
4.2 Indenture and Global Security representing the Company's Series B
Floating Rate Note due November 2000
4.3 Indenture and Global Security representing the Company's Series C
Floating Rate Note due May 2001
11. Statement re: Computation of Restated Per Share Earnings.
12. Statement re: Computation of Restated Ratio of Earnings to Fixed
Charges.
15. Letter re: Unaudited Interim Financial Information to Securities and
Exchange Commission re: Incorporation of Report of Independent
Accountants.
27. Restated Financial Data Schedule.
(b) Reports on Form 8-K.
-------------------
On May 18, 1999 the Company filed a report on Form 8-K which disclosed
that a legal action had been filed by an alleged shareholder of the
Company, naming as defendants the members of the Company's Board of
Directors and naming the Company as a nominal defendant.
26
<PAGE>
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE LIMITED, INC.
(Registrant)
By /s/ V. Ann Hailey
----------------------------------
V. Ann Hailey,
Executive Vice President and Chief
Financial Officer*
Date: April 18, 2000
- -----------------------------------------
*Ms. Hailey is the principal financial officer and has been duly authorized to
sign on behalf of the Registrant.
27
<PAGE>
EXHIBIT 4.1
-----------
EXECUTION COPY
================================================================================
THE LIMITED, INC.
$100,000,000 Series A Floating Rate Notes due May 2000
------------------------
INDENTURE
Dated as of May 19, 1999
------------------------
The Bank of New York,
Trustee
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1
Definitions and Incorporation by Reference
------------------------------------------
SECTION 1.01. Definitions ........................................ 1
SECTION 1.02. Other Definitions .................................. 4
SECTION 1.03. Incorporation by Reference of Trust Indenture Act .. 5
SECTION 1.04. Rules of Construction .............................. 5
ARTICLE 2
The Securities
--------------
SECTION 2.01. Amount of Securities ............................... 5
SECTION 2.02. Form and Dating .................................... 6
SECTION 2.03. Execution and Authentication ....................... 6
SECTION 2.04. Registrar and Paying Agent ......................... 7
SECTION 2.05. Paying Agent to Hold Money in Trust ................ 8
SECTION 2.06. Securityholder Lists ............................... 8
SECTION 2.07. Transfer and Exchange .............................. 8
SECTION 2.08. Replacement Securities ............................. 9
SECTION 2.09. Outstanding Securities ............................. 9
SECTION 2.10. Temporary Securities ............................... 10
SECTION 2.11. Cancelation ........................................ 10
SECTION 2.12. Defaulted Interest ................................. 10
SECTION 2.13. CUSIP Numbers ...................................... 10
ARTICLE 3
Redemption
----------
SECTION 3.01. Notices to Trustee ................................. 10
SECTION 3.02. Notice of Redemption ............................... 11
SECTION 3.03. Effect of Notice of Redemption ..................... 11
SECTION 3.04. Deposit of Redemption Price ........................ 12
ARTICLE 4
<PAGE>
Covenants
---------
SECTION 4.01. Payment of Securities .............................. 12
SECTION 4.02. SEC Reports ........................................ 12
SECTION 4.03. Compliance Certificate ............................. 12
SECTION 4.04. Restrictions on Liens Upon Voting Stock of
Significant Subsidiaries ........................... 13
SECTION 4.05. Compliance With Covenants and Conditions May Be
Waived by Holders of Securities ................ 13
ARTICLE 5
Successor Company
-----------------
SECTION 5.01. When Company May Merge or Transfer Assets .......... 13
ARTICLE 6
Defaults and Remedies
---------------------
SECTION 6.01. Events of Default .................................. 14
SECTION 6.02. Acceleration ....................................... 15
SECTION 6.03. Other Remedies ..................................... 15
SECTION 6.04. Waiver of Past Defaults ............................ 15
SECTION 6.05. Control by Majority ................................ 15
SECTION 6.06. Limitation on Suits ................................ 16
SECTION 6.07. Rights of Holders to Receive Payment ............... 16
SECTION 6.08. Collection Suit by Trustee ......................... 16
SECTION 6.09. Trustee May File Proofs of Claim ................... 16
SECTION 6.10. Priorities ......................................... 17
SECTION 6.11. Undertaking for Costs .............................. 17
SECTION 6.12. Waiver of Stay of Extension Laws ................... 17
ARTICLE 7
Trustee; Calculation Agent
--------------------------
SECTION 7.01. Duties of Trustee .................................. 17
SECTION 7.02. Rights of Trustee .................................. 19
SECTION 7.03. Individual Rights of Trustee ....................... 19
SECTION 7.04. Trustee's Disclaimer ............................... 20
<PAGE>
Page
----
SECTION 7.05. Notice of Defaults ................................. 20
SECTION 7.06. Reports by Trustee to Holders ...................... 20
SECTION 7.07. Compensation and Indemnity ......................... 20
SECTION 7.08. Replacement of Trustee ............................. 21
SECTION 7.09. Successor Trustee by Merger ........................ 22
SECTION 7.10. Eligibility; Disqualification ...................... 22
SECTION 7.11. Preferential Collection of Claims Against Company .. 22
SECTION 7.12. Calculation Agent .................................. 22
ARTICLE 8
Discharge of Indenture, Defeasance
----------------------------------
SECTION 8.01. Discharge of Liability on Securities; Defeasance ... 23
SECTION 8.02. Conditions to Defeasance ........................... 24
SECTION 8.03. Application of Trust Money ......................... 25
SECTION 8.04. Repayment to Company ............................... 25
SECTION 8.05. Indemnify for Government Obligations ............... 25
SECTION 8.06. Reinstatement ...................................... 25
ARTICLE 9
Amendments
----------
SECTION 9.01. Without Consent of Holders ......................... 25
SECTION 9.02. With Consent of Holders ............................ 26
SECTION 9.03. Compliance with Trust Indenture Act ................ 27
SECTION 9.04. Revocation and Effect of Consents and Waivers ...... 27
SECTION 9.05. Notation on or Exchange of Securities .............. 27
SECTION 9.06. Trustee To Sign Amendments ......................... 28
SECTION 9.07. Payment for Consent ................................ 28
ARTICLE 10
Miscellaneous
-------------
SECTION 10.01. Trust Indenture Act Controls ....................... 28
SECTION 10.02. Notices ............................................ 28
SECTION 10.03. Communication by Holders with Other Holders ........ 29
SECTION 10.04. Certificate and Opinion as to Conditions Precedent . 29
<PAGE>
Page
----
SECTION 10.05. Statements Required in Certificate or Opinion ...... 29
SECTION 10.06. When Securities Disregarded ........................ 30
SECTION 10.07. Rules by Trustee, Paying Agent and Registrar ....... 30
SECTION 10.08. Non-Business Days .................................. 30
SECTION 10.09. GOVERNING LAW ...................................... 30
SECTION 10.10. Liability Solely Corporate ......................... 30
SECTION 10.11. Successors ......................................... 31
SECTION 10.12. Multiple Originals ................................. 31
SECTION 10.13. Table of Content; Headings ......................... 31
Appendix A - Provisions Relating to Securities
Exhibit A - Form of Security
<PAGE>
INDENTURE dated as of May 19, 1999, between THE LIMITED,
INC., a Delaware corporation (the "Company"), and THE BANK OF NEW
YORK, a New York banking corporation, as trustee (the "Trustee").
Each party agrees as follows for the benefit of the other parties and for
the equal and ratable benefit of the Holders of the Company's Series A Floating
Rate Notes due May 2000 issued on the date hereof (the "Securities"). Except as
otherwise provided herein, the initial Securities will be limited to
$100,000,000 in aggregate principal amount outstanding.
ARTICLE 1
Definitions and Incorporation by Reference
------------------------------------------
SECTION 1.01. Definitions.
------------
"Affiliate" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Bankruptcy Law" means Title 11, United States Code, or any similar Federal
or state law for the relief of debtors.
"Board" means the Board of Directors of the Company or any committee
thereof duly authorized to act on behalf of the Board of Directors of the
Company.
"Business Day" means any day (other than a Saturday or Sunday) on which
banking institutions in the City of New York are open for business and which is
also a London Banking Day.
"Capital Stock" of any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
<PAGE>
"Closing Date" means May 19, 1999.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means the party named as such in this Indenture until a successor
replaces it and, thereafter, means the successor and, for purposes of any
provision contained herein and required by the TIA, each other obligor on the
indenture securities.
Custodian" means any receiver, liquidator, assignee, custodian, trustee or
sequestrator (or similar official) under any Bankruptcy Law.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the Closing Date, including those set forth in (i)
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants, (ii) statements and
pronouncements of the Financial Accounting Standards Board, (iii) such other
statements by such other entities as approved by a significant segment of the
accounting profession and (iv) the rules and regulations of the SEC governing
the inclusion of financial statements (including pro forma financial statements)
in periodic reports required to be filed pursuant to Section 13 of the Exchange
Act, including opinions and pronouncements in staff accounting bulletins and
similar written statements from the accounting staff of the SEC. All ratios and
computations based on GAAP contained in this Indenture shall be computed in
conformity with GAAP.
"Holder" or "Securityholder" means the Person in whose name a Security is
registered on the Registrar's books.
"Indebtedness" means any and all obligations of a Person for money borrowed
which in accordance with GAAP would be reflected on the balance sheet of such
Person as a liability on the date as of which Indebtedness is to be determined.
"Indenture" means this Indenture as amended or supplemented from time to
time.
"Issue Date" means the date on which the Securities are originally issued.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
<PAGE>
3
"London Banking Day" means any day (other than a Saturday or Sunday) on
which dealings in deposits are transacted in the London interbank market.
"Officer" means the Chairman of the Board, the Vice Chairman of the Board,
the Chief Financial Officer, the Treasurer or the Controller of the Company.
"Officers' Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity.
"Preferred Stock", as applied to the Capital Stock of any Person, means
Capital Stock of any class or classes (however designated) that is preferred as
to the payment of dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such Person, over shares
of Capital Stock of any other class of such Person.
"principal" of a Security means the principal of the Security plus the
premium, if any, payable on the Security which is due or overdue or is to become
due at the relevant time.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Securities issued under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Significant Subsidiary" means a Subsidiary (including its Subsidiaries),
which meets any of the following conditions:
(1) The Company's and its other Subsidiaries' investments in and advances
to the Subsidiary exceed 10 percent of the total assets of the Company and
its Subsidiaries consolidated as of the end of the most recently completed
fiscal year;
<PAGE>
4
(2) The Company's and its other Subsidiaries' proportionate share of
the total assets (after intercompany eliminations) of the Subsidiary
exceeds 10 percent of the total assets of the Company and its Subsidiaries
consolidated as of the end of the most recently completed fiscal year; or
(3) The Company's and its other Subsidiaries' equity in the income
from continuing operations before income taxes, extraordinary items and
cumulative effect of a change in accounting principles of the Subsidiary
exceeds 10 percent of such income of the Company and its Subsidiaries
consolidated for the most recently completed fiscal year.
For the purposes of making the prescribed income test in clause (3) of this
definition, the following shall be applicable:
(1) When a loss has been incurred by either the Company and its
consolidated Subsidiaries or the tested Subsidiary, but not both, the
equity in the income or loss of the tested Subsidiary shall be excluded
from the income of the Company and its Subsidiaries consolidated for
purposes of the computation; and
(2) If income of the Company and its Subsidiaries consolidated for the
most recent fiscal year is at least 10 percent lower than the average of
the income for the last five fiscal years, such average income shall be
substituted for purposes of the computation. Any loss years shall be
omitted for purposes of computing average income.
"Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which the final payment of principal of
such security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred).
"Subsidiary" of any Person means any corporation, association, partnership
or other business entity a majority of the outstanding voting stock of which is
owned, directly or indirectly, by the Company or by one or more other
Subsidiaries, or by the Company and one or more other Subsidiaries. For the
purposes of this definition, "voting stock" means stock having voting power for
the election of directors, whether at all times or only so long as no senior
class of stock has such voting power by reason of any contingency; provided,
--------
however, that "voting stock" shall not include stock which the Company
- ------- or any of its Subsidiaries owning such stock is required or has agreed
not to vote, or the voting rights with respect to which have been granted to a
Person other than the Company or any of its Subsidiaries.
<PAGE>
5
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-
------
77bbbb) as in effect on the Closing Date (or, for purposes of Section 9.03, as
in effect from time to time).
"Trustee" means the party named as such in this Indenture until a successor
replaces it and, thereafter, means the successor.
"Trust Officer" means any officer or assistant officer of the Trustee
assigned by the Trustee to administer its corporate trust matters.
"Uniform Commercial Code" means the New York Uniform Commercial Code as in
effect from time to time.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable or redeemable at the issuer's option.
"Voting Stock" of a Person means capital stock the holders of which
have general voting power under ordinary circumstances to elect at least a
majority of the board of directors of a corporation; provided that, for the
--------
purposes hereof, capital stock which carries only the right to vote conditioned
on the occurrence of an event shall not be considered voting stock whether or
not such event shall have occurred.
"Wholly Owned Subsidiary" means a Subsidiary of the Company all the Capital
Stock of which (other than directors' qualifying shares) is owned by the Company
or another Wholly Owned Subsidiary.
SECTION 1.02. Other Definitions.
------------------
Defined in
Term Section
----- -------------
"covenant defeasance option"..................................... 8.01(b)
"Event of Default"............................................... 6.01
"Global Security"................................................ Appendix A
"legal defeasance option"........................................ 8.01(b)
"Paying Agent"................................................... 2.04
"protected purchaser"............................................ 2.08
"Registrar"...................................................... 2.04
<PAGE>
6
SECTION 1.03. Incorporation by Reference of Trust Indenture Act.
--------------------------------------------------
This Indenture is subject to the mandatory provisions of the TIA, which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Holder or Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction. Unless the context otherwise
----------------------
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation; and
(5) words in the singular include the plural and words in the plural
include the singular.
<PAGE>
7
ARTICLE 2
The Securities
--------------
SECTION 2.01. Amount of Securities. The aggregate principal amount
---------------------
of the initial Securities which may be authenticated and delivered under this
Indenture is $100,000,000. The Company may from time to time offer and sell an
unlimited amount of additional Securities, which shall have terms identical to
the initial Securities and which shall be treated, together with any outstanding
Securities, as a single issue of Securities.
With respect to any additional Securities issued after the Closing
Date (except for Securities authenticated and delivered upon registration of,
transfer of, or in exchange for, or in lieu of, other Securities pursuant to
Section 2.07, 2.08, 2.09, 2.10 or the Appendix), there shall be (i) established
in or pursuant to a resolution of two Officers of the Company duly authorized by
the Board of Directors to act on behalf of the Company, (ii) accompanied by an
Opinion of Counsel from the Company to the effect that such additional
Securities comply with the provisions of this Indenture and are legal, valid,
binding and enforceable obligations of the Company, and (iii) (A) set forth or
determined in the manner provided in an Officers' Certificate or (B) established
in one or more indentures supplemental hereto, prior to the issuance of such
additional Securities:
(1) the aggregate principal amount of such additional Securities which
may be authenticated and delivered under this Indenture (except for
Securities authenticated and delivered upon registration of transfer of, or
in exchange for, or in lieu of, other Securities of the same series
pursuant to Section 2.07, 2.08, 2.09 or 2.10 or the Appendix and except for
Securities which, pursuant to Section 2.03, are deemed never to have been
authenticated and delivered hereunder); and
(2) issuance date of such additional Securities; provided, however,
-------- -------
that no additional Securities may be issued at a price that would cause
such additional Securities to have "original issue discount" within the
meaning of Section 1273 of the Code (other than de minimis original issue
discount, as defined in applicable Treasury regulations).
If any of the terms of any additional Securities are established by
action taken pursuant to a resolution on behalf of the Board of Directors in the
manner provided above, a copy of an appropriate record of such action shall be
certified by the Secretary or any Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate or the indenture supplemental hereto setting forth the terms of the
additional Securities.
<PAGE>
8
SECTION 2.02. Form and Dating. Provisions relating to the Securities
---------------
are set forth in the Appendix, which is hereby incorporated in and expressly
made a part of this Indenture. The Securities and the Trustee's certificate of
authentication shall each be substantially in the form of Exhibit A hereto,
which is hereby incorporated in and expressly made a part of this Indenture. The
Securities may have notations, legends or endorsements required by law, stock
exchange rule, agreements to which the Company is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable
to the Company). Each Security shall be dated the date of its authentication.
The Securities shall be issuable only in registered form without interest
coupons and only in denominations of $1,000 and integral multiples thereof.
SECTION 2.03. Execution and Authentication. The Chairman of the
-----------------------------
Board or the Vice Chairman of the Board and the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary of the Company duly
authorized to act on behalf of the Company shall both sign the Securities for
the Company by manual or facsimile signature.
If an officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall be
valid nevertheless.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
The Trustee shall authenticate and make available for delivery
Securities as set forth in the Appendix.
The Trustee may appoint an authenticating agent reasonably acceptable
to the Company to authenticate the Securities. Any such appointment shall be
evidenced by an instrument signed by a Trust Officer, a copy of which shall be
furnished to the Company. Unless limited by the terms of such appointment, an
authenticating agent may authenticate Securities whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as any
Registrar, Paying Agent or agent for service of notices and demands.
SECTION 2.04. Registrar and Paying Agent. The Company shall maintain
---------------------------
an office or agency where Securities may be presented for registration of
transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange. The
Company may have one or more co-registrars and one or more additional paying
agents. The term "Paying Agent" includes
<PAGE>
9
any additional paying agent, and the term "Registrar" includes any co-
registrars. The Company initially appoints the Trustee as (i) Registrar and
Paying Agent in connection with the Securities and (ii) the Securities Custodian
(as defined in the Appendix) with respect to the Global Securities (as defined
in the Appendix).
The Company shall enter into an appropriate agency agreement with any
Registrar or Paying Agent not a party to this Indenture, which shall incorporate
the terms of the TIA. The agreement shall implement the provisions of this
Indenture that relate to such agent. The Company shall notify the Trustee of the
name and address of any such agent. If the Company fails to maintain a Registrar
or Paying Agent, the Trustee shall act as such and shall be entitled to
appropriate compensation therefor pursuant to Section 7.07. The Company or any
of its domestically organized Wholly Owned Subsidiaries may act as Paying Agent
or Registrar.
The Company may remove any Registrar or Paying Agent upon written
notice to such Registrar or Paying Agent and to the Trustee; provided, however,
-------- -------
that no such removal shall become effective until (1) acceptance of an
appointment by a successor as evidenced by an appropriate agreement entered into
by the Company and such successor Registrar or Paying Agent, as the case may be,
and delivered to the Trustee or (2) notification to the Trustee that the Trustee
shall serve as Registrar or Paying Agent until the appointment of a successor in
accordance with clause (1) above. The Registrar or Paying Agent may resign at
any time upon written notice.
SECTION 2.05. Paying Agent To Hold Money in Trust. By 10:00 a.m.
------------------------------------
(New York City time) on each due date of the principal and interest on any
Security, the Company shall deposit with the Paying Agent (or if the Company or
a Subsidiary is acting as Paying Agent, segregate and hold in trust for the
benefit of the Persons entitled thereto) a sum sufficient to pay such principal
and interest when so becoming due. The Company shall require each Paying Agent
(other than the Trustee) to agree in writing that the Paying Agent shall hold in
trust for the benefit of Securityholders or the Trustee all money held by the
Paying Agent for the payment of principal of or interest on the Securities and
shall notify the Trustee of any default by the Company in making any such
payment. If the Company or a Subsidiary of the Company acts as Paying Agent, it
shall segregate the money held by it as Paying Agent and hold it as a separate
trust fund. The Company at any time may require a Paying Agent to pay all money
held by it to the Trustee and to account for any funds disbursed by the Paying
Agent. Upon complying with this Section, the Paying Agent shall have no further
liability for the money delivered to the Trustee.
SECTION 2.06. Securityholder Lists. The Trustee shall preserve in as
---------------------
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Securityholders. If the Trustee is not the
Registrar, the Company shall
<PAGE>
10
furnish, or cause the Registrar to furnish, to the Trustee, in writing at least
five Business Days before each interest payment date and at such other times as
the Trustee may request in writing, a list in such form and as of such date as
the Trustee may reasonably require of the names and addresses of
Securityholders.
SECTION 2.07. Transfer and Exchange. The Securities shall be issued
----------------------
in registered form and shall be transferable only upon the surrender of a
Security for registration of transfer and in compliance with the Appendix. When
a Security is presented to the Registrar with a request to register a transfer,
the Registrar shall register the transfer as requested if the requirements of
Section 8-401(a)(l) of the Uniform Commercial Code are met. When Securities are
presented to the Registrar with a request to exchange them for an equal
principal amount of Securities of other denominations, the Registrar shall make
the exchange as requested if the same requirements are met. To permit
registration of transfers and exchanges, the Company shall execute and the
Trustee shall authenticate Securities at the Registrar's request. The Company
may require payment of a sum sufficient to pay all taxes, assessments or other
governmental charges in connection with any transfer or exchange pursuant to
this Section. The Company shall not be required to make and the Registrar need
not register transfers or exchanges of Securities selected for redemption
(except, in the case of Securities to be redeemed in part, the portion thereof
not to be redeemed) or any Securities for a period of 15 days before a selection
of Securities to be redeemed.
Prior to the due presentation for registration of transfer of any
Security, the Company, the Trustee, the Paying Agent, and the Registrar may deem
and treat the Person in whose name a Security is registered as the absolute
owner of such Security for the purpose of receiving payment of principal of and
interest, if any, on such Security and for all other purposes whatsoever,
whether or not such Security is overdue, and none of the Company, the Trustee,
the Paying Agent, or the Registrar shall be affected by notice to the contrary.
Any Holder of a Global Security shall, by acceptance of such Global
Security, agree that transfers of beneficial interest in such Global Security
may be effected only through a book-entry system maintained by (i) the Holder of
such Global Security (or its agent) or (ii) any Holder of a beneficial interest
in such Global Security, and that ownership of a beneficial interest in such
Global Security shall be required to be reflected in a book entry.
All Securities issued upon any transfer or exchange pursuant to the
terms of this Indenture will evidence the same debt and will be entitled to the
same benefits under this Indenture as the Securities surrendered upon such
transfer or exchange.
<PAGE>
11
SECTION 2.08. Replacement Securities. If a mutilated Security is
-----------------------
surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 of the Uniform Commercial Code are met, such that the Holder (i)
satisfies the Company or the Trustee within a reasonable time after he has
notice of such loss, destruction or wrongful taking and the Registrar does not
register a transfer prior to receiving such notification, (ii) makes such
request to the Company or the Trustee prior to the Security being acquired by a
protected purchaser as defined in Section 8-303 of the Uniform Commercial Code
(a "protected purchaser") and (iii) satisfies any other reasonable requirements
of the Trustee. If required by the Trustee or the Company, such Holder shall
furnish an indemnity bond sufficient in the judgment of the Trustee to protect
the Company, the Trustee, the Paying Agent and the Registrar from any loss that
any of them may suffer if a Security is replaced. The Company and the Trustee
may charge the Holder for their expenses in replacing a Security. In the event
any such mutilated, lost, destroyed or wrongfully taken Security has become or
is about to become due and payable, the Company in its discretion may pay such
Security instead of issuing a new Security in replacement thereof.
Every replacement Security is an additional obligation of the Company.
The provisions of this Section 2.08 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, lost, destroyed or wrongfully taken
Securities.
SECTION 2.09. Outstanding Securities. Securities outstanding at any
-----------------------
time are all Securities authenticated by the Trustee except for those canceled
by it, those delivered to it for cancelation, those paid pursuant to Section
2.08 and those described in this Section as not outstanding. Subject to Section
10.06, a Security does not cease to be outstanding because the Company or an
Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.08, it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Security is held by a protected purchaser.
If the Paying Agent segregates and holds in trust, in accordance with
this Indenture, on a redemption date or maturity date money sufficient to pay
all principal and interest and liquidated damages payable on that date with
respect to the Securities (or portions thereof) to be redeemed or maturing, as
the case may be, then on and after that date such Securities (or portions
thereof) cease to be outstanding and interest on them ceases to accrue.
<PAGE>
12
SECTION 2.10. Temporary Securities. In the event that Definitive
---------------------
Securities (as defined in the Appendix) are to be issued under the terms of this
Indenture, until such Definitive Securities are ready for delivery, the Company
may prepare and the Trustee shall authenticate temporary Securities upon a
written order signed by two Officers. Temporary Securities shall be
substantially in the form of Definitive Securities but may have variations that
the Company considers appropriate for temporary Securities. Without unreasonable
delay, the Company shall prepare and the Trustee shall authenticate Definitive
Securities upon a written order signed by two Officers and deliver them in
exchange for temporary Securities upon surrender of such temporary Securities at
the office or agency of the Company, without charge to the Holder.
SECTION 2.11. Cancelation. The Company at any time may deliver
------------
Securities to the Trustee for cancelation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for registration
of transfer, exchange or payment. The Trustee and no one else shall cancel all
Securities surrendered for registration of transfer, exchange, payment or
cancelation and deliver canceled Securities to the Company pursuant to written
direction by an Officer. The Company may not issue new Securities to replace
Securities it has redeemed, paid or delivered to the Trustee for cancelation.
The Trustee shall not authenticate Securities in place of canceled Securities
other than pursuant to the terms of this Indenture.
SECTION 2.12. Defaulted Interest. If the Company defaults in a
-------------------
payment of interest on the Securities, the Company shall pay the defaulted
interest (plus interest on such defaulted interest to the extent lawful) in any
lawful manner. The Company may pay the defaulted interest to the Persons who are
Securityholders on a subsequent special record date. The Company shall fix or
cause to be fixed any such special record date and payment date to the
reasonable satisfaction of the Trustee and shall promptly mail or cause to be
mailed to each Securityholder a notice that states the special record date, the
payment date and the amount of defaulted interest to be paid.
SECTION 2.13. CUSIP Numbers. The Company in issuing the Securities
--------------
may use "CUSIP" numbers (if then generally in use) and, if so, the Trustee shall
use "CUSIP" numbers in notices of redemption as a convenience to Holders;
provided, however, that any such notice may state that no representation is made
- -------- -------
as to the correctness of such numbers either as printed on the Securities or as
contained in any notice of a redemption and that reliance may be placed only on
the other identification numbers printed on the Securities, and any such
redemption shall not be affected by any defect in or omission of such numbers.
The Company shall promptly notify the Trustee of any change in the "CUSIP"
numbers.
<PAGE>
13
ARTICLE 3
Redemption
----------
SECTION 3.01. Notices to Trustee. If the Company elects to redeem
-------------------
Securities pursuant to paragraph 5 of the Securities, it shall notify the
Trustee in writing of the redemption date and the principal amount of Securities
to be redeemed, which principal amount shall be equal to the aggregate principal
amount of all outstanding Securities.
The Company shall notify the Trustee of the redemption date and the
principal amount of Securities to be redeemed, which principal amount shall be
equal to the aggregate principal amount of all outstanding Securities, at least
five Business Days before the notice of redemption is to be mailed to the
Securityholders unless the Trustee consents to a shorter period. Such notice
shall be accompanied by an Officers' Certificate and an Opinion of Counsel from
the Company to the effect that such redemption will comply with the conditions
herein. Any such notice may be canceled at any time prior to notice of such
redemption being mailed to any Holder and shall thereby be void and of no
effect.
SECTION 3.02. Notice of Redemption. At least 15 days but not more
---------------------
than 60 days before a date for redemption of Securities, the Company shall mail
a notice of redemption by first-class mail to each Holder of Securities to be
redeemed at such Holder's registered address.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the redemption date, which shall be an Interest Payment Date (as
defined in paragraph 1 of the Securities);
(2) the redemption price, which shall be equal to 100% of the
principal amount of each outstanding security, and the amount of accrued
interest to the redemption date;
(3) the name and address of the Paying Agent;
(4) that the Securities called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(5) that, unless the Company defaults in making such redemption
payment or the Paying Agent is prohibited from making such payment pursuant
to the
<PAGE>
14
to the terms of this Indenture, interest on Securities (or portion thereof)
called for redemption ceases to accrue on and after the redemption date;
(6) the CUSIP number, if any, printed on the Securities being
redeemed; and
(7) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the
Securities.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section.
SECTION 3.03. Effect of Notice of Redemption. Once notice of
-------------------------------
redemption is mailed, Securities called for redemption become due and payable on
the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest to the redemption date;
provided, however, that if the redemption date is after a regular record date,
- -------- -------
the accrued interest shall be payable to the Securityholder of the redeemed
Securities registered on the relevant record date. Failure to give notice or any
defect in the notice to any Holder shall not affect the validity of the notice
to any other Holder.
SECTION 3.04. Deposit of Redemption Price. Prior to 10:00 a.m. (New
----------------------------
York City time) on the redemption date, the Company shall deposit with the
Paying Agent (or, if the Company or a Subsidiary is the Paying Agent, shall
segregate and hold in trust) money sufficient to pay the redemption price of and
accrued interest on all Securities to be redeemed on that date other than
Securities or portions of Securities called for redemption that have been
delivered by the Company to the Trustee for cancelation. On and after the
redemption date, interest will cease to accrue on Securities or portions thereof
called for redemption so long as the Company has deposited with the Paying Agent
funds sufficient to pay the principal of, plus accrued and unpaid interest and
liquidated damages (if any) on, the Securities to be redeemed.
ARTICLE 4
Covenants
---------
SECTION 4.01. Payment of Securities. The Company shall promptly pay
----------------------
the principal of and interest on the Securities on the dates and in the manner
provided in the Securities and in this Indenture. Principal and interest shall
be considered paid on the
<PAGE>
15
date due if on such date the Trustee or the Paying Agent holds in accordance
with this Indenture money sufficient to pay all principal and interest then due
and the Trustee or the Paying Agent, as the case may be, is not prohibited from
paying such money to the Securityholders on that date pursuant to the terms of
this Indenture.
The Company shall pay interest on overdue principal at the rate
specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
SECTION 4.02. SEC Reports. Notwithstanding that the Company may not
------------
be subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, the Company shall file with the SEC, and provide the Trustee and
Securityholders within 15 days after it files them with the SEC, copies of its
annual report and the information, documents and other reports that are
specified in Section 13 and 15(d) of the Exchange Act. In addition, the Company
shall furnish to the Trustee and the Securityholders, promptly upon their
becoming available, copies of the annual report to shareholders and any other
information provided by the Company to its public shareholders generally. The
Company also shall comply with the other provisions of TIA (S) 314(a).
Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 4.03. Compliance Certificate. The Company shall deliver to
-----------------------
the Trustee within 120 days after the end of each fiscal year of the Company an
Officers' Certificate, one of the signatories of which shall be the principal
executive officer, principal accounting officer or principal financial officer
of the Company, stating that in the course of the performance by the signers of
their duties as Officers of the Company they would normally have knowledge of
any Default and whether or not the signers know of any Default that occurred
during such period. If they do, the certificate shall describe the Default, its
status and what action the Company is taking or proposes to take with respect
thereto. The Company also shall comply with Section 314(a)(4) of the TIA.
The Company shall deliver to the Trustee, as soon as possible and in
any event within five days after the Company becomes aware of the occurrence of
any Event of Default or Default, an Officers' Certificate setting forth the
details of such Event of Default or Default and the action which the Company
proposes to take with respect thereto.
<PAGE>
16
SECTION 4.04. Restrictions on Liens Upon Voting Stock of Significant
------------------------------------------------------
Subsidiaries. The Company will not, and will not permit any Subsidiary to,
- -------------
incur, issue, assume or guarantee any Indebtedness if such Indebtedness is
secured by a pledge of, lien on, or security interest in, any shares of Voting
Stock of any Significant Subsidiary, whether such Voting Stock is now owned or
shall hereafter be acquired, without providing that the Securities (together
with, if the Company shall so determine, any other indebtedness or obligations
of the Company or any Subsidiary ranking equally with such Securities and then
existing or thereafter created) shall be secured equally and ratably with such
Indebtedness. For the purposes of the foregoing, pledging, placing a lien on or
creating a security interest in any shares of Voting Stock of a Significant
Subsidiary in order to secure then outstanding Indebtedness of the Company or
any Subsidiary shall be deemed to be the incurrence, issuance, assumption or
guarantee (as the case may be) of such Indebtedness, but the foregoing shall not
apply to Indebtedness secured by a pledge of, lien on, or security interest in,
any shares of Voting Stock of any corporation at the time it becomes a
Significant Subsidiary, including extensions, renewals and replacements of such
Indebtedness without increase in the amount thereof.
SECTION 4.05. Compliance With Covenants and Conditions May Be Waived
------------------------------------------------------
by Holders of Securities. Notwithstanding anything in this Indenture to the
- -------------------------
contrary, the Company or any Subsidiary may fail or omit in any particular
instance to comply with a covenant or condition set forth in Sections 4.04 or
5.01 if the Company shall have obtained and filed with the Trustee, prior to the
time for such compliance evidence (as provided in Article 9) of the consent of
the Holders of at least a majority in aggregate principal amount of the
Securities, either waiving such compliance in such instance or generally waiving
compliance with such covenant or condition, but no such waiver shall extend to
or affect any obligation not waived by the terms of such waiver or impair any
right consequent thereon.
ARTICLE 5
Successor Company
-----------------
<PAGE>
17
SECTION 5.01. When Company May Merge or Transfer Assets. The Company
------------------------------------------
shall not consolidate with any other Person or accept a merger of any other
Person into the Company or permit the Company to be merged into any other
Person, or sell other than for cash or lease all or substantially all its assets
to another Person unless (a) either the Company shall be the continuing
corporation, or the successor, transferee or lessee Person (if other than the
Company) shall expressly assume, by indenture supplemental hereto satisfactory
to the Trustee, executed and delivered by such Person prior to or simultaneously
with such consolidation, merger, sale or lease, the due and punctual payment of
the principal of, premium, if any, and interest on all the Securities, according
to their tenor, and the due and punctual performance and observance of all the
covenants and conditions of this Indenture to be performed or observed by the
Company, and (b) immediately after giving effect to such consolidation, merger,
sale or lease the Company or the successor, transferee or lessee Person (if any
other than the Company) would not be in default in the performance of any
covenant or condition of this Indenture.
ARTICLE 6
Defaults and Remedies
---------------------
SECTION 6.01. Events of Default. An "Event of Default" occurs if:
------------------
(1) the failure of the Company to pay any installment of interest on
any Security, when and as the same shall become due and payable, which
failure shall have continued unremedied for a period of 30 days;
(2) the failure of the Company to pay the principal or premium, if
any, on any Security, when and as the same shall become payable, whether at
maturity as therein expressed, by declaration as authorized by this
Indenture or otherwise;
(3) the failure of the Company to redeem any Securities when required
pursuant to this Indenture or the Securities;
(4) the failure of the Company to observe and perform, subject to the
provisions of Section 4.05, any other of the covenants or agreements on the
part of the Company contained in this Indenture, which failure shall not
have been remedied to the satisfaction of the Trustee, or without provision
deemed by the Trustee to be adequate for the remedying thereof having been
made, for a period of 90 days after written notice shall have been given to
the Company by the Trustee or shall have been given to the Company and the
Trustee by Holders of 25% or more in aggregate principal amount of the
Securities of such series then
<PAGE>
18
Outstanding, specifying such failure and requiring the Company to remedy
the same;
(5) the entry by a court having jurisdiction in the premises of a
decree or order for relief in respect of the Company in an involuntary case
under the Federal bankruptcy laws, as now or hereafter constituted, or any
other applicable Federal or state bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a Custodian of the Company or
for substantially all of its property, or ordering the winding-up or
liquidation of the Company's affairs, and such decree or order shall remain
unstayed and in effect for a period of 90 consecutive days; or
(6) the commencement by the Company of a voluntary case under the
Federal bankruptcy laws as now or hereafter constituted, or any other
applicable Federal or state bankruptcy, insolvency or other similar law now
or hereafter in effect, or the consent by the Company to the entry of an
order for relief in an involuntary case under any such law, or the consent
by the Company to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian or sequestrator (or similar
official) of the Company or for substantially all of its property, or the
making by it of an assignment for the benefit of creditors.
SECTION 6.02. Acceleration. If an Event of Default (other than an
-------------
Event of Default specified in Section 6.01(5) or (6) with respect to the
Company) occurs and is continuing, the Trustee by notice to the Company, or the
Holders of at least 25% in principal amount of the outstanding Securities by
notice to the Company and the Trustee, may declare the principal of and accrued
but unpaid interest on all the Securities to be due and payable. Upon such a
declaration, such principal and interest shall be due and payable immediately.
If an Event of Default specified in Section 6.01(5) or (6) with respect to the
Company occurs, the principal of and interest on all the Securities shall ipso
----
facto become and be immediately due and payable without any declaration or other
- -----
act on the part of the Trustee or any Securityholders. The Holders of a majority
in principal amount of the Securities by notice to the Trustee may rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default have been cured or
waived except nonpayment of principal or interest that has become due solely
because of acceleration. No such rescission shall affect any subsequent Default
or impair any right consequent thereto.
SECTION 6.03. Other Remedies. If an Event of Default occurs and is
---------------
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of or interest on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.
<PAGE>
19
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
For purposes of this Section 6.03, the Trustee is hereby designated as
attorney-in-fact for the Securityholders.
SECTION 6.04. Waiver of Past Defaults. The Holders of a majority in
------------------------
principal amount of the Securities by notice to the Trustee may waive an
existing Default and its consequences except (i) a Default in the payment of the
principal of or interest on a Security or (ii) a Default arising from the
failure to redeem or purchase any Security when required pursuant to the terms
of this Indenture. When a Default is waived, it is deemed cured, but no such
waiver shall extend to any subsequent or other Default or impair any consequent
right.
SECTION 6.05. Control by Majority. The Holders of a majority in
--------------------
principal amount of the Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.01, that the Trustee determines is unduly prejudicial to
the rights of other Securityholders or would involve the Trustee in personal
liability; provided, however, that the Trustee may take any other action deemed
-------- -------
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses caused
by taking or not taking such action.
SECTION 6.06. Limitation on Suits. Except to enforce the right to
--------------------
receive payment of principal, premium (if any) or interest when due, no
Securityholder may pursue any remedy with respect to this Indenture or the
Securities unless:
(1) the Holder gives to the Trustee written notice stating that an
Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of the Securities
make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable security or
indemnity against any loss, liability or expense;
<PAGE>
20
(4) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of security or indemnity; and
(5) the Holders of a majority in principal amount of the Securities do
not give the Trustee a direction inconsistent with the request during such
60-day period.
A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over another
Securityholder.
SECTION 6.07. Rights of Holders to Receive Payment. Notwithstanding
-------------------------------------
any other provision of this Indenture, the right of any Holder to receive
payment of principal of, premium, if any, and interest on the Securities held by
such Holder, on or after the respective due dates expressed in the Securities,
or to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such
Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of Default
---------------------------
specified in Section 6.01(1) or (2) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company for the whole amount then due and owing (together with interest on any
unpaid interest to the extent lawful) and the amounts provided for in Section
7.07.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may file
---------------------------------
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company or any Subsidiary,
their creditors or their property and, unless prohibited by law or applicable
regulations, may vote on behalf of the Holders in any election of a trustee in
bankruptcy or other Person performing similar functions, and any Custodian of
the Company in any such judicial proceeding is hereby authorized by each Holder
to make payments to the Trustee and, in the event that the Trustee shall consent
to the making of such payments directly to the Holders, to pay to the Trustee
any amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and its counsel, and any other amounts due
the Trustee under Section 7.07.
SECTION 6.10. Priorities. If the Trustee collects any money or
-----------
property pursuant to this Article 6, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
<PAGE>
21
SECOND: to Securityholders for amounts due and unpaid on the
Securities for principal, premium, if any, and interest, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Securities for principal, premium, if any, and interest,
respectively; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any payment to
Securityholders pursuant to this Section. At least 15 days before such record
date, the Trustee shall mail to each Securityholder and the Company a notice
that states the record date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the enforcement
----------------------
of any right or remedy under this Indenture or in any suit against the Trustee
for any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees and expenses, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section does not apply to a
suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by
Holders of more than 10% in principal amount of the Securities.
SECTION 6.12. Waiver of Stay or Extension Laws. The Company shall
---------------------------------
not insist upon, or plead, or in any manner whatsoever claim or take the benefit
or advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, which may affect the covenants or the performance of this
Indenture; and the Company hereby expressly waives all benefit or advantage of
any such law, and shall not hinder, delay or impede the execution of any power
herein granted to the Trustee, but shall suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE 7
Trustee; Calculation Agent
--------------------------
SECTION 7.01. Duties of Trustee. (a) If an Event of Default has
------------------
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent Person would exercise or use under the circumstances
in the conduct of such Person's own affairs.
<PAGE>
22
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
in the case of any such certificates or opinions which by any provision
hereof are required or contemplated to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine whether or
not they conform to the requirements of this Indenture (but need not
confirm or investigate the accuracy of mathematical calculations or other
facts stated therein).
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
(1) this paragraph does not limit the effect of paragraph (b) of this
Section;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur financial liability in the performance
of any of its duties hereunder or in the exercise of any of its rights or
powers, if it shall have
<PAGE>
23
reasonable grounds to believe that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 7.02. Rights of Trustee. (a) The Trustee may conclusively
------------------
rely on any document believed by it to be genuine and to have been signed or
presented by the proper person. The Trustee need not investigate any fact or
matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on the
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible
for the misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute wilful
-------- -------
misconduct or negligence.
(e) The Trustee may consult with counsel of its selection, and the
advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Securities shall be full and complete authorization and
protection from liability in respect to any action taken, omitted or suffered by
it hereunder in good faith and in accordance with the advice or opinion of such
counsel.
(f) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond, debenture,
note or other paper or document unless requested in writing to do so by the
Holders of not less than a majority in principal amount of the Securities at the
time outstanding, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit, and, if
the Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the Company,
personally or by agent or attorney at the sole cost of the Company.
(g) The Trustee shall not be deemed to have notice of any Default or
Event of Default unless a Trust Officer has actual knowledge thereof or unless
written notice of any event which is in fact such a default is received by the
Trustee at the
<PAGE>
24
principal corporate trust office of the Trustee, and such notice references the
Securities and this Indenture.
(h) The rights, privileges, protections, immunities and benefits given
to the Trustee, including, without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, the Trustee in each of its capacities
hereunder, and to each agent, custodian and other Person employed to act
hereunder.
SECTION 7.03. Individual Rights of Trustee. The Trustee in its
-----------------------------
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar or co-paying
agent may do the same with like rights. However, the Trustee must comply with
Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be
---------------------
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for any
statement of the Company in this Indenture or in any document issued in
connection with the sale of the Securities or in the Securities other than the
Trustee's certificate of authentication.
SECTION 7.05. Notice of Defaults. If a Default occurs and is
-------------------
continuing and if it is known to a Trust Officer of the Trustee, the Trustee
shall mail to each Securityholder notice of the Default within 90 days after it
occurs. Except in the case of a Default in payment of principal of or interest
on any Security (including payments pursuant to the mandatory redemption
provisions of such Security, if any), the Trustee may withhold the notice if and
so long as a committee of its Trust Officers in good faith determines that
withholding the notice is in the interests of Securityholders.
SECTION 7.06. Reports by Trustee to Holders. As promptly as
------------------------------
practicable after each May 15 beginning with May 15, 2000, and in any event
prior to July 15 in each year, the Trustee shall mail to each Securityholder a
brief report dated as of May 15 that complies with Section 313(a) of the TIA if
such report is required by such Section 313(a). The Trustee shall also comply
with Section 313(b) of the TIA.
A copy of each report at the time of its mailing to Securityholders
shall be filed with the SEC and each stock exchange (if any) on which the
Securities are listed. The Company agrees to notify promptly the Trustee
whenever the Securities become listed on any stock exchange and of any delisting
thereof.
SECTION 7.07. Compensation and Indemnity. The Company shall pay to
---------------------------
the Trustee from time to time such compensation for its services as the Company
and
<PAGE>
25
the Trustee shall from time to time agree in writing. The Trustee's
compensation shall not be limited by any law on compensation of a trustee of an
express trust. The Company shall reimburse the Trustee upon request for all
reasonable out-of-pocket expenses incurred or made by it, including costs of
collection, in addition to the compensation for its services. Such expenses
shall include the reasonable compensation and expenses, disbursements and
advances of the Trustee's agents, counsel, accountants and experts. The Company
shall indemnify each of the Trustee and any predecessor Trustee against any and
all loss, liability, damage, claim or expense (including reasonable attorneys'
fees and expenses) incurred by or in connection with the acceptance or
administration of this trust and the performance of its duties hereunder
including the costs and expenses of defending itself against any claim (whether
asserted by the Company, 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 that such loss, damage, claim, liability or
expense is due to its own negligence or bad faith. The Trustee shall notify the
Company of any claim for which it may seek indemnity promptly upon obtaining
actual knowledge thereof; provided, however, that any failure so to notify the
-------- --------
Company shall not relieve the Company of its indemnity obligations hereunder.
The Company shall defend the claim and the indemnified party shall provide
reasonable cooperation at the Company's expense in the defense. Such indemnified
parties may have separate counsel and the Company shall pay the fees and
expenses of such counsel; provided, however, that the Company shall not be
-------- -------
required to pay such fees and expenses if it assumes such indemnified parties'
defense and, in such indemnified parties' reasonable judgment, there is no
conflict of interest between the Company and such parties in connection with
such defense. The Company need not reimburse any expense or indemnify against
any loss, liability or expense incurred by an indemnified party through such
party's own wilful misconduct, negligence or bad faith.
To secure the Company's payment obligations in this Section, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee other than money or property held in trust to pay
principal of and interest and any liquidated damages on particular Securities.
The Company's payment obligations pursuant to this Section shall
survive the satisfaction or discharge of this Indenture, any rejection or
termination of this Indenture under any bankruptcy law or the resignation or
removal of the Trustee. When the Trustee incurs expenses after the occurrence of
a Default specified in Section 6.01(5) or (6) with respect to the Company, the
expenses are intended to constitute expenses of administration under the
Bankruptcy Law.
<PAGE>
26
SECTION 7.08. Replacement of Trustee. The Trustee may resign at any
-----------------------
time by so notifying the Company. The Holders of a majority in principal amount
of the Securities may remove the Trustee by so notifying the Trustee and may
appoint a successor Trustee. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee or
its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the Holders of
a majority in principal amount of the Securities and such Holders do not
reasonably promptly appoint a successor Trustee, or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Company shall promptly appoint a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.07.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
10% in principal amount of the Securities may petition, at the expense of the
Company, any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this
Section, the Company's obligations under Section 7.07 shall continue for the
benefit of the retiring Trustee.
<PAGE>
27
SECTION 7.09. Successor Trustee by Merger. If the Trustee
----------------------------
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger, conversion
or consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Securities shall have been authenticated but not delivered,
any such successor to the Trustee may adopt the certificate of authentication of
any predecessor trustee, and deliver such Securities so authenticated; and in
case at that time any of the Securities shall not have been authenticated, any
successor to the Trustee may authenticate such Securities either in the name of
any predecessor hereunder or in the name of the successor to the Trustee; and in
all such cases such certificates shall have the full force which it is anywhere
in the Securities or in this Indenture provided that the certificate of the
Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall at
------------------------------
all times satisfy the requirements of TIA (S) 310(a). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
(S) 310(b); provided, however, that there shall be excluded from the operation
-------- -------
of TIA (S) 310(b)(1) any indenture or indentures under which other securities or
certificates of interest or participation in other securities of the Company are
outstanding if the requirements for such exclusion set forth in TIA (S)
310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against Company. The
--------------------------------------------------
Trustee shall comply with TIA (S) 311(a), excluding any creditor relationship
listed in TIA (S) 311(b). A Trustee who has resigned or been removed shall be
subject to TIA (S) 311(a) to the extent indicated.
SECTION 7.12. Calculation Agent. The Company appoints and authorizes
------------------
The Bank of New York to act as Calculation Agent and The Bank of New York
accepts its obligation set forth herein and in the Securities upon the terms and
conditions hereof and thereof, and subject to the terms of the Calculation
Agency Agreement dated the date hereof, between the Company and the Calculation
Agent. The Company shall, so long as any of the Securities remain outstanding,
maintain under appointment a Calculation Agent to calculate the rate of interest
payable on the Securities in respect of each Interest Period (as defined in
Security). If the Calculation Agent is unable or unwilling to continue to act as
such, or if the Calculation Agent fails to establish the applicable rate of
interest for any Interest Period, or if the Company removes the Calculation
Agent, the Company shall appoint the office of another bank to act as the
Calculation Agent; provided, however, that the Calculation Agent shall not
-------- -------
resign or be
<PAGE>
28
removed until acceptance of an appointment by a successor as evidenced by an
appropriate agreement entered into by the Company and such successor
Calculation Agent; provided, further however, that the Trustee may resign as
-------- ---------------
Calculation Agent only if the Trustee resigns as Trustee in accordance with
Section 7.08./1/
ARTICLE 8
Discharge of Indenture; Defeasance
----------------------------------
SECTION 8.01. Discharge of Liability on Securities; Defeasance. (a)
-------------------------------------------------
When (i) the Company delivers to the Trustee all outstanding Securities (other
than Securities replaced pursuant to Section 2.08) for cancelation or (ii) all
outstanding Securities have become due and payable, whether at maturity or as a
result of the mailing of a notice of redemption pursuant to Article 3 hereof,
and the Company irrevocably deposits with the Trustee funds or U.S. Government
Obligations on which payment of principal and interest when due will be
sufficient to pay at maturity or upon redemption all outstanding Securities,
including interest thereon to maturity or such redemption date (other than
Securities replaced pursuant to Section 2.08), and if in either case the Company
pays all other sums payable hereunder by the Company, then this Indenture shall,
subject to Section 8.01(c), cease to be of further effect. The Trustee shall
acknowledge satisfaction and discharge of this Indenture on demand of the
Company accompanied by an Officers' Certificate and an Opinion of Counsel and at
the cost and expense of the Company.
(b) Subject to Sections 8.01(c) and 8.02, the Company at any time may
terminate (i) all of its obligations under the Securities and this Indenture
("legal defeasance option") or (ii) its obligations under Sections 4.02, 4.03
and 4.04 and the operation of Section 5.01, 6.01(4), 6.01(5) (with respect to
Significant Subsidiaries of the Company only) and 6.01(6) (with respect to
Significant Subsidiaries of the Company only) ("covenant defeasance option").
The Company may exercise its legal defeasance option notwithstanding its prior
exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment of the
Securities may not be accelerated because of an Event of Default. If the Company
exercises its covenant defeasance option, payment of the Securities may not be
accelerated because of an Event of Default specified in Section 6.01(4), 6.01(5)
(with respect to Significant Subsidiaries of the Company only) or 6.01(6) (with
respect to Significant Subsidiaries of the Company only).
- --------------
/1/ Same provisos should be included in Calculation Agency Agreement.
<PAGE>
29
Upon satisfaction of the conditions set forth herein and upon written
request of the Company, the Trustee shall acknowledge in writing the discharge
of those obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.04, 2.05, 2.06, 2.07, 2.08, 2.09, 7.07, 7.08 and in
this Article 8 shall survive until the Securities have been paid in full.
Thereafter, the Company's obligations in Sections 7.07, 8.04 and 8.05 shall
survive.
SECTION 8.02. Conditions to Defeasance. The Company may exercise its
-------------------------
legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee money
or U.S. Government Obligations for the payment of principal, premium (if
any) and interest on the Securities to maturity or redemption, as the case
may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and without
reinvestment on the deposited U.S. Government Obligations plus any
deposited money without investment will provide cash at such times and in
such amounts as will be sufficient to pay principal and interest when due
on all the Securities to maturity or redemption, as the case may be;
(3) 123 days pass after the deposit is made and during the 123-day
period no Default specified in Section 6.01(5) or (6) with respect to the
Company occurs which is continuing at the end of the period;
(4) the deposit does not constitute a default under any other
agreement binding on the Company;
(5) the Company delivers to the Trustee an Opinion of Counsel to the
effect that the trust resulting from the deposit does not constitute, or is
qualified as, a regulated investment company under the Investment Company
Act of 1940;
(6) in the case of the legal defeasance option, the Company shall have
delivered to the Trustee an Opinion of Counsel stating that (i) the Company
has received from, or there has been published by, the Internal Revenue
Service a ruling, or (ii) since the date of this Indenture there has been a
change in the applicable Federal income tax law, in either case to the
effect that, and based thereon such Opinion of Counsel shall confirm that,
the Securityholders will not recognize income, gain or loss for Federal
income tax purposes as a result of such
<PAGE>
30
defeasance and will be subject to Federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if
such defeasance had not occurred;
(7) in the case of the covenant defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Securityholders will not recognize income, gain or loss for Federal income
tax purposes as a result of such covenant defeasance and will be subject to
Federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such covenant defeasance had not
occurred; and
(8) the Company delivers to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent to the
defeasance and discharge of the Securities as contemplated by this Article
8 have been complied with.
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article 3.
SECTION 8.03. Application of Trust Money. The Trustee shall hold in
---------------------------
trust money or U.S. Government Obligations deposited with it pursuant to this
Article 8. It shall apply the deposited money and the money from U.S. Government
Obligations through the Paying Agent and in accordance with this Indenture to
the payment of principal of and interest on the Securities.
SECTION 8.04. Repayment to Company. The Trustee and the Paying Agent
---------------------
shall promptly turn over to the Company upon written request any excess money or
securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee and the
Paying Agent shall pay to the Company upon written request any money held by
them for the payment of principal or interest that remains unclaimed for two
years, and, thereafter, Securityholders entitled to the money must look to the
Company for payment as unsecured general creditors.
SECTION 8.05. Indemnity for Government Obligations. The Company
-------------------------------------
shall pay and shall indemnify the Trustee against any tax, fee or other charge
imposed on or assessed against deposited U.S. Government Obligations or the
principal and interest received on such U.S. Government Obligations.
<PAGE>
31
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is
--------------
unable to apply any money or U.S. Government Obligations in accordance with this
Article 8 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article 8 until such time as the Trustee
or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article 8; provided, however, that, if the
--------- -------
Company has made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such payment from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE 9
Amendments
----------
SECTION 9.01. Without Consent of Holders. The Company and the
---------------------------
Trustee may amend this Indenture or the Securities without notice to or consent
of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article 5;
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities; provided, however, that the
-------- -------
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the
Company;
(5) to comply with any requirement of the SEC in connection with
qualifying, or maintaining the qualification of, this Indenture under the
TIA;
(6) to make any change that does not adversely affect the rights of
any Securityholder;
<PAGE>
32
(7) to evidence and provide for acceptance of appointment hereunder by
a successor trustee;
(8) to convey, transfer, assign, mortgage or pledge to the Trustee as
security for the Securities any property or assets which the Company may be
required to convey, transfer, assign, mortgage or pledge in accordance with
the provisions of Section 4.04; or
(9) to provide for the issuance of additional Securities pursuant to
this Indenture, which additional Securities shall have terms identical to
the initial Securities and which shall be treated, together with any
outstanding Securities, as a single issue of Securities; provided, further
-------- -------
however that no Additional Securities may be issued at a price that would
-------
cause such additional Securities to have "original issue discount" within
the meaning of Section 1273 of the Code (other than de minimis original
issue discount, as defined in applicable Treasury regulations).
After an amendment under this Section becomes effective, the Company
shall mail to Securityholders a notice briefly describing such amendment. The
failure to give such notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section.
SECTION 9.02. With Consent of Holders. The Company and the Trustee
------------------------
may amend this Indenture or the Securities without notice to any Securityholder
but with the written consent of the Holders of at least a majority in principal
amount of the Securities then outstanding (including consents obtained in
connection with a tender offer or exchange for the Securities). However, without
the consent of each Securityholder affected, an amendment may not:
(1) reduce the amount of Securities whose Holders must consent to an
amendment;
(2) reduce the rate of or extend the time for payment of interest or
any liquidated damages on any Security;
(3) reduce the principal of or extend the Stated Maturity of any
Security;
(4) reduce the premium, if any, payable upon the redemption of any
Security or change the time at which any Security may be redeemed in
accordance with Article 3;
(5) make any Security payable in money other than that stated in the
Security; or
<PAGE>
33
(6) make any change in Section 6.04 or 6.07 or the second sentence of
this Section 9.02.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent approves the substance thereof.
After an amendment under this Section becomes effective, the Company
shall mail to Securityholders a notice briefly describing such amendment. The
failure to give such notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section.
SECTION 9.03. Compliance with Trust Indenture Act. Every amendment
------------------------------------
to this Indenture or the Securities shall comply with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers. A
----------------------------------------------
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any such
Holder or subsequent Holder may revoke the consent or waiver as to such Holder's
Security or portion of the Security if the Trustee receives the notice of
revocation before the date on which the Trustee receives an Officers'
Certificate from the Company certifying that the requisite number of consents
have been received. After an amendment or waiver becomes effective, it shall
bind every Securityholder. An amendment or waiver becomes effective upon the (i)
receipt by the Company or the Trustee of the requisite number of consents, (ii)
satisfaction of conditions to effectiveness as set forth in this Indenture and
any indenture supplemental hereto containing such amendment or waiver and (iii)
execution of such amendment or waiver (or supplemental indenture) by the Company
and the Trustee.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Securityholders entitled to give their consent or
take any other action described above or required or permitted to be taken
pursuant to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Securityholders at such
record date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such record date. No such consent shall be valid or effective for more than 120
days after such record date.
<PAGE>
34
SECTION 9.05. Notation on or Exchange of Securities. If an amendment
--------------------------------------
changes the terms of a Security, the Trustee may require the Holder of the
Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Company or the Trustee so determines, the Company
in exchange for the Security shall issue and the Trustee shall authenticate a
new Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
SECTION 9.06. Trustee To Sign Amendments. The Trustee shall sign any
---------------------------
amendment authorized pursuant to this Article 9 if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to Section 7.01) shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel stating that such
amendment is authorized or permitted by this Indenture and that such amendment
is the legal, valid and binding obligation of the Company enforceable against
them in accordance with its terms, subject to customary exceptions, and complies
with the provisions hereof (including Section 9.03).
SECTION 9.07. Payment for Consent. Neither the Company nor any
--------------------
Affiliate of the Company shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture or the Securities unless such consideration is
offered to be paid to all Holders that so consent, waive or agree to amend in
the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
ARTICLE 10
Miscellaneous
-------------
SECTION 10.01. Trust Indenture Act Controls. If any provision of
-----------------------------
this Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
<PAGE>
35
SECTION 10.02. Notices. Any notice or communication shall be in
--------
writing (including via telecopy, promptly confirmed in writing) and delivered in
person or mailed by first-class mail addressed as follows:
if to the Company:
The Limited, Inc.
Three Limited Parkway
Columbus, OH 43230
Attention of: Samuel Fried
Copy to: Patrick Hectorne
if to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, NY 10286
Attention of: Corporate Trust Trustee Administration
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall be mailed
to the Securityholder at the Securityholder's address as it appears on the
registration books of the Registrar and shall be sufficiently given if so mailed
within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 10.03. Communication by Holders with Other Holders.
--------------------------------------------
Securityholders may communicate pursuant to TIA (S) 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA (S) 312(c).
<PAGE>
36
SECTION 10.04. Certificate and Opinion as to Conditions Precedent.
---------------------------------------------------
Upon any request or application by the Company to the Trustee to take or refrain
from taking any action under this Indenture, the Company shall furnish to the
Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
SECTION 10.05. Statements Required in Certificate or Opinion. Each
----------------------------------------------
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 10.06. When Securities Disregarded. In determining whether
----------------------------
the Holders of the required principal amount of Securities have concurred in any
direction, waiver or consent, Securities owned by the Company or by any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company shall be disregarded and deemed not to be
outstanding, except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which a Trust Officer of the Trustee actually knows are so owned
shall be so disregarded. Subject to the foregoing, only Securities outstanding
at the time shall be considered in any such determination.
<PAGE>
37
SECTION 10.07. Rules by Trustee, Paying Agent and Registrar. The
---------------------------------------------
Trustee may make reasonable rules for action by or a meeting of Securityholders.
The Registrar and the Paying Agent may make reasonable rules for their
functions.
SECTION 10.08. Non-Business Days. If any Interest Payment Date (as
------------------
defined in Exhibit A), other than at maturity, for the Securities would
otherwise be a day that is not a Business Day, such Interest Payment Date shall
be postponed to the next day that is a Business Day, except that if such
Business Day is in the next succeeding calendar month, such Interest Payment
Date shall be the immediately preceding Business Day. If the maturity for the
Securities falls on a day which is not a Business Day, payment of principal and
interest with respect to such Security will be paid on the next succeeding
Business Day with the same force and effect as if made on such date and no
interest on such payment will accrue from and after such date. If a regular
record date is not a Business Day, the record date shall not be affected.
SECTION 10.09. GOVERNING LAW. THIS INDENTURE AND THE SECURITIES
--------------
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW
TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
SECTION 10.10. Liability Solely Corporate. No recourse shall be had
---------------------------
for the payment of the principal of, premium, if any, or interest on any
Security or for any claim based thereon or otherwise in respect thereof or of
the indebtedness represented thereby, or upon any obligation, covenant or
agreement of this Indenture, against any incorporator, stockholder, officer or
director, as such, past, present or future, of the Company or of any successor
corporation, either directly or through the Company or any successor
corporation, whether by virtue of any constitutional provision, statute or rule
of law, or by the enforcement of any assessment or penalty or otherwise; it
being expressly agreed and understood that this Indenture and the Securities are
solely corporate obligations, and that no personal liability whatsoever shall be
attached to, or be incurred by, any incorporator, stockholder, officer or
director, as such, past, present or future, of the Company or of any successor
corporation, either directly or through the Company or any successor
corporation, because of the incurring of the indebtedness hereby authorized or
under or by reason of any of the obligations, covenants, promises or agreements
contained in this Indenture or in any of the Securities or to be implied
herefrom or therefrom, and that all liability, if any, of that character against
every such incorporator, stockholder, officer and director is, by the acceptance
of the Securities and as a condition of, and as part of the consideration for,
the execution of this Indenture and the issue of the Securities, expressly
waived and released.
<PAGE>
38
SECTION 10.11. Successors. All agreements of the Company in this
-----------
Indenture and the Securities shall bind its successors. All agreements of the
Trustee in this Indenture shall bind its successors.
SECTION 10.12. Multiple Originals. The parties may sign any number
-------------------
of copies of this Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement. One signed copy is enough to prove
this Indenture.
SECTION 10.13. Table of Contents; Headings. The table of contents,
----------------------------
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
<PAGE>
39
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed as of the date first written above.
THE LIMITED, INC.
by___________________________________________
Name:
Title:
THE BANK OF NEW YORK, as Trustee
by____________________________________________
Name:
Title:
<PAGE>
APPENDIX A
PROVISIONS RELATING TO SECURITIES
---------------------------------
1. Definitions
-----------
1.1 Definitions
-----------
For the purposes of this Appendix A the following terms shall have the
meanings indicated below:
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Regulation S Global Security or beneficial interest
therein, the rules and procedures of the Depositary for such Global Security,
Euroclear and Cedel, in each case to the extent applicable to such transaction
and as in effect from time to time.
"Cedel" means Cedelbank, societe anonyme., or any successor securities
clearing agency.
"Definitive Security" means a certificated Security (bearing the
Restricted Securities Legend if the transfer of such Security is restricted by
applicable law) that does not include the Global Securities Legend.
"Depositary" means The Depository Trust Company, its nominees and
their respective successors.
"Euroclear" means the Euroclear Clearance System or any successor
securities clearing agency.
"Global Securities Legend" means the legend set forth under that
caption in Exhibit A to this Indenture.
"Initial Purchaser" means J.P. Morgan Securities Inc.
"Purchase Agreement" means the Purchase Agreement dated May 17, 1999,
between the Company and the Initial Purchaser.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Regulation S" means Regulation S under the Securities Act.
"Regulation S Securities" means all Initial Securities offered and
sold outside the United States in reliance on Regulation S.
<PAGE>
"Restricted Period", with respect to any Securities, means the period
of 40 consecutive days beginning on and including the later of (i) the day on
which such Securities are first offered to persons other than distributors (as
defined in Regulation S under the Securities Act) in reliance on Regulation S
and (ii) the Issue Date with respect to such Securities.
"Restricted Securities Legend" means the legend set forth in Section
2.3(e)(i) herein.
"Rule 144A" means Rule 144A under the Securities Act.
"Rule 144A Securities" means all Initial Securities offered and sold
to QIBs in reliance on Rule 144A.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Custodian" means the custodian with respect to a Global
Security (as appointed by the Depositary) or any successor person thereto, who
shall initially be the Trustee.
"Transfer Restricted Securities" means Definitive Securities and any
other Securities that bear or are required to bear the Restricted Securities
Legend.
1.2 Other Definitions
-----------------
Term: Defined in Section:
---- ------------------
"Agent Members"...........................................2.1(b)
"Global Security".........................................2.1(a)
"Regulation S Global Security"............................2.1(a)
"Rule 144A Global Security"...............................2.1(a)
<PAGE>
3
2. The Securities
--------------
2.1 Form and Dating
---------------
The initial Securities issued on the date hereof will be (i) offered
and sold by the Company pursuant to the Purchase Agreement and (ii) resold,
initially only to (A) QIBs in reliance on Rule 144A and (B) Persons other than
U.S. Persons (as defined in Regulation S) in reliance on Regulation S. Such
initial Securities may thereafter be transferred to, among others, QIBs and
purchasers in reliance on Regulation S. Additional Securities offered after the
date hereof may be offered and sold by the Company from time to time; provided,
--------
however, that such additional Securities shall have terms identical to the
- -------
initial Securities and shall be treated, together with any outstanding
Securities, as a single issue of Securities; provided, further however, that no
-------- ---------------
Additional Securities may be issued at a price that would cause such additional
Securities to have "original issue discount" within the meaning of Section 1273
of the Code (other than de minimis original issue discount, as defined in
applicable Treasury regulations).
(a) Global Securities. Rule 144A Securities shall be issued
------------------
initially in the form of one or more permanent global Securities in definitive,
fully registered form (collectively, the "Rule 144A Global Security") and
Regulation S Securities shall be issued initially in the form of one or more
global Securities (collectively, the "Regulation S Global Security"), in each
case without interest coupons and bearing the Global Securities Legend and
Restricted Securities Legend, which shall be deposited on behalf of the
purchasers of the Securities represented thereby with the Securities Custodian,
and registered in the name of the Depositary or a nominee of the Depositary,
duly executed by the Company and authenticated by the Trustee as provided in
this Indenture. Beneficial ownership interests in the Regulation S Global
Security shall not be exchangeable for interests in the Rule 144A Global
Security or any other Security without a Restricted Securities Legend until the
expiration of the Restricted Period. The Rule 144A Global Security and the
Regulation S Global Security are each referred to herein as a "Global Security"
and are collectively referred to herein as "Global Securities." The aggregate
principal amount of the Global Securities may from time to time be increased or
decreased by adjustments made on the records of the Trustee and the Depositary
or its nominee as hereinafter provided.
(b) Book-Entry Provisions. This Section 2.1(b) shall apply only to
---------------------
a Global Security deposited with or on behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance with
this Section 2.1(b) and pursuant to an order of the Company, authenticate and
deliver initially one or more Global Securities that (a) shall be registered in
the name of the Depositary for such Global Security or Global Securities or the
nominee of such Depositary and (b) shall be delivered by the Trustee to such
Depositary or pursuant to such Depositary's instructions or held by the Trustee
as Securities Custodian.
<PAGE>
4
Members of, or participants in, the Depositary ("Agent Members") shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depositary or by the Trustee as Securities Custodian or
under such Global Security, and the Depositary may be treated by the Company,
the Trustee and any agent of the Company or the Trustee as the absolute owner of
such Global Security for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Trustee or any agent of the
Company or the Trustee from giving effect to any written certification, proxy or
other authorization furnished by the Depositary or impair, as between the
Depositary and its Agent Members, the operation of customary practices of such
Depositary governing the exercise of the rights of a holder of a beneficial
interest in any Global Security.
(c) Definitive Securities. Except as provided in Section 2.3 or 2.4,
----------------------
owners of beneficial interests in Global Securities will not be entitled to
receive physical delivery of certificated Securities.
2.2 Authentication. The Trustee shall authenticate and make available for
---------------
delivery upon a written order of the Company signed by two Officers (1)
Securities for original issue on the date hereof in an aggregate principal
amount of $100,000,000 and (2) additional Securities offered and sold by the
Company from time to time in accordance with the terms of the Indenture. Such
order shall specify the amount of the Securities to be authenticated, the date
on which the original issue of Securities is to be authenticated. The aggregate
principal amount of Securities outstanding at any time may not exceed
$100,000,000, except as provided in Section 2.01 and 2.08 of this Indenture.
2.3 Transfer and Exchange. (a) Transfer and Exchange of Definitive
---------------------- -----------------------------------
Securities. When Definitive Securities are presented to the Registrar with a
- -----------
request:
(x) to register the transfer of such Definitive Securities; or
(y) to exchange such Definitive Securities for an equal principal
amount of Definitive Securities of other authorized denominations,
the Registrar shall register the transfer or make the exchange as requested if
its reasonable requirements for such transaction are met; provided, however,
-------- -------
that the Definitive Securities surrendered for transfer or exchange:
(i) shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company and the Registrar,
duly executed by the Holder thereof or his attorney duly authorized in
writing; and
<PAGE>
5
(ii) are accompanied by the following additional information and
documents, as applicable:
(A) if such Definitive Securities are being delivered to the
Registrar by a Holder for registration in the name of such Holder,
without transfer, a certification from such Holder to that effect (in
the form set forth on the reverse side of the Security); or
(B) if such Definitive Securities are being transferred to the
Company, a certification to that effect (in the form set forth on the
reverse side of the Security); or
(C) if such Definitive Securities are being transferred pursuant
to an exemption from registration in accordance with Rule 144 under
the Securities Act or in reliance upon another exemption from the
registration requirements of the Securities Act, (i) a certification
to that effect (in the form set forth on the reverse side of the
Security) and (ii) if the Company so requests, an opinion of counsel
or other evidence reasonably satisfactory to it as to the compliance
with the restrictions set forth in the legend set forth in Section
2.3(e)(i).
(b) Restrictions on Transfer of a Definitive Security for a
-------------------------------------------------------
Beneficial Interest in a Global Security. A Definitive Security may not be
- -----------------------------------------
exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the Trustee of
a Definitive Security, duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company and the Registrar,
together with:
(i) certification (in the form set forth on the reverse side of the
Initial Security) that such Definitive Security is being transferred (A) to
a QIB in accordance with Rule 144A or (B) outside the United States in an
offshore transaction within the meaning of Regulation S and in compliance
with Rule 904 under the Securities Act; and
(ii) written instructions directing the Trustee to make, or to direct
the Securities Custodian to make, an adjustment on its books and records
with respect to such Global Security to reflect an increase in the
aggregate principal amount of the Securities represented by the Global
Security, such instructions to contain information regarding the Depositary
account to be credited with such increase,
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Securities Custodian, the
aggregate principal amount of
<PAGE>
6
Securities represented by the Global Security to be increased by the aggregate
principal amount of the Definitive Security to be exchanged and shall credit or
cause to be credited to the account of the Person specified in such instructions
a beneficial interest in the Global Security equal to the principal amount of
the Definitive Security so canceled. If no Global Securities are then
outstanding and the Global Security has not been previously exchanged for
certificated securities pursuant to Section 2.4, the Company shall issue and the
Trustee shall authenticate, upon written order of the Company in the form of an
Officers' Certificate, a new Global Security in the appropriate principal
amount.
(c) Transfer and Exchange of Global Securities. (i) The transfer
-------------------------------------------
and exchange of Global Securities or beneficial interests therein shall be
effected through the Depositary, in accordance with this Indenture (including
applicable restrictions on transfer set forth herein, if any) and the procedures
of the Depositary therefor. A transferor of a beneficial interest in a Global
Security shall deliver a written order given in accordance with the Depositary's
procedures containing information regarding the participant account of the
Depositary to be credited with a beneficial interest in such Global Security or
another Global Security and such account shall be credited in accordance with
such order with a beneficial interest in the applicable Global Security and the
account of the Person making the transfer shall be debited by an amount equal to
the beneficial interest in the Global Security being transferred. Transfers by
an owner of a beneficial interest in the Rule 144A Global Security to a
transferee who takes delivery of such interest through the Regulation S Global
Security, whether before or after the expiration of the Restricted Period, shall
be made only upon receipt by the Trustee of a certification from the transferor
to the effect that such transfer is being made in accordance with Regulation S
or (if available) Rule 144 under the Securities Act and that, if such transfer
is being made prior to the expiration of the Restricted Period, the interest
transferred shall be held immediately thereafter through Euroclear or Cedel.
(ii) If the proposed transfer is a transfer of a beneficial interest
in one Global Security to a beneficial interest in another Global Security,
the Registrar shall reflect on its books and records the date and an
increase in the principal amount of the Global Security to which such
interest is being transferred in an amount equal to the principal amount of
the interest to be so transferred, and the Registrar shall reflect on its
books and records the date and a corresponding decrease in the principal
amount of Global Security from which such interest is being transferred.
(iii) Notwithstanding any other provisions of this Appendix (other
than the provisions set forth in Section 2.4), a Global Security may not be
transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
<PAGE>
7
(d) Restrictions on Transfer of Regulation S Global Security. (i)
---------------------------------------------------------
Prior to the expiration of the Restricted Period, interests in the Regulation S
Global Security may only be held through Euroclear or Cedel. During the
Restricted Period, beneficial ownership interests in the Regulation S Global
Security may only be sold, pledged or transferred through Euroclear or Cedel in
accordance with the Applicable Procedures and only (A) to the Company, (B) so
long as such security is eligible for resale pursuant to Rule 144A, to a person
whom the selling holder reasonably believes is a QIB that purchases for its own
account or for the account of a QIB to whom notice is given that the resale,
pledge or transfer is being made in reliance on Rule 144A, (C) in an offshore
transaction in accordance with Regulation S, (D) pursuant to an exemption from
registration under the Securities Act provided by Rule 144 (if applicable) under
the Securities Act or (E) pursuant to an effective registration statement under
the Securities Act, in each case in accordance with any applicable securities
laws of any state of the United States. Prior to the expiration of the
Restricted Period, transfers by an owner of a beneficial interest in the
Regulation S Global Security to a transferee who takes delivery of such interest
through the Rule 144A Global Security shall be made only in accordance with
Applicable Procedures and upon receipt by the Trustee of a written certification
from the transferor of the beneficial interest in the form provided on the
reverse of the Initial Security to the effect that such transfer is being made
to a person whom the transferor reasonably believes is a QIB within the meaning
of Rule 144A in a transaction meeting the requirements of Rule 144A. Such
written certification shall no longer be required after the expiration of the
Restricted Period.
(ii) Upon the expiration of the Restricted Period, beneficial
ownership interests in the Regulation S Global Security shall be
transferable in accordance with applicable law and the other terms of this
Indenture.
(e) Legend.
-------
(i) Except as permitted by the following paragraphs (ii), (iii) or
(iv), each Security certificate evidencing the Global Securities and the
Definitive Securities (and all Securities issued in exchange therefor or in
substitution thereof) shall bear a legend in substantially the following
form (each defined term in the legend being defined as such for purposes of
the legend only):
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.
<PAGE>
8
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR
OF SUCH SECURITY), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C)
FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES
IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A 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, (D) PURSUANT TO OFFERS AND SALES 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 TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO
ANY SUCH OFFER, SALE OR TRANSFER 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. THIS LEGEND WILL BE REMOVED UPON
THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
Each Definitive Security shall bear the following additional legend:
"IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION
AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE
TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS."
(ii) Upon any sale or transfer of a Transfer Restricted Security that
is a Definitive Security, the Registrar shall permit the Holder thereof to
exchange such Transfer Restricted Security for a Definitive Security that
does not bear the legends set forth above and rescind any restriction on
the transfer of such Transfer Restricted Security if the Holder certifies
in writing to the Registrar that its request for such exchange was made in
reliance on Rule 144 (such certification to be in the form set forth on the
reverse of the Initial Security).
<PAGE>
9
(iii) Upon a sale or transfer after the expiration of the Restricted
Period of any Security acquired pursuant to Regulation S, all requirements
that such Security bear the Restricted Securities Legend shall cease to
apply and the requirements requiring any such Security be issued in global
form shall continue to apply.
(f) Cancelation or Adjustment of Global Security. At such time as
---------------------------------------------
all beneficial interests in a Global Security have either been exchanged for
Definitive Securities, transferred, redeemed, repurchased or canceled, such
Global Security shall be returned by the Depositary to the Trustee for
cancelation or retained and canceled by the Trustee. At any time prior to such
cancelation, if any beneficial interest in a Global Security is exchanged for
Definitive Securities, transferred in exchange for an interest in another Global
Security, redeemed, repurchased or canceled, the principal amount of Securities
represented by such Global Security shall be reduced and an adjustment shall be
made on the books and records of the Trustee (if it is then the Securities
Custodian for such Global Security) with respect to such Global Security, by the
Trustee or the Securities Custodian, to reflect such reduction.
(g) Obligations with Respect to Transfers and Exchanges of
----------------------------------------- ------------
Securities.
- -----------
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate, Definitive Securities and
Global Securities at the Registrar's request.
(ii) No service charge shall be made for any registration of transfer
or exchange, but the Company may require payment of a sum sufficient to
cover any transfer tax, assessments, or similar governmental charge payable
in connection therewith (other than any such transfer taxes, assessments or
similar governmental charge payable upon exchange or transfer pursuant to
Section 9.05 of this Indenture).
(iii) Prior to the due presentation for registration of transfer of
any Security, the Company, the Trustee, the Paying Agent or the Registrar
may deem and treat the person in whose name a Security is registered as the
absolute owner of such Security for the purpose of receiving payment of
principal of and interest on such Security and for all other purposes
whatsoever, whether or not such Security is overdue, and none of the
Company, the Trustee, the Paying Agent or the Registrar shall be affected
by notice to the contrary.
(iv) All Securities issued upon any transfer or exchange pursuant to
the terms of this Indenture shall evidence the same debt and shall be
entitled to the same benefits under this Indenture as the Securities
surrendered upon such transfer or exchange.
<PAGE>
10
(h) No Obligation of the Trustee.
-----------------------------
(i) The Trustee shall have no responsibility or obligation to any
beneficial owner of a Global Security, a member of, or a participant in the
Depositary or any other Person with respect to the accuracy of the records
of the Depositary or its nominee or of any participant or member thereof,
with respect to any ownership interest in the Securities or with respect to
the delivery to any participant, member, beneficial owner or other Person
(other than the Depositary) of any notice (including any notice of
redemption or repurchase) or the payment of any amount, under or with
respect to such Securities. All notices and communications to be given to
the Holders and all payments to be made to Holders under the Securities
shall be given or made only to the registered Holders (which shall be the
Depositary or its nominee in the case of a Global Security). The rights of
beneficial owners in any Global Security shall be exercised only through
the Depositary subject to the applicable rules and procedures of the
Depositary. The Trustee may conclusively rely and shall be fully protected
in relying upon information furnished by the Depositary with respect to its
members, participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with respect to any
transfer of any interest in any Security (including any transfers between
or among Depositary participants, members or beneficial owners in any
Global Security) other than to require delivery of such certificates and
other documentation or evidence as are expressly required by, and to do so
if and when expressly required by, the terms of this Indenture, and to
examine the same to determine substantial compliance as to form with the
express requirements hereof.
2.4 Definitive Securities.
----------------------
(a) A Global Security deposited with the Depositary or with the
Trustee as Securities Custodian pursuant to Section 2.1 shall be transferred to
the beneficial owners thereof in the form of Definitive Securities in an
aggregate principal amount equal to the principal amount of such Global
Security, in exchange for such Global Security, only if such transfer complies
with Section 2.3 and (i) the Depositary notifies the Company that it is
unwilling or unable to continue as a Depositary for such Global Security or if
at any time the Depositary ceases to be a "clearing agency" registered under the
Exchange Act, and a successor depositary is not appointed by the Company within
90 days of such notice, or (ii) an Event of Default has occurred and is
continuing or (iii) the Company, in its sole discretion, notifies the Trustee in
writing that it elects to cause the issuance of certificated Securities under
this Indenture.
<PAGE>
11
(b) Any Global Security that is transferable to the beneficial owners
thereof pursuant to this Section 2.4 shall be surrendered by the Depositary to
the Trustee, to be so transferred, in whole or from time to time in part,
without charge, and the Trustee shall authenticate and deliver, upon such
transfer of each portion of such Global Security, an equal aggregate principal
amount of Definitive Securities of authorized denominations. Any portion of a
Global Security transferred pursuant to this Section shall be executed,
authenticated and delivered only in denominations of $1,000 and any integral
multiple thereof and registered in such names as the Depositary shall direct.
Any certificated Initial Security in the form of a Definitive Security delivered
in exchange for an interest in the Global Security shall, except as otherwise
provided by Section 2.3(e), bear the Restricted Securities Legend.
(c) Subject to the provisions of Section 2.4(b), the registered Holder
of a Global Security may grant proxies and otherwise authorize any Person,
including Agent Members and Persons that may hold interests through Agent
Members, to take any action which a Holder is entitled to take under this
Indenture or the Securities.
(d) In the event of the occurrence of any of the events specified in
Section 2.4(a)(i), (ii) or (iii), the Company will promptly make available to
the Trustee a reasonable supply of Definitive Securities in fully registered
form without interest coupons.
<PAGE>
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
SUCH SECURITY), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO
LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF
<PAGE>
2
A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES 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 TO THE COMPANY'S AND
THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND
WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE.
<PAGE>
No. QIB-1 $100,000,000
Series A Floating Rate Note due May 2000
CUSIP No.88335MAA0
THE LIMITED, INC., a Delaware corporation, promises to pay to Cede &
Co., or registered assigns, the principal sum of ONE HUNDRED MILLION DOLLARS
listed on the Schedule of Increases or Decreases in Global Security attached
hereto on May 22, 2000.
Interest Payment Dates: February 22, May 22, August 22 and November
22.
Record Dates: February 7, May 7, August 7 and November 7.
<PAGE>
2
Additional provisions of this Security are set forth on the other side
of this Security.
IN WITNESS WHEREOF, the parties have caused this instrument to be duly
executed.
THE LIMITED, INC.,
By:_________________________
Name:
Title:
By:_________________________
Name:
Title:
Dated: May 19, 1999
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE BANK OF NEW YORK,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
By:_________________________
Authorized Signatory
<PAGE>
3
[REVERSE SIDE OF SECURITY]
Series A Floating Rate Note due May 2000
1. Interest
--------
THE LIMITED INC., a Delaware corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being herein
called the "Company"), promises to pay interest on the principal amount of this
Security at the rate per annum shown above. The Company shall pay interest at a
rate per annum, reset quarterly, equal to LIBOR (as defined below) plus 55 basis
points (.55%) as determined by the Calculation Agent (as defined below).
Interest shall be computed on the basis of a 360-day year and the actual number
of days in the applicable Interest Period. The Company shall pay interest
quarterly in arrears on February 22, May 22, August 22 and November 22 of each
year, commencing on August 22, 1999 (each an "Interest Payment Date"), for the
period commencing on and including the immediately preceding Interest Payment
Date (or, in the case of the first Interest Period, commencing on and including
May 19, 1999) and ending on and including the day preceding the next Interest
Payment Date (an "Interest Period"). Interest shall be payable to the persons in
whose names the Securities are registered at the close of business on the
fifteenth calendar day prior to the Interest Payment Date (each a "Record
Date"). The principal of the Securities, together with the interest accrued and
unpaid thereon, is due on May 22, 2000 (the "Maturity Date").
If any Interest Payment Date, other than at the Maturity Date, for the
Securities would otherwise be a day that is not a Business Day (as defined
below), such Interest Payment Date shall be postponed to the next day that is a
Business Day, except that if such Business Day is in the next succeeding
calendar month, such Interest Payment Date shall be the immediately preceding
Business Day. If the Maturity Date for the Securities falls on a day which is
not a Business Day, payment of principal and interest with respect to such
Security will be paid on the next succeeding Business Day with the same force
and effect as if made on such date and no interest on such payment will accrue
from and after such date.
The interest rate for each Interest Period shall be determined by the
Calculation Agent in accordance with the following provisions:
The per annum rate of interest for each Interest Period shall be
three-month LIBOR (as defined below), on the second Business Day preceding the
relevant Interest Reset Date for such Interest Period (the "Interest
Determination Date") plus 55 basis points (.55%). The initial Interest
Determination Date will be May 17, 1999.
<PAGE>
4
"LIBOR" for each Interest Period shall be determined by the Calculation Agent in
accordance with the following provisions:
(i) On each Interest Determination Date, the Calculation Agent shall
ascertain the offered rate for three-month deposits in U.S. dollars in the
London interbank market, which appears on the Telerate Page 3750, as of
11:00 a.m. (London time) on such Interest Determination Date.
(ii) If such rate does not appear on the Telerate Page 3750, or the
Telerate Page 3750 is unavailable, the Calculation Agent shall request each
of four major banks in the London interbank (the "Reference Banks") to
provide the Calculation Agent with its offered quotation (expressed as a
rate per annum) for three-month deposits in U.S. dollars to leading banks
in the London interbank market at approximately 11:00 a.m. (London time) on
the Interest Determination Date. If at least two such quotations are
provided, LIBOR in respect of the Interest Determination Date shall be the
arithmetic mean of such quotations.
(iii) If less than two of the Reference Banks provide the Calculation
Agent with such offered quotations, LIBOR in respect of that Interest
Determination Date shall be the arithmetic mean of the rates quoted by
three major banks in the City of New York (selected by the Calculation
Agent) at approximately 11:00 a.m., New York City time, on that Interest
Determination Date for three-month loans in U.S. dollars to leading
European banks, in a principal amount equal to an amount of not less than
$1 million that is representative for a single transaction in such market
at such time; provided, however, that if the banks selected as aforesaid by
-------- -------
the Calculation Agent are not quoting as mentioned in this sentence, LIBOR
shall be LIBOR in effect of such Interest Determination Date.
"Business Day" means any day (other than a Saturday or Sunday) on
which banking institutions in the City of New York are open for business and
which is also a London Banking Day.
"Interest Reset Date" means with respect to any Interest Period, the
first day of such Interest Period.
"London Banking Day" means any day (other than a Saturday or Sunday)
on which dealings in deposits are transacted in the London interbank market.
"Telerate Page 3750" means the display designated as page "3750" on
the Dow Jones Telerate Service (or such other page as may replace that page on
that service for the purpose of displaying the Prime Index on a daily basis).
<PAGE>
5
All percentage resulting from any calculation on the Securities shall
be rounded, if necessary, to the nearest one hundred-thousandth of a percentage
point, with five one-millionths of a percentage point rounded upward (e.g.,
----
9.876545% (or .09876545) being rounded to 9.87655% (or .0987655)), and U.S.
dollar amounts used in or resulting from such calculations shall be rounded to
the nearest cent (with one-half cent being rounded upward).
The Company shall pay interest on overdue principal at the rate borne
by the Securities plus 1% per annum, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
2. Method of Payment
-----------------
The Company shall pay interest on the Securities (except defaulted
interest) to the Persons who are registered holders of Securities at the close
of business on the February 7, May 7, August 7 or November 7 next preceding the
Interest Payment Date even if Securities are canceled after the Record Date and
on or before the Interest Payment Date. Holders must surrender Securities to a
Paying Agent to collect principal payments. The Company shall pay principal,
premium, if any, and interest in money of the United States of America that at
the time of payment is legal tender for payment of public and private debts.
Payments in respect of the Securities represented by a Global Security
(including principal, premium, if any, and interest) shall be made by wire
transfer of immediately available funds to the accounts specified by The
Depository Trust Company. Payments in respect of a certificated Security
(including principal, premium, if any, and interest), will be payable by the
Company at the office of the Paying Agent maintained for such purpose or, at the
option of the Company, by mailing a check to the registered address of each
Holder thereof; provided, however, that payments on the Securities may also be
-------- -------
made, in the case of a Holder of at least $1,000,000 aggregate principal amount
of Securities, by wire transfer to a U.S. dollar account maintained by the payee
with a bank in the United States if such Holder elects payment by wire transfer
by giving written notice to the Trustee or the Paying Agent to such effect
designating such account no later than 30 days immediately preceding the
relevant due date for payment (or such other date as the Trustee may accept in
its discretion).
3. Paying Agent and Registrar; Calculation Agent
---------------------------------------------
Initially, The Bank of New York, a New York banking corporation (the
"Trustee"), will act as Paying Agent and Registrar. The Company may appoint and
change any Paying Agent, Registrar or co-registrar without notice. The Company
or any of its domestically incorporated Wholly Owned Subsidiaries may act as
Paying Agent, Registrar or co-registrar.
<PAGE>
6
Initially, The Bank of New York, a New York banking corporation (the
"Calculation Agent"), will act as Calculation Agent. The Company shall, so long
as any of the Securities remain outstanding, maintain under appointment a
Calculation Agent to calculate the rate of interest payable on the Securities in
respect of each Interest Period. If the Calculation Agent is unable or unwilling
to continue to act as such, or if the Calculation Agent fails to establish the
applicable rate of interest for any Interest Period, or if the Company removes
the Calculation Agent, the Company shall appoint the office of another bank to
act as the Calculation Agent; provided, however, that the Calculation Agent
-------- -------
shall not resign or be removed until acceptance of an appointment by a successor
as evidenced by an appropriate agreement entered into by the Company and such
successor Calculation Agent; provided, further however, that the Trustee may
-------- ---------------
resign as Calculation Agent only if the Trustee resigns as Trustee in accordance
with Section 7.08 of the Indenture.
4. Indenture
---------
The Company issued the Securities under an Indenture dated as of May
19, 1999 (the "Indenture"), between the Company and the Trustee. The terms of
the Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. (S)(S)
------
77aaa-77bbbb) as in effect on the date of the Indenture (the "TIA"). Terms
defined in the Indenture and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all terms and provisions
of the Indenture, and Securityholders are referred to the Indenture and the TIA
for a statement of such terms and provisions.
The Securities are senior unsecured obligations of the Company limited
to $100,000,000 aggregate principal amount at any one time outstanding (subject
to Section 2.01 of the Indenture). This Security is one of the Securities
referred to in the Indenture issued in an aggregate principal amount of
$100,000,000. Pursuant to the terms of Section 2.01 of the Indenture, an
unlimited amount of additional Securities of this series may be issued from time
to time. The Indenture imposes certain limitations on the ability of the Company
and its Significant Subsidiaries to, among other things, create or incur Liens
and make asset sales. The Indenture also imposes limitations on the ability of
the Company to consolidate or merge with or into any other Person or convey,
transfer or lease all or substantially all of the property of the Company.
5. Optional Redemption
-------------------
The Securities shall be redeemable at the option of the Company, in
whole but not in part, on not less than 15 nor more than 60 days prior notice,
at par, plus accrued and unpaid interest to the redemption date (subject to the
right of holders of record on the relevant record date to receive interest due
on the relevant Interest Payment Date.
<PAGE>
7
6. Sinking Fund
------------
The Securities are not subject to any sinking fund.
7. Denominations; Transfer; Exchange
---------------------------------
The Securities are in registered form without coupons in denominations
of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange
Securities in accordance with the Indenture. Upon any transfer or exchange, the
Registrar and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements or transfer documents and to pay any taxes required by
law or permitted by the Indenture. The Registrar need not register the transfer
of or exchange any Securities selected for redemption or to transfer or exchange
any Securities for a period of 15 days prior to the mailing of a notice of
redemption of Securities to be redeemed.
8. Persons Deemed Owners
---------------------
The registered Holder of this Security may be treated as the owner of
it for all purposes.
9. Unclaimed Money
---------------
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Company at its written request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must look
only to the Company, as unsecured general creditors, and not to the Trustee for
payment.
10. Discharge and Defeasance
------------------------
Subject to certain conditions, the Company at any time may terminate
some of or all its obligations under the Securities and the Indenture if the
Company deposits with the Trustee money or U.S. Government Obligations for the
payment of principal and interest on the Securities to redemption or maturity,
as the case may be.
<PAGE>
8
11. Amendment, Waiver
-----------------
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended without prior notice to any
Securityholder but with the written consent of the Holders of at least a
majority in aggregate principal amount of the outstanding Securities and (ii)
any default or noncompliance with any provision may be waived with the written
consent of the Holders of at least a majority in principal amount of the
outstanding Securities. Subject to certain exceptions set forth in the
Indenture, without the consent of any Holder of Securities, the Company and the
Trustee may amend the Indenture or the Securities (i) to cure any ambiguity,
omission, defect or inconsistency; (ii) to comply with Article 5 of the
Indenture; (iii) to provide for uncertificated Securities in addition to or in
place of certificated Securities; (iv) add additional covenants or to surrender
rights and powers conferred on the Company; (v) to comply with the requirements
of the SEC in order to effect or maintain the qualification of the Indenture
under the TIA; (vi) to make any change that does not adversely affect the rights
of any Securityholder; (vii) to appoint a successor trustee; (viii) to secure
the Securities; or (ix) to provide for the issuance of additional securities.
12. Defaults and Remedies
---------------------
If an Event of Default occurs (other than an Event of Default relating
to certain events of bankruptcy or insolvency of the Company) and is continuing,
the Trustee or the Holders of at least 25% in principal amount of the
outstanding Securities may declare the principal of and accrued but unpaid
interest on all the Securities to be due and payable. If an Event of Default
relating to certain events of bankruptcy or insolvency of the Company occurs,
the principal of and interest on all the Securities shall become immediately due
and payable without any declaration or other act on the part of the Trustee or
any Holders. Under certain circumstances, the Holders of a majority in principal
amount of the outstanding Securities may rescind any such acceleration with
respect to the Securities and its consequences.
If an Event of Default occurs and is continuing, the Trustee shall be
under no obligation to exercise any of the rights or powers under the Indenture
at the request or direction of any of the Holders unless such Holders have
offered to the Trustee reason able indemnity or security against any loss,
liability or expense. Except to enforce the right to receive payment of
principal, premium (if any) or interest when due, no Holder may pursue any
remedy with respect to the Indenture or the Securities unless (i) such Holder
has previously given the Trustee notice that an Event of Default is continuing,
(ii) Holders of at least 25% in principal amount of the outstanding Securities
have requested the Trustee in writing to pursue the remedy, (iii) such Holders
have offered the Trustee reasonable security or indemnity against any loss,
liability or expense, (iv) the Trustee has not complied with such request within
60 days after the receipt of the request
<PAGE>
9
and the offer of security or indemnity and (v) the Holders of a majority in
principal amount of the outstanding Securities have not given the Trustee a
direction inconsistent with such request within such 60-day period. Subject to
certain restrictions, the Holders of a majority in principal amount of the
outstanding Securities are given the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. The Trustee, however,
may refuse to follow any direction that conflicts with law or the Indenture or
that the Trustee determines is unduly prejudicial to the rights of any other
Holder or that would involve the Trustee in personal liability. Prior to taking
any action under the Indenture, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses caused
by taking or not taking such action.
13. Trustee Dealings with the Company
---------------------------------
Subject to certain limitations imposed by the TIA, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
14. No Recourse Against Others
--------------------------
A director, officer, employee or stockholder, as such, of the Company
shall not have any liability for any obligations of the Company under the
Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
15. Authentication
--------------
This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
16. Abbreviations
-------------
Customary abbreviations may be used in the name of a Securityholder or
an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
<PAGE>
10
17. Governing Law
-------------
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
18. CUSIP Numbers
-------------
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder of Securities upon written
request and without charge to the Holder a copy of the Indenture which has in it
the text of this Security.
<PAGE>
11
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this
Security on the books of the Company. The agent may substitute another to act
for him.
- ------------------------------------------------------------
Date: Your Signature:
------------------ ----------------------
- ------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
<PAGE>
12
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF
TRANSFER RESTRICTED SECURITIES
This certificate relates to $_________ principal amount of Securities held in
(check applicable space) ____ book-entry or _____ definitive form by the
undersigned.
The undersigned (check one box below):
[_] has requested the Trustee by written order to deliver in exchange for its
beneficial interest in the Global Security held by the Depositary a
Security or Securities in definitive, registered form of authorized
denominations and an aggregate principal amount equal to its beneficial
interest in such Global Security (or the portion thereof indicated above);
[_] has requested the Trustee by written order to exchange or register the
transfer of a Security or Securities.
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act, the undersigned confirms that such Securities
are being transferred in accordance with its terms:
CHECK ONE BOX BELOW
(1) [_] to the Company; or
(2) [_] pursuant to an effective registration statement under the
Securities Act of 1933; or
(3) [_] inside the United States to a "qualified institutional buyer"
(as defined in Rule 144A under the Securities Act of 1933) that
purchases for its own account or for the account of a qualified
institutional buyer to whom notice is given that such transfer is
being made in reliance on Rule 144A, in each case pursuant to and
in compliance with Rule 144A under the Securities Act of 1933; or
(4) [_] outside the United States in an offshore transaction within the
meaning of Regulation S under the Securities Act in compliance
with Rule 904 under the Securities Act of 1933; or
<PAGE>
13
(5) [_] pursuant to another available exemption from registration
provided by Rule 144 under the Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to register any
of the Securities evidenced by this certificate in the name of any Person
other than the registered holder thereof; provided, however, that if box
-------- -------
(4) or (5) is checked, the Trustee may require, prior to registering any
such transfer of the Securities, such legal opinions, certifications and
other information as the Company has reasonably requested to confirm that
such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities
Act of 1933.
------------------------
Your Signature
Signature Guarantee:
Date:
---------------------- -------------------------
Signature must be guaranteed Signature of Signature
by a participant in a Guarantee
recognized signature guaranty
medallion program or other
signature guarantor acceptable
to the Trustee
- --------------------------------------------------------------------------------
<PAGE>
14
TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, and is aware that the sale to it is being made in reliance on Rule 144A
and acknowledges that it has received such information regarding the Company as
the undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the exemption
from registration provided by Rule 144A.
Dated:
--------------- --------------------------------
NOTICE: To be executed by
an executive officer
<PAGE>
15
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The initial principal amount of this Global Security is $100,000,000.
The following increases or decreases in this Global Security have been made:
<TABLE>
<CAPTION>
Date of Amount of decrease in Amount of increase in Principal amount of this Signature of authorized
Exchange Principal Amount of this Principal Amount of this Global Security following signatory of Trustee or
Global Security Global Security such decrease or increase Securities Custodian
<S> <C> <C> <C> <C>
</TABLE>
<PAGE>
EXHIBIT 4.2
-----------
EXECUTION COPY
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THE LIMITED, INC.
$100,000,000 Series B Floating Rate Notes due November 2000
------------------------
INDENTURE
Dated as of May 19, 1999
------------------------
The Bank of New York,
Trustee
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1
Definitions and Incorporation by Reference
------------------------------------------
SECTION 1.01. Definitions........................................ 1
SECTION 1.02. Other Definitions.................................. 4
SECTION 1.03. Incorporation by Reference of Trust Indenture Act.. 5
SECTION 1.04. Rules of Construction.............................. 5
ARTICLE 2
The Securities
--------------
SECTION 2.01. Amount of Securities............................... 5
SECTION 2.02. Form and Dating.................................... 6
SECTION 2.03. Execution and Authentication....................... 6
SECTION 2.04. Registrar and Paying Agent......................... 7
SECTION 2.05. Paying Agent to Hold Money in Trust................ 8
SECTION 2.06. Securityholder Lists............................... 8
SECTION 2.07. Transfer and Exchange.............................. 8
SECTION 2.08. Replacement Securities............................. 9
SECTION 2.09. Outstanding Securities............................. 9
SECTION 2.10. Temporary Securities............................... 10
SECTION 2.11. Cancelation........................................ 10
SECTION 2.12. Defaulted Interest................................. 10
SECTION 2.13. CUSIP Numbers...................................... 10
ARTICLE 3
Redemption
----------
SECTION 3.01. Notices to Trustee................................. 10
SECTION 3.02. Notice of Redemption............................... 11
SECTION 3.03. Effect of Notice of Redemption..................... 11
SECTION 3.04. Deposit of Redemption Price........................ 12
ARTICLE 4
<PAGE>
Page
----
Covenants
---------
SECTION 4.01. Payment of Securities.............................. 12
SECTION 4.02. SEC Reports........................................ 12
SECTION 4.03. Compliance Certificate............................. 12
SECTION 4.04. Restrictions on Liens Upon Voting Stock of
Significant Subsidiaries........................ 13
SECTION 4.05. Compliance With Covenants and Conditions May Be
Waived by Holders of Securities................. 13
ARTICLE 5
Successor Company
-----------------
SECTION 5.01. When Company May Merge or Transfer Assets.......... 13
ARTICLE 6
Defaults and Remedies
---------------------
SECTION 6.01. Events of Default.................................. 14
SECTION 6.02. Acceleration....................................... 15
SECTION 6.03. Other Remedies..................................... 15
SECTION 6.04. Waiver of Past Defaults............................ 15
SECTION 6.05. Control by Majority................................ 15
SECTION 6.06. Limitation on Suits................................ 16
SECTION 6.07. Rights of Holders to Receive Payment............... 16
SECTION 6.08. Collection Suit by Trustee......................... 16
SECTION 6.09. Trustee May File Proofs of Claim................... 16
SECTION 6.10. Priorities......................................... 17
SECTION 6.11. Undertaking for Costs.............................. 17
SECTION 6.12. Waiver of Stay of Extension Laws................... 17
ARTICLE 7
Trustee; Calculation Agent
--------------------------
SECTION 7.01. Duties of Trustee.................................. 17
SECTION 7.02. Rights of Trustee.................................. 19
SECTION 7.03. Individual Rights of Trustee....................... 19
SECTION 7.04. Trustee's Disclaimer............................... 20
<PAGE>
Page
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SECTION 7.05. Notice of Defaults................................. 20
SECTION 7.06. Reports by Trustee to Holders...................... 20
SECTION 7.07. Compensation and Indemnity......................... 20
SECTION 7.08. Replacement of Trustee............................. 21
SECTION 7.09. Successor Trustee by Merger........................ 22
SECTION 7.10. Eligibility; Disqualification...................... 22
SECTION 7.11. Preferential Collection of Claims Against Company.. 21
SECTION 7.12. Calculation Agent.................................. 22
ARTICLE 8
Discharge of Indenture, Defeasance
----------------------------------
SECTION 8.01. Discharge of Liability on Securities; Defeasance... 23
SECTION 8.02. Conditions to Defeasance........................... 24
SECTION 8.03. Application of Trust Money......................... 25
SECTION 8.04. Repayment to Company............................... 25
SECTION 8.05. Indemnify for Government Obligations............... 25
SECTION 8.06. Reinstatement...................................... 25
ARTICLE 9
Amendments
----------
SECTION 9.01. Without Consent of Holders......................... 25
SECTION 9.02. With Consent of Holders............................ 26
SECTION 9.03. Compliance with Trust Indenture Act................ 27
SECTION 9.04. Revocation and Effect of Consents and Waivers...... 27
SECTION 9.05. Notation on or Exchange of Securities.............. 27
SECTION 9.06. Trustee To Sign Amendments......................... 28
SECTION 9.07. Payment for Consent................................ 28
ARTICLE 10
Miscellaneous
-------------
SECTION 10.01. Trust Indenture Act Controls....................... 28
SECTION 10.02. Notices............................................ 28
SECTION 10.03. Communication by Holders with Other Holders........ 29
SECTION 10.04. Certificate and Opinion as to Conditions Precedent. 29
<PAGE>
Page
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SECTION 10.05. Statements Required in Certificate or Opinion...... 29
SECTION 10.06. When Securities Disregarded........................ 30
SECTION 10.07. Rules by Trustee, Paying Agent and Registrar....... 30
SECTION 10.08. Non-Business Days.................................. 30
SECTION 10.09. GOVERNING LAW...................................... 30
SECTION 10.10. Liability Solely Corporate......................... 30
SECTION 10.11. Successors......................................... 31
SECTION 10.12. Multiple Originals................................. 31
SECTION 10.13. Table of Content; Headings......................... 31
Appendix A - Provisions Relating to Securities
Exhibit A - Form of Security
<PAGE>
INDENTURE dated as of May 19, 1999, between THE LIMITED,
INC., a Delaware corporation (the "Company"), and THE BANK OF NEW
YORK, a New York banking corporation, as trustee (the "Trustee").
Each party agrees as follows for the benefit of the other parties and
for the equal and ratable benefit of the Holders of the Company's Series B
Floating Rate Notes due November 2000 issued on the date hereof (the
"Securities"). Except as otherwise provided herein, the initial Securities will
be limited to $100,000,000 in aggregate principal amount outstanding.
ARTICLE 1
Definitions and Incorporation by Reference
------------------------------------------
SECTION 1.01. Definitions.
------------
"Affiliate" of any specified Person means any other Person, directly
or indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Bankruptcy Law" means Title 11, United States Code, or any similar
Federal or state law for the relief of debtors.
"Board" means the Board of Directors of the Company or any committee
thereof duly authorized to act on behalf of the Board of Directors of the
Company.
"Business Day" means any day (other than a Saturday or Sunday) on
which banking institutions in the City of New York are open for business and
which is also a London Banking Day.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
<PAGE>
2
"Closing Date" means May 19, 1999.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor and, for purposes of
any provision contained herein and required by the TIA, each other obligor on
the indenture securities.
Custodian" means any receiver, liquidator, assignee, custodian,
trustee or sequestrator (or similar official) under any Bankruptcy Law.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the Closing Date, including those set forth
in (i) the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants, (ii) statements and
pronouncements of the Financial Accounting Standards Board, (iii) such other
statements by such other entities as approved by a significant segment of the
accounting profession and (iv) the rules and regulations of the SEC governing
the inclusion of financial statements (including pro forma financial statements)
in periodic reports required to be filed pursuant to Section 13 of the Exchange
Act, including opinions and pronouncements in staff accounting bulletins and
similar written statements from the accounting staff of the SEC. All ratios and
computations based on GAAP contained in this Indenture shall be computed in
conformity with GAAP.
"Holder" or "Securityholder" means the Person in whose name a Security
is registered on the Registrar's books.
"Indebtedness" means any and all obligations of a Person for money
borrowed which in accordance with GAAP would be reflected on the balance sheet
of such Person as a liability on the date as of which Indebtedness is to be
determined.
"Indenture" means this Indenture as amended or supplemented from time
to time.
"Issue Date" means the date on which the Securities are originally
issued.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any conditional sale or other title
retention agreement or lease in the nature thereof).
<PAGE>
3
"London Banking Day" means any day (other than a Saturday or Sunday)
on which dealings in deposits are transacted in the London interbank market.
"Officer" means the Chairman of the Board, the Vice Chairman of the
Board, the Chief Financial Officer, the Treasurer or the Controller of the
Company.
"Officers' Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any Person,
means Capital Stock of any class or classes (however designated) that is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such Person,
over shares of Capital Stock of any other class of such Person.
"principal" of a Security means the principal of the Security plus the
premium, if any, payable on the Security which is due or overdue or is to become
due at the relevant time.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Securities issued under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Significant Subsidiary" means a Subsidiary (including its
Subsidiaries), which meets any of the following conditions:
(1) The Company's and its other Subsidiaries' investments in and
advances to the Subsidiary exceed 10 percent of the total assets of the
Company and its Subsidiaries consolidated as of the end of the most
recently completed fiscal year;
<PAGE>
4
(2) The Company's and its other Subsidiaries' proportionate share of
the total assets (after intercompany eliminations) of the Subsidiary
exceeds 10 percent of the total assets of the Company and its Subsidiaries
consolidated as of the end of the most recently completed fiscal year; or
(3) The Company's and its other Subsidiaries' equity in the income
from continuing operations before income taxes, extraordinary items and
cumulative effect of a change in accounting principles of the Subsidiary
exceeds 10 percent of such income of the Company and its Subsidiaries
consolidated for the most recently completed fiscal year.
For the purposes of making the prescribed income test in clause (3) of
this definition, the following shall be applicable:
(1) When a loss has been incurred by either the Company and its
consolidated Subsidiaries or the tested Subsidiary, but not both, the
equity in the income or loss of the tested Subsidiary shall be excluded
from the income of the Company and its Subsidiaries consolidated for
purposes of the computation; and
(2) If income of the Company and its Subsidiaries consolidated for the
most recent fiscal year is at least 10 percent lower than the average of
the income for the last five fiscal years, such average income shall be
substituted for purposes of the computation. Any loss years shall be
omitted for purposes of computing average income.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the final payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency beyond the control of the issuer unless such
contingency has occurred).
"Subsidiary" of any Person means any corporation, association,
partnership or other business entity a majority of the outstanding voting stock
of which is owned, directly or indirectly, by the Company or by one or more
other Subsidiaries, or by the Company and one or more other Subsidiaries. For
the purposes of this definition, "voting stock" means stock having voting power
for the election of directors, whether at all times or only so long as no senior
class of stock has such voting power by reason of any contingency; provided,
--------
however, that "voting stock" shall not include stock which the Company or any of
- -------
its Subsidiaries owning such stock is required or has agreed not to vote, or the
voting rights with respect to which have been granted to a Person other than the
Company or any of its Subsidiaries.
<PAGE>
5
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-
------
77bbbb) as in effect on the Closing Date (or, for purposes of Section 9.03, as
in effect from time to time).
"Trustee" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor.
"Trust Officer" means any officer or assistant officer of the Trustee
assigned by the Trustee to administer its corporate trust matters.
"Uniform Commercial Code" means the New York Uniform Commercial Code
as in effect from time to time.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.
"Voting Stock" of a Person means capital stock the holders of which
have general voting power under ordinary circumstances to elect at least a
majority of the board of directors of a corporation; provided that, for the
--------
purposes hereof, capital stock which carries only the right to vote conditioned
on the occurrence of an event shall not be considered voting stock whether or
not such event shall have occurred.
"Wholly Owned Subsidiary" means a Subsidiary of the Company all the
Capital Stock of which (other than directors' qualifying shares) is owned by the
Company or another Wholly Owned Subsidiary.
SECTION 1.02. Other Definitions.
------------------
Defined in
Term Section
---- --------------
"covenant defeasance option" .................................... 8.01(b)
"Event of Default"............................................... 6.01
"Global Security"................................................ Appendix A
"legal defeasance option"........................................ 8.01(b)
"Paying Agent"................................................... 2.04
"protected purchaser"............................................ 2.08
"Registrar"...................................................... 2.04
<PAGE>
6
SECTION 1.03. Incorporation by Reference of Trust Indenture Act.
--------------------------------------------------
This Indenture is subject to the mandatory provisions of the TIA, which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Holder or Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction. Unless the context otherwise
----------------------
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation; and
(5) words in the singular include the plural and words in the plural
include the singular.
<PAGE>
7
ARTICLE 2
The Securities
--------------
SECTION 2.01. Amount of Securities. The aggregate principal amount
---------------------
of the initial Securities which may be authenticated and delivered under this
Indenture is $100,000,000. The Company may from time to time offer and sell an
unlimited amount of additional Securities, which shall have terms identical to
the initial Securities and which shall be treated, together with any outstanding
Securities, as a single issue of Securities.
With respect to any additional Securities issued after the Closing
Date (except for Securities authenticated and delivered upon registration of,
transfer of, or in exchange for, or in lieu of, other Securities pursuant to
Section 2.07, 2.08, 2.09, 2.10 or the Appendix), there shall be (i) established
in or pursuant to a resolution of two Officers of the Company duly authorized by
the Board of Directors to act on behalf of the Company, (ii) accompanied by an
Opinion of Counsel from the Company to the effect that such additional
Securities comply with the provisions of this Indenture and are legal, valid,
binding and enforceable obligations of the Company, and (iii) (A) set forth or
determined in the manner provided in an Officers' Certificate or (B) established
in one or more indentures supplemental hereto, prior to the issuance of such
additional Securities:
(1) the aggregate principal amount of such additional Securities which
may be authenticated and delivered under this Indenture (except for
Securities authenticated and delivered upon registration of transfer of, or
in exchange for, or in lieu of, other Securities of the same series
pursuant to Section 2.07, 2.08, 2.09 or 2.10 or the Appendix and except for
Securities which, pursuant to Section 2.03, are deemed never to have been
authenticated and delivered hereunder); and
(2) issuance date of such additional Securities; provided, however,
-------- -------
that no additional Securities may be issued at a price that would cause
such additional Securities to have "original issue discount" within the
meaning of Section 1273 of the Code (other than de minimis original issue
discount, as defined in applicable Treasury regulations).
If any of the terms of any additional Securities are established by
action taken pursuant to a resolution on behalf of the Board of Directors in the
manner provided above, a copy of an appropriate record of such action shall be
certified by the Secretary or any Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate or the indenture supplemental hereto setting forth the terms of the
additional Securities.
<PAGE>
8
SECTION 2.02. Form and Dating. Provisions relating to the Securities
---------------
are set forth in the Appendix, which is hereby incorporated in and expressly
made a part of this Indenture. The Securities and the Trustee's certificate of
authentication shall each be substantially in the form of Exhibit A hereto,
which is hereby incorporated in and expressly made a part of this Indenture. The
Securities may have notations, legends or endorsements required by law, stock
exchange rule, agreements to which the Company is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable
to the Company). Each Security shall be dated the date of its authentication.
The Securities shall be issuable only in registered form without interest
coupons and only in denominations of $1,000 and integral multiples thereof.
SECTION 2.03. Execution and Authentication. The Chairman of the
-----------------------------
Board or the Vice Chairman of the Board and the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary of the Company duly
authorized to act on behalf of the Company shall both sign the Securities for
the Company by manual or facsimile signature.
If an officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall be
valid nevertheless.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
The Trustee shall authenticate and make available for delivery
Securities as set forth in the Appendix.
The Trustee may appoint an authenticating agent reasonably acceptable
to the Company to authenticate the Securities. Any such appointment shall be
evidenced by an instrument signed by a Trust Officer, a copy of which shall be
furnished to the Company. Unless limited by the terms of such appointment, an
authenticating agent may authenticate Securities whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as any
Registrar, Paying Agent or agent for service of notices and demands.
SECTION 2.04. Registrar and Paying Agent. The Company shall maintain
---------------------------
an office or agency where Securities may be presented for registration of
transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange. The
Company may have one or more co-registrars and one or more additional paying
agents. The term "Paying Agent" includes
<PAGE>
9
any additional paying agent, and the term "Registrar" includes any co-
registrars. The Company initially appoints the Trustee as (i) Registrar and
Paying Agent in connection with the Securities and (ii) the Securities Custodian
(as defined in the Appendix) with respect to the Global Securities (as defined
in the Appendix).
The Company shall enter into an appropriate agency agreement with any
Registrar or Paying Agent not a party to this Indenture, which shall incorporate
the terms of the TIA. The agreement shall implement the provisions of this
Indenture that relate to such agent. The Company shall notify the Trustee of the
name and address of any such agent. If the Company fails to maintain a Registrar
or Paying Agent, the Trustee shall act as such and shall be entitled to
appropriate compensation therefor pursuant to Section 7.07. The Company or any
of its domestically organized Wholly Owned Subsidiaries may act as Paying Agent
or Registrar.
The Company may remove any Registrar or Paying Agent upon written
notice to such Registrar or Paying Agent and to the Trustee; provided, however,
-------- -------
that no such removal shall become effective until (1) acceptance of an
appointment by a successor as evidenced by an appropriate agreement entered into
by the Company and such successor Registrar or Paying Agent, as the case may be,
and delivered to the Trustee or (2) notification to the Trustee that the Trustee
shall serve as Registrar or Paying Agent until the appointment of a successor in
accordance with clause (1) above. The Registrar or Paying Agent may resign at
any time upon written notice.
SECTION 2.05. Paying Agent To Hold Money in Trust. By 10:00 a.m.
------------------------------------
(New York City time) on each due date of the principal and interest on any
Security, the Company shall deposit with the Paying Agent (or if the Company or
a Subsidiary is acting as Paying Agent, segregate and hold in trust for the
benefit of the Persons entitled thereto) a sum sufficient to pay such principal
and interest when so becoming due. The Company shall require each Paying Agent
(other than the Trustee) to agree in writing that the Paying Agent shall hold in
trust for the benefit of Securityholders or the Trustee all money held by the
Paying Agent for the payment of principal of or interest on the Securities and
shall notify the Trustee of any default by the Company in making any such
payment. If the Company or a Subsidiary of the Company acts as Paying Agent, it
shall segregate the money held by it as Paying Agent and hold it as a separate
trust fund. The Company at any time may require a Paying Agent to pay all money
held by it to the Trustee and to account for any funds disbursed by the Paying
Agent. Upon complying with this Section, the Paying Agent shall have no further
liability for the money delivered to the Trustee.
SECTION 2.06. Securityholder Lists. The Trustee shall preserve in as
---------------------
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Securityholders. If the Trustee is not the
Registrar, the Company shall
<PAGE>
10
furnish, or cause the Registrar to furnish, to the Trustee, in writing at least
five Business Days before each interest payment date and at such other times as
the Trustee may request in writing, a list in such form and as of such date as
the Trustee may reasonably require of the names and addresses of
Securityholders.
SECTION 2.07. Transfer and Exchange. The Securities shall be issued
----------------------
in registered form and shall be transferable only upon the surrender of a
Security for registration of transfer and in compliance with the Appendix. When
a Security is presented to the Registrar with a request to register a transfer,
the Registrar shall register the transfer as requested if the requirements of
Section 8-401(a)(l) of the Uniform Commercial Code are met. When Securities are
presented to the Registrar with a request to exchange them for an equal
principal amount of Securities of other denominations, the Registrar shall make
the exchange as requested if the same requirements are met. To permit
registration of transfers and exchanges, the Company shall execute and the
Trustee shall authenticate Securities at the Registrar's request. The Company
may require payment of a sum sufficient to pay all taxes, assessments or other
governmental charges in connection with any transfer or exchange pursuant to
this Section. The Company shall not be required to make and the Registrar need
not register transfers or exchanges of Securities selected for redemption
(except, in the case of Securities to be redeemed in part, the portion thereof
not to be redeemed) or any Securities for a period of 15 days before a selection
of Securities to be redeemed.
Prior to the due presentation for registration of transfer of any
Security, the Company, the Trustee, the Paying Agent, and the Registrar may deem
and treat the Person in whose name a Security is registered as the absolute
owner of such Security for the purpose of receiving payment of principal of and
interest, if any, on such Security and for all other purposes whatsoever,
whether or not such Security is overdue, and none of the Company, the Trustee,
the Paying Agent, or the Registrar shall be affected by notice to the contrary.
Any Holder of a Global Security shall, by acceptance of such Global
Security, agree that transfers of beneficial interest in such Global Security
may be effected only through a book-entry system maintained by (i) the Holder of
such Global Security (or its agent) or (ii) any Holder of a beneficial interest
in such Global Security, and that ownership of a beneficial interest in such
Global Security shall be required to be reflected in a book entry.
All Securities issued upon any transfer or exchange pursuant to the
terms of this Indenture will evidence the same debt and will be entitled to the
same benefits under this Indenture as the Securities surrendered upon such
transfer or exchange.
<PAGE>
11
SECTION 2.08. Replacement Securities. If a mutilated Security is
-----------------------
surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 of the Uniform Commercial Code are met, such that the Holder (i)
satisfies the Company or the Trustee within a reasonable time after he has
notice of such loss, destruction or wrongful taking and the Registrar does not
register a transfer prior to receiving such notification, (ii) makes such
request to the Company or the Trustee prior to the Security being acquired by a
protected purchaser as defined in Section 8-303 of the Uniform Commercial Code
(a "protected purchaser") and (iii) satisfies any other reasonable requirements
of the Trustee. If required by the Trustee or the Company, such Holder shall
furnish an indemnity bond sufficient in the judgment of the Trustee to protect
the Company, the Trustee, the Paying Agent and the Registrar from any loss that
any of them may suffer if a Security is replaced. The Company and the Trustee
may charge the Holder for their expenses in replacing a Security. In the event
any such mutilated, lost, destroyed or wrongfully taken Security has become or
is about to become due and payable, the Company in its discretion may pay such
Security instead of issuing a new Security in replacement thereof.
Every replacement Security is an additional obligation of the Company.
The provisions of this Section 2.08 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, lost, destroyed or wrongfully taken
Securities.
SECTION 2.09. Outstanding Securities. Securities outstanding at any
-----------------------
time are all Securities authenticated by the Trustee except for those canceled
by it, those delivered to it for cancelation, those paid pursuant to Section
2.08 and those described in this Section as not outstanding. Subject to Section
10.06, a Security does not cease to be outstanding because the Company or an
Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.08, it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Security is held by a protected purchaser.
If the Paying Agent segregates and holds in trust, in accordance with
this Indenture, on a redemption date or maturity date money sufficient to pay
all principal and interest and liquidated damages payable on that date with
respect to the Securities (or portions thereof) to be redeemed or maturing, as
the case may be, then on and after that date such Securities (or portions
thereof) cease to be outstanding and interest on them ceases to accrue.
<PAGE>
12
SECTION 2.10. Temporary Securities. In the event that Definitive
---------------------
Securities (as defined in the Appendix) are to be issued under the terms of this
Indenture, until such Definitive Securities are ready for delivery, the Company
may prepare and the Trustee shall authenticate temporary Securities upon a
written order signed by two Officers. Temporary Securities shall be
substantially in the form of Definitive Securities but may have variations that
the Company considers appropriate for temporary Securities. Without unreasonable
delay, the Company shall prepare and the Trustee shall authenticate Definitive
Securities upon a written order signed by two Officers and deliver them in
exchange for temporary Securities upon surrender of such temporary Securities at
the office or agency of the Company, without charge to the Holder.
SECTION 2.11. Cancelation. The Company at any time may deliver
------------
Securities to the Trustee for cancelation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for registration
of transfer, exchange or payment. The Trustee and no one else shall cancel all
Securities surrendered for registration of transfer, exchange, payment or
cancelation and deliver canceled Securities to the Company pursuant to written
direction by an Officer. The Company may not issue new Securities to replace
Securities it has redeemed, paid or delivered to the Trustee for cancelation.
The Trustee shall not authenticate Securities in place of canceled Securities
other than pursuant to the terms of this Indenture.
SECTION 2.12. Defaulted Interest. If the Company defaults in a
-------------------
payment of interest on the Securities, the Company shall pay the defaulted
interest (plus interest on such defaulted interest to the extent lawful) in any
lawful manner. The Company may pay the defaulted interest to the Persons who are
Securityholders on a subsequent special record date. The Company shall fix or
cause to be fixed any such special record date and payment date to the
reasonable satisfaction of the Trustee and shall promptly mail or cause to be
mailed to each Securityholder a notice that states the special record date, the
payment date and the amount of defaulted interest to be paid.
SECTION 2.13. CUSIP Numbers. The Company in issuing the Securities
--------------
may use "CUSIP" numbers (if then generally in use) and, if so, the Trustee shall
use "CUSIP" numbers in notices of redemption as a convenience to Holders;
provided, however, that any such notice may state that no representation is made
- -------- -------
as to the correctness of such numbers either as printed on the Securities or as
contained in any notice of a redemption and that reliance may be placed only on
the other identification numbers printed on the Securities, and any such
redemption shall not be affected by any defect in or omission of such numbers.
The Company shall promptly notify the Trustee of any change in the "CUSIP"
numbers.
<PAGE>
13
ARTICLE 3
Redemption
----------
SECTION 3.01. Notices to Trustee. If the Company elects to redeem
-------------------
Securities pursuant to paragraph 5 of the Securities, it shall notify the
Trustee in writing of the redemption date and the principal amount of Securities
to be redeemed, which principal amount shall be equal to the aggregate principal
amount of all outstanding Securities.
The Company shall notify the Trustee of the redemption date and the
principal amount of Securities to be redeemed, which principal amount shall be
equal to the aggregate principal amount of all outstanding Securities, at least
five Business Days before the notice of redemption is to be mailed to the
Securityholders unless the Trustee consents to a shorter period. Such notice
shall be accompanied by an Officers' Certificate and an Opinion of Counsel from
the Company to the effect that such redemption will comply with the conditions
herein. Any such notice may be canceled at any time prior to notice of such
redemption being mailed to any Holder and shall thereby be void and of no
effect.
SECTION 3.02. Notice of Redemption. At least 15 days but not more
---------------------
than 60 days before a date for redemption of Securities, the Company shall mail
a notice of redemption by first-class mail to each Holder of Securities to be
redeemed at such Holder's registered address.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the redemption date, which shall be an Interest Payment Date (as
defined in paragraph 1 of the Securities);
(2) the redemption price, which shall be equal to 100% of the
principal amount of each outstanding security, and the amount of accrued
interest to the redemption date;
(3) the name and address of the Paying Agent;
(4) that the Securities called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(5) that, unless the Company defaults in making such redemption
payment or the Paying Agent is prohibited from making such payment pursuant
to the terms of this Indenture, interest on Securities (or portion thereof)
called for redemption ceases to accrue on and after the redemption date;
<PAGE>
14
(6) the CUSIP number, if any, printed on the Securities being
redeemed; and
(7) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the
Securities.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section.
SECTION 3.03. Effect of Notice of Redemption. Once notice of
-------------------------------
redemption is mailed, Securities called for redemption become due and payable on
the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest to the redemption date;
provided, however, that if the redemption date is after a regular record date,
- -------- -------
the accrued interest shall be payable to the Securityholder of the redeemed
Securities registered on the relevant record date. Failure to give notice or any
defect in the notice to any Holder shall not affect the validity of the notice
to any other Holder.
SECTION 3.04. Deposit of Redemption Price. Prior to 10:00 a.m. (New
----------------------------
York City time) on the redemption date, the Company shall deposit with the
Paying Agent (or, if the Company or a Subsidiary is the Paying Agent, shall
segregate and hold in trust) money sufficient to pay the redemption price of and
accrued interest on all Securities to be redeemed on that date other than
Securities or portions of Securities called for redemption that have been
delivered by the Company to the Trustee for cancelation. On and after the
redemption date, interest will cease to accrue on Securities or portions thereof
called for redemption so long as the Company has deposited with the Paying Agent
funds sufficient to pay the principal of, plus accrued and unpaid interest and
liquidated damages (if any) on, the Securities to be redeemed.
ARTICLE 4
Covenants
---------
SECTION 4.01. Payment of Securities. The Company shall promptly pay
----------------------
the principal of and interest on the Securities on the dates and in the manner
provided in the Securities and in this Indenture. Principal and interest shall
be considered paid on the date due if on such date the Trustee or the Paying
Agent holds in accordance with this Indenture money sufficient to pay all
principal and interest then due and the Trustee or
<PAGE>
15
the Paying Agent, as the case may be, is not prohibited from paying such money
to the Securityholders on that date pursuant to the terms of this Indenture.
The Company shall pay interest on overdue principal at the rate
specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
SECTION 4.02. SEC Reports. Notwithstanding that the Company may not
------------
be subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, the Company shall file with the SEC, and provide the Trustee and
Securityholders within 15 days after it files them with the SEC, copies of its
annual report and the information, documents and other reports that are
specified in Section 13 and 15(d) of the Exchange Act. In addition, the Company
shall furnish to the Trustee and the Securityholders, promptly upon their
becoming available, copies of the annual report to shareholders and any other
information provided by the Company to its public shareholders generally. The
Company also shall comply with the other provisions of TIA (S) 314(a).
Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 4.03. Compliance Certificate. The Company shall deliver to
-----------------------
the Trustee within 120 days after the end of each fiscal year of the Company an
Officers' Certificate, one of the signatories of which shall be the principal
executive officer, principal accounting officer or principal financial officer
of the Company, stating that in the course of the performance by the signers of
their duties as Officers of the Company they would normally have knowledge of
any Default and whether or not the signers know of any Default that occurred
during such period. If they do, the certificate shall describe the Default, its
status and what action the Company is taking or proposes to take with respect
thereto. The Company also shall comply with Section 314(a)(4) of the TIA.
The Company shall deliver to the Trustee, as soon as possible and in
any event within five days after the Company becomes aware of the occurrence of
any Event of Default or Default, an Officers' Certificate setting forth the
details of such Event of Default or Default and the action which the Company
proposes to take with respect thereto.
SECTION 4.04. Restrictions on Liens Upon Voting Stock of Significant
------------------------------------------------------
Subsidiaries. The Company will not, and will not permit any Subsidiary to,
- -------------
incur, issue,
<PAGE>
16
assume or guarantee any Indebtedness if such Indebtedness is secured by a pledge
of, lien on, or security interest in, any shares of Voting Stock of any
Significant Subsidiary, whether such Voting Stock is now owned or shall
hereafter be acquired, without providing that the Securities (together with, if
the Company shall so determine, any other indebtedness or obligations of the
Company or any Subsidiary ranking equally with such Securities and then existing
or thereafter created) shall be secured equally and ratably with such
Indebtedness. For the purposes of the foregoing, pledging, placing a lien on or
creating a security interest in any shares of Voting Stock of a Significant
Subsidiary in order to secure then outstanding Indebtedness of the Company or
any Subsidiary shall be deemed to be the incurrence, issuance, assumption or
guarantee (as the case may be) of such Indebtedness, but the foregoing shall not
apply to Indebtedness secured by a pledge of, lien on, or security interest in,
any shares of Voting Stock of any corporation at the time it becomes a
Significant Subsidiary, including extensions, renewals and replacements of such
Indebtedness without increase in the amount thereof.
SECTION 4.05. Compliance With Covenants and Conditions May Be Waived
------------------------------------------------------
by Holders of Securities. Notwithstanding anything in this Indenture to the
- -------------------------
contrary, the Company or any Subsidiary may fail or omit in any particular
instance to comply with a covenant or condition set forth in Sections 4.04 or
5.01 if the Company shall have obtained and filed with the Trustee, prior to the
time for such compliance evidence (as provided in Article 9) of the consent of
the Holders of at least a majority in aggregate principal amount of the
Securities, either waiving such compliance in such instance or generally waiving
compliance with such covenant or condition, but no such waiver shall extend to
or affect any obligation not waived by the terms of such waiver or impair any
right consequent thereon.
<PAGE>
17
ARTICLE 5
Successor Company
-----------------
SECTION 5.01. When Company May Merge or Transfer Assets. The Company
------------------------------------------
shall not consolidate with any other Person or accept a merger of any other
Person into the Company or permit the Company to be merged into any other
Person, or sell other than for cash or lease all or substantially all its assets
to another Person unless (a) either the Company shall be the continuing
corporation, or the successor, transferee or lessee Person (if other than the
Company) shall expressly assume, by indenture supplemental hereto satisfactory
to the Trustee, executed and delivered by such Person prior to or simultaneously
with such consolidation, merger, sale or lease, the due and punctual payment of
the principal of, premium, if any, and interest on all the Securities, according
to their tenor, and the due and punctual performance and observance of all the
covenants and conditions of this Indenture to be performed or observed by the
Company, and (b) immediately after giving effect to such consolidation, merger,
sale or lease the Company or the successor, transferee or lessee Person (if any
other than the Company) would not be in default in the performance of any
covenant or condition of this Indenture.
ARTICLE 6
Defaults and Remedies
---------------------
SECTION 6.01. Events of Default. An "Event of Default" occurs if:
------------------
(1) the failure of the Company to pay any installment of interest on
any Security, when and as the same shall become due and payable, which
failure shall have continued unremedied for a period of 30 days;
(2) the failure of the Company to pay the principal or premium, if
any, on any Security, when and as the same shall become payable, whether at
maturity as therein expressed, by declaration as authorized by this
Indenture or otherwise;
(3) the failure of the Company to redeem any Securities when required
pursuant to this Indenture or the Securities;
(4) the failure of the Company to observe and perform, subject to the
provisions of Section 4.05, any other of the covenants or agreements on the
part of the Company contained in this Indenture, which failure shall not
have been remedied to the satisfaction of the Trustee, or without provision
deemed by the Trustee to be adequate for the remedying thereof having been
made, for a period
<PAGE>
18
of 90 days after written notice shall have been given to the Company by the
Trustee or shall have been given to the Company and the Trustee by Holders
of 25% or more in aggregate principal amount of the Securities of such
series then Outstanding, specifying such failure and requiring the Company
to remedy the same;
(5) the entry by a court having jurisdiction in the premises of a
decree or order for relief in respect of the Company in an involuntary case
under the Federal bankruptcy laws, as now or hereafter constituted, or any
other applicable Federal or state bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a Custodian of the Company or
for substantially all of its property, or ordering the winding-up or
liquidation of the Company's affairs, and such decree or order shall remain
unstayed and in effect for a period of 90 consecutive days; or
(6) the commencement by the Company of a voluntary case under the
Federal bankruptcy laws as now or hereafter constituted, or any other
applicable Federal or state bankruptcy, insolvency or other similar law now
or hereafter in effect, or the consent by the Company to the entry of an
order for relief in an involuntary case under any such law, or the consent
by the Company to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian or sequestrator (or similar
official) of the Company or for substantially all of its property, or the
making by it of an assignment for the benefit of creditors.
SECTION 6.02. Acceleration. If an Event of Default (other than an
-------------
Event of Default specified in Section 6.01(5) or (6) with respect to the
Company) occurs and is continuing, the Trustee by notice to the Company, or the
Holders of at least 25% in principal amount of the outstanding Securities by
notice to the Company and the Trustee, may declare the principal of and accrued
but unpaid interest on all the Securities to be due and payable. Upon such a
declaration, such principal and interest shall be due and payable immediately.
If an Event of Default specified in Section 6.01(5) or (6) with respect to the
Company occurs, the principal of and interest on all the Securities shall ipso
----
facto become and be immediately due and payable without any declaration or other
- -----
act on the part of the Trustee or any Securityholders. The Holders of a majority
in principal amount of the Securities by notice to the Trustee may rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default have been cured or
waived except nonpayment of principal or interest that has become due solely
because of acceleration. No such rescission shall affect any subsequent Default
or impair any right consequent thereto.
SECTION 6.03. Other Remedies. If an Event of Default occurs and is
---------------
continuing, the Trustee may pursue any available remedy to collect the payment
of
<PAGE>
19
principal of or interest on the Securities or to enforce the performance of any
provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
For purposes of this Section 6.03, the Trustee is hereby designated as
attorney-in-fact for the Securityholders.
SECTION 6.04. Waiver of Past Defaults. The Holders of a majority in
------------------------
principal amount of the Securities by notice to the Trustee may waive an
existing Default and its consequences except (i) a Default in the payment of the
principal of or interest on a Security or (ii) a Default arising from the
failure to redeem or purchase any Security when required pursuant to the terms
of this Indenture. When a Default is waived, it is deemed cured, but no such
waiver shall extend to any subsequent or other Default or impair any consequent
right.
SECTION 6.05. Control by Majority. The Holders of a majority in
--------------------
principal amount of the Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.01, that the Trustee determines is unduly prejudicial to
the rights of other Securityholders or would involve the Trustee in personal
liability; provided, however, that the Trustee may take any other action deemed
-------- -------
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses caused
by taking or not taking such action.
SECTION 6.06. Limitation on Suits. Except to enforce the right to
--------------------
receive payment of principal, premium (if any) or interest when due, no
Securityholder may pursue any remedy with respect to this Indenture or the
Securities unless:
(1) the Holder gives to the Trustee written notice stating that an
Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of the Securities
make a written request to the Trustee to pursue the remedy;
<PAGE>
20
(3) such Holder or Holders offer to the Trustee reasonable security or
indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of security or indemnity; and
(5) the Holders of a majority in principal amount of the Securities do
not give the Trustee a direction inconsistent with the request during such
60-day period.
A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over another
Securityholder.
SECTION 6.07. Rights of Holders to Receive Payment. Notwithstanding
-------------------------------------
any other provision of this Indenture, the right of any Holder to receive
payment of principal of, premium, if any, and interest on the Securities held by
such Holder, on or after the respective due dates expressed in the Securities,
or to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such
Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of Default
---------------------------
specified in Section 6.01(1) or (2) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company for the whole amount then due and owing (together with interest on any
unpaid interest to the extent lawful) and the amounts provided for in Section
7.07.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may file
---------------------------------
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company or any Subsidiary,
their creditors or their property and, unless prohibited by law or applicable
regulations, may vote on behalf of the Holders in any election of a trustee in
bankruptcy or other Person performing similar functions, and any Custodian of
the Company in any such judicial proceeding is hereby authorized by each Holder
to make payments to the Trustee and, in the event that the Trustee shall consent
to the making of such payments directly to the Holders, to pay to the Trustee
any amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and its counsel, and any other amounts due
the Trustee under Section 7.07.
<PAGE>
21
SECTION 6.10. Priorities. If the Trustee collects any money or
-----------
property pursuant to this Article 6, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to Securityholders for amounts due and unpaid on the
Securities for principal, premium, if any, and interest, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Securities for principal, premium, if any, and interest,
respectively; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any payment to
Securityholders pursuant to this Section. At least 15 days before such record
date, the Trustee shall mail to each Securityholder and the Company a notice
that states the record date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the enforcement
----------------------
of any right or remedy under this Indenture or in any suit against the Trustee
for any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees and expenses, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section does not apply to a
suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by
Holders of more than 10% in principal amount of the Securities.
SECTION 6.12. Waiver of Stay or Extension Laws. The Company shall
---------------------------------
not insist upon, or plead, or in any manner whatsoever claim or take the benefit
or advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, which may affect the covenants or the performance of this
Indenture; and the Company hereby expressly waives all benefit or advantage of
any such law, and shall not hinder, delay or impede the execution of any power
herein granted to the Trustee, but shall suffer and permit the execution of
every such power as though no such law had been enacted.
<PAGE>
22
ARTICLE 7
Trustee; Calculation Agent
--------------------------
SECTION 7.01. Duties of Trustee. (a) If an Event of Default has
------------------
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent Person would exercise or use under the circumstances
in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
in the case of any such certificates or opinions which by any provision
hereof are required or contemplated to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine whether or
not they conform to the requirements of this Indenture (but need not
confirm or investigate the accuracy of mathematical calculations or other
facts stated therein).
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
(1) this paragraph does not limit the effect of paragraph (b) of this
Section;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
<PAGE>
23
(e) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur financial liability in the performance
of any of its duties hereunder or in the exercise of any of its rights or
powers, if it shall have reasonable grounds to believe that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 7.02. Rights of Trustee. (a) The Trustee may conclusively
------------------
rely on any document believed by it to be genuine and to have been signed or
presented by the proper person. The Trustee need not investigate any fact or
matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on the
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible
for the misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute wilful
-------- -------
misconduct or negligence.
(e) The Trustee may consult with counsel of its selection, and the
advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Securities shall be full and complete authorization and
protection from liability in respect to any action taken, omitted or suffered by
it hereunder in good faith and in accordance with the advice or opinion of such
counsel.
(f) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond, debenture,
note or other paper or
<PAGE>
24
document unless requested in writing to do so by the Holders of not less than a
majority in principal amount of the Securities at the time outstanding, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or attorney
at the sole cost of the Company.
(g) The Trustee shall not be deemed to have notice of any Default or
Event of Default unless a Trust Officer has actual knowledge thereof or unless
written notice of any event which is in fact such a default is received by the
Trustee at the principal corporate trust office of the Trustee, and such notice
references the Securities and this Indenture.
(h) The rights, privileges, protections, immunities and benefits given
to the Trustee, including, without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, the Trustee in each of its capacities
hereunder, and to each agent, custodian and other Person employed to act
hereunder.
SECTION 7.03. Individual Rights of Trustee. The Trustee in its
-----------------------------
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar or co-paying
agent may do the same with like rights. However, the Trustee must comply with
Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be
---------------------
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for any
statement of the Company in this Indenture or in any document issued in
connection with the sale of the Securities or in the Securities other than the
Trustee's certificate of authentication.
SECTION 7.05. Notice of Defaults. If a Default occurs and is
-------------------
continuing and if it is known to a Trust Officer of the Trustee, the Trustee
shall mail to each Securityholder notice of the Default within 90 days after it
occurs. Except in the case of a Default in payment of principal of or interest
on any Security (including payments pursuant to the mandatory redemption
provisions of such Security, if any), the Trustee may withhold the notice if and
so long as a committee of its Trust Officers in good faith determines that
withholding the notice is in the interests of Securityholders.
SECTION 7.06. Reports by Trustee to Holders. As promptly as
------------------------------
practicable after each May 15 beginning with May 15, 2000, and in any event
prior to July 15 in each year, the Trustee shall mail to each Securityholder a
brief report dated as
<PAGE>
25
of May 15 that complies with Section 313(a) of the TIA if such report is
required by such Section 313(a). The Trustee shall also comply with Section
313(b) of the TIA.
A copy of each report at the time of its mailing to Securityholders
shall be filed with the SEC and each stock exchange (if any) on which the
Securities are listed. The Company agrees to notify promptly the Trustee
whenever the Securities become listed on any stock exchange and of any delisting
thereof.
SECTION 7.07. Compensation and Indemnity. The Company shall pay to
---------------------------
the Trustee from time to time such compensation for its services as the Company
and the Trustee shall from time to time agree in writing. The Trustee's
compensation shall not be limited by any law on compensation of a trustee of an
express trust. The Company shall reimburse the Trustee upon request for all
reasonable out-of-pocket expenses incurred or made by it, including costs of
collection, in addition to the compensation for its services. Such expenses
shall include the reasonable compensation and expenses, disbursements and
advances of the Trustee's agents, counsel, accountants and experts. The Company
shall indemnify each of the Trustee and any predecessor Trustee against any and
all loss, liability, damage, claim or expense (including reasonable attorneys'
fees and expenses) incurred by or in connection with the acceptance or
administration of this trust and the performance of its duties hereunder
including the costs and expenses of defending itself against any claim (whether
asserted by the Company, 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 that such loss, damage, claim, liability or
expense is due to its own negligence or bad faith. The Trustee shall notify the
Company of any claim for which it may seek indemnity promptly upon obtaining
actual knowledge thereof; provided, however, that any failure so to notify the
-------- -------
Company shall not relieve the Company of its indemnity obligations hereunder.
The Company shall defend the claim and the indemnified party shall provide
reasonable cooperation at the Company's expense in the defense. Such indemnified
parties may have separate counsel and the Company shall pay the fees and
expenses of such counsel; provided, however, that the Company shall not be
-------- -------
required to pay such fees and expenses if it assumes such indemnified parties'
defense and, in such indemnified parties' reasonable judgment, there is no
conflict of interest between the Company and such parties in connection with
such defense. The Company need not reimburse any expense or indemnify against
any loss, liability or expense incurred by an indemnified party through such
party's own wilful misconduct, negligence or bad faith.
To secure the Company's payment obligations in this Section, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee other than money or property held in trust to pay
principal of and interest and any liquidated damages on particular Securities.
<PAGE>
26
The Company's payment obligations pursuant to this Section shall
survive the satisfaction or discharge of this Indenture, any rejection or
termination of this Indenture under any bankruptcy law or the resignation or
removal of the Trustee. When the Trustee incurs expenses after the occurrence of
a Default specified in Section 6.01(5) or (6) with respect to the Company, the
expenses are intended to constitute expenses of administration under the
Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. The Trustee may resign at any
-----------------------
time by so notifying the Company. The Holders of a majority in principal amount
of the Securities may remove the Trustee by so notifying the Trustee and may
appoint a successor Trustee. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee or
its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the Holders of
a majority in principal amount of the Securities and such Holders do not
reasonably promptly appoint a successor Trustee, or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Company shall promptly appoint a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.07.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
10% in principal amount of the Securities may petition, at the expense of the
Company, any court of competent jurisdiction for the appointment of a successor
Trustee.
<PAGE>
27
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this
Section, the Company's obligations under Section 7.07 shall continue for the
benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger. If the Trustee
----------------------------
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger, conversion
or consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Securities shall have been authenticated but not delivered,
any such successor to the Trustee may adopt the certificate of authentication of
any predecessor trustee, and deliver such Securities so authenticated; and in
case at that time any of the Securities shall not have been authenticated, any
successor to the Trustee may authenticate such Securities either in the name of
any predecessor hereunder or in the name of the successor to the Trustee; and in
all such cases such certificates shall have the full force which it is anywhere
in the Securities or in this Indenture provided that the certificate of the
Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall at
------------------------------
all times satisfy the requirements of TIA (S) 310(a). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
(S) 310(b); provided, however, that there shall be excluded from the operation
-------- -------
of TIA (S) 310(b)(1) any indenture or indentures under which other securities or
certificates of interest or participation in other securities of the Company are
outstanding if the requirements for such exclusion set forth in TIA (S)
310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against Company. The
--------------------------------------------------
Trustee shall comply with TIA (S) 311(a), excluding any creditor relationship
listed in TIA (S) 311(b). A Trustee who has resigned or been removed shall be
subject to TIA (S) 311(a) to the extent indicated.
SECTION 7.12. Calculation Agent. The Company appoints and authorizes
------------------
The Bank of New York to act as Calculation Agent and The Bank of New York
accepts its obligation set forth herein and in the Securities upon the terms and
conditions hereof and thereof, and subject to the terms of the Calculation
Agency
<PAGE>
28
Agreement dated the date hereof, between the Company and the Calculation
Agent. The Company shall, so long as any of the Securities remain outstanding,
maintain under appointment a Calculation Agent to calculate the rate of interest
payable on the Securities in respect of each Interest Period (as defined in
Security). If the Calculation Agent is unable or unwilling to continue to act as
such, or if the Calculation Agent fails to establish the applicable rate of
interest for any Interest Period, or if the Company removes the Calculation
Agent, the Company shall appoint the office of another bank to act as the
Calculation Agent; provided, however, that the Calculation Agent shall not
-------- -------
resign or be removed until acceptance of an appointment by a successor as
evidenced by an appropriate agreement entered into by the Company and such
successor Calculation Agent; provided, further however, that the Trustee may
-------- ---------------
resign as Calculation Agent only if the Trustee resigns as Trustee in accordance
with Section 7.08./1/
ARTICLE 8
Discharge of Indenture; Defeasance
----------------------------------
SECTION 8.01. Discharge of Liability on Securities; Defeasance. (a)
-------------------------------------------------
When (i) the Company delivers to the Trustee all outstanding Securities (other
than Securities replaced pursuant to Section 2.08) for cancelation or (ii) all
outstanding Securities have become due and payable, whether at maturity or as a
result of the mailing of a notice of redemption pursuant to Article 3 hereof,
and the Company irrevocably deposits with the Trustee funds or U.S. Government
Obligations on which payment of principal and interest when due will be
sufficient to pay at maturity or upon redemption all outstanding Securities,
including interest thereon to maturity or such redemption date (other than
Securities replaced pursuant to Section 2.08), and if in either case the Company
pays all other sums payable hereunder by the Company, then this Indenture shall,
subject to Section 8.01(c), cease to be of further effect. The Trustee shall
acknowledge satisfaction and discharge of this Indenture on demand of the
Company accompanied by an Officers' Certificate and an Opinion of Counsel and at
the cost and expense of the Company.
(b) Subject to Sections 8.01(c) and 8.02, the Company at any time may
terminate (i) all of its obligations under the Securities and this Indenture
("legal defeasance option") or (ii) its obligations under Sections 4.02, 4.03
and 4.04 and the operation of Section 5.01, 6.01(4), 6.01(5) (with respect to
Significant Subsidiaries of the Company only) and 6.01(6) (with respect to
Significant Subsidiaries of the Company
- --------------------------
/1/ Same provisos should be included in Calculation Agency Agreement.
<PAGE>
29
only) ("covenant defeasance option"). The Company may exercise its legal
defeasance option notwithstanding its prior exercise of its covenant defeasance
option.
If the Company exercises its legal defeasance option, payment of the
Securities may not be accelerated because of an Event of Default. If the Company
exercises its covenant defeasance option, payment of the Securities may not be
accelerated because of an Event of Default specified in Section 6.01(4), 6.01(5)
(with respect to Significant Subsidiaries of the Company only) or 6.01(6) (with
respect to Significant Subsidiaries of the Company only).
Upon satisfaction of the conditions set forth herein and upon written
request of the Company, the Trustee shall acknowledge in writing the discharge
of those obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.04, 2.05, 2.06, 2.07, 2.08, 2.09, 7.07, 7.08 and in
this Article 8 shall survive until the Securities have been paid in full.
Thereafter, the Company's obligations in Sections 7.07, 8.04 and 8.05 shall
survive.
SECTION 8.02. Conditions to Defeasance. The Company may exercise its
-------------------------
legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee money
or U.S. Government Obligations for the payment of principal, premium (if
any) and interest on the Securities to maturity or redemption, as the case
may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and without
reinvestment on the deposited U.S. Government Obligations plus any
deposited money without investment will provide cash at such times and in
such amounts as will be sufficient to pay principal and interest when due
on all the Securities to maturity or redemption, as the case may be;
(3) 123 days pass after the deposit is made and during the 123-day
period no Default specified in Section 6.01(5) or (6) with respect to the
Company occurs which is continuing at the end of the period;
(4) the deposit does not constitute a default under any other
agreement binding on the Company;
<PAGE>
30
(5) the Company delivers to the Trustee an Opinion of Counsel to the
effect that the trust resulting from the deposit does not constitute, or is
qualified as, a regulated investment company under the Investment Company
Act of 1940;
(6) in the case of the legal defeasance option, the Company shall have
delivered to the Trustee an Opinion of Counsel stating that (i) the Company
has received from, or there has been published by, the Internal Revenue
Service a ruling, or (ii) since the date of this Indenture there has been a
change in the applicable Federal income tax law, in either case to the
effect that, and based thereon such Opinion of Counsel shall confirm that,
the Securityholders will not recognize income, gain or loss for Federal
income tax purposes as a result of such defeasance and will be subject to
Federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such defeasance had not occurred;
(7) in the case of the covenant defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Securityholders will not recognize income, gain or loss for Federal income
tax purposes as a result of such covenant defeasance and will be subject to
Federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such covenant defeasance had not
occurred; and
(8) the Company delivers to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent to the
defeasance and discharge of the Securities as contemplated by this Article
8 have been complied with.
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article 3.
SECTION 8.03. Application of Trust Money. The Trustee shall hold in
---------------------------
trust money or U.S. Government Obligations deposited with it pursuant to this
Article 8. It shall apply the deposited money and the money from U.S. Government
Obligations through the Paying Agent and in accordance with this Indenture to
the payment of principal of and interest on the Securities.
SECTION 8.04. Repayment to Company. The Trustee and the Paying Agent
---------------------
shall promptly turn over to the Company upon written request any excess money or
securities held by them at any time.
<PAGE>
31
Subject to any applicable abandoned property law, the Trustee and the
Paying Agent shall pay to the Company upon written request any money held by
them for the payment of principal or interest that remains unclaimed for two
years, and, thereafter, Securityholders entitled to the money must look to the
Company for payment as unsecured general creditors.
SECTION 8.05. Indemnity for Government Obligations. The Company
-------------------------------------
shall pay and shall indemnify the Trustee against any tax, fee or other charge
imposed on or assessed against deposited U.S. Government Obligations or the
principal and interest received on such U.S. Government Obligations.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is
--------------
unable to apply any money or U.S. Government Obligations in accordance with this
Article 8 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article 8 until such time as the Trustee
or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article 8; provided, however, that, if the
--------- -------
Company has made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such payment from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE 9
Amendments
----------
SECTION 9.01. Without Consent of Holders. The Company and the
---------------------------
Trustee may amend this Indenture or the Securities without notice to or consent
of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article 5;
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities; provided, however, that the
-------- -------
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
<PAGE>
32
(4) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the
Company;
(5) to comply with any requirement of the SEC in connection with
qualifying, or maintaining the qualification of, this Indenture under the
TIA;
(6) to make any change that does not adversely affect the rights of
any Securityholder;
(7) to evidence and provide for acceptance of appointment hereunder by
a successor trustee;
(8) to convey, transfer, assign, mortgage or pledge to the Trustee as
security for the Securities any property or assets which the Company may be
required to convey, transfer, assign, mortgage or pledge in accordance with
the provisions of Section 4.04; or
(9) to provide for the issuance of additional Securities pursuant to
this Indenture, which additional Securities shall have terms identical to
the initial Securities and which shall be treated, together with any
outstanding Securities, as a single issue of Securities; provided, further
-------- -------
however that no Additional Securities may be issued at a price that would
-------
cause such additional Securities to have "original issue discount" within
the meaning of Section 1273 of the Code (other than de minimis original
issue discount, as defined in applicable Treasury regulations).
After an amendment under this Section becomes effective, the Company
shall mail to Securityholders a notice briefly describing such amendment. The
failure to give such notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section.
SECTION 9.02. With Consent of Holders. The Company and the Trustee
------------------------
may amend this Indenture or the Securities without notice to any Securityholder
but with the written consent of the Holders of at least a majority in principal
amount of the Securities then outstanding (including consents obtained in
connection with a tender offer or exchange for the Securities). However, without
the consent of each Securityholder affected, an amendment may not:
(1) reduce the amount of Securities whose Holders must consent to an
amendment;
<PAGE>
33
(2) reduce the rate of or extend the time for payment of interest or
any liquidated damages on any Security;
(3) reduce the principal of or extend the Stated Maturity of any
Security;
(4) reduce the premium, if any, payable upon the redemption of any
Security or change the time at which any Security may be redeemed in
accordance with Article 3;
(5) make any Security payable in money other than that stated in the
Security; or
(6) make any change in Section 6.04 or 6.07 or the second sentence of
this Section 9.02.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent approves the substance thereof.
After an amendment under this Section becomes effective, the Company
shall mail to Securityholders a notice briefly describing such amendment. The
failure to give such notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section.
SECTION 9.03. Compliance with Trust Indenture Act. Every amendment
------------------------------------
to this Indenture or the Securities shall comply with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers. A
----------------------------------------------
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any such
Holder or subsequent Holder may revoke the consent or waiver as to such Holder's
Security or portion of the Security if the Trustee receives the notice of
revocation before the date on which the Trustee receives an Officers'
Certificate from the Company certifying that the requisite number of consents
have been received. After an amendment or waiver becomes effective, it shall
bind every Securityholder. An amendment or waiver becomes effective upon the
(i) receipt by the Company or the Trustee of the requisite number of consents,
(ii) satisfaction of conditions to effectiveness as set forth in this Indenture
and any indenture supplemental hereto containing such amendment or waiver and
(iii) execution of such amendment or waiver (or supplemental indenture) by the
Company and the Trustee.
<PAGE>
34
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Securityholders entitled to give their consent or
take any other action described above or required or permitted to be taken
pursuant to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Securityholders at such
record date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such record date. No such consent shall be valid or effective for more than 120
days after such record date.
SECTION 9.05. Notation on or Exchange of Securities. If an amendment
--------------------------------------
changes the terms of a Security, the Trustee may require the Holder of the
Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Company or the Trustee so determines, the Company
in exchange for the Security shall issue and the Trustee shall authenticate a
new Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
SECTION 9.06. Trustee To Sign Amendments. The Trustee shall sign any
---------------------------
amendment authorized pursuant to this Article 9 if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to Section 7.01) shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel stating that such
amendment is authorized or permitted by this Indenture and that such amendment
is the legal, valid and binding obligation of the Company enforceable against
them in accordance with its terms, subject to customary exceptions, and complies
with the provisions hereof (including Section 9.03).
SECTION 9.07. Payment for Consent. Neither the Company nor any
--------------------
Affiliate of the Company shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture or the Securities unless such consideration is
offered to be paid to all Holders that so consent, waive or agree to amend in
the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
<PAGE>
35
ARTICLE 10
Miscellaneous
-------------
SECTION 10.01. Trust Indenture Act Controls. If any provision of
-----------------------------
this Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 10.02. Notices. Any notice or communication shall be in
--------
writing (including via telecopy, promptly confirmed in writing) and delivered in
person or mailed by first-class mail addressed as follows:
if to the Company:
The Limited, Inc.
Three Limited Parkway
Columbus, OH 43230
Attention of: Samuel Fried
Copy to: Patrick Hectorne
if to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, NY 10286
Attention of: Corporate Trust Trustee Administration
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall be mailed
to the Securityholder at the Securityholder's address as it appears on the
registration books of the Registrar and shall be sufficiently given if so mailed
within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
<PAGE>
36
SECTION 10.03. Communication by Holders with Other Holders.
--------------------------------------------
Securityholders may communicate pursuant to TIA (S) 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA (S) 312(c).
SECTION 10.04. Certificate and Opinion as to Conditions Precedent.
---------------------------------------------------
Upon any request or application by the Company to the Trustee to take or refrain
from taking any action under this Indenture, the Company shall furnish to the
Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
SECTION 10.05. Statements Required in Certificate or Opinion. Each
----------------------------------------------
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 10.06. When Securities Disregarded. In determining whether
----------------------------
the Holders of the required principal amount of Securities have concurred in any
direction, waiver or consent, Securities owned by the Company or by any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the
<PAGE>
37
Company shall be disregarded and deemed not to be outstanding, except that, for
the purpose of determining whether the Trustee shall be protected in relying on
any such direction, waiver or consent, only Securities which a Trust Officer of
the Trustee actually knows are so owned shall be so disregarded. Subject to the
foregoing, only Securities outstanding at the time shall be considered in any
such determination.
SECTION 10.07. Rules by Trustee, Paying Agent and Registrar. The
---------------------------------------------
Trustee may make reasonable rules for action by or a meeting of Securityholders.
The Registrar and the Paying Agent may make reasonable rules for their
functions.
SECTION 10.08. Non-Business Days. If any Interest Payment Date (as
------------------
defined in Exhibit A), other than at maturity, for the Securities would
otherwise be a day that is not a Business Day, such Interest Payment Date shall
be postponed to the next day that is a Business Day, except that if such
Business Day is in the next succeeding calendar month, such Interest Payment
Date shall be the immediately preceding Business Day. If the maturity for the
Securities falls on a day which is not a Business Day, payment of principal and
interest with respect to such Security will be paid on the next succeeding
Business Day with the same force and effect as if made on such date and no
interest on such payment will accrue from and after such date. If a regular
record date is not a Business Day, the record date shall not be affected.
SECTION 10.09. GOVERNING LAW. THIS INDENTURE AND THE SECURITIES
--------------
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW
TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
SECTION 10.10. Liability Solely Corporate. No recourse shall be had
---------------------------
for the payment of the principal of, premium, if any, or interest on any
Security or for any claim based thereon or otherwise in respect thereof or of
the indebtedness represented thereby, or upon any obligation, covenant or
agreement of this Indenture, against any incorporator, stockholder, officer or
director, as such, past, present or future, of the Company or of any successor
corporation, either directly or through the Company or any successor
corporation, whether by virtue of any constitutional provision, statute or rule
of law, or by the enforcement of any assessment or penalty or otherwise; it
being expressly agreed and understood that this Indenture and the Securities are
solely corporate obligations, and that no personal liability whatsoever shall be
attached to, or be incurred by, any incorporator, stockholder, officer or
director, as such, past, present or future, of the Company or of any successor
corporation, either directly or through the Company or any successor
corporation, because of the incurring of the indebtedness hereby authorized or
under or by reason of any of the obligations, covenants, promises or agreements
<PAGE>
38
contained in this Indenture or in any of the Securities or to be implied
herefrom or therefrom, and that all liability, if any, of that character against
every such incorporator, stockholder, officer and director is, by the acceptance
of the Securities and as a condition of, and as part of the consideration for,
the execution of this Indenture and the issue of the Securities, expressly
waived and released.
SECTION 10.11. Successors. All agreements of the Company in this
-----------
Indenture and the Securities shall bind its successors. All agreements of the
Trustee in this Indenture shall bind its successors.
SECTION 10.12. Multiple Originals. The parties may sign any number
-------------------
of copies of this Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement. One signed copy is enough to prove
this Indenture.
SECTION 10.13. Table of Contents; Headings. The table of contents,
----------------------------
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
<PAGE>
39
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed as of the date first written above.
THE LIMITED, INC.
by____________________________
Name:
Title:
THE BANK OF NEW YORK, as Trustee
by____________________________
Name:
Title:
<PAGE>
APPENDIX A
PROVISIONS RELATING TO SECURITIES
---------------------------------
1. Definitions
-----------
1.1 Definitions
-----------
For the purposes of this Appendix A the following terms shall have the
meanings indicated below:
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Regulation S Global Security or beneficial interest
therein, the rules and procedures of the Depositary for such Global Security,
Euroclear and Cedel, in each case to the extent applicable to such transaction
and as in effect from time to time.
"Cedel" means Cedelbank, societe anonyme., or any successor securities
clearing agency.
"Definitive Security" means a certificated Security (bearing the
Restricted Securities Legend if the transfer of such Security is restricted by
applicable law) that does not include the Global Securities Legend.
"Depositary" means The Depository Trust Company, its nominees and
their respective successors.
"Euroclear" means the Euroclear Clearance System or any successor
securities clearing agency.
"Global Securities Legend" means the legend set forth under that
caption in Exhibit A to this Indenture.
"Initial Purchaser" means J.P. Morgan Securities Inc.
"Purchase Agreement" means the Purchase Agreement dated May 17, 1999,
between the Company and the Initial Purchaser.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Regulation S" means Regulation S under the Securities Act.
"Regulation S Securities" means all Initial Securities offered and
sold outside the United States in reliance on Regulation S.
<PAGE>
"Restricted Period", with respect to any Securities, means the period
of 40 consecutive days beginning on and including the later of (i) the day on
which such Securities are first offered to persons other than distributors (as
defined in Regulation S under the Securities Act) in reliance on Regulation S
and (ii) the Issue Date with respect to such Securities.
"Restricted Securities Legend" means the legend set forth in
Section 2.3(e)(i) herein.
"Rule 144A" means Rule 144A under the Securities Act.
"Rule 144A Securities" means all Initial Securities offered and sold
to QIBs in reliance on Rule 144A.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Custodian" means the custodian with respect to a Global
Security (as appointed by the Depositary) or any successor person thereto, who
shall initially be the Trustee.
"Transfer Restricted Securities" means Definitive Securities and any
other Securities that bear or are required to bear the Restricted Securities
Legend.
1.2 Other Definitions
-----------------
Term: Defined in Section:
---- ------------------
"Agent Members" .......................................... 2.1(b)
"Global Security" ........................................ 2.1(a)
"Regulation S Global Security" ........................... 2.1(a)
"Rule 144A Global Security" .............................. 2.1(a)
<PAGE>
3
2. The Securities
--------------
2.1 Form and Dating
---------------
The initial Securities issued on the date hereof will be (i) offered
and sold by the Company pursuant to the Purchase Agreement and (ii) resold,
initially only to (A) QIBs in reliance on Rule 144A and (B) Persons other than
U.S. Persons (as defined in Regulation S) in reliance on Regulation S. Such
initial Securities may thereafter be transferred to, among others, QIBs and
purchasers in reliance on Regulation S. Additional Securities offered after the
date hereof may be offered and sold by the Company from time to time; provided,
--------
however, that such additional Securities shall have terms identical to the
- -------
initial Securities and shall be treated, together with any outstanding
Securities, as a single issue of Securities; provided, further however, that no
-------- ---------------
Additional Securities may be issued at a price that would cause such additional
Securities to have "original issue discount" within the meaning of Section 1273
of the Code (other than de minimis original issue discount, as defined in
applicable Treasury regulations).
(a) Global Securities. Rule 144A Securities shall be issued
------------------
initially in the form of one or more permanent global Securities in definitive,
fully registered form (collectively, the "Rule 144A Global Security") and
Regulation S Securities shall be issued initially in the form of one or more
global Securities (collectively, the "Regulation S Global Security"), in each
case without interest coupons and bearing the Global Securities Legend and
Restricted Securities Legend, which shall be deposited on behalf of the
purchasers of the Securities represented thereby with the Securities Custodian,
and registered in the name of the Depositary or a nominee of the Depositary,
duly executed by the Company and authenticated by the Trustee as provided in
this Indenture. Beneficial ownership interests in the Regulation S Global
Security shall not be exchangeable for interests in the Rule 144A Global
Security or any other Security without a Restricted Securities Legend until the
expiration of the Restricted Period. The Rule 144A Global Security and the
Regulation S Global Security are each referred to herein as a "Global Security"
and are collectively referred to herein as "Global Securities." The aggregate
principal amount of the Global Securities may from time to time be increased or
decreased by adjustments made on the records of the Trustee and the Depositary
or its nominee as hereinafter provided.
(b) Book-Entry Provisions. This Section 2.1(b) shall apply only to a
----------------------
Global Security deposited with or on behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance with
this Section 2.1(b) and pursuant to an order of the Company, authenticate and
deliver initially one or more Global Securities that (a) shall be registered in
the name of the Depositary for such Global Security or Global Securities or the
nominee of such Depositary and (b) shall be delivered by the Trustee to such
Depositary or pursuant to such Depositary's instructions or held by the Trustee
as Securities Custodian.
<PAGE>
4
Members of, or participants in, the Depositary ("Agent Members") shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depositary or by the Trustee as Securities Custodian or
under such Global Security, and the Depositary may be treated by the Company,
the Trustee and any agent of the Company or the Trustee as the absolute owner of
such Global Security for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Trustee or any agent of the
Company or the Trustee from giving effect to any written certification, proxy or
other authorization furnished by the Depositary or impair, as between the
Depositary and its Agent Members, the operation of customary practices of such
Depositary governing the exercise of the rights of a holder of a beneficial
interest in any Global Security.
(c) Definitive Securities. Except as provided in Section 2.3 or 2.4,
----------------------
owners of beneficial interests in Global Securities will not be entitled to
receive physical delivery of certificated Securities.
2.2 Authentication. The Trustee shall authenticate and make available for
---------------
delivery upon a written order of the Company signed by two Officers (1)
Securities for original issue on the date hereof in an aggregate principal
amount of $100,000,000 and (2) additional Securities offered and sold by the
Company from time to time in accordance with the terms of the Indenture. Such
order shall specify the amount of the Securities to be authenticated, the date
on which the original issue of Securities is to be authenticated. The aggregate
principal amount of Securities outstanding at any time may not exceed
$100,000,000, except as provided in Section 2.01 and 2.08 of this Indenture.
2.3 Transfer and Exchange. (a) Transfer and Exchange of Definitive
---------------------- -----------------------------------
Securities. When Definitive Securities are presented to the Registrar with a
- -----------
request:
(x) to register the transfer of such Definitive Securities; or
(y) to exchange such Definitive Securities for an equal principal
amount of Definitive Securities of other authorized denominations,
the Registrar shall register the transfer or make the exchange as requested if
its reasonable requirements for such transaction are met; provided, however,
-------- -------
that the Definitive Securities surrendered for transfer or exchange:
(i) shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company and the Registrar,
duly executed by the Holder thereof or his attorney duly authorized in
writing; and
<PAGE>
5
(ii) are accompanied by the following additional information and
documents, as applicable:
(A) if such Definitive Securities are being delivered to the
Registrar by a Holder for registration in the name of such Holder,
without transfer, a certification from such Holder to that effect (in
the form set forth on the reverse side of the Security); or
(B) if such Definitive Securities are being transferred to the
Company, a certification to that effect (in the form set forth on the
reverse side of the Security); or
(C) if such Definitive Securities are being transferred pursuant
to an exemption from registration in accordance with Rule 144 under
the Securities Act or in reliance upon another exemption from the
registration requirements of the Securities Act, (i) a certification
to that effect (in the form set forth on the reverse side of the
Security) and (ii) if the Company so requests, an opinion of counsel
or other evidence reasonably satisfactory to it as to the compliance
with the restrictions set forth in the legend set forth in Section
2.3(e)(i).
(b) Restrictions on Transfer of a Definitive Security for a
-------------------------------------------------------
Beneficial Interest in a Global Security. A Definitive Security may not be
- -----------------------------------------
exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the Trustee of
a Definitive Security, duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company and the Registrar,
together with:
(i) certification (in the form set forth on the reverse side of the
Initial Security) that such Definitive Security is being transferred (A) to
a QIB in accordance with Rule 144A or (B) outside the United States in an
offshore transaction within the meaning of Regulation S and in compliance
with Rule 904 under the Securities Act; and
(ii) written instructions directing the Trustee to make, or to direct
the Securities Custodian to make, an adjustment on its books and records
with respect to such Global Security to reflect an increase in the
aggregate principal amount of the Securities represented by the Global
Security, such instructions to contain information regarding the Depositary
account to be credited with such increase,
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Securities Custodian, the
aggregate principal amount of
<PAGE>
6
Securities represented by the Global Security to be increased by the aggregate
principal amount of the Definitive Security to be exchanged and shall credit or
cause to be credited to the account of the Person specified in such instructions
a beneficial interest in the Global Security equal to the principal amount of
the Definitive Security so canceled. If no Global Securities are then
outstanding and the Global Security has not been previously exchanged for
certificated securities pursuant to Section 2.4, the Company shall issue and the
Trustee shall authenticate, upon written order of the Company in the form of an
Officers' Certificate, a new Global Security in the appropriate principal
amount.
(c) Transfer and Exchange of Global Securities. (i) The transfer
-------------------------------------------
and exchange of Global Securities or beneficial interests therein shall be
effected through the Depositary, in accordance with this Indenture (including
applicable restrictions on transfer set forth herein, if any) and the procedures
of the Depositary therefor. A transferor of a beneficial interest in a Global
Security shall deliver a written order given in accordance with the Depositary's
procedures containing information regarding the participant account of the
Depositary to be credited with a beneficial interest in such Global Security or
another Global Security and such account shall be credited in accordance with
such order with a beneficial interest in the applicable Global Security and the
account of the Person making the transfer shall be debited by an amount equal to
the beneficial interest in the Global Security being transferred. Transfers by
an owner of a beneficial interest in the Rule 144A Global Security to a
transferee who takes delivery of such interest through the Regulation S Global
Security, whether before or after the expiration of the Restricted Period, shall
be made only upon receipt by the Trustee of a certification from the transferor
to the effect that such transfer is being made in accordance with Regulation S
or (if available) Rule 144 under the Securities Act and that, if such transfer
is being made prior to the expiration of the Restricted Period, the interest
transferred shall be held immediately thereafter through Euroclear or Cedel.
(ii) If the proposed transfer is a transfer of a beneficial interest
in one Global Security to a beneficial interest in another Global Security,
the Registrar shall reflect on its books and records the date and an
increase in the principal amount of the Global Security to which such
interest is being transferred in an amount equal to the principal amount of
the interest to be so transferred, and the Registrar shall reflect on its
books and records the date and a corresponding decrease in the principal
amount of Global Security from which such interest is being transferred.
(iii) Notwithstanding any other provisions of this Appendix (other
than the provisions set forth in Section 2.4), a Global Security may not be
transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
<PAGE>
7
(d) Restrictions on Transfer of Regulation S Global Security.
---------------------------------------------------------
(i) Prior to the expiration of the Restricted Period, interests in the
Regulation S Global Security may only be held through Euroclear or Cedel. During
the Restricted Period, beneficial ownership interests in the Regulation S Global
Security may only be sold, pledged or transferred through Euroclear or Cedel in
accordance with the Applicable Procedures and only (A) to the Company, (B) so
long as such security is eligible for resale pursuant to Rule 144A, to a person
whom the selling holder reasonably believes is a QIB that purchases for its own
account or for the account of a QIB to whom notice is given that the resale,
pledge or transfer is being made in reliance on Rule 144A, (C) in an offshore
transaction in accordance with Regulation S, (D) pursuant to an exemption from
registration under the Securities Act provided by Rule 144 (if applicable) under
the Securities Act or (E) pursuant to an effective registration statement under
the Securities Act, in each case in accordance with any applicable securities
laws of any state of the United States. Prior to the expiration of the
Restricted Period, transfers by an owner of a beneficial interest in the
Regulation S Global Security to a transferee who takes delivery of such interest
through the Rule 144A Global Security shall be made only in accordance with
Applicable Procedures and upon receipt by the Trustee of a written certification
from the transferor of the beneficial interest in the form provided on the
reverse of the Initial Security to the effect that such transfer is being made
to a person whom the transferor reasonably believes is a QIB within the meaning
of Rule 144A in a transaction meeting the requirements of Rule 144A. Such
written certification shall no longer be required after the expiration of the
Restricted Period.
(ii) Upon the expiration of the Restricted Period, beneficial
ownership interests in the Regulation S Global Security shall be
transferable in accordance with applicable law and the other terms of this
Indenture.
(e) Legend.
-------
(i) Except as permitted by the following paragraphs (ii), (iii) or
(iv), each Security certificate evidencing the Global Securities and the
Definitive Securities (and all Securities issued in exchange therefor or in
substitution thereof) shall bear a legend in substantially the following
form (each defined term in the legend being defined as such for purposes of
the legend only):
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.
<PAGE>
8
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR
OF SUCH SECURITY), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C)
FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES
IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A 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, (D) PURSUANT TO OFFERS AND SALES 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 TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO
ANY SUCH OFFER, SALE OR TRANSFER 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. THIS LEGEND WILL BE REMOVED UPON
THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
Each Definitive Security shall bear the following additional legend:
"IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION
AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE
TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS."
(ii) Upon any sale or transfer of a Transfer Restricted Security that
is a Definitive Security, the Registrar shall permit the Holder thereof to
exchange such Transfer Restricted Security for a Definitive Security that
does not bear the legends set forth above and rescind any restriction on
the transfer of such Transfer Restricted Security if the Holder certifies
in writing to the Registrar that its request for such exchange was made in
reliance on Rule 144 (such certification to be in the form set forth on the
reverse of the Initial Security).
<PAGE>
9
(iii) Upon a sale or transfer after the expiration of the Restricted
Period of any Security acquired pursuant to Regulation S, all requirements
that such Security bear the Restricted Securities Legend shall cease to
apply and the requirements requiring any such Security be issued in global
form shall continue to apply.
(f) Cancelation or Adjustment of Global Security. At such time as
---------------------------------------------
all beneficial interests in a Global Security have either been exchanged for
Definitive Securities, transferred, redeemed, repurchased or canceled, such
Global Security shall be returned by the Depositary to the Trustee for
cancelation or retained and canceled by the Trustee. At any time prior to such
cancelation, if any beneficial interest in a Global Security is exchanged for
Definitive Securities, transferred in exchange for an interest in another Global
Security, redeemed, repurchased or canceled, the principal amount of Securities
represented by such Global Security shall be reduced and an adjustment shall be
made on the books and records of the Trustee (if it is then the Securities
Custodian for such Global Security) with respect to such Global Security, by the
Trustee or the Securities Custodian, to reflect such reduction.
(g) Obligations with Respect to Transfers and Exchanges of
-----------------------------------------------------
Securities.
- -----------
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate, Definitive Securities and
Global Securities at the Registrar's request.
(ii) No service charge shall be made for any registration of transfer
or exchange, but the Company may require payment of a sum sufficient to
cover any transfer tax, assessments, or similar governmental charge payable
in connection therewith (other than any such transfer taxes, assessments or
similar governmental charge payable upon exchange or transfer pursuant to
Section 9.05 of this Indenture).
(iii) Prior to the due presentation for registration of transfer of
any Security, the Company, the Trustee, the Paying Agent or the Registrar
may deem and treat the person in whose name a Security is registered as the
absolute owner of such Security for the purpose of receiving payment of
principal of and interest on such Security and for all other purposes
whatsoever, whether or not such Security is overdue, and none of the
Company, the Trustee, the Paying Agent or the Registrar shall be affected
by notice to the contrary.
(iv) All Securities issued upon any transfer or exchange pursuant to
the terms of this Indenture shall evidence the same debt and shall be
entitled to the same benefits under this Indenture as the Securities
surrendered upon such transfer or exchange.
<PAGE>
10
(h) No Obligation of the Trustee.
-----------------------------
(i) The Trustee shall have no responsibility or obligation to any
beneficial owner of a Global Security, a member of, or a participant in the
Depositary or any other Person with respect to the accuracy of the records
of the Depositary or its nominee or of any participant or member thereof,
with respect to any ownership interest in the Securities or with respect to
the delivery to any participant, member, beneficial owner or other Person
(other than the Depositary) of any notice (including any notice of
redemption or repurchase) or the payment of any amount, under or with
respect to such Securities. All notices and communications to be given to
the Holders and all payments to be made to Holders under the Securities
shall be given or made only to the registered Holders (which shall be the
Depositary or its nominee in the case of a Global Security). The rights of
beneficial owners in any Global Security shall be exercised only through
the Depositary subject to the applicable rules and procedures of the
Depositary. The Trustee may conclusively rely and shall be fully protected
in relying upon information furnished by the Depositary with respect to its
members, participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with respect to any
transfer of any interest in any Security (including any transfers between
or among Depositary participants, members or beneficial owners in any
Global Security) other than to require delivery of such certificates and
other documentation or evidence as are expressly required by, and to do so
if and when expressly required by, the terms of this Indenture, and to
examine the same to determine substantial compliance as to form with the
express requirements hereof.
2.4 Definitive Securities.
----------------------
(a) A Global Security deposited with the Depositary or with the
Trustee as Securities Custodian pursuant to Section 2.1 shall be transferred to
the beneficial owners thereof in the form of Definitive Securities in an
aggregate principal amount equal to the principal amount of such Global
Security, in exchange for such Global Security, only if such transfer complies
with Section 2.3 and (i) the Depositary notifies the Company that it is
unwilling or unable to continue as a Depositary for such Global Security or if
at any time the Depositary ceases to be a "clearing agency" registered under the
Exchange Act, and a successor depositary is not appointed by the Company within
90 days of such notice, or (ii) an Event of Default has occurred and is
continuing or (iii) the Company, in its sole discretion, notifies the Trustee in
writing that it elects to cause the issuance of certificated Securities under
this Indenture.
<PAGE>
11
(b) Any Global Security that is transferable to the beneficial
owners thereof pursuant to this Section 2.4 shall be surrendered by the
Depositary to the Trustee, to be so transferred, in whole or from time to time
in part, without charge, and the Trustee shall authenticate and deliver, upon
such transfer of each portion of such Global Security, an equal aggregate
principal amount of Definitive Securities of authorized denominations. Any
portion of a Global Security transferred pursuant to this Section shall be
executed, authenticated and delivered only in denominations of $1,000 and any
integral multiple thereof and registered in such names as the Depositary shall
direct. Any certificated Initial Security in the form of a Definitive Security
delivered in exchange for an interest in the Global Security shall, except as
otherwise provided by Section 2.3(e), bear the Restricted Securities Legend.
(c) Subject to the provisions of Section 2.4(b), the registered
Holder of a Global Security may grant proxies and otherwise authorize any
Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Indenture or the Securities.
(d) In the event of the occurrence of any of the events specified
in Section 2.4(a)(i), (ii) or (iii), the Company will promptly make available to
the Trustee a reasonable supply of Definitive Securities in fully registered
form without interest coupons.
<PAGE>
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
SUCH SECURITY), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO
LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF
<PAGE>
2
A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES 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 TO THE COMPANY'S AND
THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND
WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE.
<PAGE>
No. QIB-1 $100,000,000
Series B Floating Rate Note due November 2000
CUSIP No. 88335MAB8
THE LIMITED, INC., a Delaware corporation, promises to pay to Cede &
Co., or registered assigns, the principal sum of ONE HUNDRED MILLION DOLLARS
listed on the Schedule of Increases or Decreases in Global Security attached
hereto on November 22, 2000.
Interest Payment Dates: February 22, May 22, August 22 and
November 22.
Record Dates: February 7, May 7, August 7 and November 7.
<PAGE>
2
Additional provisions of this Security are set forth on the other side
of this Security.
IN WITNESS WHEREOF, the parties have caused this instrument to be duly
executed.
THE LIMITED, INC.,
By:_________________________
Name:
Title:
By:_________________________
Name:
Title:
Dated: May 19, 1999
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE BANK OF NEW YORK,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
By:_________________________
Authorized Signatory
<PAGE>
3
[REVERSE SIDE OF SECURITY]
Series B Floating Rate Note due November 2000
1. Interest
--------
THE LIMITED INC., a Delaware corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being herein
called the "Company"), promises to pay interest on the principal amount of this
Security at the rate per annum shown above. The Company shall pay interest at a
rate per annum, reset quarterly, equal to LIBOR (as defined below) plus 80 basis
points (.80%) as determined by the Calculation Agent (as defined below).
Interest shall be computed on the basis of a 360-day year and the actual number
of days in the applicable Interest Period. The Company shall pay interest
quarterly in arrears on February 22, May 22, August 22 and November 22 of each
year, commencing on August 22, 1999 (each an "Interest Payment Date"), for the
period commencing on and including the immediately preceding Interest Payment
Date (or, in the case of the first Interest Period, commencing on and including
May 19, 1999) and ending on and including the day preceding the next Interest
Payment Date (an "Interest Period"). Interest shall be payable to the persons in
whose names the Securities are registered at the close of business on the
fifteenth calendar day prior to the Interest Payment Date (each a "Record
Date"). The principal of the Securities, together with the interest accrued and
unpaid thereon, is due on November 22, 2000 (the "Maturity Date").
If any Interest Payment Date, other than at the Maturity Date, for the
Securities would otherwise be a day that is not a Business Day (as defined
below), such Interest Payment Date shall be postponed to the next day that is a
Business Day, except that if such Business Day is in the next succeeding
calendar month, such Interest Payment Date shall be the immediately preceding
Business Day. If the Maturity Date for the Securities falls on a day which is
not a Business Day, payment of principal and interest with respect to such
Security will be paid on the next succeeding Business Day with the same force
and effect as if made on such date and no interest on such payment will accrue
from and after such date.
The interest rate for each Interest Period shall be determined by the
Calculation Agent in accordance with the following provisions:
The per annum rate of interest for each Interest Period shall be
three-month LIBOR (as defined below), on the second Business Day preceding the
relevant Interest Reset Date for such Interest Period (the "Interest
Determination Date") plus 80 basis points (.80%). The initial Interest
Determination Date will be May 17, 1999.
<PAGE>
4
"LIBOR" for each Interest Period shall be determined by the Calculation Agent in
accordance with the following provisions:
(i) On each Interest Determination Date, the Calculation Agent shall
ascertain the offered rate for three-month deposits in U.S. dollars in the
London interbank market, which appears on the Telerate Page 3750, as of
11:00 a.m. (London time) on such Interest Determination Date.
(ii) If such rate does not appear on the Telerate Page 3750, or the
Telerate Page 3750 is unavailable, the Calculation Agent shall request each
of four major banks in the London interbank (the "Reference Banks") to
provide the Calculation Agent with its offered quotation (expressed as a
rate per annum) for three-month deposits in U.S. dollars to leading banks
in the London interbank market at approximately 11:00 a.m. (London time) on
the Interest Determination Date. If at least two such quotations are
provided, LIBOR in respect of the Interest Determination Date shall be the
arithmetic mean of such quotations.
(iii) If less than two of the Reference Banks provide the Calculation
Agent with such offered quotations, LIBOR in respect of that Interest
Determination Date shall be the arithmetic mean of the rates quoted by
three major banks in the City of New York (selected by the Calculation
Agent) at approximately 11:00 a.m., New York City time, on that Interest
Determination Date for three-month loans in U.S. dollars to leading
European banks, in a principal amount equal to an amount of not less than
$1 million that is representative for a single transaction in such market
at such time; provided, however, that if the banks selected as aforesaid by
-------- -------
the Calculation Agent are not quoting as mentioned in this sentence, LIBOR
shall be LIBOR in effect of such Interest Determination Date.
"Business Day" means any day (other than a Saturday or Sunday) on
which banking institutions in the City of New York are open for business and
which is also a London Banking Day.
"Interest Reset Date" means with respect to any Interest Period, the
first day of such Interest Period.
"London Banking Day" means any day (other than a Saturday or Sunday)
on which dealings in deposits are transacted in the London interbank market.
"Telerate Page 3750" means the display designated as page "3750" on
the Dow Jones Telerate Service (or such other page as may replace that page on
that service for the purpose of displaying the Prime Index on a daily basis).
<PAGE>
5
All percentage resulting from any calculation on the Securities shall
be rounded, if necessary, to the nearest one hundred-thousandth of a percentage
point, with five one-millionths of a percentage point rounded upward (e.g.,
----
9.876545% (or .09876545) being rounded to 9.87655% (or .0987655)), and U.S.
dollar amounts used in or resulting from such calculations shall be rounded to
the nearest cent (with one-half cent being rounded upward).
The Company shall pay interest on overdue principal at the rate borne
by the Securities plus 1% per annum, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
2. Method of Payment
-----------------
The Company shall pay interest on the Securities (except defaulted
interest) to the Persons who are registered holders of Securities at the close
of business on the February 7, May 7, August 7 or November 7 next preceding the
Interest Payment Date even if Securities are canceled after the Record Date and
on or before the Interest Payment Date. Holders must surrender Securities to a
Paying Agent to collect principal payments. The Company shall pay principal,
premium, if any, and interest in money of the United States of America that at
the time of payment is legal tender for payment of public and private debts.
Payments in respect of the Securities represented by a Global Security
(including principal, premium, if any, and interest) shall be made by wire
transfer of immediately available funds to the accounts specified by The
Depository Trust Company. Payments in respect of a certificated Security
(including principal, premium, if any, and interest), will be payable by the
Company at the office of the Paying Agent maintained for such purpose or, at the
option of the Company, by mailing a check to the registered address of each
Holder thereof; provided, however, that payments on the Securities may also be
-------- -------
made, in the case of a Holder of at least $1,000,000 aggregate principal amount
of Securities, by wire transfer to a U.S. dollar account maintained by the payee
with a bank in the United States if such Holder elects payment by wire transfer
by giving written notice to the Trustee or the Paying Agent to such effect
designating such account no later than 30 days immediately preceding the
relevant due date for payment (or such other date as the Trustee may accept in
its discretion).
3. Paying Agent and Registrar; Calculation Agent
---------------------------------------------
Initially, The Bank of New York, a New York banking corporation (the
"Trustee"), will act as Paying Agent and Registrar. The Company may appoint and
change any Paying Agent, Registrar or co-registrar without notice. The Company
or any of its domestically incorporated Wholly Owned Subsidiaries may act as
Paying Agent, Registrar or co-registrar.
<PAGE>
6
Initially, The Bank of New York, a New York banking corporation (the
"Calculation Agent"), will act as Calculation Agent. The Company shall, so long
as any of the Securities remain outstanding, maintain under appointment a
Calculation Agent to calculate the rate of interest payable on the Securities in
respect of each Interest Period. If the Calculation Agent is unable or unwilling
to continue to act as such, or if the Calculation Agent fails to establish the
applicable rate of interest for any Interest Period, or if the Company removes
the Calculation Agent, the Company shall appoint the office of another bank to
act as the Calculation Agent; provided, however, that the Calculation Agent
-------- -------
shall not resign or be removed until acceptance of an appointment by a successor
as evidenced by an appropriate agreement entered into by the Company and such
successor Calculation Agent; provided, further however, that the Trustee may
-------- ---------------
resign as Calculation Agent only if the Trustee resigns as Trustee in accordance
with Section 7.08 of the Indenture.
4. Indenture
---------
The Company issued the Securities under an Indenture dated as of May
19, 1999 (the "Indenture"), between the Company and the Trustee. The terms of
the Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. (S)(S)
------
77aaa-77bbbb) as in effect on the date of the Indenture (the "TIA"). Terms
defined in the Indenture and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all terms and provisions
of the Indenture, and Securityholders are referred to the Indenture and the TIA
for a statement of such terms and provisions.
The Securities are senior unsecured obligations of the Company limited
to $100,000,000 aggregate principal amount at any one time outstanding (subject
to Section 2.01 of the Indenture). This Security is one of the Securities
referred to in the Indenture issued in an aggregate principal amount of
$100,000,000. Pursuant to the terms of Section 2.01 of the Indenture, an
unlimited amount of additional Securities of this series may be issued from time
to time. The Indenture imposes certain limitations on the ability of the Company
and its Significant Subsidiaries to, among other things, create or incur Liens
and make asset sales. The Indenture also imposes limitations on the ability of
the Company to consolidate or merge with or into any other Person or convey,
transfer or lease all or substantially all of the property of the Company.
5. Optional Redemption
-------------------
The Securities shall be redeemable at the option of the Company, in
whole but not in part, on not less than 15 nor more than 60 days prior notice,
at par, plus accrued and unpaid interest to the redemption date (subject to the
right of holders of record on the relevant record date to receive interest due
on the relevant Interest Payment Date.
<PAGE>
7
6. Sinking Fund
------------
The Securities are not subject to any sinking fund.
7. Denominations; Transfer; Exchange
---------------------------------
The Securities are in registered form without coupons in denominations
of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange
Securities in accordance with the Indenture. Upon any transfer or exchange, the
Registrar and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements or transfer documents and to pay any taxes required by
law or permitted by the Indenture. The Registrar need not register the transfer
of or exchange any Securities selected for redemption or to transfer or exchange
any Securities for a period of 15 days prior to the mailing of a notice of
redemption of Securities to be redeemed.
8. Persons Deemed Owners
---------------------
The registered Holder of this Security may be treated as the owner of
it for all purposes.
9. Unclaimed Money
---------------
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Company at its written request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must look
only to the Company, as unsecured general creditors, and not to the Trustee for
payment.
10. Discharge and Defeasance
------------------------
Subject to certain conditions, the Company at any time may terminate
some of or all its obligations under the Securities and the Indenture if the
Company deposits with the Trustee money or U.S. Government Obligations for the
payment of principal and interest on the Securities to redemption or maturity,
as the case may be.
<PAGE>
8
11. Amendment, Waiver
-----------------
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended without prior notice to any
Securityholder but with the written consent of the Holders of at least a
majority in aggregate principal amount of the outstanding Securities and (ii)
any default or noncompliance with any provision may be waived with the written
consent of the Holders of at least a majority in principal amount of the
outstanding Securities. Subject to certain exceptions set forth in the
Indenture, without the consent of any Holder of Securities, the Company and the
Trustee may amend the Indenture or the Securities (i) to cure any ambiguity,
omission, defect or inconsistency; (ii) to comply with Article 5 of the
Indenture; (iii) to provide for uncertificated Securities in addition to or in
place of certificated Securities; (iv) add additional covenants or to surrender
rights and powers conferred on the Company; (v) to comply with the requirements
of the SEC in order to effect or maintain the qualification of the Indenture
under the TIA; (vi) to make any change that does not adversely affect the rights
of any Securityholder; (vii) to appoint a successor trustee; (viii) to secure
the Securities; or (ix) to provide for the issuance of additional securities.
12. Defaults and Remedies
---------------------
If an Event of Default occurs (other than an Event of Default relating
to certain events of bankruptcy or insolvency of the Company) and is continuing,
the Trustee or the Holders of at least 25% in principal amount of the
outstanding Securities may declare the principal of and accrued but unpaid
interest on all the Securities to be due and payable. If an Event of Default
relating to certain events of bankruptcy or insolvency of the Company occurs,
the principal of and interest on all the Securities shall become immediately due
and payable without any declaration or other act on the part of the Trustee or
any Holders. Under certain circumstances, the Holders of a majority in principal
amount of the outstanding Securities may rescind any such acceleration with
respect to the Securities and its consequences.
If an Event of Default occurs and is continuing, the Trustee shall be
under no obligation to exercise any of the rights or powers under the Indenture
at the request or direction of any of the Holders unless such Holders have
offered to the Trustee reason able indemnity or security against any loss,
liability or expense. Except to enforce the right to receive payment of
principal, premium (if any) or interest when due, no Holder may pursue any
remedy with respect to the Indenture or the Securities unless (i) such Holder
has previously given the Trustee notice that an Event of Default is continuing,
(ii) Holders of at least 25% in principal amount of the outstanding Securities
have requested the Trustee in writing to pursue the remedy, (iii) such Holders
have offered the Trustee reasonable security or indemnity against any loss,
liability or expense, (iv) the Trustee has not complied with such request within
60 days after the receipt of the request
<PAGE>
9
and the offer of security or indemnity and (v) the Holders of a majority in
principal amount of the outstanding Securities have not given the Trustee a
direction inconsistent with such request within such 60-day period. Subject to
certain restrictions, the Holders of a majority in principal amount of the
outstanding Securities are given the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. The Trustee, however,
may refuse to follow any direction that conflicts with law or the Indenture or
that the Trustee determines is unduly prejudicial to the rights of any other
Holder or that would involve the Trustee in personal liability. Prior to taking
any action under the Indenture, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses caused
by taking or not taking such action.
13. Trustee Dealings with the Company
---------------------------------
Subject to certain limitations imposed by the TIA, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
14. No Recourse Against Others
--------------------------
A director, officer, employee or stockholder, as such, of the Company
shall not have any liability for any obligations of the Company under the
Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
15. Authentication
--------------
This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
16. Abbreviations
-------------
Customary abbreviations may be used in the name of a Securityholder or
an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
<PAGE>
10
17. Governing Law
-------------
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
18. CUSIP Numbers
-------------
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder of Securities upon written
request and without charge to the Holder a copy of the Indenture which has in it
the text of this Security.
<PAGE>
11
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this
Security on the books of the Company. The agent may substitute another to act
for him.
- --------------------------------------------------------------------------------
Date: ________________ Your Signature: _________________________________________
- --------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
<PAGE>
12
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF
TRANSFER RESTRICTED SECURITIES
This certificate relates to $_________ principal amount of Securities held in
(check applicable space) ____ book-entry or _____ definitive form by the
undersigned.
The undersigned (check one box below):
[_] has requested the Trustee by written order to deliver in exchange for its
beneficial interest in the Global Security held by the Depositary a
Security or Securities in definitive, registered form of authorized
denominations and an aggregate principal amount equal to its beneficial
interest in such Global Security (or the portion thereof indicated above);
[_] has requested the Trustee by written order to exchange or register the
transfer of a Security or Securities.
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act, the undersigned confirms that such Securities
are being transferred in accordance with its terms:
CHECK ONE BOX BELOW
(1) [_] to the Company; or
(2) [_] pursuant to an effective registration statement under the
Securities Act of 1933; or
(3) [_] inside the United States to a "qualified institutional buyer"
(as defined in Rule 144A under the Securities Act of 1933) that
purchases for its own account or for the account of a qualified
institutional buyer to whom notice is given that such transfer is
being made in reliance on Rule 144A, in each case pursuant to and
in compliance with Rule 144A under the Securities Act of 1933; or
(4) [_] outside the United States in an offshore transaction within the
meaning of Regulation S under the Securities Act in compliance
with Rule 904 under the Securities Act of 1933; or
<PAGE>
13
(5) [_] pursuant to another available exemption from registration
provided by Rule 144 under the Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to register any
of the Securities evidenced by this certificate in the name of any Person
other than the registered holder thereof; provided, however, that if box
-------- -------
(4) or (5) is checked, the Trustee may require, prior to registering any
such transfer of the Securities, such legal opinions, certifications and
other information as the Company has reasonably requested to confirm that
such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities
Act of 1933.
__________________________
Your Signature
Signature Guarantee:
Date: ___________________ __________________________
Signature must be guaranteed Signature of Signature
by a participant in a Guarantee
recognized signature guaranty
medallion program or other
signature guarantor acceptable
to the Trustee
- --------------------------------------------------------------------------------
<PAGE>
14
TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, and is aware that the sale to it is being made in reliance on Rule 144A
and acknowledges that it has received such information regarding the Company as
the undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the exemption
from registration provided by Rule 144A.
Dated: ________________ ______________________________
NOTICE: To be executed by
an executive officer
<PAGE>
15
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The initial principal amount of this Global Security is $100,000,000.
The following increases or decreases in this Global Security have been made:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Date of Amount of decrease in Amount of increase in Principal amount of this Signature of authorized
Exchange Principal Amount of this Principal Amount of this Global Security following signatory of Trustee or
Global Security Global Security such decrease or increase Securities Custodian
</TABLE>
<PAGE>
EXHIBIT 4.3
-----------
EXECUTION COPY
================================================================================
THE LIMITED, INC.
$100,000,000 Series C Floating Rate Notes due May 2001
-------------
INDENTURE
Dated as of May 19, 1999
-------------
The Bank of New York,
Trustee
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1
Definitions and Incorporation by Reference
------------------------------------------
SECTION 1.01. Definitions........................................ 1
SECTION 1.02. Other Definitions.................................. 4
SECTION 1.03. Incorporation by Reference of Trust Indenture Act.. 5
SECTION 1.04. Rules of Construction.............................. 5
ARTICLE 2
The Securities
--------------
SECTION 2.01. Amount of Securities............................... 5
SECTION 2.02. Form and Dating.................................... 6
SECTION 2.03. Execution and Authentication....................... 6
SECTION 2.04. Registrar and Paying Agent......................... 7
SECTION 2.05. Paying Agent to Hold Money in Trust................ 8
SECTION 2.06. Securityholder Lists............................... 8
SECTION 2.07. Transfer and Exchange.............................. 8
SECTION 2.08 Replacement Securities............................. 9
SECTION 2.09. Outstanding Securities............................. 9
SECTION 2.10. Temporary Securities............................... 10
SECTION 2.11. Cancelation........................................ 10
SECTION 2.12. Defaulted Interest................................. 10
SECTION 2.13. CUSIP Numbers...................................... 10
ARTICLE 3
Redemption
----------
SECTION 3.01. Notices to Trustee................................. 10
SECTION 3.02. Notice of Redemption............................... 11
SECTION 3.03. Effect of Notice of Redemption..................... 11
SECTION 3.04. Deposit of Redemption Price........................ 12
ARTICLE 4
<PAGE>
Page
Covenants ----
---------
SECTION 4.01. Payment of Securities............................. 12
SECTION 4.02. SEC Reports....................................... 12
SECTION 4.03. Compliance Certificate............................ 12
SECTION 4.04. Restrictions on Liens Upon Voting Stock of
Significant Subsidiaries...................... 13
SECTION 4.05. Compliance With Covenants and Conditions May Be
Waived by Holders of Securities............... 13
ARTICLE 5
Successor Company
-----------------
SECTION 5.01. When Company May Merge or Transfer Assets......... 13
ARTICLE 6
Defaults and Remedies
---------------------
SECTION 6.01. Events of Default................................. 14
SECTION 6.02. Acceleration...................................... 15
SECTION 6.03. Other Remedies.................................... 15
SECTION 6.04. Waiver of Past Defaults........................... 15
SECTION 6.05. Control by Majority............................... 15
SECTION 6.06. Limitation on Suits............................... 16
SECTION 6.07. Rights of Holders to Receive Payment.............. 16
SECTION 6.08. Collection Suit by Trustee........................ 16
SECTION 6.09. Trustee May File Proofs of Claim.................. 16
SECTION 6.10. Priorities........................................ 17
SECTION 6.11. Undertaking for Costs............................. 17
SECTION 6.12. Waiver of Stay of Extension Laws.................. 17
ARTICLE 7
Trustee; Calculation Agent
--------------------------
SECTION 7.01. Duties of Trustee................................. 17
SECTION 7.02. Rights of Trustee................................. 19
SECTION 7.03. Individual Rights of Trustee...................... 19
SECTION 7.04. Trustee's Disclaimer.............................. 20
<PAGE>
Page
----
SECTION 7.05. Notice of Defaults................................ 20
SECTION 7.06. Reports by Trustee to Holders..................... 20
SECTION 7.07. Compensation and Indemnity........................ 20
SECTION 7.08. Replacement of Trustee............................ 21
SECTION 7.09. Successor Trustee by Merger....................... 22
SECTION 7.10. Eligibility; Disqualification..................... 22
SECTION 7.11. Preferential Collection of Claims Against Company. 22
SECTION 7.12. Calculation Agent................................. 22
ARTICLE 8
Discharge of Indenture, Defeasance
----------------------------------
SECTION 8.01. Discharge of Liability on Securities; Defeasance.. 23
SECTION 8.02. Conditions to Defeasance.......................... 24
SECTION 8.03. Application of Trust Money........................ 25
SECTION 8.04. Repayment to Company.............................. 25
SECTION 8.05. Indemnify for Government Obligations.............. 25
SECTION 8.06. Reinstatement..................................... 25
ARTICLE 9
Amendments
----------
SECTION 9.01. Without Consent of Holders........................ 25
SECTION 9.02. With Consent of Holders........................... 26
SECTION 9.03 Compliance with Trust Indenture Act............... 27
SECTION 9.04. Revocation and Effect of Consents and Waivers..... 27
SECTION 9.05. Notation on or Exchange of Securities............. 27
SECTION 9.06. Trustee To Sign Amendments........................ 28
SECTION 9.07. Payment for Consent............................... 28
ARTICLE 10
Miscellaneous
-------------
SECTION 10.01 Trust Indenture Act Controls...................... 28
SECTION 10.02. Notices........................................... 28
SECTION 10.03. Communication by Holders with Other Holders....... 29
SECTION 10.04. Certificate and Opinion as to Conditions Precedent 29
<PAGE>
Page
----
SECTION 10.05. Statements Required in Certificate or Opinion..... 29
SECTION 10.06. When Securities Disregarded....................... 30
SECTION 10.07. Rules by Trustee, Paying Agent and Registrar...... 30
SECTION 10.08. Non-Business Days................................. 30
SECTION 10.09. GOVERNING LAW..................................... 30
SECTION 10.10. Liability Solely Corporate........................ 30
SECTION 10.11. Successors........................................ 31
SECTION 10.12. Multiple Originals................................ 31
SECTION 10.13. Table of Content; Headings........................ 31
Appendix A - Provisions Relating to Securities
Exhibit A - Form of Security
<PAGE>
INDENTURE dated as of May 19, 1999, between THE
LIMITED, INC., a Delaware corporation (the "Company"), and
THE BANK OF NEW YORK, a New York banking corporation, as
trustee (the "Trustee").
Each party agrees as follows for the benefit of the other parties and
for the equal and ratable benefit of the Holders of the Company's Series C
Floating Rate Notes due May 2001 issued on the date hereof (the "Securities").
Except as otherwise provided herein, the initial Securities will be limited to
$100,000,000 in aggregate principal amount outstanding.
ARTICLE 1
Definitions and Incorporation by Reference
------------------------------------------
SECTION 1.01. Definitions.
------------
"Affiliate" of any specified Person means any other Person, directly
or indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Bankruptcy Law" means Title 11, United States Code, or any similar
Federal or state law for the relief of debtors.
"Board" means the Board of Directors of the Company or any committee
thereof duly authorized to act on behalf of the Board of Directors of the
Company.
"Business Day" means any day (other than a Saturday or Sunday) on
which banking institutions in the City of New York are open for business and
which is also a London Banking Day.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
<PAGE>
2
"Closing Date" means May 19, 1999.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor and, for purposes of
any provision contained herein and required by the TIA, each other obligor on
the indenture securities.
"Custodian" means any receiver, liquidator, assignee, custodian,
trustee or sequestrator (or similar official) under any Bankruptcy Law.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the Closing Date, including those set forth
in (i) the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants, (ii) statements and
pronouncements of the Financial Accounting Standards Board, (iii) such other
statements by such other entities as approved by a significant segment of the
accounting profession and (iv) the rules and regulations of the SEC governing
the inclusion of financial statements (including pro forma financial statements)
in periodic reports required to be filed pursuant to Section 13 of the Exchange
Act, including opinions and pronouncements in staff accounting bulletins and
similar written statements from the accounting staff of the SEC. All ratios and
computations based on GAAP contained in this Indenture shall be computed in
conformity with GAAP.
"Holder" or "Securityholder" means the Person in whose name a Security
is registered on the Registrar's books.
"Indebtedness" means any and all obligations of a Person for money
borrowed which in accordance with GAAP would be reflected on the balance sheet
of such Person as a liability on the date as of which Indebtedness is to be
determined.
"Indenture" means this Indenture as amended or supplemented from time
to time.
"Issue Date" means the date on which the Securities are originally
issued.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any conditional sale or other title
retention agreement or lease in the nature thereof).
<PAGE>
3
"London Banking Day" means any day (other than a Saturday or Sunday)
on which dealings in deposits are transacted in the London interbank market.
"Officer" means the Chairman of the Board, the Vice Chairman of the
Board, the Chief Financial Officer, the Treasurer or the Controller of the
Company.
"Officers' Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any Person,
means Capital Stock of any class or classes (however designated) that is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such Person,
over shares of Capital Stock of any other class of such Person.
"principal" of a Security means the principal of the Security plus the
premium, if any, payable on the Security which is due or overdue or is to become
due at the relevant time.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Securities issued under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Significant Subsidiary" means a Subsidiary (including its
Subsidiaries), which meets any of the following conditions:
(1) The Company's and its other Subsidiaries' investments in and
advances to the Subsidiary exceed 10 percent of the total assets of the
Company and its Subsidiaries consolidated as of the end of the most
recently completed fiscal year;
<PAGE>
4
(2) The Company's and its other Subsidiaries' proportionate share of
the total assets (after intercompany eliminations) of the Subsidiary
exceeds 10 percent of the total assets of the Company and its Subsidiaries
consolidated as of the end of the most recently completed fiscal year; or
(3) The Company's and its other Subsidiaries' equity in the income
from continuing operations before income taxes, extraordinary items and
cumulative effect of a change in accounting principles of the Subsidiary
exceeds 10 percent of such income of the Company and its Subsidiaries
consolidated for the most recently completed fiscal year.
For the purposes of making the prescribed income test in clause (3) of
this definition, the following shall be applicable:
(1) When a loss has been incurred by either the Company and its
consolidated Subsidiaries or the tested Subsidiary, but not both, the
equity in the income or loss of the tested Subsidiary shall be excluded
from the income of the Company and its Subsidiaries consolidated for
purposes of the computation; and
(2) If income of the Company and its Subsidiaries consolidated for the
most recent fiscal year is at least 10 percent lower than the average of
the income for the last five fiscal years, such average income shall be
substituted for purposes of the computation. Any loss years shall be
omitted for purposes of computing average income.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the final payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency beyond the control of the issuer unless such
contingency has occurred).
"Subsidiary" of any Person means any corporation, association,
partnership or other business entity a majority of the outstanding voting stock
of which is owned, directly or indirectly, by the Company or by one or more
other Subsidiaries, or by the Company and one or more other Subsidiaries. For
the purposes of this definition, "voting stock" means stock having voting power
for the election of directors, whether at all times or only so long as no senior
class of stock has such voting power by reason of any contingency; provided,
--------
however, that "voting stock" shall not include stock which the Company or any of
- -------
its Subsidiaries owning such stock is required or has agreed not to vote, or the
voting rights with respect to which have been granted to a Person other than the
Company or any of its Subsidiaries.
<PAGE>
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-
77bbbb) as in effect on the Closing Date (or, for purposes of Section 9.03, as
in effect from time to time).
"Trustee" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor.
"Trust Officer" means any officer or assistant officer of the Trustee
assigned by the Trustee to administer its corporate trust matters.
"Uniform Commercial Code" means the New York Uniform Commercial Code
as in effect from time to time.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.
"Voting Stock" of a Person means capital stock the holders of which
have general voting power under ordinary circumstances to elect at least a
majority of the board of directors of a corporation; provided that, for the
--------
purposes hereof, capital stock which carries only the right to vote conditioned
on the occurrence of an event shall not be considered voting stock whether or
not such event shall have occurred.
"Wholly Owned Subsidiary" means a Subsidiary of the Company all the
Capital Stock of which (other than directors' qualifying shares) is owned by the
Company or another Wholly Owned Subsidiary.
SECTION 1.02. Other Definitions.
------------------
Defined in
Term Section
---- ----------------
"covenant defeasance option"......................... 8.01(b)
"Event of Default"................................... 6.01
"Global Security".................................... Appendix A
"legal defeasance option"............................ 8.01(b)
"Paying Agent"....................................... 2.04
"protected purchaser"................................ 2.08
"Registrar".......................................... 2.04
<PAGE>
6
SECTION 1.03. Incorporation by Reference of Trust Indenture Act. This
-------------------------------------------------
Indenture is subject to the mandatory provisions of the TIA, which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Holder or Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction. Unless the context otherwise
---------------------
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation; and
(5) words in the singular include the plural and words in the plural
include the singular.
<PAGE>
7
ARTICLE 2
The Securities
--------------
SECTION 2.01. Amount of Securities. The aggregate principal amount of
--------------------
the initial Securities which may be authenticated and delivered under this
Indenture is $100,000,000. The Company may from time to time offer and sell an
unlimited amount of additional Securities, which shall have terms identical to
the initial Securities and which shall be treated, together with any outstanding
Securities, as a single issue of Securities.
With respect to any additional Securities issued after the Closing
Date (except for Securities authenticated and delivered upon registration of,
transfer of, or in exchange for, or in lieu of, other Securities pursuant to
Section 2.07, 2.08, 2.09, 2.10 or the Appendix), there shall be (i) established
in or pursuant to a resolution of two Officers of the Company duly authorized by
the Board of Directors to act on behalf of the Company, (ii) accompanied by an
Opinion of Counsel from the Company to the effect that such additional
Securities comply with the provisions of this Indenture and are legal, valid,
binding and enforceable obligations of the Company, and (iii) (A) set forth or
determined in the manner provided in an Officers' Certificate or (B) established
in one or more indentures supplemental hereto, prior to the issuance of such
additional Securities:
(1) the aggregate principal amount of such additional Securities which
may be authenticated and delivered under this Indenture (except for
Securities authenticated and delivered upon registration of transfer of, or
in exchange for, or in lieu of, other Securities of the same series
pursuant to Section 2.07, 2.08, 2.09 or 2.10 or the Appendix and except for
Securities which, pursuant to Section 2.03, are deemed never to have been
authenticated and delivered hereunder); and
(2) issuance date of such additional Securities; provided, however,
-------- -------
that no additional Securities may be issued at a price that would cause
such additional Securities to have "original issue discount" within the
meaning of Section 1273 of the Code (other than de minimis original issue
discount, as defined in applicable Treasury regulations).
If any of the terms of any additional Securities are established by
action taken pursuant to a resolution on behalf of the Board of Directors in the
manner provided above, a copy of an appropriate record of such action shall be
certified by the Secretary or any Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate or the indenture supplemental hereto setting forth the terms of the
additional Securities.
<PAGE>
8
SECTION 2.02. Form and Dating. Provisions relating to the Securities
---------------
are set forth in the Appendix, which is hereby incorporated in and expressly
made a part of this Indenture. The Securities and the Trustee's certificate of
authentication shall each be substantially in the form of Exhibit A hereto,
which is hereby incorporated in and expressly made a part of this Indenture. The
Securities may have notations, legends or endorsements required by law, stock
exchange rule, agreements to which the Company is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable
to the Company). Each Security shall be dated the date of its authentication.
The Securities shall be issuable only in registered form without interest
coupons and only in denominations of $1,000 and integral multiples thereof.
SECTION 2.03. Execution and Authentication. The Chairman of the Board
----------------------------
or the Vice Chairman of the Board and the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary of the Company duly authorized to act on
behalf of the Company shall both sign the Securities for the Company by manual
or facsimile signature.
If an officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall be
valid nevertheless.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
The Trustee shall authenticate and make available for delivery
Securities as set forth in the Appendix.
The Trustee may appoint an authenticating agent reasonably acceptable
to the Company to authenticate the Securities. Any such appointment shall be
evidenced by an instrument signed by a Trust Officer, a copy of which shall be
furnished to the Company. Unless limited by the terms of such appointment, an
authenticating agent may authenticate Securities whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as any
Registrar, Paying Agent or agent for service of notices and demands.
SECTION 2.04. Registrar and Paying Agent. The Company shall maintain
--------------------------
an office or agency where Securities may be presented for registration of
transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange. The
Company may have one or more co-registrars and one or more additional paying
agents. The term "Paying Agent" includes
<PAGE>
any additional paying agent, and the term "Registrar" includes any
co-registrars. The Company initially appoints the Trustee as (i) Registrar and
Paying Agent in connection with the Securities and (ii) the Securities Custodian
(as defined in the Appendix) with respect to the Global Securities (as defined
in the Appendix).
The Company shall enter into an appropriate agency agreement with any
Registrar or Paying Agent not a party to this Indenture, which shall incorporate
the terms of the TIA. The agreement shall implement the provisions of this
Indenture that relate to such agent. The Company shall notify the Trustee of the
name and address of any such agent. If the Company fails to maintain a Registrar
or Paying Agent, the Trustee shall act as such and shall be entitled to
appropriate compensation therefor pursuant to Section 7.07. The Company or any
of its domestically organized Wholly Owned Subsidiaries may act as Paying Agent
or Registrar.
The Company may remove any Registrar or Paying Agent upon written
notice to such Registrar or Paying Agent and to the Trustee; provided, however,
-------- -------
that no such removal shall become effective until (1) acceptance of an
appointment by a successor as evidenced by an appropriate agreement entered into
by the Company and such successor Registrar or Paying Agent, as the case may be,
and delivered to the Trustee or (2) notification to the Trustee that the Trustee
shall serve as Registrar or Paying Agent until the appointment of a successor in
accordance with clause (1) above. The Registrar or Paying Agent may resign at
any time upon written notice.
SECTION 2.05. Paying Agent To Hold Money in Trust. By 10:00 a.m. (New
-----------------------------------
York City time) on each due date of the principal and interest on any Security,
the Company shall deposit with the Paying Agent (or if the Company or a
Subsidiary is acting as Paying Agent, segregate and hold in trust for the
benefit of the Persons entitled thereto) a sum sufficient to pay such principal
and interest when so becoming due. The Company shall require each Paying Agent
(other than the Trustee) to agree in writing that the Paying Agent shall hold in
trust for the benefit of Securityholders or the Trustee all money held by the
Paying Agent for the payment of principal of or interest on the Securities and
shall notify the Trustee of any default by the Company in making any such
payment. If the Company or a Subsidiary of the Company acts as Paying Agent, it
shall segregate the money held by it as Paying Agent and hold it as a separate
trust fund. The Company at any time may require a Paying Agent to pay all money
held by it to the Trustee and to account for any funds disbursed by the Paying
Agent. Upon complying with this Section, the Paying Agent shall have no further
liability for the money delivered to the Trustee.
SECTION 2.06. Securityholder Lists. The Trustee shall preserve in as
--------------------
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Securityholders. If the Trustee is not the
Registrar, the Company shall
<PAGE>
furnish, or cause the Registrar to furnish, to the Trustee, in writing at least
five Business Days before each interest payment date and at such other times as
the Trustee may request in writing, a list in such form and as of such date as
the Trustee may reasonably require of the names and addresses of
Securityholders.
SECTION 2.07. Transfer and Exchange. The Securities shall be issued in
---------------------
registered form and shall be transferable only upon the surrender of a Security
for registration of transfer and in compliance with the Appendix. When a
Security is presented to the Registrar with a request to register a transfer,
the Registrar shall register the transfer as requested if the requirements of
Section 8-401(a)(l) of the Uniform Commercial Code are met. When Securities are
presented to the Registrar with a request to exchange them for an equal
principal amount of Securities of other denominations, the Registrar shall make
the exchange as requested if the same requirements are met. To permit
registration of transfers and exchanges, the Company shall execute and the
Trustee shall authenticate Securities at the Registrar's request. The Company
may require payment of a sum sufficient to pay all taxes, assessments or other
governmental charges in connection with any transfer or exchange pursuant to
this Section. The Company shall not be required to make and the Registrar need
not register transfers or exchanges of Securities selected for redemption
(except, in the case of Securities to be redeemed in part, the portion thereof
not to be redeemed) or any Securities for a period of 15 days before a selection
of Securities to be redeemed.
Prior to the due presentation for registration of transfer of any
Security, the Company, the Trustee, the Paying Agent, and the Registrar may deem
and treat the Person in whose name a Security is registered as the absolute
owner of such Security for the purpose of receiving payment of principal of and
interest, if any, on such Security and for all other purposes whatsoever,
whether or not such Security is overdue, and none of the Company, the Trustee,
the Paying Agent, or the Registrar shall be affected by notice to the contrary.
Any Holder of a Global Security shall, by acceptance of such Global
Security, agree that transfers of beneficial interest in such Global Security
may be effected only through a book-entry system maintained by (i) the Holder of
such Global Security (or its agent) or (ii) any Holder of a beneficial interest
in such Global Security, and that ownership of a beneficial interest in such
Global Security shall be required to be reflected in a book entry.
All Securities issued upon any transfer or exchange pursuant to the
terms of this Indenture will evidence the same debt and will be entitled to the
same benefits under this Indenture as the Securities surrendered upon such
transfer or exchange.
<PAGE>
11
SECTION 2.08. Replacement Securities. If a mutilated Security is
----------------------
surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 of the Uniform Commercial Code are met, such that the Holder (i)
satisfies the Company or the Trustee within a reasonable time after he has
notice of such loss, destruction or wrongful taking and the Registrar does not
register a transfer prior to receiving such notification, (ii) makes such
request to the Company or the Trustee prior to the Security being acquired by a
protected purchaser as defined in Section 8-303 of the Uniform Commercial Code
(a "protected purchaser") and (iii) satisfies any other reasonable requirements
of the Trustee. If required by the Trustee or the Company, such Holder shall
furnish an indemnity bond sufficient in the judgment of the Trustee to protect
the Company, the Trustee, the Paying Agent and the Registrar from any loss that
any of them may suffer if a Security is replaced. The Company and the Trustee
may charge the Holder for their expenses in replacing a Security. In the event
any such mutilated, lost, destroyed or wrongfully taken Security has become or
is about to become due and payable, the Company in its discretion may pay such
Security instead of issuing a new Security in replacement thereof.
Every replacement Security is an additional obligation of the Company.
The provisions of this Section 2.08 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, lost, destroyed or wrongfully taken
Securities.
SECTION 2.09. Outstanding Securities. Securities outstanding at any
----------------------
time are all Securities authenticated by the Trustee except for those canceled
by it, those delivered to it for cancelation, those paid pursuant to Section
2.08 and those described in this Section as not outstanding. Subject to Section
10.06, a Security does not cease to be outstanding because the Company or an
Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.08, it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Security is held by a protected purchaser.
If the Paying Agent segregates and holds in trust, in accordance with
this Indenture, on a redemption date or maturity date money sufficient to pay
all principal and interest and liquidated damages payable on that date with
respect to the Securities (or portions thereof) to be redeemed or maturing, as
the case may be, then on and after that date such Securities (or portions
thereof) cease to be outstanding and interest on them ceases to accrue.
<PAGE>
12
SECTION 2.10. Temporary Securities. In the event that Definitive
--------------------
Securities (as defined in the Appendix) are to be issued under the terms of this
Indenture, until such Definitive Securities are ready for delivery, the Company
may prepare and the Trustee shall authenticate temporary Securities upon a
written order signed by two Officers. Temporary Securities shall be
substantially in the form of Definitive Securities but may have variations that
the Company considers appropriate for temporary Securities. Without unreasonable
delay, the Company shall prepare and the Trustee shall authenticate Definitive
Securities upon a written order signed by two Officers and deliver them in
exchange for temporary Securities upon surrender of such temporary Securities at
the office or agency of the Company, without charge to the Holder.
SECTION 2.11. Cancelation. The Company at any time may deliver
-----------
Securities to the Trustee for cancelation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for registration
of transfer, exchange or payment. The Trustee and no one else shall cancel all
Securities surrendered for registration of transfer, exchange, payment or
cancelation and deliver canceled Securities to the Company pursuant to written
direction by an Officer. The Company may not issue new Securities to replace
Securities it has redeemed, paid or delivered to the Trustee for cancelation.
The Trustee shall not authenticate Securities in place of canceled Securities
other than pursuant to the terms of this Indenture.
SECTION 2.12. Defaulted Interest. If the Company defaults in a payment
------------------
of interest on the Securities, the Company shall pay the defaulted interest
(plus interest on such defaulted interest to the extent lawful) in any lawful
manner. The Company may pay the defaulted interest to the Persons who are
Securityholders on a subsequent special record date. The Company shall fix or
cause to be fixed any such special record date and payment date to the
reasonable satisfaction of the Trustee and shall promptly mail or cause to be
mailed to each Securityholder a notice that states the special record date, the
payment date and the amount of defaulted interest to be paid.
SECTION 2.13. CUSIP Numbers. The Company in issuing the Securities may
-------------
use "CUSIP" numbers (if then generally in use) and, if so, the Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Holders; provided,
--------
however, that any such notice may state that no representation is made as to the
- -------
correctness of such numbers either as printed on the Securities or as contained
in any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers. The Company shall
promptly notify the Trustee of any change in the "CUSIP" numbers.
<PAGE>
13
ARTICLE 3
Redemption
----------
SECTION 3.01. Notices to Trustee. If the Company elects to redeem
------------------
Securities pursuant to paragraph 5 of the Securities, it shall notify the
Trustee in writing of the redemption date and the principal amount of Securities
to be redeemed, which principal amount shall be equal to the aggregate principal
amount of all outstanding Securities.
The Company shall notify the Trustee of the redemption date and the
principal amount of Securities to be redeemed, which principal amount shall be
equal to the aggregate principal amount of all outstanding Securities, at least
five Business Days before the notice of redemption is to be mailed to the
Securityholders unless the Trustee consents to a shorter period. Such notice
shall be accompanied by an Officers' Certificate and an Opinion of Counsel from
the Company to the effect that such redemption will comply with the conditions
herein. Any such notice may be canceled at any time prior to notice of such
redemption being mailed to any Holder and shall thereby be void and of no
effect.
SECTION 3.02. Notice of Redemption. At least 15 days but not more than
--------------------
60 days before a date for redemption of Securities, the Company shall mail a
notice of redemption by first-class mail to each Holder of Securities to be
redeemed at such Holder's registered address.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the redemption date, which shall be an Interest Payment Date (as
defined in paragraph 1 of the Securities);
(2) the redemption price, which shall be equal to 100% of the
principal amount of each outstanding security, and the amount of accrued
interest to the redemption date;
(3) the name and address of the Paying Agent;
(4) that the Securities called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(5) that, unless the Company defaults in making such redemption
payment or the Paying Agent is prohibited from making such payment pursuant
to the
<PAGE>
14
terms of this Indenture, interest on Securities (or portion thereof) called
for redemption ceases to accrue on and after the redemption date;
(6) the CUSIP number, if any, printed on the Securities being
redeemed; and
(7) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the
Securities.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section.
SECTION 3.03. Effect of Notice of Redemption. Once notice of
------------------------------
redemption is mailed, Securities called for redemption become due and payable on
the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest to the redemption date;
provided, however, that if the redemption date is after a regular record date,
- -------- -------
the accrued interest shall be payable to the Securityholder of the redeemed
Securities registered on the relevant record date. Failure to give notice or any
defect in the notice to any Holder shall not affect the validity of the notice
to any other Holder.
SECTION 3.04. Deposit of Redemption Price. Prior to 10:00 a.m. (New
---------------------------
York City time) on the redemption date, the Company shall deposit with the
Paying Agent (or, if the Company or a Subsidiary is the Paying Agent, shall
segregate and hold in trust) money sufficient to pay the redemption price of and
accrued interest on all Securities to be redeemed on that date other than
Securities or portions of Securities called for redemption that have been
delivered by the Company to the Trustee for cancelation. On and after the
redemption date, interest will cease to accrue on Securities or portions thereof
called for redemption so long as the Company has deposited with the Paying Agent
funds sufficient to pay the principal of, plus accrued and unpaid interest and
liquidated damages (if any) on, the Securities to be redeemed.
ARTICLE 4
Covenants
---------
SECTION 4.01. Payment of Securities. The Company shall promptly pay
---------------------
the principal of and interest on the Securities on the dates and in the manner
provided in the Securities and in this Indenture. Principal and interest shall
be considered paid on the
<PAGE>
15
date due if on such date the Trustee or the Paying Agent holds in accordance
with this Indenture money sufficient to pay all principal and interest then due
and the Trustee or the Paying Agent, as the case may be, is not prohibited from
paying such money to the Securityholders on that date pursuant to the terms of
this Indenture.
The Company shall pay interest on overdue principal at the rate
specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
SECTION 4.02. SEC Reports. Notwithstanding that the Company may not be
-----------
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, the Company shall file with the SEC, and provide the Trustee and
Securityholders within 15 days after it files them with the SEC, copies of its
annual report and the information, documents and other reports that are
specified in Section 13 and 15(d) of the Exchange Act. In addition, the Company
shall furnish to the Trustee and the Securityholders, promptly upon their
becoming available, copies of the annual report to shareholders and any other
information provided by the Company to its public shareholders generally. The
Company also shall comply with the other provisions of TIA (S) 314(a).
Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 4.03. Compliance Certificate. The Company shall deliver to the
----------------------
Trustee within 120 days after the end of each fiscal year of the Company an
Officers' Certificate, one of the signatories of which shall be the principal
executive officer, principal accounting officer or principal financial officer
of the Company, stating that in the course of the performance by the signers of
their duties as Officers of the Company they would normally have knowledge of
any Default and whether or not the signers know of any Default that occurred
during such period. If they do, the certificate shall describe the Default, its
status and what action the Company is taking or proposes to take with respect
thereto. The Company also shall comply with Section 314(a)(4) of the TIA.
The Company shall deliver to the Trustee, as soon as possible and in
any event within five days after the Company becomes aware of the occurrence of
any Event of Default or Default, an Officers' Certificate setting forth the
details of such Event of Default or Default and the action which the Company
proposes to take with respect thereto.
<PAGE>
16
SECTION 4.04. Restrictions on Liens Upon Voting Stock of Significant
------------------------------------------------------
Subsidiaries. The Company will not, and will not permit any Subsidiary to,
- ------------
incur, issue, assume or guarantee any Indebtedness if such Indebtedness is
secured by a pledge of, lien on, or security interest in, any shares of Voting
Stock of any Significant Subsidiary, whether such Voting Stock is now owned or
shall hereafter be acquired, without providing that the Securities (together
with, if the Company shall so determine, any other indebtedness or obligations
of the Company or any Subsidiary ranking equally with such Securities and then
existing or thereafter created) shall be secured equally and ratably with such
Indebtedness. For the purposes of the foregoing, pledging, placing a lien on or
creating a security interest in any shares of Voting Stock of a Significant
Subsidiary in order to secure then outstanding Indebtedness of the Company or
any Subsidiary shall be deemed to be the incurrence, issuance, assumption or
guarantee (as the case may be) of such Indebtedness, but the foregoing shall not
apply to Indebtedness secured by a pledge of, lien on, or security interest in,
any shares of Voting Stock of any corporation at the time it becomes a
Significant Subsidiary, including extensions, renewals and replacements of such
Indebtedness without increase in the amount thereof.
SECTION 4.05. Compliance With Covenants and Conditions May Be Waived
------------------------------------------------------
by Holders of Securities. Notwithstanding anything in this Indenture to the
- ------------------------
contrary, the Company or any Subsidiary may fail or omit in any particular
instance to comply with a covenant or condition set forth in Sections 4.04 or
5.01 if the Company shall have obtained and filed with the Trustee, prior to the
time for such compliance evidence (as provided in Article 9) of the consent of
the Holders of at least a majority in aggregate principal amount of the
Securities, either waiving such compliance in such instance or generally waiving
compliance with such covenant or condition, but no such waiver shall extend to
or affect any obligation not waived by the terms of such waiver or impair any
right consequent thereon.
ARTICLE 5
Successor Company
-----------------
<PAGE>
17
SECTION 5.01. When Company May Merge or Transfer Assets. The Company
-----------------------------------------
shall not consolidate with any other Person or accept a merger of any other
Person into the Company or permit the Company to be merged into any other
Person, or sell other than for cash or lease all or substantially all its assets
to another Person unless (a) either the Company shall be the continuing
corporation, or the successor, transferee or lessee Person (if other than the
Company) shall expressly assume, by indenture supplemental hereto satisfactory
to the Trustee, executed and delivered by such Person prior to or simultaneously
with such consolidation, merger, sale or lease, the due and punctual payment of
the principal of, premium, if any, and interest on all the Securities, according
to their tenor, and the due and punctual performance and observance of all the
covenants and conditions of this Indenture to be performed or observed by the
Company, and (b) immediately after giving effect to such consolidation, merger,
sale or lease the Company or the successor, transferee or lessee Person (if any
other than the Company) would not be in default in the performance of any
covenant or condition of this Indenture.
ARTICLE 6
Defaults and Remedies
---------------------
SECTION 6.01. Events of Default. An "Event of Default" occurs if:
-----------------
(1) the failure of the Company to pay any installment of interest on
any Security, when and as the same shall become due and payable, which
failure shall have continued unremedied for a period of 30 days;
(2) the failure of the Company to pay the principal or premium, if
any, on any Security, when and as the same shall become payable, whether at
maturity as therein expressed, by declaration as authorized by this
Indenture or otherwise;
(3) the failure of the Company to redeem any Securities when required
pursuant to this Indenture or the Securities;
(4) the failure of the Company to observe and perform, subject to the
provisions of Section 4.05, any other of the covenants or agreements on the
part of the Company contained in this Indenture, which failure shall not
have been remedied to the satisfaction of the Trustee, or without provision
deemed by the Trustee to be adequate for the remedying thereof having been
made, for a period of 90 days after written notice shall have been given to
the Company by the Trustee or shall have been given to the Company and the
Trustee by Holders of 25% or more in aggregate principal amount of the
Securities of such series then
<PAGE>
18
Outstanding, specifying such failure and requiring the Company to remedy
the same;
(5) the entry by a court having jurisdiction in the premises of a
decree or order for relief in respect of the Company in an involuntary case
under the Federal bankruptcy laws, as now or hereafter constituted, or any
other applicable Federal or state bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a Custodian of the Company or
for substantially all of its property, or ordering the winding-up or
liquidation of the Company's affairs, and such decree or order shall remain
unstayed and in effect for a period of 90 consecutive days; or
(6) the commencement by the Company of a voluntary case under the
Federal bankruptcy laws as now or hereafter constituted, or any other
applicable Federal or state bankruptcy, insolvency or other similar law now
or hereafter in effect, or the consent by the Company to the entry of an
order for relief in an involuntary case under any such law, or the consent
by the Company to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian or sequestrator (or similar
official) of the Company or for substantially all of its property, or the
making by it of an assignment for the benefit of creditors.
SECTION 6.02. Acceleration. If an Event of Default (other than an
------------
Event of Default specified in Section 6.01(5) or (6) with respect to the
Company) occurs and is continuing, the Trustee by notice to the Company, or the
Holders of at least 25% in principal amount of the outstanding Securities by
notice to the Company and the Trustee, may declare the principal of and accrued
but unpaid interest on all the Securities to be due and payable. Upon such a
declaration, such principal and interest shall be due and payable immediately.
If an Event of Default specified in Section 6.01(5) or (6) with respect to the
Company occurs, the principal of and interest on all the Securities shall ipso
----
facto become and be immediately due and payable without any declaration or other
- -----
act on the part of the Trustee or any Securityholders. The Holders of a majority
in principal amount of the Securities by notice to the Trustee may rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default have been cured or
waived except nonpayment of principal or interest that has become due solely
because of acceleration. No such rescission shall affect any subsequent Default
or impair any right consequent thereto.
SECTION 6.03. Other Remedies. If an Event of Default occurs and is
--------------
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of or interest on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.
<PAGE>
19
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
For purposes of this Section 6.03, the Trustee is hereby designated as
attorney-in-fact for the Securityholders.
SECTION 6.04. Waiver of Past Defaults. The Holders of a majority in
-----------------------
principal amount of the Securities by notice to the Trustee may waive an
existing Default and its consequences except (i) a Default in the payment of the
principal of or interest on a Security or (ii) a Default arising from the
failure to redeem or purchase any Security when required pursuant to the terms
of this Indenture. When a Default is waived, it is deemed cured, but no such
waiver shall extend to any subsequent or other Default or impair any consequent
right.
SECTION 6.05. Control by Majority. The Holders of a majority in
-------------------
principal amount of the Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.01, that the Trustee determines is unduly prejudicial to
the rights of other Securityholders or would involve the Trustee in personal
liability; provided, however, that the Trustee may take any other action deemed
-------- -------
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses caused
by taking or not taking such action.
SECTION 6.06. Limitation on Suits. Except to enforce the right to
-------------------
receive payment of principal, premium (if any) or interest when due, no
Securityholder may pursue any remedy with respect to this Indenture or the
Securities unless:
(1) the Holder gives to the Trustee written notice stating that an
Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of the Securities
make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable security or
indemnity against any loss, liability or expense;
<PAGE>
20
(4) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of security or indemnity; and
(5) the Holders of a majority in principal amount of the Securities do
not give the Trustee a direction inconsistent with the request during such
60-day period.
A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over another
Securityholder.
SECTION 6.07. Rights of Holders to Receive Payment. Notwithstanding
------------------------------------
any other provision of this Indenture, the right of any Holder to receive
payment of principal of, premium, if any, and interest on the Securities held by
such Holder, on or after the respective due dates expressed in the Securities,
or to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such
Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of Default
--------------------------
specified in Section 6.01(1) or (2) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company for the whole amount then due and owing (together with interest on any
unpaid interest to the extent lawful) and the amounts provided for in Section
7.07.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may file
--------------------------------
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company or any Subsidiary,
their creditors or their property and, unless prohibited by law or applicable
regulations, may vote on behalf of the Holders in any election of a trustee in
bankruptcy or other Person performing similar functions, and any Custodian of
the Company in any such judicial proceeding is hereby authorized by each Holder
to make payments to the Trustee and, in the event that the Trustee shall consent
to the making of such payments directly to the Holders, to pay to the Trustee
any amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and its counsel, and any other amounts due
the Trustee under Section 7.07.
SECTION 6.10. Priorities. If the Trustee collects any money or
----------
property pursuant to this Article 6, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
<PAGE>
21
SECOND: to Securityholders for amounts due and unpaid on the
Securities for principal, premium, if any, and interest, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Securities for principal, premium, if any, and interest,
respectively; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any payment to
Securityholders pursuant to this Section. At least 15 days before such record
date, the Trustee shall mail to each Securityholder and the Company a notice
that states the record date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the enforcement
---------------------
of any right or remedy under this Indenture or in any suit against the Trustee
for any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees and expenses, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section does not apply to a
suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by
Holders of more than 10% in principal amount of the Securities.
SECTION 6.12. Waiver of Stay or Extension Laws. The Company shall not
--------------------------------
insist upon, or plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, which may affect the covenants or the performance of this
Indenture; and the Company hereby expressly waives all benefit or advantage of
any such law, and shall not hinder, delay or impede the execution of any power
herein granted to the Trustee, but shall suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE 7
Trustee; Calculation Agent
--------------------------
SECTION 7.01. Duties of Trustee. (a) If an Event of Default has
-----------------
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent Person would exercise or use under the circumstances
in the conduct of such Person's own affairs.
<PAGE>
22
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
in the case of any such certificates or opinions which by any provision
hereof are required or contemplated to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine whether or
not they conform to the requirements of this Indenture (but need not
confirm or investigate the accuracy of mathematical calculations or other
facts stated therein).
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
(1) this paragraph does not limit the effect of paragraph (b) of this
Section;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur financial liability in the performance
of any of its duties hereunder or in the exercise of any of its rights or
powers, if it shall have
<PAGE>
23
reasonable grounds to believe that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 7.02. Rights of Trustee. (a) The Trustee may conclusively rely
-----------------
on any document believed by it to be genuine and to have been signed or
presented by the proper person. The Trustee need not investigate any fact or
matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on the
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible
for the misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute wilful
-------- -------
misconduct or negligence.
(e) The Trustee may consult with counsel of its selection, and the
advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Securities shall be full and complete authorization and
protection from liability in respect to any action taken, omitted or suffered by
it hereunder in good faith and in accordance with the advice or opinion of such
counsel.
(f) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond, debenture,
note or other paper or document unless requested in writing to do so by the
Holders of not less than a majority in principal amount of the Securities at the
time outstanding, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit, and, if
the Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the Company,
personally or by agent or attorney at the sole cost of the Company.
(g) The Trustee shall not be deemed to have notice of any Default or
Event of Default unless a Trust Officer has actual knowledge thereof or unless
written notice of any event which is in fact such a default is received by the
Trustee at the
<PAGE>
24
principal corporate trust office of the Trustee, and such notice references the
Securities and this Indenture.
(h) The rights, privileges, protections, immunities and benefits given
to the Trustee, including, without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, the Trustee in each of its capacities
hereunder, and to each agent, custodian and other Person employed to act
hereunder.
SECTION 7.03. Individual Rights of Trustee. The Trustee in its
----------------------------
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar or co-paying
agent may do the same with like rights. However, the Trustee must comply with
Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be
--------------------
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for any
statement of the Company in this Indenture or in any document issued in
connection with the sale of the Securities or in the Securities other than the
Trustee's certificate of authentication.
SECTION 7.05. Notice of Defaults. If a Default occurs and is
------------------
continuing and if it is known to a Trust Officer of the Trustee, the Trustee
shall mail to each Securityholder notice of the Default within 90 days after it
occurs. Except in the case of a Default in payment of principal of or interest
on any Security (including payments pursuant to the mandatory redemption
provisions of such Security, if any), the Trustee may withhold the notice if and
so long as a committee of its Trust Officers in good faith determines that
withholding the notice is in the interests of Securityholders.
SECTION 7.06. Reports by Trustee to Holders. As promptly as
-----------------------------
practicable after each May 15 beginning with May 15, 2000, and in any event
prior to July 15 in each year, the Trustee shall mail to each Securityholder a
brief report dated as of May 15 that complies with Section 313(a) of the TIA if
such report is required by such Section 313(a). The Trustee shall also comply
with Section 313(b) of the TIA.
A copy of each report at the time of its mailing to Securityholders
shall be filed with the SEC and each stock exchange (if any) on which the
Securities are listed. The Company agrees to notify promptly the Trustee
whenever the Securities become listed on any stock exchange and of any delisting
thereof.
SECTION 7.07. Compensation and Indemnity. The Company shall pay to the
--------------------------
Trustee from time to time such compensation for its services as the Company and
<PAGE>
25
the Trustee shall from time to time agree in writing. The Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Company shall reimburse the Trustee upon request for all reasonable
out-of-pocket expenses incurred or made by it, including costs of collection, in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation and expenses, disbursements and advances of the
Trustee's agents, counsel, accountants and experts. The Company shall indemnify
each of the Trustee and any predecessor Trustee against any and all loss,
liability, damage, claim or expense (including reasonable attorneys' fees and
expenses) incurred by or in connection with the acceptance or administration of
this trust and the performance of its duties hereunder including the costs and
expenses of defending itself against any claim (whether asserted by the Company,
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 that
such loss, damage, claim, liability or expense is due to its own negligence or
bad faith. The Trustee shall notify the Company of any claim for which it may
seek indemnity promptly upon obtaining actual knowledge thereof; provided,
--------
however, that any failure so to notify the Company shall not relieve the Company
- -------
of its indemnity obligations hereunder. The Company shall defend the claim and
the indemnified party shall provide reasonable cooperation at the Company's
expense in the defense. Such indemnified parties may have separate counsel and
the Company shall pay the fees and expenses of such counsel; provided, however,
-------- -------
that the Company shall not be required to pay such fees and expenses if it
assumes such indemnified parties' defense and, in such indemnified parties'
reasonable judgment, there is no conflict of interest between the Company and
such parties in connection with such defense. The Company need not reimburse any
expense or indemnify against any loss, liability or expense incurred by an
indemnified party through such party's own wilful misconduct, negligence or bad
faith.
To secure the Company's payment obligations in this Section, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee other than money or property held in trust to pay
principal of and interest and any liquidated damages on particular Securities.
The Company's payment obligations pursuant to this Section shall
survive the satisfaction or discharge of this Indenture, any rejection or
termination of this Indenture under any bankruptcy law or the resignation or
removal of the Trustee. When the Trustee incurs expenses after the occurrence of
a Default specified in Section 6.01(5) or (6) with respect to the Company, the
expenses are intended to constitute expenses of administration under the
Bankruptcy Law.
<PAGE>
26
SECTION 7.08. Replacement of Trustee. The Trustee may resign at any
----------------------
time by so notifying the Company. The Holders of a majority in principal amount
of the Securities may remove the Trustee by so notifying the Trustee and may
appoint a successor Trustee. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee or
its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the Holders of
a majority in principal amount of the Securities and such Holders do not
reasonably promptly appoint a successor Trustee, or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Company shall promptly appoint a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.07.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
10% in principal amount of the Securities may petition, at the expense of the
Company, any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this
Section, the Company's obligations under Section 7.07 shall continue for the
benefit of the retiring Trustee.
<PAGE>
27
SECTION 7.09. Successor Trustee by Merger. If the Trustee consolidates
---------------------------
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger, conversion
or consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Securities shall have been authenticated but not delivered,
any such successor to the Trustee may adopt the certificate of authentication of
any predecessor trustee, and deliver such Securities so authenticated; and in
case at that time any of the Securities shall not have been authenticated, any
successor to the Trustee may authenticate such Securities either in the name of
any predecessor hereunder or in the name of the successor to the Trustee; and in
all such cases such certificates shall have the full force which it is anywhere
in the Securities or in this Indenture provided that the certificate of the
Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall at all
-----------------------------
times satisfy the requirements of TIA ss. 310(a). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
(S) 310(b); provided, however, that there shall be excluded from the operation
-------- -------
of TIA (S) 310(b)(1) any indenture or indentures under which other securities or
certificates of interest or participation in other securities of the Company are
outstanding if the requirements for such exclusion set forth in TIA (S)
310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against Company. The
-------------------------------------------------
Trustee shall comply with TIA (S) 311(a), excluding any creditor relationship
listed in TIA (S) 311(b). A Trustee who has resigned or been removed shall be
subject to TIA (S) 311(a) to the extent indicated.
SECTION 7.12. Calculation Agent. The Company appoints and authorizes
-----------------
The Bank of New York to act as Calculation Agent and The Bank of New York
accepts its obligation set forth herein and in the Securities upon the terms and
conditions hereof and thereof, and subject to the terms of the Calculation
Agency Agreement dated the date hereof, between the Company and the Calculation
Agent. The Company shall, so long as any of the Securities remain outstanding,
maintain under appointment a Calculation Agent to calculate the rate of interest
payable on the Securities in respect of each Interest Period (as defined in
Security). If the Calculation Agent is unable or unwilling to continue to act as
such, or if the Calculation Agent fails to establish the applicable rate of
interest for any Interest Period, or if the Company removes the Calculation
Agent, the Company shall appoint the office of another bank to act as the
Calculation Agent; provided, however, that the Calculation Agent shall not
-------- -------
resign or be
<PAGE>
28
removed until acceptance of an appointment by a successor as evidenced by an
appropriate agreement entered into by the Company and such successor Calculation
Agent; provided, further however, that the Trustee may resign as Calculation
-------- ---------------
Agent only if the Trustee resigns as Trustee in accordance with Section 7.08./1/
ARTICLE 8
Discharge of Indenture; Defeasance
----------------------------------
SECTION 8.01. Discharge of Liability on Securities; Defeasance. (a)
------------------------------------------------
When (i) the Company delivers to the Trustee all outstanding Securities (other
than Securities replaced pursuant to Section 2.08) for cancelation or (ii) all
outstanding Securities have become due and payable, whether at maturity or as a
result of the mailing of a notice of redemption pursuant to Article 3 hereof,
and the Company irrevocably deposits with the Trustee funds or U.S. Government
Obligations on which payment of principal and interest when due will be
sufficient to pay at maturity or upon redemption all outstanding Securities,
including interest thereon to maturity or such redemption date (other than
Securities replaced pursuant to Section 2.08), and if in either case the Company
pays all other sums payable hereunder by the Company, then this Indenture shall,
subject to Section 8.01(c), cease to be of further effect. The Trustee shall
acknowledge satisfaction and discharge of this Indenture on demand of the
Company accompanied by an Officers' Certificate and an Opinion of Counsel and at
the cost and expense of the Company.
(b) Subject to Sections 8.01(c) and 8.02, the Company at any time may
terminate (i) all of its obligations under the Securities and this Indenture
("legal defeasance option") or (ii) its obligations under Sections 4.02, 4.03
and 4.04 and the operation of Section 5.01, 6.01(4), 6.01(5) (with respect to
Significant Subsidiaries of the Company only) and 6.01(6) (with respect to
Significant Subsidiaries of the Company only) ("covenant defeasance option").
The Company may exercise its legal defeasance option notwithstanding its prior
exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment of the
Securities may not be accelerated because of an Event of Default. If the Company
exercises its covenant defeasance option, payment of the Securities may not be
accelerated because of an Event of Default specified in Section 6.01(4), 6.01(5)
(with respect to Significant Subsidiaries of the Company only) or 6.01(6) (with
respect to Significant Subsidiaries of the Company only).
- ------------------------
/1/ Same provisos should be included in Calculation Agency Agreement.
<PAGE>
29
Upon satisfaction of the conditions set forth herein and upon written
request of the Company, the Trustee shall acknowledge in writing the discharge
of those obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.04, 2.05, 2.06, 2.07, 2.08, 2.09, 7.07, 7.08 and in
this Article 8 shall survive until the Securities have been paid in full.
Thereafter, the Company's obligations in Sections 7.07, 8.04 and 8.05 shall
survive.
SECTION 8.02. Conditions to Defeasance. The Company may exercise its
------------------------
legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee money
or U.S. Government Obligations for the payment of principal, premium (if
any) and interest on the Securities to maturity or redemption, as the case
may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and without
reinvestment on the deposited U.S. Government Obligations plus any
deposited money without investment will provide cash at such times and in
such amounts as will be sufficient to pay principal and interest when due
on all the Securities to maturity or redemption, as the case may be;
(3) 123 days pass after the deposit is made and during the 123-day
period no Default specified in Section 6.01(5) or (6) with respect to the
Company occurs which is continuing at the end of the period;
(4) the deposit does not constitute a default under any other
agreement binding on the Company;
(5) the Company delivers to the Trustee an Opinion of Counsel to the
effect that the trust resulting from the deposit does not constitute, or is
qualified as, a regulated investment company under the Investment Company
Act of 1940;
(6) in the case of the legal defeasance option, the Company shall have
delivered to the Trustee an Opinion of Counsel stating that (i) the Company
has received from, or there has been published by, the Internal Revenue
Service a ruling, or (ii) since the date of this Indenture there has been a
change in the applicable Federal income tax law, in either case to the
effect that, and based thereon such Opinion of Counsel shall confirm that,
the Securityholders will not recognize income, gain or loss for Federal
income tax purposes as a result of such
<PAGE>
30
defeasance and will be subject to Federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if
such defeasance had not occurred;
(7) in the case of the covenant defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Securityholders will not recognize income, gain or loss for Federal income
tax purposes as a result of such covenant defeasance and will be subject to
Federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such covenant defeasance had not
occurred; and
(8) the Company delivers to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent to the
defeasance and discharge of the Securities as contemplated by this Article
8 have been complied with.
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article 3.
SECTION 8.03. Application of Trust Money. The Trustee shall hold in
--------------------------
trust money or U.S. Government Obligations deposited with it pursuant to this
Article 8. It shall apply the deposited money and the money from U.S. Government
Obligations through the Paying Agent and in accordance with this Indenture to
the payment of principal of and interest on the Securities.
SECTION 8.04. Repayment to Company. The Trustee and the Paying Agent
--------------------
shall promptly turn over to the Company upon written request any excess money or
securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee and the
Paying Agent shall pay to the Company upon written request any money held by
them for the payment of principal or interest that remains unclaimed for two
years, and, thereafter, Securityholders entitled to the money must look to the
Company for payment as unsecured general creditors.
SECTION 8.05. Indemnity for Government Obligations. The Company shall
------------------------------------
pay and shall indemnify the Trustee against any tax, fee or other charge imposed
on or assessed against deposited U.S. Government Obligations or the principal
and interest received on such U.S. Government Obligations.
<PAGE>
31
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is unable
-------------
to apply any money or U.S. Government Obligations in accordance with this
Article 8 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article 8 until such time as the Trustee
or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article 8; provided, however, that, if the
-------- -------
Company has made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such payment from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE 9
Amendments
----------
SECTION 9.01. Without Consent of Holders. The Company and the Trustee
--------------------------
may amend this Indenture or the Securities without notice to or consent of any
Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article 5;
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities; provided, however, that the
-------- -------
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the
Company;
(5) to comply with any requirement of the SEC in connection with
qualifying, or maintaining the qualification of, this Indenture under the
TIA;
(6) to make any change that does not adversely affect the rights of
any Securityholder;
<PAGE>
32
(7) to evidence and provide for acceptance of appointment hereunder by
a successor trustee;
(8) to convey, transfer, assign, mortgage or pledge to the Trustee as
security for the Securities any property or assets which the Company may be
required to convey, transfer, assign, mortgage or pledge in accordance with
the provisions of Section 4.04; or
(9) to provide for the issuance of additional Securities pursuant to
this Indenture, which additional Securities shall have terms identical to
the initial Securities and which shall be treated, together with any
outstanding Securities, as a single issue of Securities; provided, further
-------- -------
however that no Additional Securities may be issued at a price that would
-------
cause such additional Securities to have "original issue discount" within
the meaning of Section 1273 of the Code (other than de minimis original
issue discount, as defined in applicable Treasury regulations).
After an amendment under this Section becomes effective, the Company
shall mail to Securityholders a notice briefly describing such amendment. The
failure to give such notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section.
SECTION 9.02. With Consent of Holders. The Company and the Trustee may
-----------------------
amend this Indenture or the Securities without notice to any Securityholder but
with the written consent of the Holders of at least a majority in principal
amount of the Securities then outstanding (including consents obtained in
connection with a tender offer or exchange for the Securities). However, without
the consent of each Securityholder affected, an amendment may not:
(1) reduce the amount of Securities whose Holders must consent to an
amendment;
(2) reduce the rate of or extend the time for payment of interest or
any liquidated damages on any Security;
(3) reduce the principal of or extend the Stated Maturity of any
Security;
(4) reduce the premium, if any, payable upon the redemption of any
Security or change the time at which any Security may be redeemed in
accordance with Article 3;
(5) make any Security payable in money other than that stated in the
Security; or
<PAGE>
33
(6) make any change in Section 6.04 or 6.07 or the second sentence of
this Section 9.02.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent approves the substance thereof.
After an amendment under this Section becomes effective, the Company
shall mail to Securityholders a notice briefly describing such amendment. The
failure to give such notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section.
SECTION 9.03. Compliance with Trust Indenture Act. Every amendment to
-----------------------------------
this Indenture or the Securities shall comply with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers. A consent
---------------------------------------------
to an amendment or a waiver by a Holder of a Security shall bind the Holder and
every subsequent Holder of that Security or portion of the Security that
evidences the same debt as the consenting Holder's Security, even if notation of
the consent or waiver is not made on the Security. However, any such Holder or
subsequent Holder may revoke the consent or waiver as to such Holder's Security
or portion of the Security if the Trustee receives the notice of revocation
before the date on which the Trustee receives an Officers' Certificate from the
Company certifying that the requisite number of consents have been received.
After an amendment or waiver becomes effective, it shall bind every
Securityholder. An amendment or waiver becomes effective upon the (i) receipt by
the Company or the Trustee of the requisite number of consents, (ii)
satisfaction of conditions to effectiveness as set forth in this Indenture and
any indenture supplemental hereto containing such amendment or waiver and (iii)
execution of such amendment or waiver (or supplemental indenture) by the Company
and the Trustee.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Securityholders entitled to give their consent or
take any other action described above or required or permitted to be taken
pursuant to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Securityholders at such
record date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such record date. No such consent shall be valid or effective for more than 120
days after such record date.
<PAGE>
34
SECTION 9.05. Notation on or Exchange of Securities. If an amendment
--------------------------------------
changes the terms of a Security, the Trustee may require the Holder of the
Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Company or the Trustee so determines, the Company
in exchange for the Security shall issue and the Trustee shall authenticate a
new Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
SECTION 9.06. Trustee To Sign Amendments. The Trustee shall sign any
--------------------------
amendment authorized pursuant to this Article 9 if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to Section 7.01) shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel stating that such
amendment is authorized or permitted by this Indenture and that such amendment
is the legal, valid and binding obligation of the Company enforceable against
them in accordance with its terms, subject to customary exceptions, and complies
with the provisions hereof (including Section 9.03).
SECTION 9.07. Payment for Consent. Neither the Company nor any
-------------------
Affiliate of the Company shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture or the Securities unless such consideration is
offered to be paid to all Holders that so consent, waive or agree to amend in
the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
ARTICLE 10
Miscellaneous
-------------
SECTION 10.01. Trust Indenture Act Controls. If any provision of this
----------------------------
Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
<PAGE>
35
SECTION 10.02. Notices. Any notice or communication shall be in
-------
writing (including via telecopy, promptly confirmed in writing) and delivered in
person or mailed by first-class mail addressed as follows:
if to the Company:
The Limited, Inc.
Three Limited Parkway
Columbus, OH 43230
Attention of: Samuel Fried
Copy to: Patrick Hectorne
if to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, NY 10286
Attention of: Corporate Trust Trustee Administration
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall be mailed
to the Securityholder at the Securityholder's address as it appears on the
registration books of the Registrar and shall be sufficiently given if so mailed
within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 10.03. Communication by Holders with Other Holders.
-------------------------------------------
Securityholders may communicate pursuant to TIA (S) 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA (S) 312(c).
<PAGE>
36
SECTION 10.04. Certificate and Opinion as to Conditions Precedent.
--------------------------------------------------
Upon any request or application by the Company to the Trustee to take or refrain
from taking any action under this Indenture, the Company shall furnish to the
Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
SECTION 10.05. Statements Required in Certificate or Opinion. Each
---------------------------------------------
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 10.06. When Securities Disregarded. In determining whether the
---------------------------
Holders of the required principal amount of Securities have concurred in any
direction, waiver or consent, Securities owned by the Company or by any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company shall be disregarded and deemed not to be
outstanding, except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which a Trust Officer of the Trustee actually knows are so owned
shall be so disregarded. Subject to the foregoing, only Securities outstanding
at the time shall be considered in any such determination.
<PAGE>
37
SECTION 10.07. Rules by Trustee, Paying Agent and Registrar. The
--------------------------------------------
Trustee may make reasonable rules for action by or a meeting of Securityholders.
The Registrar and the Paying Agent may make reasonable rules for their
functions.
SECTION 10.08. Non-Business Days. If any Interest Payment Date (as
-----------------
defined in Exhibit A), other than at maturity, for the Securities would
otherwise be a day that is not a Business Day, such Interest Payment Date shall
be postponed to the next day that is a Business Day, except that if such
Business Day is in the next succeeding calendar month, such Interest Payment
Date shall be the immediately preceding Business Day. If the maturity for the
Securities falls on a day which is not a Business Day, payment of principal and
interest with respect to such Security will be paid on the next succeeding
Business Day with the same force and effect as if made on such date and no
interest on such payment will accrue from and after such date. If a regular
record date is not a Business Day, the record date shall not be affected.
SECTION 10.09. GOVERNING LAW. THIS INDENTURE AND THE SECURITIES SHALL
-------------
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO
THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
SECTION 10.10. Liability Solely Corporate. No recourse shall be had
--------------------------
for the payment of the principal of, premium, if any, or interest on any
Security or for any claim based thereon or otherwise in respect thereof or of
the indebtedness represented thereby, or upon any obligation, covenant or
agreement of this Indenture, against any incorporator, stockholder, officer or
director, as such, past, present or future, of the Company or of any successor
corporation, either directly or through the Company or any successor
corporation, whether by virtue of any constitutional provision, statute or rule
of law, or by the enforcement of any assessment or penalty or otherwise; it
being expressly agreed and understood that this Indenture and the Securities are
solely corporate obligations, and that no personal liability whatsoever shall be
attached to, or be incurred by, any incorporator, stockholder, officer or
director, as such, past, present or future, of the Company or of any successor
corporation, either directly or through the Company or any successor
corporation, because of the incurring of the indebtedness hereby authorized or
under or by reason of any of the obligations, covenants, promises or agreements
contained in this Indenture or in any of the Securities or to be implied
herefrom or therefrom, and that all liability, if any, of that character against
every such incorporator, stockholder, officer and director is, by the acceptance
of the Securities and as a condition of, and as part of the consideration for,
the execution of this Indenture and the issue of the Securities, expressly
waived and released.
<PAGE>
38
SECTION 10.11. Successors. All agreements of the Company in this
----------
Indenture and the Securities shall bind its successors. All agreements of the
Trustee in this Indenture shall bind its successors.
SECTION 10.12. Multiple Originals. The parties may sign any number of
------------------
copies of this Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement. One signed copy is enough to prove this
Indenture.
SECTION 10.13. Table of Contents; Headings. The table of contents,
---------------------------
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
<PAGE>
39
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed as of the date first written above.
THE LIMITED, INC.
by
----------------------------
Name:
Title:
THE BANK OF NEW YORK, as Trustee
by
----------------------------
Name:
Title:
<PAGE>
APPENDIX A
PROVISIONS RELATING TO SECURITIES
---------------------------------
1. Definitions
-----------
1.1 Definitions
-----------
For the purposes of this Appendix A the following terms shall have the
meanings indicated below:
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Regulation S Global Security or beneficial interest
therein, the rules and procedures of the Depositary for such Global Security,
Euroclear and Cedel, in each case to the extent applicable to such transaction
and as in effect from time to time.
"Cedel" means Cedelbank, societe anonyme., or any successor securities
clearing agency.
"Definitive Security" means a certificated Security (bearing the
Restricted Securities Legend if the transfer of such Security is restricted by
applicable law) that does not include the Global Securities Legend.
"Depositary" means The Depository Trust Company, its nominees and
their respective successors.
"Euroclear" means the Euroclear Clearance System or any successor
securities clearing agency.
"Global Securities Legend" means the legend set forth under that
caption in Exhibit A to this Indenture.
"Initial Purchaser" means J.P. Morgan Securities Inc.
"Purchase Agreement" means the Purchase Agreement dated May 17, 1999,
between the Company and the Initial Purchaser.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Regulation S" means Regulation S under the Securities Act.
"Regulation S Securities" means all Initial Securities offered and
sold outside the United States in reliance on Regulation S.
<PAGE>
"Restricted Period", with respect to any Securities, means the period
of 40 consecutive days beginning on and including the later of (i) the day on
which such Securities are first offered to persons other than distributors (as
defined in Regulation S under the Securities Act) in reliance on Regulation S
and (ii) the Issue Date with respect to such Securities.
"Restricted Securities Legend" means the legend set forth in Section
2.3(e)(i) herein.
"Rule 144A" means Rule 144A under the Securities Act.
"Rule 144A Securities" means all Initial Securities offered and sold
to QIBs in reliance on Rule 144A.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Custodian" means the custodian with respect to a Global
Security (as appointed by the Depositary) or any successor person thereto, who
shall initially be the Trustee.
"Transfer Restricted Securities" means Definitive Securities and any
other Securities that bear or are required to bear the Restricted Securities
Legend.
1.2 Other Definitions
-----------------
Term: Defined in Section:
---- ------------------
"Agent Members"...........................................................2.1(b)
"Global Security".........................................................2.1(a)
"Regulation S Global Security"............................................2.1(a)
"Rule 144A Global Security"...............................................2.1(a)
<PAGE>
3
2. The Securities
--------------
2.1 Form and Dating
---------------
The initial Securities issued on the date hereof will be (i) offered
and sold by the Company pursuant to the Purchase Agreement and (ii) resold,
initially only to (A) QIBs in reliance on Rule 144A and (B) Persons other than
U.S. Persons (as defined in Regulation S) in reliance on Regulation S. Such
initial Securities may thereafter be transferred to, among others, QIBs and
purchasers in reliance on Regulation S. Additional Securities offered after the
date hereof may be offered and sold by the Company from time to time; provided,
--------
however, that such additional Securities shall have terms identical to the
- -------
initial Securities and shall be treated, together with any outstanding
Securities, as a single issue of Securities; provided, further however, that no
-------- ---------------
Additional Securities may be issued at a price that would cause such additional
Securities to have "original issue discount" within the meaning of Section 1273
of the Code (other than de minimis original issue discount, as defined in
applicable Treasury regulations).
(a) Global Securities. Rule 144A Securities shall be issued initially
-----------------
in the form of one or more permanent global Securities in definitive, fully
registered form (collectively, the "Rule 144A Global Security") and Regulation S
Securities shall be issued initially in the form of one or more global
Securities (collectively, the "Regulation S Global Security"), in each case
without interest coupons and bearing the Global Securities Legend and Restricted
Securities Legend, which shall be deposited on behalf of the purchasers of the
Securities represented thereby with the Securities Custodian, and registered in
the name of the Depositary or a nominee of the Depositary, duly executed by the
Company and authenticated by the Trustee as provided in this Indenture.
Beneficial ownership interests in the Regulation S Global Security shall not be
exchangeable for interests in the Rule 144A Global Security or any other
Security without a Restricted Securities Legend until the expiration of the
Restricted Period. The Rule 144A Global Security and the Regulation S Global
Security are each referred to herein as a "Global Security" and are collectively
referred to herein as "Global Securities." The aggregate principal amount of the
Global Securities may from time to time be increased or decreased by adjustments
made on the records of the Trustee and the Depositary or its nominee as
hereinafter provided.
(b) Book-Entry Provisions. This Section 2.1(b) shall apply only to a
---------------------
Global Security deposited with or on behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance with
this Section 2.1(b) and pursuant to an order of the Company, authenticate and
deliver initially one or more Global Securities that (a) shall be registered in
the name of the Depositary for such Global Security or Global Securities or the
nominee of such Depositary and (b) shall be delivered by the Trustee to such
Depositary or pursuant to such Depositary's instructions or held by the Trustee
as Securities Custodian.
<PAGE>
4
Members of, or participants in, the Depositary ("Agent Members") shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depositary or by the Trustee as Securities Custodian or
under such Global Security, and the Depositary may be treated by the Company,
the Trustee and any agent of the Company or the Trustee as the absolute owner of
such Global Security for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Trustee or any agent of the
Company or the Trustee from giving effect to any written certification, proxy or
other authorization furnished by the Depositary or impair, as between the
Depositary and its Agent Members, the operation of customary practices of such
Depositary governing the exercise of the rights of a holder of a beneficial
interest in any Global Security.
(c) Definitive Securities. Except as provided in Section 2.3 or 2.4,
---------------------
owners of beneficial interests in Global Securities will not be entitled to
receive physical delivery of certificated Securities.
2.2 Authentication. The Trustee shall authenticate and make available for
--------------
delivery upon a written order of the Company signed by two Officers (1)
Securities for original issue on the date hereof in an aggregate principal
amount of $100,000,000 and (2) additional Securities offered and sold by the
Company from time to time in accordance with the terms of the Indenture. Such
order shall specify the amount of the Securities to be authenticated, the date
on which the original issue of Securities is to be authenticated. The aggregate
principal amount of Securities outstanding at any time may not exceed
$100,000,000, except as provided in Section 2.01 and 2.08 of this Indenture.
2.3 Transfer and Exchange. (a) Transfer and Exchange of Definitive
--------------------- -----------------------------------
Securities. When Definitive Securities are presented to the Registrar with a
- ----------
request:
(x) to register the transfer of such Definitive Securities; or
(y) to exchange such Definitive Securities for an equal principal
amount of Definitive Securities of other authorized denominations,
the Registrar shall register the transfer or make the exchange as requested if
its reasonable requirements for such transaction are met; provided, however,
-------- -------
that the Definitive Securities surrendered for transfer or exchange:
(i) shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company and the Registrar,
duly executed by the Holder thereof or his attorney duly authorized in
writing; and
<PAGE>
5
(ii) are accompanied by the following additional information and
documents, as applicable:
(A) if such Definitive Securities are being delivered to the
Registrar by a Holder for registration in the name of such Holder,
without transfer, a certification from such Holder to that effect (in
the form set forth on the reverse side of the Security); or
(B) if such Definitive Securities are being transferred to the
Company, a certification to that effect (in the form set forth on the
reverse side of the Security); or
(C) if such Definitive Securities are being transferred pursuant
to an exemption from registration in accordance with Rule 144 under
the Securities Act or in reliance upon another exemption from the
registration requirements of the Securities Act, (i) a certification
to that effect (in the form set forth on the reverse side of the
Security) and (ii) if the Company so requests, an opinion of counsel
or other evidence reasonably satisfactory to it as to the compliance
with the restrictions set forth in the legend set forth in Section
2.3(e)(i).
(b) Restrictions on Transfer of a Definitive Security for a Beneficial
------------------------------------------------------------------
Interest in a Global Security. A Definitive Security may not be exchanged for a
- -----------------------------
beneficial interest in a Global Security except upon satisfaction of the
requirements set forth below. Upon receipt by the Trustee of a Definitive
Security, duly endorsed or accompanied by a written instrument of transfer in
form reasonably satisfactory to the Company and the Registrar, together with:
(i) certification (in the form set forth on the reverse side of the
Initial Security) that such Definitive Security is being transferred (A) to
a QIB in accordance with Rule 144A or (B) outside the United States in an
offshore transaction within the meaning of Regulation S and in compliance
with Rule 904 under the Securities Act; and
(ii) written instructions directing the Trustee to make, or to direct
the Securities Custodian to make, an adjustment on its books and records
with respect to such Global Security to reflect an increase in the
aggregate principal amount of the Securities represented by the Global
Security, such instructions to contain information regarding the Depositary
account to be credited with such increase,
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Securities Custodian, the
aggregate principal amount of
<PAGE>
6
Securities represented by the Global Security to be increased by the aggregate
principal amount of the Definitive Security to be exchanged and shall credit or
cause to be credited to the account of the Person specified in such instructions
a beneficial interest in the Global Security equal to the principal amount of
the Definitive Security so canceled. If no Global Securities are then
outstanding and the Global Security has not been previously exchanged for
certificated securities pursuant to Section 2.4, the Company shall issue and the
Trustee shall authenticate, upon written order of the Company in the form of an
Officers' Certificate, a new Global Security in the appropriate principal
amount.
(c) Transfer and Exchange of Global Securities. (i) The transfer and
------------------------------------------
exchange of Global Securities or beneficial interests therein shall be effected
through the Depositary, in accordance with this Indenture (including applicable
restrictions on transfer set forth herein, if any) and the procedures of the
Depositary therefor. A transferor of a beneficial interest in a Global Security
shall deliver a written order given in accordance with the Depositary's
procedures containing information regarding the participant account of the
Depositary to be credited with a beneficial interest in such Global Security or
another Global Security and such account shall be credited in accordance with
such order with a beneficial interest in the applicable Global Security and the
account of the Person making the transfer shall be debited by an amount equal to
the beneficial interest in the Global Security being transferred. Transfers by
an owner of a beneficial interest in the Rule 144A Global Security to a
transferee who takes delivery of such interest through the Regulation S Global
Security, whether before or after the expiration of the Restricted Period, shall
be made only upon receipt by the Trustee of a certification from the transferor
to the effect that such transfer is being made in accordance with Regulation S
or (if available) Rule 144 under the Securities Act and that, if such transfer
is being made prior to the expiration of the Restricted Period, the interest
transferred shall be held immediately thereafter through Euroclear or Cedel.
(ii) If the proposed transfer is a transfer of a beneficial interest
in one Global Security to a beneficial interest in another Global Security,
the Registrar shall reflect on its books and records the date and an
increase in the principal amount of the Global Security to which such
interest is being transferred in an amount equal to the principal amount of
the interest to be so transferred, and the Registrar shall reflect on its
books and records the date and a corresponding decrease in the principal
amount of Global Security from which such interest is being transferred.
(iii) Notwithstanding any other provisions of this Appendix (other
than the provisions set forth in Section 2.4), a Global Security may not be
transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
<PAGE>
7
(d) Restrictions on Transfer of Regulation S Global Security. (i)
--------------------------------------------------------
Prior to the expiration of the Restricted Period, interests in the Regulation S
Global Security may only be held through Euroclear or Cedel. During the
Restricted Period, beneficial ownership interests in the Regulation S Global
Security may only be sold, pledged or transferred through Euroclear or Cedel in
accordance with the Applicable Procedures and only (A) to the Company, (B) so
long as such security is eligible for resale pursuant to Rule 144A, to a person
whom the selling holder reasonably believes is a QIB that purchases for its own
account or for the account of a QIB to whom notice is given that the resale,
pledge or transfer is being made in reliance on Rule 144A, (C) in an offshore
transaction in accordance with Regulation S, (D) pursuant to an exemption from
registration under the Securities Act provided by Rule 144 (if applicable) under
the Securities Act or (E) pursuant to an effective registration statement under
the Securities Act, in each case in accordance with any applicable securities
laws of any state of the United States. Prior to the expiration of the
Restricted Period, transfers by an owner of a beneficial interest in the
Regulation S Global Security to a transferee who takes delivery of such interest
through the Rule 144A Global Security shall be made only in accordance with
Applicable Procedures and upon receipt by the Trustee of a written certification
from the transferor of the beneficial interest in the form provided on the
reverse of the Initial Security to the effect that such transfer is being made
to a person whom the transferor reasonably believes is a QIB within the meaning
of Rule 144A in a transaction meeting the requirements of Rule 144A. Such
written certification shall no longer be required after the expiration of the
Restricted Period.
(ii) Upon the expiration of the Restricted Period, beneficial
ownership interests in the Regulation S Global Security shall be
transferable in accordance with applicable law and the other terms of this
Indenture.
(e) Legend.
------
(i) Except as permitted by the following paragraphs (ii), (iii) or
(iv), each Security certificate evidencing the Global Securities and the
Definitive Securities (and all Securities issued in exchange therefor or in
substitution thereof) shall bear a legend in substantially the following
form (each defined term in the legend being defined as such for purposes of
the legend only):
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.
<PAGE>
8
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR
OF SUCH SECURITY), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C)
FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES
IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A 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, (D) PURSUANT TO OFFERS AND SALES 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 TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO
ANY SUCH OFFER, SALE OR TRANSFER 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. THIS LEGEND WILL BE REMOVED UPON
THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
Each Definitive Security shall bear the following additional legend:
"IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER
INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO
CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS."
(ii) Upon any sale or transfer of a Transfer Restricted Security that
is a Definitive Security, the Registrar shall permit the Holder thereof to
exchange such Transfer Restricted Security for a Definitive Security that
does not bear the legends set forth above and rescind any restriction on
the transfer of such Transfer Restricted Security if the Holder certifies
in writing to the Registrar that its request for such exchange was made in
reliance on Rule 144 (such certification to be in the form set forth on the
reverse of the Initial Security).
<PAGE>
9
(iii) Upon a sale or transfer after the expiration of the Restricted
Period of any Security acquired pursuant to Regulation S, all requirements
that such Security bear the Restricted Securities Legend shall cease to
apply and the requirements requiring any such Security be issued in global
form shall continue to apply.
(f) Cancelation or Adjustment of Global Security. At such time as all
--------------------------------------------
beneficial interests in a Global Security have either been exchanged for
Definitive Securities, transferred, redeemed, repurchased or canceled, such
Global Security shall be returned by the Depositary to the Trustee for
cancelation or retained and canceled by the Trustee. At any time prior to such
cancelation, if any beneficial interest in a Global Security is exchanged for
Definitive Securities, transferred in exchange for an interest in another Global
Security, redeemed, repurchased or canceled, the principal amount of Securities
represented by such Global Security shall be reduced and an adjustment shall be
made on the books and records of the Trustee (if it is then the Securities
Custodian for such Global Security) with respect to such Global Security, by the
Trustee or the Securities Custodian, to reflect such reduction.
(g) Obligations with Respect to Transfers and Exchanges of Securities.
-----------------------------------------------------------------
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate, Definitive Securities and
Global Securities at the Registrar's request.
(ii) No service charge shall be made for any registration of transfer
or exchange, but the Company may require payment of a sum sufficient to
cover any transfer tax, assessments, or similar governmental charge payable
in connection therewith (other than any such transfer taxes, assessments or
similar governmental charge payable upon exchange or transfer pursuant to
Section 9.05 of this Indenture).
(iii) Prior to the due presentation for registration of transfer of
any Security, the Company, the Trustee, the Paying Agent or the Registrar
may deem and treat the person in whose name a Security is registered as the
absolute owner of such Security for the purpose of receiving payment of
principal of and interest on such Security and for all other purposes
whatsoever, whether or not such Security is overdue, and none of the
Company, the Trustee, the Paying Agent or the Registrar shall be affected
by notice to the contrary.
(iv) All Securities issued upon any transfer or exchange pursuant to
the terms of this Indenture shall evidence the same debt and shall be
entitled to the same benefits under this Indenture as the Securities
surrendered upon such transfer or exchange.
<PAGE>
10
(h) No Obligation of the Trustee.
----------------------------
(i) The Trustee shall have no responsibility or obligation to any
beneficial owner of a Global Security, a member of, or a participant in the
Depositary or any other Person with respect to the accuracy of the records
of the Depositary or its nominee or of any participant or member thereof,
with respect to any ownership interest in the Securities or with respect to
the delivery to any participant, member, beneficial owner or other Person
(other than the Depositary) of any notice (including any notice of
redemption or repurchase) or the payment of any amount, under or with
respect to such Securities. All notices and communications to be given to
the Holders and all payments to be made to Holders under the Securities
shall be given or made only to the registered Holders (which shall be the
Depositary or its nominee in the case of a Global Security). The rights of
beneficial owners in any Global Security shall be exercised only through
the Depositary subject to the applicable rules and procedures of the
Depositary. The Trustee may conclusively rely and shall be fully protected
in relying upon information furnished by the Depositary with respect to its
members, participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with respect to any
transfer of any interest in any Security (including any transfers between
or among Depositary participants, members or beneficial owners in any
Global Security) other than to require delivery of such certificates and
other documentation or evidence as are expressly required by, and to do so
if and when expressly required by, the terms of this Indenture, and to
examine the same to determine substantial compliance as to form with the
express requirements hereof.
2.4 Definitive Securities.
---------------------
(a) A Global Security deposited with the Depositary or with the
Trustee as Securities Custodian pursuant to Section 2.1 shall be transferred to
the beneficial owners thereof in the form of Definitive Securities in an
aggregate principal amount equal to the principal amount of such Global
Security, in exchange for such Global Security, only if such transfer complies
with Section 2.3 and (i) the Depositary notifies the Company that it is
unwilling or unable to continue as a Depositary for such Global Security or if
at any time the Depositary ceases to be a "clearing agency" registered under the
Exchange Act, and a successor depositary is not appointed by the Company within
90 days of such notice, or (ii) an Event of Default has occurred and is
continuing or (iii) the Company, in its sole discretion, notifies the Trustee in
writing that it elects to cause the issuance of certificated Securities under
this Indenture.
<PAGE>
11
(b) Any Global Security that is transferable to the beneficial owners
thereof pursuant to this Section 2.4 shall be surrendered by the Depositary to
the Trustee, to be so transferred, in whole or from time to time in part,
without charge, and the Trustee shall authenticate and deliver, upon such
transfer of each portion of such Global Security, an equal aggregate principal
amount of Definitive Securities of authorized denominations. Any portion of a
Global Security transferred pursuant to this Section shall be executed,
authenticated and delivered only in denominations of $1,000 and any integral
multiple thereof and registered in such names as the Depositary shall direct.
Any certificated Initial Security in the form of a Definitive Security delivered
in exchange for an interest in the Global Security shall, except as otherwise
provided by Section 2.3(e), bear the Restricted Securities Legend.
(c) Subject to the provisions of Section 2.4(b), the registered Holder
of a Global Security may grant proxies and otherwise authorize any Person,
including Agent Members and Persons that may hold interests through Agent
Members, to take any action which a Holder is entitled to take under this
Indenture or the Securities.
(d) In the event of the occurrence of any of the events specified in
Section 2.4(a)(i), (ii) or (iii), the Company will promptly make available to
the Trustee a reasonable supply of Definitive Securities in fully registered
form without interest coupons.
<PAGE>
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
SUCH SECURITY), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO
LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF
<PAGE>
2
A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES 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 TO THE COMPANY'S AND
THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND
WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE.
<PAGE>
No. QIB-1 $100,000,000
Series C Floating Rate Note due May 2001
CUSIP No.88335MAC6
THE LIMITED, INC., a Delaware corporation, promises to pay to Cede &
Co., or registered assigns, the principal sum of ONE HUNDRED MILLION DOLLARS
listed on the Schedule of Increases or Decreases in Global Security attached
hereto on May 22, 2001.
Interest Payment Dates: February 22, May 22, August 22 and November
22.
Record Dates: February 7, May 7, August 7 and November 7.
<PAGE>
2
Additional provisions of this Security are set forth on the other side
of this Security.
IN WITNESS WHEREOF, the parties have caused this instrument to be duly
executed.
THE LIMITED, INC.,
By:
----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
Dated: May 19, 1999
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE BANK OF NEW YORK,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
By:
-------------------------------
Authorized Signatory
<PAGE>
3
[REVERSE SIDE OF SECURITY]
Series C Floating Rate Note due May 2001
1. Interest
--------
THE LIMITED INC., a Delaware corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being herein
called the "Company"), promises to pay interest on the principal amount of this
Security at the rate per annum shown above. The Company shall pay interest at a
rate per annum, reset quarterly, equal to LIBOR (as defined below) plus 90 basis
points (.90%) as determined by the Calculation Agent (as defined below).
Interest shall be computed on the basis of a 360-day year and the actual number
of days in the applicable Interest Period. The Company shall pay interest
quarterly in arrears on February 22, May 22, August 22 and November 22 of each
year, commencing on August 22, 1999 (each an "Interest Payment Date"), for the
period commencing on and including the immediately preceding Interest Payment
Date (or, in the case of the first Interest Period, commencing on and including
May 19, 1999) and ending on and including the day preceding the next Interest
Payment Date (an "Interest Period"). Interest shall be payable to the persons in
whose names the Securities are registered at the close of business on the
fifteenth calendar day prior to the Interest Payment Date (each a "Record
Date"). The principal of the Securities, together with the interest accrued and
unpaid thereon, is due on May 22, 2001 (the "Maturity Date").
If any Interest Payment Date, other than at the Maturity Date, for the
Securities would otherwise be a day that is not a Business Day (as defined
below), such Interest Payment Date shall be postponed to the next day that is a
Business Day, except that if such Business Day is in the next succeeding
calendar month, such Interest Payment Date shall be the immediately preceding
Business Day. If the Maturity Date for the Securities falls on a day which is
not a Business Day, payment of principal and interest with respect to such
Security will be paid on the next succeeding Business Day with the same force
and effect as if made on such date and no interest on such payment will accrue
from and after such date.
The interest rate for each Interest Period shall be determined by the
Calculation Agent in accordance with the following provisions:
The per annum rate of interest for each Interest Period shall be
three-month LIBOR (as defined below), on the second Business Day preceding the
relevant Interest Reset Date for such Interest Period (the "Interest
Determination Date") plus 90 basis points (.90%). The initial Interest
Determination Date will be May 17, 1999.
<PAGE>
4
"LIBOR" for each Interest Period shall be determined by the Calculation Agent in
accordance with the following provisions:
(i) On each Interest Determination Date, the Calculation Agent shall
ascertain the offered rate for three-month deposits in U.S. dollars in the
London interbank market, which appears on the Telerate Page 3750, as of
11:00 a.m. (London time) on such Interest Determination Date.
(ii) If such rate does not appear on the Telerate Page 3750, or the
Telerate Page 3750 is unavailable, the Calculation Agent shall request each
of four major banks in the London interbank (the "Reference Banks") to
provide the Calculation Agent with its offered quotation (expressed as a
rate per annum) for three-month deposits in U.S. dollars to leading banks
in the London interbank market at approximately 11:00 a.m. (London time) on
the Interest Determination Date. If at least two such quotations are
provided, LIBOR in respect of the Interest Determination Date shall be the
arithmetic mean of such quotations.
(iii) If less than two of the Reference Banks provide the Calculation
Agent with such offered quotations, LIBOR in respect of that Interest
Determination Date shall be the arithmetic mean of the rates quoted by
three major banks in the City of New York (selected by the Calculation
Agent) at approximately 11:00 a.m., New York City time, on that Interest
Determination Date for three-month loans in U.S. dollars to leading
European banks, in a principal amount equal to an amount of not less than
$1 million that is representative for a single transaction in such market
at such time; provided, however, that if the banks selected as aforesaid by
-------- -------
the Calculation Agent are not quoting as mentioned in this sentence, LIBOR
shall be LIBOR in effect of such Interest Determination Date.
"Business Day" means any day (other than a Saturday or Sunday) on
which banking institutions in the City of New York are open for business and
which is also a London Banking Day.
"Interest Reset Date" means with respect to any Interest Period, the
first day of such Interest Period.
"London Banking Day" means any day (other than a Saturday or Sunday)
on which dealings in deposits are transacted in the London interbank market.
"Telerate Page 3750" means the display designated as page "3750" on
the Dow Jones Telerate Service (or such other page as may replace that page on
that service for the purpose of displaying the Prime Index on a daily basis).
<PAGE>
5
All percentage resulting from any calculation on the Securities shall
be rounded, if necessary, to the nearest one hundred-thousandth of a percentage
point, with five one-millionths of a percentage point rounded upward (e.g.,
----
9.876545% (or .09876545) being rounded to 9.87655% (or .0987655)), and U.S.
dollar amounts used in or resulting from such calculations shall be rounded to
the nearest cent (with one-half cent being rounded upward).
The Company shall pay interest on overdue principal at the rate borne
by the Securities plus 1% per annum, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
2. Method of Payment
-----------------
The Company shall pay interest on the Securities (except defaulted
interest) to the Persons who are registered holders of Securities at the close
of business on the February 7, May 7, August 7 or November 7 next preceding the
Interest Payment Date even if Securities are canceled after the Record Date and
on or before the Interest Payment Date. Holders must surrender Securities to a
Paying Agent to collect principal payments. The Company shall pay principal,
premium, if any, and interest in money of the United States of America that at
the time of payment is legal tender for payment of public and private debts.
Payments in respect of the Securities represented by a Global Security
(including principal, premium, if any, and interest) shall be made by wire
transfer of immediately available funds to the accounts specified by The
Depository Trust Company. Payments in respect of a certificated Security
(including principal, premium, if any, and interest), will be payable by the
Company at the office of the Paying Agent maintained for such purpose or, at the
option of the Company, by mailing a check to the registered address of each
Holder thereof; provided, however, that payments on the Securities may also be
-------- -------
made, in the case of a Holder of at least $1,000,000 aggregate principal amount
of Securities, by wire transfer to a U.S. dollar account maintained by the payee
with a bank in the United States if such Holder elects payment by wire transfer
by giving written notice to the Trustee or the Paying Agent to such effect
designating such account no later than 30 days immediately preceding the
relevant due date for payment (or such other date as the Trustee may accept in
its discretion).
3. Paying Agent and Registrar; Calculation Agent
---------------------------------------------
Initially, The Bank of New York, a New York banking corporation (the
"Trustee"), will act as Paying Agent and Registrar. The Company may appoint and
change any Paying Agent, Registrar or co-registrar without notice. The Company
or any of its domestically incorporated Wholly Owned Subsidiaries may act as
Paying Agent, Registrar or co-registrar.
<PAGE>
6
Initially, The Bank of New York, a New York banking corporation (the
"Calculation Agent"), will act as Calculation Agent. The Company shall, so long
as any of the Securities remain outstanding, maintain under appointment a
Calculation Agent to calculate the rate of interest payable on the Securities in
respect of each Interest Period. If the Calculation Agent is unable or unwilling
to continue to act as such, or if the Calculation Agent fails to establish the
applicable rate of interest for any Interest Period, or if the Company removes
the Calculation Agent, the Company shall appoint the office of another bank to
act as the Calculation Agent; provided, however, that the Calculation Agent
-------- -------
shall not resign or be removed until acceptance of an appointment by a successor
as evidenced by an appropriate agreement entered into by the Company and such
successor Calculation Agent; provided, further however, that the Trustee may
-------- ---------------
resign as Calculation Agent only if the Trustee resigns as Trustee in accordance
with Section 7.08 of the Indenture.
4. Indenture
---------
The Company issued the Securities under an Indenture dated as of May
19, 1999 (the "Indenture"), between the Company and the Trustee. The terms of
the Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. (S)(S)
77aaa-77bbbb) as in effect on the date of the Indenture (the "TIA"). Terms
defined in the Indenture and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all terms and provisions
of the Indenture, and Securityholders are referred to the Indenture and the TIA
for a statement of such terms and provisions.
The Securities are senior unsecured obligations of the Company limited
to $100,000,000 aggregate principal amount at any one time outstanding (subject
to Section 2.01 of the Indenture). This Security is one of the Securities
referred to in the Indenture issued in an aggregate principal amount of
$100,000,000. Pursuant to the terms of Section 2.01 of the Indenture, an
unlimited amount of additional Securities of this series may be issued from time
to time. The Indenture imposes certain limitations on the ability of the Company
and its Significant Subsidiaries to, among other things, create or incur Liens
and make asset sales. The Indenture also imposes limitations on the ability of
the Company to consolidate or merge with or into any other Person or convey,
transfer or lease all or substantially all of the property of the Company.
5. Optional Redemption
-------------------
The Securities shall be redeemable at the option of the Company, in
whole but not in part, on not less than 15 nor more than 60 days prior notice,
at par, plus accrued and unpaid interest to the redemption date (subject to the
right of holders of record on the relevant record date to receive interest due
on the relevant Interest Payment Date.
<PAGE>
7
6. Sinking Fund
------------
The Securities are not subject to any sinking fund.
7. Denominations; Transfer; Exchange
---------------------------------
The Securities are in registered form without coupons in denominations
of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange
Securities in accordance with the Indenture. Upon any transfer or exchange, the
Registrar and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements or transfer documents and to pay any taxes required by
law or permitted by the Indenture. The Registrar need not register the transfer
of or exchange any Securities selected for redemption or to transfer or exchange
any Securities for a period of 15 days prior to the mailing of a notice of
redemption of Securities to be redeemed.
8. Persons Deemed Owners
---------------------
The registered Holder of this Security may be treated as the owner of
it for all purposes.
9. Unclaimed Money
---------------
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Company at its written request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must look
only to the Company, as unsecured general creditors, and not to the Trustee for
payment.
10. Discharge and Defeasance
------------------------
Subject to certain conditions, the Company at any time may terminate
some of or all its obligations under the Securities and the Indenture if the
Company deposits with the Trustee money or U.S. Government Obligations for the
payment of principal and interest on the Securities to redemption or maturity,
as the case may be.
<PAGE>
8
11. Amendment, Waiver
-----------------
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended without prior notice to any
Securityholder but with the written consent of the Holders of at least a
majority in aggregate principal amount of the outstanding Securities and (ii)
any default or noncompliance with any provision may be waived with the written
consent of the Holders of at least a majority in principal amount of the
outstanding Securities. Subject to certain exceptions set forth in the
Indenture, without the consent of any Holder of Securities, the Company and the
Trustee may amend the Indenture or the Securities (i) to cure any ambiguity,
omission, defect or inconsistency; (ii) to comply with Article 5 of the
Indenture; (iii) to provide for uncertificated Securities in addition to or in
place of certificated Securities; (iv) add additional covenants or to surrender
rights and powers conferred on the Company; (v) to comply with the requirements
of the SEC in order to effect or maintain the qualification of the Indenture
under the TIA; (vi) to make any change that does not adversely affect the rights
of any Securityholder; (vii) to appoint a successor trustee; (viii) to secure
the Securities; or (ix) to provide for the issuance of additional securities.
12. Defaults and Remedies
---------------------
If an Event of Default occurs (other than an Event of Default relating
to certain events of bankruptcy or insolvency of the Company) and is continuing,
the Trustee or the Holders of at least 25% in principal amount of the
outstanding Securities may declare the principal of and accrued but unpaid
interest on all the Securities to be due and payable. If an Event of Default
relating to certain events of bankruptcy or insolvency of the Company occurs,
the principal of and interest on all the Securities shall become immediately due
and payable without any declaration or other act on the part of the Trustee or
any Holders. Under certain circumstances, the Holders of a majority in principal
amount of the outstanding Securities may rescind any such acceleration with
respect to the Securities and its consequences.
If an Event of Default occurs and is continuing, the Trustee shall be
under no obligation to exercise any of the rights or powers under the Indenture
at the request or direction of any of the Holders unless such Holders have
offered to the Trustee reasonable indemnity or security against any loss,
liability or expense. Except to enforce the right to receive payment of
principal, premium (if any) or interest when due, no Holder may pursue any
remedy with respect to the Indenture or the Securities unless (i) such Holder
has previously given the Trustee notice that an Event of Default is continuing,
(ii) Holders of at least 25% in principal amount of the outstanding Securities
have requested the Trustee in writing to pursue the remedy, (iii) such Holders
have offered the Trustee reasonable security or indemnity against any loss,
liability or expense, (iv) the Trustee has not complied with such request within
60 days after the receipt of the request
<PAGE>
9
and the offer of security or indemnity and (v) the Holders of a majority in
principal amount of the outstanding Securities have not given the Trustee a
direction inconsistent with such request within such 60-day period. Subject to
certain restrictions, the Holders of a majority in principal amount of the
outstanding Securities are given the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. The Trustee, however,
may refuse to follow any direction that conflicts with law or the Indenture or
that the Trustee determines is unduly prejudicial to the rights of any other
Holder or that would involve the Trustee in personal liability. Prior to taking
any action under the Indenture, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses caused
by taking or not taking such action.
13. Trustee Dealings with the Company
---------------------------------
Subject to certain limitations imposed by the TIA, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
14. No Recourse Against Others
--------------------------
A director, officer, employee or stockholder, as such, of the Company
shall not have any liability for any obligations of the Company under the
Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
15. Authentication
--------------
This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
16. Abbreviations
-------------
Customary abbreviations may be used in the name of a Securityholder or
an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
<PAGE>
10
17. Governing Law
-------------
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
18. CUSIP Numbers
-------------
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder of Securities upon written
request and without charge to the Holder a copy of the Indenture which has in it
the text of this Security.
<PAGE>
11
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security on the books of
the Company. The agent may substitute another to act for him.
- --------------------------------------------------------------------------------
Date: Your Signature:
---------------- -----------------------------------------
- --------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
<PAGE>
12
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF
TRANSFER RESTRICTED SECURITIES
This certificate relates to $_________ principal amount of Securities held
in (check applicable space)_____book-entry or________definitive form by the
undersigned.
The undersigned (check one box below):
[_] has requested the Trustee by written order to deliver in exchange for
its beneficial interest in the Global Security held by the Depositary
a Security or Securities in definitive, registered form of authorized
denominations and an aggregate principal amount equal to its
beneficial interest in such Global Security (or the portion thereof
indicated above);
[_] has requested the Trustee by written order to exchange or register the
transfer of a Security or Securities.
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act, the undersigned confirms that such Securities
are being transferred in accordance with its terms:
CHECK ONE BOX BELOW
(1) [_] to the Company; or
(2) [_] pursuant to an effective registration statement under the
Securities Act of 1933; or
(3) [_] inside the United States to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act of
1933) that purchases for its own account or for the account
of a qualified institutional buyer to whom notice is given
that such transfer is being made in reliance on Rule 144A,
in each case pursuant to and in compliance with Rule 144A
under the Securities Act of 1933; or
(4) [_] outside the United States in an offshore transaction
within the meaning of Regulation S under the Securities Act
in compliance with Rule 904 under the Securities Act of
1933; or
<PAGE>
13
(5) [_] pursuant to another available exemption from registration
provided by Rule 144 under the Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to
register any of the Securities evidenced by this certificate in the
name of any Person other than the registered holder thereof; provided,
--------
however, that if box (4) or (5) is checked, the Trustee may require,
-------
prior to registering any such transfer of the Securities, such legal
opinions, certifications and other information as the Company has
reasonably requested to confirm that such transfer is being made
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act of 1933.
------------------------
Your Signature
Signature Guarantee:
Date:
------------------------- ------------------------------------
Signature must be guaranteed Signature of Signature
by a participant in a Guarantee
recognized signature guaranty
medallion program or other
signature guarantor acceptable
to the Trustee
- --------------------------------------------------------------------------------
<PAGE>
14
TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, and is aware that the sale to it is being made in reliance on Rule 144A
and acknowledges that it has received such information regarding the Company as
the undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the exemption
from registration provided by Rule 144A.
Dated:
----------------- ------------------------------------
NOTICE: To be executed by
an executive officer
<PAGE>
15
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The initial principal amount of this Global Security is $100,000,000.
The following increases or decreases in this Global Security have been made:
<TABLE>
<CAPTION>
Date of Amount of decrease Amount of increase Principal amount of Signature of
Exchange in Principal Amount in Principal Amount this Global Security authorized signatory
of this Global of this Global following such of Trustee or
Security Security decrease or increase Securities Custodian
<S> <C> <C> <C> <C>
</TABLE>
<PAGE>
EXHIBIT 11
----------
THE LIMITED, INC. AND SUBSIDIARIES
RESTATED COMPUTATION OF PER SHARE EARNINGS
(Thousands except per share amounts)
<TABLE>
<CAPTION>
Quarter Ended
---------------------------------
July 31, August 1,
1999 1998
--------------- ---------------
<S> <C> <C>
Net income $57,482 $1,688,068
Less: impact of IBI dilutive options and restricted
shares on consolidated income* (1,265) (327)
--------------- ---------------
Adjusted net income $56,217 $1,687,741
=============== ===============
Weighted average common shares outstanding:
Common shares issued 379,454 379,454
Dilutive effect of stock options and restricted shares 9,197 6,947
Treasury shares (158,425) (143,322)
--------------- ---------------
Diluted shares 230,226 243,079
=============== ===============
Net income per diluted share $0.24 $6.94
=============== ===============
</TABLE>
<TABLE>
<CAPTION>
Twenty-six weeks Ended
---------------------------------
July 31, August 1,
1999 1998
--------------- ---------------
<S> <C> <C>
Net income $102,933 $1,777,727
Less: impact of IBI dilutive options and restricted
shares on consolidated income* (1,778) (835)
--------------- ---------------
Adjusted net income $101,155 $1,776,892
=============== ==============
Weighted average common shares outstanding:
Common shares issued 379,454 379,454
Dilutive effect of stock options and restricted shares 8,506 6,236
Treasury shares (155,073) (124,469)
--------------- ---------------
Diluted shares 232,887 261,221
=============== ==============
Net income per diluted share $0.43 $6.80
=============== ==============
</TABLE>
*Represents the impact of dilutive options and restricted shares at Intimate
Brands as a reduction to income.
<PAGE>
EXHIBIT 12
----------
THE LIMITED, INC. AND SUBSIDIARIES
RESTATED RATIO OF EARNINGS TO FIXED CHARGES
(Thousands except ratio amounts)
Twenty-six Weeks Ended
-----------------------------
July 31, August 1,
1999 1998
------------- -------------
Adjusted Earnings
- -----------------
Pretax earnings $185,933 $1,875,727
Portion of minimum rent ($355,113 in 1999
and $366,398 in 1998) representative 118,371 122,133
of interest
Interest on indebtedness 36,949 32,155
Minority interest 22,489 21,821
------------- -------------
Total earnings as adjusted $363,742 $2,051,836
============= =============
Fixed Charges
- -------------
Portion of minimum rent representative
of interest $118,371 $122,133
Interest on indebtedness 36,949 32,155
------------- -------------
Total fixed charges $155,320 $154,288
============= =============
Ratio of earnings to fixed charges 2.34x 13.30x
============= =============
<PAGE>
EXHIBIT 15
----------
Securities and Exchange Commission
450 5th Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Commissioners:
We are aware that our report dated September 8, 1999, except for the information
in Note 2 as to which the date is February 16, 2000, on our review of the
interim consolidated financial information of The Limited, Inc. and Subsidiaries
(the "Company") as of and for the thirteen and twenty-six week periods ended
July 31, 1999 and included in this Form 10-Q/A is incorporated by reference in
the Company's registration statements on Form S-8, Registration Nos. 33-18533,
33-25005, 2-92277, 33-24829, 33-24507, 33-24828, 2-95788, 2-88919, 33-24518, 33-
6965, 33-14049, 33-22844, 33-44041, 33-49871, 333-04927, 333-04941, and the
registration statements on Form S-3, Registration Nos. 33-20788, 33-31540, 33-
43832, and 33-53366. Pursuant to Rule 436(c) under the Securities Act of 1933,
this report should not be considered a part of the registration statement
prepared or certified by us within the meaning of Sections 7 and 11 of that
Act.
Very truly yours,
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Columbus, Ohio
April 14, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Financial Statements (unaudited) of The Limited, Inc. and
Subsidiaries for the quarter ended July 31, 1999 and is qualified in its
entirety by reference to such financial statements.
THE COMPANY CHANGED ITS ACCOUNTING POLICY FOR GIFT CERTIFICATES, STORE CREDITS
AND LAYAWAY SALES (SEE NOTE 2 TO THE CONSOLIDATED FINANCIAL STATEMENTS). THE
COMPANY HAS GIVEN RETROACTIVE EFFECT TO THIS NEW ACCOUNTING POLICY BY RESTATING
ITS PREVIOUSLY ISSUED FINANCIAL STATEMENTS BEGINNING WITH FISCAL 1996.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-29-2000
<PERIOD-START> MAY-02-1999
<PERIOD-END> JUL-31-1999
<CASH> 490,322
<SECURITIES> 0
<RECEIVABLES> 72,824
<ALLOWANCES> 0
<INVENTORY> 1,238,404
<CURRENT-ASSETS> 2,061,589
<PP&E> 3,116,234
<DEPRECIATION> 1,715,695
<TOTAL-ASSETS> 4,027,696
<CURRENT-LIABILITIES> 1,195,998
<BONDS> 750,000
0
0
<COMMON> 189,727
<OTHER-SE> 1,648,638
<TOTAL-LIABILITY-AND-EQUITY> 4,027,696
<SALES> 2,267,821
<TOTAL-REVENUES> 2,267,821
<CGS> 1,540,174
<TOTAL-COSTS> 1,540,174
<OTHER-EXPENSES> 587,371
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,159
<INCOME-PRETAX> 105,482
<INCOME-TAX> 48,000
<INCOME-CONTINUING> 57,482
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 57,482
<EPS-BASIC> .26
<EPS-DILUTED> .24
</TABLE>
