<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 12, 1998.
FILE NO. 333-46611
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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INTERFACE, INC.
(Exact name of issuer as specified in its charter)
<TABLE>
<S> <C>
GEORGIA 58-1451243
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
</TABLE>
2859 PACES FERRY ROAD, SUITE 2000, ATLANTA, GEORGIA 30339, (770) 437-6800
(Address, including zip code, and telephone number, including area code, of
issuer's principal executive offices)
RAYMOND S. WILLOCH, ESQUIRE
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
INTERFACE, INC.
2859 PACES FERRY ROAD, SUITE 2000, ATLANTA, GEORGIA 30339, (770) 437-6800
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
COPIES TO:
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W. RANDY EADDY, ESQ. ARTHUR JAY SCHWARTZ, ESQ.
KILPATRICK STOCKTON LLP SMITH, GAMBRELL & RUSSELL, LLP
1100 PEACHTREE STREET, ATLANTA, GEORGIA 30309- SUITE 3100
4530 1230 PEACHTREE STREET, ATLANTA, GEORGIA 30309
(404) 815-6500 (404) 815-3500
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
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If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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<CAPTION>
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PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED(1) REGISTERED(2) PER UNIT(2)(3) PRICE(2)(3) FEE(2)
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<S> <C> <C> <C> <C>
Debt Securities.................. -- 100%(4) -- --
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Subsidiary Guarantees(5)......... (5) (5) (5) (5)
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Preferred Stock, par value $1.00
per share....................... -- -- $300,000,000 $88,500**
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Depositary Shares(6)............. -- -- -- --
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Class A Common Stock, par value
$.10 per share.................. -- -- -- --
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** Previously paid
(1) Securities registered hereunder (the "Securities") may be sold separately,
together or as units with other Securities registered hereunder. The
Securities registered hereunder include such indeterminate number of shares
of Common Stock or Preferred Stock which may be issued upon conversion of
convertible Debt Securities or convertible Preferred Stock.
(2) Pursuant to Rule 457(o) under the Securities Act of 1933, as amended (the
"Securities Act"), which permits the registration fee to be calculated on
the basis of the maximum offering price of all the securities registered,
the table does not specify by each class information as to the amount to be
registered, proposed maximum offering price per unit or the proposed maximum
aggregate offering price.
(3) Estimated in accordance with Rule 457(o) under the Securities Act, solely
for the purpose of determining the registration fee.
(4) Or, in the event of the issuance of original issue discount securities, such
higher principal amount as may be sold for an initial public offering price
of up to $300,000,000.
(5) Certain of the Debt Securities may be guaranteed by the Company's principal
wholly-owned domestic subsidiaries (the "Guarantors"). The Guarantors are
registering the Subsidiary Guarantees. Pursuant to Rule 457(n), no
registration fee is required with respect to the Subsidiary Guarantees.
(6) There are also being registered hereunder an indeterminate number of
Depositary Shares to be evidenced by Depositary Receipts issued pursuant to
a Deposit Agreement. If fractional interests in shares of the Preferred
Stock registered hereunder are offered, Depositary Receipts may be
distributed to those persons purchasing such fractional interests and the
shares of Preferred Stock will be deposited with the Depositary under the
Deposit Agreement.
THE COMPANY HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE COMPANY SHALL FILE A
FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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PROSPECTUS (INTERFACE LOGO)
$300,000,000
INTERFACE, INC.
DEBT SECURITIES
PREFERRED STOCK
CLASS A COMMON STOCK
</TABLE>
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Interface, Inc. ("Interface" or the "Company") intends to issue from time
to time, in one or more series, up to $300,000,000 aggregate offering price of
its (i) unsecured debt securities ("Debt Securities"), which may be either
senior debt securities ("Senior Debt Securities") or subordinated debt
securities ("Subordinated Debt Securities"), (ii) preferred shares, par value
$1.00 per share ("Preferred Shares"), which may be issued in whole or in a
fraction of a Preferred Share in the form of depositary shares evidenced by
depositary receipts ("Depositary Shares") and (iii) shares of Class A Common
Stock, par value $.10 per share ("Common Stock"); the Debt Securities, Preferred
Shares, Depositary Shares and Common Stock are referred to collectively as the
"Securities". The Securities offered hereby (the "Offered Securities") may be
offered separately or together, in separate series, in amounts, at prices, and
on terms to be determined at the time of sale and to be set forth in a
supplement to this Prospectus (a "Prospectus Supplement").
The specific terms of the Offered Securities in respect of which this
Prospectus is being delivered, such as, where applicable, (i) in the case of
Debt Securities, the specific designation (including whether senior or
subordinated), aggregate principal amount, denomination, maturity, premium, if
any, priority, interest rate (which may be variable or fixed), time of payment
of any premium and any interest, terms for optional redemption or repayment or
for sinking fund payments, if any, and terms for conversion into or exchange for
other Offered Securities; (ii) in the case of Preferred Shares, the specific
title and stated value, number of shares or fractional interests therein, the
dividend, liquidation, redemption, conversion, voting and other rights, and
whether interests in the Preferred Shares will be represented by Depositary
Shares; and (iii) in the case of all Offered Securities, any initial offering
price, will be set forth in the applicable Prospectus Supplement. The Prospectus
Supplement will also contain information, where applicable, about material
United States federal income tax considerations relating to, and any listing on
a securities exchange of, the Offered Securities offered thereby.
------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR CERTAIN CONSIDERATIONS RELEVANT TO
AN INVESTMENT IN THE OFFERED SECURITIES.
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The Offered Securities may be offered directly through underwriters or
dealers or through such firms or other firms acting alone or through dealers.
The Offered Securities may also be sold directly by the Company or through
agents to investors. The names of any agents, dealers or managing underwriters,
and of any underwriters involved in the sale of the Offered Securities in
respect of which this Prospectus is being delivered, the applicable agents'
commission, dealers' purchase price or underwriters' discounts and commissions,
and the net proceeds to the Company from such sale, will be set forth in the
applicable Prospectus Supplement. See "Plan of Distribution".
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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This Prospectus may not be used to consummate the sale of the Securities
unless accompanied by a Prospectus Supplement.
March 16, 1998
<PAGE> 3
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements, and other information, may be inspected and copied at prescribed
rates at the public reference facilities maintained by the Commission at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the Commission's regional offices located at Seven World Trade Center, 13th
Floor, New York, New York 10048, and 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. In addition, the Commission maintains a site on the
World Wide Web portion of the Internet, which contains reports, proxy and
information statements and other information regarding registrants (such as the
Company) that file electronically with the Commission, at http://www.sec.gov.
The Company has filed with the Commission a Registration Statement on Form
S-3 (including all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act").
This Prospectus, which is part of the Registration Statement, does not contain
all of the information set forth or incorporated by reference in the
Registration Statement and the exhibits and schedules thereto. For further
information with respect to the Company and the Securities offered hereby,
reference is hereby made to the Registration Statement and such exhibits and
schedules which may be inspected and copied in the manner and at the locations
described above. Statements contained herein concerning the provisions of any
document are not necessarily complete and, in each instance, reference is made
to the copy of the document filed as an exhibit to the Registration Statement or
otherwise filed with the Commission. Each statement is qualified in its entirety
by such reference.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents heretofore filed by the Company with the Commission
are hereby incorporated by reference: (i) the Company's Annual Report on Form
10-K for the year ended December 29, 1996; (ii) the Company's quarterly reports
on Form 10-Q for the quarters ended March 30, 1997 (as amended by Form 10-Q/A
filed May 16, 1997), June 29, 1997, and September 28, 1997; (iii) the
description of the Company's capital stock contained in the Company's Form 8-A
filed on April 30, 1984, as amended by Form 8 filed on August 19, 1988,
including all amendments or reports filed for the purpose of updating such
description; (iv) the Company's current report on Form 8-K filed March 4, 1998;
and (v) the description of the Company's Series B Participating Cumulative
Preferred Stock Purchase Rights contained in the Company's Form 8-A filed on
March 4, 1998, as amended by Form 8-A/A filed on March 12, 1998.
All reports and other documents filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Securities
offered hereby shall be deemed to be incorporated by reference into this
Prospectus and to be a part hereof from the date of filing of the reports and
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference in this Prospectus or any Prospectus Supplement shall
be deemed to be modified or superseded for purposes of this Prospectus or any
Prospectus Supplement to the extent that a statement contained herein, therein
or in any other subsequently filed documents which also is or is deemed to be
incorporated by reference in this Prospectus or in any Prospectus Supplement
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus or any Prospectus Supplement.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
(without exhibits other than exhibits specifically incorporated by reference) of
any or all documents incorporated by reference into this Prospectus. Written or
oral requests for such copies should be directed to: Interface, Inc., 2859 Paces
Ferry Road, Suite 2000, Atlanta, Georgia 30339, Attention: Corporate Secretary
(telephone: 770-437-6800).
2
<PAGE> 4
THE COMPANY
Interface, Inc. ("Interface" or the "Company") is a global manufacturer,
marketer, installer and servicer of products for the commercial and
institutional interiors market. With a 40% market share, the Company is the
worldwide leader in the modular carpet segment, which includes both carpet tile
and two-meter roll goods. The Company's Bentley Mills, Prince Street and Firth
brands are leaders in the high quality, designer-oriented sector of the
broadloom segment. The Company provides carpet installation and maintenance
services through its domestic dealer network, Re:Source Americas, and provides
specialized carpet replacement services through its Renovisions, Inc.
("Renovisions") subsidiary. The Company's Interior Fabrics Group includes the
leading U.S. manufacturer of panel fabrics for use in open plan office furniture
systems, with a market share in excess of 60%. The Company's specialty products
operations produce raised/access flooring systems, antimicrobial additives,
adhesives and various other chemical compounds and products. These complementary
product offerings, together with an integrated marketing philosophy, enable
Interface to take a "total interior solutions" approach to serving the diverse
needs of its customers around the world.
The Company markets products in over 100 countries around the world under
such established brand names as Interface and Heuga in modular carpet; Bentley
Mills, Prince Street and Firth in broadloom carpets; Guilford of Maine, Stevens
Linen, Camborne, Toltec and Intek in interior fabrics and upholstery products;
Intersept in chemicals; and C-Tec and Intercell in raised/access flooring
systems. The Company utilizes an internal marketing and sales force of over
1,100 experienced personnel (the largest in the commercial floorcovering
industry), stationed at over 95 locations in over 39 countries, to market the
Company's carpet products and services in person to its customers. The Company's
principal geographic markets are North America (70% of 1997 net sales), the
United Kingdom and Western Europe (23% of 1997 net sales), and Asia-Pacific (7%
of 1997 net sales). The Company is aggressively developing opportunities in
Greater China and Southeast Asia, South America, and Central and Eastern Europe,
which management believes represent significant growth markets for the Company.
While the Company's net sales from U.S. operations have historically been
derived primarily from the renovation market, Interface believes that the
recovery in the U.S. commercial office market, which began in the mid 1990's,
will drive growth in the new construction market over the next several years.
From a high of nearly 24% in 1986, suburban office vacancy rates dropped to a
decade low of 9.7% as of September 1997, according to CB Commercial/Torto
Wheaton Research. In addition, CB Commercial/Torto Wheaton Research reports that
34 out of 54 major metropolitan areas were below the 10% vacancy level in
September 1997. The Company believes that a 10% vacancy level is a critical
threshold which drives new construction. Given the decade-long downturn in the
office market, the Company believes the recovery should continue for a number of
years. The Company expects that all of its domestic operations will benefit from
these industry developments. In its international markets, the Company expects
to benefit from both increased use and acceptance of its products as well as a
recovery in several commercial office markets, particularly in Europe. The
Company also believes that, within the overall floorcovering market, the demand
for modular carpet is increasing worldwide as more customers recognize its
advantages in terms of greater design options and flexibility, longer average
life, and ease of access to sub-floor wiring.
For 1997, the Company had net sales and net income of $1.1 billion and
$37.5 million, respectively, the highest in the Company's history. Net sales
were composed of floorcovering sales ($898.2 million), fabric sales ($184.7
million) and chemical and specialty product sales ($52.4 million), accounting
for 79%, 16% and 5% of total net sales, respectively. The Company achieved a
compound annual growth rate in its net sales and net income of 16% and 28%,
respectively, over the five-year period from 1993 to 1997.
RECENT ACQUISITION
On December 30, 1997, the Company completed the acquisition of the European
carpet businesses of Readicut International plc ("Readicut"), for approximately
$50 million, subject to final adjustment.
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After the planned divestiture of certain assets of Readicut, including its
Network Flooring dealer division and Joseph, Hamilton & Seaton Ltd., the
Company's final investment for the retained Readicut businesses is expected to
be less than $15 million. The retained businesses will include Firth Carpets
Ltd., based in West Yorkshire, England, a leading manufacturer of high quality
woven and tufted carpet primarily for the contract markets; and a 40% interest
in Vebe Floorcoverings BV, located in the Netherlands, a leading manufacturer of
needlepunch carpet. Firth Carpets is located in close proximity to the Company's
Camborne Holdings Ltd. facility and its Shelf, England modular carpet facility,
which is expected to allow Interface to realize significant synergies with these
existing operations. In February 1998, the Company entered into a joint venture
arrangement with Condor Carpets plc pursuant to which Condor Carpets acquired a
60% interest in Vebe Floorcoverings.
The Company was incorporated under the laws of the State of Georgia in
1973. The Company's principal executive offices are located at 2859 Paces Ferry
Road, Suite 2000, Atlanta, Georgia 30339, and its telephone number is (770)
437-6800.
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RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the
Offered Securities. This Prospectus and the accompanying Prospectus Supplement
contain "forward-looking" statements as defined in the Private Securities
Litigation Reform Act of 1995, that are based on current expectations, estimates
and projections. Statements that are not historical facts, including statements
about the Company's beliefs and expectations, are forward-looking statements.
These statements contain potential risks and uncertainties; therefore, actual
results may differ materially. The Company undertakes no obligation to update
publicly any forward-looking statements, whether as a result of new information,
future events or otherwise. Important factors that may affect such statements
include, but are not limited to, those set forth below.
STRONG COMPETITION
The commercial floorcovering industry is highly competitive. Globally, the
Company competes for sales of its modular and broadloom carpet with other carpet
manufacturers and manufacturers of vinyl and other types of floorcovering.
Although the industry recently has experienced significant consolidation, a
large number of manufacturers remain in the industry. Management believes that
the Company is the largest manufacturer of modular carpet in the world, with a
global market share over two times that of its nearest competitor. However, a
number of domestic and foreign competitors manufacture modular carpet as one
segment of their business, and certain of these competitors have financial
resources in excess of the Company's.
CYCLICAL NATURE OF INDUSTRY
Sales of the Company's principal products are related to the construction
and renovation of commercial and institutional buildings. Such activity is
cyclical and can be affected by the strength of a country's general economy,
prevailing interest rates and other factors that lead to cost control measures
by businesses and other users of commercial or institutional space. The effects
of such cyclicality upon the new construction sector of the market tend to be
more pronounced than its effects upon the renovation sector. Although the
predominant portion of the Company's sales are generated from the renovation
sector, any such adverse cycle, in either sector of the market, would lessen the
overall demand for commercial interiors products, which could impair the
Company's growth.
RELIANCE ON KEY PERSONNEL
The Company believes that its continued success will depend to a
significant extent upon the efforts and abilities of its senior management
executives, particularly Ray C. Anderson, Chairman of the Board and Chief
Executive Officer; Charles R. Eitel, President and Chief Operating Officer; and
Gordon D. Whitener, Senior Vice President. Each of Messrs. Anderson, Eitel and
Whitener have entered into employment agreements with the Company containing
certain covenants of non-competition, and the Company currently maintains
key-man insurance on each of Messrs. Anderson and Eitel. In addition, the
Company relies significantly on the leadership of its design staff by David
Oakey of David Oakey Designs, Inc., which provides product design/production
engineering services to the Company under an exclusive consulting contract that
contains certain covenants of non-competition. The loss of all or some of such
personnel could have an adverse impact on the Company.
RISKS OF FOREIGN OPERATIONS
The Company has substantial international operations. In fiscal 1997,
approximately 32% of the Company's net sales and a significant portion of the
Company's production were outside the United States, primarily in Europe but
also in Asia. The Company's corporate strategy includes the expansion of its
international business on a worldwide basis. As a result, the Company's
operations are subject to various political, economic and other uncertainties,
including risks of restrictive taxation policies, foreign exchange restrictions,
changing political conditions and governmental regulations. In addition, recent
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economic events in Asia, including depreciation of certain Asian currencies,
failures of financial institutions, stock market declines and reductions in
planned capital investment at key enterprises, may adversely impact the
Company's sales in the Asian markets. The Company also makes a substantial
portion of its net sales in currencies other than U.S. dollars, which subjects
it to the risks inherent in currency translations. The Company's ability to
manufacture and ship products from facilities in several foreign countries
reduces the risks of foreign currency fluctuations it might otherwise
experience, and the Company also engages from time to time in hedging programs
intended to further reduce those risks. Despite this, the scope and volume of
the Company's global operations make it impossible to eliminate completely all
foreign currency translation risks as an influence on the Company's financial
results.
HOLDING COMPANY STRUCTURE
The operations of the Company are conducted through its subsidiaries and,
therefore, any Debt Securities will be effectively subordinated to all
indebtedness and other liabilities and commitments of the Company's
subsidiaries, other than subsidiaries which are guarantors of any such Debt
Securities. The Company is substantially dependent on the earnings and cash flow
of its subsidiaries and must rely upon distributions from its subsidiaries to
meet its debt obligations, including its obligations with respect to any Debt
Securities. Any right of the holders of such Debt Securities to participate in
the assets of a non-guarantor subsidiary of the Company upon any liquidation or
reorganization of such subsidiary will be subject to the prior claims of such
subsidiary's creditors, including the lenders under the Company's bank credit
facility and trade creditors. In addition, 100% of the capital stock of the
Company's principal domestic subsidiaries and up to 66% of the capital stock of
its principal foreign subsidiaries are pledged as collateral to the lenders
under the Company's bank credit facility. Accordingly, upon any liquidation or
reorganization of the Company, the holders of such Debt Securities will have no
claim against such capital stock until the lenders under the Company's bank
credit facility are paid in full. The Company has requested that the lenders
under the credit facility release this collateral, but there can be no assurance
that such collateral will be released.
CONTROL OF ELECTION OF A MAJORITY OF BOARD
The Company's Chairman and Chief Executive Officer, Ray C. Anderson,
beneficially owns approximately 60% of the Company's outstanding Class B Common
Stock, and has entered into a voting agreement, which expires in April 1998,
with certain other holders of Class B Common Stock pursuant to which such other
holders have irrevocably appointed Mr. Anderson their proxy and attorney-in-fact
to vote their shares. The holders of the Class B Common Stock are entitled, as a
class, to elect a majority of the Board of Directors of the Company, which means
that Mr. Anderson has sufficient voting power (which voting power will be
unaffected by the expiration of the voting agreement) to elect a majority of the
Board of Directors. The holders of the Class B Common Stock generally vote
together as a single class with the holders of the Class A Common Stock on all
other matters submitted to the shareholders for a vote, however, and Mr.
Anderson's beneficial ownership of the outstanding Class A and Class B Common
Stock combined is less than 10%. See "Description of Capital Stock -- Class B
Stock Voting Agreement".
RELIANCE ON PETROLEUM-BASED RAW MATERIALS
Petroleum-based products comprise the predominant portion of the cost of
raw materials used by the Company in manufacturing. While the Company generally
attempts to match cost increases with corresponding price increases, large
increases in the cost of such petroleum-based raw materials could adversely
affect the Company if the Company were unable to pass through to its customers
such increases in raw material costs.
RELIANCE ON THIRD PARTY FOR SUPPLY OF FIBER
E. I. DuPont de Nemours and Company ("DuPont") currently supplies a
significant percentage of the Company's requirements for synthetic fiber, the
principal raw material used in the Company's carpet
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products. DuPont also competes with the Company's Re:Source Americas network
through DuPont's own distribution channel and aligned carpet mills. While the
Company believes that there are adequate alternative sources of supply from
which it could fulfill its synthetic fiber requirements, the unanticipated
termination or interruption of the supply arrangement with DuPont could have a
material adverse effect on the Company because of the cost and delay associated
with shifting more business to another supplier.
RESTRICTIONS DUE TO SUBSTANTIAL INDEBTEDNESS
The Company's indebtedness is substantial in relation to its shareholders'
equity. As of December 28, 1997, the Company's long-term debt (net of current
portion) totaled $389 million or approximately 55% of its total capitalization.
As a consequence of its level of indebtedness a substantial portion of the
Company's cash flow from operations must be dedicated to debt service
requirements. The terms of the Company's outstanding indebtedness also restrict
the ability of the Company and its subsidiaries to, among other things, incur
additional indebtedness, pay dividends or make certain other restricted payments
or investments in certain situations, consummate certain asset sales, enter into
certain transactions with affiliates, incur liens, or merge or consolidate with
any other person or sell, assign, transfer, lease, convey or otherwise dispose
of all or substantially all of their assets. They also require the Company to
meet certain financial tests and comply with certain other reporting,
affirmative and negative covenants.
YEAR 2000 RISK
The "year 2000 issue" arises from the widespread use of computer programs
that rely on two-digit date codes to perform computations or decision-making
functions. Many of these programs may fail due to an inability to properly
interpret date codes beginning January 1, 2000. For example, such programs may
misinterpret "00" as the year 1900 rather than 2000. In addition, some
equipment, being controlled by microprocessor chips, may not deal appropriately
with the year "00". The Company is evaluating its computer systems with the help
of outside consultants to determine which modifications and expenditures will be
necessary to make its systems compatible with year 2000 requirements. The
Company believes that its systems will be year 2000-compliant upon
implementation of such modifications.
The Company currently estimates the total cost of such modifications,
excluding the cost of modifications to program logic control systems relating to
manufacturing equipment, to be at least $17 million, although it could be
significantly more. The Company and its outside consultants are currently
evaluating the costs of modifications to these program logic control systems. Of
the total project cost, approximately $10 million is attributable to the cost of
new hardware and software which will be capitalized in connection with the
consolidation globally of the Company's management and financial accounting
systems. The remaining $7 million will be expensed as incurred over the next two
years. However, there can be no assurance that all necessary modifications will
be identified and corrected or that unforeseen difficulties or costs will not
arise. In addition, there can be no assurance that the systems of other
companies on which the Company's systems rely will be modified on a timely
basis, or that the failure by another company to properly modify its systems
will not negatively impact the Company's systems or operations.
FRAUDULENT CONVEYANCE CONSIDERATIONS
Under applicable provisions of the federal bankruptcy law or comparable
provisions of state fraudulent transfer laws, if any subsidiary of the Company
guarantees any Debt Securities, and at the time it incurs such a guarantee, such
subsidiary (a)(i) was or is insolvent or rendered insolvent by reason of such
incurrence, (ii) was or is engaged in a business or transaction for which the
assets remaining with such subsidiary constituted unreasonably small capital or
(iii) intended or intends to incur, or believed or believes that it would incur,
debts beyond its ability to pay such debts as they mature and (b) received or
receives less than reasonably equivalent value or fair consideration, the
obligations of such subsidiary under its guarantee could be avoided, or claims
in respect of such guarantee could be subordinated to all other debts of such
subsidiary. Among other things, a legal challenge of a guarantee
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on fraudulent conveyance grounds may focus on the benefits, if any, realized by
such subsidiary as a result of the issuance by the Company of the Debt
Securities. To the extent that any guarantee were a fraudulent conveyance or
held unenforceable for any other reason, the holders of any such Debt Securities
which are so guaranteed would cease to have any claim in respect of such
subsidiary and would be solely creditors of the Company and any other guarantors
whose guarantees were not avoided or held unenforceable. In such event, the
claims of the holders of such Debt Securities would be subject to the prior
payment of all liabilities of the subsidiary whose guarantee was avoided. There
can be no assurance that, after providing for all prior claims, there would be
sufficient assets to satisfy the claims of the holders of such Debt Securities
relating to any avoided portion of a guarantee. Because the law of fraudulent
transfers is inherently fact based and fact specific, in rendering their
opinions on the validity of any Debt Securities guaranteed by subsidiaries of
the Company, counsel for the Company and counsel for any underwriters will
express no opinion as to federal or state laws relating to fraudulent transfers.
ABSENCE OF PUBLIC MARKET
There is no existing market for any of the Debt Securities and there can be
no assurance as to the liquidity of any market that may develop for the Debt
Securities, the ability of holders to sell Debt Securities, or the price at
which holders would be able to sell the Debt Securities. Future trading prices
of the Debt Securities will depend on many factors, including, among other
things, prevailing interest rates, the Company's operating results and the
market for similar securities. Historically, the market for securities similar
to the Debt Securities has been subject to disruptions that have caused
substantial volatility in the prices of such securities. There can be no
assurance that any market for the Debt Securities, if such market develops, will
not be subject to similar disruptions. Certain of the underwriters engaged with
respect to any offering of Debt Securities may intend to make a market in any
Debt Securities offered hereby; however, except as otherwise provided in a
prospectus supplement with respect to such Debt Securities, such underwriters
will not be obligated to do so and any market making may be discontinued at any
time without notice.
ANTI-TAKEOVER EFFECTS OF SHAREHOLDER RIGHTS PLAN
The Board of Directors has adopted a Rights Agreement pursuant to which
holders of Common Stock will be entitled to purchase from the Company a fraction
of a share of the Company's Series B Participating Cumulative Preferred Stock if
a third party acquires beneficial ownership of 15% or more of the Common Stock
and will be entitled to purchase the stock of an Acquiring Person (as defined in
the Rights Agreement) at a discount upon the occurrence of certain triggering
events. These provisions of the Rights Agreement could have the effect of
discouraging tender offers or other transactions that would result in
shareholders receiving a premium over the market price for the Common Stock. See
"Description of Capital Stock -- Description of Preferred Stock Purchase
Rights".
USE OF PROCEEDS
Unless otherwise specified in the applicable Prospectus Supplement, the
Company intends to use the net proceeds from the sale of the Securities for
general corporate purposes, including working capital, the repayment or
refinancing of previously outstanding indebtedness, future acquisitions and
capital expenditures. Pending application of the net proceeds for specific
purposes, proceeds may be invested in short-term or marketable securities.
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<PAGE> 10
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the historical consolidated ratios of
earnings to fixed charges for the Company for the periods indicated. The ratio
of earnings to fixed charges is determined by dividing net earnings before
interest expense, taxes on income, amortization of debt expense, and a portion
of rent expense representative of the interest component by the sum of interest
expense, amortization of debt expense and the portion of rent expense
representative of the interest component.
<TABLE>
<CAPTION>
JANUARY 2, JANUARY 1, DECEMBER 31, DECEMBER 29, DECEMBER 28,
1994 1995 1995 1996 1997
- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
1.9 2.0 2.1 2.3 2.6
</TABLE>
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. The particular terms of the Debt Securities
offered by any Prospectus Supplement (the "Offered Debt Securities") and the
extent, if any, to which such general provisions may not apply thereto will be
described in the Prospectus Supplement relating to such Offered Debt Securities.
The Debt Securities may be issued from time to time, in one or more series,
and will constitute either Senior Debt Securities or Subordinated Debt
Securities. Senior Debt Securities will be issued under an Indenture (the
"Senior Indenture"), between the Company, the Guarantors (as defined herein),
and First Union National Bank, as Trustee (the "Senior Trustee"). Subordinated
Debt Securities will be issued under an Indenture (the "Subordinated
Indenture"), between the Company, the Guarantors and a trustee to be named prior
to the offering of any Subordinated Debt Securities, as Trustee (the
"Subordinated Trustee"). The Senior Indenture and the Subordinated Indenture are
referred to herein individually as an "Indenture" and, collectively, as the
"Indentures", and the Senior Trustee and the Subordinated Trustee are referred
to herein individually as the "Trustee" and collectively as the "Trustees".
The following summaries of certain provisions of the Debt Securities,
guarantees of the Debt Securities ("Guarantees"), and the Indentures do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all of the provisions of the Indentures, including the
definitions therein of certain terms. Certain capitalized terms used herein are
defined in the Indentures. The Indentures are substantially identical, except
for certain covenants of the Company and provisions relating to subordination.
GENERAL
The Indentures do not limit the amount of Debt Securities that can be
issued thereunder and provide that Debt Securities of any series may be issued
thereunder up to the aggregate principal amount which may be authorized from
time to time by the Company. Except as may be set forth in any Prospectus
Supplement, the Indentures do not limit the amount of other Indebtedness or
securities, other than certain secured Indebtedness as described below, that may
be issued by the Company or its Subsidiaries. All Senior Debt Securities will be
unsecured obligations of the Company. The Senior Debt Securities and the
Guarantees will rank on a parity with all other unsecured and unsubordinated
Indebtedness of the Company and the Guarantors. All Subordinated Debt Securities
will be unsecured obligations of the Company. The Subordinated Debt Securities
and the Guarantees will be subordinated in right of payment to the prior payment
in full of Senior Indebtedness (which term includes the Senior Debt Securities)
of the Company and the Guarantors as described below under "Provisions
Applicable Solely to Subordinated Debt Securities -- Subordination."
Substantially all of the operations of the Company are conducted by
Subsidiaries of the Company. Accordingly, the Company is dependent upon the
distribution of the earnings of its Subsidiaries, whether in the form of
dividends, advances or payments on account of intercompany obligations, to
service its
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<PAGE> 11
debt obligations. The subsidiaries of the Company that are not Material U.S.
Subsidiaries will not guarantee the Debt Securities.
Because creditors of non-guarantor Subsidiaries of the Company are entitled
to a claim on the assets of such Subsidiaries, in the event of a liquidation or
reorganization, creditors of such Subsidiaries are likely to be paid in full
before any distribution is made to the Company and holders of Senior Debt
Securities or Subordinated Debt Securities, except to the extent that the
Company is itself recognized as a creditor of such Subsidiary, in which case the
claims of the Company would still be subordinate to any security interests in
the assets of such Subsidiary and any Indebtedness of such Subsidiary senior to
that held by the Company.
Reference is made to the Prospectus Supplement for the following terms
thereof: (i) the title of the Offered Debt Securities and classification as
Senior Debt Securities or Subordinated Debt Securities; (ii) any limit upon the
aggregate principal amount of the Offered Debt Securities; (iii) if other than
100% of the principal amount, the percentage of the principal amount at which
the Offered Debt Securities will be offered; (iv) the date or dates on which the
principal of the Offered Debt Securities will be payable (or method of
determination thereof); (v) the rate or rates (which may be fixed or variable)
at which the Offered Debt Securities will bear interest (or method of
determination thereof), if any, the date or dates from which any such interest
will accrue and on which such interest will be payable, and the record dates for
the determination of the holders to whom interest is payable; (vi) if other than
U.S. dollars, the currency or units based on or relating to currencies in which
the Offered Debt Securities are denominated and which the principal of, interest
on and any Additional Amounts (as defined below) will or may be payable; (vii)
if other than as set forth herein, the place or places where the principal of,
interest on and any Additional Amounts payable in respect of the Offered Debt
Securities will be payable; (viii) the price or prices at which, the period or
periods within which, and the terms and conditions upon which Offered Debt
Securities may be redeemed, in whole or in part, at the option of the Company;
(ix) whether the Offered Debt Securities are convertible into Common Stock and,
if so, the terms and conditions upon which such conversion will be effected,
including the initial conversion price or conversion rate, the conversion period
and other conversion provisions in addition to or in lieu of those described in
the applicable Indenture; (x) the obligation, if any, of the Company to redeem,
repurchase or repay Offered Debt Securities, whether pursuant to any sinking
fund or analogous provisions or pursuant to other provisions set forth therein
or at the option of a holder thereof; (xi) whether the Offered Debt Securities
will be represented in whole or in part by one or more global notes registered
in the name of a depository or its nominee; (xii) whether and under what
circumstances the Company will pay Additional Amounts in respect of certain
taxes imposed on certain holders of Offered Debt Securities or as otherwise
provided; and (xiii) any other terms or conditions not inconsistent with the
provisions of the Indenture upon which the Offered Debt Securities will be
offered. "Principal" when used herein includes, when appropriate, the premium,
if any, on the Debt Securities. For a description of the terms of the Offered
Debt Securities, reference must be made to both the Prospectus Supplement
relating thereto and to the description of Debt Securities set forth herein.
Unless otherwise provided in the Prospectus Supplement, principal, interest
and Additional Amounts, if any, will be payable, and the Debt Securities will be
transferable or, if applicable, convertible at the office or offices or agency
maintained by the Company for such purposes; provided that payment of interest
on registered Debt Securities may be made by check mailed to the persons
entitled thereto at the addresses of such persons appearing on the Debt Security
register. In the case of registered Debt Securities, interest on the Debt
Securities will be payable on any interest payment date to the persons in whose
name the Debt Securities are registered at the close of business on the record
date with respect to such interest payment date.
Unless otherwise specified in the applicable Prospectus Supplement, Debt
Securities will be issued only in fully registered form, without coupons, in
minimum denominations of $1,000 (or $5,000 in the case of Bearer Securities) and
any integral multiple thereof. The Debt Securities may be represented in whole
or in part by one or more global notes registered in the name of a depository or
its nominee and, if so represented, interests in such global note will be shown
on, and transfers thereof will be effected only
10
<PAGE> 12
through, records maintained by the designated depository and its participants as
described below. Where Debt Securities of any series are issued in bearer form,
the special restrictions and considerations, including special offering
restrictions and special income tax considerations, applicable to any such Debt
Securities and to payment on and transfer and exchange of such Debt Securities
will be described in the applicable Prospectus Supplement.
Some of the Debt Securities may be issued as discounted Debt Securities
(bearing no interest or bearing interest at a rate that, at the time of
issuance, is below market rates) to be sold at a substantial discount below
their stated principal amount ("Original Issue Discount Securities"). Federal
income tax consequences and other special considerations applicable to any such
Original Issue Discount Securities will be described in the Prospectus
Supplement relating thereto.
If the purchase price of any Debt Securities is payable in one or more
foreign currencies or currency units, or if any Debt Securities are denominated
in one or more foreign currencies or currency units, or if the principal of or
interest, if any, on any Debt Securities is payable in one or more foreign
currencies or currency units, the restrictions, elections, certain income tax
considerations, specific terms and other information with respect to such issue
of Debt Securities and such foreign currency or currency units will be set forth
in the applicable Prospectus Supplement.
Debt Securities may be presented for exchange, and registered Debt
Securities may be presented for transfer, in the manner, at the places and
subject to the restrictions set forth in the applicable Indenture, the Debt
Securities and the Prospectus Supplement relating thereto. Debt Securities in
bearer form and the coupons, if any, appertaining thereto will be transferable
by delivery. No service charge will be made for any transfer or exchange of Debt
Securities, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Indentures require the annual filing by the Company with the Trustee of
a certificate as to compliance with certain covenants contained in the
Indentures.
The Company will comply with Section 14(e) under the Exchange Act, and any
other tender offer rules under the Exchange Act that may then be applicable, in
connection with any obligation of the Company to purchase Debt Securities at the
option of the holders thereof. Any such obligation applicable to a series of
Debt Securities will be described in the Prospectus Supplement relating thereto.
Unless otherwise described in a Prospectus Supplement relating to any
Offered Debt Securities, the Indentures do not contain any provisions that would
limit the ability of the Company to incur indebtedness or that would afford
holders of Debt Securities protection in the event of a sudden and significant
decline in the credit quality of the Company or a takeover, recapitalization or
highly leveraged or similar transaction involving the Company. Accordingly, the
Company could in the future enter into transactions that could increase the
amount of Indebtedness outstanding at that time or otherwise affect the
Company's capital structure or credit rating. Reference is made to the
Prospectus Supplement relating to the particular series of Debt Securities
offered thereby for information with respect to any deletions from,
modifications of or addition to the Events of Default described below or
covenants of the Company contained in the Indentures, including any addition of
a covenant or other provision providing event risk or similar protection.
GLOBAL SECURITIES
The Debt Securities may be issued in whole or in part in the form of one or
more temporary or permanent global securities (the "Global Securities") that
will be deposited with, or on behalf of, a bank or trust company selected by the
Company having its principal office in the United States and having a combined
capital and surplus of at least $50,000,000 ("Depositary") or its nominee
identified in the applicable Prospectus Supplement. In such a case, one or more
Global Securities will be issued in a denomination or aggregate denomination
equal to the portion of the aggregate principal amount of outstanding Debt
Securities of the series to be represented by such Global Security or Global
Securities. Unless and until it is exchanged in whole or in part for Debt
Securities in registered form, a Global
11
<PAGE> 13
Security may not be registered for transfer or exchange except as a whole by the
Depositary for such Global Security to a nominee of such Depositary or by a
nominee of such Depositary to such Depositary or another nominee of such
Depositary or by such Depositary or any nominee to a successor Depositary or a
nominee of such successor Depositary and except in the circumstances described
in the applicable Prospectus Supplement.
The specific terms of the depositary arrangement with respect to any
portion of a series of Debt Securities to be represented by a Global Security
will be described in the applicable Prospectus Supplement. The Company expects
that the following provisions will apply to depositary arrangements.
Unless otherwise specified in the applicable Prospectus Supplement, Debt
Securities which are to be represented by a Global Security to be deposited with
or on behalf of a Depositary will be represented by a Global Security registered
in the name of such Depositary or its nominee. Upon the issuance of such Global
Security, and the deposit of such Global Security with or on behalf of the
Depositary of such Global Security, the Depositary will credit, on its
book-entry registration and transfer system, the respective principal amounts of
the Debt Securities represented by such Global Security to the accounts of
institutions that have accounts with such Depositary or its nominee
("participants"). The accounts to be credited will be designated by the
underwriters or agents of such Debt Securities or, if such Debt Securities are
offered and sold directly by the Company, by the Company. Ownership of
beneficial interests in such Global Security will be limited to participants or
Persons that may hold interests through participants. Ownership of beneficial
interests by participants in such Global Security will be shown on, and the
transfer of that ownership interest will be effected only through, records
maintained by the Depositary or its nominee for such Global Security. Ownership
of beneficial interests in such Global Security by Persons that hold through
participants will be shown on, and the transfer of that ownership interest
within such participant will be effected only through, records maintained by
such participant. The laws of some jurisdictions require that certain purchasers
of securities take physical delivery of such securities in certificated form.
The foregoing limitations and such laws may impair the ability to transfer
beneficial interests in such Global Securities.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
applicable Indenture. Unless otherwise specified in the applicable Prospectus
Supplement, owners of beneficial interests in such Global Security will not be
entitled to have Debt Securities of the series represented by such Global
Security registered in their names, will not receive or be entitled to receive
physical delivery of Debt Securities of such series in certificated form and
will not be considered the holders thereof for any purposes under the applicable
Indenture. Accordingly, each Person owning a beneficial interest in such Global
Security must rely on the procedures of the Depositary and, if such Person is
not a participant, on the procedures of the participant through which such
Person owns its interest, to exercise any rights of a holder under the
applicable Indenture. The Company understands that under existing industry
practices, if the Company requests any action of holders or an owner of a
beneficial interest in such Global Security desires to give any notice to take
any action a holder is entitled to give or take under the applicable Indenture,
the Depositary would authorize the participants to give such notice or take such
action, and participants would authorize beneficial owners owning through such
participants to give such notice or take such action or would otherwise act upon
the instructions of beneficial owners owning through them.
Principal of and any premium and interest on a Global Security will be
payable in the manner described in the applicable Prospectus Supplement.
CERTAIN COVENANTS
Unless otherwise described herein or in a Prospectus Supplement relating to
any Offered Debt Securities, the Indentures contain the following covenants,
among others:
Limitation on Liens. The Senior Indenture provides that the Company
will not, and will not permit any of its Subsidiaries to, create, incur or
otherwise cause or suffer to exist or become
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<PAGE> 14
effective any Liens of any kind upon any of the Property of such Person or
any shares of stock or debt of any Subsidiary (whether such Property,
shares of stock or debt are now owned or hereafter acquired), unless all
payments due under the Senior Indenture and the Senior Debt Securities are
secured on an equal and ratable basis with the obligation so secured until
such time as such obligation is no longer secured by a Lien, except for
Permitted Liens.
Notwithstanding the foregoing, the Company or any Subsidiary may
create, incur, suffer or permit to exist Liens which would otherwise be
subject to the restrictions set forth in the preceding paragraph, if after
giving effect thereto and at the time of determination, Exempted Debt does
not exceed 10% of Consolidated Net Assets.
Limitations on Sale and Lease-Back Transactions. The Indentures
provide that the Company will not, nor will it permit any of its
Subsidiaries to, sell or transfer any Property, whether now owned or
hereafter acquired, and thereafter rent or lease such Property or other
Property which the Company or any of its Subsidiaries intends to use for
substantially the same purpose or purposes as the Property being sold or
transferred, except for such transactions occurring after the Issue Date
(i) with respect to Properties first acquired by the Company or any of its
Subsidiaries after such dates with the intent at the time of such
acquisition that such Properties be the subjects of such transactions, and
such transactions are actually consummated within 60 days after the initial
acquisition of such Properties, so long as the Asset Value of such
Properties do not exceed $25,000,000 in the aggregate, and (ii) with
respect to all other Properties in all such other transactions, so long as
the Asset Value of such other Properties do not exceed $5,000,000 in the
aggregate.
Limitation on Guarantees by Subsidiaries. The Indentures provide that
the Company will not permit any Subsidiary, directly or indirectly, to
assume, guarantee or in any manner become liable with respect to any
Indebtedness of the Company or any Guarantor unless such Subsidiary is a
Guarantor or simultaneously executes and delivers a supplemental indenture
to the Indentures providing for the guarantee of payment of the Debt
Securities by such Subsidiary on the terms of the Guarantees.
If the Company or any of its Subsidiaries acquire or form a Material
U.S. Subsidiary, the Company will cause any such Subsidiary to (i) execute
and deliver to the Trustee a supplemental indenture in form and substance
reasonably satisfactory to such Trustee pursuant to which such Subsidiary
shall guarantee all of the obligations of the Company with respect to the
Notes issued under such Indenture on a senior basis and (ii) deliver to
such Trustee an opinion of counsel reasonably satisfactory to such Trustee
to the effect that a supplemental indenture has been duly executed and
delivered by such Subsidiary and such Subsidiary is in compliance with the
terms of the Indenture.
Notwithstanding the foregoing, upon any sale or disposition (by merger
or otherwise) of any Guarantor by the Company or a Subsidiary of the
Company to any Person that is not an Affiliate of the Company or any of its
Subsidiaries, such Guarantor will be deemed to be released from all
obligations under its Guarantee; provided, however, that each such
Guarantor is sold or disposed of in a transaction that does not violate the
Indentures.
MERGER, CONSOLIDATION OR SALE OF ASSETS
The Indentures provide that the Company will not consolidate or merge with
or into, or sell, lease, convey or otherwise dispose of all or substantially all
of its assets, or assign any of its obligations under the Debt Securities or
applicable Indenture, and the Company will not permit any of its Subsidiaries to
enter into any such transaction or series of transactions if such transaction or
series of transactions, in the aggregate, would dispose of all or substantially
all of the assets of the Company or the Company and its Subsidiaries, taken as a
whole, unless (i) the entity formed by or surviving any such consolidation or
merger (if other than the Company), or to which such sale, lease, conveyance or
other disposition shall have been made (the "Surviving Entity"), is a
corporation organized and existing under the laws of the United States, any
state thereof, or the District of Columbia; (ii) the Surviving Entity assumes by
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<PAGE> 15
supplemental indenture all of the obligations of the Company under the Debt
Securities and the applicable Indenture; and (iii) immediately after giving
effect to such transaction, no Default or Event of Default shall have occurred
and be continuing. With respect to the sale of assets, the phrase "all or
substantially all" as used in the Indentures varies according to the facts and
circumstances of the subject transaction, has no clearly established meaning
under applicable law and is subject to judicial interpretation. Accordingly, in
certain circumstances there may be a degree of uncertainty in ascertaining
whether a particular transaction would involve a disposition of "all or
substantially all" of the assets of a person, and therefore it may be unclear as
to whether a disposition of assets comes within the terms of this provision.
CONVERSION
The Indentures contain certain general provisions regarding the possible
conversion of Debt Securities into Common Stock (or cash in lieu thereof). The
specific terms applicable to any series of Convertible Debt Securities that is
then being offered, including the initial conversion price or conversion rate,
any adjustments to such conversion price or conversion rate and the conversion
period, as well as the conditions upon which such conversion will be effected,
will be set forth in the Prospectus Supplement relating thereto.
EVENTS OF DEFAULT AND REMEDIES
An Event of Default with respect to the Debt Securities of any series is
defined in each Indenture as: (i) default in the payment of any installment of
interest on or any Additional Amounts payable in respect of any of the Debt
Securities of such series as and when the same shall become due and payable, and
continuance of such default for a period of 30 days; (ii) default in the payment
of all or any part of the principal of any of the Debt Securities of such series
as and when the same shall become due and payable either at maturity, upon any
redemption, or otherwise; (iii) the failure by the Company to perform or observe
any of its other covenants, conditions or agreements contained in the Debt
Securities of such series or set forth in the applicable Indenture and
continuance of such failure for a period of 30 days after due notice by the
applicable Trustee or by the holders of at least 25% in principal amount of the
Debt Securities of that series then outstanding; (iv) default in the payment of
any scheduled payment of principal of or interest on any Indebtedness of the
Company or any Subsidiary of the Company (other than the Debt Securities of such
series) aggregating more than $25 million in principal amount, when due after
giving effect to any applicable grace period, that results in such Indebtedness
becoming due and payable prior to the date on which it would otherwise become
due and payable, and such acceleration shall not have been rescinded or
annulled, or such Indebtedness shall not have been discharged; or (v) certain
events of bankruptcy, insolvency or reorganization involving the Company or its
Significant Subsidiaries as more fully described in the Indentures. Additional
Events of Default may be added for the benefit of holders of certain series of
Debt Securities which, if added, will be described in the Prospectus Supplement
relating to such Debt Securities. The Indentures provide that the Trustee shall
notify the holders of Debt Securities of each series of any continuing default
known to the Trustee which has occurred with respect to that series within 90
days after the occurrence thereof. The Indentures provide that notwithstanding
the foregoing, except in the case of default in the payment of the principal of,
interest on or any Additional Amounts payable in respect of any of the Debt
Securities of such series the Trustee may withhold such notice if the Trustee in
good faith determines that the withholding of such notice is in the interests of
the holders of Debt Securities of such series.
If an Event of Default of the type described in clause (v) above shall
happen and be continuing, then the principal of (or, with respect to a series of
Original Issue Discount Securities, such portion of the principal amount as may
be specified in the terms of such series), accrued and unpaid interest on, and
any Additional Amounts payable in respect of the Debt Securities will become
immediately due and payable. If one or more Events of Default of the type
described in clauses (i) through (iv) with respect to any series of Debt
Securities at the time outstanding shall happen and be continuing, then either
the Trustee or the holders of not less than 25% of the principal amount of that
series of the Debt Securities
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<PAGE> 16
then outstanding may declare the principal (or, with respect to a series of
Original Issue Discount Securities, such portion of the principal amount as may
be specified in the terms of such series), accrued and unpaid interest on and
any Additional Amounts payable in respect of the Debt Securities of that series
due and payable immediately. This provision is subject to the condition that if,
after any declaration of acceleration and before Stated Maturity of the
principal with respect to the Debt Securities of any series, all arrears of
interest and any Additional Amounts and the expenses of the Trustee, its agents
or attorneys shall be paid by or for the account of the Company, and all
Defaults (other than the payment of principal that has been declared due and
payable) have been cured to the satisfaction of the Trustee, then the Trustee
shall, upon the written request of the holders of a majority in principal amount
of the Debt Securities of the applicable series, waive such Default and rescind
or annul the declaration of acceleration; but no such waiver, rescission or
annulment shall extend to or affect any subsequent Default or impair any right
consequent thereon.
No holder of any Debt Security of any series will have the right to pursue
a remedy under the applicable Indenture or the Debt Securities, unless (i) such
holder gives the Trustee notice of a continuing Default with respect to the Debt
Securities of that series, (ii) the holders of at least a majority of the Debt
Securities of the applicable series make a request to the Trustee to pursue the
remedy, (iii) such holder or holders offered the Trustee security or indemnity
satisfactory to the Trustee against any loss, liability or expense and (iv) the
Trustee does not comply with the request within 10 days after the receipt of the
request and the offer of security or indemnity. However, nothing contained in
the Indentures shall affect or impair the right of any holder of Debt Securities
to institute suit to enforce payment of the principal of, interest on and any
Additional Amounts payable in respect of such holder's Debt Securities on or
after the due dates expressed in such Debt Securities.
The Company must furnish to the Trustee a statement, detailing any Defaults
of which it is aware, within five days of becoming aware of the occurrence of
any Default.
REPORTS
The Indentures provide that the Company will file with the Trustee copies
of the annual reports and other information, documents and reports that the
Company is required to file with the Commission pursuant to the Exchange Act. If
the Company is not required to file such reports and other information, the
Indentures provide that the Company shall file with the Trustee and cause to be
mailed to the holders of Debt Securities (i) annual reports containing the
information required to be contained in an annual report on Form 10-K, (ii)
quarterly reports containing the information required to be contained in a
quarterly report on Form 10-Q and (iii) promptly after the occurrence of an
event required to be therein reported, such other reports containing information
required to be contained in a current report on Form 8-K. The Company shall also
comply with the requirements of the Trust Indenture Act of 1939, as amended.
DISCHARGE
Each Indenture provides that it will cease to be of further effect (except
that certain obligations will survive) with respect to a series of Debt
Securities when all outstanding Debt Securities of such series authenticated and
issued have been delivered (other than destroyed, lost or stolen Debt Securities
that have been replaced or paid) to the Trustee for cancellation and the Company
has paid all sums payable under such Indenture with respect to such series of
Debt Securities.
MODIFICATION OF THE INDENTURES
Each Indenture contains provisions permitting the Company and the
applicable Trustee, with the consent of the holders of not less than a majority
in principal amount of the Debt Securities of each series at the time
outstanding under such Indenture, to enter into supplemental indentures to amend
any of the provisions of that Indenture or any supplemental indenture with
respect to the Debt Securities of such series; provided that, unless consented
to by each holder of Debt Securities of such series, no such
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<PAGE> 17
supplemental indenture may (i) reduce the amount of Debt Securities whose
holders must consent to an amendment or a waiver; (ii) reduce the rate of or
change the time for payment of interest or Additional Amounts, including default
interest on any Debt Security; (iii) reduce the principal of or change the
Stated Maturity of any Debt Security or alter the provisions with respect to
redemption; (iv) make any Debt Security payable in money other than that stated
in the Debt Security; (v) make any change in the types of amendment that need
the approval of every affected holder of Debt Securities; (vi) with respect to
the Senior Indenture, affect the ranking of the Debt Securities; or (vi) waive a
Default in the payment of principal of, any Additional Amounts payable in
respect of or interest on, or with respect to, any Debt Security.
The applicable Trustee and the Company may enter into supplemental
indentures which amend the applicable Indenture and the Debt Securities with
respect to a particular series without the consent of any holder of Debt
Securities in order to: (i) cure any ambiguity, omission, defect or
inconsistency; (ii) comply with such Indenture concerning the substitution of
successor corporations pursuant to a merger or consolidation or to add any
additional material U.S. subsidiaries as guarantors; (iii) comply with any
requirements of the Commission in connection with the qualification of such
Indenture under the Trust Indenture Act; (iv) provide for uncertificated
securities; (v) make any change that does not materially adversely affect the
legal rights of any holder of Debt Securities under the applicable Indenture as
then in effect; (vi) secure the Debt Securities and make intercreditor
arrangements with respect to any such Debt Securities (unless prohibited by such
Indenture); (vii) provide for a replacement Trustee; or (viii) add to the
covenants and agreements of the Company for the benefit of all the holders of
all of the Debt Securities with respect to a series or surrender any right or
power reserved for the Company in such Indenture.
DEFEASANCE AND COVENANT DEFEASANCE
Each Indenture provides that the Company may elect either (i) to terminate
(and be deemed to have satisfied) all its obligations with respect to the Debt
Securities outstanding under such Indenture (except for the obligations to
register the transfer or exchange of such Debt Securities, to replace mutilated,
destroyed, lost or stolen Debt Securities, to maintain an office or agency in
respect of the Debt Securities, to compensate and indemnify the applicable
Trustee and to punctually pay or cause to be paid the principal of, interest on
and any Additional Amounts payable in respect of all Debt Securities of such
series when due) ("defeasance") or (ii) to be released from its obligations with
respect to certain covenants ("covenant defeasance"), in either case upon the
deposit with the Trustee, in trust for such purpose, of money (and/or U.S.
Government Obligations (as defined in the Indentures) which through the payment
of principal and interest in accordance with their terms will provide money in
an amount sufficient (in the opinion of a nationally recognized firm of
independent public accountants) to pay the principal of, interest on and any
Additional Amounts payable in respect of the outstanding Debt Securities of such
series, and any mandatory sinking fund or analogous payments thereon, on the
scheduled due dates therefor. Such a trust may be established only if, among
other things, the Company has delivered to the Trustee an opinion of counsel (as
specified in such Indenture) with regard to certain matters, including a ruling
from the Internal Revenue Service or an opinion to the effect that the holders
of such Debt Securities will not recognize income, gain or loss for income tax
purposes as a result of such deposit and discharge and will be subject to income
tax on the same amounts and in the same manner and at the same times as would
have been the case if such deposit and defeasance or covenant defeasance, as the
case may be, had not occurred. The applicable Prospectus Supplement may further
describe these or other provisions, if any, permitting defeasance or covenant
defeasance with respect to the Debt Securities of any series.
THE GUARANTEES
Under the Indentures, each of the Guarantors will unconditionally guarantee
on a joint and several basis all of the Company's obligations under the Debt
Securities, including its obligations to pay principal, premium, if any, and
interest with respect to the Debt Securities. Further, each Material U.S.
Subsidiary of
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the Company will be a Guarantor until the Guarantor is sold or disposed of in a
transaction that does not violate the Indenture. See "-- Merger, Consolidation
or Sale of Assets".
THE TRUSTEE
The Senior Trustee also serves as trustee under the indenture covering the
Company's 9 1/2% Senior Subordinated Notes due 2005. Prior to the issuance of
any Subordinated Debt Securities under the Subordinated Indenture, the Company
will engage a qualified trustee to serve as Trustee under the Subordinated
Indenture. Any such Trustee will be an "eligible trustee" under the Trust
Indenture Act of 1939, as amended.
The Indentures provide that, except during the continuance of an Event of
Default, the Trustee thereunder will perform only such duties as are
specifically set forth in the Indentures. If an Event of Default has occurred
and is continuing, the Trustee will exercise such rights and powers vested in it
under the Indenture and use the same degree of care and skill in its exercise as
a prudent person would exercise under the circumstances in the conduct of such
person's own affairs.
PROVISIONS APPLICABLE SOLELY TO SUBORDINATED DEBT SECURITIES
Subordination. The Subordinated Debt Securities will be subordinate and
junior in right of payment, to the extent set forth in the Subordinated
Indenture, to all Senior Indebtedness (as defined below) of the Company. If the
Company should default in the payment of any principal of, interest on or any
Additional Amounts payable in respect of any Senior Indebtedness when the same
becomes due and payable, whether at maturity or at a date fixed for prepayment
or by declaration or otherwise, then, upon written notice of such default to the
Company by the holders of such Senior Indebtedness or any trustee therefor and
subject to certain rights of the Company to dispute such default and subject to
proper notification of the Trustee, unless and until such default shall have
been cured or waived or shall have ceased to exist, no direct or indirect
payment (in cash, property, securities, by set-off or otherwise) will be made or
agreed to be made for principal of, interest on or any Additional Amounts
payable in respect of the Subordinated Debt Securities, or in respect of any
redemption, retirement, purchase or other acquisition of the Subordinated Debt
Securities, other than those made in capital stock of the Company (or cash in
lieu of fractional shares thereof) pursuant to any conversion right of the
Subordinated Debt Securities or otherwise.
The term "Senior Indebtedness" is defined to mean Indebtedness (including
the Senior Debt Securities) of the Company outstanding at any time except (a)
any Indebtedness as to which, by the terms of the instrument creating or
evidencing the same, it is provided that such Indebtedness is not senior in
right of payment to the Subordinated Debt Securities, (b) the Subordinated Debt
Securities, (c) any Indebtedness of the Company to a wholly-owned Subsidiary of
the Company, (d) interest accruing after the filing of a petition initiating
certain events of bankruptcy or insolvency unless such interest is an allowed
claim enforceable against the Company in a proceeding under federal or state
bankruptcy laws and (e) trade payables.
If (i) without the consent of the Company, a court shall enter an order for
relief with respect to the Company under the United States federal bankruptcy
laws or a judgment, order or decree adjudging the Company a bankrupt or
insolvent, or enter an order for relief for reorganization, arrangement,
adjustment or composition of or in respect of the Company under the United
States federal or state bankruptcy or insolvency laws or (ii) the Company shall
institute proceedings for the entry of an order for relief with respect to the
Company under the United States federal bankruptcy laws or for an adjudication
of insolvency, or shall consent to the institution of bankruptcy or insolvency
proceedings against it, or shall file a petition seeking, or seek or consent to
reorganization, arrangement, composition or similar relief under any applicable
law, or shall consent to the filing of such petition or to the appointment of a
receiver, custodian, liquidator, assignee, trustee, sequestrator or similar
official in respect of the Company or of substantially all of its property, or
the Company shall make a general assignment for the benefit of
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creditors, then all Senior Indebtedness (including any interest thereon accruing
after the commencement of any such proceedings and any Additional Amounts
payable in respect thereof) will first be paid in full before any payment or
distribution, whether in cash, securities or other property, is made on account
of the principal of, interest on or any Additional Amounts payable in respect of
the Subordinated Debt Securities. In such event, any payment or distribution on
account of the principal of, interest on or any Additional Amounts payable in
respect of Subordinated Debt Securities, whether in cash, securities or other
property (other than securities of the Company or any other corporation provided
for by a plan of reorganization or readjustment, the payment of which is
subordinate, at least to the extent provided in the subordination provisions
with respect to the Subordinated Debt Securities, to the payment of all Senior
Indebtedness then outstanding and to any securities issued in respect thereof
under any such plan of reorganization or readjustment), which would otherwise
(but for the subordination provisions) be payable or deliverable in respect of
the Subordinated Debt Securities will be paid or delivered directly to the
holders of Senior Indebtedness in accordance with the priorities then existing
among such holders until all Senior Indebtedness (including any interest thereon
accruing after the commencement of any such proceedings and any Additional
Amounts payable in respect thereof) has been paid in full. If any payment or
distribution on account of the principal of, interest on or any Additional
Amounts payable in respect of the Subordinated Debt Securities of any character,
whether in cash, securities or other property (other than securities of the
Company or any other corporation provided for by a plan of reorganization or
readjustment, the payment of which is subordinate, at least to the extent
provided in the subordination provisions with respect to the Subordinated Debt
Securities, to the payment of all Senior Indebtedness then outstanding and to
any securities issued in respect thereof under any such plan of reorganization
or readjustment), shall be received by any holder of any Subordinated Debt
Securities in contravention of any of the terms of the Subordinated Indenture
and before all the Senior Indebtedness shall have been paid in full, such
payment or distribution of securities will be received in trust for the benefit
of, and will be paid over or delivered and transferred to, the holders of the
Senior Indebtedness then outstanding in accordance with the priorities then
existing among such holders for application to the payment of all Senior
Indebtedness remaining unpaid to the extent necessary to pay all such Senior
Indebtedness remaining unpaid to the extent necessary to pay all such Senior
Indebtedness in full. In the event of any such proceeding, after payment in full
of all sums owing with respect to Senior Indebtedness, the holders of
Subordinated Debt Securities, together with the holders of any obligations of
the Company ranking on a parity with the Subordinated Debt Securities, will be
entitled to be repaid from the remaining assets of the Company the amounts at
that time due and owing on account of unpaid principal of, interest on and any
Additional Amounts payable in respect of the Subordinated Debt Securities and
such other obligations before any payment or other distribution, whether in
cash, property or otherwise, shall be made on account of any capital stock or
obligations of the Company ranking junior to the Subordinated Debt Securities
and such other obligations.
By reason of such subordination, in the event of the insolvency of the
Company, holders of Senior Indebtedness may receive more, ratably, than holders
of the Subordinated Debt Securities. In addition, other creditors of the Company
who are not holders of Subordinated Debt Securities or holders of Senior
Indebtedness may recover less, ratably, than holders of Senior Indebtedness and
may recover more, ratably, than holders of Subordinated Debt Securities. Such
subordination will not prevent the occurrence of an Event of Default or limit
the right of acceleration in respect of the Subordinated Debt Securities.
CERTAIN DEFINITIONS
"Affiliate" of any specified Person shall mean 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," (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as applied to any specified
Person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of that Person, whether
through the ownership of voting Debt Securities or by contract or otherwise. The
Trustee may request and conclusively rely on an Officers' Certificate to
determine whether any Person is an Affiliate of the Company.
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"Asset Value" means, with respect to any property or asset of the Company
or any of its Subsidiaries, an amount equal to the greater of (i) the book value
of such property or asset as established in accordance with GAAP or (ii) the
fair market value of such property or asset as determined in good faith by the
board of directors (or equivalent governing body in the case of any foreign
Subsidiary) of such Person.
"Attributable Liens" means in connection with a sale and lease-back
transaction, the lesser of (a) the fair market value of the assets subject to
such transaction and (b) the present value (discounted at a rate per annum equal
to the average interest borne by all outstanding Securities issued under the
Indenture (which may include securities in addition to the Senior Debt
Securities) determined on a weighted average basis and compounded semiannually)
of the obligations of the lessee for rental payments during the term of the
related lease.
"Bank Receivables Agreement" means the Receivables Sale Agreement dated as
of December 27, 1996 (the "1996 Bank Receivables Agreement"), among Interface
Securitization Corporation, the Company, certain financial institutions parties
thereto, and Canadian Imperial Bank of Commerce, as Administrative Agent, as
such agreement, in whole or in part, may from time to time be amended, renewed,
extended, substituted, refinanced, restructured, replaced, supplemented or
otherwise modified, whether with the same or any other Person(s) as
purchaser(s), lender(s) or agent(s) (including, without limitation, any
successive renewals, extensions, substitutions, refinancings, restructurings,
replacements, supplements or other modifications of the foregoing, whether with
the same or any other Person), provided that the sales of receivables pursuant
to any such Bank Receivables Agreement are on non-recourse terms not materially
less favorable to the Company and its Subsidiaries as provided for in the 1996
Bank Receivables Agreement and that the aggregate amount of sales under such
Bank Receivables Agreement and the Receivables Sales Agreement at any one time
outstanding shall not exceed a total of $100,000,000.
"Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions and trust companies in
the City of New York, State of New York, or Atlanta, Georgia are authorized or
obligated by law, regulation or executive order to close.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations, rights in or other equivalents (however designated)
of such Person's capital stock, and rights (other than Debt Securities
convertible into capital stock), warrants or options exchangeable for or
convertible into such capital stock.
"Capitalized Lease Obligation" shall mean any obligation under a lease of
(or other agreement conveying the right to use) any property (whether real,
personal or mixed) that is required to be classified and accounted for as a
capital lease obligation under GAAP, and the amount of any such obligation at
any date shall be the capitalized amount thereof at such date, determined in
accordance with GAAP.
"Common Stock" means, with respect to any Person, any and all shares,
interests or other participations in, and other equivalents (however designated
and whether voting or nonvoting) of, such Person's common stock, whether
outstanding at the Issue Date or issued after the Issue Date, and includes,
without limitation, all series and classes of such common stock.
"Consolidated Net Assets" means as of any particular time the aggregate
amount of assets after deducting therefrom all current liabilities except for
(a) notes and loans payable, (b) current maturities of long-term debt and (c)
current maturities of obligations under capital leases, all as set forth on the
most recent consolidated balance sheet of the Company and its consolidated
Subsidiaries and computed in accordance with GAAP.
"Consolidated Net Worth" shall mean, with respect to any Person at any
date, the consolidated stockholders' equity of such Person and its Subsidiaries,
as determined from time to time in accordance with GAAP.
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"Credit Agreements" means, collectively, (i) the Second Amended and
Restated Credit Agreement dated as of June 25, 1997, among the Company, certain
Subsidiaries of the Company, the banks and other lending institutions parties
thereto, SunTrust Bank, Atlanta, as Co-Agent and Collateral Agent, and The First
National Bank of Chicago, as Co-Agent, (ii) the Amended and Restated Letter of
Credit Agreement dated as of June 25, 1997, among the Company, certain
Subsidiaries of the Company, the banks and other lending institutions parties
thereto, and SunTrust Bank, Atlanta, as Domestic Agent and Collateral Agent and
(iii) the Term Loan Agreement, dated as of June 25, 1997, among the Company, the
banks and other lending institutions parties thereto, SunTrust Bank, Atlanta, as
Administrative Agent and Collateral Agent, and the First National Bank of
Chicago, as Syndication Agent, in each case as such agreement, in whole or in
part, may from time to time be amended, renewed, extended, substituted,
refinanced, restructured, replaced, supplemented or otherwise modified
(including, without limitation, any successive renewals, extensions,
substitutions, refinancings, restructurings, replacements, supplementations or
other modifications of the foregoing), and whether with the present lenders of
any other lenders.
"Currency Agreement" shall mean, with respect to any Person, any foreign
exchange contract, currency swap agreement or other similar agreement or
arrangement designed to protect such Person or any of its Subsidiaries against
fluctuations in currency values.
"Default" shall mean any event that is, or after notice or passage of time
or both would be, an Event of Default.
"Exempted Debt" means the sum of the following as of the date of
determination: (i) Indebtedness of the Company and any of its Subsidiaries
secured by Liens not otherwise permitted under the definition of "Permitted
Liens" below and (ii) Attributable Liens of the Company and its Subsidiaries in
respect of sale and lease-back transactions entered into after the Issue Date.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"GAAP" shall mean generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, consistently applied, that are applicable to the circumstances as of
the date of determination.
"Guarantee" shall mean each guarantee of the Debt Securities by each
Guarantor created pursuant to the Indentures.
"guarantee" means, as applied to any obligation, (i) a guarantee (other
than by endorsement of negotiable instruments for collection in the ordinary
course of business), direct or indirect, in any manner, of any part or all of
such obligation and (ii) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, the
payment of amounts drawn down by letters of credit.
"Guarantor" means each of Interface Interior Fabrics, Inc. (formerly
Guilford of Maine, Inc.), a Delaware corporation, Guilford (Delaware), Inc., a
Delaware corporation, Interface Flooring Systems, Inc., a Georgia corporation,
Interface Europe, Inc., a Delaware corporation, Interface Asia-Pacific, Inc., a
Georgia corporation, Bentley Mills, Inc., a Delaware corporation, Prince Street
Technologies, Ltd., a Georgia corporation, Intek, Inc., a Georgia corporation,
Toltec Fabrics, Inc., a Georgia corporation, Interface Architectural Resources,
Inc. (formerly C-Tec, Inc.), a Michigan corporation, Flooring Consultants, Inc.,
an Arizona corporation, Lasher/White Carpet Company, Inc., a New York
corporation, B. Shehadi & Sons, Inc., a New Jersey corporation, Guilford of
Maine, Inc., a Nevada corporation, Guilford of Maine Finishing Services, Inc., a
Nevada corporation, Guilford of Maine Decorative Fabrics, Inc., a Nevada
corporation, Guilford of Maine Marketing Co., a Nevada corporation, Intek
Marketing Co., a Nevada corporation, Interface Holding Company, a Nevada
corporation, Interface Americas, Inc., a Georgia corporation, Interface Americas
Services, Inc., a Georgia corporation, Interface Specialty Resources, Inc.,
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a Nevada corporation, Re:Source Americas Enterprises, Inc., a Georgia
corporation, Interface Royalty Company, a Nevada corporation, Interface
Licensing Company, a Nevada corporation, Prince Street Royalty Company, a Nevada
corporation, Bentley Royalty Company, a Nevada corporation, Superior/Reiser
Flooring Resources, Inc., a Texas corporation, Quaker City International, Inc.,
a Pennsylvania corporation, Commercial Flooring Systems, Inc., a Pennsylvania
corporation, Congress Flooring Corp., a Massachusetts corporation, and each
other Material U.S. Subsidiary and shall include any successor replacing such
Person pursuant to the terms of the Indentures, and thereafter means such
successor.
"Guilford Equipment Lease" means the Master Equipment Lease Agreement dated
as of June 30, 1995, between Fleet Credit Corporation and Guilford of Maine,
Inc., relating to the leasing of various textile manufacturing equipment in
aggregate amount (acquisition costs) of not more than $19,000,000, as such
agreement, in whole or in part, may from time to time be amended, renewed,
extended, substituted, refinanced, restructured, replaced, supplemented or
otherwise modified, whether with the same or any other Person(s) as lessor(s) or
lender(s) (including, without limitation, any successive renewals, extensions,
substitutions, refinancings, restructurings, replacements, supplements or other
modifications of the foregoing).
"Indebtedness" shall mean, with respect to any Person, without duplication,
(a) all liabilities of such Person for borrowed money or for the deferred
purchase price of property or services, excluding any trade payables and other
accrued current liabilities incurred in the ordinary course of business and
which are not overdue by more than 90 days, but including, without limitation,
all obligations, contingent or otherwise, of such Person in connection with any
letters of credit, banker's acceptance or other similar credit transaction; (b)
all obligations of such Person evidenced by bonds, notes, debentures or other
similar instruments; (c) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even if the rights and remedies of the seller or lender
under such agreement in the event of default are limited to repossession or sale
of such property), but excluding trade accounts payable arising in the ordinary
course of business; (d) all obligations of such Person arising under Capitalized
Lease Obligations; (e) all Indebtedness referred to in the preceding clauses of
other Persons and all dividends of other Persons, the payment of which is
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon property (including,
without limitation, accounts and contract rights) owned by such Person, even
though such Person has not assumed or become liable for the payment of such
Indebtedness (the amount of such obligation being deemed to be the lesser of the
value of such property or asset or the amount of the obligation so secured); (f)
all guarantees of Indebtedness referred to in this definition by such Person;
(g) all Redeemable Capital Stock of such Person valued at the greater of its
voluntary or involuntary maximum fixed repurchase price plus accrued dividends;
(h) all obligations under or in respect of Currency Agreements and Interest Rate
Protection Obligations of such Person; and (i) any amendment, supplement,
modification, deferral, renewal, extension or refunding of any liability of the
types referred to in clauses (a) through (h) above. For purposes hereof, the
"maximum fixed repurchase price" of any Redeemable Capital Stock which does not
have a fixed repurchase price shall be calculated in accordance with the terms
of such Redeemable Capital Stock as if such Redeemable Capital Stock were
purchased on any date on which Indebtedness shall be required to be determined
pursuant to the Indentures, and if such price is based upon, or measured by, the
fair market value of such Redeemable Capital Stock, such fair market value shall
be determined in good faith by the board of directors of the issuer of such
Redeemable Capital Stock.
"Interest Rate Protection Agreement" means, with respect to the Company or
any of its Subsidiaries, any arrangement with any other Person whereby, directly
or indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such Person
calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include without limitation, interest rate swaps, caps,
floors, collars and similar agreements.
"Interest Rate Protection Obligations" mean the obligations of any Person
pursuant to an Interest Rate Protection Agreement.
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"Issue Date" means the first date on which a Debt Security is authenticated
by the Trustee.
"Lien" shall mean any mortgage, pledge, security interest, lien, charge,
hypothecation, assignment, deposit arrangement, title retention, preferential
right, trust or other arrangement having the practical effect of the foregoing
and shall include the interest of a vendor or lessor under any conditional sale
agreement, capitalized lease or other title retention agreement.
"Material Subsidiary" means each Subsidiary, now existing or hereinafter
established or acquired, that has or acquires total assets in excess of
$10,000,000, or that holds any fixed assets material to the operations or
business of another Material Subsidiary.
"Material U.S. Subsidiary" means each Material Subsidiary that is
incorporated in the United States or any State thereof.
"Permitted Liens" shall mean, with respect to any Person:
(a) Liens existing on the date the Indentures are executed;
(b) Liens for taxes, assessments or governmental charges or claims
either (a) not delinquent or (b) contested in good faith by appropriate
proceedings and as to which the Company or any of its Subsidiaries shall
have set aside on its books such reserves as may be required pursuant to
GAAP;
(c) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen and other Liens imposed by law
incurred in the ordinary course of business for sums not yet delinquent or
being contested in good faith, if such reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made in
respect thereof;
(d) Liens incurred or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance or other
types of social security, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money);
(e) judgment Liens not giving rise to an Event of Default so long as
such Lien is adequately bonded and any appropriate legal proceedings which
may have been duly initiated for the review of such judgment shall not have
been finally terminated or the period within which such proceedings may be
initiated shall not have expired;
(f) easements, rights-of-way, zoning restrictions and other similar
charges or encumbrances in respect of real Property not interfering in any
material respect with the ordinary conduct of the business of the Company
or any of its Subsidiaries;
(g) any interest or title of a lessor under any Capitalized Lease
Obligation or operating lease;
(h) purchase money Liens to finance the acquisition or construction of
Property or assets of the Company or any Subsidiary of the Company acquired
or constructed in the ordinary course of business; provided, however, that
(i) the related purchase money Indebtedness shall not be secured by any
Property or assets of the Company or any Subsidiary of the Company other
than the Property and assets so acquired or constructed and (ii) the Lien
securing such Indebtedness either (x) exists at the time of such
acquisition or construction or (y) shall be created within 90 days of such
acquisition or construction;
(i) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
(j) Liens on any Property securing the obligations of the Company or
any Subsidiaries in respect of letters of credit issued by the lenders
under the Credit Agreements and as permitted under the Credit Agreements in
support of industrial development revenue bonds;
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(k) Liens, if any, that may be deemed to have been granted in
connection with accounts receivable or interests in accounts receivable of
the Company or any Subsidiary as a result of the assignment thereof
pursuant to the Receivables Purchase Agreement or the Bank Receivables
Agreement;
(l) Liens, if any, arising under the Guilford Equipment Lease; and
(m) Liens on Property included in the IRB Collateral as may be
approved by the Collateral Agent pursuant to the terms of the Amended and
Restated Letter of Credit Agreement, dated as of June 25, 1997 referred to
in clause (ii) of the definition of "Credit Agreements" above (if not
defined in this Prospectus, all terms used in this paragraph (m) are
defined in such Letter of Credit Agreement).
"Person" shall mean any individual, corporation, partnership, limited
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof, or any other entity.
"Property" of any Person means all types of real, personal, tangible,
intangible or mixed property owned by such Person whether or not included in the
most recent consolidated financial statements of the Company and its
Subsidiaries under GAAP.
"Receivables Sale Agreement" means the Receivables Sale Agreement dated as
of August 4, 1995 (the "1995 Receivables Sale Agreement") among the Company,
Interface Securitization Corporation, Special Purpose Accounts Receivables
Cooperative Corporation, and Canadian Imperial Bank of Commerce as servicing
agent, as such agreement, in whole or in part, may from time to time be amended,
renewed, extended, substituted, refinanced, restructured, replaced, supplemented
or otherwise modified, whether with the same or any other Person(s) as
purchaser(s), lender(s) or agent(s) (including, without limitation, any
successive renewals, extensions, substitutions, refinancings, restructurings,
replacements, supplements or other modifications of the foregoing) provided that
the sales of receivables pursuant to any such Receivables Sale Agreement are on
non-recourse terms not materially less favorable to the Company and its
Subsidiaries as provided for in the 1995 Receivables Sale Purchase Agreement and
that the aggregate amount of sales under such Receivables Sale Agreement and the
Bank Receivables Agreement at any one time outstanding shall not exceed a total
of $100,000,000.
"Redeemable Capital Stock" means any shares of any class or series of
Capital Stock that, either by the terms thereof, by the terms of any security
into which it is convertible or exchangeable or by contract or otherwise, is or
upon the happening of an event or passage of time would be, required to be
redeemed prior to the Stated Maturity with respect to the principal of any
Security or is redeemable at the option of the holder thereof at any time prior
to any such Stated Maturity, or is convertible into or exchangeable for debt
securities at any time prior to any such Stated Maturity.
"Significant Subsidiary" shall have the same meaning as in Rule 1.02(v) of
Regulation S-X under the Securities Act.
"Stated Maturity," when used with respect to any Security or any
installment of interest thereon, shall mean the date specified in such Security
as the fixed date on which the principal of such Security or such installment of
interest is due and payable.
"Subsidiary" of any Person shall mean any Person, any corporation or other
entity (including, without limitation, partnerships, joint ventures and
associations) regardless of its jurisdiction of organization or formation, at
least a majority of the total combined voting power of all classes of voting
stock or other ownership interests of which shall, at the time as of which any
determination is being made, be owned by such Person, either directly or
indirectly through one or more other Subsidiaries.
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DESCRIPTION OF CAPITAL STOCK
The Company is authorized by its Articles of Incorporation, as amended (the
"Articles of Incorporation"), to issue 40,000,000 shares of Class A Common
Stock, par value $.10 per share (the "Class A Common Stock"); 40,000,000 shares
of Class B Common Stock, par value $.10 per share (the "Class B Common Stock");
and 5,000,000 shares of Preferred Stock, par value $1.00 per share (the
"Preferred Stock"). On December 28, 1997, the Company had issued and outstanding
21,385,825 shares of Class A Common Stock, 2,769,470 shares of Class B Common
Stock and no shares of Preferred Stock. The Board of Directors has approved an
amendment to the Articles of Incorporation which would increase the authorized
shares of Class A Common Stock to 80,000,000 shares, and recommended the
amendment to the shareholders of the Company for approval at the annual meeting
of shareholders to be held May 19, 1998.
Shareholders' rights and related matters are governed by the Georgia
Business Corporation Code, the Company's Articles of Incorporation, and its
Bylaws, as amended (the "Bylaws"). Certain provisions of the Articles of
Incorporation and Bylaws of the Company are summarized below and could have the
effect of preventing a change in control of the Company. The cumulative effect
of these provisions could make it more difficult for any person or entity to
acquire or exercise control of the Company and to effect changes in management.
The following summary is qualified in its entirety by reference to the Company's
Articles of Incorporation and Bylaws.
CLASS A AND CLASS B COMMON STOCK
Voting. The Class A Common Stock and Class B Common Stock have one vote
per share on all matters submitted to the Company's shareholders. The holders of
the Class B Common Stock have the right to elect the smallest number of
directors that constitutes a majority of the entire Board of Directors; the
holders of the Class A Common Stock elect the remaining directors. The holders
of shares of both classes vote together as a class on all other matters
submitted to the shareholders for a vote, except as otherwise required by law.
The directors elected by the holders of Class A Common Stock may be removed only
by the holders of Class A Common Stock and the directors elected by the holders
of the Class B Common Stock may be removed only by the holders of Class B Common
Stock.
Conversion. Shares of Class B Common Stock are convertible on a
one-for-one basis into Class A Common Stock at any time at the option of the
holder, and at other times upon the transfer of Class B shares to an ineligible
shareholder. If the outstanding shares of Class B Common Stock fall below 10% of
the aggregate outstanding shares of Class A and Class B Common Stock, then,
immediately upon the occurrence of such event, all the outstanding Class B
Common Stock will be automatically converted into Class A Common Stock, on a
share-for-share basis.
Dividends. Holders of Class A Common Stock are entitled to receive cash
dividends on at least an equal per share basis as holders of Class B Common
Stock if and when such dividends are declared by the Board of Directors of the
Company from funds legally available therefor. In the case of any dividend paid
in stock, holders of Class A Common Stock are entitled to receive the same
percentage dividend (payable in shares of Class A Common Stock) as the holders
of Class B Common Stock receive (payable in shares of Class B Common Stock).
Liquidation. Holders of Class A and Class B Common Stock share with each
other on a ratable basis as a single class in the net assets of the Company
available for distribution in respect of Class A and Class B Common Stock in the
event of liquidation.
Other Terms. The holders of the Class A Common Stock and Class B Common
Stock do not have preemptive rights enabling them to subscribe for or receive
shares of any class of stock of the Company or any other securities convertible
into shares of any class of stock of the Company. Except as otherwise summarized
above, the holders of shares of both classes of Common Stock, as such, have the
same rights and are subject to the same limitations.
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CLASS B STOCK VOTING AGREEMENT
Certain holders of Class B Common Stock of the Company have entered into a
voting agreement (the "Voting Agreement") providing for certain of their Class B
shares to be voted as a block in the manner determined by the record owners of a
majority of the shares subject to the Voting Agreement. The Voting Agreement
expires on April 13, 1998. The shares of Class B Common Stock subject to the
Voting Agreement exceed a majority of the outstanding shares of Class B Common
Stock. Ray C. Anderson owns a majority of the shares subject to the Voting
Agreement, and thus can direct the voting of the entire block. (The Voting
Agreement also gives Mr. Anderson the right of first refusal to purchase any
shares subject to the Voting Agreement that are proposed to be sold in the
public market or in a private transaction.) Under the terms of the Class B
Common Stock, its special voting rights to elect a majority of the Board members
would terminate irrevocably if the total outstanding shares of Class B Common
Stock ever comprises less than ten percent (10%) of the Company's total issued
and outstanding shares of Class A and Class B Common Stock. On December 28,
1997, the outstanding Class B shares constituted approximately 11.5% of the
total outstanding shares of Class A and Class B Common Stock.
PREFERRED STOCK
General. Under the Articles of Incorporation, the Company's Board of
Directors is authorized to create and issue up to 5,000,000 shares of Preferred
Stock in one or more series and to determine the rights and preferences of each
series, to the extent permitted by the Articles of Incorporation. As of the date
of this Prospectus, no shares of Preferred Stock are outstanding.
Reference is made to the applicable Prospectus Supplement relating to the
series of any shares of Preferred Stock offered thereby and to the applicable
amendment to the Articles of Incorporation establishing such series of Preferred
Stock for specific terms, including: (i) the title and stated value of such
Preferred Stock; (ii) the number of shares of such Preferred Stock offered, the
liquidation preference per share and the initial offering price of such
Preferred Stock; (iii) the dividend rate(s), period(s) and/or payment date(s) or
method(s) of calculation thereof applicable to such Preferred Stock; (iv) the
date from which dividends on such Preferred Stock shall accumulate, if
applicable; (v) the procedures for any auction and remarketing, if any, for such
Preferred Stock; (vi) the provisions for a sinking fund, if any, for such
Preferred Stock; (vii) the provisions for redemption, if applicable, of such
Preferred Stock; (viii) any listing of such Preferred Stock on any public
trading market; (ix) the terms and conditions, if applicable, upon which such
Preferred Stock will be convertible into Class A or Class B Common Stock of the
Company, including the conversion price (or manner of calculation thereof); (x)
a discussion of any material Federal income tax considerations applicable to
such Preferred Stock; (xi) the relative ranking and preferences of such
Preferred Stock as to dividend rights and rights upon liquidation, dissolution
or winding up of the affairs of the Company; (xii) any limitations on issuance
of any series of Preferred Stock ranking senior to or on a parity with such
series of Preferred Stock as to dividend rights and rights upon liquidation,
dissolution or winding up of the affairs of the Company; and (xiii) any other
specific terms, preferences, rights (including, without limitation, voting
rights), limitations or restrictions of such Preferred Stock.
Liquidation Preference. Unless otherwise specified in the applicable
Prospectus Supplement, upon any liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary, the holders of any series of
Preferred Stock in respect of which this Prospectus is being delivered will have
preference and priority over Class A or Class B Common Stock, and any other
class of stock or series of a class of stock of the Company ranking on
liquidation junior to such series of Preferred Stock, for payment out of the
assets of the Company or proceeds thereof, whether from capital or surplus, in
the amount set forth in the applicable Prospectus Supplement. After such
payment, the holders of such series of Preferred Stock will be entitled to no
other payments. If, in the case of any such liquidation, dissolution or winding
up of the Company, the assets of the Company or proceeds thereof shall be
insufficient to make the full liquidation payment in respect of such series of
Preferred Stock and liquidating payments on any other series of Preferred Stock
ranking as to liquidation on a parity with such series, then those assets and
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<PAGE> 27
proceeds will be distributed among the holders of such series of Preferred Stock
and any such other series of Preferred Stock ratably in accordance with the
respective amounts that would be payable on such shares of such series of
Preferred Stock and such other series of Preferred Stock if all amounts thereon
were paid in full. A sale of all or substantially all of the Company's assets or
a consolidation or merger of the Company with one or more corporations shall not
be deemed to be a liquidation, dissolution or winding up of the Company.
DEPOSITARY SHARES
General. The Company may, at its option, elect to issue fractional shares
of Preferred Stock, rather than full shares of Preferred Stock. If such option
is exercised, the Company may elect to have a Depositary issue receipts for
Depositary Shares, each receipt representing a fraction (to be set forth in the
Prospectus Supplement relating to a particular series of Preferred Stock) of a
share of a particular series of Preferred Stock as described below. The shares
of any series of Preferred Stock represented by Depositary Shares will be
deposited under a Deposit Agreement ("Deposit Agreement") between the Company
and a Depositary. Subject to the terms of the Deposit Agreement, each owner of a
Depositary Share will be entitled, in proportion to the applicable fraction of a
share of Preferred Stock represented by such Depositary Share, to all the rights
and preferences of the Preferred Stock represented thereby (including dividend,
voting, redemption and liquidation rights).
The Depositary Shares will be evidenced by depositary receipts issued
pursuant to the Deposit Agreement ("Depositary Receipts"). Depositary Receipts
will be distributed to those persons purchasing the fractional shares of
Preferred Stock in accordance with the terms of an offering of the Preferred
Stock. In connection with the issuance of any series of Preferred Stock
represented by Depositary Shares, the forms of Deposit Agreement and Depositary
Receipt will be filed as exhibits to the Registration Statement of which this
Prospectus is a part, and the following summary is qualified in its entirety by
reference to such exhibits.
Pending the preparation of definitive engraved Depositary Receipts, the
Depositary may, upon the written order of the Company, issue temporary
Depositary Receipts substantially identical to (and entitling the holders
thereof to all the rights pertaining to) the definitive Depositary Receipts but
not in definitive form. Definitive Depositary Receipts will be prepared
thereafter without unreasonable delay, and temporary Depositary Receipts will be
exchangeable for definitive Depositary Receipts at the Company's expense.
Upon surrender of Depositary Receipts at the office of the Depositary and
upon payment of the charges provided in the Deposit Agreement and subject to the
terms thereof, a holder of Depositary Receipts is entitled to have the
Depositary deliver to such holder the whole shares of Preferred Stock relating
to the surrendered Depositary Receipts. Holders of Depositary Shares will be
entitled to receive whole shares of the related series of Preferred Stock on the
basis set forth in the related Prospectus Supplement for such series of
Preferred Stock, but holders of such whole shares will not thereafter be
entitled to receive Depositary Shares therefor. If the Depositary Receipts
delivered by the holder evidence a number of Depositary Shares in excess of the
number of Depositary Shares representing the number of whole shares of the
related series of Preferred Stock to be withdrawn, the Depositary will deliver
to such holder at the same time a new Depositary Receipt evidencing such excess
number of Depositary Shares.
Dividends and Other Distributions. The Depositary will distribute all cash
dividends or other cash distributions received in respect of the Preferred Stock
to the record holders of Depositary Shares relating to such Preferred Stock in
proportion to the numbers of such Depositary Shares owned by such holders.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Shares
entitled thereto, unless the Depositary determines that it is not feasible to
make such distribution, in which case the Depositary may, with the approval of
the Company, sell such property and distribute the net proceeds from such sale
to such holders.
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Redemption of Depositary Shares. If a series of Preferred Stock
represented by Depositary Shares is subject to redemption, the Depositary Shares
will be redeemed from the proceeds received by the Depositary resulting from the
redemption, in whole or in part, of such series of Preferred Stock held by the
Depositary. The redemption price per Depositary Share will be equal to the
applicable fraction of the redemption price per share payable with respect to
such series of the Preferred Stock. Whenever the Company redeems shares of
Preferred Stock held by the Depositary, the Depositary will redeem as of the
same redemption date the number of Depositary Shares representing shares of
Preferred Stock so redeemed. If less than all the Depositary Shares are to be
redeemed, the Depositary Shares to be redeemed will be selected by lot or
ratably as may be determined by the Depositary.
Voting the Preferred Shares. Upon receipt of notice of any meeting at
which the holders of the Preferred Stock are entitled to vote, the Depositary
will mail the information contained in such notice of meeting to the record
holders of the Depositary Shares relating to such Preferred Stock. Each record
holder of such Depositary Shares on the record date (which will be the same date
as the record date for the Preferred Stock) will be entitled to instruct the
Depositary as to the exercise of the voting rights pertaining to the amount of
the Preferred Stock represented by such holder's Depositary Shares. The
Depositary will endeavor, insofar as practicable, to vote the amount of the
Preferred Stock represented by such Depositary Shares in accordance with such
instructions, and the Company will agree to take all action which may be deemed
necessary by the Depositary in order to enable the Depositary to do so. The
Depositary will abstain from voting shares of the Preferred Stock to the extent
it does not receive specific instructions from the holders of Depositary Shares
representing such Preferred Stock.
Amendment and Termination of the Deposit Agreement. The form of Depositary
Receipt evidencing the Depositary Shares and any provision of the Deposit
Agreement may at any time be amended by agreement between the Company and the
Depositary. However, any amendment which materially and adversely alters the
rights of the holders of Depositary Shares will not be effective unless such
amendment has been approved by the holders of at least a majority of the
Depositary Shares then outstanding. The Deposit Agreement may be terminated by
the Company or the Depositary only if (i) all outstanding Depositary Shares have
been redeemed or (ii) there has been a final distribution in respect to the
Preferred Stock in connection with any liquidation, dissolution or winding up of
the Company and such distribution has been distributed to the holders of
Depositary Receipts.
Charges of Depositary. The Company will pay all transfer and other taxes
and governmental charges arising solely from the existence of the depositary
arrangements. The Company will pay charges of the Depositary in connection with
the initial deposit of the Preferred Stock and any redemption of the Preferred
Stock. Holders of Depositary Receipts will pay other transfer and other taxes
and governmental charges and such other charges as are expressly provided in the
Deposit Agreement to be for their accounts.
Miscellaneous. The Depositary will forward to the record holders of the
Depositary Shares relating to such Preferred Stock all reports and
communications from the Company which are delivered to the Depositary.
Neither the Depositary nor the Company will be liable if it is prevented or
delayed by law or any circumstance beyond its control in performing its
obligations under the Deposit Agreement. The obligations of the Company and the
Depositary under the Deposit Agreement will be limited to performance in good
faith of their duties thereunder, and they will not be obligated to prosecute or
defend any legal proceeding in respect of any Depositary Shares or Preferred
Stock unless satisfactory indemnity is furnished. They may rely upon written
advice of counsel or accountants, or information provided by persons presenting
Preferred Stock for deposit, holders of Depositary Receipts or other persons
believed to be competent and on documents believed to be genuine.
Resignation and Removal of Depositary. The Depositary may resign at any
time by delivering to the Company notice of its election to do so, and the
Company may at any time remove the Depositary, any such resignation or removal
to take effect upon the appointment of a successor Depositary and its acceptance
of such appointment. Such successor Depositary must be appointed within 60 days
after
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delivery of the notice of resignation or removal and must be a bank or trust
company having its principal office in the United States and having a combined
capital and surplus of at least $50,000,000.
CERTAIN PROVISIONS OF THE ARTICLES OF INCORPORATION
The Company's Articles of Incorporation eliminate, to the extent permitted
under Georgia law, the liability of directors to the Company or its shareholders
or any other person for monetary damages for breach of any duty as a director,
whether as a fiduciary or otherwise. Georgia law provides that no provision in a
corporation's articles of incorporation or bylaws shall eliminate or limit the
liability of a director for (i) any appropriation, in violation of the
director's duties, of any business opportunity of the corporation, (ii) acts or
omissions which involve intentional misconduct or a knowing violation of law,
(iii) unlawful corporate distributions or (iv) any transaction from which the
director received an improper benefit. Liability for monetary damages would
remain unaffected by the Articles of Incorporation if liability is based on any
of these grounds. This provision of the Articles of Incorporation will limit the
remedies available to a shareholder dissatisfied with a Board decision that is
protected by this provision, and a shareholder's only remedy in such a
circumstance may be to bring a suit to prevent the Board's action. In many
situations, this remedy may not be effective, for example, when shareholders are
not aware of a transaction or an event until it is too late to prevent it. In
these cases, the shareholders and the Company could be injured by a Board
decision and have no effective remedy.
DESCRIPTION OF PREFERRED STOCK PURCHASE RIGHTS
On February 24, 1998, the Company's Board of Directors declared a dividend
of one preferred share purchase right (a "Right") for each share of Common Stock
of the Company. Each Right entitles the registered holder to purchase from the
Company one one-hundredth ( 1/100) of a share of Series B Participating
Cumulative Preferred Stock (the "Preferred Shares"), of the Company at a price
of $180.00 per one one-hundredth of a Preferred Share (the "Purchase Price"),
subject to adjustments to the exercise price and the number of Preferred Shares
issuable upon exercise from time to time to prevent dilution. The Rights are not
exercisable until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") have acquired beneficial ownership of 15% or more of the
outstanding Common Stock or (ii) 10 business days following the commencement of,
or announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 15% or more of the outstanding shares of Common Stock (the earlier of
such dates being called the "Distribution Date").
In the event that the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power is sold after a person or group has become an Acquiring Person, proper
provision will be made so that each holder of a Right will thereafter have the
right to receive, upon the exercise thereof at the then current exercise price
of the Right, that number of shares of common stock of the acquiring company
which at the time of such transaction will have a market value of two times the
exercise price of the Right. In the event that any person or group of affiliated
or associated persons becomes an Acquiring Person, proper provision shall be
made so that each holder of a Right, other than Rights beneficially owned by the
Acquiring Person (which will thereafter be void), will thereafter have the right
to receive upon exercise that number of shares of Common Stock having a market
value of two times the exercise price of the Right.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment of $1.00 per share but will be entitled to an
aggregate dividend of 100 times the dividend declared per share of Common Stock.
In the event of liquidation, the holders of the Preferred Shares will be
entitled to a minimum preferential liquidation payment of $100.00 per share but
will be entitled to an aggregate payment of 100 times the payment made per share
of Common Stock. Each Preferred Share will have 100 votes, voting together with
the shares of Common Stock. Finally, in the event of any merger, consolidation
or other transaction in which shares of Common Stock are exchanged, each
Preferred Share will be entitled to receive 100 times
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the amount received per share of Common Stock. These rights are protected by
customary antidilution provisions.
Prior to the Distribution Date, the Rights may not be detached or
transferred separately from the Common Stock. The Rights will expire on March
15, 2008 (the "Final Expiration Date"), unless the Final Expiration Date is
extended or unless the Rights are earlier redeemed or exchanged by the Company,
in each case, as described below. At any time prior to the acquisition by a
person or group of affiliated or associated persons of beneficial ownership of
15% or more of the outstanding Common Stock, the Board of Directors of the
Company may redeem the Rights in whole, but not in part, at a price of $0.01 per
Right (the "Redemption Price"). Immediately upon any redemption of the Rights,
the right to exercise the Rights will terminate and the only right of the
holders of Rights will be to receive the Redemption Price. A more detailed
description and terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") between the Company and Wachovia Bank, N.A. as Rights Agent.
TRANSFER AGENT
The transfer agent for the Company's Common Stock is Wachovia Bank, N.A.
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PLAN OF DISTRIBUTION
GENERAL
The Company may sell the Securities (i) through underwriters or dealers;
(ii) directly to one or more other purchasers; (iii) through agents; or (iv) to
both investors and dealers through a specific bidding or auction process or
otherwise. The Prospectus Supplement with respect to the Offered Securities will
set forth the terms of the offering of such Offered Securities, including the
name or names of any underwriters, dealers or agents, the purchase price of such
Offered Securities and the proceeds to the Company from such sale, any
underwriting discounts and other items constituting underwriters' compensation,
any initial public offering price and any discounts, commissions or concessions
allowed or reallowed or paid to dealers, and any bidding or auction process. Any
initial offering price and any discounts, commissions or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
If underwriters are used in an offering, the Offered Securities will be
acquired by the underwriters for their own account. The Offered Securities may
be sold from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. The Offered Securities may be offered to the public either
through underwriting syndicates represented by one or more managing underwriters
or directly by one or more of such firms. The specific managing underwriter or
underwriters, if any, will be set forth in the Prospectus Supplement relating to
the Offered Securities, together with the members of the underwriting syndicate,
if any. Unless otherwise set forth in the Prospectus Supplement, the obligations
of the underwriters to purchase the Offered Securities will be subject to
certain conditions precedent, and the underwriters will be obligated to purchase
all such Offered Securities if any are purchased.
Offered Securities may be sold directly by the Company or through agents
designated by the Company from time to time. The Prospectus Supplement will set
forth the name of any agent involved in the offer or sale of the Offered
Securities in respect of which the Prospectus Supplement is delivered as well as
any commissions or other compensation payable by the Company to such agent.
Unless otherwise indicated in the Prospectus Supplement, any such agent is
acting on a best efforts basis for the period of its appointment.
Any underwriters, dealers or agents participating in the distribution of
the Offered Securities may be deemed to be underwriters and any discounts or
commissions received by them on the sale or resale of the Offered Securities may
be deemed to be underwriting discounts and commissions under the Securities Act.
Agents, dealers or underwriters may be entitled, under agreements entered into
with the Company, to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act, and to contribution with respect
to payments that the agents, dealers or underwriters may be required to make in
respect thereof. Agents, dealers and underwriters may engage in transactions
with or perform services for the Company in the ordinary course of business.
The Offered Securities, other than any Common Stock, will be a new issue or
issues of securities with no established trading market. Any Common Stock issued
by the Company pursuant to this Registration Statement will be quoted on The
Nasdaq Stock Market. Unless otherwise indicated in a Prospectus Supplement, the
Company does not currently intend to list any Offered Debt Securities on any
securities exchange or other public trading market. No assurance can be given
that the underwriters, dealers or agents, if any, involved in the sale of the
Offered Securities will make a market in such Offered Securities. Whether or not
any of the Offered Securities are listed on a national securities exchange or
other public trading market, or the underwriters, dealers or agents, if any,
involved in the sale of the Offered Securities make a market in such Offered
Securities, no assurance can be given as to the liquidity of the trading market
for such Offered Securities.
Agents and underwriters may be entitled under agreements entered into with
the Company to indemnification by the Company against certain civil liabilities,
including liabilities under the Securities Act that may arise from any untrue
statement or alleged untrue statement of a material fact or any omission or
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alleged omission to state a material fact in this Prospectus, any supplement or
amendment hereto, or in the Registration Statement of which this Prospectus
forms a part, or to contribution with respect to payments which the agents or
underwriters may be required to make in respect thereof. Agents and underwriters
may engage in transactions with, or perform services for, the Company in the
ordinary course of business.
DELAYED DELIVERY ARRANGEMENTS
If so indicated in the Prospectus Supplement, the Company may authorize
underwriters or other persons acting as the Company's agents to solicit offers
by certain institutions to purchase Offered Securities from the Company pursuant
to contracts providing for payment and delivery on a future date. Institutions
with whom such contracts may be made include commercial and savings banks,
insurance companies, pension funds, investment companies, educational and
charitable institutions and others, but in all cases will be subject to the
approval of the Company. The obligations of any purchaser under any such
contract will be subject to the condition that the purchase of the Offered
Securities shall not at the time of delivery be prohibited under the laws of the
jurisdiction to which such purchaser is subject. The underwriters and such
agents will not have any responsibility in respect of the validity or
performance of such contracts.
LEGAL MATTERS
Certain legal matters regarding the validity of the Securities offered
hereby will be passed upon for the Company by Kilpatrick Stockton LLP, Atlanta,
Georgia. Certain legal matters relating to this offering will be passed upon for
the underwriters, if any, by Smith, Gambrell & Russell, LLP, Atlanta, Georgia,
or such other firm as may be identified in an applicable Prospectus Supplement.
As of February 28, 1998, attorneys at Kilpatrick Stockton LLP who worked on the
preparation of the Prospectus beneficially owned in the aggregate 5,000 shares
of the Company's outstanding Class A and Class B Common Stock.
EXPERTS
The consolidated financial statements and schedule incorporated by
reference in this Prospectus have been audited by BDO Seidman, LLP, independent
certified public accountants, to the extent and for the periods set forth in
their reports incorporated hereby by reference, and are incorporated herein in
reliance upon such reports given upon the authority of said firm as experts in
auditing and accounting.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND REGISTRATION.
The expenses of the Registrant in connection with the registration and
distribution of the securities being registered are set forth in the following
table. All of the amounts shown are estimated except for the registration fees
of the Securities and Exchange Commission (the "Commission"):
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee......... $ 88,500
Legal Fees and Expenses..................................... 150,000
Accountants' Fees and Expenses.............................. 100,000
Rating Agency Fees.......................................... 85,000
Printing Expenses........................................... 150,000
Nasdaq Listing Fee.......................................... 17,500
Trustee, Transfer Agent and Registrar Fees.................. 10,000
Miscellaneous............................................... 24,000
--------
Total............................................. $625,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As provided under Georgia law, the Registrant's Articles of Incorporation,
as amended (the "Articles of Incorporation") provide that a director shall not
be personally liable to the Registrant or its shareholders for monetary damages
for breach of duty of care or any other duty owed to the Registrant as a
director, except that such provision shall not eliminate or limit the liability
of a director (a) for any appropriation, in violation of his duties, of any
business opportunity of the Registrant, (b) for acts or omissions which involve
intentional misconduct or a knowing violation of law, (c) for unlawful corporate
distributions, or (d) for any transaction from which the director received an
improper benefit.
Under Article VII of the Registrant's Bylaws, as amended (the "Bylaws"),
the Registrant is authorized to indemnify its officers and directors for any
liability and expense incurred by them in connection with or resulting from any
threatened, pending or completed legal action or other proceeding or
investigation by reason of his being or having been an officer or director. An
officer or director may only be indemnified if he acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best interests of
the Registrant, and, with respect to a criminal matter, he did not have
reasonable cause to believe that his conduct was unlawful. No officer or
director who has been adjudged liable for the improper receipt of a personal
benefit is entitled to indemnification.
Any officer or director who has been wholly successful on the merits or
otherwise in an action or proceeding in his official capacity is entitled to
indemnification as to expenses by the Registrant. All other determinations in
respect of indemnification shall be made by either: (i) a majority vote of a
quorum of disinterested directors; (ii) independent legal counsel selected in
accordance with the Bylaws and at the request of the Board; or (iii) the holders
of a majority of the Registrant's stock who at such time are entitled to vote
for the election of directors.
The provisions of the Registrant's Bylaws on indemnification are consistent
in all material respects with the laws of the State of Georgia, which authorize
indemnification of corporate officers and directors.
The Registrant's directors and officers are insured against losses arising
from any claim against them as such for wrongful acts or omissions, subject to
certain limitations.
II-1
<PAGE> 34
ITEM 16. EXHIBITS.
The following exhibits are filed as part of this Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
<C> <C> <S>
1.1 -- Form of Underwriting Agreement for Debt Securities.**
1.2 -- Form of Underwriting Agreement for Preferred Stock.**
1.3 -- Form of Underwriting Agreement for Common Stock.**
3.1 -- Composite Articles of Incorporation (included as Exhibit 4.1
to the Company's current report on Form 8-K, filed with the
Commission on March 4, 1998 and incorporated herein by
reference).
3.2 -- Bylaws, as amended (included as Exhibit 3.2 to the Company's
quarterly report on Form 10-Q for the quarter ended April 1,
1990, previously filed with the Commission and incorporated
herein by reference).
4.1 -- Form of Indenture for senior debt securities.
4.2 -- Form of Indenture for subordinated debt securities.**
4.3 -- Form of Articles of Amendment to Articles of Incorporation
setting forth the designation of rights and preferences for
the Preferred Stock.**
4.4 -- Form of Deposit Agreement and Depositary Receipt.**
5 -- Opinion of Kilpatrick Stockton LLP.
12 -- Statement on the Computation of Ratio of Earnings to Fixed
Charges.
23.1 -- Consent of BDO Seidman, LLP.
23.2 -- Consent of Kilpatrick Stockton LLP (included in Exhibit 5).
24 -- Power of Attorney (set forth on signature page).*
25 -- Statement of eligibility and qualification of First Union
National Bank, Trustee.
</TABLE>
- ---------------
* Previously filed.
** To be filed as an exhibit to Form 8-K in reference to the specific offering
of Securities, if any, to which it relates.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the Prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the registration
statement; provided, however, that paragraphs (1)(i) and (1)(ii) do not
apply if the Registration Statement is on Form S-3, Form S-8 or Form
F-3, and the information required
II-2
<PAGE> 35
to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the Registrant pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes:
(1) To use its best efforts to distribute prior to the opening of
bids, to prospective bidders, underwriters and dealers, a reasonable number
of copies of a prospectus which at that time meets the requirements of
Section 10(a) of the Securities Act, and relating to the securities offered
at competitive bidding, as contained in the Registration Statement,
together with any supplements thereto.
(2) To file an amendment to the Registration Statement reflecting the
results of bidding, the terms of the reoffering and related matters to the
extent required by Form S-3, not later than the first use, authorized by
the Registrant after the opening of bids, of a prospectus relating to the
securities offered at competitive bidding, unless no further public
offering of such securities by the Registrant and no reoffering of such
securities by the purchasers is proposed to be made.
(c) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(d) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions of the Articles of Incorporation or Bylaws
or otherwise, the Registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
(e) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For purposes of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE> 36
(f) The undersigned Registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the Commission under Section 305(b)(2) of
the Act.
II-4
<PAGE> 37
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this amendment to
the registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Atlanta, State of Georgia, on March
12, 1998.
INTERFACE, INC.
By: /s/ DANIEL T. HENDRIX
------------------------------------
Daniel T. Hendrix
Senior Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons, in the
capacities indicated, on the 12th day of March, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
* Chairman of the Board and Chief Executive
- ----------------------------------------------------- Officer (Principal Executive Officer)
Ray C. Anderson
/s/ DANIEL T. HENDRIX Senior Vice President, Chief Financial Officer
- ----------------------------------------------------- and Director (Principal Financial and
Daniel T. Hendrix Accounting Officer)
* Director
- -----------------------------------------------------
Brian L. DeMoura
* Director
- -----------------------------------------------------
Charles R. Eitel
* Director
- -----------------------------------------------------
Donald E. Russell
Director
- -----------------------------------------------------
John H. Walker
* Director
- -----------------------------------------------------
Gordon D. Whitener
Director
- -----------------------------------------------------
Dianne Dillon-Ridgley
* Director
- -----------------------------------------------------
Carl I. Gable
Director
- -----------------------------------------------------
June M. Henton
</TABLE>
II-5
<PAGE> 38
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
* Director
- -----------------------------------------------------
J. Smith Lanier, II
Director
- -----------------------------------------------------
Leonard G. Saulter
Director
- -----------------------------------------------------
Clarinus C. Th. van Andel
*By: /s/ DANIEL T. HENDRIX
------------------------------------------------
Daniel T. Hendrix
Pursuant to Power of Attorney
</TABLE>
II-6
<PAGE> 1
EXHIBIT 4.1
================================================================================
----------------------------------------
INTERFACE, INC., as Issuer
B. SHEHADI & SONS, INC.
BENTLEY MILLS, INC.
BENTLEY ROYALTY COMPANY
COMMERCIAL FLOORING SYSTEMS, INC.
CONGRESS FLOORING CORP.
FLOORING CONSULTANTS, INC.
GUILFORD (DELAWARE), INC.
GUILFORD OF MAINE DECORATIVE FABRICS, INC.
GUILFORD OF MAINE FINISHING SERVICES, INC.
GUILFORD OF MAINE, INC.
GUILFORD OF MAINE MARKETING CO.
INTEK, INC.
INTEK MARKETING CO.
INTERFACE AMERICAS, INC.
INTERFACE AMERICAS SERVICES, INC.
INTERFACE ARCHITECTURAL RESOURCES, INC.
INTERFACE ASIA-PACIFIC, INC.
INTERFACE EUROPE, INC.
INTERFACE FLOORING SYSTEMS, INC.
INTERFACE HOLDING COMPANY
INTERFACE INTERIOR FABRICS, INC.
INTERFACE LICENSING COMPANY
INTERFACE ROYALTY COMPANY
INTERFACE SPECIALTY RESOURCES, INC.
LASHER/WHITE CARPET COMPANY, INC.
PRINCE STREET ROYALTY COMPANY
PRINCE STREET TECHNOLOGIES, LTD.
QUAKER CITY INTERNATIONAL, INC.
RE:SOURCE AMERICAS ENTERPRISES, INC.
SUPERIOR/REISER FLOORING RESOURCES, INC.
TOLTEC FABRICS, INC.
as Guarantors
and
FIRST UNION NATIONAL BANK
as Trustee
SENIOR INDENTURE
Dated as of __________________, 1998
----------------------------------------
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
<S> <C> <C>
Section 1.1. Definitions........................................................................1
Section 1.2. Other Definitions.................................................................14
Section 1.3. Incorporation by Reference of Trust Indenture Act.................................15
Section 1.4. Rules of Construction.............................................................15
ARTICLE TWO
THE SECURITIES
Section 2.1. Terms and Forms...................................................................16
Section 2.2. Execution and Authentication......................................................20
Section 2.3. Registrar, Paying Agent, Conversion Agent, Depository and
Securities Custodian..............................................................22
Section 2.4. Securityholder Lists..............................................................23
Section 2.5. Transfer, Registration and Exchange...............................................23
Section 2.6. Replacement Securities............................................................26
Section 2.7. Outstanding Securities............................................................27
Section 2.8. Treasury Securities...............................................................28
Section 2.9. Temporary Securities..............................................................28
Section 2.10. Securities in Global Form.........................................................28
Section 2.11. Cancellation......................................................................29
Section 2.12. Defaulted Interest................................................................29
Section 2.13. Persons Deemed Owners.............................................................29
ARTICLE THREE
REDEMPTION
Section 3.1. Applicability of Article..........................................................30
Section 3.2. Notices to Trustee................................................................30
Section 3.3. Selection of Securities to Be Redeemed............................................31
Section 3.4. Notice of Redemption..............................................................31
Section 3.5. Effect of Notice of Redemption....................................................33
Section 3.6. Deposit of Redemption Price.......................................................33
Section 3.7. Securities Redeemed in Part.......................................................34
</TABLE>
- ---------------------------
Note: This table of contents shall not, for any purpose, be deemed to be a part
of this Indenture.
i
<PAGE> 3
<TABLE>
ARTICLE FOUR
COVENANTS
<S> <C> <C>
Section 4.1. Payment of Securities.............................................................34
Section 4.2. Maintenance of Office or Agency for Notices and Demands...........................35
Section 4.3. Money for Securities Payments to Be Held in Trust.................................36
Section 4.4. Commission Reports; Reports to Trustee; Reports to Holders........................37
Section 4.5. Compliance Certificates...........................................................38
Section 4.6. Corporate Existence...............................................................38
Section 4.7. Limitation on Liens...............................................................39
Section 4.8. Limitations on Sale and Lease-Back Transactions...................................39
Section 4.9. Limitation on Guarantees by Subsidiaries..........................................39
Section 4.10. Waiver of Stay; Extension of Usury Laws...........................................39
ARTICLE FIVE
SUCCESSORS
Section 5.1. When Company May Merge, Etc.......................................................40
Section 5.2. Successor Corporation Substituted.................................................40
ARTICLE SIX
DEFAULTS AND REMEDIES
Section 6.1 Events of Default.................................................................41
Section 6.2. Acceleration......................................................................42
Section 6.3. Other Remedies....................................................................43
Section 6.4. Waiver of Past Defaults...........................................................43
Section 6.5. Control by Majority...............................................................44
Section 6.6. Limitation on Suits by Holders....................................................44
Section 6.7. Rights of Holders to Receive Payment..............................................44
Section 6.8. Collection Suit by Trustee........................................................45
Section 6.9. Trustee May File Proofs of Claim..................................................45
Section 6.10. Application of Money Collected....................................................45
Section 6.11. Undertaking for Costs.............................................................46
Section 6.12. Discontinuance or Abandonment of Proceedings......................................47
ARTICLE SEVEN
TRUSTEE
Section 7.1. Duties of Trustee.................................................................47
Section 7.2. Rights of Trustee.................................................................48
Section 7.3. Individual Rights of Trustee......................................................49
</TABLE>
- ---------------------------
Note: This table of contents shall not, for any purpose, be deemed to be a part
of this Indenture.
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
Section 7.4. Trustee's Disclaimer..............................................................49
Section 7.5. Notice of Defaults................................................................49
Section 7.6. Reports by Trustee to Holders.....................................................49
Section 7.7. Compensation and Indemnity........................................................50
Section 7.8. Replacement of Trustee............................................................51
Section 7.9. Successor Trustee by Merger, Etc..................................................52
Section 7.10. Eligibility; Disqualification.....................................................52
Section 7.11. Preferential Collection of Claims Against Company.................................52
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
Section 8.1. Discharge of Indenture; Defeasance................................................53
Section 8.2. Conditions to Defeasance..........................................................54
Section 8.3. Application of Trust Money........................................................55
Section 8.4. Repayment to Company..............................................................56
Section 8.5. Reinstatement of Company's Obligations............................................56
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.1. Without Consent of Holders........................................................56
Section 9.2. With Consent of Holders...........................................................57
Section 9.3. Compliance with Trust Indenture Act...............................................59
Section 9.4. Revocation and Effect of Consents and Waivers.....................................59
Section 9.5. Notation on or Exchange of Securities.............................................59
Section 9.6. Trustee to Sign Amendments........................................................60
ARTICLE TEN
REPAYMENT AT THE OPTION OF HOLDERS
Section 10.1. Applicability of Article..........................................................60
ARTICLE ELEVEN
SINKING FUNDS
Section 11.1. Applicability of Article..........................................................60
Section 11.2. Satisfaction of Sinking Fund Payments with Securities.............................61
Section 11.3. Redemption of Securities for Sinking Fund.........................................61
</TABLE>
- ---------------------------
Note: This table of contents shall not, for any purpose, be deemed to be a part
of this Indenture.
iii
<PAGE> 5
<TABLE>
ARTICLE TWELVE
CONVERSION OF SECURITIES
<S> <C> <C>
Section 12.1. Applicability of Article..........................................................62
Section 12.2. Exercise of Conversion Privilege..................................................62
Section 12.3. Fractional Interests..............................................................63
Section 12.4. Adjustment of Conversion Price....................................................64
Section 12.5. Continuation of Conversion Privilege in Case of Merger,
Consolidation or Sale of Assets...................................................66
Section 12.6. Notice of Certain Events..........................................................68
Section 12.7. Taxes on Conversion...............................................................68
Section 12.8. Company to Provide Stock..........................................................69
Section 12.9. Disclaimer of Responsibility for Certain Matters..................................69
Section 12.10. Return of Funds Deposited for Redemption of Converted
Securities........................................................................70
ARTICLE THIRTEEN
MISCELLANEOUS
Section 13.1. Trust Indenture Act Controls......................................................70
Section 13.2. Notices...........................................................................70
Section 13.3. Communication by Holders with Other Holders.......................................72
Section 13.4. Certificate and Opinion as to Conditions Precedent................................72
Section 13.5. Statements Required in Certificate or Opinion.....................................72
Section 13.6. Rules by Trustee and Agents.......................................................73
Section 13.7. Legal Holidays....................................................................73
Section 13.8. No Recourse Against Others........................................................73
Section 13.9. Governing Law.....................................................................73
Section 13.10. No Adverse Interpretation of Other Agreements.....................................73
Section 13.11. Successors........................................................................73
Section 13.12. Severability......................................................................73
Section 13.13. Multiple Originals................................................................74
Section 13.14. Table of Contents; Headings.......................................................74
Section 13.15. Securities in Foreign Currencies..................................................74
ARTICLE FOURTEEN
GUARANTEE OF SECURITIES
Section 14.1. Guarantee.........................................................................74
Section 14.2. Execution and Delivery of Guarantee...............................................76
Section 14.3. Additional Guarantors.............................................................76
</TABLE>
- ---------------------------
Note: This table of contents shall not, for any purpose, be deemed to be a part
of this Indenture.
iv
<PAGE> 6
<TABLE>
<S> <C> <C>
Section 14.4. Release of a Guarantor............................................................77
Section 14.5. Waiver of Subrogation.............................................................77
Section 14.6. Guarantee Provisions Solely to Define Relative Rights.............................78
Section 14.7. Reliance on Judicial Order or Certificate of Liquidating Agent
Regarding Dissolution, Etc. of Guarantors.........................................78
Section 14.8. Article Fourteen Applicable to Paying Agents......................................79
Section 14.9. No Suspension of Remedies.........................................................79
SIGNATURES..............................................................................................80
EXHIBIT A Senior Guarantee
</TABLE>
- ------------------------------------
Note: This table of contents shall not, for any purpose, be deemed to be a part
of this Indenture.
v
<PAGE> 7
Reconciliation and tie between Trust Indenture Act of 1939
and Indenture, dated as of ___________, 1998
<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section Section
- --------------- ----------
<S> <C> <C>
ss.310 (a)(1)....................................................................... 7.10
(a)(2)....................................................................... 7.10
(a)(3)....................................................................... N.A.
(a)(4)....................................................................... N.A.
(b).......................................................................... 7.8, 7.10, 13.2
(c).......................................................................... N.A.
ss.311 (a).......................................................................... 7.11
(b).......................................................................... 7.11
(c).......................................................................... N.A.
ss.312 (a).......................................................................... 2.4
(b).......................................................................... 13.3
(c).......................................................................... 13.3
ss.313 (a).......................................................................... 7.6
(b)(1)....................................................................... N.A.
(b)(2)....................................................................... 7.6
(c).......................................................................... 7.6, 13.2
(d).......................................................................... 7.6
ss.314 (a).......................................................................... 4.4, 13.2
(b).......................................................................... N.A.
(c)(1)....................................................................... 13.4
(c)(2)....................................................................... 13.4
(c)(3)....................................................................... N.A.
(d).......................................................................... N.A.
(e).......................................................................... 13.5
(f).......................................................................... N.A.
ss.315 (a).......................................................................... 7.1(b)
(b).......................................................................... 7.5, 13.2
(c).......................................................................... 7.1(a)
(d).......................................................................... 7.1(c)
(e).......................................................................... 6.11
ss.316 (a) (last sentence).......................................................... 2.8
(a)(1)(A).................................................................... 6.5
(a)(1)(B).................................................................... 6.4
(a)(2)....................................................................... N.A.
(b).......................................................................... 6.7
ss.317 (a)(1)....................................................................... 6.8
(a)(2)....................................................................... 6.9
(b).......................................................................... 4.3
ss.318 (a).......................................................................... 13.1
</TABLE>
- ------------------------------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of this Indenture.
vi
<PAGE> 8
INDENTURE dated as of ________________, 1998 between B. SHEHADI & SONS,
INC., a New Jersey corporation, BENTLEY MILLS, INC., a Delaware corporation,
BENTLEY ROYALTY COMPANY, a Nevada corporation, COMMERCIAL FLOORING SYSTEMS,
INC., a Pennsylvania corporation, CONGRESS FLOORING CORP., a Massachusetts
corporation, FLOORING CONSULTANTS, INC., an Arizona corporation, GUILFORD
(DELAWARE), INC., a Delaware corporation, GUILFORD OF MAINE, INC., a Nevada
corporation, GUILFORD OF MAINE DECORATIVE FABRICS, INC., a Nevada corporation,
GUILFORD OF MAINE FINISHING SERVICES, INC., a Nevada corporation, GUILFORD OF
MAINE MARKETING CO., a Nevada corporation, INTEK, INC., a Georgia corporation,
INTEK MARKETING CO., a Nevada corporation, INTERFACE AMERICAS, INC., a Georgia
corporation, INTERFACE AMERICAS SERVICES, INC., a Georgia corporation, INTERFACE
ARCHITECTURAL RESOURCES, INC. (formerly C-Tec, Inc.), a Michigan corporation,
INTERFACE ASIA-PACIFIC, INC., a Georgia corporation, INTERFACE EUROPE, INC., a
Delaware corporation, INTERFACE FLOORING SYSTEMS, INC., a Georgia corporation,
INTERFACE HOLDING COMPANY, a Nevada corporation, INTERFACE, INC., a corporation
incorporated under the laws of the State of Georgia, INTERFACE INTERIOR FABRICS,
INC. (formerly Guilford of Maine, Inc.), a Delaware corporation, INTERFACE
LICENSING COMPANY, a Nevada corporation, INTERFACE ROYALTY COMPANY, a Nevada
corporation, INTERFACE SPECIALTY RESOURCES, INC., a Nevada corporation,
LASHER/WHITE CARPET COMPANY, INC., a New York corporation, PRINCE STREET ROYALTY
COMPANY, a Nevada corporation, PRINCE STREET TECHNOLOGIES, LTD., a Georgia
corporation, QUAKER CITY INTERNATIONAL, INC., a Pennsylvania corporation,
RE:SOURCE AMERICAS ENTERPRISES, INC., a Georgia corporation, SUPERIOR/REISER
FLOORING RESOURCES, INC., a Texas corporation, TOLTEC FABRICS, INC., a Georgia
corporation, (collectively, the "Guarantors") and First Union National Bank, a
national banking association (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 Securities
issued hereunder:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
Section 1.1. Definitions.
"Additional Amounts" shall mean any additional amounts that are
required by a Security or by or pursuant to a Board Resolution, under
circumstances specified therein, to be paid by the Company in respect of certain
taxes imposed on certain Holders, or as otherwise specified in the terms of such
Security established pursuant to Section 2.1, and that are owing to such
Holders.
"Affiliate" of any specified Person shall mean any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person.
1
<PAGE> 9
For the purposes of this definition, "control," (including, with correlative
meanings, the terms "controlling," "controlled by" and "under common control
with"), as applied to any specified Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise. The Trustee may request and conclusively rely on an
Officers' Certificate to determine whether any Person is an Affiliate of the
Company.
"Agent" shall mean any Registrar or Paying Agent or authenticating
agent or co-registrar.
"Asset Value" means, with respect to any Property or asset of the
Company or any of its Subsidiaries, an amount equal to the greater of (i) the
book value of such Property or asset as established in accordance with GAAP or
(ii) the fair market value of such Property or asset as determined in good faith
by the board of directors (or equivalent governing body in the case of any
foreign Subsidiary) of such Person.
"Attributable Liens" means in connection with a sale and lease-back
transaction, the lesser of (a) the fair market value of the assets subject to
such transaction and (b) the present value (discounted at a rate per annum equal
to the average interest borne by all outstanding Securities determined on a
weighted average basis and compounded semiannually) of the obligations of the
lessee for rental payments during the term of the related lease.
"Authorized Newspaper" means a newspaper printed in the English
language or in the official language of the country of publication and
customarily published at least once a day on each Business Day in each calendar
week and of general circulation in New York, New York or in any other place as
expressly required in this Indenture, whether or not such newspaper is published
on Legal Holidays, or, with respect to the Securities of any series, such other
newspapers as may be specified in or pursuant to the Board Resolution of the
Company or supplement to this Indenture pursuant to which such series of
Securities is issued. Whenever, under the provisions of this Indenture or such
Board Resolution, two or more publications of a notice or other communication
are required or permitted, such publications may be in the same or different
newspapers in the same city meeting the foregoing requirements and in each case
on any Business Day. If, because of temporary or permanent suspension of
publication or general circulation of any newspaper or for any other reason, it
is impossible or impracticable to publish any notices required by this Indenture
or a Board Resolution in the manner provided, then such publication in lieu
thereof or such other notice as shall be made with the approval of the Trustee
shall constitute a sufficient publication of such notice.
"Bank Receivables Agreement" means the Receivables Sale Agreement dated
as of December 27, 1996 (the "1996 Bank Receivables Agreement"), among Interface
Securitization Corporation, the Company, certain financial institutions parties
thereto, and Canadian Imperial Bank of Commerce, as Administrative Agent, as
such agreement, in whole or in part, may from time to time be amended, renewed,
extended, substituted, refinanced, restructured, replaced, supplemented or
otherwise modified, whether with the same or any other Person(s) as
purchaser(s), lender(s) or agent(s) (including, without limitation, any
successive renewals, extensions, substitutions, refinancings, restructurings,
replacements, supplements or other modifications of the foregoing,
2
<PAGE> 10
whether with the same or any other Person), provided that the sales of
receivables pursuant to any such Bank Receivables Agreement are on non-recourse
terms not materially less favorable to the Company and its Subsidiaries as
provided for in the 1996 Bank Receivables Agreement and that the aggregate
amount of sales under such Bank Receivables Agreement and the Receivables Sales
Agreement at any one time outstanding shall not exceed a total of $100,000,000.
"Bankruptcy Law" shall mean Title 11 of the United States Code or any
similar federal or state law for the relief of debtors.
"Bearer Security" means any Security in the form established pursuant
to Section 2.1 hereunder which is payable to the bearer thereof.
"Board" or "Board of Directors" shall mean the Board of Directors of
the Company or any duly authorized committee of such Board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company as properly adopted by the
Board of Directors and in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions and trust companies in
the City of New York, State of New York, or Atlanta, Georgia are authorized or
obligated by law, regulation or executive order to close.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations, rights in or other equivalents (however designated)
of such Person's capital stock, and rights (other than debt securities
convertible into capital stock), warrants or options exchangeable for or
convertible into such capital stock.
"Capitalized Lease Obligation" shall mean any obligation under a lease
of (or other agreement conveying the right to use) any Property (whether real,
personal or mixed) that is required to be classified and accounted for as a
capital lease obligation under GAAP, and the amount of any such obligation at
any date shall be the capitalized amount thereof at such date, determined in
accordance with GAAP.
"Class A Common Stock" shall mean the Class A Common Stock, $.10 par
value per share, of the Company.
"Commission" shall mean the Securities and Exchange Commission.
"Common Stock" means, with respect to any Person, any and all shares,
interests or other participations in, and other equivalents (however designated
and whether voting or nonvoting) of, such Person's common stock, whether
outstanding at the Issue Date or issued after the Issue Date, and includes,
without limitation, all series and classes of such common stock.
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<PAGE> 11
"Company" shall mean the Person named as the "Company" in the first
paragraph of this Indenture, until a successor Person replaces it pursuant to
the applicable provisions of this Indenture and, thereafter, "Company" means
such successor.
"Company Request" or "Company Order" shall mean a written request or
order signed in the name of the Company by its Chairman of the Board, its
President, an Executive Vice President, a Senior Vice President or a Vice
President, and by any one of its Treasurer, an Assistant Treasurer, its
Secretary or an Assistant Secretary, and delivered to the Trustee.
"Consolidated Net Assets" means as of any particular time the aggregate
amount of assets after deducting therefrom all current liabilities except for
(a) notes and loans payable, (b) current maturities of long-term debt and (c)
current maturities of obligations under capital leases, all as set forth on the
most recent consolidated balance sheet of the Company and its consolidated
Subsidiaries and computed in accordance with GAAP.
"Consolidated Net Worth" shall mean, with respect to any Person at any
date, the consolidated stockholders' equity of such Person and its Subsidiaries,
as determined from time to time in accordance with GAAP.
"Consolidation" shall mean, with respect to any Person, the
consolidation of the accounts of such Person if and to the extent the accounts
of such Person and each of its Subsidiaries would normally be consolidated with
those of such Person, all in accordance with GAAP. The term "consolidated" shall
have a similar meaning.
"Corporate Trust Office of the Trustee" shall mean the corporate trust
office of the Trustee at which at any particular time its corporate trust
business shall be principally administered, which on the date hereof is located
in Atlanta, Georgia.
"Coupon" shall mean any interest coupon appertaining to a Bearer
Security.
"Credit Agreements" means, collectively, (i) the Second Amended and
Restated Credit Agreement dated as of June 25, 1997, among the Company, certain
Subsidiaries of the Company, the banks and other lending institutions parties
thereto, SunTrust Bank, Atlanta, as Co-Agent and Collateral Agent, and The First
National Bank of Chicago, as Co-Agent, (ii) the Amended and Restated Letter of
Credit Agreement dated as of June 25, 1997, among the Company, certain
Subsidiaries of the Company, the banks and other lending institutions parties
thereto, and SunTrust Bank, Atlanta, as Domestic Agent and Collateral Agent, and
(iii) the Term Loan Agreement, dated as of June 25, 1997, among the Company, the
banks and other lending institutions parties thereto, SunTrust Bank, Atlanta, as
Administrative Agent and Collateral Agent, and The First National Bank of
Chicago, as Syndication Agent, in each case as such agreement, in whole or in
part, may from time to time be amended, renewed, extended, substituted,
refinanced, restructured, replaced, supplemented or otherwise modified
(including, without limitation, any successive renewals, extensions,
substitutions, refinancings, restructurings, replacements, supplementations or
other modifications of the foregoing), and whether with the present lenders of
any other lenders.
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"Currency Agreement" shall mean, with respect to any Person, any
foreign exchange contract, currency swap agreement or other similar agreement or
arrangement designed to protect such Person or any of its Subsidiaries against
fluctuations in currency values.
"Default" shall mean any event that is, or after notice or passage of
time or both would be, an Event of Default as defined in Section 6.1 of this
Indenture.
"Depository" or "U.S. Depository" shall mean, with respect to the
Securities of any series issuable or issued in whole or in part in the form of
one or more global Securities, the Person designated as U.S. Depository pursuant
to Section 2.1, which shall be a banking institution or a trust company with a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition and shall be registered as a
clearing agency under the Exchange Act, and, if so provided pursuant to Section
2.1 with respect to the Securities of any series, any successor to such Person.
If at any time there is more than one such Person, "Depository" or "U.S.
Depository" shall mean, with respect to any series of Securities, the qualifying
entity which has been appointed with respect to the Securities of that series.
"Designated Senior Indebtedness" shall have the meaning given such term
in the Senior Subordinated Notes Indenture.
"Eligible Obligations" shall mean obligations as a result of the
deposit of which (along with the simultaneous deposit, if any, of money or U.S.
Government Obligations or both) the Securities will be rated in the highest
generic long-term debt rating category assigned by one or more nationally
recognized rating agencies to debt with respect to which the issuer thereof has
been released from its obligations to the same extent that the Company has been
released from its obligations under this Indenture pursuant to the defeasance
provision of this Indenture.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exempted Debt" means the sum of the following as of the date of
determination: (i) Indebtedness of the Company and any of its Subsidiaries
secured by Liens not otherwise permitted under the definition "Permitted Liens"
in this Section 1.1, and (ii) Attributable Liens of the Company and its
Subsidiaries in respect of sale and lease-back transactions entered into after
the Issue Date.
"GAAP" shall mean generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, consistently applied, that are applicable to the
circumstances as of the date of determination.
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<PAGE> 13
"Guarantee" shall mean each guarantee of the Securities by each
Guarantor created pursuant to Article Fourteen.
"guarantee" means, as applied to any obligation, (i) a guarantee (other
than by endorsement of negotiable instruments for collection in the ordinary
course of business), direct or indirect, in any manner, of any part or all of
such obligation and (ii) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, the
payment of amounts drawn down by letters of credit.
"Guarantor" means each of B. Shehadi & Sons, Inc., a New Jersey
corporation, Bentley Mills, Inc., a Delaware corporation, Bentley Royalty
Company, a Nevada corporation, Commercial Flooring Systems, Inc., a Pennsylvania
corporation, Congress Flooring Corp., a Massachusetts corporation, Flooring
Consultants, Inc., an Arizona corporation, Guilford (Delaware), Inc., a Delaware
corporation, Guilford of Maine, Inc., a Nevada corporation, Guilford of Maine
Decorative Fabrics, Inc., a Nevada corporation, Guilford of Maine Finishing
Services, Inc., a Nevada corporation, Guilford of Maine Marketing Co., a Nevada
corporation, Intek, Inc., a Georgia corporation, Intek Marketing Co., a Nevada
corporation, Interface Americas, Inc., a Georgia corporation, Interface Americas
Services, Inc., a Georgia corporation, Interface Architectural Resources, Inc.
(formerly C-Tec, Inc.), a Michigan corporation, Interface Asia-Pacific, Inc., a
Georgia corporation, Interface Europe, Inc., a Delaware corporation, Interface
Flooring Systems, Inc., a Georgia corporation, Interface Holding Company, a
Nevada corporation, Interface Interior Fabrics, Inc. (formerly Guilford of
Maine, Inc.), a Delaware corporation, Interface Licensing Company, a Nevada
corporation, Interface Royalty Company, a Nevada corporation, Interface
Specialty Resources, Inc., a Nevada corporation, Lasher/White Carpet Company,
Inc., a New York corporation, Prince Street Royalty Company, a Nevada
corporation, Prince Street Technologies, Ltd., a Georgia corporation, Quaker
City International, Inc., a Pennsylvania corporation, Re:Source Americas
Enterprises, Inc., a Georgia corporation, Superior/Reiser Flooring Resources,
Inc., a Texas corporation, Toltec Fabrics, Inc., a Georgia corporation, and each
other Material U.S. Subsidiary and shall include any successor replacing such
Person pursuant to this Indenture, and thereafter means such successor.
"Guilford Equipment Lease" means the Master Equipment Lease Agreement
dated as of June 30, 1995, between Fleet Credit Corporation and Guilford of
Maine, Inc., relating to the leasing of various textile manufacturing equipment
in aggregate amount (acquisition costs) of not more than $19,000,000, as such
agreement, in whole or in part, may from time to time be amended, renewed,
extended, substituted, refinanced, restructured, replaced, supplemented or
otherwise modified, whether with the same or any other Person(s) as lessor(s) or
lender(s) (including, without limitation, any successive renewals, extensions,
substitutions, refinancings, restructurings, replacements, supplements or other
modifications of the foregoing).
"Holder," "Securityholders" or "Holders of Securities" or other similar
term shall mean, with respect to a Registered Security, the Person in whose name
a particular Security shall be registered
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<PAGE> 14
on the books of the Registrar kept for that purpose in accordance with the terms
hereof and, with respect to a Bearer Security or any coupon, the bearer thereof,
and the word "majority," used in connection with the term "Holder,"
"Securityholders" or "Holder of Securities" or other similar term, shall signify
the "majority in principal amount" whether or not so expressed.
"incur" shall mean, with respect to any Indebtedness or other
obligation of any Person, to create, issue, incur (by conversion, exchange or
otherwise), assume, guarantee or otherwise become liable in respect of such
Indebtedness or other obligation or the recording, as required pursuant to GAAP
or otherwise, of any such Indebtedness or other obligation on the balance sheet
of such Person (and "incurrence," "incurred," "incurrable," and "incurring"
shall have meanings correlative to the foregoing); provided that a change in
GAAP that results in an obligation of such Person that exists at such time
becoming Indebtedness shall not be deemed an incurrence of such Indebtedness.
"Indebtedness" shall mean, with respect to any Person, without
duplication, (a) all liabilities of such Person for borrowed money or for the
deferred purchase price of property or services, excluding any trade payables
and other accrued current liabilities incurred in the ordinary course of
business and which are not overdue by more than 90 days, but including, without
limitation, all obligations, contingent or otherwise, of such Person in
connection with any letters of credit, banker's acceptance or other similar
credit transaction; (b) all obligations of such Person evidenced by bonds,
notes, debentures or other similar instruments; (c) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even if the rights and remedies of
the seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), but excluding trade accounts payable
arising in the ordinary course of business; (d) all obligations of such Person
arising under Capitalized Lease Obligations; (e) all Indebtedness referred to in
the preceding clauses of other Persons and all dividends of other Persons, the
payment of which is secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured by) any Lien upon
property (including, without limitation, accounts and contract rights) owned by
such Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness (the amount of such obligation being deemed to be
the lesser of the value of such property or asset or the amount of the
obligation so secured); (f) all guarantees of Indebtedness referred to in this
definition by such Person; (g) all Redeemable Capital Stock of such Person
valued at the greater of its voluntary or involuntary maximum fixed repurchase
price plus accrued dividends; (h) all obligations under or in respect of
Currency Agreements and Interest Rate Protection Obligations of such Person; and
(i) any amendment, supplement, modification, deferral, renewal, extension or
refunding of any liability of the types referred to in clauses (a) through (h)
above. For purposes hereof, the "maximum fixed repurchase price" of any
Redeemable Capital Stock which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Redeemable Capital Stock as if
such Redeemable Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to this Indenture, and if such price
is based upon, or measured by, the fair market value of such Redeemable Capital
Stock, such fair market value shall be determined in good faith by the board of
directors of the issuer of such Redeemable Capital Stock.
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<PAGE> 15
"Indenture" shall mean this Indenture as amended, modified or
supplemented from time to time.
"Interest Rate Protection Agreement" means, with respect to the Company
or any of its Subsidiaries, any arrangement with any other Person whereby,
directly or indirectly, such Person is entitled to receive from time to time
periodic payments calculated by applying either a floating or a fixed rate of
interest on a stated notional amount in exchange for periodic payments made by
such Person calculated by applying a fixed or a floating rate of interest on the
same notional amount and shall include without limitation, interest rate swaps,
caps, floors, collars and similar agreements.
"Interest Rate Protection Obligations" mean the obligations of any
Person pursuant to an Interest Rate Protection Agreement.
"Interest Swap Obligations" shall mean the obligations of any Person
pursuant to any interest rate swap agreement, interest rate collar agreement or
other similar agreement or arrangement designed to protect such Person or any of
its Subsidiaries against fluctuations in interest rates.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time, or any successor federal income tax laws.
"Issue Date" shall mean the first date on which a Security is
authenticated by the Trustee pursuant to this Indenture.
"Legal Holiday" shall mean a Saturday, a Sunday or a day on which
banking institutions and trust companies in the City of New York, State of New
York or Atlanta, Georgia are authorized or obligated by law, regulation or
executive order to close.
"Lien" shall mean any mortgage, pledge, security interest, lien,
charge, hypothecation, assignment, deposit arrangement, title retention,
preferential right, trust or other arrangement having the practical effect of
the foregoing and shall include the interest of a vendor or lessor under any
conditional sale agreement, capitalized lease or other title retention
agreement.
"Material Subsidiary" means each Subsidiary, now existing or
hereinafter established or acquired, that has or acquires total assets in excess
of $10,000,000, or that holds any fixed assets material to the operations or
business of another Material Subsidiary.
"Material U.S. Subsidiary" means each Material Subsidiary that is
incorporated in the United States or any State thereof.
"Maturity," when used with respect to any Security, shall mean the date
on which the principal of such Security or an installment of principal becomes
due and payable as therein or herein provided, whether at the Stated Maturity or
by declaration of acceleration, notice of redemption, notice of option to elect
repayment or otherwise.
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<PAGE> 16
"Minority Interest" shall mean any shares of stock of any class of a
Subsidiary that are not owned by the Company or a Subsidiary.
"Officer" shall mean the Chairman of the Board of Directors, the
President, any Executive Vice President, any Senior Vice President, any Vice
President, the Chief Financial Officer, the Treasurer, the Secretary or the
Controller of the Company or a Guarantor, as the case may be.
"Officers' Certificate" shall mean a certificate signed by two Officers
or by an Officer and an Assistant Treasurer or Assistant Secretary of the
Company or a Guarantor, as the case may be, that shall comply with applicable
provisions of this Indenture, and delivered to the Trustee.
"Opinion of Counsel" shall mean a written opinion from a Person's legal
counsel (who may be an employee of or counsel to such Person or the Trustee) who
is reasonably acceptable to the Trustee.
"Original Issue Discount Security" shall mean any Security which
provides for an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration of the Maturity thereof after an
Event of Default.
"Periodic Offering" shall mean an offering of Securities of a series
from time to time the specific terms of which Securities, including, without
limitation, the rate or rates of interest, if any, thereon, the maturity or
maturities thereof, the original issue date or dates thereof, the redemption
provisions, if any, and any other terms specified as contemplated by Section 2.1
with respect thereto, are to be determined by the Company, or one or more of the
Company's agents designated in an Officers' Certificate, upon the issuance of
such Securities.
"Permitted Liens" shall mean, with respect to any Person:
(a) Liens existing on the date hereof;
(b) Liens for taxes, assessments or governmental charges or
claims either (a) not delinquent or (b) contested in good faith by
appropriate proceedings and as to which the Company or any of its
Subsidiaries shall have set aside on its books such reserves as may be
required pursuant to GAAP;
(c) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, suppliers, materialmen and repairmen and other
Liens imposed by law incurred in the ordinary course of business for
sums not yet delinquent or being contested in good faith, if such
reserve or other appropriate provision, if any, as shall be required by
GAAP shall have been made in respect thereof;
(d) Liens incurred or deposits made in the ordinary course
of business in connection with workers' compensation, unemployment
insurance or other types of social security, or to secure the
performance of tenders, statutory obligations, surety and appeal bonds,
bids, leases, government contracts, performance and return-of-money
bonds and other similar obligations (exclusive of obligations for the
payment of borrowed money);
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<PAGE> 17
(e) judgment Liens not giving rise to an Event of Default so
long as such Lien is adequately bonded and any appropriate legal
proceedings which may have been duly initiated for the review of such
judgment shall not have been finally terminated or the period within
which such proceedings may be initiated shall not have expired;
(f) easements, rights-of-way, zoning restrictions and other
similar charges or encumbrances in respect of real Property not
interfering in any material respect with the ordinary conduct of the
business of the Company or any of its Subsidiaries;
(g) any interest or title of a lessor under any Capitalized
Lease Obligation or operating lease;
(h) purchase money Liens to finance the acquisition or
construction of Property or assets of the Company or any Subsidiary of
the Company acquired or constructed in the ordinary course of business;
provided, however, that (i) the related purchase money Indebtedness
shall not be secured by any Property or assets of the Company or any
Subsidiary of the Company other than the Property and assets so
acquired or constructed and (ii) the Lien securing such Indebtedness
either (x) exists at the time of such acquisition or construction or
(y) shall be created within 90 days of such acquisition or
construction;
(i) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of customs duties in
connection with the importation of goods;
(j) Liens on any Property securing the obligations of the
Company or any Subsidiaries in respect of letters of credit issued by
the lenders under the Credit Agreements and as permitted under the
Credit Agreements in support of industrial development revenue bonds;
(k) Liens, if any, that may be deemed to have been granted
in connection with accounts receivable or interests in accounts
receivable of the Company or any Subsidiary as a result of the
assignment thereof pursuant to the Receivables Sale Agreement or the
Bank Receivables Agreement;
(l) Liens, if any, arising under the Guilford Equipment
Lease; and
(m) Liens on Property included in the IRB Collateral as may
be approved by the Collateral Agent pursuant to the terms of the
Amended and Restated Letter of Credit Agreement, dated as of
June 25, 1997, referred to in clause (ii) of the definition of "Credit
Agreements" in this Section 1.1 (if not defined in this Indenture, all
terms used in this paragraph (m) are defined in such Letter of Credit
Agreement).
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<PAGE> 18
"Person" shall mean any individual, corporation, partnership, limited
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof, or any other entity.
"Place of Payment," when used with respect to the Securities of or
within any series, means the place or places where the principal of and
interest, if any, and any Additional Amounts on the Securities of that series
are payable as specified as provided pursuant to Section 2.1.
"Property" of any Person means all types of real, personal, tangible,
intangible or mixed property owned by such Person whether or not included in the
most recent consolidated financial statements of the Company and its
Subsidiaries under GAAP.
"Receivables Sale Agreement" means the Receivables Sale Agreement dated
as of August 4, 1995 (the "1995 Receivables Sale Agreement") among the Company,
Interface Securitization Corporation, Special Purpose Accounts Receivables
Cooperative Corporation, and Canadian Imperial Bank of Commerce as servicing
agent, as such agreement, in whole or in part, may from time to time be amended,
renewed, extended, substituted, refinanced, restructured, replaced, supplemented
or otherwise modified, whether with the same or any other Person(s) as
purchaser(s), lender(s) or agent(s) (including, without limitation, any
successive renewals, extensions, substitutions, refinancings, restructurings,
replacements, supplements or other modifications of the foregoing) provided that
the sales of receivables pursuant to any such Receivables Sale Agreement are on
non-recourse terms not materially less favorable to the Company and its
Subsidiaries as provided for in the 1995 Receivables Sale Agreement and that the
aggregate amount of sales under such Receivables Sale Agreement and the Bank
Receivables Agreement at any one time outstanding shall not exceed a total of
$100,000,000.
"Redeemable Capital Stock" means any shares of any class or series of
Capital Stock that, either by the terms thereof, by the terms of any security
into which it is convertible or exchangeable or by contract or otherwise, is or
upon the happening of an event or passage of time would be, required to be
redeemed prior to the Stated Maturity with respect to the principal of any
Security or is redeemable at the option of the holder thereof at any time prior
to any such Stated Maturity, or is convertible into or exchangeable for debt
securities at any time prior to any such Stated Maturity.
"Redemption Date," when used with respect to any Security to be
redeemed, in whole or in part, shall mean the date fixed for such redemption by
or pursuant to this Indenture.
"Redemption Price" shall mean the amount payable for the redemption of
any Security on the Redemption Date, and shall always include interest accrued
and unpaid to the Redemption Date and any Additional Amounts payable with
respect thereto, unless otherwise specifically provided.
"Registered Security" shall mean any Security registered on the books
of the Registrar kept for that purpose in accordance with the terms hereof.
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<PAGE> 19
"Responsible Officer," when used with respect to the Trustee, shall
mean any officer in the corporate trust department of the Trustee or any officer
of the Trustee customarily performing functions similar to those performed by
any officer in the corporate trust department of the Trustee with respect to a
particular corporate matter or any other officer to whom any corporate trust
matter is referred because of his knowledge of and familiarity with the
particular subject.
"Securities" shall mean the debt securities, as amended or supplemented
from time to time pursuant to this Indenture, that are issued under this
Indenture.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Senior Indebtedness" means the principal of, premium, if any, and
interest on any Indebtedness (including the Securities) of the Company, whether
outstanding on the Issue Date or thereafter created, incurred or assumed, and
whether at any time owing, actually or contingently, unless, in the case of any
particular Indebtedness, the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to the Senior Subordinated
Notes. Without limiting the generality of the foregoing, "Senior Indebtedness"
shall include the principal of, premium, if any, and interest (including
interest accruing after the filing of a petition initiating any proceeding under
any state, federal or foreign bankruptcy or insolvency laws, whether or not
allowable as a claim in such proceeding) and shall also include reimbursement
payments, fees, expenses, indemnities, gross-up payments, and other obligations
of every nature from time to time owing, actually or contingently, by the
Company in respect of any such amounts owing by the Company or any of its
Subsidiaries under the Credit Agreements, the Receivables Purchase Agreement,
the Bank Receivables Agreement, the Guilford Equipment Lease, Interest Rate
Protection Agreements, Currency Agreements or other extensions of credit to the
Company or any of its Subsidiaries from banks or other lending institutions.
Notwithstanding the foregoing, "Senior Indebtedness" shall not include (a)
Indebtedness that is expressly subordinate or junior in right of payment to any
Indebtedness of the Company, (b) Indebtedness which, when incurred and without
respect to any election under Section 1111(b) of Title 11 of the United States
Code, is without recourse to the Company, (c) Indebtedness which is represented
by Redeemable Capital Stock, (d) Indebtedness for goods, materials or services
purchased in the ordinary course of business or Indebtedness consisting of trade
payables or other current liabilities (other than Indebtedness in respect of any
services rendered by or purchased from, or current liabilities owing to, banks
or financial institutions or the current portion of any long-term Indebtedness
which would constitute Senior Indebtedness but for the operation of this clause
(d)), (e) Indebtedness of or amounts owed by the Company for compensation to
employees or for services rendered to the Company, (f) any liability for
federal, state, local or other taxes owed or owing by the Company, (g)
Indebtedness of the Company to a Subsidiary of the Company or any other
Affiliate of the Company or any of such Affiliate's Subsidiaries, (h) that
portion of any Indebtedness which, at the time of the incurrence, is incurred by
the Company in violation of the Senior Subordinated Notes Indenture and (i)
amounts owing under leases (other than Capitalized Lease Obligations and the
Guilford Equipment Lease).
"Senior Subordinated Notes" shall mean, collectively, the unsecured
Senior Subordinated Notes Due 2005 issued by Interface, and guaranteed by
certain Subsidiaries of Interface, in the
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<PAGE> 20
aggregate principal amount of $125,000,000 (plus the aggregate principal amount,
if any, of such Senior Subordinated Notes issued pursuant to the underwriters'
over-allotment option up to a total amount of $18,750,000).
"Senior Subordinated Notes Indenture" shall mean the Indenture dated as
of November 15, 1995, by and among Interface, Bentley, Guilford (Delaware),
Inc., Guilford of Maine, Inc., Interface Asia-Pacific, Inc., Interface Europe,
Inc., Interface Flooring Systems, Inc., Interface Research Corporation, Pandel,
Inc., Prince Street, Rockland React-Rite, Inc., and First Union National Bank of
Georgia (now First Union National Bank), pursuant to which Interface issued its
Senior Subordinated Notes, as the same has been or may hereafter be amended or
supplemented from time to time.
"Significant Subsidiary" shall have the same meaning as in Rule 1.02(v)
of Regulation S-X under the Securities Act of 1933, as amended.
"Stated Maturity," when used with respect to any Security or any
installment of interest thereon, shall mean the date specified in such Security
as the fixed date on which the principal of such Security or such installment of
interest is due and payable.
"Subsidiary" means, with respect to any Person, any corporation or
other entity (including, without limitation, partnerships, joint ventures and
associations) regardless of its jurisdiction of organization or formation, at
least a majority of the total combined voting power of all classes of voting
stock or other ownership interests of which shall, at the time as of which any
determination is being made, be owned by such Person, either directly or
indirectly through one or more other Subsidiaries.
"TIA" or "Trust Indenture Act" shall mean the Trust Indenture Act of
1939 (15 U.S.C. Sections 77aaa-77bbbb), as amended and as in effect on the date
of this Indenture, except as provided in Sections 9.1 and 9.3 hereof.
"Transfer Agent" shall mean any Person, which may be the Company,
authorized by the Company to exchange or register the transfer of Securities.
"Trustee" shall mean the Person named in the first paragraph of this
Indenture unless a successor replaces such Person pursuant to the provisions
hereunder, and thereafter shall mean such successor.
"U.S. Government Obligations" shall mean securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America, the payment of which is unconditionally guaranteed as a full faith and
credit obligation of the United States of America, that, in either case, are not
callable or redeemable at the option of the issuer thereof and shall also
include a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act) or trust company as custodian with respect to any
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<PAGE> 21
such U.S. Government Obligation or a specific payment of interest on or
principal of any such U.S. Government Obligation held by such custodian for the
account of the holder of a depository receipt; provided that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt for any amount received by the
custodian in respect of the U.S. Government Obligations or the specific payment
of interest on or principal of the U.S. Government Obligations evidenced by such
depository receipt.
"Yield to Maturity" means the yield to maturity, computed at the time
of issuance of a Security (or, if applicable, at the most recent redetermination
of interest on such Security) as set forth in such Security in accordance with
generally accepted United States bond yield computation principles.
Section 1.2. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
---- ----------
<S> <C>
"Conversion Agent"..............................................2.3
"Conversion Price".............................................12.4
"covenant defeasance option"....................................8.1
"Date of Conversion"...........................................12.2
"Event of Default"..............................................6.1
"Last Sale Price"..............................................12.3
"legal defeasance option".......................................8.1
"mandatory sinking fund payment"...............................11.1
"optional sinking fund payment"................................11.1
"Paying Agent"..................................................2.3
"Rights"......................................................12.11
"Registrar".....................................................2.3
"Securities Custodian"..........................................2.3
"Surviving Entity"..............................................5.1
</TABLE>
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<PAGE> 22
<TABLE>
<S> <C>
"Trading Day".....................................................12.3
</TABLE>
Section 1.3. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Securities;
"indenture security holder" means a Securityholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Securities means the Company, any other obligor upon
the Securities or any successor obligor upon the 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 Commission rule under
the TIA and not otherwise defined herein have the meanings so assigned to them.
In addition, for purposes of Sections 311(b)(4) and 311(b)(6) of the
TIA, the following terms shall have the following meanings:
"cash transaction" means any transaction in which full payment for
goods or securities sold is made within seven days after delivery of the goods
or securities in currency or in checks or other orders drawn upon banks' or
bankers' acceptances and payable upon demand.
"self-liquidating paper" means any draft, bill of exchange, acceptance
or obligation which is made, drawn, negotiated or incurred by the Company for
the purpose of financing the purchase, processing, manufacture, shipment,
storage or sale of goods, wares or merchandise and which is secured by documents
evidencing title to, possession of or a lien upon, the goods, wares or
merchandise or the receivables or proceeds arising from the sale of the goods,
wares or merchandise previously constituting the security, provided the security
is received by the Trustee simultaneously with the creation of the creditor
relationship with the Company arising from the making, drawing, negotiating or
incurring of the draft, bill of exchange, acceptance or obligation.
Section 1.4. Rules of Construction.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
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<PAGE> 23
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(c) "or" is not exclusive;
(d) words in the singular include the plural and words in
the plural include the singular;
(e) provisions apply to successive events and
transactions;
(f) times of day shall refer to City of New York, New
York time;
(g) the words "herein," "hereof" and "hereunder" and
other words of similar import refer to this Indenture as a whole and
not to any particular Article, Section or other subdivision; and
(h) all references to "$" or dollars shall refer to the
lawful currency of the United States of America.
ARTICLE TWO
THE SECURITIES
Section 2.1. Terms and Forms.
The aggregate principal amount of Securities that may be authenticated
and delivered under this Indenture is unlimited. The Securities may be issued in
one or more series of Securities and shall bear the title, interest, if any, at
the rates and from the dates, shall mature at the times, may be redeemable at
the prices and upon the terms, shall be denominated and payable at the place or
places and in the currency or currencies (which may be other than United States
dollars), including composite currencies, and shall contain or be subject to
such other terms as shall be approved by or pursuant to a Board Resolution of
the Company or in one or more supplements to this Indenture.
The Securities of each series shall rank equally and pari passu as to
the right of payment of principal and interest, if any, with the Securities of
each other series unless such series is subordinate by its terms to the
Securities, and with all other Designated Senior Indebtedness. Unless otherwise
provided by the terms of the instrument establishing any series of Securities,
all Securities of such series shall constitute Designated Senior Indebtedness.
The Securities of each series hereunder shall be in one or more forms
approved from time to time by or pursuant to a Board Resolution of the Company
or in one or more supplements to this Indenture establishing the following:
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<PAGE> 24
(1) the title or designation of the Securities and the series
in which such Securities shall be included (which, unless such
Securities constitute part of a series of Securities previously issued,
shall distinguish the Securities of the series from all other
Securities);
(2) any limit upon the aggregate principal amount of the
Securities of such title or the Securities of such series which may be
authenticated and delivered under this Indenture (except for Securities
authenticated and delivered upon registration or transfer of, or in
exchange for, or in lieu of, other Securities of the series pursuant to
Sections 2.5, 2.6, 2.9 or 3.7);
(3) if other than 100% of the aggregate principal amount of
the Securities are offered, the percentage of the principal amount at
which the Series of such Securities will be offered;
(4) whether Securities of the series are to be issuable as
Registered Securities, Bearer Securities (with or without coupons) or
both; any restrictions applicable to the offer, sale or delivery of
Bearer Securities and the terms upon which Bearer Securities of the
series may be exchanged for Registered Securities of the series; and
whether any Securities of the series are to be issuable initially in
global form and, if so, (i) whether beneficial owners of interests in
any such global Security may exchange such interest for Securities of
such series and of like tenor of any authorized form and denomination
and the circumstances under which any such exchanges may occur, if
other than in the manner specified in Section 2.9 and (ii) the name of
the Depository or the U.S. Depository, as the case may be, with respect
to any global Security;
(5) the date as of which any Bearer Securities of the series
and any temporary global Security representing outstanding Securities
of the series shall be dated if other than the date of original
issuance of the first Security of the series to be issued;
(6) if Securities of the series are to be issuable as Bearer
Securities, whether interest in respect of any portion of a temporary
Bearer Security in global form (representing all of the outstanding
Bearer Securities of the series) payable in respect of any date or
dates prior to the exchange of such temporary Bearer Security for
definitive Securities of the series shall be paid to any clearing
organization with respect to the portion of such temporary Bearer
Security held for its account and, in such event, the terms and
conditions (including any certification requirements) upon which any
such interest payment received by a clearing organization will be
credited to the Persons entitled to interest payable on such date or
dates;
(7) the date or dates on which the principal of such
Securities is payable (or method of determination thereof);
(8) the rate or rates at which such Securities shall bear
interest, if any, or the method in which such rate or rates are
determined, the date or dates from which such interest
17
<PAGE> 25
shall accrue, the dates on which such interest shall be payable and the
record date for Holders entitled to the interest payable on Registered
Securities on any such date, whether and under what circumstances
Additional Amounts on such Securities shall be payable and, if so,
whether the Company has the option to redeem the affected Securities
rather than pay such Additional Amounts, and the basis upon which
interest shall be calculated if other than as otherwise provided in
this Indenture;
(9) the place or places, if any, in addition to or other than
the City of New York, New York, where the principal of and interest on
or Additional Amounts, if any, payable in respect of such Securities
shall be payable;
(10) the period or periods within which, the price or prices
at which and the terms and conditions upon which such Securities may be
redeemed, in whole or in part, at the option of the Company;
(11) the obligation or right, if any, of the Company to redeem
or purchase such Securities pursuant to a sinking fund, at the option
of a Holder thereof or otherwise and the period or periods within
which, the price or prices at which and the terms and conditions upon
which such Securities shall be redeemed or purchased in whole or in
part, pursuant to such obligation or right, and any provisions for the
remarketing of such Securities;
(12) the denominations in which Registered Securities of the
series, if any, shall be issuable, and the denominations in which
Bearer Securities of the series, if any, shall be issuable, in either
case if other than as otherwise provided in this Indenture;
(13) if other than the principal amount thereof, the portion
of the principal amount of such Securities which shall be payable upon
declaration of acceleration of the maturity thereof pursuant to Section
6.2;
(14) if other than such coin or currency of the United States
of America as at the time of payment is legal tender for payment of
public or private debts, the coin or currency, including composite
currencies, in which payment of the principal of or interest, if any,
and any Additional Amounts in respect of such Securities shall be
payable and whether the Securities of the series may be discharged
other than as provided in Article Eight;
(15) if the principal of or interest, if any, and any
Additional Amounts in respect of such Securities are to be payable, at
the election of the Company or a Holder thereof, in a coin or currency,
including composite currencies, other than that in which the Securities
are stated to be payable, the period or periods within which, and the
terms and conditions upon which, such election may be made;
(16) if the amount of payments of principal of or interest,
if any, or any Additional Amounts in respect of such Securities may be
determined with reference to an index,
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<PAGE> 26
formula or other method based on a coin or currency other than that in
which the Securities are stated to be payable, the manner in which such
amounts shall be determined;
(17) if the Securities of such series are to be issuable in
definitive form (whether upon original issue or upon exchange of a
temporary Security of such series) only upon receipt of certain
certificates or other documents or satisfaction of other conditions,
then the form and terms of such certificates, documents or conditions;
(18) any terms which may be related to warrants issued by the
Company in connection with, or for the purchase of, Securities of such
series, including whether and under what circumstances the Securities
of any series may be used toward the exercise price of any such
warrants;
(19) whether the Securities of the series are to be
convertible into shares of Class A Common Stock, and the conversion
price, conversion period and any conversion provisions other than as
provided in Article Twelve;
(20) any other events of default or covenants with respect to
Securities of such series; and
(21) any other terms of such Securities (which terms shall not
be inconsistent with the provisions of this Indenture).
If the form of the Security of any series is approved by or pursuant to
a Board Resolution, an Officers' Certificate delivered to the Trustee shall
state that all conditions precedent relating to the authentication and delivery
of such Security have been complied with and shall be accompanied by a copy of
the Board Resolution by or pursuant to which the form of such Security has been
approved. The Securities may have notations, legends or endorsements required
by law, stock exchange rule, agreements to which the Company is subject or
usage (provided that any such notation, legend or endorsement is in a form
acceptable to the Company and the Trustee). Each Security shall be dated the
date of its authentication. Each Security may contain any other terms as are
not inconsistent with the provisions of this Indenture.
All Securities of any one series and coupons appertaining to Bearer
Securities of such series, if any, shall be substantially identical except as to
denomination and the rate or rates of interest, if any, the time or times at
which the principal thereof may be payable, the date from which interest, if
any, shall accrue and except as may otherwise be provided in or pursuant to such
Board Resolution and set forth in the Officers' Certificate hereinabove
described or in any such indenture supplemental hereto. All Securities of any
one series need not be issued at the same time and, unless otherwise provided, a
series may be reopened for issuances of additional Securities of such series or
to establish additional terms of such series of Securities.
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<PAGE> 27
The Securities of each series may be issued as Registered Securities
without coupons or, if provided by the terms of the instrument establishing such
series of Securities, as Bearer Securities, with or without coupons and, in
either case, may be issued initially, temporarily or permanently in global form
(as provided in Section 2.10). Unless the form of a Security for a series
provides otherwise, the Registered Securities shall be issued in denominations
of $1,000 or integral multiples thereof and Bearer Securities shall be issuable
in the denomination of $5,000.
Except as otherwise specified as contemplated by this Section 2.1 for
Securities of any series, interest on the Securities of each series shall be
computed on the basis of a 360-day year of twelve 30-day months.
If any of the terms of the series are established by action taken by or
pursuant to a Board Resolution, a copy of an appropriate record of such action
shall be certified by an authorized officer or other authorized Person on behalf
of the Company and delivered to the Trustee at or prior to the delivery of the
Officers' Certificate setting forth, or providing the manner for determining,
the terms of the series.
With respect to Securities of a series subject to a Periodic Offering,
such Board Resolution or Officers' Certificate may provide general terms for
Securities of such series and provide either that the specific terms of
particular Securities of such series shall be specified in a Company Order or
that such terms shall be determined by the Company, or one or more of the
Company's agents designated in an Officers' Certificate, in accordance with a
Company Order.
Section 2.2. Execution and Authentication.
Two Officers shall sign the Securities and the coupons for the Company
by manual or facsimile signature. The Company's seal may be reproduced on the
Securities, but the Company's seal shall not be required to be included on the
Securities.
If an Officer whose signature is on a Security or coupon no longer
holds that office at the time the Security is authenticated by the Trustee, the
Security and coupon shall nevertheless be valid.
The aggregate principal amount of Securities outstanding hereunder at
any time shall be unlimited except that such outstanding amount (exclusive of
any premium) may not exceed the amount authorized from time to time by the Board
of Directors of the Company and except as provided in Section 2.6. Upon receipt
of a Company Order for the authentication and delivery of Securities of a
series, the Trustee shall authenticate and deliver for original issue Securities
of a series as to which an Officers' Certificate of the Company or a
supplemental indenture has been delivered to the Trustee pursuant to Section
2.1.
No Security or any coupon appertaining thereto shall be valid until the
Trustee or the authenticating agent referred to below manually signs the
certificate of authentication on the Security. Each Registered Security shall be
dated the date of its authentication. Bearer Securities
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<PAGE> 28
and any temporary Bearer Security in global form shall be dated as specified in
the Officers' Certificate of the Company or in the supplements to this Indenture
contemplated by Section 2.1. The signature of the Trustee or the authenticating
agent referred to below shall be conclusive evidence that the Security has been
authenticated under this Indenture.
The Trustee may appoint an authenticating agent reasonably acceptable
to the Company to authenticate the Securities. Unless otherwise provided in the
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 an Agent to deal with the Company or an Affiliate.
Except as permitted by Section 2.6, the Trustee shall not authenticate
and deliver any Bearer Security unless all appurtenant coupons for interest then
matured have been detached and canceled.
The Trustee's certificate of authentication shall be in the following
form:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
Dated
---------------------
This is one of the Securities of the series designated herein and
referred to in the within-mentioned Indenture.
-------------------------------------------
FIRST UNION NATIONAL BANK, as Trustee
By:
---------------------------------------
Authorized Officer
If the forms and terms of the Securities of the series and any related
coupons have been established in or pursuant to one or more Officers'
Certificates as permitted by Section 2.1 and 2.2, in authenticating such
Securities and accepting the additional responsibilities under this Indenture
relating to such Securities, the Trustee shall be entitled to receive, and
(subject to Section 7.1) shall be fully protected in relying upon an Opinion of
Counsel to the effect that:
(a) the form or forms of such Securities and any coupons have been
established in conformity with the provisions of this Indenture;
(b) the terms (or the manner of determining the terms) of such
Securities and any coupons have been established in conformity with the
provisions of this Indenture;
(c) such Securities, together with any coupons appertaining
thereto, when completed by appropriate insertions and executed and delivered by
the Company to the Trustee for authentication in accordance with this Indenture,
authenticated and delivered by the Trustee in accordance with this
21
<PAGE> 29
Indenture and issued by the Company in the manner and subject to any conditions
specified in such Opinion of Counsel, will constitute the legal, valid and
binding obligations of the Company, enforceable in accordance with their terms,
subject to applicable bankruptcy, insolvency, reorganization and other similar
laws of general applicability relating to or affecting the enforcement of
creditors' rights, to general equitable principles and to such other
qualifications as such counsel shall conclude do not materially affect the
rights of Holders of such Securities and any coupons;
(d) all laws and requirements in respect of the execution and
delivery by the Company of such Securities, any coupons and supplemental
indentures, if any, have been complied with and that authentication and delivery
of such Securities and any coupons and the execution and delivery of the
supplemental indenture, if any, by the Trustee will not violate the terms of the
Indenture;
(e) the Company has the corporate power to issue such Securities
and any coupons, and has duly taken all necessary corporate action with respect
to such issuance; and
(f) the issuance of such Securities and any coupons will not
contravene the articles of incorporation or by-laws of the Company or result in
any violation of any of the terms or provisions of any law or regulation or of
any indenture, mortgage or other agreement known to such counsel by which the
Company is bound.
Notwithstanding the provisions of any other section of this Indenture,
with respect to Securities of a series subject to a Periodic Offering, it shall
not be necessary to deliver the Officers' Certificate otherwise required or the
Company Order and Opinion of Counsel otherwise required pursuant to the
preceding two paragraphs prior to or at the time of issuance of each Security,
but such documents shall be delivered prior to or at the time of issuance of the
first Security of such series.
The Trustee shall not be required to authenticate and deliver any such
Securities if the issuance of such Securities pursuant to this Indenture will
affect the Trustee's own rights, duties or immunities under the Securities and
this Indenture or otherwise in a manner which is not reasonably acceptable to
the Trustee.
Section 2.3. Registrar, Paying Agent, Conversion Agent, Depository and
Securities Custodian.
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 including the office or agency maintained by the Company
pursuant to Section 4.2 where Securities may be presented for payment (the
"Paying Agent") and, if applicable, an office or agency where the Securities may
be presented for conversion (the "Conversion Agent"). The Registrar shall keep a
register of the Securities and of their transfer and exchange. The Company may
appoint one or more co-registrars and one or more additional paying agents or
conversion agents. The term "Paying Agent" includes any additional paying agent,
and the term "Conversion Agent" includes any additional conversion agent.
22
<PAGE> 30
The Company shall enter into an appropriate agency agreement with any
Registrar, Paying Agent, Conversion Agent, Depository, Securities Custodian or
co-registrar not a party to this Indenture, which agreement shall implement the
provisions of this Indenture that relate to such agent and incorporate the terms
of the TIA. The Company shall promptly notify the Trustee of the name and
address of any such agent. If the Company fails to maintain a Registrar, Paying
Agent, Conversion Agent, if applicable, or Securities Custodian, if applicable,
the Trustee shall act as such upon reasonable notice thereof and shall be
entitled to appropriate compensation therefor pursuant to Section 7.7. The
Company or any of its Subsidiaries may act as Paying Agent, Conversion Agent,
Registrar, co-registrar or Transfer Agent.
The Company shall promptly notify the Trustee regarding any change of
the Person acting as Registrar, Paying Agent, Conversion Agent or Securities
Custodian.
The Company initially appoints the Trustee as Registrar and Paying
Agent in connection with the Securities and the Trustee accepts such
appointment.
Section 2.4. Securityholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Securityholders. If the Trustee is not the Registrar, the Company shall furnish
to the Trustee at least 14 Business Days before each interest payment date (and
in all events at intervals of not more than six months) 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. The Company and the Trustee shall otherwise comply with TIA
Section 312(a).
Section 2.5. Transfer, Registration and Exchange.
When a Registered Security is presented at an office or agency
maintained for that series pursuant to Section 4.2 in proper form for
registration of transfer with a request to register a transfer, the Registrar or
co-registrar at that office shall register the transfer as requested.
At the option of the Securityholder, Registered Securities of any
series may be exchanged upon surrender to the Registrar or a co-registrar for
Registered Securities of the same series of like aggregate principal amount,
stated maturity and tenor and of other authorized denominations upon surrender
at any office or agency maintained for that series pursuant to Section 4.2.
If so provided with respect to Securities of a series, at the option of
the Holder, Bearer Securities of any such series may be exchanged for Registered
Securities of the same series containing identical terms and provisions, of any
authorized denominations and aggregate principal amount, upon surrender of the
Bearer Securities to be exchanged at any office or agency maintained for that
series pursuant to Section 4.2, with all unmatured coupons and all matured
coupons in default thereto appertaining. If the Holder of a Bearer Security is
unable to produce any such unmatured coupon or coupons or matured coupon or
coupons in default, such exchange may be effected if the Bearer Securities are
accompanied by payment in funds acceptable to the Company and the Trustee in an
amount equal to the face amount of such missing coupon or coupons, or the
surrender of such missing coupon or coupons may be waived by the Company and the
Trustee if
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<PAGE> 31
there is furnished to them such security or indemnity as they may require to
save each of them and any Paying Agent for that series harmless. If thereafter
the Holder of such Bearer Security shall surrender to any Paying Agent for that
series any such missing coupon in respect of which such a payment shall have
been made, such Holder shall be entitled to receive the amount of such payment;
provided, however, that except as otherwise provided in Section 4.2, interest
represented by coupons shall be payable only upon presentation and surrender of
those coupons at an office or agency located outside the United States.
Notwithstanding the foregoing, in case a Bearer Security of any series is
surrendered at any such office or agency maintained for that series pursuant to
Section 4.2 in exchange for a Registered Security of the same series and like
tenor after the close of business at such office or agency on any record date
for the payment of interest and any Additional Amounts thereon and before the
opening of business at such office or agency on the relevant payment date
therefor, such Bearer Security shall be surrendered without the coupon relating
to such payment date or proposed date of payment, as the case may be (or if such
coupon is so surrendered with such Bearer Security, such coupon shall be
returned to the Person so surrendering the Bearer Security), and interest will
not be payable on such payment date or proposed date for payment, as the case
may be, in respect of the Registered Security issued in exchange for such Bearer
Security, but will be payable only to the Holder of such coupon when due in
accordance with the provisions of this Indenture.
Every Security presented or surrendered for registration of transfer or
exchange shall (if so required by the Company or the Registrar or co-registrar)
be duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Registrar duly executed by the Holder
thereof or his attorney duly authorized in writing. To permit transfers and
exchanges, the Company shall execute and the Trustee shall authenticate
Securities at the Registrar's or co-registrar's request.
Notwithstanding the foregoing, except as otherwise specified as
contemplated by Section 2.1, any global Security shall be exchangeable only if
(i) the Depository or U.S. Depository, as applicable, is at any time unwilling,
unable or ineligible to continue as the Depository and a successor Depository,
or U.S. Depository as applicable, is not appointed by the Company within 90 days
of the date the Company is so informed in writing, (ii) the Company executes and
delivers to the Trustee a Company Order to the effect that such global Security
shall be so exchangeable, or (iii) an Event of Default has occurred and is
continuing with respect to the Securities. If the beneficial owners of interests
in a global Security are entitled to exchange such interests for Securities of
such series and of like tenor and principal amount and of any authorized form
and denomination, as specified as contemplated by Section 2.1, then without
unnecessary delay but in any event not later than the earliest date on which
such interests may be so exchanged, the Company shall deliver to the Trustee
definitive Securities of that series in aggregate principal amount equal to the
principal amount of such global Security, executed by the Company. On or after
the earliest date on which such interests may be so exchanged, such global
Securities shall be surrendered from time to time by the U.S. Depository or such
other Depository as shall be specified in the Company Order with respect
thereto, and in accordance with instructions given to the Trustee and the U.S.
Depository or such other Depository, as the case may be, which instructions
shall be in writing and, if requested by the Trustee, accompanied by an
Officers' Certificate of the Company or an Opinion of Counsel, as shall be
24
<PAGE> 32
specified in the Company Order with respect thereto to the Trustee, as the
Company's agent for such purpose, to be exchanged, in whole or in part, for
definitive Securities of the same series without charge. The Trustee shall
authenticate and make available for delivery, in exchange for each portion of
such surrendered global Security, a like aggregate principal amount of
definitive Securities of the same series of authorized denominations and of like
tenor as the portion of such global Security to be exchanged which shall be in
the form of Bearer Securities or Registered Securities, or any combination
thereof, as shall be specified by the beneficial owner thereof (unless the
Securities of the series are not issuable both as Bearer Securities and as
Registered Securities, in which case the definitive Securities exchanged for the
global Security shall be issuable only in the form in which the Securities are
issuable, as specified as contemplated by Section 2.1); provided, however, that
no such exchanges may occur (a) for a period of 15 days next preceding the 15th
day of any selection of Securities of that series to be redeemed pursuant to
Section 3.3, or to exchange any Securities of a series selected, called or being
called for redemption in whole or in part except in the case of any Security to
be redeemed in part, the portion thereof not so to be redeemed; and provided,
further, that (unless otherwise specified as contemplated by Section 2.1) no
Bearer Security delivered in exchange for a portion of a global Security shall
be mailed or otherwise delivered to any location in the United States. Promptly
following any such exchange in part, such global Security shall be returned by
the Trustee to the U.S. Depository or such other Depository referred to above in
accordance with the instructions of the Company referred to above. If a
Registered Security is issued in exchange for any portion of a global Security
after the close of business at the office or agency where such exchange occurs
on any record date for the payment of interest or any Additional Amounts
thereon, and before the opening of business at such office or agency on the
relevant payment date therefor, interest and any Additional Amounts in respect
of such Registered Security will not be payable on such payment date, but will
be payable on such payment date only to the Person to whom interest or any
Additional Amounts in respect of such portion of such global Security is payable
in accordance with the provisions of this Indenture.
No service charge shall be made for any registration of transfer or
exchange, or redemption of Securities, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of Securities, other
than exchanges pursuant to Section 2.9 or 9.5 not involving any transfer.
The Company shall not be required (a) to issue, register the transfer
of, or exchange any Securities of any series for a period of 15 days next
preceding the day of any selection of Securities of such series to be redeemed
pursuant to Section 3.3, or (b) to register the transfer of or exchange any
Securities of any series selected, called or being called for redemption in
whole or in part except, in the case of any Registered Security to be redeemed
in part, the portion thereof not so to be redeemed or (c) to exchange any Bearer
Security so selected for redemption except, to the extent provided with respect
to Securities of a series, that such a Bearer Security may be exchanged for a
Registered Security of that series, provided that such Registered Security shall
be immediately surrendered for redemption with written instruction for payment
consistent with the provisions of this Indenture.
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All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
endorsed thereon surrendered upon such registration of transfer or exchange.
Notwithstanding anything herein or in the forms or terms of any
Securities to the contrary, none of the Company, the Trustee or any agent of the
Company or the Trustee shall be required to exchange any Bearer Security for a
Registered Security if such exchange would result in adverse federal income tax
consequences to the Company (such as, for example, the inability of the Company
to deduct from its income, as computed for federal income tax purposes, the
interest payable on the Bearer Securities) under then-applicable United States
federal income tax laws. The Trustee and any such agent shall be entitled to
rely on an Officers' Certificate or an Opinion of Counsel in determining such
result.
Section 2.6. Replacement Securities.
If the Holder of a mutilated or defaced Security or a Security with a
mutilated or defaced coupon appertaining to it surrenders such Security to the
Trustee or if the Holder of a Security presents evidence to the satisfaction of
the Company and the Trustee of the destruction, loss or theft of the Security or
the destruction, loss or theft of a coupon and surrenders the Security to which
such coupon appertains with all appurtenant coupons not so lost, stolen or
wrongfully taken, the Company shall issue and the Trustee shall authenticate a
replacement Security of the same series and of like tenor, with coupons
corresponding to the coupons, if any, appertaining to the surrendered Security,
if the requirements set forth in the next succeeding paragraph are met. If
required by the Trustee or the Company, an indemnity bond must be supplied by
the Holder that is sufficient in the judgment of the Trustee or the Company, as
the case may be, to protect the Company, the Trustee, any Agent or any
authenticating agent from any loss which any of them may suffer if a Security is
replaced.
Upon the issuance of any substitute Security, the Company may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses (including the
fees and expenses of the Trustee) connected therewith. In case any Security or
coupon which has matured or is about to mature or has been called for redemption
in full shall become mutilated or defaced or be destroyed, lost or stolen, the
Company may, instead of issuing a substitute Security or coupon, pay or
authorize the payment of the same (without surrender thereof except in the case
of a mutilated or defaced Security or coupon); provided, however, that the
applicant for such payment shall furnish to the Company and to the Trustee and
any agent of the Company or the Trustee such security or indemnity as any of
them may require to save each of them harmless, and, in every case of
destruction, loss or theft, the applicant shall also furnish to the Company and
the Trustee and any agent of the Company or the Trustee evidence to their
satisfaction of the destruction, loss or theft of such Security or coupon and of
the ownership thereof.
Every substitute Security of any series, with coupons, if any, issued
pursuant to the provisions of this Section 2.6 by virtue of the fact that any
Security is destroyed, lost or stolen or that
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a coupon appertaining to it is destroyed, lost or stolen shall constitute an
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Security or coupon shall be at any time enforceable by anyone and
shall be entitled to all the benefits of (but shall be subject to all the
limitations of rights set forth in) this Indenture equally and proportionately
with any and all other Securities duly authenticated and delivered hereunder.
All Securities shall be held and owned upon the express condition that, to the
extent permitted by the law, the foregoing provisions are exclusive with respect
to the replacement or payment of mutilated, defaced, destroyed, lost or stolen
Securities and shall preclude any and all other rights or remedies
notwithstanding any law or statute existing or hereafter enacted to the contrary
with respect to the replacement or payment of negotiable instruments or other
securities without their surrender.
Section 2.7. Outstanding Securities.
The Securities of any series outstanding at any time are all the
Securities of such series authenticated and delivered by the Trustee except for
those canceled by it, those delivered to it for cancellation, those described in
this Section as not outstanding and in the case of any global Securities, the
principal amount by which such global Securities have been reduced by the
Trustee or the Securities Custodian in accordance with this Indenture.
If any Security is replaced or paid pursuant to Section 2.6, it ceases
to be outstanding unless the Trustee and the Company receive proof satisfactory
to them that the replaced Security is held by a bona fide purchaser.
If the principal amount of any Security is considered paid under
Section 4.1 or 8.1, it ceases to be outstanding and interest on it ceases to
accrue.
If the Paying Agent segregates and holds in trust, in accordance with
this Indenture, on a Redemption Date or maturity date money sufficient to pay
all principal and interest payable on that date with respect to the Securities
of a particular series (or portions thereof) to be redeemed or maturing, as the
case may be (and in the case of any Security which is to be redeemed prior to
the Maturity thereof, notice of such redemption has been duly given or provision
satisfactory to the Trustee has been made for giving such notice), and the
Paying Agent is not prohibited from paying such money to Securityholders on that
date pursuant to the terms of this Indenture, then on and after that date such
Securities of that series (or portions thereof) cease to be outstanding and
interest on them ceases to accrue.
If any Security is canceled by the Trustee or delivered to the Trustee
for cancellation, it ceases to be outstanding and interest on it ceases to
accrue.
A Security of any series does not cease to be outstanding because the
Company or an Affiliate holds such Security, except as otherwise provided in
Section 2.8 hereof.
In determining whether the Holders of the requisite principal amount of
outstanding Securities of any or all series have given any request, demand,
authorization, direction, notice,
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consent or waiver hereunder, (i) the principal amount of an Original Issue
Discount Security that shall be deemed to be outstanding for such purposes shall
be the amount of the principal thereof that would be due and payable as of the
date of such determination upon a declaration of acceleration of the maturity
thereof pursuant to Section 6.2 and (ii) the principal amount of a Security
denominated in a foreign currency or currencies, of the principal amount (or, in
the case of an Original Issue Discount Security, the United States dollar
equivalent, determined pursuant to Section 13.15, of such Security of the amount
determined as provided in (i) above) of such Security.
Section 2.8. Treasury Securities.
In determining whether the Holders of the required principal amount of
Securities (in the aggregate or with respect to a particular series, in each
case only as expressly provided herein) have concurred in any direction, waiver
or consent, any Securities owned by the Company or an Affiliate shall be
disregarded (including for purposes of determining the outstanding principal
amount of Securities or any series of Securities) except that, for the purposes
of determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Securities that the Trustee knows are so
owned shall be so disregarded.
Section 2.9. Temporary Securities.
Until definitive Securities of any series are ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary Securities upon
receipt of the written order of the Company signed by two Officers. Temporary
Securities and, if Bearer Securities, temporary coupons, shall be substantially
in the form of definitive Securities and, if Bearer Securities, definitive
coupons, but may have variations that the Company considers appropriate for
temporary Securities, as conclusively evidenced by the Company's preparation of
such Securities. Without unreasonable delay, the Company shall prepare and the
Trustee, upon receipt of the written order of the Company signed by two
Officers, shall authenticate definitive Securities in exchange for temporary
Securities. Until such exchange, temporary Securities shall be entitled to the
same rights, benefits and privileges as definitive Securities.
Section 2.10. Securities in Global Form.
If Securities of a series are issuable in global form, any such
Security may provide that it shall represent the aggregate amount of outstanding
Securities from time to time endorsed thereon and may also provide that the
aggregate amount of outstanding Securities represented thereby may from time to
time be reduced to reflect exchanges. Any endorsement of a Security in global
form to reflect the amount, or any increase or decrease in the amount or changes
in the rights of Holders, of outstanding Securities represented thereby shall be
made in such manner and by such Person or Persons as shall be specified therein.
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Section 2.11. Cancellation.
The Company at any time may deliver Securities or coupons to the
Trustee for cancellation. The Registrar and the Paying Agent shall forward to
the Trustee any Securities surrendered to them for registration of transfer,
exchange or payment and any coupons surrendered for payment. The Trustee shall
cancel all Securities surrendered for registration of transfer, exchange,
payment, replacement or cancellation and all coupons surrendered for payment and
shall destroy canceled Securities in accordance with the usual destruction
procedures of the Trustee and deliver evidence of such destruction to the
Company, unless the Company directs the Trustee to return such canceled
Securities to the Company by written order signed by two Officers. The Company
may not issue new Securities to replace Securities that it has redeemed or paid
or that have been delivered to the Trustee for cancellation.
Section 2.12. Defaulted Interest.
If the Company defaults on a payment of interest or any Additional
Amounts on any series of Registered Securities, and so long as the Trustee deems
the following procedure practicable, the Company shall pay the defaulted
interest and any Additional Amounts to Persons who are Holders of Registered
Securities of such series on a subsequent special record date in the following
manner. The Company shall fix the special record date (which shall be at least
five days before the payment date) for the payment of such defaulted interest
and any Additional Amounts on such Securities and the payment date for such
defaulted interest. At least 15 days before the special record date, the Trustee
shall mail each Holder of Registered Securities a notice that states the special
record date, the payment date and the amount of defaulted interest and any
Additional Amounts to be paid and such other information as the Trustee, in its
discretion, deems appropriate, provided the Company has made arrangements
satisfactory to the Trustee for payment of the aggregate amount to be paid on
such payment date. On such payment date the Trustee shall pay out of funds
provided by the Company such defaulted interest and any Additional Amounts. In
case a Bearer Security of any series is surrendered at the office or agency of
the Company maintained pursuant to Section 4.2 in a Place of Payment for such
series in exchange for a Registered Security of such series after the close of
business at such office or agency on any special record date and before the
opening of business at such office or agency on the related proposed date for
payment of defaulted interest and any Additional Amounts, such Bearer Security
shall be surrendered without the coupon relating to such proposed date of
payment and defaulted interest and any Additional amounts will not be payable on
such proposed date of payment in respect of the Registered Security issued in
exchange for such Bearer Security, but will be payable only to the Holder of
such coupon on or after such payment date in accordance with the provisions of
this Indenture. The Company may pay defaulted interest and any Additional
Amounts in any other lawful manner.
Section 2.13. Persons Deemed Owners.
Prior to due presentment of a Registered Security for registration of
transfer, the Company, the Trustee and any Agent may deem and treat the Person
in whose name any such Registered Security is registered as the absolute owner
of such Registered Security (whether or not such
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Security shall be overdue and notwithstanding any notation of the ownership or
other writing thereon made by anyone other than the Company, any Registrar or
co-registrar) for the purpose of receiving payments of principal of, interest on
or any Additional Amounts payable with respect to such Registered Security and
for all other purposes whatsoever and neither the Company, the Trustee nor any
Agent shall be affected by any notice to the contrary.
The Company, the Trustee and any agent of the Company or the Trustee
may treat the bearer of any Bearer Security and the bearer of any coupon as the
absolute owner of such Security or coupon for the purpose of receiving payment
thereof or on account thereof and for all other purposes whatsoever, whether or
not such Security or coupon shall be overdue, and neither the Company, the
Trustee nor any agent of the Company or the Trustee shall be affected by any
notice to the contrary.
ARTICLE THREE
REDEMPTION
Section 3.1. Applicability of Article.
This Article shall apply to the Securities of each series, if any, that
by their terms are subject to redemption at the option of the Company or
pursuant to the operation of a sinking fund or otherwise are required to be
redeemed pursuant to the terms of the Securities. If the terms of any Security
shall conflict with any provision of this Article Three, the terms of such
Security shall govern.
Section 3.2. Notices to Trustee.
If the Company elects to redeem Securities pursuant to the optional
redemption provisions, if any, set forth in such Securities, it shall furnish to
the Trustee an Officers' Certificate setting forth the paragraph of the
Securities of the applicable series pursuant to which the redemption shall
occur, the Redemption Date, the principal amount of Securities to be redeemed
and the Redemption Price.
If Securities of any series by their terms are redeemable pursuant to
the operation of a sinking fund or pursuant to another mandatory redemption
provision of the Securities, the Company shall notify the Trustee by an
Officers' Certificate of the amount of the next sinking fund payment or amount
required to satisfy such mandatory redemption payment and the portion of such
payment which is to be satisfied by delivering and crediting Securities of the
same series pursuant to Section 3.6.
If the Company elects to reduce, pursuant to the terms of such
Securities, the principal amount of Securities to be redeemed, it shall notify
the Trustee by an Officers' Certificate of the amount of the reduction and the
basis for it. If the Company elects to credit against any such redemption
Securities of the same series it has not previously delivered to the Trustee for
cancellation, it shall deliver the Securities with such Officers' Certificate.
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The Company shall give each notice or Officers' Certificate provided
for in this Section at least 45 days (unless a shorter period shall be
satisfactory to the Trustee or a longer period required by Section 3.4) but not
more than 60 days before the applicable Redemption Date.
If the Registrar is not the Trustee, the Company shall, concurrently
with each notice of redemption or repurchase, cause the Registrar to deliver to
the Trustee a certificate (upon which the Trustee may rely) setting forth the
principal amounts of Securities held by each Holder.
Section 3.3. Selection of Securities to Be Redeemed.
If less than all of the Securities of a series are to be redeemed, the
Trustee shall select the Securities to be redeemed on a pro rata basis, by lot
or by such method as the Trustee shall deem fair and appropriate. In the event
of partial redemption by lot, the particular Securities of a series to be
redeemed shall be selected, unless otherwise provided herein, not less than 30
nor more than 60 days prior to the Redemption Date by the Trustee from the
outstanding Securities of such series not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Security selected for
partial redemption, the principal amount thereof to be redeemed. Securities and
portions of Securities selected shall be in amounts of $1,000 or whole multiples
of $1,000; except that if all of the Securities of a Holder are to be redeemed,
the entire outstanding amount of Securities held by such Holder, even if not a
multiple of $1,000, shall be redeemed. Except as provided in the preceding
sentence, provisions of this Indenture that apply to Securities called for
redemption also apply to the portions of the principal amount of such Securities
called for redemption.
Section 3.4. Notice of Redemption.
The Trustee shall give notice of a redemption at least 30 days but not
more than 60 days before the Redemption Date, with respect to Registered
Securities, by mailing a notice of redemption to each Holder of Registered
Securities of such series to be redeemed at such Holder's address as it appears
on the Securities register maintained by the Registrar and, with respect to
Bearer Securities, by publishing in an Authorized Newspaper notice of such
redemption on two separate days.
All notices of redemption shall identify the Securities to be redeemed
and shall state:
(a) the Redemption Date;
(b) the Redemption Price, if any;
(c) the name and address of the Paying Agent;
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(d) that Securities called for redemption must be
surrendered to the Paying Agent to collect the Redemption Price;
(e) the paragraph of the Securities pursuant to which
the Securities called for redemption are being redeemed;
(f) that, unless the Company defaults in making the
redemption payment, interest on Securities called for redemption ceases to
accrue on and after the Redemption Date and the only remaining right of the
Holders of such Securities is to receive payment of the Redemption Price upon
surrender to the Paying Agent of the Securities to be redeemed;
(g) if any Security is to be redeemed in part, the
portion of the principal amount (equal to $1,000 or any integral multiple
thereof) of such Security to be redeemed and that, on or after the Redemption
Date, upon surrender of such Security, a new Security or Securities of the same
series in aggregate principal amount equal to the unredeemed portion thereof
will be issued without charge to the Securityholder;
(h) if less than all of the Securities of a series are
to be redeemed, the identification of the particular Securities of such series
(or portion thereof) to be redeemed, as well as the aggregate principal amount
of Securities of such series to be redeemed and the aggregate principal amount
of Securities of such series estimated to be outstanding after such partial
redemption;
(i) that the redemption is from a sinking fund, if such
is the case;
(j) that, unless otherwise specified in such notice,
Bearer Securities of any series, if any, surrendered for redemption must be
accompanied by all coupons maturing subsequent to the Redemption Date or the
amount of any such missing coupon or coupons will be deducted from the
Redemption Price unless security or indemnity satisfactory to the Company, the
Trustee and any Paying Agent is furnished;
(k) if Bearer Securities of any series are to be redeemed
and any Registered Securities of such series are not to be redeemed, and if such
Bearer Securities may be exchanged for Registered Securities not subject to
redemption on such Redemption Date, the last date, as determined by the Company,
on which such exchanges may be made;
(l) the CUSIP number, if any, of each Security to be
redeemed. The Trustee shall not be responsible for the correctness or accuracy
of any such CUSIP number; and
(m) any other information that the Trustee, in its
discretion, deems necessary or appropriate including without limitation
withholding tax-related information.
At the Company's request, the Trustee shall give the notice of
redemption in the name and at the expense of the Company. The Company shall
provide the Trustee with the information required by this Section and shall
provide notice of such redemption to the Trustee at least 45 days prior to the
Redemption Date (unless a shorter period shall be satisfactory to the Trustee).
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Section 3.5. Effect of Notice of Redemption.
Once notice of redemption is mailed, Securities of the series called
for redemption become due and payable on the Redemption Date at the Redemption
Price. Upon surrender to any Paying Agent, such Securities shall be paid at the
Redemption Price; provided, however, that installments of interest whose Stated
Maturity is on or prior to the Redemption Date shall be payable, in the case of
Bearer Securities, to bearers of the coupons for such interest and Additional
Amounts upon surrender thereof and, in the case of Registered Securities, to the
Holders of such series of Securities, registered as such, at the close of
business on the relevant record date for the payment of such installment of
interest and Additional Amounts.
Notice of redemption shall be deemed to be given when mailed or
published, as the case may be, whether or not the Holder receives the notice. In
any event, failure to give such notice, or any defect therein, shall not affect
the validity of the proceedings for the redemption of the Securities.
If any Bearer Security surrendered for redemption shall not be
accompanied by all appurtenant coupons maturing after the Redemption Date, such
Security may be paid after deducting from the Redemption Price an amount equal
to the face amount of all such missing coupons, or the surrender of each missing
coupon or coupons may be waived by the Company and the Trustee if there shall be
furnished to them such security or indemnity as they may require to save each of
them and any Paying Agent for such Security harmless. If thereafter the Holder
of such Security shall surrender to the Trustee or any Paying Agent for such
Security any such missing coupon in respect of which a deduction shall have been
made from the Redemption Price, such Holder shall be entitled to receive the
amount so deducted; provided, however, that interest (and any Additional
Amounts) represented by coupons shall be payable only upon presentation and
surrender of these coupons at an office or agency located outside of the United
States except as otherwise provided in Section 4.2.
Section 3.6. Deposit of Redemption Price.
Prior to the Redemption Date, the Company shall irrevocably deposit
with the Trustee or with the Paying Agent (or if the Company or a Subsidiary of
the Company is acting as the Paying Agent, set aside, segregate and hold in
trust, as provided herein) in immediately available funds money sufficient to
pay the Redemption Price on all Securities to be redeemed on that date.
If the Company complies with the preceding paragraph, then, unless the
Company defaults in the payment of such Redemption Price, interest on the
Securities to be redeemed will cease to accrue on and after the applicable
Redemption Date, whether or not such Securities are presented for payment. If
any Security called for redemption shall not be so paid upon surrender for
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redemption because of the failure of the Company to comply with the preceding
paragraph, interest will be paid on the unpaid principal, from the Redemption
Date until such principal is paid, and, to the extent lawful, on any interest
not paid on such unpaid principal, in each case at the rate provided in the
Securities for the applicable series.
If any Security by its terms permits any sinking fund payment
obligation to be satisfied by delivering and crediting Securities, the Company
shall deliver such Securities to the Trustee for crediting against such payment
obligation in accordance with the terms of such Securities and this Indenture.
Section 3.7. Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, the Company
shall issue and the Trustee shall authenticate for the Holder at the expense of
the Company a new Security of the same series equal in principal amount to the
unredeemed portion of the Security surrendered.
If a Security in global form is surrendered upon redemption in part,
the Company shall execute, and the Trustee shall authenticate and deliver to the
U.S. Depository or other Depository for such Security in global form as shall be
specified in the Company Order to the Trustee with respect thereto, without
service charge, a new Security in global form in a denomination equal to and in
exchange for the unredeemed portion of the principal of the Security in global
form so surrendered.
ARTICLE FOUR
COVENANTS
Subject to the provisions of Section 8.1, so long as Securities are
outstanding hereunder, the Company covenants for the benefit of the
Securityholders that:
Section 4.1. Payment of Securities.
The Company will punctually pay the principal of, interest and
Additional Amounts, if any, on the Securities on the dates and in the manner
provided in the Securities, any coupons appertaining thereto and this Indenture.
Principal, interest and any Additional Amounts shall be considered paid on the
date due if the Paying Agent (other than the Company or any of its Subsidiaries)
holds on that date money sufficient to pay all principal, interest and any
Additional Amounts then due.
Any interest due on and any Additional Amounts payable in respect of
Bearer Securities on or before their maturity, in respect of the principal of
such a Security, shall be payable only upon presentation and surrender of the
several coupons for such interest installments as are evidenced thereby as they
severally mature.
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The Company shall pay interest on overdue principal and, to the extent
lawful, interest on overdue installments of interest or Additional Amounts, if
any, at the rate borne by such Securities.
In case a Bearer Security of any series is surrendered in exchange for
a Registered Security of such series after the close of business (at an office
or agency in a Place of Payment for such series) on any record date established
to determine the Person to whom interest or any Additional Amounts are payable
on the next following interest payment date therefor and before the opening of
business (at such office or agency) on such interest payment date, such Bearer
Security shall be surrendered without the coupon relating to such interest
payment date, and interest will not be payable on such interest payment date in
respect of the Registered Security issued in exchange of such Bearer Security,
but will be payable only to the Holder of such coupon when due in accordance
with the provisions of this Indenture.
Section 4.2. Maintenance of Office or Agency for Notices and Demands.
The Company shall maintain in each Place of Payment for any series of
Securities an office or agency where Securities of that series (but not Bearer
Securities, except as otherwise provided below, unless such Place of Payment is
located outside the United States) may be presented or surrendered for payment,
where Securities of that series may be surrendered for registration of transfer
or exchange and where notices and demands to or upon the Company in respect of
the Securities of that series and this Indenture may be served.
If Securities of a series are issuable as Bearer Securities, the
Company will maintain (A) in the City of New York, State of New York, an office
or agency where any Registered Securities of that series may be presented or
surrendered for payment, where any Registered Securities of that series may be
surrendered for registration of transfer, where Securities of that series may be
surrendered for exchange, where Securities of that series that are convertible
or exchangeable may be surrendered for conversion or exchange, as applicable,
where notices and demands to or upon the Company in respect of the Securities of
that series and this Indenture may be served and where Bearer Securities of that
series and related coupons may be presented or surrendered for payment in the
circumstances described in the second following paragraph (and not otherwise)
(B) subject to any laws or regulations applicable thereto, in a Place of Payment
for that series which is located outside the United States, an office or agency
where Securities of that series and related coupons may be presented and
surrendered for payment; provided, however, that, if the Securities of that
series are listed on any stock exchange located outside the United States and
such stock exchange shall so require, the Company will maintain a Paying Agent
for the Securities of that series in any required city located outside the
United States so long as the Securities of that series are listed on such
exchange, and (C) subject to any laws or regulations applicable thereto, in a
Place of Payment for that series located outside the United States an office or
agency where any Registered Securities of that series may be surrendered for
registration of transfer, where Securities of that series may be surrendered for
exchange, where Securities of that series that are convertible and exchangeable
may be surrendered for conversion or exchange, as applicable and where notices
and demands to or upon the Company in respect of the Securities of that series
and this Indenture may be served.
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The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee, except that Bearer Securities of that series and the
related coupons may be presented and surrendered for payment (including payment
of any Additional Amounts payable on Bearer Securities of that series) at the
place specified for that purpose pursuant to Section 2.1.
Except as otherwise provided in the form of Bearer Security of any
particular series pursuant to the provisions of this Indenture, no payment of
principal or interest or Additional Amounts on Bearer Securities shall be made
at any office or agency of the Company in the United States or by check mailed
to any address in the United States or by transfer to an account maintained with
a bank located in the United States; provided, however, payment of principal of
and interest in U.S. dollars (including Additional Amounts payable in respect
thereof) on any Bearer Security may be made at the office of the Paying Agent in
the City of New York, State of New York if (but only if) payment of the full
amount of such principal, interest or Additional Amounts at all offices outside
the United States maintained for that purpose by the Company in accordance with
this Indenture is illegal or effectively precluded by exchange controls or other
similar restrictions.
The Company may also from time to time designate one or more other
offices or agencies where the Securities of one or more series may be presented
or surrendered for any or all such purposes and may from time to time rescind
such designations; provided, however, that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an office
or agency in each Place of Payment for Securities of any series for such
purposes. The Company will give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency.
Section 4.3. Money for Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent with
respect to any series of Securities and any related coupons, it shall, on or
before each due date of the principal of, or interest or Additional Amounts on,
any of the Securities of that series, segregate and hold in trust for the
benefit of the Person entitled thereto a sum sufficient to pay the principal or
interest or Additional Amounts so becoming due until such sums shall be paid to
such Persons or otherwise disposed of as herein provided and shall promptly
notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any
series of Securities and any related coupons, it shall, on or prior to each due
date of the principal of, or interest or Additional Amounts on, any Securities
of that series, deposit with a Paying Agent a sum sufficient to pay the
principal or interest and Additional Amounts so becoming due, such sum to be
held in trust for the benefit of the Persons entitled to such principal,
interest or Additional Amounts, and (unless such Paying Agent is the Trustee)
the Company shall promptly notify the Trustee of its action or failure so to
act.
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The Company shall cause each Paying Agent, other than the Trustee, for
any series of Securities, to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the provisions
of this Section, that such Paying Agent shall:
(a) hold all sums held by it for the payment of the principal
of or interest or any Additional Amounts on Securities of that series in trust
for the benefit of the Persons entitled thereto until such sums shall be paid to
such Persons or otherwise disposed of as herein provided;
(b) give the Trustee notice of any Default by the Company in
the making of any payment of principal or interest or any Additional Amounts on
the Securities of that series; and
(c) at any time during the continuance of any such Default,
upon the written request of the Trustee, forthwith pay to the Trustee all sums
so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same terms as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such sums.
Except as otherwise provided in the form of Securities of any
particular series pursuant to the provisions of this Indenture, any money
deposited with the Trustee or any Paying Agent, or then held by the Company, in
trust for the payment of the principal of or interest or any Additional Amounts
on any Security of any series and remaining unclaimed for two years after such
principal or interest has or Additional Amounts have become due and payable
shall be paid to the Company upon receipt of a Company Order to that effect or
(if then held by the Company) shall be discharged from such trust; and the
Holder of such Security or any coupon appertaining thereto shall thereafter, as
an unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent, with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in an Authorized Newspaper in each Place of Payment, or to be
mailed to Holders of Registered Securities, or both, notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such publication or mailing, any unclaimed
balance of such money then remaining shall be repaid to the Company.
Section 4.4. Commission Reports; Reports to Trustee; Reports to Holders.
So long as any Security is outstanding, the Company will:
(a) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual reports and
of the information, documents and other reports which the Company may be
required to file with the Commission pursuant to Section 13 or
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Section 15(d) of the Exchange Act (or copies of such portions thereof as may be
prescribed by the Commission by rules and regulations); or, if the Company is
not required to file with the Commission information, documents or reports
pursuant to either Section 13 or Section 15(d) of the Exchange Act, then the
Company will file with the Trustee and mail to the Holders of the Securities, as
the names and addresses of such Holders appear upon the register of Securities,
(i) annual reports containing the information required by the Exchange Act to be
contained in an Annual Report on Form 10-K, (ii) quarterly reports containing
the information required by the Exchange Act to be contained in a Quarterly
Report on Form 10-Q and (iii) promptly after the occurrence of an event required
to be therein reported, such other reports containing information required by
the Exchange Act to be contained in a Current Report on Form 8-K;
(b) file with the Trustee and the Commission, in accordance with
the rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by the
Company with the conditions and covenants provided for in this Indenture as may
be required by such rules and regulations, including, in the case of annual
reports, if required by such rules and regulations, certificates or opinions of
independent public accountants, conforming to the requirements of Sections 13.4
and 13.5, as to compliance with conditions or covenants, compliance with which
is subject to verification by accountants; and
(c) mail to the Holders of the Registered Securities, as the names
and addresses of such Holders appear upon the register of Securities, in the
manner and to the extent provided in Section 7.6, such additional summaries of
any information, documents and reports required to be filed with the Trustee
pursuant to the provisions of paragraphs (a) and (b) of this Section 4.4 as may
be required to be provided to such Holders by the rules and regulations of the
Commission under the provisions of the TIA.
Section 4.5. Compliance Certificates.
Within 120 days after the close of each fiscal year of the Company
ending after the date hereof, the Company shall deliver to the Trustee an
Officers' Certificate, one of the signatories of which shall be the Company's
principal executive officer, principal financial officer or principal accounting
officer, stating that in the course of the performance by the signers of their
duties as Officers of the Company they would normally obtain knowledge of any
Default by the Company and whether or not they have obtained knowledge of any
such Default, and, if so, specifying each such Default of which the signers have
knowledge and the nature thereof and what action the Company is taking or
proposes to take with respect thereto. The Company shall also comply with TIA
Section 314(a)(4).
Section 4.6. Corporate Existence.
Subject to Article Five, the Company will do or cause to be done all
things necessary to and will cause each of its Subsidiaries to preserve and keep
in full force and effect its corporate existence, material rights (charter and
statutory) and franchises of the Company and each of its
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Subsidiaries; provided, however, that the Company shall not be required to
preserve any such material right or franchise or the corporate existence of any
of its Subsidiaries if the Board of Directors shall reasonably determine that
(a) the preservation thereof is no longer desirable in the conduct of the
business of the Company or such subsidiary and (b) the loss thereof is not
disadvantageous in any material respect to the Holders of the Securities.
Section 4.7. Limitation on Liens.
The Company will not, and will not permit any of its Subsidiaries to,
create, incur or otherwise cause or suffer to exist or become effective any
Liens of any kind upon any of the Property of such Person or any shares of stock
or debt of any Subsidiary now owned or hereafter acquired, unless all payments
due under this Indenture and the Securities are secured on an equal and ratable
basis with the obligation so secured until such time as such obligation is no
longer secured by a Lien, except for Permitted Liens.
Notwithstanding the foregoing, the Company or any Subsidiary may
create, incur, suffer or permit to exist Liens which would otherwise be subject
to the restriction set forth in the preceding paragraph, if after giving effect
thereto and at the time of determination, Exempted Debt does not exceed 10% of
Consolidated Net Assets.
Section 4.8. Limitations on Sale and Lease-Back Transactions.
The Company will not, nor will it permit any of its Subsidiaries to,
sell or transfer any Property, whether now owned or hereafter acquired, and
thereafter rent or lease such Property or other Property which the Company or
any of its Subsidiaries intends to use for substantially the same purpose or
purposes as the Property being sold or transferred, except for such transactions
occurring after the Issue Date (i) with respect to Properties first acquired by
the Company or any of its Subsidiaries after the Issue Date with the intent at
the time of such acquisition that such Properties be the subjects of such
transactions, and such transactions are actually consummated within 60 days
after the initial acquisition of such Properties, so long as the Asset Value of
such Properties do not exceed $25,000,000 in the aggregate, and (ii) with
respect to all other Properties in all such other transactions, so long as the
Asset Value of such other Properties do not exceed $5,000,000 in the aggregate.
Section 4.9. Limitation on Guarantees by Subsidiaries.
The Company will not permit any Subsidiary, directly or indirectly, to
assume, guarantee or in any manner become liable with respect to any
Indebtedness of the Company or any Guarantor unless such Subsidiary is a
Guarantor or simultaneously executes and delivers a supplemental indenture to
this Indenture providing for the guarantee of payment of the Securities by such
Subsidiary pursuant to the terms of Article Fourteen hereto. In connection with
the execution and delivery of the supplemental indenture, such Subsidiary shall
execute and deliver a Guarantee substantially in the form of Exhibit A hereto.
Section 4.10. Waiver of Stay; Extension of Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law or any usury law or
other law that would prohibit or forgive the Company from
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paying all or any portion of the principal of, or interest on or any Additional
Amounts payable with respect to the Securities as contemplated herein or in the
Securities, wherever enacted, now or at any time hereafter in force, or that may
affect the covenants or the performance of this Indenture; and (to the extent
that it may lawfully do so) the Company hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law had been
enacted.
ARTICLE FIVE
SUCCESSORS
Section 5.1. When Company May Merge, Etc.
The Company will not consolidate or merge with or into, or sell, lease,
convey or otherwise dispose of all or substantially all of its assets in one
transaction or a series of related transactions or assign any of its obligations
under this Indenture or the Securities to, any Person or Persons, and the
Company will not permit any of its Subsidiaries to enter into any such
transaction or series of transactions if such transaction or series of
transactions, in the aggregate, would result in a sale, assignment, conveyance,
transfer, lease or other disposition of all or substantially all of the
Properties and assets of the Company or the Company and its Subsidiaries, taken
as a whole, to any other Person or Persons, unless:
(a) the entity formed by or surviving any such consolidation
or merger (if other than the Company), or to which such sale, lease,
conveyance or other disposition or assignment shall have been made (the
"Surviving Entity"), is a corporation organized and existing under the
laws of the United States, any state thereof or the District of
Columbia;
(b) the Surviving Entity assumes by a supplemental indenture
in a form satisfactory to the Trustee all of the obligations of the
Company under the Securities and this Indenture; and
(c) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing.
The Company shall deliver to the Trustee prior to the consummation of
the proposed transaction an Officers' Certificate to the foregoing effect and an
Opinion of Counsel stating that the proposed transaction and such supplemental
indenture comply with this Indenture.
Section 5.2. Successor Corporation Substituted.
Upon any consolidation or merger or any sale, lease, conveyance or
other disposition of all or substantially all of the assets of the Company or
any assignment of its obligations under this
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Indenture or the Securities in accordance with Section 5.1, the Surviving Entity
shall succeed to, and may be substituted for, and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor corporation has been named as the Company herein, and, except in the
case of a lease, the predecessor corporation shall be relieved of all
obligations and covenants under this Indenture and the Securities.
ARTICLE SIX
DEFAULTS AND REMEDIES
Section 6.1 Events of Default.
"Event of Default" is hereby defined for all purposes of this Indenture
and with respect to any series of Securities (except where the term is otherwise
defined for specific purposes) as any one of the following events (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) the Company defaults in the payment of any installment of
interest on or any Additional Amounts payable in respect of any
Security of that series when and as the same shall become due and
payable and such failure continues for a period of 30 days;
(b) the Company defaults in the payment of the principal of
any Security of that series when and as the same shall become due and
payable at Stated Maturity, upon redemption or otherwise;
(c) the Company fails to perform or observe any of its other
covenants, conditions or agreements in this Indenture or in the
Securities (other than a covenant, condition or agreement a Default in
whose performance or whose breach is elsewhere in this Section
specifically dealt with), and such failure continues for a period of 90
days after the date on which written notice of such Default has been
given to the Company by the Trustee or to the Company and to the
Trustee by the Holders of not less than 25% of the principal amount of
the Securities of that series then outstanding under this Indenture;
(d) the Company or any Subsidiary defaults in the payment of
any scheduled payment of principal of or interest on one or more
agreements, instruments, mortgages, bonds, debentures or other
evidences of Indebtedness under which the Company or any Subsidiary
then has outstanding Indebtedness in an aggregate outstanding principal
amount of not less than $25,000,000 and such default has resulted in
such Indebtedness becoming, whether by declaration or otherwise, due
and payable in full, or a default in any payment when due at final
maturity of any such Indebtedness shall occur;
(e) the entry by a court having jurisdiction in the premises
of (i) a decree or order for relief in respect of the Company or any
Significant Subsidiary in an involuntary case or
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proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization or other similar law or (ii) a decree or
order adjudging the Company or any Significant Subsidiary a bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in respect
of the Company or any Significant Subsidiary under any applicable
federal or state law, or appointing a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of the
Company or any Significant Subsidiary or of any substantial part of
their Property, or ordering the winding up or liquidation of their
affairs, and the continuance of any such decree or order for relief or
any such other decree or order unstayed and in effect for a period of
90 consecutive days;
(f) the commencement by the Company or any Significant
Subsidiary of a voluntary case or proceeding under any applicable
federal or state bankruptcy, insolvency, reorganization or other
similar law, or of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the consent by the Company or any Significant
Subsidiary to the entry of a decree or order for relief in respect of
the Company or any Significant Subsidiary in an involuntary case or
proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization or other similar law or to the commencement
of any bankruptcy or insolvency case or proceeding against the Company
or any Significant Subsidiary, or the filing by the Company or any
Significant Subsidiary of a petition or answer or consent seeking
reorganization or relief under any applicable federal or state law, or
the consent by the Company or any Significant Subsidiary to the filing
of such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator or
similar official of the Company or any Significant Subsidiary or of any
substantial part of their Property, or the making by the Company or any
Significant Subsidiary of an assignment for the benefit of creditors,
or the admission by the Company or any Significant Subsidiary in
writing of their inability to pay their debts generally as they become
due, or the taking of corporate action by the Company or any
Significant Subsidiary in furtherance of any such action; or
(g) any other Event of Default provided with respect to
Securities of that series.
The Company must furnish to the Trustee a statement, detailing any
Defaults of which it is aware, within five days of becoming aware of the
occurrence of any Default.
Section 6.2. Acceleration.
If an Event of Default specified in Section 6.1(e) or (f) shall occur
and be continuing, then the principal of (or, with respect to a series of
Original Issue Discount Securities, such portion of the principal amount as may
be specified in the terms of such series), and any accrued and unpaid interest
on and any Additional Amounts payable in respect of the Securities shall
immediately become due and payable without any declaration or other act on the
part of the Trustee or any Securityholder. If one or more Events of Default
specified in Sections 6.1(a), (b), (c), (d) or (g) with respect to any series of
Securities at the time outstanding shall occur and be continuing, then, and
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in each and every such case, either the Trustee, by notice in writing to the
Company, or the Holders of not less than 25% of the principal amount of the
Securities of that series then outstanding, by notice in writing to the Company
and the Trustee, may declare due and payable, if not already due and payable,
the principal of (or, with respect to a series of Original Issue Discount
Securities, such portion of the principal amount as may be specified in the
terms of such series) plus any accrued interest on and any Additional Amounts
payable in respect of all of the Securities of that series; and upon any such
declaration all such amounts upon such Securities shall become and be
immediately due and payable, anything in this Indenture or in the Securities to
the contrary notwithstanding. This provision is subject to the condition that
if, after any declaration of acceleration and before Stated Maturity of the
principal with respect to Securities of any series, all arrears of interest and
any Additional Amounts and the expenses of the Trustee, its agents or counsel
shall be paid by or for the account of the Company, and all Defaults (other than
the payment of principal that has been declared due and payable) have been cured
to the satisfaction of the Trustee, then the Trustee shall, upon the written
request of the Holders of a majority in principal amount of the Securities of
that series, waive such Default and rescind or annul the declaration of
acceleration; but no such waiver or rescission or annulment shall extend to or
affect any subsequent Default, or impair any right consequent thereon.
Section 6.3. Other Remedies.
If an Event of Default with respect to Securities of any series occurs
and is continuing, the Trustee may pursue any available remedy to collect the
payment of principal of, interest on or any Additional Amounts payable in
respect of the Securities of that series or to enforce the performance of any
provision of the Securities of that series or this Indenture. The Trustee may
maintain a proceeding even if it does not possess any of the Securities of that
series 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 any Event of Default shall not impair any such
right or remedy or constitute a waiver of or acquiescence in the Event of
Default. No remedy is exclusive of any other remedy. All available remedies are
cumulative.
Section 6.4. Waiver of Past Defaults.
Provided the applicable series of Securities shall not then be due and
payable by reason of a declaration pursuant to Section 6.2, the Holders of a
majority in principal amount of the Securities of any series at the time
outstanding may on behalf of the Holders of all the Securities of such series
waive any past Default hereunder with respect to such series and its
consequences by providing written notice thereof to the Company and the Trustee,
except a Default (i) in the payment of interest on, any Additional Amounts
payable in respect of or the principal of any Security of such series or (ii) in
respect of a covenant or provision hereof which under Article Nine cannot be
modified or amended without the consent of the Holder of each outstanding
Security of such series affected. In the case of any such waiver, the Company,
the Trustee and the Holders of the Securities of such
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series shall be restored to their former positions and rights hereunder,
respectively; provided that no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereto.
Section 6.5. Control by Majority.
The Holders of a majority in principal amount of the Securities then
outstanding of any series may direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or of exercising any
power or trust conferred upon the Trustee under this Indenture with respect to
the Securities of such series; provided, however, that subject to the provisions
of Sections 7.1 and 7.2, the Trustee shall have the right to decline to follow
any such direction if the Trustee, advised by counsel, determines that the
action or proceeding so directed may not lawfully be taken or if the Trustee in
good faith shall by Responsible Officers determine that the action or proceeding
so directed would involve the Trustee in liability and that the Trustee is not
satisfactorily indemnified from the costs thereof.
Section 6.6. Limitation on Suits by Holders.
No Holder of any Security of any series or any coupon appertaining
thereto shall have the right to pursue a remedy with respect to this Indenture
or the Securities unless:
(a) such Holder gives to the Trustee notice of a continuing
Event of Default with respect to Securities of that series;
(b) the Holders of at least a majority in principal amount of
the Securities of that series make a request to the Trustee to pursue
the remedy;
(c) such Holder or Holders offer to the Trustee security or
indemnity satisfactory to the Trustee against any loss, liability or
expense; and
(d) the Trustee does not comply with the request within 30
days after receipt of the request and the offer of security or
indemnity.
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 6.7. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Security or coupon to receive payment of principal of, interest on
and any Additional Amounts payable with respect to the Security or coupon, on or
after the respective due dates expressed in the Security or coupon, 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.
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Section 6.8. Collection Suit by Trustee.
If an Event of Default specified in Section 6.1(a) or (b) occurs and is
continuing with respect to the Securities of any series, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Company
for the whole amount of principal, interest and any Additional Amounts remaining
unpaid on such Securities, together with interest on overdue principal and, to
the extent lawful, interest on overdue installments of interest and any
Additional Amounts, in each case at the rate or Yield to Maturity (in the case
of Original Issue Discount Securities) specified in such Securities and such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel and any other amounts due the
Trustee under Section 7.7.
Section 6.9. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee and
the Securityholders allowed in any judicial proceedings relative to the Company,
its creditors or its Property and the Trustee shall be entitled and empowered to
collect and receive any money or other Property payable or deliverable on any
such claims and to distribute it, and any trustee, receiver, liquidator,
custodian or other similar official in any such judicial proceedings is hereby
authorized by each Securityholder to make such payments to the Trustee and, in
the event that the Trustee shall consent to the making of such payments directly
to Securityholders, to pay to the Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due the Trustee under Section 7.7.
Nothing herein contained shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Securityholder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of any claim of any Securityholder in such proceeding.
Section 6.10. Application of Money Collected.
Any money or Property collected by the Trustee with respect to any
series of the Securities under this Article Six shall be paid out by the Trustee
in the following order and, in the case of the distribution of moneys on account
of principal, interest or any Additional Amounts owing on any Securities of any
series, upon presentation of such Securities and coupons appertaining to such
Securities in respect of which monies have been collected (except that the
Trustee may waive presentation of Registered Securities when interest alone is
to be paid), and stamping thereon the payment, or issuing Securities of such
series in reduced principal amounts in exchange for the presented Securities of
like series if only partially paid, and upon surrender thereof if fully paid:
FIRST: To the payment of all reasonable costs and expenses of
collection, and reasonable compensation to the Trustee, its agents and
counsel, and of all other reasonable expenses, losses, and liabilities
incurred, and all advances made, by the Trustee including but not
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limited to all amounts due to the Trustee under Section 7.7 except as a
result of its negligence or bad faith;
SECOND: In case the principal of the outstanding Securities of such
series shall not have become due and be unpaid, to the payment of
interest on and any Additional Amounts Payable with respect to such
Securities, in the order of the maturity of the installments of such
interest and Additional Amounts, with interest, to the extent lawful,
upon the overdue installments of interest and Additional Amounts at the
rate or Yield to Maturity (in the case of Original Issue Discount
Securities) specified in such Securities, such payments to be made
ratably to the Persons entitled thereto, without discrimination or
preferences;
THIRD: In case the principal of the outstanding Securities of such
series shall have become due, by declaration or otherwise, to the
payment of the whole amount then owing and unpaid upon such Securities
for principal, interest and any Additional Amounts, with interest at
the rate or Yield to Maturity (in the case of Original Issue Discount
Securities) specified in such Securities on the overdue principal, and,
to the extent lawful, on the overdue installments of interest and
Additional Amounts; and in case such monies shall be insufficient to
pay in full the whole amount so due and unpaid upon such Securities,
then to the payment of such principal, interest and any Additional
Amounts, ratably, without preference or priority of any kind, to the
aggregate of such principal and accrued and unpaid interest and
Additional Amounts; and
FOURTH: In case the Trustee shall retain possession of any funds after
all obligations of the Company hereunder have been fully paid and
satisfied, such funds shall be paid to the Company, its successors or
assigns.
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 Company shall mail to each Securityholder and the Trustee a notice
that states the record date, the payment date and the amount to be paid.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit instituted by the Trustee, a suit
instituted by a Holder pursuant to Section 6.7 or a suit instituted by Holders
of more than 10% in principal amount of the Securities then outstanding. This
Section 6.11 shall be in lieu of section 315(e) of the TIA and said section
315(e) is hereby expressly excluded from this Indenture, as permitted by the
TIA.
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Section 6.12. Discontinuance or Abandonment of Proceedings.
If the Trustee or any Holder shall have proceeded to enforce any right
under this Indenture, and such proceedings shall have been discontinued or
abandoned because of waiver, or for any other reason, or shall have been
determined adversely to the Trustee or such Holder, then, and in any such case,
the Company and the Trustee and such Holder or Holders shall each be restored to
its former position and rights hereunder, and all rights, remedies and powers of
the Trustee and the Holders shall continue as though no such proceedings had
been taken.
ARTICLE SEVEN
TRUSTEE
Section 7.1. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee,
subject to paragraph (e) below, 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:
(i) 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
(ii) 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 opinions or certificates which by any
provision hereof are specifically required to be furnished to the Trustee, the
Trustee shall examine the certificates and opinions to determine whether or not
they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) This paragraph does not limit the effect of paragraph (b)
of this Section 7.1;
(ii) The Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the
pertinent facts; and
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(iii) The Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance
with a direction received by it pursuant to Section 6.5.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b) and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if the Trustee 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.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
(g) No provision of this Indenture shall require the Trustee to
determine the maximum interest rate permissible under applicable law.
(h) Every provision of this Indenture relating to the conduct of 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 7.2. Rights of Trustee.
Subject to the provisions of TIA Sections 315(a) through 315(d):
(a) The Trustee may rely on and shall be protected in acting
or refraining from acting on any document reasonably 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 and 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 such Officers' Certificate or Opinion of Counsel.
The Trustee may consult with counsel of its selection and the written
advice of such counsel or any Opinion of Counsel with respect to legal
matters relating to this Indenture and the Securities shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in accordance
with the advice or opinion of such counsel or such 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.
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(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 the rights, discretion or powers conferred upon it hereunder;
provided, however, that the Trustee's conduct does not constitute
willful misconduct, negligence or bad faith.
(e) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request
or direction of any of the Holders pursuant to this Indenture, unless
such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction.
Section 7.3. 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 an
Affiliate with the same rights it would have if it were not Trustee. Any Paying
Agent, Registrar or co-registrar may do the same with like rights. However, the
Trustee must comply with Sections 7.10 and 7.11.
Section 7.4. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation as
to the validity or adequacy of this Indenture, any Guarantee or the Securities;
it shall not be accountable for the Company's use of the proceeds from the sale
of 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 7.5. Notice of Defaults.
If a Default occurs with respect to Securities of any series and is
continuing and if it is known to the Trustee, the Trustee shall give to each
Securityholder of such series a notice of the Default within 90 days after it
occurs in the manner and to the extent provided in TIA 313(c), and otherwise as
provided in Section 13.2 hereof. Except in the case of a Default in payment of
the principal of, interest on or any Additional Amount payable with respect to
any Security (including payments pursuant to a redemption or repurchase of the
Securities pursuant hereto), the Trustee may withhold the notice if and so long
as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of Securityholders.
Section 7.6. Reports by Trustee to Holders.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, the Trustee shall mail to each Holder of a
Registered Security a brief report dated as of such reporting date if required
by, and in compliance with, TIA Section 313(a). The Trustee also shall comply
with TIA Section 313(b). The Trustee shall also transmit by mail all reports as
required by TIA Section 313(c).
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Commencing at the time this Indenture is qualified under the TIA, a
copy of each report at the time of its mailing to Securityholders shall be filed
with the Commission and each securities exchange, if any, on which the
Securities are listed. The Company agrees to notify promptly the Trustee
whenever the Securities become listed on any securities exchange and of any
delisting thereof.
Section 7.7. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time such
compensation as shall be agreed to in writing from time to time between the
Company and the Trustee for all services rendered by it hereunder. The Trustee's
compensation shall not be limited by any law on compensation of a trustee of an
express trust. The Company shall reimburse the Trustee upon request for all
reasonable disbursements, advances and expenses incurred or made by the Trustee
in accordance with any provision of this Indenture. Such expenses shall include
the reasonable compensation and the disbursements, advances and expenses of the
Trustee's agents and counsel, except to the extent any such disbursement,
advance or expense may be attributable to its negligence, bad faith or willful
misconduct.
The Company shall indemnify the Trustee and its directors, officers,
agents and employees against any and all loss, liability, damage, claim or
expense (including reasonable attorneys' fees and expenses) incurred by it or
such officer, director, agent or employee in connection with the acceptance,
performance or administration of its duties under this Indenture, except as set
forth in the next paragraph. The Trustee shall notify the Company promptly of
any claim asserted against the Trustee for which it may seek such indemnity. The
Company shall be entitled to assume the defense of such claim, with counsel
reasonably satisfactory to the Trustee; provided, however, that if such claim is
made against both the Company and the Trustee and the Trustee shall have
reasonably concluded that there may be one or more legal defenses available to
it which are different from or in addition to those available to the Company,
the Trustee shall have the right to select separate counsel to defend such claim
on behalf of the Trustee. In the event that the Company assumes the defense of
any such claim, the Company shall have no obligation to pay the fees and
expenses of separate counsel for the Trustee (except where the Trustee is
entitled to select separate counsel for the reason provided in the immediately
preceding sentence) and the Trustee shall cooperate in the defense of such
claim. The Company need not pay for any settlement made without its prior
written consent. The Company need not reimburse any expense or indemnity against
any loss or liability to the extent incurred by the Trustee through its gross
negligence, bad faith or willful misconduct.
The Company need not reimburse any expense or indemnify against any
loss, liability or expense incurred by the Trustee or its directors, officers,
agents or employees through such Person's own willful misconduct, negligence or
bad faith.
To secure the Company's payment obligations in this Section 7.7, the
Trustee shall have a Lien prior to the Securities on all money or Property held
or collected by the Trustee other than
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money or Property held in trust to pay the principal of, interest on or any
Additional Amounts payable with respect to particular Securities. The Company's
payment obligations pursuant to this Section 7.7 shall survive the resignation
or replacement of the Trustee and any termination discharge or defeasance
hereunder.
When the Trustee incurs expenses after the occurrence of an Event of
Default specified in Section 6.1(e) or (f), the expenses are intended to
constitute expenses of administration under any Bankruptcy Law.
Section 7.8. Replacement of Trustee.
The Trustee may resign at any time by so notifying the Company;
provided, however, no such resignation shall be effective until a successor
Trustee has accepted its appointment pursuant to this Section 7.8. The Holders
of a majority in principal amount of the then outstanding Securities may remove
the Trustee by so notifying the Trustee and the Company. The Company shall
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged bankrupt or insolvent;
(c) a receiver or public officer takes charge of the Trustee
or its Property; or
(d) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Company shall promptly appoint 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.
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 the Securityholders. Each notice shall include the name of the
successor Trustee and the address of the Corporate Trust Office of the successor
Trustee. 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
7.7. Notwithstanding replacement of the Trustee pursuant to this Section 7.8,
the Company's obligations under Section 7.7 shall continue for the benefit of
the retiring Trustee.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of a majority in principal amount
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of the then outstanding Securities may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
Section 7.9. Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or transfers
all or substantially all of its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or transferee
corporation or banking association without any further act shall be the
successor Trustee if it is otherwise eligible hereunder to be such successor
Trustee. In case any Securities shall have been authenticated, but not
delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such authentication and
deliver the Securities so authenticated with the same effect as if such
successor Trustee had itself authenticated such Securities. In case any of the
Securities shall not have been authenticated by such predecessor Trustee, any
successor Trustee may authenticate such Securities either in the name of any
predecessor hereunder or in the name of the successor Trustee. In all such cases
such certificates shall have the full force and effect which this Indenture
provides for the certificate of authentication of the Trustee; provided,
however, that the right to adopt the certificate of authentication of any
predecessor Trustee or to authenticate Securities in the name of any predecessor
Trustee shall apply only to its successor or successors by merger, conversion or
consolidation.
Section 7.10. Eligibility; Disqualification.
The Trustee shall at all times satisfy the requirements of TIA Section
310(a). The Trustee shall have a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of
condition. If the Trustee shall cease to be eligible in accordance with this
Section 7.10, the Trustee shall resign immediately in the manner and with the
effect specified in this Article.
Section 7.11. Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated
therein.
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ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
Section 8.1. Discharge of Indenture; Defeasance.
(a) This Indenture shall cease to be of further effect with respect to
a series of Securities and the Company may terminate its obligations under such
Securities and the Indenture with respect to such Securities (except that the
Company's obligations under Section 7.7 and the Trustee's and the Paying Agent's
obligations under Section 8.4 shall survive) if (i) all Securities of such
series previously authenticated and issued (other than destroyed, lost or stolen
Securities of such series that have been replaced or Securities of such series
that are paid pursuant to Section 4.1 or Securities of such series for whose
payment money or securities have theretofore been held in trust and thereafter
repaid to the Company as provided in Section 8.5) have been delivered to the
Trustee for cancellation and the Company has paid all sums payable by it
hereunder with respect thereto; or (ii) (A) the Securities of such series mature
within one year or all of them are to be called for redemption within one year
under arrangements satisfactory to the Trustee for giving notice of redemption,
(B) the Company irrevocably deposits in trust with the Trustee during such
one-year period, under the terms of an irrevocable trust agreement in form and
substance satisfactory to the Trustee, as trust funds solely for the benefit of
the Holders for that purpose, money or U.S. Government Obligations sufficient
(in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee), without consideration of any reinvestment of any interest thereon, to
pay the principal of, interest on and any Additional Amounts payable with
respect to the Securities of such series to maturity or redemption, as the case
may be, and to pay all other sums payable by the Company hereunder with respect
to such Securities, (C) no Default or Event of Default with respect to the
Securities of such series shall have occurred and be continuing on the date of
such deposit, (D) such deposit will not result in a breach or violation of, or
constitute a default under, this Indenture or any other agreement or instrument
to which the Company is a party or by which it is bound, and (E) the Company has
delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, in
each case stating that all conditions precedent provided for herein relating to
the satisfaction and discharge of this Indenture with respect to such series of
Securities have been complied with.
(b) Subject to Sections 8.1(c), 8.2 and 8.5, the Company at any time
may terminate (i) all its obligations under the Securities of any series and
this Indenture with respect to such series of Securities ("legal defeasance
option") or (ii) its obligations under Article Four (except those obligations
set forth in Sections 4.1 and 4.2 thereof) and Section 5.1 with respect to any
series of Securities ("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 of the applicable series may not be accelerated because of an Event
of Default.
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Upon satisfaction of the conditions set forth herein and upon request
of the Company, the Trustee shall acknowledge in writing the discharge of those
obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.3, 2.4, 2.5, 2.6, 7.7 and 8.5 and Article Eleven and
Article Twelve and the Trustee's and Paying Agent's obligation under Section
8.4, shall survive until the Securities have been paid in full. Thereafter, the
Company's obligations in Sections 7.7 and 8.5 and any Guarantors' obligations in
respect thereof and the Trustee's and Paying Agent's obligations under Section
8.4 shall survive.
Section 8.2. Conditions to Defeasance.
The Company may exercise its legal defeasance option or its covenant
defeasance option with respect to a series of Securities only if the following
conditions are satisfied:
(a) the Company has irrevocably deposited or caused to be deposited in
trust for the benefit of the Holders of such series with the Trustee or a Paying
Agent or a trustee satisfactory to the Trustee and the Company, under the terms
of an irrevocable trust agreement in form and substance satisfactory to the
Trustee and any such Paying Agent, (i) money in an amount or Eligible
Obligations sufficient, or (ii) U.S. Government Obligations or Eligible
Obligations that shall be payable as to principal and interest in such amounts
and at such times as are sufficient, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (without consideration of any reinvestment of
such interest), or (iii) any combination thereof in an amount sufficient, to pay
the principal of, interest on and any Additional Amounts payable with respect to
the outstanding Securities of such series and any mandatory sinking fund or
analogous payments thereon on the dates such installments are due to redemption
or Stated Maturity, (y) the trustee of the irrevocable trust shall have been
irrevocably instructed to pay such money or the proceeds of such U.S. Government
Obligations or Eligible Obligations to the Trustee and (z) the Trustee or Paying
Agent shall have been irrevocably instructed in writing to apply the deposited
money and the proceeds from U.S. Government Obligations or Eligible Obligations
in accordance with the terms of this Indenture and the terms of the Securities
of such series to the payment of principal of, interest on and any Additional
Amounts payable with respect to the Securities of such series;
(b) such deposit described in clause (a) of this Section 8.2 will not
result in a breach or violation of, or constitute a Default under, any other
agreement or instrument to which the Company is a party or by which it is bound;
(c) no Default or Event of Default shall have occurred and be
continuing (i) as of the date of such deposit or (ii) insofar as Sections 6.1(d)
and 6.1(e) are concerned at any time during the period ending on the 91st day
after the date of such deposit or, if longer, ending on the day following the
expiration of the longest preference period applicable to the Company in respect
of such deposit (it being understood that the condition in this clause (ii) is a
condition subsequent and shall not be deemed satisfied until the expiration of
such period);
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(d) the Company has paid or caused to be paid all sums currently due
and payable by the Company hereunder and under the Securities with respect to
such series including but not limited to all amounts due under Section 7.7;
(e) such defeasance shall not cause or permit any Securities then
listed on any national securities exchange to be delisted;
(f) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent provided
for herein relating to the termination by the Company of its obligations as
provided in this Section 8.2 have been complied with;
(g) in the case of the legal defeasance option, the Company has
delivered to the Trustee either (i) a ruling received from the Internal Revenue
Service to the effect that, or (ii) an Opinion of Counsel who is not an employee
of the Company stating that, since the date first set forth hereinabove, there
has been a change in the applicable federal income tax law, and based upon
either case (i) or (ii) such Opinion of Counsel shall confirm that, the Holders
of the Securities of such series will not recognize income, gain or loss for
federal income tax purposes as a result of the Company's exercise of its legal
defeasance option under this Section 8.2 and will be subject to federal income
tax on the same amount and in the same manner and at the same times as would
have been the case if such legal defeasance option had not been exercised; and
(h) in the case of the covenant defeasance option, the Company has
delivered to the Trustee either (i) a ruling received from the Internal Revenue
Service to the effect that, or (ii) an Opinion of Counsel by recognized counsel
who is not an employee of the Company stating that, the Holders of the
Securities of such series will not recognize income, gain or loss for federal
income tax purposes as a result of the Company's exercise of its covenant
defeasance option under this paragraph and will be subject to federal income tax
on the same amount and in the same manner and at the same times as would have
been the case if such covenant defeasance option had not been exercised.
Section 8.3. Application of Trust Money.
The Trustee or a trustee satisfactory to the Trustee and the Company
shall hold in trust money, U.S. Government Obligations or Eligible Obligations
deposited with it pursuant to Section 8.2. It shall apply the deposited money
and the money from U.S. Government Obligations and Eligible Obligations through
the Paying Agent and in accordance with this Indenture to the payment of
principal of, interest on and any Additional Amounts payable with respect to the
Securities.
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Section 8.4. Repayment to Company.
The Trustee and the Paying Agent shall promptly turn over to the
Company upon written request any money, U.S. Government Obligations or Eligible
Obligations held by them in trust pursuant to Section 8.2 which, in the opinion
of a nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, are in excess of the
amount thereof which would then be required to be deposited to effect such
defeasance, in accordance with the provisions of this Indenture.
The Trustee or the Paying Agent shall pay promptly to the Company upon
written request any money held by them for the payment of principal, interest or
Additional Amounts that remains unclaimed for two years after the date upon
which such payment shall have become due, unless otherwise required by mandatory
provisions of applicable escheat or abandoned or unclaimed property law (except
that with respect to any amounts then held by the Company in trust as its own
Paying Agent no such request need be given and at such time the Company shall be
discharged from its duties to hold such money in trust as Paying Agent). After
payment to the Company, Securityholders entitled to the money must look to the
Company for payment as general creditors unless an applicable escheat, unclaimed
property or abandoned property law designates another Person, and all liability
of the Trustee and such Paying Agent with respect to such money shall cease.
Section 8.5. Reinstatement of Company's Obligations.
If the Trustee or Paying Agent is unable to apply any money, U.S.
Government Obligations or Eligible Obligations in accordance with Section 8.2 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 of the applicable series shall be revived and reinstated as though no
deposit had occurred pursuant to Section 8.2 until such time as the Trustee or
Paying Agent is permitted to apply all such money, U.S. Government Obligations
or Eligible Obligations in accordance with Section 8.2; provided, however, that
if the Company has made any payment of interest on, Additional Amounts payable
with respect to 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, U.S. Government
Obligations or Eligible Obligations held by the Trustee or Paying Agent.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.1. Without Consent of Holders.
The Company, when authorized by a Board Resolution, and the Trustee may
enter into an indenture or indentures supplemental hereto to amend or supplement
this Indenture or the Securities
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with respect to a particular series without prior notice to or the consent of
any Securityholder of such series:
(a) to cure any ambiguity, omission, defect or inconsistency;
(b) to comply with Article Five or to add an additional
Guarantor pursuant to Section 14.3;
(c) to comply with any requirements of the Commission in
connection with the qualification of this Indenture under the TIA as
then in effect;
(d) 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 Internal Revenue Code or in a manner such that
the uncertificated Securities are described in Section 163(f)(2) of the
Internal Revenue Code;
(e) to make any change that does not materially adversely
affect the legal rights of any Securityholder under this Indenture as
then in effect;
(f) to secure the Securities and to make intercreditor
arrangements with respect to any such security, unless the incurrence
of such obligations or the security thereof is prohibited by this
Indenture;
(g) to evidence or to provide for a replacement Trustee under
Section 7.8; or
(h) to add to the covenants and agreements of the Company for
the benefit of all of the Holders of all of the Securities with respect
to a series (and if such covenants are to be for the benefit of less
than all series of Securities, stating that such covenants are being
included solely for the benefit of such series) and to surrender any
right or power herein reserved to the Company.
After an amendment or supplement under this Section becomes effective,
the Company shall give to Securityholders a notice briefly describing the
substance thereof in the manner as provided in Section 13.2. The failure to give
such notice to all Securityholders, or any defect therein, shall not impair or
affect the validity of any supplemental indenture.
Section 9.2. With Consent of Holders.
The Company, when authorized by a Board Resolution, and the Trustee may
enter into one or more supplemental indentures to amend or supplement this
Indenture or the Securities with respect to a particular series with the written
consent of the Holders of a majority of the principal amount of the then
outstanding Securities of such series. The Holders of a majority in principal
amount of the then outstanding Securities of a particular series may waive
compliance by the
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Company with any provision of this Indenture or the Securities with respect to
such series without prior notice to any other Securityholder.
Notwithstanding the first paragraph of this Section 9.2, without the
consent of each Securityholder affected, an amendment, supplement or waiver
under this Section may not:
(a) reduce the amount of Securities whose Holders must consent
to an amendment or waiver;
(b) reduce the rate of or change the time for payment of
interest or Additional Amounts, including default interest, on any such
Security;
(c) reduce the principal of or change the Stated Maturity of
any such Security or alter the provisions with respect to redemption
pursuant to Section 3.5;
(d) make any such Security payable in money other than that
stated in such Security;
(e) make any change in this paragraph of this Section 9.2;
(f) make any change in this Indenture that adversely affects
the priority of payment of such Securities; or
(g) make any change in Section 6.4 or 6.7.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, supplement or
waiver but it shall be sufficient if such consent approves the substance
thereof.
A supplemental indenture which changes or eliminates any covenant or
other provision of this Indenture which has been included solely for the benefit
of one or more series of Securities, or which modifies the rights of the Holders
of Securities of such series with respect to such covenant or other provision,
shall be deemed not to affect the rights under this Indenture of the Holders of
Securities of any other series.
Any amendment, supplement or waiver shall be effective upon
certification to the Trustee by the Company or an agent of the Company that such
amendment, supplement or waiver has been authorized by the Company and that the
consent of the majority in principal amount of the Securities has been obtained
unless such consents specify that they shall become effective at a later date,
in which case such amendment, supplement or waiver shall become effective in
accordance with the terms of such consent. After an amendment, supplement or
waiver under this Section becomes effective with respect to any series of
Securities, the Company shall give to Securityholders of such series a notice
briefly describing the substance thereof in the manner as provided in Section
13.2.
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The failure to give such notice to all Securityholders of such series, or any
defect therein, shall not impair or affect the validity of any supplemental
indenture.
Section 9.3. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Securities or
waiver of the provisions hereof or thereof shall be set forth in a supplemental
indenture that complies with the TIA as then in effect.
Section 9.4. Revocation and Effect of Consents and Waivers.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Security is a continuing consent by the Holder and every
subsequent Holder of 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 written notice of revocation before the
date the amendment, supplement or waiver becomes effective.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then notwithstanding the first
sentence of the immediately preceding paragraph, those Persons who were Holders
at such record date (or their duly designated proxies), and only those Persons,
shall be entitled to consent to such amendment, supplement or waiver or to
revoke any consent previously given, whether or not such Persons continue to be
Holders after such record date. Such consent shall be valid or effective only
for actions taken within 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder, subject to the fourth paragraph of Section 9.2 and
unless it makes a change described in any of clauses (a) through (g) of Section
9.2. In that case, the amendment, supplement or waiver shall bind each Holder of
a Security who has consented to it and every subsequent Holder of a Security or
a portion of a Security that evidences the same debt as the consenting Holder's
Security.
Section 9.5. Notation on or Exchange of Securities.
If a supplemental indenture or 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 shall so determine, the Company in exchange for all such Securities may
issue and the Trustee shall authenticate new Securities of the same series that
reflect the changed terms. Failure to make the appropriate notation or issue a
new Security shall not affect the validity and effect of such amendment or
supplement.
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Section 9.6. Trustee to Sign Amendments.
Upon the written request of the Company, accompanied by a Board
Resolution authorizing the execution of a supplemental indenture, and upon the
filing with the Trustee of evidence of the consent of the Securityholders if
such consent shall be required under Section 9.2, the Trustee shall sign any
supplemental indenture authorized pursuant to this Article Nine; provided that
the Trustee shall not be obligated to sign any supplemental indenture that
adversely affects the Trustee's rights, duties, liabilities or immunities. In
signing or refusing to sign such supplemental indenture, the Trustee shall be
entitled to receive and, in accordance with Sections 7.1 and 7.2, 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, that
it is not inconsistent herewith, and that it will be valid and binding upon the
Company in accordance with its terms.
ARTICLE TEN
REPAYMENT AT THE OPTION OF HOLDERS
Section 10.1. Applicability of Article.
Securities of any series which are repayable at the option of the
Holders thereof before their maturity shall be repaid in accordance with the
terms of the Securities of such series. The repayment of any principal amount of
Securities pursuant to such option of the Holder to require repayment of
Securities before their maturity shall not operate as a payment, redemption or
satisfaction of the indebtedness represented by such Securities unless and until
the Company, at its option, shall deliver or surrender the same to the Trustee
with a directive that such Securities be canceled. Notwithstanding anything to
the contrary contained in this Article Ten, in connection with any repayment of
Securities, the Company may arrange for the purchase of any Securities by an
agreement with one or more investment bankers or other purchasers to purchase
such Securities by paying to the Holders of such Securities on or before the
close of business on the repayment date an amount not less than the repayment
price payable by the Company on repayment of such Securities, and the obligation
of the Company to pay the repayment price of such Securities shall be satisfied
and discharged to the extent such payment is so paid by such purchasers.
ARTICLE ELEVEN
SINKING FUNDS
Section 11.1. Applicability of Article.
The provisions of this Article Eleven shall be applicable to any
sinking fund for the retirement of Securities of a series, except as otherwise
permitted or required by any form of Security of such series issued pursuant to
this Indenture.
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The minimum amount of any sinking fund payment provided for by the
terms of Securities of any series is referred to in this Article Eleven as a
"mandatory sinking fund payment," and any payment in excess of such minimum
amount provided for by the terms of Securities of such series is herein referred
to as an "optional sinking fund payment." If provided for by the terms of
Securities of any series, the cash amount of any sinking fund payment may be
subject to reduction as provided in Section 11.2. Each sinking fund payment
shall be applied to the redemption of Securities of any series as provided for
by the terms of Securities of such series.
Section 11.2. Satisfaction of Sinking Fund Payments with Securities.
The Company may, in satisfaction of all or any part of any sinking fund
payment with respect to the Securities of such series to be made pursuant to the
terms of such Securities as provided for by the terms of such series (1) deliver
outstanding Securities of such series (other than any of such Securities
previously called for redemption or any of such Securities in respect of which
cash shall have been released to the Company), together in the case of any
Bearer Securities of such series with all unmatured coupons appertaining
thereto, and (2) apply as a credit Securities of such series which have been
redeemed either at the election of the Company pursuant to the terms of such
series of Securities or through the application of permitted optional sinking
fund payments pursuant to the terms of such Securities, provided that such
series of Securities have not been previously so credited. Such Securities shall
be received and credited for such purpose by the Trustee at the Redemption Price
specified in such Securities for redemption through operation of the sinking
fund and the amount of such sinking fund payment shall be reduced accordingly.
If as a result of the delivery or credit of Securities of any series in lieu of
cash payments pursuant to this Section 11.2, the principal amount of Securities
of such series to be redeemed in order to exhaust the aforesaid cash payment
shall be less than $100,000, the Trustee need not call Securities of such series
for redemption, except upon Company request, and such cash payment shall be held
by the Trustee or a Paying Agent for Securities of that series and applied to
the next succeeding sinking fund payment; provided, however, that the Trustee or
such Paying Agent shall at the request of the Company from time to time pay over
and deliver to the Company any cash payment so being held by the Trustee or such
Paying Agent upon delivery by the Company to the Trustee of Securities purchased
by the Company having an unpaid principal amount equal to the cash payment
requested to be released to the Company.
Section 11.3. Redemption of Securities for Sinking Fund.
Not less than 60 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing mandatory sinking fund
payment for that series pursuant to the terms of that series, the portion
thereof, if any, which is to be satisfied by payment of cash and the portion
thereof, if any, which is to be satisfied by delivering and crediting of
Securities of that series pursuant to Section 11.2, and the optional amount, if
any, to be added in cash to the next ensuing mandatory sinking fund payment, and
will also deliver to the Trustee any Securities to be so credited and not
theretofore delivered. If such Officers' Certificate shall specify an optional
amount to be added in cash to the next ensuing mandatory sinking fund payment,
the Company shall thereupon be
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obligated to pay the amount therein specified. Not less than 30 days before each
such sinking fund payment date the Trustee shall select the Securities to be
redeemed upon such sinking fund payment date in the manner specified in Section
3.3 and cause notice of the redemption thereof to be given in the name of and at
the expense of the Company in the manner provided in Section 3.4. Such notice
having been duly given , the redemption of such Securities shall be made upon
the terms and in the manner stated in Sections 3.5 and 3.6.
ARTICLE TWELVE
CONVERSION OF SECURITIES
Section 12.1. Applicability of Article.
The provisions of this Article Twelve shall be applicable to the
Securities of any series which are convertible into Class A Common Stock or, if
so provided in a Board Resolution, Officers' Certificate or executed
supplemental indenture referred to in Section 2.1 by or pursuant to which the
form and terms of the Securities of such series were established, cash in lieu
thereof, as provided by the terms of the Securities of such series.
Section 12.2. Exercise of Conversion Privilege.
In order to exercise the conversion privilege, the Holder of any
Security to be converted shall surrender such Security to the Conversion Agent
at any time during usual business hours at its office or agency maintained for
the purpose as provided in Section 4.2, accompanied by a fully executed written
notice, in substantially the form set forth on the reverse of the Security, that
the Holder elects to convert such Security or a stated portion thereof
constituting a multiple of $1,000 in principal amount and, if such Security is
surrendered for conversion during the period between the close of business on
any record date for such Security and the opening of business on the related
interest payment date and has not been called for redemption on a Redemption
Date within such period (or on such interest payment date), accompanied also by
payment of an amount equal to the interest payable on such interest payment date
on the portion of the principal amount of the Security being surrendered for
conversion. No interest shall be payable on any Security called for redemption
which is converted between the record date and the opening of business of the
next succeeding interest payment date. Such notice shall also state the name or
names (and address) in which the certificate or certificates for shares of Class
A Common Stock shall be issued (or to whom payment in cash in lieu of Class A
Common Stock shall be made). Securities surrendered for conversion shall (if so
required by the Company or the Conversion Agent) be duly endorsed by, or be
accompanied by a written instrument or instruments of transfer in form
satisfactory to the Company and the Conversion Agent duly executed by, the
Holder or his attorney duly authorized in writing. As promptly as practicable
after the receipt of such notice and the surrender of such Security as
aforesaid, the Company shall, subject to the provisions of Section 12.7, issue
and deliver at such office or agency to such Holder, or on his written order, a
certificate or certificates for the number of full shares of Class A Common
Stock issuable on conversion of such Security in accordance with the provisions
of such Security and cash, as provided in Section 12.3, in respect of any
fraction of
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a share of Class A Common Stock otherwise issuable upon such conversion or, if
so provided in a Board Resolution, Officers' Certificate or executed
supplemental indenture referred to in Section 2.1 by or pursuant to which the
form and terms of the Securities of such Series were established, cash, in lieu
of shares of Class A Common Stock. Such conversion shall be at the Conversion
Price in effect, and shall be deemed to have been effected, immediately prior to
the close of business on the date (herein called the "Date of Conversion") on
which such notice in proper form shall have been received by the Conversion
Agent and such Security shall have been surrendered as aforesaid, and the Person
or Persons in whose name or names any certificate or certificates for shares of
Class A Common Stock shall be issuable, if any, upon such conversion shall be
deemed to have become on the Date of Conversion the holder or holders of record
of the shares represented thereby; provided, however, that any such surrender on
any date when the stock transfer books of the Company shall be closed shall
constitute the Person or Persons in whose name or names the certificate or
certificates for such shares are to be issued, if any, as the record holder or
holders thereof for all purposes at the opening of business on the next
succeeding day on which such stock transfer books are open but such conversion
shall nevertheless be at the Conversion Price in effect at the close of business
on the date when such Security shall have been so surrendered with the
conversion notice in proper form. In the case of conversion of a portion, but
less than all, of a Security, the Company shall execute, and the Trustee shall
authenticate and make available for delivery to the Holder thereof, at the
expense of the Company, a Security or Securities in the aggregate principal
amount of the unconverted portion of the Security surrendered. Except as
otherwise expressly provided in this Indenture, no payment or adjustment shall
be made for interest accrued on any Security (or portion thereof) converted or
for dividends or distributions on any Class A Common Stock issued upon
conversion of any Security. The right, if any, of a Holder of any Security to
cause the Company to redeem, purchase or repay such Security shall terminate
upon receipt by the Company of any notice of conversion of such Security.
Section 12.3. Fractional Interests.
No fractions of shares or scrip representing fractions of shares shall
be issued upon conversion of Securities. If more than one Security shall be
surrendered for conversion at one time by the same Holder, the number of full
shares which shall be issuable upon conversion thereof shall be computed on the
basis of the aggregate principal amount of the Securities so surrendered. If any
fraction of a share of Class A Common Stock would, except for the provisions of
this Section 12.3, be issuable on the conversion of any Security or Securities,
the Company shall make payment in lieu thereof in cash equal to the value of
such fraction computed on the basis of the Last Sale Price of one share of Class
A Common Stock on the most recent Trading Day prior to the Date of Conversion.
"Last Sale Price" on any Trading Day shall mean (i) the closing price
regular way (or, if no closing price is reported the average of the bid and
asked prices) as reported on the New York Stock Exchange Composite Tape, or (ii)
if on such Trading Day the Class A Common Stock is not listed or admitted to
trading on such exchange, the closing price regular way (or, if no closing price
is reported the average of the bid and asked prices) on the principal national
securities exchange on which the Class A Common Stock is listed or admitted, or
(iii) if not listed or admitted to trading
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on any national securities exchange on such Trading Day, then the average of the
closing bid and asked prices as reported through the National Association of
Securities Dealers, Inc. on its NASDAQ National Market System or NASDAQ System
or a similar organization if NASDAQ is no longer reporting information, or (iv)
if the Class A Common Stock is not listed or admitted to trading on any national
securities exchange or quoted on such National Market System or NASDAQ System on
such Trading Day, then the average of the closing bid and asked prices in the
over-the-counter market as furnished by any New York Stock Exchange member firm
selected from time to time by the Company for that purpose, or (v) if not quoted
by any such organization on such Trading Day, the fair value of such Class A
Common Stock on such Trading Day, as determined by the Board of Directors. The
term "Trading Day" shall mean each Monday, Tuesday, Wednesday, Thursday and
Friday, other than any day on which securities are not traded on the applicable
above mentioned exchanges or markets.
Section 12.4. Adjustment of Conversion Price.
The "Conversion Price" for a Series of Securities shall be as set forth
in a Board Resolution, Officers' Certificate or executed supplemental indenture
referred to in Section 2.1 by or pursuant to which the form and terms of the
Securities of such Series were established, and shall be subject to adjustment
from time to time as follows:
(a) In case the Company shall (1) pay a dividend or make a
distribution in shares of Class A Common Stock to holders of Class A Common
Stock, (2) subdivide its outstanding shares of Class A Common Stock into a
greater number of shares of Class A Common Stock, (3) combine its outstanding
shares of Class A Common Stock into a smaller number of shares of Class A Common
Stock or (4) issue by reclassification of its Class A Common Stock any shares of
Capital Stock of the Company, the Conversion Price in effect immediately prior
to such action shall be adjusted so that the Holder of any Security thereafter
surrendered for conversion shall be entitled to receive the number of shares of
Class A Common Stock or other Capital Stock of the Company which he would have
owned immediately following such action had such Security been converted
immediately prior thereto. An adjustment made pursuant to this subsection (a)
shall become effective immediately, except as provided in subsection (e) below,
after the record date in the case of a dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision,
combination or reclassification. If as a result of an adjustment made pursuant
to this subsection (a), the Holder of any Security thereafter surrendered for
conversion shall become entitled to receive shares of two or more classes of
Capital Stock (including shares of Class A Common Stock and other Capital Stock)
of the Company, the Board of Directors (whose determination shall be conclusive
and shall be described in a statement filed with the Trustee) shall determine
the allocation of the adjusted Conversion Price between or among shares of such
classes of Capital Stock or shares of Class A Common Stock and other Capital
Stock.
(b) In case the Company shall issue rights or warrants to all
holders of Class A Common Stock entitling them (for a period not exceeding 45
days from the date of such issuance) to subscribe for or purchase shares of
Class A Common Stock or Securities convertible into Class A Common Stock at a
price per share less than the current market price per share (as determined
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pursuant to subsection (d) below) of the Class A Common Stock on the record date
mentioned below, the Conversion Price shall be adjusted to a price, computed to
the nearest cent, so that the same shall equal the price determined by
multiplying:
(1) the Conversion Price in effect immediately prior
to the date of issuance of such rights or warrants by
(2) a fraction, of which (i) the numerator shall be
(A) the number of shares of Class A Common Stock outstanding
on the date of issuance of such rights or warrants,
immediately prior to such issuance, plus (B) the number of
shares of Class A Common Stock which the aggregate offering
price of the total number of shares of Class A Common Stock
(or the aggregate conversion price of the convertible
securities) so offered for subscription or purchase would
purchase at such current market price (determined by
multiplying such total number of shares by the exercise price
of such rights or warrants and dividing the product so
obtained by such current market price), and of which (ii) the
denominator shall be (A) the number of shares of Class A
Common Stock outstanding on the date of issuance of such
rights or warrants, immediately prior to such issuance, plus
(B) the number of additional shares of Class A Common Stock
(or into which the convertible securities are convertible)
which are so offered for subscription or purchase.
Such adjustment shall become effective immediately, except as provided in
subsection (e) below, after the record date for the determination of holders
entitled to receive such rights or warrants.
(c) In case the Company shall distribute to substantially all
holders of Class A Common Stock, evidences of indebtedness, equity securities
(including equity interests in the Company's Subsidiaries) other than common
stock, or other assets (other than cash dividends paid out of surplus of the
Company), or shall distribute to substantially all holders of Class A Common
Stock rights or warrants to subscribe for securities (other than those referred
to in subsection (b) above) then in each such case the Conversion Price shall be
adjusted so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the date of such distribution by
a fraction of which the numerator shall be the current market price per share
(determined as provided n subsection (d) below) of the Class A Common Stock on
the record date mentioned below less the then fair market value (as determined
by the Board of Directors, whose determination shall, if made in good faith, be
conclusive evidence of such fair market value) of the portion of the assets so
distributed or of such subscription rights or warrants applicable to one share
of Class A Common Stock, and of which the denominator shall be such current
market price per share of the Class A Common Stock. Such adjustment shall become
effective immediately, except as provided in subsection (e) below, after the
record date for the determination of stockholders entitled to receive such
distribution.
(d) For the purpose of any computation under subsections (b)
and (c) above, the current market price per share of Class A Common Stock on any
date shall be deemed to be the
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average of the Last Sale Prices for the 30 consecutive Trading Days commencing
45 Trading Days before the date in question.
(e) In any case in which this Section 12.4 shall require that
an adjustment be made immediately following a record date, the Company may elect
to defer the effectiveness of such adjustment (but in no event until a date
later than the effective time of the event giving rise to such adjustment), in
which case the Company shall, with respect to any Security converted after such
record date and before such adjustment shall have become effective, (i) defer
paying any cash payment pursuant to Section 12.3 or issuing to the Holder of
such Security the number of shares of Class A Common Stock and other Capital
Stock of the Company issuable upon such conversion in excess of the number of
shares of Class A Common Stock and other Capital Stock of the Company issuable
thereupon only on the basis of the Conversion Price prior to adjustment and
(ii), not later than five Business Days after such adjustment shall have become
effective, pay to such Holder the appropriate cash payment pursuant to Section
12.3 and issue to such Holder the additional shares of Class A Common Stock and
other Capital Stock of the Company issuable on such conversion.
(f) No adjustment in the Conversion Price shall be required
unless such adjustment would require an increase or decrease of at least 1% of
the Conversion Price; provided that any adjustments which by reason of this
subsection (f) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment and provided, further, that adjustment
shall be required and made in accordance with the provisions of this Article
Twelve (other than this subsection (f)) not later than such time as may be
required in order to preserve the tax-free nature of a distribution to the
holders of Securities or Class A Common Stock. All calculations under this
Article Twelve shall be made to the nearest cent or to the nearest one-hundredth
of a share, as the case may be.
(g) Whenever the Conversion Price is adjusted as herein
provided, the Company shall promptly (i) file with the Trustee and each
Conversion Agent an Officers' Certificate setting forth the Conversion Price
after such adjustment and setting forth a brief statement of the facts requiring
such adjustment, which certificate shall be conclusive evidence of the
correctness of such adjustment, and (ii) mail or cause to be mailed a notice of
such adjustment to each Holder of Securities at his address as the same appears
on either the registry books of the Company or in the filings described in
Section 2.4. Anything in this Section 12.4 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Conversion Price, in
addition to those required by this Section 12.4, as it in its discretion shall
determine to be advisable in order that any stock dividend, subdivision of
shares, distribution of rights or warrants to purchase stock or securities, or
distribution of other assets (other than cash dividends) hereafter made by the
Company to its stockholders shall not be taxable.
Section 12.5. Continuation of Conversion Privilege in Case of Merger,
Consolidation or Sale of Assets.
If any of the following shall occur, namely: (a) any consolidation or
merger of the Company as a result of which the holders of Class A Common Stock
shall be entitled to receive stock, other
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securities or other assets (including cash) with respect to or in exchange for
Class A Common Stock; or (b) any sale or conveyance of all or substantially all
of the Property or business of the Company as an entirety, then the Company, or
such successor or purchasing corporation, as the case may be, shall, as a
condition precedent to such consolidation, merger, sale or conveyance, execute
and deliver to the Trustee a supplemental indenture (which shall conform to the
TIA as in force at the date of the execution thereof) providing that the Holder
of each convertible Security then outstanding shall have the right to convert
such Security into the kind and amount of shares of stock and other securities
and Property (including cash) receivable upon such consolidation, merger, sale
or conveyance by a holder of the number of shares of Class A Common Stock
issuable upon conversion of such Security immediately prior to such
reclassification, change, consolidation, merger, sale or conveyance. Such
supplemental indenture shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Article
Twelve. If, in the case of any such consolidation, merger, sale or conveyance,
the stock or other securities and Property (including cash) receivable thereupon
by a holder of shares of Class A Common Stock includes shares of stock or other
securities and Property (including cash) of a corporation other than the
successor or purchasing corporation, as the case may be, in such consolidation,
merger, sale or conveyance, then such supplemental indenture shall also be
executed by such other corporation and shall contain such additional provisions
to protect the interests of the Holders of the Securities as the Board of
Directors shall reasonably consider necessary by reason of the foregoing. The
provisions of this Section 12.5 shall similarly apply to successive
consolidations, mergers, sales or conveyances.
Within 30 days after the execution of such supplemental indenture the
Company shall give notice of the execution of such supplemental indenture, with
respect to Registered Securities affected by such supplemental indenture, by
mailing a notice of the execution of such supplemental indenture to each Holder
of Registered Securities at such Holder's address as it appears on the
Securities register maintained by the Registrar and, with respect to Bearer
Securities affected by such supplemental indenture, by publishing in an
Authorized Newspaper notice of the execution of such supplemental indenture on
two separate days.
Neither the Trustee nor any Conversion Agent shall be under any
responsibility to determine the correctness of any provisions contained in any
such supplemental indenture relating either to the kind or amount of shares of
stock or securities or Property (including cash) receivable by Holders of
Securities upon the conversion of their Securities after any such consolidation,
merger, sale or conveyance or to any adjustment to be made with respect thereto,
but, subject to the provisions of Sections 7.1 and 7.2, may accept as conclusive
evidence of the correctness of any such provisions, and shall be protected in
relying upon, the Officers' Certificate (which the Company shall be obligated to
file with the Trustee prior to the execution of any such supplemental indenture)
with respect thereto.
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Section 12.6. Notice of Certain Events.
If:
(a) the Company shall declare a dividend (or any other
distribution) payable to the holders of Class A Common Stock otherwise than in
cash; or
(b) the Company shall authorize the granting to the holders of
Class A Common Stock of rights to subscribe for or purchase any shares of stock
of any class or of any other rights; or
(c) the Company shall authorize any reclassification or change
of the Class A Common Stock (other than a subdivision or combination of its
outstanding shares of Class A Common Stock), or any consolidation or merger to
which the Company is a party and for which approval of any stockholders of the
Company is required, or the sale or conveyance of all or substantially all the
Property or business of the Company; or
(d) there shall be authorized or ordered any voluntary or
involuntary dissolution, liquidation or winding-up of the Company; or
(e) such other event shall occur as may be specified in any
Securities issued pursuant to this Indenture, then, the Company shall cause to
be filed at the office or agency maintained for the purpose of conversion of the
Securities as provided in Section 4.2, and shall, with respect to Registered
Securities convertible into Class A Common Stock, cause to be mailed to each
Holder of such Registered Securities, at such Holder's address as it shall
appear on the Securities register maintained by the Registrar and, with respect
to Bearer Securities convertible into Class A Common Stock, cause to be
published in an Authorized Newspaper on two separate days, at least 20 days
before the date hereinafter specified (or the earlier of the dates hereinafter
specified, in the event that more than one date is specified), a notice stating
the date on which (1) a record is expected to be taken for the purpose of such
dividend, distribution or rights, or if a record is not to be taken, the date as
of which the holders of Class A Common Stock of record to be entitled to such
dividend, distribution or rights are to be determined, or (2) such
reclassification, change, consolidation, merger, sale, conveyance, dissolution,
liquidation or winding-up is expected to become effective and the date, if any
is to be fixed, as of which it is expected that holders of Class A Common Stock
of record shall be entitled to exchange their shares of Class A Common Stock for
securities or other Property deliverable upon such reclassification, change,
consolidation, merger, sale, conveyance, dissolution, liquidation or winding-up.
Section 12.7. Taxes on Conversion.
The Company will pay any and all documentary, stamp or similar taxes
payable to the United States of America or any political subdivision or taxing
authority thereof or therein in respect of the issue or delivery of shares of
Class A Common Stock on conversion of Securities pursuant thereto; provided,
however, that the Company shall not be required to pay any tax which may be
payable in
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respect of any transfer involved in the issue or delivery of shares of Class A
Common Stock in a name other than that of the Holder of the Securities to be
converted (or payment of cash in lieu thereof to a Person other than such
Holder) and no such issue or delivery (or payment) shall be made unless and
until the Person requesting such issue or delivery (or payment) has paid to the
Company the amount of any such tax or has established, to the satisfaction of
the Company, that such tax has been paid. The Company extends no protection with
respect to any other taxes imposed in connection with conversion of Securities.
Section 12.8. Company to Provide Stock.
The Company shall reserve, free from preemptive rights, out of its
authorized but unissued shares, sufficient shares to provide for the conversion
of convertible Securities from time to time as such Securities are presented for
conversion; provided, however, that nothing contained herein shall be construed
to preclude the Company from satisfying its obligations in respect of the
conversion of Securities by delivery of repurchase shares of Class A Common
Stock which are held in the treasury of the Company.
If any shares of Class A Common Stock to be reserved for the purpose of
conversion of Securities hereunder require registration with or approval of any
governmental authority under any Federal or state law before such shares may be
validly issued or delivered upon conversion, then the Company covenants that it
will in good faith and as expeditiously as possible endeavor to secure such
registration or approval, as the case may be; provided, however, that nothing in
this Section 12.8 shall be deemed to affect in any way the obligations of the
Company to convert Securities into Class A Common Stock as provided in this
Article Twelve.
Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value, if any, of the Class A Common Stock,
the Company will take all corporate action which may, in the Opinion of Counsel,
be necessary in order that the Company may validly and legally issue fully paid
and non-assessable shares of Class A Common Stock at such adjusted Conversion
Price.
The Company covenants that all shares of Class A Common Stock which may
be issued upon conversion of Securities will upon issue be fully paid and
non-assessable by the Company and free of preemptive rights.
Section 12.9. Disclaimer of Responsibility for Certain Matters.
Neither the Trustee, the Conversion Agent nor any agent of either shall
at any time be under any duty or responsibility to any Holder of Securities to
determine whether any facts exist which may require any adjustment of the
Conversion Price, or with respect to the Officers' Certificate referred to in
Section 12.4(h), or with respect to the nature or extent of any such adjustment
when made, or with respect to the method employed, or herein or in any
supplemental indenture provided to be employed, in making the same. Neither the
Trustee, the Conversion Agent nor any agent of either shall be accountable with
respect to the validity of value (or the kind or amount) or any shares
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of Class A Common Stock, or of any securities or Property (including cash),
which may at any time be issued or delivered upon the conversion of any
Security; and neither the Trustee, the Conversion Agent nor any agent of either
makes any representation with respect thereto. Neither the Trustee, the
Conversion Agent nor any agent of either shall be responsible for any failure of
the Company to issue, register the transfer of or deliver any shares of Class A
Common Stock or stock certificates or other securities or Property (including
cash) upon the surrender of any Security for the purpose of conversion or,
subject to Sections 7.1 and 7.2, to comply with any of the covenants of the
Company contained in this Article Twelve.
Section 12.10. Return of Funds Deposited for Redemption of Converted Securities.
Any funds which at any time shall have been deposited by the Company or
on its behalf with the Trustee or any Conversion Agent for the purpose of paying
the principal of and interest, if any, on any of the Securities and which shall
not be required for such purposes because of the conversion of such Securities,
as provided in this Article Twelve, shall after such conversion be repaid to the
Company by the Trustee or such Conversion Agent.
ARTICLE THIRTEEN
MISCELLANEOUS
Section 13.1. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by operation of subsection (c) of Section 318 of the TIA, the
imposed duties shall control.
Section 13.2. Notices.
Any notice or communication by the Company or the Trustee to the other
is duly given if in writing and delivered in Person or by registered or
certified mail (postage prepaid, return receipt requested), telecopier or
overnight air courier guaranteeing next day delivery, addressed as follows:
If to the Company:
Interface, Inc.
2859 Paces Ferry Road
Suite 2000
Atlanta, Georgia 30339
Attention: General Counsel
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With a copy to:
Kilpatrick Stockton LLP
1100 Peachtree Street
Suite 2800
Atlanta, Georgia 30309-4530
Attn: G. Kimbrough Taylor, Jr., Esq.
If to the Trustee:
First Union National Bank
Suite 1100, First Union Plaza
999 Peachtree Street, N.E.
Atlanta, Georgia 30309
Attn: Corporate Trust Department
The Company or the Trustee by notice to the others may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication to the Company shall be deemed to have been
duly given or made at the time delivered by hand if personally delivered; five
calendar days after mailing if sent by registered or certified mail; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and the
next Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery (except that a notice of change of
address shall not be deemed to have been given until actually received by the
addressee).
Any notice or communication to the Trustee shall be deemed to have been
duly given or made upon receipt.
Any notice or communication to a Holder of a Registered Security shall
be mailed by first-class mail to such Securityholder's address shown on the
register kept by the Registrar. 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.
Except with respect to notices or communications to the Trustee, a
notice or communication is mailed in the manner provided above within the time
prescribed, it is duly given, whether or not the addressee receives it.
If the Company mails a notice or communication to Securityholders, it
shall mail a copy to the Trustee and each Agent at the same time.
Any notice to be given to a Holder of Bearer Securities shall be given
by publication in an Authorized Newspaper on two separate days within the time
prescribed.
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Section 13.3. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with
other Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
Section 13.4. 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:
(a) 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
(b) an Opinion of Counsel, in form and substance reasonably
satisfactory to the Trustee, stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
Section 13.5. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(a) a statement that each party making such certificate or
opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of each such party, such
party has made such examination or investigation as is necessary
to enable such party to express an informed opinion as to whether or
not such covenant or condition has been complied with; and
(d) a statement as to whether or not, in the opinion of each
such party, such condition or covenant has been complied with;
provided, however, that with respect to matters of law, an Officers' Certificate
may be based upon an Opinion of Counsel, unless the signers know, or in the
exercise of reasonable care should know, that such Opinion of Counsel is
erroneous, and provided, further, that with respect to matters of fact, an
Opinion of Counsel may rely on an Officers' Certificate or certificates of
public officials, unless the signer knows, or in the exercise of reasonable care
should know, that any such document is erroneous.
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<PAGE> 80
Section 13.6. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of
Securityholders. The Registrar and the Paying Agent may make reasonable rules
for their functions.
Section 13.7. Legal Holidays.
If a payment date is a Legal Holiday at a place of payment, payment may
be made at that place on the next succeeding Business Day, and no interest on
the amount payable on such payment date shall accrue for the intervening period.
Section 13.8. No Recourse Against Others.
A director, officer, employee or stockholder, as such, of the Company
shall not have any liability for any obligations of the Company under the
Securities or this Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Securityholder by accepting a
Security waives and releases all such liability. The waiver and release are part
of the consideration for the issue of Securities.
Section 13.9. Governing Law.
This Indenture and the Securities shall be governed by, and construed
in accordance with, the laws of the State of New York.
This Indenture is subject to the provisions of the TIA that are
required to be part of this Indenture and shall, to the extent applicable, be
governed by such provisions.
Section 13.10. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or any Subsidiary. Any such indenture, loan or
debt agreement may not be used to interpret this Indenture.
Section 13.11. Successors.
All agreements of the Company in this Indenture and the Securities
shall bind its successors. All agreements of the Trustee in this Indenture shall
bind its successors.
Section 13.12. Severability.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
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<PAGE> 81
Section 13.13. Multiple Originals.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement. One signed copy is enough to prove this Indenture.
Section 13.14. Table of Contents; Headings.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not intended to be considered a part hereof and shall not
modify or restrict any of the terms or provisions hereof.
Section 13.15. Securities in Foreign Currencies.
Wherever this Indenture provides for any action by, or the
determination of any of the rights of, Holders of Securities of any series in
which not all of such Securities are denominated in the same currency, or any
distribution to Holders of Securities, in the absence of any provision to the
contrary in the form of Security of any particular series, any amount in respect
of any Security denominated in a currency other than United States dollars shall
be treated for any such action, determination or distribution as that amount of
United States dollars that could be obtained for such amount on such reasonable
basis of exchange and as of such date as the Company may specify in a written
notice to the Trustee, or in the absence of such notice, as the Trustee may
determine.
ARTICLE FOURTEEN
GUARANTEE OF SECURITIES
Section 14.1. Guarantee.
Subject to the provisions of this Article Fourteen, each Guarantor
hereby jointly and severally unconditionally guarantees to each Holder of a
Security authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, irrespective of the validity and enforceability of this
Indenture, the Securities or the obligations of the Company or any other
Guarantors to the Holders or the Trustee hereunder or thereunder, that: (a) the
principal of, premium, if any, and interest on the Securities will be duly and
punctually paid in full when due, whether at maturity, by acceleration or
otherwise, and interest on the overdue principal and (to the extent permitted by
law) interest, if any, on the Securities and all other obligations of the
Company or the Guarantors to the Holders or the Trustee hereunder or thereunder
(including, without limitation, fees, expenses or other) will be promptly paid
in full or performed, all in accordance with the terms hereof and thereof; and
(b) in case of any extension of time of payment or renewal of any Securities,
the same will be promptly paid in full when due or performed in accordance with
the terms of the extension or renewal, whether at Stated Maturity, by
acceleration or otherwise. Failing payment when due of any amount so guaranteed,
or failing performance of any other obligation of the Company to the Holders,
for whatever reason, each Guarantor will be obligated to pay, or to perform or
cause the
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<PAGE> 82
performance of, the same immediately. An Event of Default under this Indenture
or the Securities shall constitute an event of default under this Guarantee, and
shall entitle the Holders of Securities to accelerate the obligations of the
Guarantors hereunder in the same manner and to the same extent as the
obligations of the Company.
Each of the Guarantors hereby agrees that its obligations hereunder
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Securities or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any holder of the Securities with
respect to any provisions hereof or thereof, any release of any other Guarantor,
the recovery of any judgment against the Company, any action to enforce the
same, whether or not a Guarantee is affixed to any particular Security, or any
other circumstance which might otherwise constitute a legal or equitable
discharge or defense of a Guarantor. Each of the Guarantors hereby waives the
benefit of diligence, presentment, demand of payment, filing of claims with a
court in the event of insolvency or bankruptcy of the Company, any right to
require a proceeding first against the Company, protest, notice and all demands
whatsoever and covenants that its Guarantee will not be discharged except by
complete performance of the obligations contained in the Securities, this
Indenture and this Guarantee. If any Holder or the Trustee is required by any
court or otherwise to return to the Company or to any Guarantor, or any
custodian, trustee, liquidator or other similar official acting in relation to
the Company or such Guarantor, any amount paid by the Company or such Guarantor
to the Trustee or such Holder, this Guarantee, to the extent theretofore
discharged, shall be reinstated in full force and effect. Each Guarantor further
agrees that, as between it, on the one hand, and the Holders of Securities and
the Trustee, on the other hand subject to this Article Fourteen, (a) the
maturity of the obligations guaranteed hereby may be accelerated as provided in
Article Six hereof for the purposes of this Guarantee, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
obligations guaranteed hereby, and (b) in the event of any acceleration of such
obligations as provided in Article Six hereof, such obligations (whether or not
due and payable) shall forthwith become due and payable by the Guarantors for
the purpose of this Guarantee.
This Guarantee shall remain in full force and effect and continue to be
effective should any petition be filed by or against the Company for liquidation
or reorganization, should the Company become insolvent or make an assignment for
the benefit of creditors or should a receiver or trustee be appointed for all or
any significant part of the Company's assets, and shall, to the fullest extent
permitted by law, continue to be effective or be reinstated, as the case may be,
if at any time payment and performance of the Securities are, pursuant to
applicable law, rescinded or reduced in amount, or must otherwise be restored or
returned by any obligee on the Securities, whether as a "voidable preference,"
"fraudulent transfer" or otherwise, all as though such payment or performance
had not been made. In the event that any payment, or any part thereof, is
rescinded, reduced, restored or returned, the Securities shall, to the fullest
extent permitted by law, be reinstated and deemed reduced only by such amount
paid and not so rescinded, reduced, restored or returned.
No stockholder, officer, director, employer or incorporator, past,
present or future, or any Guarantor, as such, shall have any personal liability
under this Guarantee by reason of his, her or its status as such stockholder,
officer, director, employer or incorporator.
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<PAGE> 83
The Guarantors shall have the right to seek contribution from any
non-paying Guarantor so long as the exercise of such right does not impair the
rights of the Holders or the Trustee under this Guarantee.
The Guarantee of each Guarantor is limited to an amount that would not
render such Guarantor insolvent. The Guarantee of any Guarantor, and this
Section 14.1 as applicable to any Guarantor, may be modified, without the
consent of the Holders, to reflect such further fraudulent conveyance savings
provisions, net worth or maximum amount limitations as to recourse or similar
provisions as are set forth in, and after giving effect to, any other guarantee
of such Guarantor provided that no such amendment or modification thereafter
shall be in a manner which is adverse to the Holders in any respect. No
modification or amendment referred to in the preceding sentence shall be
permitted if it would disadvantage the Holders relative to the holders of the
obligations of such Guarantor. Any amendment or modification pursuant to this
paragraph shall comply with the provisions of Article Nine.
Section 14.2. Execution and Delivery of Guarantee.
To evidence further the Guarantee set forth in Section 14.1, each
Guarantor hereby agrees that a notation of such Guarantee, substantially in the
form included in Exhibit A hereto, shall be endorsed on each Security
authenticated and delivered by the Trustee after such Guarantee is executed and
executed by either manual or facsimile signature of an Officer of each
Guarantor. The validity and enforceability of any Guarantee shall not be
affected by the fact that it is not affixed to any particular Security.
Each of the Guarantors hereby agrees that its Guarantee set forth in
Section 14.1 shall remain in full force and effect notwithstanding any failure
to endorse on each Security a notation of such Guarantee.
If an Officer of a Guarantor whose signature is on this Indenture or a
Security no longer holds that office at the time the Trustee authenticates such
Security or at any time thereafter, such Guarantor's Guarantee of such Security
shall be valid nevertheless.
The delivery of any Security by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of any Guarantee set forth in
this Indenture on behalf of the Guarantor.
Section 14.3. Additional Guarantors.
(a) Any Person may become a Guarantor by executing and delivering
to the Trustee (i) a supplemental indenture in form and substance
satisfactory to the Trustee, which subjects such Person to the
provisions of this Indenture as a Guarantor, and (ii) an Opinion of
Counsel to the effect that such supplemental indenture has been duly
authorized and executed by such Person and constitutes the legal,
valid, binding and enforceable obligation of such Person (subject to
such customary exceptions concerning fraudulent conveyance laws,
creditors' rights and equitable principles as may be acceptable to the
Trustee in its discretion).
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<PAGE> 84
(b) If the Company or any of its Subsidiaries acquires or
forms a Material U.S. Subsidiary or if any Subsidiary of the Company
shall become a Material U.S. Subsidiary, the Company will cause any
such Subsidiary to (i) execute and deliver to the Trustee a
supplemental indenture in form and substance reasonably satisfactory
to the Trustee pursuant to which such Subsidiary shall guarantee all of
the obligations of the Company with respect to the Securities issued
under this Indenture on a senior basis in substantially the same manner
and to the same extent set forth in this Article Fourteen and (ii)
deliver to such Trustee an Opinion of Counsel reasonably satisfactory
to such Trustee to the effect that a supplemental indenture has been
duly executed and delivered by such Subsidiary and such Subsidiary is
in compliance with the terms of this Indenture.
Section 14.4. Release of a Guarantor.
(a) Upon the sale or disposition of all of the Capital Stock of a
Guarantor by the Company or a Subsidiary of the Company, or upon the
consolidation or merger of a Guarantor with or into any Person (in each
case, other than to the Company or an Affiliate of the Company), such
Guarantor shall be deemed automatically and unconditionally released
and discharged from all obligations under this Article Fourteen without
any further action required on the part of the Trustee or any Holder;
provided that each such Guarantor is sold or disposed of in a
transaction which does not violate Section 5.1.
(b) The Trustee shall deliver an appropriate instrument evidencing
the release of a Guarantor upon receipt of a request of the Company
accompanied by an Officers' Certificate certifying as to the compliance
with this Section 14.4. Any Guarantor not so released or the entity
surviving such Guarantor, as applicable, will remain or be liable under
its Guarantee as provided in this Article Fourteen.
The Trustee shall execute any documents reasonably requested by the
Company or a Guarantor in order to evidence the release of such Guarantor from
its obligations under its Guarantee endorsed on the Securities and under this
Article Fourteen.
Nothing contained in this Indenture or in any of the Securities shall
prevent any consolidation or merger of a Guarantor with or into the Company or
another Guarantor or shall prevent any sale or conveyance of the Property of a
Guarantor as an entirety or substantially as an entirety to the Company or
another Guarantor.
Section 14.5. Waiver of Subrogation.
Each Guarantor hereby irrevocably waives any claim or other rights
which it may now or hereafter acquire against the Company that arise from the
existence, payment, performance or enforcement of such Guarantor's obligations
under this Guarantee and this Indenture, including, without limitation, any
right of subrogation, reimbursement, exoneration, indemnification, and any right
to participate in any claim or remedy of any Holder of Securities against the
Company, whether or not such claim, remedy or right arises in equity, or under
contract, statute or common law,
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including, without limitation, the right to take or receive from the Company,
directly or indirectly, in cash or other Property or by set-off or in any other
manner, payment or security on account of such claim or other rights. If any
amount shall be paid to any Guarantor in violation of the preceding sentence and
the Securities shall not have been paid in full, such amount shall have been
deemed to have been paid to such Guarantor for the benefit of, and held in trust
for the benefit of, the Holders of the Securities, and shall forthwith be paid
to the Trustee for the benefit of such Holders to be credited and applied upon
the Securities, whether matured or unmatured, in accordance with the terms of
this Indenture. Each Guarantor acknowledges that it will receive direct and
indirect benefits from the financing arrangements contemplated by this Indenture
and that the waiver set forth in this Section 14.5 is knowingly made in
contemplation of such benefits.
This Section 14.5 as applicable to any particular Guarantor may be
amended or modified, without the consent of the Holders, in a manner to be
consistent with the terms of any waiver of subrogation language set forth in any
other guarantee of such Guarantor; provided that no such amendment or
modification thereafter shall be in a manner which is adverse to the Holders in
any respect. No modification or amendment referred to in the preceding sentence
shall be permitted if it would disadvantage the Holders relative to the holders
of the obligations of such Guarantor. Any amendment or modification pursuant to
this paragraph shall comply with the provisions of Article Nine.
Section 14.6. Guarantee Provisions Solely to Define Relative Rights.
Nothing contained in this Article Fourteen (other than a release
pursuant to Section 14.4) or elsewhere in this Indenture or in the Securities is
intended to or shall (a) impair, as among each Guarantor, its creditors other
than the Holders of the Securities, the obligation of such Guarantor, which is
absolute and unconditional, to make payments to the Holders in respect of its
obligations under this Guarantee as and when the same shall become due and
payable in accordance with their terms; or (b) affect the relative rights
against such Guarantor of the Holders of the Securities and creditors of such
Guarantor or (c) prevent the Trustee or the Holder of any Security from
exercising all remedies otherwise permitted by applicable law upon Default or an
Event of Default under this Indenture.
The failure by any Guarantor to make a payment in respect of its
obligations under this Guarantee by reason of any provision of this Article
Fourteen shall not be construed as preventing the occurrence of a Default or an
Event of Default hereunder.
Section 14.7. Reliance on Judicial Order or Certificate of Liquidating Agent
Regarding Dissolution, Etc. of Guarantors.
Upon payment or distribution of assets of any Guarantor referred to in
this Article Fourteen, the Trustee subject to the provisions of Section 7.1, and
the Holders shall be entitled to rely upon any order or decree entered by any
court of competent jurisdiction in which such insolvency, bankruptcy,
receivership, liquidation, reorganization, dissolution, winding-up or similar
case or proceeding is pending, or a certificate of the trustee in bankruptcy,
receiver, liquidating trustee,
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<PAGE> 86
custodian, assignee for the benefit of creditors, agent or other Person making
such payment or distribution, delivered to the Trustee or to the Holders, for
the purpose of ascertaining the Persons entitled to participate in such payment
or distribution, the holders of other Indebtedness of such Guarantor, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article Fourteen.
Section 14.8. Article Fourteen Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article Fourteen shall in such case (unless the context
otherwise requires) be construed as extending to and including such Paying Agent
within its meaning as fully for all intents and purposes as if such Paying Agent
were named in this Article Fourteen in addition to or in place of the Trustee.
Section 14.9. No Suspension of Remedies.
Nothing contained in this Article Fourteen shall limit the right of the
Trustee or the Holders of Securities to take any action to accelerate the
maturity of the Securities pursuant to Article Six or to pursue any rights or
remedies hereunder or under applicable law.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be affixed hereto and
attested, all as of the date first above written.
INTERFACE, INC.
By:
--------------------------------------
Name:
Title:
<TABLE>
<S> <C>
B. SHEHADI & SONS, INC INTERFACE EUROPE, INC.
BENTLEY MILLS, INC INTERFACE FLOORING SYSTEMS, INC.
BENTLEY ROYALTY COMPANY INTERFACE HOLDING COMPANY
COMMERCIAL FLOORING SYSTEMS, INC INTERFACE INTERIOR FABRICS, INC.
CONGRESS FLOORING CORP INTERFACE LICENSING COMPANY
FLOORING CONSULTANTS, INC INTERFACE ROYALTY COMPANY
GUILFORD (DELAWARE), INC INTERFACE SPECIALTY RESOURCES, INC.
GUILFORD OF MAINE DECORATIVE FABRICS, INC LASHER/WHITE CARPET COMPANY, INC.
GUILFORD OF MAINE FINISHING SERVICES, INC PRINCE STREET ROYALTY COMPANY
GUILFORD OF MAINE, INC PRINCE STREET TECHNOLOGIES, LTD.
GUILFORD OF MAINE MARKETING CO QUAKER CITY INTERNATIONAL, INC.
INTEK, INC RE:SOURCE AMERICAS ENTERPRISES, INC.
INTEK MARKETING CO SUPERIOR/REISER FLOORING RESOURCES, INC.
INTERFACE AMERICAS, INC TOLTEC FABRICS, INC.
INTERFACE AMERICAS SERVICES, INC
INTERFACE ARCHITECTURAL RESOURCES, INC
INTERFACE ASIA-PACIFIC, INC
</TABLE>
By:
--------------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK
By:
--------------------------------------
Name:
Title:
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<PAGE> 88
EXHIBIT A
SENIOR GUARANTEE
For value received, the undersigned hereby unconditionally guarantees
to the Holder of this Security the payments of principal of, if any, and
interest on this Security in the amounts and at the time when due and interest
on the overdue principal, premium, if any, and interest, if any, of this
Security, if lawful, and the payment or performance of all other obligations of
the Company under the Indenture or the Securities, to the Holder of this
Security and the Trustee, all in accordance with and subject to the terms and
limitations of this Security, Article Fourteen of the Indenture and this
Guarantee. The validity and enforceability of any Guarantee shall not be
affected by the fact that it is not affixed to any particular Security.
The obligations of the undersigned to the Holders of Securities and to
the Trustee pursuant to the Guarantee and the Indenture are expressly set forth
in Article Fourteen of the Indenture and reference is hereby made to the
Indenture for the precise terms of the Guarantee and all of the other provisions
of the Indenture to which this Guarantee relates. Each Holder of a Security, by
accepting the same, agrees to and shall be bound by such provisions.
This Guarantee is subject to release upon the terms set forth in the
Indenture.
<TABLE>
<S> <C>
B. SHEHADI & SONS, INC INTERFACE EUROPE, INC.
BENTLEY MILLS, INC INTERFACE FLOORING SYSTEMS, INC.
BENTLEY ROYALTY COMPANY INTERFACE HOLDING COMPANY
COMMERCIAL FLOORING SYSTEMS, INC INTERFACE INTERIOR FABRICS, INC.
CONGRESS FLOORING CORP INTERFACE LICENSING COMPANY
FLOORING CONSULTANTS, INC INTERFACE ROYALTY COMPANY
GUILFORD (DELAWARE), INC INTERFACE SPECIALTY RESOURCES, INC.
GUILFORD OF MAINE DECORATIVE FABRICS, INC LASHER/WHITE CARPET COMPANY, INC.
GUILFORD OF MAINE FINISHING SERVICES, INC PRINCE STREET ROYALTY COMPANY
GUILFORD OF MAINE, INC PRINCE STREET TECHNOLOGIES, LTD.
GUILFORD OF MAINE MARKETING CO QUAKER CITY INTERNATIONAL, INC.
INTEK, INC RE:SOURCE AMERICAS ENTERPRISES, INC.
INTEK MARKETING CO SUPERIOR/REISER FLOORING RESOURCES, INC.
INTERFACE AMERICAS, INC TOLTEC FABRICS, INC.
INTERFACE AMERICAS SERVICES, INC
INTERFACE ARCHITECTURAL RESOURCES, INC
INTERFACE ASIA-PACIFIC, INC
</TABLE>
By:
---------------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 5
Kilpatrick Stockton LLP
1100 Peachtree Street
Atlanta, Georgia 30309-4530
(404) 815-6500
Board of Directors
Interface, Inc.
2859 Paces Ferry Road
Suite 2000
Atlanta, Georgia 30339
Dear Sirs:
We are acting as counsel for Interface, Inc. (the "Company") in connection
with the Registration Statement on Form S-3 No. 333-46611 (the Registration
Statement") filed with the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended, relating to the offering from
time to time, as set forth in the prospectus contained in the Registration
Statement (the "Prospectus") and as to be set forth in one or more supplements
to the Prospectus (each such supplement, a "Prospectus Supplement") of the
Company's (i) debt securities (the "Debt Securities"), (ii) preferred shares
(the "Preferred Shares"), (iii) Preferred Shares which may be represented by
depositary shares (the "Depositary Shares") and (iv) Class A common stock (the
"Common Stock") with an aggregate issue price of up to $3,000,000. The Debt
Securities, the Preferred Shares, the Depositary Shares and the Common Shares
are collectively referred to as the "Securities".
The Debt Securities will be issued in one or more series and may be either
senior debt securities (the "Senior Securities") issued pursuant to an Indenture
(the "Senior Indenture") between the Company and First Union National Bank as
trustee (the "Senior Trustee"), or subordinated debt securities (the
"Subordinated Securities") issued pursuant to an Indenture (the "Subordinated
Indenture") between the Company and a trustee to be named prior to the offering
of any subordinated securities (the "Subordinated Trustee"). The Depositary
Shares will be issued under one or more deposit agreements (the "Deposit
Agreements"), each to be between the Company and a financial institution
identified therein as the depositary (the "Depositary").
We are familiar with the corporate proceedings of the Company to date with
respect to the proposed issuance and sale of the Securities, including
resolutions of the Board of Directors of the Company (the "Resolutions")
authorizing the Indentures and the issuance, offering and sale of the Securities
and we have examined such corporate records of the Company and such other
documents and certificates as we have deemed necessary as a basis for the
opinions hereinafter expressed.
Based on the foregoing, and having regard for such legal considerations as
we have deemed relevant, we are of the opinion that:
<PAGE> 2
The Debt Securities will be issued in one or more series and may be either
senior debt securities (the "Senior Securities") issued pursuant to an Indenture
(the "Senior Indenture") between the Company and First Union National Bank as
trustee (the "Senior Trustee"), or subordinated debt securities (the
"Subordinated Securities") issued pursuant to an Indenture (the "Subordinated
Indenture") between the Company and a trustee to be named prior to the offering
of any subordinated securities (the "Subordinated Trustee"). The Depositary
Shares will be issued under one or more deposit agreements (the "Deposit
Agreements"), each to be between the Company and a financial institution
identified therein as the depositary (the "Depositary").
We are familiar with the corporate proceedings of the Company to date with
respect to the proposed issuance and sale of the Securities, including
resolutions of the Board of Directors of the Company (the "Resolutions")
authorizing the Indentures and the issuance, offering and sale of the Securities
and we have examined such corporate records of the Company and such other
documents and certificates as we have deemed necessary as a basis for the
opinions hereinafter expressed.
Based on the foregoing, and having regard for such legal considerations as
we have deemed relevant, we are of the opinion that:
The Debt Securities will be issued in one or more series and may be either
senior debt securities (the "Senior Securities") issued pursuant to an Indenture
(the "Senior Indenture") between the Company and First Union National Bank as
trustee (the "Senior Trustee"), or subordinated debt securities (the
"Subordinated Securities") issued pursuant to an Indenture (the "Subordinated
Indenture") between the Company and a trustee to be named prior to the offering
of any subordinated securities (the "Subordinated Trustee"). The Depositary
Shares will be issued under one or more deposit agreements (the "Deposit
Agreements"), each to be between the Company and a financial institution
identified therein as the depositary (the "Depositary").
We are familiar with the corporate proceedings of the Company to date with
respect to the proposed issuance and sale of the Securities, including
resolutions of the Board of Directors of the Company (the "Resolutions")
authorizing the Indentures and the issuance, offering and sale of the Securities
and we have examined such corporate records of the Company and such other
documents and certificates as we have deemed necessary as a basis for the
opinions hereinafter expressed.
Based on the foregoing, and having regard for such legal considerations as
we have deemed relevant, we are of the opinion that:
<PAGE> 3
1. The Senior Indenture has been duly authorized and, when executed and
delivered by the Company pursuant to the authority granted in the Resolutions,
and assuming due authorization, execution and delivery thereof by the Senior
Trustee, will constitute a valid and legally binding instrument of the Company
enforceable against the Company in accordance with its terms.
2. The Senior Securities have been duly authorized and, when the final
terms thereof have been duly established and approved and when duly executed by
the Company, in each case pursuant to the authority granted in the Resolutions,
and authenticated by the Senior Trustee in accordance with the Senior Indenture
and delivered to and paid for by the purchases thereof, will constitute valid
and legally binding obligations of the Company entitled to the benefits of the
Senior Indenture.
3. The Subordinated Indenture has been duly authorized and, when executed
and delivered by the Company pursuant to the authority granted in the
Resolutions, and assuming due authorization, execution and delivery thereof by
the Subordinated Trustee, will constitute a valid and legally binding instrument
of the Company enforceable against the Company in accordance withits terms.
4. The Subordinated Securities have been duly authorized and, when the
final terms thereof have been duly established and approved and when duly
executed by the Company, in each case pursuant to the authority granted in the
Resolutions, and authenticated by the Subordinated Trustee in accordance with
the Subordinated Indenture and delivered to and paid for by the purchasers
thereof, will constitute valid and legally binding obligations of the Company
entitled to the benefits of the Subordinated Indenture.
5. The Preferred Shares have been duly authorized and, when the final
terms thereof have been duly established and approved and certificates
representing such shares have been duly executed by the Company, in each case
pursuant to the authority granted in the Resolutions, and delivered to and paid
for by the purchasers thereof, and when all corporate action necessary for
issuance of such shares has been taken, including the adoption and filing with
the Secretary of State of the State of Georgia of Articles of Amendment, such
shares will be validly issued, fully paid and non-assessable.
6. The Depositary Shares have been duly authorized and, when the final
terms thereof have been duly established and approved, in each case
<PAGE> 4
its terms.
4. The Subordinated Securities have been duly authorized and, when the
final terms thereof have been duly established and approved and when duly
executed by the Company, in each case pursuant to the authority granted in the
Resolutions, and authenticated by the Subordinated Trustee in accordance with
the Subordinated Indenture and delivered to and paid for by the purchasers
thereof, will constitute valid and legally binding obligations of the Company
entitled to the benefits of the Subordinated Indenture.
5. The Preferred Shares have been duly authorized and, when the final
terms thereof have been duly established and approved and certificates
representing such shares have been duly executed by the Company, in each case
pursuant to the authority granted in the Resolutions, and delivered to and paid
for by the purchasers thereof, and when all corporate action necessary for
issuance of such shares has been taken, including the adoption and filing with
the Secretary of State of the State of Georgia of Articles of Amendment, such
shares will be validly issued, fully paid and non-assessable.
6. The Depositary Shares have been duly authorized and, when the final
terms thereof have been duly established and approved, in each case
<PAGE> 5
pursuant to the authority granted in the Resolutions, and when the depositary
receipts representing the Depositary Shares (the "Depositary Receipts") have
been duly executed by the Depositary and delivered to and paid for by the
purchasers thereof, and when all corporate action necessary for issuance of
such Depositary Shares and the underlying Preferred Shares has been taken, such
Depositary Shares will be validly issued and will entitle the holders thereof
to the rights specified in the Depositary Receipts and the Deposit Agreement.
7. The Common Shares have been duly authorized and, when all corporate
action necessary for the issuance of such Common Shares has been taken and when
the Common Shares have been delivered against payment therefor, the Common
Shares will be validly issued, fully paid and non-assessable.
8. The Common Shares issuable upon conversion of any issue of Preferred
Shares have been duly authorized and, when all corporate action necessary for
the issuance of such Common Shares has been taken and when the Common Shares
have been delivered upon conversion of such Preferred Shares, such Common
Shares will be validly issued, fully paid and non-assessable.
9. The Common Shares issuable upon conversion of any issue of Debt
Securities have been duly authorized and, when all corporate action necessary
for the issuance of such Common Shares has been taken and when the Common
Shares have been delivered upon conversion of such Debt Securities, such
Common Shares will be validly issued, fully paid and non-assessable.
The opinions set forth above are subject, as to enforcement, to (i)
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or other similar laws relating
to or affecting the enforcement of creditors' rights generally and (ii) general
equitable principles (regardless of whether enforcement is considered in a
proceeding in equity or at law) and (iii) provisions of law that require that a
judgment for money damages rendered by a court in the United States be
expressed only in United States dollars.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the use of our name under the heading "Legal
Matters" in the Prospectus.
Very truly yours,
Kilpatrick Stockton LLP
By: /s/ W. RANDY EADDY
--------------------------
W. Randy Eaddy, A Partner
<PAGE> 1
EXHIBIT 12
<TABLE>
<CAPTION>
RATIO OF EARNINGS TO FIXED DEBT
-----------------------------------------------------------------------
(in thousands) Fiscal Year Ended
-----------------------------------------------------------------------
January 2, January 1, December 31, December 29, December 28,
1994 1995 1995 1996 1997
----- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Pre-Tax Earnings 21,304 25,713 31,676 43,427 61,271
Add Back:
Interest Expense 22,840 24,094 26,753 32,772 35,038
Amortization of debt expense 243 243 243 794 794
Rent expense representative of the
interest component 714 826 1,106 1,134 1,449
----------------------------------------------------------------------
Fixed Charge 23,797 25,163 28,102 34,700 37,281
----------------------------------------------------------------------
Earnings 45,101 50,876 59,778 78,127 98,552
======================================================================
Ratio of Earnings to Fixed Charges 1.9 2.0 2.1 2.3 2.6
======================================================================
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Interface, Inc.
Atlanta, Georgia
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement of our reports dated February
20, 1997, relating to the consolidated financial statements and schedule of
Interface, Inc. and subsidiaries appearing in the Company's Annual Report on
Form 10-K for the year ended December 29, 1996.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
/s/ BDO SEIDMAN, LLP
BDO SEIDMAN, LLP
Atlanta, Georgia
March 12, 1998
<PAGE> 1
File No. 333-46611
EXHIBIT 25
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM T-1
---------------------
STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED,
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2)
-----------
---------------------
FIRST UNION NATIONAL BANK
(Exact name of Trustee as specified in its charter)
TWO FIRST UNION CENTER
CHARLOTTE, NORTH CAROLINA 28288 58-1079889
(Address of principal (Zip Code) (I.R.S. Employer
executive officer) Identification No.)
Teresa L. Davis
First Union National Bank
1100 First Union Plaza
999 Peachtree Street, N.E.
Atlanta, Georgia 30309
(404) 827-7346
(Name, Address and Telephone Number of Agent for Service)
--------------------
INTERFACE, INC.
(Exact name of obligor as specified in its charter)
GEORGIA
(State or other jurisdiction of incorporation or organization)
58-1451243
(IRS employer identification no.)
2859 PACES FERRY ROAD, SUITE 2000
ATLANTA, GEORGIA 30339
(Name, address, including zip code, and telephone number, including area code,
of principal executive offices)
RAYMOND S. WILLOCH, ESQUIRE
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
INTERFACE, INC.
2859 PACES FERRY ROAD, SUITE 2000
ATLANTA, GEORGIA 30339
(770) 437-6800
--------------------
$150,000,000 SENIOR NOTES DUE 2008
(Title of the indenture securities)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE> 2
1. General information.
(a) The following are the names and addresses of each examining or
supervising authority to which the Trustee is subject:
The Comptroller of the Currency, Washington, D.C.
Federal Reserve Bank of Atlanta, Georgia.
Federal Deposit Insurance Corporation, Washington, D.C.
Securities and Exchange Commission, Division of Market Regulation,
Washington, D.C.
(b) The Trustee is authorized to exercise corporate trust powers.
2. Affiliations with obligor.
The obligor is not an affiliate of the Trustee.
16. List of Exhibits.
(1) Articles of Association of the Trustee as now in effect. (See
Exhibit 1 of the Form T-1 filed in connection with Registration
Statement No. 333-31863, which is incorporated herein by reference)
(2) Certificate of Authority of the Trustee to commence business. (See
Exhibit 2 of the Form T-1 filed in connection with Registration
Statement No. 333-31863, which is incorporated herein by reference)
(3) Authorization of the Trustee to exercise corporate trust powers.
Incorporated in Exhibit (4).
(4) By-Laws of the Trustee, as amended, to date. (See Exhibit 4 of the
Form T-1 filed in connection with Registration Statement No.
333-31863, which is incorporated herein by reference)
(5) Not applicable.
(6) Consent by the Trustee required by Section 321(b) of the Trust
Indenture Act of 1939. Included on Page 6 of this Form T-1
Statement.
(7) Most recent report of condition of the Trustee. (See Exhibit 7 of
the Form T-1 filed in connection with Registration Statement No.
333-31863, which is incorporated herein by reference)
(8) Not applicable.
(9) Not applicable.
2
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the Trustee, FIRST UNION NATIONAL BANK, a national banking association
organized and existing under the laws of the United States of America, has duly
caused this statement of eligibility and qualification to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of
Atlanta, and State of Georgia on the 11th day of March, 1998.
FIRST UNION NATIONAL BANK
(Trustee)
BY: /s/ Teresa L. Davis
-------------------------------
Teresa L. Davis, Vice President
3
<PAGE> 4
EXHIBIT T-1(6)
CONSENT OF TRUSTEE
Under section 321(b) of the Trust Indenture Act of 1939 and in connection
with the proposed issuance of Notes of INTERFACE, INC., First Union National
Bank, as the Trustee herein named, hereby consents that reports of examinations
of said Trustee by Federal, State, Territorial or District authorities may be
furnished by such authorities to the Securities and Exchange Commission upon
requests therefor.
FIRST UNION NATIONAL BANK
By: /s/ Emily E. Katt
------------------------------
Dated: March 11, 1998 Emily E. Katt, Vice President
4
