<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/ x / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 28, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------------ ----------------------.
COMMISSION FILE NUMBER: 1-11311
LEAR CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 13-3386776
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
21557 TELEGRAPH ROAD, SOUTHFIELD, MI 48086-5008
(Address of principal executive offices) (zip code)
</TABLE>
(810) 746-1500
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to the
filing requirements for the past 90 days. Yes x No
--- ---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Approximate number of shares of Common Stock, $0.01 par value per share,
outstanding at November 4, 1996: 65,410,232
<PAGE> 2
LEAR CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 28, 1996
INDEX
<TABLE>
<CAPTION>
Part I - Financial Information: Page No.
------------------------------- --------
<S> <C>
Item 1 - Consolidated Financial Statements
Introduction to the Consolidated Financial Statements 3
Consolidated Balance Sheets - September 28, 1996 and
December 31, 1995 4
Consolidated Statements of Income - Three and Nine Month Periods
ended September 28, 1996 and September 30, 1995 5
Consolidated Statements of Cash Flows - Nine Month Periods
ended September 28, 1996 and September 30, 1995 6
Notes to Consolidated Financial Statements 7
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 12
Part II - Other Information:
----------------------------
Item 6 - Exhibits and Report on Form 8-K 17
Signatures 18
----------
Exhibit Index 19
-------------
</TABLE>
2
<PAGE> 3
LEAR CORPORATION
PART I - FINANCIAL INFORMATION
ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS
INTRODUCTION TO THE CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated financial statements of Lear Corporation and
subsidiaries (the "Company") have been prepared by Lear Corporation, without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. The Company believes that the disclosures are adequate to make
the information presented not misleading when read in conjunction with the
financial statements and the notes thereto included in the Company's Annual
Report on Form 10-K as filed with the Securities and Exchange Commission for
the period ended December 31, 1995.
The financial information presented reflects all adjustments (consisting only
of normal recurring adjustments) which are, in the opinion of management,
necessary for a fair statement of the results of operations and financial
position for the interim periods presented. These results are not necessarily
indicative of a full year's results of operations.
3
<PAGE> 4
LEAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
September 28, December 31,
1996 1995
---- ----
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 51.5 $ 34.1
Accounts receivable, net 1,047.9 831.9
Inventories 202.1 196.2
Recoverable customer engineering and tooling 130.5 91.9
Other 76.6 53.1
----------- -----------
1,508.6 1,207.2
----------- -----------
LONG TERM ASSETS:
Property, plant and equipment, net 792.6 642.8
Goodwill, net 1,401.7 1,098.4
Other 160.5 112.9
----------- -----------
2,354.8 1,854.1
----------- -----------
$ 3,863.4 $ 3,061.3
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings $ 5.5 $ 16.9
Accounts payable and drafts 960.3 857.0
Accrued liabilities 479.8 392.2
Current portion of long-term debt 8.5 9.9
----------- -----------
1,454.1 1,276.0
----------- -----------
LONG-TERM LIABILITIES:
Deferred national income taxes 44.2 37.3
Long-term debt 1,241.0 1,038.0
Other 177.4 130.0
----------- -----------
1,462.6 1,205.3
----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value, 150,000,000 authorized;
64,266,690 issued at September 28, 1996,
and 56,253,541 issued at December 31, 1995 .6 .6
Additional paid-in capital 817.0 559.1
Notes receivable from sale of common stock (.9) ( .9)
Less- Common stock held in treasury, 10,230 shares at cost (.1) (.1)
Retained earnings 142.9 42.2
Minimum pension liability adjustment (3.5) (3.5)
Cumulative translation adjustment (9.3) (17.4)
----------- -----------
946.7 580.0
----------- -----------
$ 3,863.4 $ 3,061.3
=========== ===========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
4
<PAGE> 5
LEAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED, IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
September 28, September 30, September 28, September 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $ 1,505.6 $ 1,080.6 $ 4,530.1 $ 3,266.7
Cost of sales 1,361.9 997.4 4,098.9 3,012.0
Selling, general and administrative expenses 56.9 35.1 149.2 85.3
Amortization of goodwill 9.3 5.1 24.0 11.5
---------- ---------- --------- ---------
Operating income 77.5 43.0 258.0 157.9
Interest expense 28.4 21.6 75.9 50.0
Other expense, net 7.6 4.4 14.6 10.3
---------- ---------- --------- ---------
Income before provision for national income
taxes and extraordinary item 41.5 17.0 167.5 97.6
Provision for national income taxes 16.7 5.9 66.8 40.6
---------- ---------- --------- ---------
Net income before extraordinary item 24.8 11.1 100.7 57.0
Extraordinary loss on early extinguishment
of debt - (2.6) - (2.6)
---------- ---------- --------- ---------
Net income $ 24.8 $ 8.5 $ 100.7 $ 54.4
========== ========== ========= =========
Earnings per common share (Fully diluted):
Net income before extraordinary item $ .37 $ 0.22 $ 1.62 $ 1.13
Extraordinary loss - (0.05) - (0.05)
----------- ----------- ---------- ----------
Net income $ .37 $ 0.17 $ 1.62 $ 1.08
=========== =========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE> 6
LEAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN MILLIONS)
<TABLE>
<CAPTION>
Nine Months Ended
-----------------
September 28, September 30,
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 100.7 $ 54.4
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of goodwill 107.3 60.4
Amortization of deferred financing fees 2.5 1.9
Deferred national income taxes (1.2) 3.1
Extraordinary loss - 2.6
Other, net (4.8) .9
Change in working capital items, net of effects of acquisitions (76.5) (117.1)
-------- --------
Net cash provided by operating activities 128.0 6.2
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (100.0) (65.9)
Acquisitions, net (457.0) (891.8)
Other, net 4.0 2.2
-------- --------
Net cash used by investing activities (553.0) (955.5)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in long-term debt, net 203.2 689.0
Short-term borrowings, net (6.2) (64.7)
Increase in cash overdrafts 13.0 29.6
Proceeds from sale of common stock, net 244.7 281.6
Other, net (1.4) (9.2)
-------- --------
Net cash provided by financing activities 453.3 926.3
-------- --------
Effect of foreign currency translation (10.9) 6.2
-------- --------
NET CHANGE IN CASH AND CASH EQUIVALENTS 17.4 (16.8)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 34.1 32.0
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 51.5 $ 15.2
======== ========
CHANGES IN WORKING CAPITAL, net of effects of acquisitions
Accounts receivable $ (130.1) $ (124.3)
Inventories 13.9 (14.4)
Accounts payable 36.4 20.0
Accrued liabilities and other 3.3 1.6
-------- --------
$ (76.5) $ (117.1)
======== ========
SUPPLEMENTARY DISCLOSURE:
Cash paid for interest $ 79.1 $ 53.9
======== ========
Cash paid for income taxes $ 63.8 $ 57.0
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE> 7
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Lear
Corporation, a Delaware corporation, and its wholly-owned and majority-owned
subsidiaries. Investments in less than majority-owned businesses are generally
accounted for under the equity method.
(2) ACQUISITIONS
MASLAND CORPORATION
On June 27, the Company through a wholly owned subsidiary ("Acquisition
Corp.") acquired approximately 97% of the outstanding shares of common stock of
Masland Corporation ("Masland") pursuant to an offer to purchase which was
commenced on May 30, 1996. On July 1, 1996, Acquisition Corp. merged with and
into Masland, such that Masland became a wholly-owned subsidiary of the
Company. The aggregate purchase price for the acquisition of Masland (the
"Masland Acquisition") was $475.7 million (including the assumption of $80.7
million of Masland's existing net indebtedness and $10.0 million in fees and
expenses). Funds for the Masland Acquisition were provided by borrowings under
the Credit Agreement and New Credit Agreement, as described in Note 5.
Masland is a leading supplier of floor and acoustic systems to the
North American automotive market. Masland also is a major supplier of interior
luggage compartment trim components and other acoustical products which are
designed to minimize noise, heat and vibration for passenger cars and light
trucks.
The Masland Acquisition was accounted for as a purchase, and
accordingly, the assets purchased and liabilities assumed in the acquisition
have been reflected in the accompanying balance sheet as of September 28, 1996.
The operating results of Masland have been included in the statement of
operations since the date of acquisition. The purchase price consisted of the
following and has been allocated to the net assets purchased as follows (in
millions):
<TABLE>
<S> <C>
Consideration paid to stockholders, net of cash received $ 337.8
Consideration paid to former Masland stock option holders 22.1
Debt assumed 96.8
Stock options issued to former Masland option holders 9.0
Estimated fees and expenses 10.0
-------
Cost of acquisition $ 475.7
=======
Property, plant and equipment $ 127.2
Net working capital 36.7
Other assets purchased and liabilities assumed, net (6.6)
Goodwill 318.4
-------
Total allocation of cost $ 475.7
=======
</TABLE>
The purchase price and related allocation may be revised in the next year
based on revisions of preliminary estimates of fair values made at the date of
purchase. Such changes are not expected to be significant.
7
<PAGE> 8
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
AUTOMOTIVE INDUSTRIES
On August 17, 1995, the Company purchased all of the issued and
outstanding common stock of Automotive Industries Holding, Inc. ("AI") for an
aggregate purchase price of $885.0 million. AI is a leading designer and
manufacturer of high quality interior trim systems and blow molded products
principally for North American and European car and light truck manufacturers.
PRO FORMA INFORMATION
The following pro forma unaudited results of operations of the Company
for the three and nine month periods ended September 28, 1996 and September 30,
1995 were prepared to illustrate the estimated effects of (i) the Masland
Acquisition (including the refinancing of certain debt of Masland pursuant to
the Credit Agreement), (ii) the AI acquisition and certain acquisitions
completed by AI prior to the purchase of AI by the Company (including the
refinancing of certain debt of AI pursuant to the Credit Agreement), (iii) the
public offering of 7.5 million shares of the Company's common stock by the
Company and the application of net proceeds therefrom in September 1995, (iv)
the refinancing of the Company's prior credit facility with borrowings under the
Credit Agreement, (v) the completion of the New Credit Agreement (Note 5) and
(vi) the 1996 Note Offering (Note 4) and the 1996 Common Stock Offering (Note 3)
and the application of the net proceeds to the Company therefrom to repay
indebtedness outstanding under the Credit Agreements, a portion of which was
incurred to finance the Masland Acquisition, (collectively, the "Pro Forma
Transactions"), as if the Pro Forma Transactions had occurred as of January 1 of
each year presented.
(Unaudited, in millions, except per share data):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------- -----------------
September 28, September 30, September 28, September 30,
------------- ------------- ------------- -------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales $ 1,505.6 $ 1,281.7 $ 4,791.8 $ 4,144.6
Net income $ 25.0 $ 6.0 $ 102.7 $ 66.0
Net income per share $ .37 $ .09 $ 1.52 $ .98
</TABLE>
The pro forma information above does not purport to be indicative of the
results that actually would have been achieved if the operations were combined
during the periods presented, and is not intended to be a projection of future
results or trends.
(3) ISSUANCE OF COMMON STOCK
In July 1996, the Company issued and sold 7.5 million shares of common
stock (the "1996 Common Stock Offering"). Concurrently with this issuance, 7.5
million shares were sold by certain stockholders of the Company. Net of
issuance costs, the Company received proceeds of approximately $242.8 million
for the shares of common stock sold by the Company. The proceeds of this
issuance were used to repay indebtedness outstanding under the Credit
Agreements, a portion of which was incurred to finance the Masland Acquisition.
8
<PAGE> 9
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
(4) ISSUANCE OF SUBORDINATED NOTES
In July 1996, the Company issued $200 million aggregate principal amount
of its 9 1/2 % Subordinated Notes due 2006 (the "1996 Note Offering").
Interest on the notes is payable on January 15 and July 15 of each year. The
notes are redeemable at the option of the Company, in whole or in part, on or
after July 15, 2001. Net of issuance costs, the Company received proceeds of
approximately $195.5 million in connection with the sale of the notes. The
proceeds of this issuance were used to repay indebtedness outstanding under the
Credit Agreements, a portion of which was incurred to finance the Masland
Acquisition.
(5) NEW CREDIT AGREEMENT
On June 27, 1996, the Company entered into a second revolving credit
agreement with a syndicate of financial institutions (the "New Credit
Agreement"). The New Credit Agreement contains substantially identical terms as
the Company's $1.445 billion Credit Agreement dated August 17, 1995, as amended
(the "Credit Agreement") and permits borrowings of up to $300 million. Following
the Masland Acquisition, the Company borrowed the full amount permitted under
the New Credit Agreement and used the proceeds to repay a portion of the
outstanding indebtedness under the Credit Agreement.
Borrowings under the Credit Agreement and the New Credit Agreement bear
interest, at the election of the Company, at a floating rate of interest equal
to (i) the higher of Chemical Bank's prime lending rate or the federal funds
rate plus .5% or (ii) the Eurodollar Rate (as defined in the New Credit
Agreement and Credit Agreement) plus a borrowing margin of .5% to 1.0%. The
applicable borrowing margin is determined based on the level of a specified
financial ratio of the Company. Under the Credit Agreement and the New Credit
Agreement, Lear is permitted to convert variable rate interest obligations on an
aggregate of up to $500 million in principal amount of indebtedness into fixed
rate interest obligations.
Amounts available under the New Credit Agreement and the Credit
Agreement will be reduced by an aggregate amount of $750 million prior to
maturity on September 30, 2001.
9
<PAGE> 10
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
(6) INVENTORIES
Inventories are stated at the lower of cost or market. Cost is
principally determined by using the first-in, first-out method. Finished goods
and work-in-process inventories include material, labor and manufacturing
overhead costs.
Inventories are comprised of the following (in millions):
<TABLE>
<CAPTION>
September 28, December 31,
1996 1995
---- ----
<S> <C> <C>
Raw materials $ 128.6 $ 139.4
Work-in-process 24.9 18.0
Finished goods 48.6 38.8
-------- --------
$ 202.1 $ 196.2
======== ========
</TABLE>
(7) LONG-TERM DEBT
Long term debt is comprised of the following (in millions):
<TABLE>
<CAPTION>
September 28, December 31,
1996 1995
---- ----
<S> <C> <C>
Domestic revolving credit loans $ 716.4 $ 717.1
Industrial revenue bonds 22.7 20.9
Other 40.4 39.9
-------- --------
779.5 777.9
Less- Current portion (8.5) (9.9)
-------- --------
771.0 768.0
-------- --------
Subordinated Debt:
9 1/2 % Subordinated Notes 200.0 -
8 1/4 % Subordinated Notes 145.0 145.0
11 1/4 % Senior Subordinated Notes 125.0 125.0
-------- --------
470.0 270.0
-------- --------
$1,241.0 $1,038.0
======== ========
</TABLE>
10
<PAGE> 11
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
(8) COMMON SHARES OUTSTANDING
The weighted average number of shares of the Company's common stock is
as follows for the periods presented:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
September 28, September 30, September 28, September 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Primary 67,004,490 50,927,792 62,320,313 49,985,045
Fully Diluted 67,004,490 50,966,315 62,342,246 50,206,725
</TABLE>
(9) SUBSEQUENT EVENT
In October 1996, Lear signed a Memorandum of Understanding with Borealis
Holding AB to acquire its wholly owned subsidiary, Borealis Industrier AB.
Borealis Industrier AB manufactures instrument panels, door panels, climate
systems, exterior trim and various components for the European automotive and
truck industry. Borealis Industrier AB had 1995 sales of approximately $230
million and employs approximately 1,800 people at six sites located in Sweden.
Consummation of the acquisition is subject to certain conditions, including
the signing of a definitive agreement, completion of due diligence and the
acceptance by the Swedish competition authority.
11
<PAGE> 12
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 28, 1996 VS. THREE MONTHS ENDED SEPTEMBER 30, 1995.
Net sales of $1,505.6 million in the quarter ended September 28, 1996 surpassed
the third quarter of 1995 by $425.0 million or 39.3%. Net sales as compared to
prior year benefited from the acquisitions of Masland Corporation and
Automotive Industries Holding, Inc., in June 1996 and August 1995,
respectively. Further contributing to the overall increase in sales was new
business introduced globally within the past year and increased automotive
production and content on carryover seat programs in North America and Mexico.
Net sales in the United States and Canada of $1,013.3 million in the third
quarter of 1996 exceeded the comparable period in the prior year by $283.1
million or 38.8%. Sales in the current quarter benefited from the contribution
of $203.6 million in incremental sales from the Masland and AI acquisitions and
vehicle production increases by domestic automotive manufacturers on
established passenger car and truck seat programs.
Net sales in Europe of $331.5 million increased in the third quarter of 1996 as
compared to the third quarter of 1995 by $52.9 million or 19.0%. Sales in the
quarter ended September 28, 1996 benefited from $21.5 million in sales from the
AI acquisition and additional volume on existing programs in Italy, Germany and
Sweden.
Net sales of $160.8 million in the third quarter of 1996 in the Company's
remaining geographic regions, consisting of Mexico, the Pacific Rim, South
America and South Africa surpassed the third quarter of the prior year by $89.0
million or 124.0%. Sales in the current quarter benefited from increased
General Motors passenger car and Chrysler truck activity and from new business
operations in South America, Australia and South Africa.
Gross Profit (net sales less cost of sales) and gross margin (gross profit as a
percentage of net sales) were $143.7 million and 9.5% for the third quarter of
1996 as compared to $83.2 million and 7.7% in 1995. Gross profit in the
current quarter benefited from the overall growth in North American and
European sales activity, including the acquisition of Masland and production of
new business programs in South America and South Africa.
Selling, general and administrative expenses as a percentage of net sales
increased to 3.8% in the third quarter of 1996 as compared to 3.3% in the third
quarter of 1995. The increase in actual expenditures was primarily due to the
Masland acquisition and engineering and support expenses associated with the
expansion of domestic and international business.
12
<PAGE> 13
Operating income and operating margin improved to $77.5 million and 5.1% for
the quarter ended September 28, 1996, as compared to $43.0 million and 4.0% a
year earlier. The increase in operating income was primarily due to increased
market demand and content on domestic and foreign car and truck programs and to
the acquisition of Masland, partially offset by increased design, development
and administrative expenses. Non-cash depreciation and amortization charges
were $39.6 million and $23.3 million for the third quarter of 1996 and 1995,
respectively.
Interest expense for the third quarter of 1996 increased by $6.8 million over
the prior year to $28.4 million. The increase is primarily due to interest
incurred on additional debt utilized to finance the Masland and AI
acquisitions.
Other expenses for the three months ended September 28, 1996, which include
state and local taxes, foreign exchange, minority interest of consolidated
subsidiaries, equity income of non-consolidated affiliates and other
non-operating expenses, increased in comparison to prior year due to increased
minority interest expenses related to the Company's South American and Masland
operations and higher state and local taxes.
Net income for the third quarter of 1996 was $24.8 million, or $.37 per share,
as compared to $8.5 million, or $.17 per share in the corresponding quarter in
the prior year. The provision for income taxes was $16.7 million resulting in
an effective tax rate of 40.2% for the current quarter as compared to $5.9
million and an effective tax rate of 34.7% in the prior year. The 34.7% tax
rate in the prior year reflects a change in the estimated annual tax rate.
Earnings per share increased in the third quarter of 1996 by 117.6% despite an
increase in the weighted average number of shares outstanding of approximately
16.0 million shares. Net income for the quarter ended September 30, 1995
reflects an extraordinary loss of $2.6 million related to the early retirement
of debt.
NINE MONTHS ENDED SEPTEMBER 28, 1996 VS. NINE MONTHS ENDED SEPTEMBER 30, 1995.
Net sales of $4,530.1 million for the nine month period of 1996 surpassed the
nine month period of the prior year by $1,263.4 million or 38.7%. Sales as
compared to the prior year benefited from the acquisitions of AI and Masland,
new business introduced globally within the past twelve months and increased
production build schedules on mature domestic and foreign seat programs.
Gross profit and gross margin were $431.2 million and 9.5% for the nine month
period ended September 28, 1996 as compared to $254.7 million and 7.8% a year
earlier. Gross profit in the current year reflects the contribution of the AI
and Masland acquisitions coupled with benefits derived from increased global
market demand on new and ongoing seat programs. Partially offsetting the
increase in gross profit were the General Motors' work stoppage in the first
quarter of 1996 and downtime associated with a Chrysler model changeover.
13
<PAGE> 14
Selling, general and administrative expenses, including research and
development, for the current period increased as a percentage of net sales to
3.3% from 2.6% in the comparable period in the prior year. Actual expenditures
increased in comparison to prior year due to the inclusion of AI and Masland
operating expenses as well as increased North American and European engineering
and administrative expenses necessary to support established and potential
business opportunities.
Operating income and operating margin improved to $258.0 million and 5.7% for
the first nine months of 1996 as compared to $157.9 million and 4.8% in the
prior year. The increase in operating income was largely the result of the
Masland acquisition coupled with increased industry build schedules by domestic
and foreign automotive manufacturers on new and mature seat programs.
Partially offsetting the increase in operating income were engineering and
administrative support expenses, Chrysler's downtime for model changeover and
the adverse impact of the General Motors' work stoppage in the first quarter of
1996. Non-cash depreciation and amortization charges were $107.3 million and
$60.4 million for the nine month period of the current and prior years,
respectively.
For the nine months ended September 28, 1996, interest expense increased by
$25.9 million to $75.9 million as compared to the corresponding period in the
prior year. The increase in interest expense was largely the result of
interest incurred on additional debt utilized to finance the Masland and AI
acquisitions.
Other expenses for the nine months ended September 28, 1996, which include
state and local taxes, foreign exchange, minority interest of consolidated
subsidiaries, equity income of non-consolidated affiliates and other
non-operating expenses, increased in comparison to prior year as increased
state and local taxes and minority interest expense from the Company's South
American and Masland operations more than offset favorable foreign exchange
related to the Company's North American and European operations.
Net income for the first nine months of 1996 was $100.7 million, or $1.62 per
share, as compared to $54.4 million, or $1.08 per share in the comparable
period in 1995. The provision for income taxes in the current period was $66.8
million, resulting in an effective tax rate of 39.9%, as compared to $40.6
million and an effective tax rate of 41.6% in the previous year. The decline
in the effective tax rates is primarily due to changes in operating performance
and related income levels among the various tax jurisdictions. Earnings per
share increased in the first nine months of 1996 by 50.0% despite the impact of
the General Motors work stoppage and an increase in the weighted average number
of shares outstanding of approximately 12.1 million shares on a fully-diluted
basis.
The Company's future operating results are directly related to domestic and
foreign automotive vehicle production. In October and November, 1996, work
stoppages at various customer facilities have adversely affected the fourth
quarter operating results of the Company. Based upon preliminary estimates,
which could differ materially depending on production schedules for the
remainder of 1996 as to the recovery of a portion of these lost volumes, the
Company anticipates that the earnings per share for the quarter ending
December 31, 1996, will be adversely affected by approximately $.10 per share.
14
<PAGE> 15
LIQUIDITY AND CAPITAL RESOURCES
On July 1, 1996, the Company completed the acquisition of 100% of the
outstanding shares of Masland for an aggregate purchase price of $475.7
million, including the assumption of existing net indebtedness and transaction
costs. In connection with the Masland Acquisition, the Company entered into a
second revolving credit agreement with a syndicate of financial institutions
(the "New Credit Agreement" and, together with the Credit Agreement, the
"Credit Agreements"). The New Credit Agreement contains substantially
identical terms as the Credit Agreement and permits borrowings of up to $300
million. Substantially all of the total purchase price of Masland was
initially financed with borrowings under the Credit Agreements.
In July, 1996, the Company issued 7.5 million shares of common stock at $33.50
per share and $200 million aggregate principal amount of 9 1/2% Subordinated
Notes due 2006. The $438.3 million of proceeds ($242.8 million and $195.5
million from the Common Stock Offering and Note Offering proceeds,
respectively), net of issuance costs, received by the Company were used to
repay indebtedness incurred under the Credit Agreements in connection with the
purchase of Masland.
As of the end of September, the Company had an aggregate of $1.745 billion
available under these secured Credit Agreements, of which $716.4 million was
outstanding and $44.0 million was committed under outstanding letters of
credit, resulting in $984.6 million unused and available. In addition to debt
outstanding under the Credit Agreements, the Company had an additional $538.6
million of debt, including short-term borrowings, primarily consisting of
$470.0 million of subordinated debentures due between 2000 and 2006.
Borrowing under the Credit Agreements are guaranteed by substantially all of
the Company's direct and indirect domestic subsidiaries and secured by (i) a
pledge of all of the capital stock of substantially all of the Company's
domestic subsidiaries, (ii) a grant of security interest in substantially all
of the assets of the Company and its domestic subsidiaries and (iii) the
mortgages of certain of the real property of the Company and its domestic
subsidiaries.
The 9 1/2% Notes are subordinated in right of payment to all existing and
future Senior Indebtedness (as defined in the Indenture relating to the 9 1/2%
Notes), including indebtedness outstanding under the Credit Agreements and the
11 1/4% Notes. Interest on the 9 1/2% Notes is payable on January 15 and July
15 of each year. The 9 1/2% Notes are redeemable at the option of the Company,
in whole or in part, on or after July 15, 2001. The Indenture pursuant to
which the 9 1/2% Notes were issued contains certain covenants that restrict,
among other things, the incurrence of additional indebtedness, the payment of
dividends, the repurchase of capital stock, the creation of liens, the sale of
assets, and the issuance of preferred stock.
In the second quarter of 1996, Moody's Investors Services ("Moody's") upgraded
its rating of the Company's primary debt instruments. The Credit Agreements
were upgraded from Ba2 to Ba1, the Company's 8 1/4% Subordinated Notes from B2
to B1 and the Company's 11 1/4% Senior Subordinated Notes from B1 to Ba3.
Standard and Poors Ratings Group ("S&P") also upgraded its rating of the Credit
Agreements to BB+ from BB- and the two subordinated debt issues to BB- from B.
The 9 1/2% Subordinated Notes were assigned a B1 and BB- rating from Moody's
and S&P, respectively.
15
<PAGE> 16
Net cash provided by operating activities increased to $128.0 million during
the nine months ended September 28, 1996 compared to $6.2 million during the
comparable period in 1995. Net income increased 85%, from $54.4 million in
1995 to $100.7 million in 1996 as a result of increased activities due to the
acquisitions of AI and Masland, new business awarded, cost reduction programs
and increased production levels on existing programs. In addition, net income
includes noncash depreciation and goodwill amortization charges for the nine
month periods, which increased by $46.9 million, from $60.4 million in 1995 to
$107.3 million in 1996 primarily as a result of the AI and Masland
acquisitions. Cash flow provided by earnings was partially offset by the net
change in working capital.
The net change in working capital resulted in a net use of $76.5 million and
$117.1 million for the nine months ended September 28, 1996 and September 30,
1995, respectively. The use of working capital decreased in 1996 primarily due
to a reduction in inventory levels from December 31, 1995 despite an increase
in sales activity.
Net cash used by investing activities, primarily acquisitions, was $553.0
million and $955.5 million for the nine months ended September 28, 1996 and
September 30, 1995, respectively. The Masland Acquisition, consummated July
1996, resulted in a net $457.0 million use of funds while the AI Acquisition,
consummated August 1995, resulted in a net $891.8 million cash use. Capital
expenditures increased in the nine month periods from $65.9 million in 1995 to
$100.0 million in 1996 as a result of the Masland and AI acquisitions as well
as to support new programs under production in 1996.
As of September 28, 1996 the Company had $51.5 million of cash and cash
equivalents. The Company believes that cash flows from operations and
available credit facilities will be sufficient to meet its debt service
obligations, projected capital expenditures and working capital requirements.
"SAFE HARBOR" PROVISIONS
This Report contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Investors are cautioned that
any forward-looking statements, including statements regarding the intent,
belief, or current expectations of the Company or its management, are not
guarantees of future performance and involve risks and uncertainties, and that
actual results may differ materially from those in the forward-looking
statements as a result of various factors including, but not limited to, (i)
general economic conditions in the markets in which the Company operates, (ii)
fluctuations in worldwide or regional automobile and light truck production,
(iii) labor disputes involving the Company or its significant customers, (iv)
changes in practices and/or policies of the Company's significant customers
towards outsourcing automotive components and systems, and (v) other risks
detailed from time to time in the Company's Securities and Exchange Commission
filings. The Company does not intend to update these forward-looking
statements.
16
<PAGE> 17
LEAR CORPORATION
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
The following report on Form 8-K was filed during the quarter ended September
28, 1996:
Form 8-K filed on July 3, 1996 (dated June 27, 1996) with respect to the
acquisition of Masland Corporation. Such 8-K contains audited financial
statements of Masland Corporation for the fiscal year ended June 30, 1995
and unaudited financial statements for the period ended March 29, 1996.
17
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused the report to be signed on its behalf by the
undersigned thereunto duly authorized.
LEAR CORPORATION
Dated: November 11, 1996 By: /s/ James H. Vandenberghe
-----------------------------
James H. Vandenberghe
Executive Vice President,
Chief Financial Officer
and a Director
18
<PAGE> 19
LEAR CORPORATION
FORM 10 -Q
EXHIBIT INDEX
FOR THE QUARTER ENDED SEPTEMBER 28, 1996
EXHIBIT
NUMBER EXHIBIT
4.1 Indenture dated as of July 1, 1996 by and between the Company
and The Bank of New York, as trustee, relating to the 9 1/2%
Subordinated Notes due 2006, filed herewith.
27.1 Financial Data Schedule for the quarter ended September 28,
1996, filed herewith.
19
<PAGE> 1
EXECUTION COPY
EXHIBIT 4.1
-----
================================================================================
INDENTURE
Dated as of July 1, 1996
between
LEAR CORPORATION,
as Issuer
and
The Bank of New York,
as Trustee
________________
$200,000,000
9-1/2% Subordinated Notes
Due 2006
________________
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
Definitions and Incorporation by Reference
<S> <C> <C>
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Other Definitions . . . . . . . . . . . . . . . . . . . 23
SECTION 1.03. Incorporation by Reference of
Trust Indenture Act . . . . . . . . . . . . . . . . 23
SECTION 1.04. Rules of Construction . . . . . . . . . . . . . . . . . 24
ARTICLE II
The Securities
SECTION 2.01. Form and Dating . . . . . . . . . . . . . . . . . . . 24
SECTION 2.02. Execution and Authentication . . . . . . . . . . . . . 25
SECTION 2.03. Registrar and Paying Agent . . . . . . . . . . . . . . 26
SECTION 2.04. Paying Agent To Hold Money in Trust . . . . . . . . . . 26
SECTION 2.05. Holder Lists . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.06. Registration of Transfer and Exchange . . . . . . . . . 27
SECTION 2.07. Replacement Securities . . . . . . . . . . . . . . . . 28
SECTION 2.08. Outstanding Securities . . . . . . . . . . . . . . . . 28
SECTION 2.09. Treasury Securities . . . . . . . . . . . . . . . . . . 29
SECTION 2.10. Temporary Securities . . . . . . . . . . . . . . . . . 29
SECTION 2.11. Cancellation . . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.12. CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.13. Defaulted Interest . . . . . . . . . . . . . . . . . . 30
SECTION 2.14. Person Deemed Owners . . . . . . . . . . . . . . . . . 31
ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee . . . . . . . . . . . . . . . . . . 31
SECTION 3.02. Selection of Securities To Be Redeemed . . . . . . . . 31
SECTION 3.03. Notice of Redemption . . . . . . . . . . . . . . . . . 32
SECTION 3.04. Effect of Notice of Redemption . . . . . . . . . . . . 33
SECTION 3.05. Deposit of Redemption Price . . . . . . . . . . . . . . 33
SECTION 3.06. Securities Redeemed in Part . . . . . . . . . . . . . . 33
</TABLE>
<PAGE> 3
Contents, p. 2
<TABLE>
<CAPTION>
ARTICLE IV
Covenants
<S> <C> <C>
SECTION 4.01. Payment of Securities . . . . . . . . . . . . . . . . . . . . 33
SECTION 4.02. Limitation on Restricted Payments . . . . . . . . . . . . . . 34
SECTION 4.03. Limitation on Indebtedness . . . . . . . . . . . . . . . . . 36
SECTION 4.04. Limitation on Payment Restrictions Affecting Subsidiaries . . 37
SECTION 4.05. Limitation on Creation of Liens . . . . . . . . . . . . . . . 38
SECTION 4.06. Limitation on Senior Subordinated Indebtedness . . . . . . . 38
SECTION 4.07. Transactions with Shareholders and Affiliates . . . . . . . . 39
SECTION 4.08. Sales of Assets . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 4.09. Limitation on Issuance of Preferred Stock . . . . . . . . . . 43
SECTION 4.10. Corporate Existence . . . . . . . . . . . . . . . . . . . . . 43
SECTION 4.11. SEC Reports; Reports to Holders . . . . . . . . . . . . . . . 43
SECTION 4.12. Compliance Certificates . . . . . . . . . . . . . . . . . . . 45
SECTION 4.13. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . 46
SECTION 4.14. Payment of Taxes and Other Claims . . . . . . . . . . . . . . 46
SECTION 4.15. Maintenance of Properties and Insurance . . . . . . . . . . . 46
ARTICLE IVA
Unrestricted Subsidiaries
SECTION 4A.01. Unrestricted Subsidiaries . . . . . . . . . . . . . . . . . . 47
ARTICLE V
Merger, etc.
SECTION 5.01. When Company May Merge, etc. . . . . . . . . . . . . . . . . 48
SECTION 5.02. Successor Corporation Substituted . . . . . . . . . . . . . . 49
ARTICLE VI
Defaults and Remedies
SECTION 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 6.02. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 6.03. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . 53
</TABLE>
<PAGE> 4
Contents, p. 3
<TABLE>
<S> <C> <C>
SECTION 6.04. Waiver of Past Defaults . . . . . . . . . . . . . . . 53
SECTION 6.05. Control by Majority . . . . . . . . . . . . . . . . . 54
SECTION 6.06. Limitation on Suits . . . . . . . . . . . . . . . . . 54
SECTION 6.07. Rights of Holders To Receive Payment . . . . . . . . 54
SECTION 6.08. Collection Suit by Trustee . . . . . . . . . . . . . 54
SECTION 6.09. Trustee May File Proofs of Claim . . . . . . . . . . 55
SECTION 6.10. Priorities . . . . . . . . . . . . . . . . . . . . . 56
SECTION 6.11. Undertaking for Costs . . . . . . . . . . . . . . . . 57
SECTION 6.12. Parties May Be Restored to Former Position and Rights
in Certain Circumstances . . . . . . . . . . . . 57
ARTICLE VII
Trustee
SECTION 7.01. Duties of Trustee . . . . . . . . . . . . . . . . . . 57
SECTION 7.02. Rights of Trustee . . . . . . . . . . . . . . . . . . 59
SECTION 7.03. Individual Rights of Trustee . . . . . . . . . . . . 59
SECTION 7.04. Trustee's Disclaimer . . . . . . . . . . . . . . . . 59
SECTION 7.05. Notice of Defaults . . . . . . . . . . . . . . . . . 60
SECTION 7.06. Reports by Trustee to Holders . . . . . . . . . . . . 60
SECTION 7.07. Compensation and Indemnity . . . . . . . . . . . . . 60
SECTION 7.08. Replacement of Trustee . . . . . . . . . . . . . . . 61
SECTION 7.09. Successor Trustee by Merger, etc. . . . . . . . . . . 63
SECTION 7.10. Eligibility; Disqualification . . . . . . . . . . . . 63
SECTION 7.11. Preferential Collection of Claims Against
the Company . . . . . . . . . . . . . . . . . . 63
ARTICLE VIII
Discharge of Indenture
SECTION 8.01. Discharge of Liability on Securities; Defeasance . . 64
SECTION 8.02. Conditions to Defeasance . . . . . . . . . . . . . . 65
SECTION 8.03. Application of Trust Money . . . . . . . . . . . . . 66
SECTION 8.04. Repayment to Company . . . . . . . . . . . . . . . . 66
SECTION 8.05. Indemnity for Government Obligations . . . . . . . . 66
SECTION 8.06. Reinstatement . . . . . . . . . . . . . . . . . . . . 67
</TABLE>
<PAGE> 5
Contents, p. 4
<TABLE>
<CAPTION>
ARTICLE IX
Amendments
<S> <C> <C>
SECTION 9.01. Without Consent of Holders . . . . . . . . . . . . . . 67
SECTION 9.02. With Consent of Holders . . . . . . . . . . . . . . . 67
SECTION 9.03. Compliance with Trust Indenture Act . . . . . . . . . 68
SECTION 9.04. Revocation and Effect of Consents . . . . . . . . . . 68
SECTION 9.05. Notation on or Exchange of Securities . . . . . . . . 69
SECTION 9.06. Trustee To Sign Amendments, etc. . . . . . . . . . . 69
ARTICLE X
Subordination
SECTION 10.01. Securities Subordinated to Senior Indebtedness . . . . 69
SECTION 10.02. Priority and Payment Over of Proceeds in
Certain Events . . . . . . . . . . . . . . . . . . . 70
SECTION 10.03. Payments May Be Paid Prior to Dissolution . . . . . . . 73
SECTION 10.04. Rights of Holders of Senior Indebtedness Not To Be
Impaired . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 10.05. Authorization to Trustee To Take Action To Effectuate
Subordination . . . . . . . . . . . . . . . . . . . . 74
SECTION 10.06. Distribution or Notice to Representative . . . . . . . 74
SECTION 10.07. Subrogation . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 10.08. Obligations of Company Unconditional . . . . . . . . . 75
SECTION 10.09. Trustee Entitled To Assume Payments Not Prohibited in
Absence of Notice . . . . . . . . . . . . . . . . . . 75
SECTION 10.10. Right of Trustee To Hold Senior Indebtedness . . . . . 77
ARTICLE XI
Right To Require Repurchase
SECTION 11.01. Repurchase of Securities at Option of the Holder upon
Change of Control Triggering Event . . . . . . . . 77
SECTION 11.02. Covenant To Comply with Securities Laws upon
Purchase of Securities . . . . . . . . . . . . . . . 79
</TABLE>
<PAGE> 6
Contents, p. 5
<TABLE>
<CAPTION>
ARTICLE XII
Miscellaneous
<S> <C> <C>
SECTION 12.01. Trust Indenture Act Controls . . . . . . . . . . . 80
SECTION 12.02. Notices . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 12.03. Communication by Holders with Other Holders . . . 81
SECTION 12.04. Certificate and Opinion as to Conditions Precedent . 81
SECTION 12.05. Statements Required in Certificate or Opinion . . . . 81
SECTION 12.06. Rules by Trustee and Agents . . . . . . . . . . . . . 82
SECTION 12.07. Legal Holidays . . . . . . . . . . . . . . . . . . . 82
SECTION 12.08. Duplicate Originals . . . . . . . . . . . . . . . . . 82
SECTION 12.09. Governing Law . . . . . . . . . . . . . . . . . . . . 82
SECTION 12.10. No Adverse Interpretation of Other Agreements . . . . 82
SECTION 12.11. Successors . . . . . . . . . . . . . . . . . . . . . 82
SECTION 12.12. Severability . . . . . . . . . . . . . . . . . . . . 83
SECTION 12.13. Counterpart Originals . . . . . . . . . . . . . . . . 83
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
EXHIBIT A--Form of Security
</TABLE>
<PAGE> 7
INDENTURE dated as of July 1, 1996, between LEAR CORPORATION, a
Delaware corporation (the "Company"), as issuer, and The Bank of
New York, a New York banking corporation, as trustee (the
"Trustee").
Each Party hereto agrees as follows for the equal and ratable benefit of the
Holders of the Company's 9-1/2% Subordinated Notes Due 2006 (the "Securities"):
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.
"Acquired Indebtedness" means, with respect to the Company, Indebtedness of
a person existing at the time such person becomes a Restricted Subsidiary of
the Company or assumed in connection with the acquisition by the Company or a
Restricted Subsidiary of the Company of assets from such person, which assets
constitute all of an operating unit of such person, and not incurred in
connection with, or in contemplation of, such person becoming a subsidiary of
the Company or such acquisition.
"Affiliate" means, when used with reference to the Company or another
person, any person directly or indirectly controlling, controlled by, or under
direct or indirect common control with, the Company or such other person, as
the case may be. For the purposes of this definition, "control" when used with
respect to any specified person means the power to direct or cause the
direction of management or policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative of the
foregoing. Notwithstanding the foregoing, the term "Affiliate" shall not
include any wholly-owned subsidiary of the Company other than an Unrestricted
Subsidiary.
"Agent" means any Registrar, Paying Agent or agent for service of notices
and demands.
"Agent Bank" means Chemical Bank and/or its Affiliates together with any
bank which is or becomes a
<PAGE> 8
2
party to the Senior Credit Agreements or any successor to Chemical Bank and/or
its Affiliates, and any other Agent Bank under the Senior Credit Agreements.
"Asset Sale" means any sale exceeding $10,000,000, or any series of sales in
related transactions exceeding $10,000,000 in the aggregate, by the Company or
any Restricted Subsidiary of the Company, directly or indirectly, of
properties or assets other than in the ordinary course of business, including
capital stock of a Restricted Subsidiary of the Company, except for (i) the
sale of receivables by the Company or any subsidiary of the Company in the
ordinary course of business of the Company or any of its subsidiaries, or the
transfer of receivables to a special-purpose subsidiary of the Company and the
issuance by such special-purpose subsidiary, on a basis which is nonrecourse
(except for representations as to the status or eligibility of such receivables
or to the limited extent described in clause (ix)(B) of the definition of
"Permitted Indebtedness") to the Company or any other subsidiary of the Company
(other than an Unrestricted Subsidiary), of securities secured by such
receivables (a "Qualified Receivables Program"), and (ii) any
sale-and-lease-back transaction involving a Capitalized Lease Obligation
permitted under Section 4.03.
"Automotive Interior Business" means the production, design, development,
manufacture, marketing or sale of seat systems, interior systems and
components, vehicle interiors or components or any related businesses.
"average weighted life" means, as of the date of determination, with
reference to any debt security, the quotient obtained by dividing (i) the sum
of the products of the number of years from the date of determination to the
dates of each successive scheduled principal payment of such debt security
multiplied by the amount of such principal payment by (ii) the sum of all such
principal payments.
"Board of Directors" means, with respect to any person, the Board of
Directors of such person or any duly authorized committee of such Board of
Directors.
"Board Resolution" means a copy of a resolution certified by the secretary
or an assistant secretary of such person to have been duly adopted by the Board
of Directors of such person or any duly authorized committee thereof and
<PAGE> 9
3
to be in full force and effect on the date of such certification, and delivered
to the Trustee.
"Business Day" means a day that is not a Legal Holiday as defined in Section
12.07.
"capital stock" means any and all shares, interests, participations, rights
or other equivalents (however designated) of corporate stock and any and all
forms of partnership interests or other equity interests in a person.
"Capitalized Lease Obligation" means any lease obligation of a person
incurred with respect to any property (whether real, personal or mixed)
acquired or leased by such person and used in its business that is accounted
for as a capital lease on the balance sheet of such person in accordance with
GAAP.
"Cash Equivalents" means (A) any evidence of Indebtedness maturing, or
otherwise payable without penalty, not more than 365 days after the date of
acquisition issued by the United States of America or an instrumentality or
agency thereof and guaranteed fully as to principal, premium, if any, and
interest by the United States of America, (B) any certificate of deposit
maturing, or otherwise payable without penalty, not more than 365 days after
the date of acquisition issued by, or a time deposit of, a commercial banking
institution that has combined capital and surplus of not less than
$300,000,000, whose debt is rated, at the time as of which any Investment
therein is made, "A2" (or higher) according to Moody's or "A" (or higher)
according to S&P, (C) commercial paper, maturing not more than 90 days after
the date of acquisition, issued by a corporation (other than an Affiliate or
subsidiary of the Company) organized and existing under the laws of the United
States of America or any jurisdiction thereof, with a rating, at the time as of
which any Investment therein is made, of "P-1" (or higher) according to Moody's
or "A-1" (or higher) according to S&P, (D) any money market deposit accounts
issued or offered by any domestic institution in the business of accepting
money market accounts or any commercial bank having capital and surplus in
excess of $300,000,000 and (E) repurchase obligations with a term of not more
than seven days for underlying securities of the type described in clauses (A)
and (B).
<PAGE> 10
4
"Cash Proceeds" means, with respect to any Asset Sale, cash payments
(including any cash received by way of deferred payment pursuant to a note
receivable or otherwise, but only as and when so received) received from such
Asset Sale.
"Change of Control" means an event or series of events by which (i) any
"person" (as such term is used in Sections 13(d) and 14(d) of the Exchange
Act) (1) is or becomes the "beneficial owner" (as defined in Rules 13d-3 and
13d-5 under the Exchange Act, except that a person shall be deemed to have
"beneficial ownership" of all shares that any such person has the right to
acquire without condition, other than the passage of time, whether such right
is exercisable immediately or only after the passage of time) of 50% or more of
the Voting Stock of the Company, (2) is or becomes a shareholder of the Company
with the right to appoint or remove directors of the Company holding 50% or
more of the voting rights at meetings of the Board of Directors on all, or
substantially all, matters or (3) is or becomes able to exercise the right to
give directions with respect to the operating and financial policies of the
Company with which the relevant directors are obliged to comply by reason of:
(A) provisions contained in the organizational documents of the Company or (B)
the existence of any contract permitting such person to exercise control over
the Company; (ii) the Company consolidates with, or merges or amalgamates with
or into another person or, directly or indirectly, conveys, transfers, or
leases all or substantially all of its assets to any person, or any person
consolidates with, or merges or amalgamates with or into the Company, in any
such event pursuant to a transaction in which the outstanding Voting Stock of
the Company is changed into or exchanged for cash, securities or other
property, other than any such transaction where (A) the outstanding Voting
Stock of the Company is changed into or exchanged for Voting Stock of the
surviving corporation which is not redeemable capital stock or (x) such Voting
Stock and (y) cash, securities and other property in an amount which could be
paid by the Company as a Restricted Payment pursuant to Section 4.02 (and such
amount shall be treated as a Restricted Payment subject to the provisions of
Section 4.02) and (B) the holders of the Voting Stock of the Company
immediately prior to such transaction own, directly or indirectly, not less
than a majority of the Voting Stock of the surviving corporation immediately
after such transaction; (iii) during any period of two consecutive years,
individuals who at the beginning of such period
<PAGE> 11
5
constituted the Board of Directors of the Company (together with any new
directors whose election by such Board of Directors or whose nomination for
election by the shareholders of the Company was approved by a vote of 66-2/3%
of the directors then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors of the Company then in office; or (iv) the shareholders of
the Company approve any plan or proposal for the liquidation or dissolution of
the Company (whether or not otherwise in compliance with the provisions of this
Indenture).
"Change of Control Triggering Event" means the occurrence of both a Change
of Control and a Rating Decline.
"Commercial Letter of Credit" means any letter of credit or similar
instrument issued for the purpose of providing the primary payment mechanism in
connection with the purchase of any materials, goods or services by the Company
or any of its subsidiaries in the ordinary course of business of the Company or
such subsidiary.
"Common Stock" means the common stock, par value $.01 per share, of the
Company.
"Company" means the party named as such in this Indenture, or any other
obligor under this Indenture, until a successor replaces it pursuant to this
Indenture and thereafter means the successor.
"Consolidated" or "consolidated" means, when used with reference to any
amount, such amount determined on a consolidated basis in accordance with GAAP,
after the elimination of intercompany items.
"Consolidated Adjusted Net Worth" means, with respect to any person, as of
any date of determination, the total amount of stockholders' equity of such
person and its Restricted Subsidiaries which would appear on the consolidated
balance sheet of such person as of the date of determination, less (to the
extent otherwise included therein) the following (the amount of such
stockholders' equity and deductions therefrom to be computed, except as noted
below, in accordance with GAAP): (i) an amount attributable to interests in
subsidiaries of such person held by persons other than such person or its
Restricted
<PAGE> 12
6
Subsidiaries; (ii) any reevaluation or other write-up in book value of assets
subsequent to December 31, 1995, other than upon the acquisition of assets
acquired in a transaction to be accounted for by purchase accounting under GAAP
made within twelve months after the acquisition of such assets; (iii) treasury
stock; (iv) an amount equal to the excess, if any, of the amount reflected for
the securities of any person which is not a subsidiary over the lesser of cost
or market value (as determined in good faith by the Board of Directors) of such
securities; and (v) Disqualified Stock of the Company or any Restricted
Subsidiary of the Company.
"Consolidated Amortization Expense" means for any person, for any period,
the amortization of goodwill and other intangible items of such person and its
Restricted Subsidiaries for such period, determined on a consolidated basis in
accordance with GAAP.
"Consolidated Cash Flow Available for Interest Expense" means, for any
person and the Company, the sum of the aggregate amount, for the four fiscal
quarters for which financial information in respect thereof is available
immediately prior to the date of the transaction giving rise to the need to
calculate the Consolidated Cash Flow Available for Interest Expense (the
"Transaction Date"), of (i) Consolidated Net Income (Loss) of such person, (ii)
Consolidated Income Tax Expense, (iii) Consolidated Depreciation Expense, (iv)
Consolidated Amortization Expense, (v) Consolidated Interest Expense and (vi)
other noncash items reducing Consolidated Net Income (Loss), minus noncash
items increasing Consolidated Net Income (Loss). Consolidated Cash Flow
Available for Interest Expense for any period shall be adjusted to give pro
forma effect (to the extent applicable) to (i) each acquisition by the Company
or a Restricted Subsidiary of the Company during such period up to and
including the Transaction Date (the "Reference Period") in any person which, as
a result of such acquisition, becomes a Restricted Subsidiary of the Company,
or the acquisition of assets from any person which constitute substantially all
of an operating unit or business of such person and (ii) the sale or other
disposition of any assets (including capital stock) of the Company or a
Restricted Subsidiary of the Company, other than in the ordinary course of
business, during the Reference Period, as if such acquisition or sale or
disposition of assets by the Company or a Restricted
<PAGE> 13
7
Subsidiary of the Company occurred on the first day of the Reference Period.
"Consolidated Depreciation Expense" means for any person, for any period,
the depreciation expense of such person and its Restricted Subsidiaries for
such period, determined on a consolidated basis in accordance with GAAP.
"Consolidated Income Tax Expense" means, for any person, for any period, the
aggregate of the income tax expense of such person and its Restricted
Subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP.
"Consolidated Interest Expense" means, for any person, for any period, the
sum of (a) the Interest Expense of such person and its Restricted Subsidiaries
for such period, determined on a consolidated basis, (b) dividends in respect
of preferred or preference stock of a Restricted Subsidiary of the Company held
by persons other than the Company or a wholly owned Restricted Subsidiary of
the Company and (c) interest incurred during the period and capitalized by the
Company and its Restricted Subsidiaries on a consolidated basis in accordance
with GAAP. For purposes of clause (b) of the preceding sentence, dividends
shall be deemed to be an amount equal to the actual dividends paid divided by
one minus the applicable actual combined Federal, state, local and foreign
income tax rate of the Company (expressed as a decimal), on a consolidated
basis, for the fiscal year immediately preceding the date of the transaction
giving rise to the need to calculate Consolidated Interest Expense.
"Consolidated Interest Expense Coverage Ratio" means, with respect to any
person, the ratio of (i) the aggregate amount of the applicable Consolidated
Cash Flow Available for Interest Expense of such person to (ii) the aggregate
Consolidated Interest Expense which such person shall accrue during the first
full fiscal quarter following the Transaction Date and the three fiscal
quarters immediately subsequent to such fiscal quarter, such Consolidated
Interest Expense to be calculated on the basis of the amount of such person's
Indebtedness (on a consolidated basis) outstanding on the Transaction Date and
reasonably anticipated by such person in good faith to be outstanding from time
to time during such period.
<PAGE> 14
8
"Consolidated Net Income (Loss)" means, with respect to any person, for any
period, the aggregate of the net income (loss) of such person and its
Restricted Subsidiaries for such period, determined on a consolidated basis in
accordance with GAAP; provided that there shall be excluded from such net
income (to the extent otherwise included therein) (i) the net income (loss) of
any person which is not a Restricted Subsidiary of such person and which is
accounted for by the equity method of accounting, except to the extent of the
amount of cash dividends or distributions paid by such other person to such
person or to a Restricted Subsidiary of such person, (ii) the net income (loss)
of any person accrued prior to the date on which it is acquired by such person
or a Restricted Subsidiary of such person in a pooling of interests
transaction, (iii) except for NS Beteiligungs GmbH (a German Foreign
Subsidiary) or any successor entity, the net income (loss) of any Restricted
Subsidiary of such person to the extent that the declaration or payment of
dividends or similar distributions or transfers or loans by that Restricted
Subsidiary is not at the time permitted by operation of the terms of its
charter or any agreement or instrument (except any agreement or instrument
permitted under Section 4.04), judgment, decree, order, statute, rule or
governmental regulation applicable to such Restricted Subsidiary, in each case
determined in accordance with GAAP, (iv) any gain or loss, together with any
related provision for taxes in respect of such gain or loss, realized upon the
sale or other disposition (including, without limitation, dispositions pursuant
to sale-and-lease-back transactions) of any asset or property outside of the
ordinary course of business and any gain or loss realized upon the sale or
other disposition by such person of any capital stock or marketable securities
and (v) any noncash charges incurred by the Company and its Restricted
Subsidiaries at any time in connection with SFAS 106.
"Corporate Trust Office" means the office of the Trustee located in New
York, New York, at which at any particular time its corporate services business
shall be principally administered, which office at the date of execution of
this Indenture is located at 101 Barclay Street, Floor 21 West, New York, New
York 10286.
"Currency Swap Obligations" means, with respect to any person, the
Obligations of such person pursuant to any foreign exchange contract, currency
swap agreement or other
<PAGE> 15
9
similar agreement as to which such person is a party or beneficiary.
"Default" means any event which is, or after notice or lapse of time or both
would be, an Event of Default.
"Defaulted Interest" means the interest provided for in Section 2.13.
"Disinterested Director" means, with respect to an Affiliate Transaction or
series of related Affiliate Transactions, a member of a Board of Directors who
has no financial interest, and whose employer has no financial interest, in
such Affiliate Transaction or series of related Affiliate Transactions.
"Disqualified Stock" means any capital stock of the Company or any
Restricted Subsidiary of the Company which, by its terms (or by the terms of
any security into which it is convertible or for which it is exchangeable), or
upon the happening of any event, matures or is mandatorily redeemable, pursuant
to a sinking fund obligation or otherwise, or is redeemable at the option of
the holder thereof, in whole or in part, on or prior to the maturity date of
the Securities or which is exchangeable or convertible into debt securities of
the Company or any Restricted Subsidiary of the Company, except to the extent
that such exchange or conversion rights cannot be exercised prior to the
maturity of the Securities.
"Event of Default" shall have the meaning provided in Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Foreign Subsidiary" means any subsidiary of the Company organized and
conducting its principal operations outside the United States.
"GAAP" means generally accepted accounting principles on a basis
consistently applied, provided that all ratios and calculations contained in
this Indenture will be calculated in accordance with generally accepted
accounting principles in effect on the date of this Indenture.
<PAGE> 16
10
"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 or (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 nonperformance) of any part
or all of such Obligation, including, without limiting the foregoing, the
payment of amounts drawn down by letters of credit. Notwithstanding anything
herein to the contrary, a guarantee shall not include any agreement solely
because such agreement creates a Lien on the assets of any person. The amount
of a guarantee shall be deemed to be the maximum amount of the Obligation
guaranteed for which the guarantor could be held liable under such guarantee.
"Holder" means the person in whose name a Security is registered on the
Registrar's books.
"Indebtedness" means (without duplication), with respect to any person, any
indebtedness, contingent or otherwise, in respect of borrowed money (whether or
not the recourse of the lender is to the whole of the assets of such person or
only to a portion thereof), or evidenced by bonds, notes, debentures or similar
instruments or representing the balance deferred and unpaid of the purchase
price of any property (except any such balance that constitutes a trade payable
in the ordinary course of business that is not overdue by more than 120 days or
is being contested in good faith), if and to the extent any of the foregoing
indebtedness would appear as a liability upon a balance sheet of such person
prepared on a consolidated basis in accordance with GAAP, and shall also include
letters of credit, Obligations with respect to Swap Obligations, any Capitalized
Lease Obligation, the maximum fixed repurchase price of any Disqualified Stock,
Obligations secured by a Lien to which any property or asset, including
leasehold interests under Capitalized Lease Obligations and any other tangible
or intangible property rights, owned by such person is subject, whether or not
the Obligations secured thereby shall have been assumed (provided that, if the
Obligations have not been assumed, such Obligations shall be deemed to be in an
amount not to exceed the fair market value of the property or properties to
which the Lien relates, as determined in good faith by the Board of Directors of
such person and as evidenced by a Board Resolution), and guarantees of items
which would be included within this
<PAGE> 17
11
definition (regardless of whether such items would appear upon such balance
sheet); provided that for the purpose of computing the amount of Indebtedness
outstanding at any time, items shall be excluded to the extent that they would
be eliminated as intercompany items in consolidation. For purposes of the
preceding sentence, the maximum fixed repurchase price of any Disqualified
Stock which does not have a fixed repurchase price shall be calculated in
accordance with the terms of such Disqualified Stock as if such Disqualified
Stock were repurchased 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 Disqualified Stock (or any equity
security for which it may be exchanged or converted), such fair market value
shall be determined in good faith by the Board of Directors of such person.
"Indenture" means this Indenture, as amended, supplemented or modified from
time to time.
"Interest Expense" means for any person, for any period, the aggregate
amount of interest in respect of Indebtedness (including all fees and charges
owed with respect to letters of credit and bankers' acceptance financing and
the net costs associated with Interest Swap Obligations and all but the
principal component of rentals in respect of Capitalized Lease Obligations)
incurred or scheduled to be incurred by such person during such period, all as
determined in accordance with GAAP, except that non-cash amortization or
write-off of deferred financing fees and expenses shall not be included in the
calculation of Interest Expense. For purposes of this definition, (a) interest
on Indebtedness determined on a fluctuating basis for periods succeeding the
date of determination shall be deemed to accrue at a rate equal to the rate of
interest on such Indebtedness in effect on the last day of the fiscal quarter
immediately preceding the date of determination and (b) interest on a
Capitalized Lease Obligation shall be deemed to accrue at an interest rate
reasonably determined in good faith by an Officer of such person to be the rate
of interest implicit in such Capitalized Lease Obligation in accordance with
GAAP (including Statement of Financial Accounting Standards No. 13 of the
Financial Accounting Standards Board).
"Interest Swap Obligation" means, with respect to any person, the
Obligations of such person pursuant to any arrangement with any other person
whereby, directly or
<PAGE> 18
12
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.
"Investment" by any person means (i) all investments by such person in any
other person in the form of loans, advances or capital contributions; (ii) all
guarantees of Indebtedness or other obligations of any other person by such
person; (iii) all purchases (or other acquisitions for consideration) by such
person of Indebtedness, capital stock or other securities of any other person;
(iv) all other items that would be classified as investments (including,
without limitation, purchases outside the ordinary course of business) on a
balance sheet of such person prepared in accordance with GAAP; or (v) the
designation of any Restricted Subsidiary of the Company as an Unrestricted
Subsidiary as provided under Section 4A.01. For purposes of this definition and
the provisions described under Section 4A.01 and Section 4.02 (i) with respect
to a Restricted Subsidiary that is designated as an Unrestricted Subsidiary,
"Investment" will mean the portion (proportionate to the Company's equity
interest in such subsidiary) of the net book value of the stockholders' equity
of such subsidiary at the time that such subsidiary is designated as an
Unrestricted Subsidiary plus, without duplication, all other outstanding
Investments made by the Company in that Restricted Subsidiary; (ii) with
respect to a person that is designated as an Unrestricted Subsidiary
simultaneously with its becoming a subsidiary of the Company, "Investment" will
mean the Investment made by the Company and its Restricted Subsidiaries to
acquire such subsidiary plus, without duplication, all other outstanding
Investments made by the Company in such person; and (iii) any property
transferred to or from an Unrestricted Subsidiary will be valued at its fair
market value at the time of such transfer, in each case as determined in good
faith by the Board of Directors.
"Investment Grade" is defined as BBB- or higher by S&P or Baa3 or higher by
Moody's or the equivalent of such ratings by S&P or Moody's.
"Letters of Credit" means letters of credit under the Senior Credit
Agreements.
<PAGE> 19
13
"Lien" means any lien, security interest, charge or encumbrance of any kind
(including any conditional sale or other title retention agreement or any lease
creating a Capitalized Lease Obligation).
"Moody's" means Moody's Investor Services, Inc. or if Moody's ceases to make
a rating of the Securities publicly available, a nationally recognized
securities rating agency selected by the Company.
"Net Cash Proceeds" means, with respect to any Asset Sale, the Cash Proceeds
of such Asset Sale net of fees, commissions, expenses and other costs of sale
(including payment of the outstanding principal amount of, premium or penalty,
if any, and interest on any Indebtedness which is either secured by a Lien on
the stock or other assets sold or can be or is accelerated by such sale), taxes
paid or payable as a result thereof, and any amount required to be paid to any
person (other than the Company or any of its subsidiaries) owning a beneficial
interest in the stock or other assets sold, provided that when any noncash
consideration for an Asset Sale is converted into cash, such cash shall then
constitute Net Cash Proceeds.
"Obligation" means any principal, interest, premium, penalties, fees and any
other liabilities payable under the documentation governing any Indebtedness.
"Officer" of any person means the Chairman of the Board, the President, any
Vice President, the Treasurer, the Secretary or the Controller of such person.
"Officers' Certificate" means a certificate signed by two Officers or by an
Officer and an Assistant Treasurer, Assistant Secretary or Assistant Controller
of any person.
"Opinion of Counsel" means a written opinion from legal counsel prepared in
accordance with Sections 12.04 and 12.05. The counsel may be an employee of or
counsel to the Company.
"Permitted Indebtedness" means: (i) Indebtedness of the Company pursuant to
its Obligations under, or Indebtedness of any Restricted Subsidiary of the
Company under, the Senior Credit Agreements; provided that in no event shall
the aggregate amount of Indebtedness permitted to be outstanding at any one
time pursuant to this clause (i) exceed $1,800,000,000 (less any amounts
<PAGE> 20
14
permanently repaid under the Senior Credit Agreements but without deducting
payments under the revolving credit facilities and the swing line facility of
the Senior Credit Agreements unless the commitments thereunder have been
permanently reduced); (ii) Indebtedness represented by guarantees of
Indebtedness which is permitted by Section 4.03; (iii) Indebtedness evidenced
by the Securities; (iv) Indebtedness evidenced by the Senior Subordinated Notes
and the Subordinated Notes; (v) Indebtedness of the Company to any Restricted
Subsidiary of the Company and Indebtedness of any Restricted Subsidiary of the
Company to the Company or another Restricted Subsidiary of the Company,
provided that the Company or such Restricted Subsidiary shall not become liable
to any person other than the Company or a Restricted Subsidiary of the Company
with respect thereto; (vi) Indebtedness of the Company or any Restricted
Subsidiary of the Company represented by Swap Obligations, provided that such
Swap Obligations are related to payment Obligations on Indebtedness otherwise
permitted by Section 4.03 and shall not result in an increase in the principal
amount of the underlying outstanding Indebtedness or are used for the hedging
of foreign currency translation risk in the ordinary course; (vii) Indebtedness
of the Company and its Restricted Subsidiaries, and any undrawn amounts, under
legally binding revolving credit or standby credit facilities existing on the
date of this Indenture and Refinancing Indebtedness in respect of such
Indebtedness or amounts; (viii) Indebtedness of any Foreign Subsidiary that is
a Restricted Subsidiary to the extent that the aggregate principal amount of
the Indebtedness being incurred, together with all other outstanding
Indebtedness of such Foreign Subsidiary incurred pursuant to this clause
(viii), does not exceed an amount equal to the sum of (x) 80% of the
consolidated book value of the accounts receivable of such Foreign Subsidiary
and (y) 60% of the consolidated book value of the inventories of such Foreign
Subsidiary; (ix) Indebtedness of the Company or any of its Restricted
Subsidiaries in respect of guarantees of receivables originated by the Company
or any of its Restricted Subsidiaries and sold to other persons to the extent
that (A) the sale of such receivables does not constitute an Asset Sale and (B)
such guarantees are in respect of warranties granted by the Company or a
Restricted Subsidiary on the products giving rise to such receivables and such
guarantees are not in respect of any other aspect of such receivables,
including the capacity of any customer to meet its obligations under such
receivables; (x) Indebtedness of the Company and its Restricted Subsidiaries in
respect of
<PAGE> 21
15
guarantees of Indebtedness of less than majority owned persons, provided that
in no event shall Indebtedness permitted pursuant to this clause (x) exceed
$5,000,000; (xi) other Indebtedness of the Company and of any Restricted
Subsidiary of the Company, provided that in no event shall the aggregate amount
of Indebtedness of the Company and of Restricted Subsidiaries of the Company
permitted to be outstanding pursuant to this clause (xi) at any one time exceed
$50,000,000; and (xii) Indebtedness of special-purpose subsidiaries of the
Company in respect of securities secured by receivables transferred to such
special-purpose subsidiaries by the Company or a Subsidiary of the Company,
provided that (A) the transfer of such receivables does not constitute an Asset
Sale, (B) such special-purpose subsidiaries engage in no activities other than
the purchase of such receivables and the issuance of such securities, and (C)
such securities are non-recourse to the Company or any other Restricted
Subsidiary of the Company (except for representations as to the status or
eligibility of such receivables or to the limited extent described in clause
(ix)(B) above in this definition).
"Permitted Liens" means (i) Liens for taxes, assessments, governmental
charges or claims which are being contested in good faith by appropriate
proceedings, promptly instituted and diligently conducted and, if a reserve or
other appropriate provision, if any, as shall be required in conformity with
GAAP shall have been made therefor; (ii) statutory Liens of landlords and
carriers', warehousemen's, mechanics', suppliers', materialmen's, repairmen's,
or other like Liens arising in the ordinary course of business and with respect
to amounts not yet delinquent or being contested in good faith by appropriate
process of law, if a reserve or other appropriate provision, if any, as shall
be required by GAAP shall have been made therefor; (iii) Liens incurred or
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security; (iv)
Liens incurred or deposits made to secure the performance of tenders, bids,
leases, statutory obligations, surety and appeal bonds, government contracts,
performance and return-of-money bonds and other Obligations of like nature
incurred in the ordinary course of business (exclusive of Obligations for the
payment of borrowed money); (v) easements, rights-of-way, restrictions, zoning
provisions and other governmental restrictions and other similar charges or
encumbrances not interfering in any material respect with the business of the
Company or any of
<PAGE> 22
16
its subsidiaries; (vi) judgment Liens not giving rise to a Default or Event of
Default; (vii) leases or subleases granted to others not interfering in any
material respect with the business of the Company or any of its subsidiaries;
(viii) Liens encumbering customary initial deposits and margin deposits, and
other Liens incurred in the ordinary course of business and which are within
the general parameters customary in the industry, in each case securing
Indebtedness under Swap Obligations; (ix) any interest or title of a lessor in
the property subject to any Capitalized Lease Obligation or operating lease or
any Lien granted by a lessor on such property which does not interfere in any
material respect with the business of the Company and its Restricted
Subsidiaries; (x) Liens arising from filing UCC financing statements regarding
leases; (xi) Liens securing reimbursement Obligations with respect to
Commercial Letters of Credit which encumber documents and other property
relating to such Commercial Letters of Credit and the products and proceeds
thereof; (xii) other Liens existing on the date of this Indenture; (xiii) other
Liens to secure Obligations not in excess of $1,000,000 in the aggregate at any
time outstanding, except to secure Indebtedness; (xiv) Liens on accounts
receivable and any assets related thereto granted in connection with a
Qualified Receivables Program; and (xv) Liens securing Indebtedness permitted
pursuant to clauses (i), (vi), (vii), (viii), (xi) and (xii) of the definition
of "Permitted Indebtedness".
"person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"principal" of a debt security means the principal of the security plus, if
such security has been called for redemption, the premium, if any, payable on
such security upon redemption of such security.
"Rating Decline" means the occurrence of the following on, or within 90 days
after, the date of public notice of the occurrence of a Change of Control or of
the intention of the Company to effect a Change of Control (which period shall
be extended so long as the rating of the Securities is under publicly announced
consideration for possible downgrading by either Moody's or S&P): (i) in the
event that the Securities are rated by either Moody's or S&P prior to the date
of such public notice as Investment Grade, the rating of the Securities by both
such rating agencies
<PAGE> 23
17
shall be decreased to below Investment Grade or (ii) in the event the
Securities are rated below Investment Grade by both such rating agencies prior
to the date of such public notice, the rating of the Securities by either
rating agency shall be decreased by one or more gradations (including
gradations within rating categories as well as between rating categories).
"Redemption Date" means, with respect to any Security to be redeemed, the
date fixed for such redemption pursuant to this Indenture.
"Redemption Price" means, with respect to any Security to be redeemed, the
price fixed for such redemption pursuant to this Indenture as set forth in
paragraph 5 of the form of Security annexed hereto as Exhibit A.
"refinance" has the meaning specified in the definition of "Refinancing
Indebtedness", and "refinances", "refinancing" and "refinancings" have
correlative meanings.
"Refinancing Indebtedness" means Indebtedness of the Company or its
Restricted Subsidiaries, the net proceeds of which (after customary fees,
expenses and costs related to the incurrence of such Indebtedness) are applied
to repay, refund, prepay, repurchase, redeem, defease, retire or refinance
(collectively, "refinance") outstanding Indebtedness permitted to be incurred
under the terms of this Indenture; provided that Refinancing Indebtedness that
refinances any Permitted Indebtedness shall be deemed to be incurred and to be
outstanding under the relevant clause in the definition of "Permitted
Indebtedness"; and provided further that (A) the original issue amount of the
Refinancing Indebtedness shall not exceed the maximum principal amount, accrued
interest and premium, if any, of the Indebtedness to be repaid or, if greater
in the case of clause (i) or (vii) of the definition of "Permitted
Indebtedness", permitted to be outstanding under the agreements governing the
Indebtedness being refinanced (or if such Indebtedness was issued at an
original issue discount, the original issue price plus amortization of the
original issue discount at the time of the incurrence of the Refinancing
Indebtedness) plus the amount of customary fees, expenses and costs related to
the incurrence of such Refinancing Indebtedness, (B) Refinancing Indebtedness
incurred by any Restricted Subsidiary of the Company shall not be used to
refinance outstanding Indebtedness other than Senior Indebtedness of the
Company and (C) with respect to
<PAGE> 24
18
any Refinancing Indebtedness which refinances Indebtedness which ranks pari
passu or junior in right of payment to the Securities, (1) the Refinancing
Indebtedness has an average weighted life which is equal to or greater than the
then average weighted life of the Indebtedness being refinanced, (2) if such
Indebtedness being refinanced is pari passu in right of payment to the
Securities, such Refinancing Indebtedness does not rank senior in right of
payment to the payment of principal of and interest on the Securities, and (3)
if such Indebtedness being refinanced is subordinated to the Securities, such
Refinancing Indebtedness is subordinated to the Securities to the same extent
and on substantially the same terms.
"Representative" means the trustee, agent or representative for
an issue of Senior Indebtedness.
"Restricted Debt Prepayment" means any purchase, redemption,
defeasance (including, but not limited to, in substance or legal defeasance) or
other acquisition or retirement for value (collectively a "prepayment"),
directly or indirectly, by the Company or a Restricted Subsidiary of the
Company (other than to the Company or a Restricted Subsidiary of the Company),
prior to the scheduled maturity or prior to any scheduled repayment of
principal or sinking fund payment in respect of Indebtedness of the Company or
such Restricted Subsidiary which would rank subordinate in right of payment to
the Securities ("Prepaid Debt"); provided, that (i) any such prepayment of any
Prepaid Debt shall not be deemed to be a Restricted Debt Prepayment to the
extent such prepayment is made (x) with the proceeds of the substantially
concurrent sale (other than to a subsidiary of the Company) of shares of the
capital stock (other than Disqualified Stock) of the Company or rights,
warrants or options to purchase such capital stock of the Company or (y) in
exchange for or with the proceeds from the substantially concurrent issuance of
Refinancing Indebtedness and (ii) no Default or Event of Default shall have
occurred and be continuing at the time or shall occur as a result of such sale
of capital stock or issuance of such Refinancing Indebtedness.
"Restricted Investment" means, with respect to any person, any
Investments by such person in any of its Affiliates (other than its Restricted
Subsidiaries) or in any person that becomes an Affiliate (unless it becomes a
Restricted Subsidiary) as a result of such Investment to the extent that the
aggregate amount of all such Investments
<PAGE> 25
19
made after the date of this Indenture, whether or not outstanding, less the
amount of cash received by such person upon the disposition or satisfaction of
any such Investment exceeds $100,000,000.
"Restricted Payment" means any (i) Restricted Stock Payment, (ii)
Restricted Debt Prepayment or (iii) Restricted Investment.
"Restricted Stock Payment" means (i) with respect to the Company,
any dividend, either in cash or in property (except dividends payable in Common
Stock), on, or the making by the Company of any other distribution in respect
of, its capital stock, now or hereafter outstanding, or the redemption,
repurchase, retirement or other acquisition for value by the Company or any
Restricted Subsidiary of the Company, directly or indirectly, of capital stock
of the Company or any warrants, rights (other than exchangeable or convertible
Indebtedness of the Company) or options to purchase or acquire shares of any
class of the Company's capital stock, now or hereafter outstanding, and (ii)
with respect to any subsidiary of the Company, any redemption, repurchase,
retirement or other acquisition for value by the Company or a Restricted
Subsidiary of the Company of capital stock of such subsidiary or any warrants,
rights (other than exchangeable or convertible Indebtedness of any subsidiary
of the Company), or options to purchase or acquire shares of any class of
capital stock of such subsidiary, now or hereafter outstanding, except with
respect to capital stock of such subsidiary or such warrants, rights or options
owned by (x) the Company or a Restricted Subsidiary of the Company or (y) any
person which is not an Affiliate of the Company.
"Restricted Subsidiary" means any subsidiary of the Company other
than an Unrestricted Subsidiary.
"S&P" means Standard & Poor's Corporation, or if it ceases to
make a rating of the Securities publicly available, a nationally recognized
securities rating agency selected by the Company.
"SEC" means the Securities and Exchange Commission and any
government agency succeeding to its functions.
"Securities" means the 9-1/2% Subordinated Notes due 2006 of the
Company issued pursuant to this Indenture.
<PAGE> 26
20
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Credit Agreements" means, both individually and
collectively, (i) the Credit Agreement dated as of August 17, 1995, among the
Company, the several financial institutions parties thereto from time to time
(the "Original Banks") and the Agent Bank and (ii) the Credit Agreement dated
June 27, 1996, among the Company, the several financial institutions parties
thereto (together with the Original Banks, the "Banks") and the Agent Bank, as
the same have been heretofore amended and may be amended hereafter from time to
time, and any subsequent credit agreement or agreements constituting a
refinancing, extension or modification thereof.
"Senior Indebtedness" means the Obligations of the Company with
respect to (i) any and all amounts payable by or on behalf of the Company or
any of its Restricted Subsidiaries under or in respect of its obligations
(including reimbursement obligations in respect of letters of credit) incurred
and outstanding from time to time under the Senior Credit Agreements, the
security documents entered into in connection therewith, or any refinancings
thereof (including interest accruing on or after filing of any petition in
bankruptcy or reorganization relating to the Company, at the rate specified in
such Senior Indebtedness whether or not a claim for post-filing interest is
allowed in such proceeding); (ii) Swap Obligations of the Company or any of its
Restricted Subsidiaries related to any payment Obligations on Senior
Indebtedness or the hedging of foreign currency translation risk entered into
in the ordinary course; (iii) any and all amounts payable by the Company under
or in respect of its Obligations incurred and outstanding from time to time
under the Senior Subordinated Notes or any refinancings thereof; and (iv) any
other Indebtedness of the Company, whether outstanding on the date of this
Indenture or hereafter created, incurred or assumed, 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 is not senior in right of payment to the Securities; provided
that, notwithstanding the foregoing, Senior Indebtedness shall not include (A)
Indebtedness represented by the Securities, (B) Indebtedness incurred in
violation of this Indenture, (C) Indebtedness which is represented by
Disqualified Stock, (D) amounts payable or any other Indebtedness to trade
creditors created, incurred,
<PAGE> 27
21
assumed or guaranteed by the Company or any subsidiary of the Company in the
ordinary course of business in connection with obtaining goods or services, (E)
amounts payable or any other Indebtedness to employees of the Company or any
subsidiary of the Company as compensation for services, (F) Indebtedness of the
Company to a subsidiary of the Company, (G) any liability for Federal, state,
local or other taxes owed or owing by the Company and (H) Indebtedness
represented by the Subordinated Notes.
"Senior Subordinated Indebtedness" means, with respect to any
person, any Indebtedness of a person that specifically provides that such
Indebtedness is to rank pari passu with other Senior Subordinated Indebtedness
of such person and is not subordinated by its terms to any Indebtedness of such
person which is not Senior Indebtedness.
"Senior Subordinated Notes" means the 11 1/4% Senior Subordinated
Notes of the Company due 2000, issued pursuant to an Indenture dated as of July
15, 1992 among the Company and The Bank of New York, as trustee.
"Senior Subordinated Notes Trustee" means The Bank of New York,
or any duly appointed successor thereto, as trustee under an Indenture dated as
of July 15, 1992, among the Company and The Bank of New York, as trustee.
"Significant Subsidiary" means one or more subsidiaries of the
Company which, in the aggregate, have (i) assets, or in which the Company and
its other subsidiaries have Investments, equal to or greater than 5% or more of
the total assets of the Company and its subsidiaries consolidated at the end of
the most recently completed fiscal year of the Company or (ii) consolidated
gross revenue equal to or exceeding 5% of the consolidated gross revenue of the
Company for its most recently completed fiscal year.
"Special Record Date" for the payment of any Defaulted Interest
means a date fixed by the Trustee pursuant to Section 2.13.
"Specified Senior Indebtedness" means (i) Indebtedness under the
Senior Credit Agreements (or any refunding or refinancing thereof) and (ii) any
other single issue of Senior Indebtedness (other than the Senior Subordinated
Notes) having an initial principal amount of
<PAGE> 28
22
$30,000,000 or more. For purposes of this definition, a refinancing of any
Specified Senior Indebtedness shall be treated as such only if it ranks or would
rank on a pari passu basis with the Indebtedness refinanced.
"Subordinated Notes" means the 8 1/4% Subordinated Notes of the
Company due 2002, issued pursuant to an Indenture dated as of February 1, 1994
among the Company and State Street Bank & Trust Company, as trustee.
"subsidiary" of any person means (i) a corporation a majority of
whose capital stock with voting power, under ordinary circumstances, to elect
directors is at the time, directly or indirectly, owned by such person or by
such person and a subsidiary or subsidiaries of such person or by a subsidiary
or subsidiaries of such person or (ii) any other person (other than a
corporation) in which such person or such person and a subsidiary or
subsidiaries of such person or a subsidiary or subsidiaries of such persons, at
the time, directly or indirectly, owned at least a majority ownership interest.
"Swap Obligations" of any person means the net Obligations of
such person pursuant to any agreement, cap, collar, swap or other financial
agreement or arrangement designed to protect such person against, in the case
of Interest Swap Obligations, fluctuations in interest rates and, in the case
of Currency Swap Obligations, fluctuations in currency exchange rates.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Section
77aaa-77bbbb), as in effect on the date of this Indenture (except as otherwise
provided in Section 9.03).
"Trustee" means the party named as such above until a successor
replaces it pursuant to this Indenture and thereafter means the successor.
"Trust Officer" means any officer in the corporate trust
department of the Trustee or any other officer of the Trustee assigned by the
Trustee to administer this Indenture.
"UCC" means the Uniform Commercial Code in effect from time to
time in any state in the United States of America or the District of Columbia.
<PAGE> 29
23
"U.S. Government Obligations" means direct obligations of the
United States of America for the payment of which the full faith and credit of
the United States of America is pledged and which are non-callable at the
option of the issuer thereof.
"Voting Stock" means all classes of capital stock then
outstanding of a person normally entitled to vote in elections of directors.
SECTION 1.02. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
---- ----------
<S> <C>
"Bankruptcy Law" .................. 6.01
"Banks" ........................... 1.01
"Custodian" ....................... 6.01
"incurrence" ...................... 4.03
"Interest Payment Date" ........... Section 1
of Exh. A
hereto
"Legal Holiday" ................... 12.07
"Original Banks" .................. 1.01
"Paying Agent" .................... 2.03
"Payment Blockage Period" ......... 10.02
"Prepaid Debt" .................... 1.01
"Purchase Date" ................... 11.01
"Purchase Price" .................. 11.01
"Qualified Receivables Program" ... 1.01
"Record Date" ..................... Section 2
of Exh. A
hereto
"Reference Period" ................ 1.01
"Registrar" ....................... 2.03
"Repurchase Date" ................. 4.08
"Repurchase Offer" ................ 4.08
"Repurchase Offer Amount" ......... 4.08
"Repurchase Price" ................ 4.08
"Special Record Date" ............. 2.13
"Transaction Date" ................ 1.01
"Unrestricted Subsidiary".......... 4A.01
</TABLE>
SECTION 1.03. Incorporation by Reference of Trust Indenture
Act. Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture.
<PAGE> 30
24
The following TIA terms used in this Indenture have the
following meanings:
"indenture securities" means the Securities:
"indenture security holder" means a Holder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee; and
"obligor" on the Securities means the Company and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule
have the meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction. Unless the context
otherwise requires: (i) a term has the meaning assigned to it; (ii) an
accounting term not otherwise defined has the meaning assigned to it in
accordance with generally accepted accounting principles; (iii) references to
GAAP shall mean generally accepted accounting principles in effect in the
United States as of the time and for the period as to which such accounting
principles are to be applied; (iv) notwithstanding the provisions of Section
1.04(iii), all ratios and calculations contained in this Indenture shall be
calculated in accordance with generally accepted accounting principles in
effect as of the date hereof; (v) "or" is not exclusive; (vi) words in the
singular include the plural, and in the plural include the singular; and (vii)
provisions apply to successive events and transactions.
ARTICLE II
The Securities
SECTION 2.01. Form and Dating. The Securities and the
Trustee's certificate of authentication shall be substantially in the form of
Exhibit A, which is hereby incorporated in and expressly made a part of this
Indenture. The Securities may have notations, legends or endorsements
<PAGE> 31
25
required by law, stock exchange rule or usage. Each Security shall be dated the
date of its authentication.
The terms and provisions contained in the Securities annexed
hereto as Exhibit A shall constitute, and are hereby expressly made, a part of
this Indenture. To the extent applicable, the Company and the Trustee, by
their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby.
The definitive Securities shall be printed, lithographed or
engraved or produced by any combination of these methods or may be produced in
any other manner permitted by the rules of any securities exchange on which
such Securities may then be listed, all as determined by the Officers executing
such Securities, as evidenced by their execution of such Securities.
SECTION 2.02. Execution and Authentication. Two Officers
shall sign the Securities for the Company by manual or facsimile signature.
The Company's seal shall be reproduced on the Securities and may be in
facsimile form.
If an Officer whose signature is on a Security no longer holds
that office at the time the Security is authenticated, the Security shall be
valid nevertheless.
A Security shall not be valid until authenticated by the
manual signature of the Trustee. The signature shall be conclusive evidence
that the Security has been authenticated under this Indenture.
The Trustee shall authenticate and deliver Securities for
original issue in the aggregate principal amount of not more than $200,000,000
pursuant to a written order of the Company signed by two Officers. The order
shall specify the amount of Securities to be authenticated and the date upon
which the original issue of Securities is to be authenticated. The aggregate
principal amount of Securities outstanding at any time may not exceed
$200,000,000 except as provided in Sections 2.07 and 2.08.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate Securities. Unless limited by the
terms of such appointment, an authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by
<PAGE> 32
26
such agent. An authenticating agent has the same rights as an Agent to deal
with the Company or an Affiliate of the Company.
The Securities shall be issuable only in registered form
without coupons and only in denominations of $1,000 and integral multiples
thereof.
SECTION 2.03. Registrar and Paying Agent. The Company shall
maintain in the Borough of Manhattan, New York, New York, an office or agency
where Securities may be presented for registration of transfer or for exchange
(the "Registrar") and an office or agency where Securities may be presented for
payment (the "Paying Agent"), and the Company shall maintain in the Borough of
Manhattan, New York, New York, an office or agency where notices or demands to
or upon the Company in respect of the Securities and the Indenture may be
served. 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. The term "Paying Agent" includes any
additional paying agent and the term "Registrar" includes any additional
registrar. The Company may change any Paying Agent or Registrar without prior
notice to any Holder.
The Company shall enter into an appropriate agency agreement
with any Agent not a party to this Indenture, which shall incorporate the terms
of the TIA. The agreement shall implement the provisions of this Indenture
that relate to such Agent. The Company shall give prompt written notice to the
Trustee of the name and address of any Agent who is not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any
Affiliate of the Company may act as Paying Agent or Registrar.
The Company initially appoints the Trustee at the address
specified in Section 12.02 as Registrar and Paying Agent, and the Company
initially appoints the Trustee as agent for service of notices and demands.
SECTION 2.04. Paying Agent To Hold Money in Trust. Prior to
the due date of principal of and interest on any Security, the Company shall
deposit with the Paying Agent money sufficient to pay such principal and
interest so becoming due. The Company shall require each Paying Agent
<PAGE> 33
27
other than the Trustee to agree in writing that the Paying Agent shall hold in
trust for the benefit of Holders or the Trustee all money held by the Paying
Agent for the payment of principal of and interest on the Securities (whether
such money has been paid to it by the Company or any other obligor on the
Securities) and shall notify the Trustee of any failure by the Company (or any
other obligor on the Securities) in making any such payment. While any such
failure continues, the Trustee may require a Paying Agent to pay all money held
by it to the Trustee and to account for any funds disbursed. The Company at
any time may require a Paying Agent to pay all money held by it to the Trustee.
Upon payment over to the Trustee, the Paying Agent (if other than the Company)
shall have no further liability for the money so paid over to the Trustee. If
the Company acts as Paying Agent, it shall segregate and hold in a separate
trust fund for the benefit of the Holders all money held by it as Paying Agent.
SECTION 2.05. Holder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to
it of the names and addresses of Holders. If the Trustee is not the Registrar,
the Company shall furnish to the Trustee on or before each interest payment
date for the Securities and at such other times as the Trustee may request in
writing a list in such form and as of such date as the Trustee may reasonably
require of the names and addresses of Holders.
SECTION 2.06. Registration of Transfer and Exchange. The
Securities shall be issued in registered form and shall be transferable only
upon the surrender of a Security for registration of transfer. When Securities
are presented to the Registrar or a coregistrar with a request to register
their transfer or to exchange them for an equal principal amount of Securities
of other denominations, the Registrar shall register the transfer or make the
exchange if its requirements for such transaction are met; provided that a
Security presented or surrendered for registration of transfer or exchange
shall be duly endorsed or accompanied by a written instrument of transfer in
form satisfactory to the Registrar duly executed by the Holder thereof or his
attorney duly authorized in writing. To permit registrations of transfer and
exchanges, the Company shall issue Securities, and the Trustee shall
authenticate Securities at the Registrar's request. No service charge shall be
made for any registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any
<PAGE> 34
28
tax or other governmental charge that may be imposed in connection with
registration, transfer or exchange of Securities other than exchanges pursuant
to Section 2.10, 3.06, 9.05 or 11.01(d) not involving any transfer.
The Registrar shall not be required to register the transfer
or exchange of (i) any Security selected for redemption in whole or in part,
except the unredeemed portion of any Security being redeemed in part or (ii)
any Security for a period of 15 days before the mailing of a notice of
redemption of Securities to be redeemed.
SECTION 2.07. Replacement Securities. If a mutilated
Security is surrendered to the Trustee or if the Holder of a Security claims
that the Security has been lost, destroyed or wrongfully taken, the Company
shall issue and the Trustee, at the Company's request, shall authenticate a
replacement Security if the requirements of the Trustee and the Company are
met; provided that, if any such Security has been called for redemption in
accordance with the terms thereof, the Trustee may pay the Redemption Price
thereof on the Redemption Date without authenticating or replacing such
Security. The Trustee or the Company may, in either case,
require the Holder to provide an indemnity bond sufficient in the judgment of
each of the Trustee and the Company 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 or if the Redemption Price therefor is paid pursuant to
this Section. The Company may charge the Holder who has lost a Security for
its expenses in replacing a Security.
Every replacement Security is an additional obligation of the
Company and shall be entitled to the benefits of this Indenture.
SECTION 2.08. Outstanding Securities. The Securities
outstanding at any time are all the Securities authenticated by the Trustee
except for those canceled by it, those delivered to it for cancellation and
those described in this Section as not outstanding.
If a Security is replaced pursuant to Section 2.07, it ceases
to be outstanding and interest ceases to accrue unless the Trustee receives
proof satisfactory to it that the replaced Security is held by a bona fide
purchaser.
<PAGE> 35
29
If all principal of and interest on any of the Securities are
considered paid under Section 4.01, such Securities shall cease to be
outstanding and interest on them shall cease to accrue.
Except as provided in Section 2.09, a Security does not cease
to be outstanding because the Company or an Affiliate of the Company holds such
Security.
SECTION 2.09. Treasury Securities. In determining whether
the Holders of the required principal amount of Securities have concurred in
any direction, waiver or consent, Securities owned by the Company or any other
obligor, or by any person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Company or such other
obligor, shall be considered as though they are not outstanding, except that
for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Securities which such
Trustee actually knows are so owned shall be so disregarded.
SECTION 2.10. Temporary Securities. Until definitive
Securities are ready for delivery, the Company may prepare and execute and the
Trustee shall authenticate temporary Securities. Temporary Securities shall be
substantially in the form of definitive Securities but may have variations that
the Company considers appropriate for temporary Securities.
If temporary Securities are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay. After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at the Corporate Trust Office of the Trustee, without charge to the
Holder. Upon surrender for cancellation of any one or more temporary
Securities, the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor a like aggregate principal amount of definitive
Securities having the same date as such temporary Securities. Until so
exchanged such temporary Securities shall in all respects be entitled to the
same benefits under this Indenture as definitive Securities.
SECTION 2.11. Cancellation. The Company at any time may
deliver Securities to the Trustee for cancellation. The Registrar and Paying
Agent shall forward to the Trustee
<PAGE> 36
30
any Securities surrendered to them for registration of transfer, exchange,
payment or repurchase. The Trustee shall cancel all Securities surrendered for
registration of transfer, exchange, payment, repurchase, redemption, replacement
or cancellation and shall return canceled Securities to the Company. The
Company may not issue new Securities to replace Securities that it has paid or
that have been delivered to the Trustee for cancellation.
SECTION 2.12. CUSIP Numbers. The Company in issuing the
Securities may use "CUSIP" numbers (if then generally in use), and the Trustee
shall use CUSIP numbers in notices given pursuant to Section 3.03, 4.08 or
11.01 as a convenience to Holders; provided that any such notice shall state
that no representation is made as to the correctness of such numbers either as
printed on the Securities or as contained in any such notice and that reliance
may be placed only on the other identification numbers printed on the
Securities. The Company shall promptly notify the Trustee of any change in the
CUSIP numbers.
SECTION 2.13. Defaulted Interest. If the Company fails to
make a payment of interest on the Securities, it shall pay such interest, plus
interest payable on the defaulted interest (to the extent permitted by law), to
the persons who are Holders on a subsequent special record date (the "Special
Record Date"), which shall be fixed in the following manner: the Company shall
notify the Trustee in writing of the amount of Defaulted Interest proposed to
be paid on each Security and the date of the proposed payment (which shall be
at least 40 days from the date of such notice), and at the same time the
Company shall deposit with the Trustee an amount of cash equal to the aggregate
amount proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date of
the proposed payment, such cash when deposited to be held in trust for the
benefit of the persons entitled to such Defaulted Interest as in this clause
provided. Thereupon the Trustee shall fix a Special Record Date for the
payment of such Defaulted Interest which shall be not more than 15 or less than
10 days prior to the date of the proposed payment and not less than 15 days
after the receipt of the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such Special Record Date and, in
the name and at the expense of the Company, shall cause notice of the proposed
payment of such Defaulted Interest and the Special Record Date
<PAGE> 37
31
therefor to be mailed, first-class postage prepaid, to each Holder at his
address as it appears in the register, not less than 10 days prior to such
Special Record Date. Notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor having been mailed as aforesaid, such
Defaulted Interest shall be paid to the persons in whose names the Securities
are registered as of the close of business on such Special Record Date.
Notwithstanding the foregoing, no such payment of Defaulted
Interest shall affect the status of the failure to pay interest when due as an
Event of Default under Section 6.01.
SECTION 2.14. Person Deemed Owners. Prior to due presentment
for transfer, the Company, the Trustee, the authenticating agent, if any, and
any Agent may treat the Holder as the owner of such Security for the purpose of
receiving payment of principal of and interest on such Security and for all
other purposes whatsoever, whether or not such Security be overdue, and neither
the Company, the Trustee, the authenticating agent, if any, nor any Agent
(including the Paying Agent, if any) shall be affected by notice to the
contrary.
ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee. If the Company elects to
redeem Securities pursuant to paragraph 5 of the Securities, it shall notify
the Trustee of the intended redemption date and the principal amount of
Securities to be redeemed.
The Company shall give each notice provided for in this
Section and an Officers' Certificate at least 30 days before the Redemption
Date (unless a shorter period shall be satisfactory to the Trustee).
SECTION 3.02. Selection of Securities To Be Redeemed. If
fewer than all the Securities are to be redeemed, the Trustee shall select the
Securities to be redeemed from the outstanding Securities not previously called
for redemption pro rata or by lot in accordance with a method the Trustee
considers fair and appropriate. The Trustee may select for redemption portions
of the principal
<PAGE> 38
32
amount of Securities that have denominations larger than $1,000.
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 them selected shall be in amounts of $1,000 or whole
multiples of $1,000. Provisions of this Indenture that apply to Securities
called for redemption also apply to portions of Securities called for
redemption.
SECTION 3.03. Notice of Redemption. At least 15 days but not
more than 60 days before the Redemption Date, the Company shall mail a notice
of redemption by first-class mail to each Holder whose Securities are to be
redeemed at the address of such Holder appearing in the register.
The notice shall identify the Securities to be redeemed and
shall state: (1) the Redemption Date; (2) the Redemption Price; (3) if any
Security is being redeemed in part, the portion of the principal amount of such
Security to be redeemed and that, after the Redemption Date, upon surrender
of such Security, a new Security or Securities in principal amount equal to the
unredeemed portion shall be issued; (4) the name and address of the Paying
Agent; (5) that Securities called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price plus accrued interest (if any) to
the Redemption Date; (6) 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 is to receive payment of the Redemption Price plus accrued interest (if
any) to the Redemption Date upon surrender of the Securities to the Paying
Agent; (7) the Security's CUSIP number (subject to the proviso in Section 2.12
hereof) and (8) the aggregate principal amount of Securities being redeemed.
At the Company's written request, the Trustee shall give the
notice of redemption in the Company's name and at its expense. Concurrently
with the giving of any such notice by the Company to the Holders, the Company
shall deliver to the Trustee an Officers' Certificate stating that such notice
has been given. The notice mailed in the manner herein provided shall be
conclusively presumed to have been duly given whether or not the Holder
receives such notice.
<PAGE> 39
33
In any case, failure to give such notice by mail or any defect in the notice to
the Holder of any Security shall not affect the validity of the proceeding for
the redemption of any other Security.
SECTION 3.04. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable
on the Redemption Date at the Redemption Price plus accrued interest to the
Redemption Date. Upon surrender to the Paying Agent, such Securities shall be
paid at the Redemption Price plus accrued interest (if any) to the Redemption
Date.
SECTION 3.05. Deposit of Redemption Price. Prior to the
Redemption Date, the Company shall deposit with the Trustee or with the Paying
Agent (or if the Company is acting as its own Paying Agent, the Company shall
segregate and hold in trust) money sufficient to pay the Redemption Price of
and accrued interest to the Redemption Date on all Securities to be redeemed on
that date other than Securities or portions thereof called for redemption on
that date which have been delivered by the Company to the Trustee for
cancellation.
SECTION 3.06. 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
equal in principal amount to the unredeemed portion of the Security
surrendered.
ARTICLE IV
Covenants
SECTION 4.01. Payment of Securities. The Company shall pay
the principal of and interest on the Securities on the dates and in the manner
provided in the Securities and in this Indenture. Principal and interest shall
be considered paid on the date due if the Trustee or Paying Agent (other than
the Company or an Affiliate of the Company) holds on that date money designated
for and sufficient to pay all principal and interest then due if payment
thereof is not prohibited by Article X.
The Company shall pay interest on overdue principal at the
rate then borne by the Securities; it shall
<PAGE> 40
34
pay interest on overdue installments of interest at the same rate to the extent
legally permitted.
SECTION 4.02. Limitation on Restricted Payments. The Company
shall not, and shall not permit any Restricted Subsidiary of the Company to,
directly or indirectly, make any Restricted Payment unless (a) no Default or
Event of Default has occurred and is continuing at the time or shall occur as a
consequence of such Restricted Payment and (b) after giving effect to such
Restricted Payment, the aggregate amount expended for all Restricted Payments
subsequent to December 31, 1993 (the amount so expended, if other than in cash,
to be determined by the Board of Directors, whose reasonable determination
shall be conclusive and evidenced by a Board Resolution) does not exceed the
sum of (i) 50% of Consolidated Net Income of the Company (or in the case such
Consolidated Net Income shall be a deficit, minus 100% of such deficit) during
the period (treated as one accounting period) subsequent to December 31, 1993
and ending on the last day of the fiscal quarter immediately preceding such
Restricted Payment, (ii) the aggregate net proceeds, including cash and the
fair market value of property other than cash (as determined in good faith
by the Board of Directors of the Company and evidenced by a Board Resolution),
received by the Company during such period from any person other than a
Restricted Subsidiary of the Company, as a result of the issuance of capital
stock of the Company (other than any Disqualified Stock) or warrants, rights or
options to purchase or acquire such capital stock, including such capital stock
issued upon conversion or exchange of Indebtedness or upon exercise of warrants
or options and any contributions to the capital of the Company received by the
Company from any such person less the amount of such net proceeds actually
applied as permitted by clause (ii) of the next paragraph or by the proviso to
the definition of "Restricted Debt Prepayment", (iii) in the case of the
redesignation of an Unrestricted Subsidiary to a Restricted Subsidiary, the
amount by which Restricted Payments permitted under this Section 4.02 would
have increased if such Unrestricted Subsidiary had never been designated as an
Unrestricted Subsidiary, determined at the time of such redesignation and (iv)
without duplication to clause (iii), the net reduction in Restricted
Investments in Unrestricted Subsidiaries resulting from dividends, repayments
of loans or advances or other transfers of assets or amounts received upon the
disposition of any Restricted Investments; provided that, at the time of such
Restricted Payment and after giving effect thereto, the Company or any
<PAGE> 41
35
Restricted Subsidiary of the Company shall be able to incur an additional $1.00
of Indebtedness pursuant to clauses (a) and (b) of Section 4.03. For purposes
of any calculation pursuant to the preceding sentence which is required to be
made within 60 days after the declaration of a dividend by the Company, such
dividend shall be deemed to be paid at the date of declaration.
The provisions of this Section 4.02 shall not be violated by
reason of (i) the payment of any dividend within 60 days after the date of
declaration thereof if, at such date of declaration such payment complied with
the provisions hereof; (ii) the purchase, redemption, acquisition or retirement
of any shares of the Company's capital stock in exchange for, or out of the
proceeds of the substantially concurrent sale (other than to a subsidiary of
the Company) of, other shares of capital stock (other than Disqualified Stock)
of the Company or rights, warrants or options to purchase or acquire such
capital stock of the Company; or (iii) payments by the Company (A) for the
mandatory repurchase of shares of Common Stock or other capital stock of the
Company (or scheduled payments of principal of or interest on notes issued to
finance the repurchase of such shares) from employees of the Company or its
subsidiaries under employment agreements or in connection with employment
termination agreements, (B) to satisfy any Obligations under the terms of the
Stockholders Agreement or (C) for the purchase, redemption or retirement of any
shares of any capital stock of the Company or options to purchase capital stock
of the Company in connection with the exercise of outstanding stock options;
provided that no Default or Event of Default has occurred and is continuing at
the time, or shall occur as a result, of such Restricted Payment. For purposes
of determining the aggregate amount of Restricted Payments in accordance with
clause (b) of the first paragraph of this Section 4.02, all amounts expended
pursuant to clause (i) or (ii) (except to the extent deemed to have been paid
pursuant to the immediately preceding paragraph) of this paragraph shall be
included.
For the purpose of this Section 4.02 and the proviso to the
definition of "Restricted Debt Prepayment", the net proceeds from the issuance
of shares of capital stock of the Company upon the conversion of debt
securities shall be deemed to be an amount equal to the net book value of such
debt securities (plus the additional amount required to be paid upon such
conversion, if any), less any cash payment on account of fractional shares; the
"net book
<PAGE> 42
36
value" of a security shall be the amount received by the Company on the
issuance of such security, as adjusted on the books of the Company to the
date of conversion. The foregoing shall not be interpreted to limit the
authority of the Board of Directors to determine the value of other securities
of the Company or of any subsidiary of the Company or other property received
as net proceeds; provided that the value of the other property shall not exceed
the net book value of such property.
Within 45 days after the end of the fiscal quarter in which
any Restricted Payment was made, the Company shall deliver to the Trustee an
Officers' Certificate setting forth the date of each such Restricted Payment
and the computation by which the amount available for Restricted Payments on
that date was determined.
SECTION 4.03. Limitation on Indebtedness. Except for
Permitted Indebtedness and Refinancing Indebtedness, the Company shall not, and
shall not permit any Restricted Subsidiary of the Company to, directly or
indirectly, create, incur, issue, assume, guarantee or otherwise become liable
for, contingently or otherwise, extend the maturity of or become responsible
for the payment of (collectively, an "incurrence"), any Obligations in respect
of any Indebtedness including Acquired Indebtedness unless (a) no Default or
Event of Default shall have occurred and be continuing at the time or as a
consequence of the incurrence of such Indebtedness and (b) after giving effect
to the incurrence of such Indebtedness and the receipt and application of the
proceeds thereof on a pro forma basis, the Consolidated Interest Expense
Coverage Ratio of the Company is greater than 2 to 1; provided, however, that
in no event shall the Company or any Restricted Subsidiary of the Company incur
any Obligations in respect of any Indebtedness of an Unrestricted Subsidiary of
the Company except in compliance with Section 4.02.
For purposes of all covenants contained in this Section 4.03,
an incurrence shall be deemed to occur when any person becomes a subsidiary of
the Company by merger or consolidation, acquisition or otherwise.
Within 45 days after the end of the fiscal quarter in which
any Indebtedness was incurred pursuant to this Section, the Company shall
deliver to the Trustee and the Holders an Officers' Certificate setting forth
the date of each such incurrence and the calculations by which each such
<PAGE> 43
37
incurrence was determined to be permitted on that date and stating that such
Indebtedness does not violate the provisions of Section 4.03.
SECTION 4.04. Limitation on Payment Restrictions Affecting
Subsidiaries. The Company shall not, and shall not permit any Restricted
Subsidiary of the Company to, create or otherwise cause or suffer to exist or
become effective any consensual restriction which by its terms expressly
restricts any such Restricted Subsidiary from (i) paying dividends or making
any other distributions on such Restricted Subsidiary's capital stock or paying
any Indebtedness owed to the Company or any Restricted Subsidiary of the
Company, (ii) making any loans or advances to the Company or any Restricted
Subsidiary of the Company or (iii) transferring any of its property or assets
to the Company or any Restricted Subsidiary of the Company, except (a) any
restrictions existing under agreements in effect at the issuance of the
Securities, (b) any restrictions under agreements evidencing the Senior Credit
Agreements and Swap Obligations, (c) any restrictions under any agreement
evidencing any Acquired Indebtedness of a Restricted Subsidiary of the Company
incurred pursuant to Section 4.03, provided that such restrictions shall not
restrict or encumber any assets of the Company or its Restricted Subsidiaries
other than such Restricted Subsidiary and its subsidiaries, (d) in the case of
clause (iii) above, customary nonassignment provisions entered into in the
ordinary course of business consistent with past practice in leases and other
contracts to the extent such provisions restrict the transfer or subletting of
any such lease or the assignment of rights under such contract, (e) any
restriction with respect to a Restricted Subsidiary of the Company imposed
pursuant to an agreement which has been entered into for the sale or
disposition of all or substantially all of the capital stock or assets of such
Restricted Subsidiary, provided that consummation of such transaction would not
result in a Default or Event of Default, that such restriction terminates if
such transaction is closed or abandoned and that the closing or abandonment of
such transaction occurs within one year of the date such agreement was entered
into, (f) any encumbrance or restriction with respect to a Restricted
Subsidiary that is a Foreign Subsidiary pursuant to an agreement relating to
Indebtedness incurred by such Foreign Subsidiary if the incurrence of such
Indebtedness is permitted pursuant to Section 4.03 and, at the time of
incurrence of such Indebtedness, and after giving effect
<PAGE> 44
38
thereto, the aggregate principal amount of the Indebtedness being incurred,
together with all other outstanding Indebtedness of such Foreign Subsidiary
incurred pursuant to this clause (f), does not exceed an amount equal to the
sum of (x) 80% of the consolidated book value of the accounts receivable of
such Foreign Subsidiary and (y) 60% of the consolidated book value of the
inventories of such Foreign Subsidiary, or (g) any restrictions existing under
any agreement which refinances any Indebtedness in accordance with the
definition of "Refinancing Indebtedness", provided that the terms and
conditions of any such agreement are not materially less favorable than those
under the agreement creating or evidencing the Indebtedness being refinanced.
SECTION 4.05. Limitation on Creation of Liens. The Company
shall not, and shall not permit any Restricted Subsidiary of the Company to,
create, incur, assume or suffer to exist any Liens upon any of their respective
assets unless the Securities are secured by such assets on an equal and ratable
basis with the obligation so secured until such time as such obligation is no
longer secured by a Lien (provided that if the obligation secured by such Lien
is subordinated to the Securities, the Lien securing such obligation shall
be subordinate and junior to the Lien securing the Securities with the same
relative priority as such subordinated obligations have with respect to the
Securities), except for (i) Liens securing Senior Indebtedness that would be
permitted to be incurred under clauses (a) and (b) of Section 4.03 if such
Indebtedness were incurred on the date such Lien is granted; (ii) Liens with
respect to Acquired Indebtedness, provided that such Liens do not extend to or
cover any property or assets of the Company or any Restricted Subsidiary of the
Company other than the property or assets of the entity acquired, and provided
further that such Liens were not incurred in connection with, or in
contemplation of, the transactions giving rise to such Acquired Indebtedness;
(iii) Liens securing Indebtedness which is incurred to refinance secured
Indebtedness and which is permitted to be incurred under Section 4.03, provided
that such Liens do not extend to or cover any property or assets of the Company
or any Restricted Subsidiary of the Company other than the property or assets
securing the Indebtedness being refinanced; and (iv) Permitted Liens.
SECTION 4.06. Limitation on Senior Subordinated Indebtedness.
The Company shall not issue, incur, create, assume, guarantee or otherwise
become liable for any
<PAGE> 45
39
Indebtedness in an aggregate principal amount in excess of $250,000,000 at any
one time outstanding which is subordinate or junior in right of payment to any
Indebtedness of the Company, including, without limitation, Indebtedness that
refinances the Senior Subordinated Notes, unless such Indebtedness is pari
passu with or subordinate in right of payment to the Securities.
SECTION 4.07. Transactions with Shareholders and Affiliates.
The Company shall not, and shall not permit any Restricted Subsidiary of the
Company to, directly or indirectly, enter into or suffer to exist any
transaction (an "Affiliate Transaction") (including, without limitation, the
purchase, sale, lease or exchange of any property or the rendering of any
service) with any holder of more than 10% of any class of equity securities of
the Company or with any Affiliate of the Company or of any such holder (other
than a Restricted Subsidiary of the Company or the Company), on terms that are
less favorable to the Company or such Restricted Subsidiary, as the case may
be, than would be available in a comparable transaction with an unrelated
person. In addition, neither the Company nor any Restricted Subsidiary of the
Company shall enter into any Affiliate Transaction or series of related
Affiliate Transactions involving or having a value of more than $5,000,000,
unless a majority of Disinterested Directors (or, if there are no Disinterested
Directors, a majority of the Board of Directors) of the Company or such
Restricted Subsidiary, as the case may be, determines in good faith pursuant to
a Board Resolution that such Affiliate Transaction or series of related
Affiliate Transactions is fair to the Company or such Restricted Subsidiary, as
the case may be.
The foregoing provisions shall not apply to (i) any Restricted
Payment permitted to be paid pursuant to Section 4.02 and (ii) payments of
investment banking and financial advisory or consulting fees and other fees to
Lehman Brothers Inc., The Cypress Group L.L.C. or any of their respective
subsidiaries or Affiliates in connection with the sale of the Securities (or
any refunding, refinancing or conversion thereof) and other customary
investment banking and financial advisory or consulting fees.
SECTION 4.08. Sales of Assets. Subject to the provisions of
Section 5.01, the Company shall not, and shall not permit any Restricted
Subsidiary to, make any Asset Sale unless (i) the Company (or such Restricted
Subsidiary, as
<PAGE> 46
40
the case may be) receives consideration at the time of such sale at least equal
to the fair market value of the shares or assets included in such Asset Sale
(as determined in good faith by the Board of Directors, including valuation of
all noncash consideration) and (ii) (x) either (A) the Net Cash Proceeds are
reinvested within 12 months (or, pursuant to a determination of the Board of
Directors, held pending reinvestment) in replacement assets or assets
used in the Automotive Interior Business or used to purchase all of the issued
and outstanding capital stock of a person engaged in such business or used to
fund research and development costs or (B) if the Net Cash Proceeds are not
applied or are not required to be applied as set forth in clause (ii)(x)(A) or
if after applying such Net Cash Proceeds as set forth in clause (ii)(x)(A)
there remain Net Cash Proceeds, such Net Cash Proceeds are applied within 12
months of the original receipt thereof to the permanent prepayment, repayment,
retirement or purchase of Senior Indebtedness, the Subordinated Notes or
Indebtedness of a Restricted Subsidiary, (y) if and to the extent that the
gross proceeds from such Asset Sale (after giving effect to the application of
clauses (ii)(x)(A) and (B), when added to the gross proceeds from all prior
Asset Sales (not applied as set forth in clauses (ii)(x)(A) or (B))) exceeds
$25,000,000, such proceeds are applied first to a repurchase offer to
repurchase the Subordinated Notes pursuant to the indenture governing the
Subordinated Notes and then to a Repurchase Offer (as defined below) to
repurchase the Securities (on a pro rata basis with all other Indebtedness
ranking pari passu in right of payment to the Securities (other than the
Subordinated Notes)) at a purchase price equal to 100% of the principal amount
thereof plus accrued interest to the date of prepayment and (z) if the
aggregate principal amount tendered pursuant to a Repurchase Offer is less than
the Repurchase Offer Amount (as defined below), such excess amount is applied
for general corporate purposes; provided that when any noncash consideration is
converted into cash, such cash shall then constitute Net Cash Proceeds and
shall be subject to clause (ii) of this sentence.
To repurchase the Securities, the Company shall offer to
purchase the Securities (the "Repurchase Offer"), on a specified date (the
"Repurchase Date"), pursuant to the provisions hereof at a price equal to 100%
of their principal amount, plus interest accrued to the Repurchase Date (the
"Repurchase Price"). If the Repurchase Date is on or after a record date and
on or before the related interest payment date, then any accrued interest shall
be paid to the
<PAGE> 47
41
person in whose name the Security is registered at the close of business on
such record date, and no additional interest shall be payable to Holders who
tender Securities pursuant to the Repurchase Offer. Net Cash Proceeds
allocable to the purchase of Securities will be accumulated and the Company
shall be required to make a Repurchase Offer to the holders of Securities only
if an aggregate amount (the "Repurchase Offer Amount") of at least $25,000,000
of such Net Cash Proceeds has been accumulated as of the first day of any
fiscal quarter which amount has neither been paid nor set aside for the
purchase of the Securities, other Indebtedness ranking pari passu in right of
payment to the Securities (other than the Subordinated Notes), or the
Subordinated Notes tendered in a prior Repurchase Offer or repurchase offer, as
applicable, or reallocated for general corporate purposes as herein provided.
If the Company elects to commence a Repurchase Offer, or
within 10 Business Days after the first day of each fiscal quarter in which the
Company is obligated to make a Repurchase Offer, the Company shall deliver to
the Trustee and send, by first class mail to each Holder at his last address
as it appears upon the list of Holders maintained by the Registrar pursuant to
Section 2.03 hereof, a written notice stating that the Holder may elect to have
such Holder's Securities purchased by the Company either in whole or in part in
integral multiples of $1,000 of principal amount, plus accrued interest thereon
to the Repurchase Date. The notice shall specify a Repurchase Date which is at
least 20 Business Days after the date of such notice and shall contain all
instructions and materials necessary to enable such Holders to tender
Securities pursuant to the Repurchase Offer, together with the information
contained in the second following paragraph of this Section 4.08. Not later
than the date upon which written notice of a Repurchase Offer is delivered to
the Trustee, the Company shall deliver to the Trustee an Officers' Certificate
as to (x) the Repurchase Offer Amount and the amount of accrued interest to the
Repurchase Date, (y) the allocation of the Net Cash Proceeds from the Asset
Sale or Asset Sales pursuant to which such Repurchase Offer is being made and
(z) the compliance of such allocation with the provisions of this Section 4.08.
If the Company designates a depositary or a Paying Agent to
receive tendered Securities on its behalf in the Repurchase Offer, the Company
shall deposit with such depositary or Paying Agent, no later than the
Repurchase Date,
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42
funds sufficient to pay for the Securities to be purchased in the Repurchase
Offer. The depositary, the Paying Agent or the Company, as the case may be,
shall, within five Business Days following the Repurchase Date, mail or deliver
payment to each tendering Holder by check in an amount equal to the principal
amount, plus accrued interest thereon to the Repurchase Date, of the Securities
tendered by such Holder and accepted by the Company for purchase. Upon the
expiration of the period for which the Repurchase Offer remains open, the
depositary, the Paying Agent or the Company, as the case may be, shall deliver
to the Trustee the Securities or portions thereof which have been properly
tendered to and accepted for purchase by the Company. In addition, the Company
shall deliver to the Trustee an Officers' Certificate stating that such
Securities were accepted by the Company pursuant to and in accordance with the
terms of this Section 4.08. The Trustee shall deliver to Holders whose
Securities have been purchased only in part new Securities equal in principal
amount to the portion not purchased of the Securities surrendered.
Holders electing to have a Security purchased shall be
required to surrender the Security, with an appropriate letter of transmittal
duly completed, which shall include the "Option of Holder to Elect Purchase" on
the reverse of the Security, to the Company, a depositary, if appointed by the
Company, or a Paying Agent at the address specified in the notice prior to the
expiration of the period for which the Repurchase Offer remains open. Holders
shall be entitled to withdraw their election to have their Securities purchased
if the Company, the depositary or Paying Agent, as the case may be, receives,
not later than two Business Days prior to the Repurchase Date, a facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Security which was delivered for purchase by the Holder and a
statement that such Holder is withdrawing his election to have such Security
purchased. If the aggregate principal amount of Securities tendered by Holders
pursuant to the Repurchase Offer exceeds the Repurchase Offer Amount, the
Company shall select the Securities to be purchased on a pro rata basis (with
such adjustments as may be deemed appropriate by the Company so that only
Securities in denominations of $1,000 or integral multiples thereof shall be
purchased). Holders whose Securities are purchased only in part shall be
issued new Securities equal in principal amount to the unpurchased portion of
the Securities surrendered.
<PAGE> 49
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Whenever Net Cash Proceeds received by the Company and
allocated for the repayment of the Securities exceeds $25,000,000, such Net
Cash Proceeds shall be set aside by the Company in a separate account pending
disbursement or reallocation pursuant to this Section 4.08. Such Net Cash
Proceeds may be invested in Cash Equivalents; provided that the maturity date
of such Cash Equivalents shall not be later than the Repurchase Date. The
Company shall be entitled to any interest or dividends accrued, earned or paid
on such Cash Equivalents.
SECTION 4.09. Limitation on Issuance of Preferred Stock. The
Company shall not permit any of its Restricted Subsidiaries to issue any
preferred or preference stock (except to the Company or a wholly owned
Restricted Subsidiary of the Company) or permit any person (other than the
Company or any wholly owned Restricted Subsidiary of the Company) to hold any
such preferred or preference stock unless the Company would be entitled to
create, incur or assume Indebtedness pursuant to Section 4.03 in the aggregate
principal amount equal to the aggregate liquidation value of the preferred or
preference stock to be issued.
SECTION 4.10. Corporate Existence. Subject to Article V, the
Company shall do or cause to be done all things necessary to preserve and keep
in full force and effect its corporate existence and that of each subsidiary of
the Company and the rights (charter and statutory), licenses and corporate
franchises of the Company and its subsidiaries; provided that the Company shall
not be required to preserve any such existence (except of the Company), right,
license or franchise if the Board of Directors of the Company or a duly
authorized officer of the Company shall determine that the preservation thereof
is no longer desirable in the conduct of the business of the Company or such
subsidiary and that the loss thereof is not disadvantageous in any material
respect to the Holders.
SECTION 4.11. SEC Reports; Reports to Holders. (a) The
Company shall supply without cost to each Holder and shall file with the
Trustee within 15 days after the Company files them with the SEC, copies of the
annual reports and of the information, documents, and other reports (or copies
of such portions of any of the foregoing as the SEC may by rules and
regulations prescribe), if any, which the Company is required to file with the
SEC pursuant to
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44
Section 13 or 15(d) of the Exchange Act. The Company also shall comply with
the other provisions of TIA Section 314(a).
(b) So long as any of the Securities remain outstanding, if the
Company is not required to file reports with the SEC, the Company shall
prepare, for the first three quarters of each fiscal year, quarterly reports
containing: (i) unaudited consolidated financial statements of the Company and
its subsidiaries including, but not limited to, a balance sheet, a statement of
operations, a statement of changes in financial position and all appropriate
notes and (ii) management's discussion and analysis of the quarterly results.
The Company shall also prepare, on an annual basis, complete audited
consolidated financial statements including, but not limited to, the items
referred to in (i) above and a consolidated statement of changes in
stockholders' equity. Such annual reports will also include, to the extent
such information would be required to be filed with the SEC pursuant to Section
13 or 15(d) of the Exchange Act, (1) management's discussion and analysis of
the annual results, (2) a description of the business and properties of the
Company and its subsidiaries focusing on material trends, events and changes
during the year, (3) a description of all transactions with the Company and its
subsidiaries by executive officers, directors, or holders of more than 10% of
any class of equity securities of the Company or any of its subsidiaries, (4) a
description of material litigation or claims against the Company or its
subsidiaries, and (5) a description of any material loss or interference
with the business of the Company and its subsidiaries from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree. All financial
statements herein described shall be prepared in accordance with GAAP
consistently applied (except as otherwise noted therein) and except for changes
with which the Company's independent public accountants concur and except that
quarterly statements may be subject to year-end adjustments and the absence or
incompleteness of footnotes thereto. The Company shall cause a copy of such
reports to be mailed to the Trustee within 60 days after the close of each of
the first three quarters of each fiscal year and within 120 days after the
close of each fiscal year, and promptly following receipt thereof the Trustee
shall cause such reports to be mailed to each of the Holders of the Securities
at such Holder's last address appearing on the register of the Securities.
<PAGE> 51
45
(c) Delivery of such reports, information and documents to
the Trustee is for informational purposes only and the Trustee's receipt of
such shall not constitute constructive notice of any information contained
therein or determinable from information contained therein, including the
Company's compliance with any of its covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officers' Certificates).
SECTION 4.12. Compliance Certificates. (a) The Company
shall deliver to the Trustee, within 60 days after the end of each of its first
three fiscal quarters, an Officers' Certificate stating whether or not the
signers know of any Default or Event of Default that occurred during such
fiscal quarter. If they do know of such a Default or Event of Default, the
certificate shall describe any such Default or Event of Default and its status.
The first certificate to be delivered pursuant to this Section 4.12 shall be
for the first fiscal quarter beginning after the execution of this Indenture.
(b) The Company shall deliver to the Trustee, within 120 days
after the end of each fiscal year of the Company, an Officers' Certificate (one
signatory to which shall be its principal executive officer, principal
financial officer or principal accounting officer) stating that a review of the
activities of the Company and its subsidiaries during the preceding fiscal year
has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed, fulfilled and
complied with its obligations, covenants and conditions under this Indenture,
and further stating, as to each such Officer signing such certificate, that to
the best of such Officer's knowledge the Company has kept, observed, performed,
fulfilled and complied with each and every covenant and condition contained in
this Indenture and is not in default in performance or observance of any of the
terms, provisions and conditions hereof (or, if a Default or Event of Default
shall have occurred, describing all such Defaults or Events of Default of which
he may have knowledge) and that to the best of such Officer's knowledge no
event has occurred and is continuing which is, or after notice or lapse of time
or both would become, an Event of Default, or if such an event has occurred and
is continuing, specifying each such event known to such Officers and the nature
and status thereof.
<PAGE> 52
46
(c) The Company shall deliver to the Trustee within 120 days
after the end of each fiscal year written statements by the Company's
independent certified public accountants stating as to the Company (A) that
their audit examination has included a review of the terms of this Indenture
and the Securities as they relate to accounting matters, and (B) whether, in
connection with their audit examination, any Default or Event of Default has
come to their attention and, if such a Default or Event of Default has come to
their attention, specifying the nature and period of existence thereof;
provided that, without any restriction as to the scope of such audit
examinations, such independent certified public accountants shall not be liable
by reason of any failure to obtain knowledge of any such Default or Event of
Default that would not be disclosed in the course of any audit examination
conducted in accordance with generally accepted auditing standards.
SECTION 4.13. Notice of Defaults. Upon the occurrence of any
Default or Event of Default under this Indenture, the Company, promptly after
it becomes aware thereof, shall deliver to the Trustee an Officers'
Certificate specifying such Default or Event of Default and what action the
Company or the relevant subsidiary of the Company is taking or proposes to take
with respect thereto.
SECTION 4.14. Payment of Taxes and Other Claims. The Company
shall pay or discharge or cause to be paid or discharged, before any penalty
accrues thereon, (i) all material taxes, assessments and governmental charges
levied or imposed upon the Company or any subsidiary of the Company or upon the
income, profits or property of the Company or any subsidiary of the Company and
(ii) all material lawful claims for labor, materials and supplies which, if
unpaid, would by law become a Lien upon the property of the Company or any
subsidiary of the Company; provided that none of the Company or any subsidiary
of the Company shall be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claims the amount, applicability
or validity of which is being contested in good faith by appropriate
proceedings and for which adequate provision has been made or where the failure
to affect such payment or discharge is not adverse in any material respect to
the Holders.
SECTION 4.15. Maintenance of Properties and Insurance. The
Company shall cause all material properties owned by or leased to it or any
subsidiary of the Company
<PAGE> 53
47
and used or useful in the conduct of its business or the business of such
subsidiary to be maintained and kept in normal condition, repair and working
order and supplied with all necessary equipment and shall cause to be made all
necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Company may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times; provided that nothing in this Section 4.15 shall
prevent the Company or any subsidiary of the Company from discontinuing the
use, operation or maintenance of any such properties, or disposing of any of
them, if such discontinuance or disposal is, in the judgment of the Board of
Directors of the Company or the subsidiary concerned, or of any officer (or
other agent employed by the Company or any subsidiary of the Company) of the
Company or such subsidiary having managerial responsibility for any such
property, desirable in the conduct of the business of the Company or any
subsidiary of the Company and if such discontinuance or disposal is not adverse
in any material respect to the Holders.
The Company shall provide or cause to be provided, for itself
and any subsidiaries of the Company, insurance (including appropriate self
insurance) against loss or damage of the kinds customary for corporations
similarly situated and owning like properties, including, but not limited to,
public liability insurance, with reputable insurers or with the government of
the United States of America or an agency or instrumentality thereof, in such
amounts with such deductibles and by such methods as shall be customary for
corporations similarly situated in the industry.
ARTICLE IVA
Unrestricted Subsidiaries
SECTION 4A.01. Unrestricted Subsidiaries. The Company may
designate any Foreign Subsidiary of the Company to be an "Unrestricted
Subsidiary" as provided below in which event such subsidiary and each other
person that is then or thereafter becomes a subsidiary of such subsidiary will
be deemed to be an Unrestricted Subsidiary. "Unrestricted Subsidiary" means
(1) any subsidiary designated as such by the Board of Directors as set forth
below and (2) any subsidiary of an Unrestricted Subsidiary.
<PAGE> 54
48
The Board of Directors may designate any subsidiary of the Company (including
any newly acquired or newly formed subsidiary) to be an Unrestricted Subsidiary
unless such subsidiary owns any capital stock of, or owns or holds any Lien on
any property of, any other subsidiary of the Company which is not a subsidiary
of the subsidiary to be so designated or otherwise an Unrestricted Subsidiary,
provided that either (A) the subsidiary to be so designated has total assets of
$5,000 or less or (B) if such subsidiary has assets greater than $5,000, the
Investment resulting from such designation would be permitted under Section
4.02. The Board of Directors may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided, however, that immediately after giving effect
to such designation (x) the Company could incur $1.00 of additional
Indebtedness under Section 4.03 and (y) no Default shall have occurred and be
continuing. Any such designation by the Board of Directors shall be evidenced
to the Trustee by filing with the Trustee a copy of the Board Resolution giving
effect to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing provisions, both within 15 days
following such designation.
ARTICLE V
Merger, etc.
SECTION 5.01. When Company May Merge, etc. The Company shall
not consolidate or merge with or into, or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its assets to, any person
unless: (1) the person formed by or surviving any such consolidation or merger
(if other than the Company), or to which such sale, assignment, transfer,
lease, conveyance or disposition has been made, is a corporation organized and
existing under the laws of the United States of America, any state thereof or
the District of Columbia; (ii) the corporation formed by or surviving any such
consolidation or merger (if other than the Company), or to which such sale,
assignment, transfer, lease, conveyance or disposition has been made, assumes
by supplemental indenture satisfactory in form to the Trustee all the
obligations of the Company under the Securities and this Indenture; (iii)
immediately after such transaction, and giving effect thereto, no Default or
Event of Default has occurred and is continuing; (iv) the Company or any
corporation formed by or surviving any such consolidation or merger, or to
which such sale, assignment, transfer, lease, conveyance or disposition has
been made,
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49
has Consolidated Adjusted Net Worth (immediately after the transaction and
giving effect thereto, excluding any write-ups of assets resulting from such
consolidation or merger) at least equal to the Consolidated Adjusted Net Worth
of the Company immediately preceding the transaction; (v) immediately
after such transaction and giving effect thereto, the Company or any
corporation formed by or surviving any such consolidation or merger, or to
which such sale, assignment, transfer, lease, conveyance or disposition shall
have been made, shall be able to incur an additional $1.00 of Indebtedness
pursuant to clause (b) of Section 4.03; and (vi) the Company has delivered to
the Trustee (A) an Officers' Certificate (attaching the calculation to
demonstrate compliance with clauses (iv) and (v) above) and an Opinion of
Counsel, each stating that such consolidation, merger or transfer and such
supplemental indenture comply with this Section 5.01 and that all conditions
precedent relating to such transaction have been complied with, and (B) a
certificate from the Company's independent certified public accountants,
stating that the Company has made the calculations required by clauses (iv) and
(v) above.
SECTION 5.02. Successor Corporation Substituted. Upon any
consolidation or merger, or any sale, assignment, transfer, lease, conveyance
or other disposition of all or substantially all the assets of the Company in
accordance with Section 5.01, the successor corporation formed by such
consolidation or into which the Company is merged or to which such sale,
assignment, transfer, lease, conveyance or other disposition is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor
corporation had been named as the Company herein. In the event of any such
sale or conveyance, but not any such lease, the Company or any successor
corporation which thereafter shall have become such in the manner described in
this Article V shall be discharged from all obligations and covenants under
this Indenture and the Securities and may be dissolved and liquidated.
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ARTICLE VI
Defaults and Remedies
SECTION 6.01. Events of Default. An "Event of Default"
occurs if:
(i) the Company defaults in the payment of interest on any
Security when it becomes due and payable and such default continues
for a period of 30 days, whether or not such payment shall be
prohibited by the provisions of Article X hereof;
(ii) the Company defaults in the payment of the principal of
any Security when the same becomes due and payable at maturity, upon
acceleration, redemption or otherwise, whether or not such payment
shall be prohibited by the provisions of Article X hereof;
(iii) the Company fails to comply with any of its other
agreements or covenants in, or provisions of, the Securities or this
Indenture and the Default continues for the period and after the
notice specified below;
(iv) any Indebtedness of the Company or a Significant
Subsidiary of the Company for borrowed money (or the payment of which
is guaranteed by the Company or any Significant Subsidiary) having an
outstanding principal amount of $25,000,000 or more in the
aggregate, whether such Indebtedness now exists or shall hereafter be
created, is declared to be due and payable prior to its stated
maturity or failure by the Company or any Significant Subsidiary to
pay the final scheduled principal installment in an amount of at least
$25,000,000 in respect of any such Indebtedness on the stated maturity
date thereof (after giving effect to any extension of such maturity
date by the holder of such Indebtedness and after the expiration of
any grace period in respect of such final scheduled principal
installment contained in the instrument under which such Indebtedness
is outstanding); provided that it shall not be an Event of Default
under this clause (iv) if such Indebtedness which has been declared
due and payable prior to its stated maturity is Indebtedness of a
subsidiary the payment of which is guaranteed by the Letters of Credit;
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(v) a final judgment or final judgments for the payment of
money are entered by a court of competent jurisdiction against the
Company or any subsidiary of the Company and such judgment remains
undischarged and unbonded for a period (during which execution shall
not be effectively stayed) of 60 days after judgment is entered;
provided that the aggregate of all such judgments exceeds $25,000,000;
(vi) the Company or any Significant Subsidiary of the Company,
pursuant to or within the meaning of any Bankruptcy Law: (A)
commences a voluntary case or proceeding, (B) consents to the entry of
an order for relief against it in an involuntary case or proceeding,
(C) consents to the appointment of a Custodian of it or for all or
substantially all of its property, or (D) makes a general assignment
for the benefit of its creditors; or
(vii) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that: (A) is for relief against the
Company or any Significant Subsidiary of the Company in an involuntary
case or proceeding, (B) appoints a Custodian for the Company or any
Significant Subsidiary of the Company or for all or substantially all
of the Company's or any Significant Subsidiary's property, or (C)
orders the liquidation of the Company or any Significant Subsidiary of
the Company;
and in case of (vii) the order or decree remains unstayed and in effect for 60
days.
The term "Bankruptcy Law" means Title 11 of the U.S. Code or
any similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, sequestrator or
similar official under any Bankruptcy Law.
A Default under clause (iii) of this Section 6.01 is not an
Event of Default until the Trustee notifies the Company in writing, or the
Holders of at least 25% in principal amount of the Securities then outstanding
notify the Company and the Trustee, in writing, of the Default, and the Company
does not cure the Default within 30 days after receipt of the notice; provided
that a Default by the Company with respect to the provisions of either Article
V or XI of this Indenture shall constitute an Event of Default
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immediately upon such notification and without passage of time. The notice
must specify the Default, demand that it be remedied and state that the notice
is a "Notice of Default". Such notice to the Company shall be given by the
Trustee if so requested in writing by the Holders of at least 25% of the
principal amount of the Securities then outstanding.
Except for a Default under Section 6.01(i) or (ii) of this
Indenture, the Trustee shall not be deemed to know of a Default unless a Trust
Officer has actual knowledge of such Default or receives written notice of such
Default with specific reference to such Default.
SECTION 6.02. Acceleration. Subject to Article X, if an
Event of Default (other than an Event of Default specified in clause (vi) or
(vii) of Section 6.01) occurs and is continuing, the Trustee or the Holders of
at least 25% of the principal amount of the Securities then outstanding, by
written notice to the Company (and the Agent Bank, so long as the Indebtedness
under the Senior Credit Agreements is outstanding) (and the Senior Subordinated
Notes Trustee, so long as the Indebtedness under the Senior Subordinated Notes
is outstanding) may declare due and payable 100% of the principal amount of the
Securities plus any accrued interest to the date of payment. Upon a
declaration of acceleration, such principal and accrued interest to the date of
such acceleration shall be due and payable upon the first to occur of (i) an
acceleration under the Senior Credit Agreements (or any refunding or
refinancing thereof), or (ii) five Business Days after notice of such
declaration is given to the Company (and the Agent Bank, so long as the
Indebtedness under the Senior Credit Agreements is outstanding) (and the Senior
Subordinated Notes Trustee, so long as the Indebtedness under the Senior
Subordinated Notes is outstanding); provided that, if the Event of Default
giving rise to such acceleration is cured before the earlier to occur of (i) or
(ii), such notice of acceleration and its consequences shall be deemed
rescinded and annulled. In the event of a declaration of acceleration under
this Indenture because an Event of Default set forth in Section 6.01(iv) has
occurred and is continuing, such declaration of acceleration shall be
automatically annulled if the Holders of the Indebtedness which is the subject
of such Event of Default have rescinded their declaration of acceleration in
respect of such Indebtedness within 90 days thereof or all amounts payable in
respect of such Indebtedness have been paid and such
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Indebtedness has been discharged during such 90-day period and if (i) the
annulment of such acceleration would not conflict with any judgment or decree
of a court of competent jurisdiction, (ii) all existing Events of Default,
except nonpayment of principal or interest that has been due solely because of
the acceleration, have been cured or waived, and (iii) the Company has
delivered an Officers' Certificate to the Trustee to the effect of clauses (i)
and (ii) of this sentence. If an Event of Default specified in clause (vi) or
(vii) of Section 6.01 with respect to the Company occurs, all unpaid principal
and accrued interest on the Securities shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holder.
The Holders of a majority of the outstanding principal amount
of the Securities by written notice to the Trustee may rescind an acceleration
and its consequences if (i) all existing Events of Default other than the
nonpayment of principal of or interest on the Securities which have become due
solely because of the acceleration, have been cured or waived and (ii) the
rescission would not conflict with any judgment or decree of a court of
competent jurisdiction.
SECTION 6.03. Other Remedies. If an Event of Default occurs
and is continuing, the Trustee may pursue any available remedy by proceeding at
law or in equity to collect the payment of principal of or interest on the
Securities or to enforce the performance of any provision of the Securities or
this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Holder in exercising any
right or remedy accruing upon the Event of Default shall not impair the right
or remedy or constitute a waiver of or acquiescence in the Event of Default.
No remedy is exclusive of any other remedy. All remedies are cumulative to the
extent permitted by law.
SECTION 6.04. Waiver of Past Defaults. Subject to Sections
6.02, 6.07 and 9.02, the Holders of at least a majority in principal amount of
the Securities then outstanding by notice to the Trustee may waive an existing
Default or Event of Default and its consequences, except a Default in the
nonpayment of the principal of or interest on
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any Security as specified in clauses (i) or (ii) of Section 6.01. When a
Default or Event of Default is waived, it is cured and ceases.
SECTION 6.05. Control by Majority. The Holders of at least a
majority in principal amount of the Securities then outstanding may direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee or exercising any trust or power conferred on it. However, the
Trustee may refuse to follow any direction that conflicts with law or this
Indenture, that the Trustee determines may be unduly prejudicial to the rights
of other Holders or that may involve the Trustee in personal liability.
SECTION 6.06. Limitation on Suits. A Holder may not pursue a
remedy with respect to this Indenture or the Securities unless: (i) the Holder
gives to the Trustee written notice of a continuing Event of Default; (ii) the
Holders of at least 25% in principal amount of the Securities then outstanding
make a written request to the Trustee to pursue the remedy; (iii) such Holder
or Holders offer to the Trustee indemnity satisfactory to the Trustee against
any loss, liability, cost or expense; (iv) the Trustee does not comply with the
request within 60 days after receipt of the request and the offer of indemnity;
and (v) during such 60-day period the Holders of at least a majority in
principal amount of the Securities then outstanding do not give the Trustee a
direction inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of
another Holder or to obtain a preference or priority over another Holder.
SECTION 6.07. Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
of a Security to receive payment of principal of or interest on the Security on
or after the respective due dates expressed or provided for in the Security,
subject to the provisions of Article X, 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 the Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of
Default specified in Section 6.01(i) or (ii) occurs and is continuing, the
Trustee may recover judgement in its
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55
own name and as trustee of an express trust against the Company or any other
obligor on the Securities for the whole amount of principal and accrued
interest remaining unpaid on the Securities. The Company or any other obligor
on the Securities shall pay interest on overdue principal (including interest
accruing on or after the filing of any petition in bankruptcy or reorganization
relating to the Company or any other obligor on the Securities, whether or not
a claim for post-filing interest is allowed in such proceeding), and the
Company or any other obligor on the Securities shall pay interest on overdue
installments of interest, to the extent permitted by law (including interest
accruing on or after the filing of any petition in bankruptcy or reorganization
relating to the Company or any other obligor on the Securities, whether or not
a claim for post-filing interest is allowed in such proceeding), in each case
at the rate then borne by the Securities, and such further amount as shall be
sufficient to cover the costs and expense of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee
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 Holders allowed
in any judicial proceeding relative to the Company (or any other obligor upon
the Securities), its creditors or its property and shall be entitled and
empowered to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same, and any
custodian in any such judicial proceedings is hereby authorized by each Holder
to make such payments to the Trustee and, in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 7.07. Nothing herein contained
shall be deemed to authorize the Trustee to authorize or consent to or accept
or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Securities or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Holder in any such proceeding.
Any term or provision of this Section 6.09 to the contrary
notwithstanding, if any judicial proceeding re-
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ferred to above is commenced by or against the Company, and if the Trustee does
not file a proper claim or proof of claim in the form required in such judicial
proceedings prior to 30 days before the expiration of time to file such claims
or proofs, unless such claim is either deemed filed or need not be filed in
order for such claim to be allowed under applicable law, rules or
regulations, then so long as any Senior Indebtedness remains outstanding, (i)
the Agent Bank or a Representative, on behalf of the holders and owners of the
Senior Indebtedness, as their interests may appear, is hereby authorized and
empowered (in its own name or in the name of the Trustee or any Holder or
otherwise), but shall have no obligation, to demand, sue for, collect and
receive every payment or distribution received in respect of any such
proceeding and give acquittance therefor and to file claims and proofs of
claim, as their interests may appear, and (ii) to the extent permitted by
applicable laws, rules or regulations, the Trustee shall duly and promptly
take, on behalf of holders of the Senior Indebtedness, as their interests may
appear, such action as the Agent Bank or such Representative may request (a) to
collect all amounts payable by the Company in respect of the Securities and to
file appropriate claims or proofs of claim in respect of such Securities, (b)
to execute and deliver to the Agent Bank or such Representative such
assignments or other instruments as it may request (other than an instrument
allowing the Agent Bank or such Representative to vote the Securities) in order
to enable it to enforce any and all claims with respect to all amounts payable
in respect of the Securities to which they are entitled under the Indenture,
and (c) to collect and receive any and all payments with respect to all amounts
payable in respect of the Securities to which they are entitled under the
Indenture.
SECTION 6.10. Priorities. If the Trustee collects any money
pursuant to this Article VI, it shall pay out the money in the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to holders of Senior Indebtedness in accordance with
Article X hereof;
THIRD: to Holders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or
priority of any kind, according
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to the amounts due and payable on the Securities for principal and
interest, respectively; and
FOURTH: to the Company or any other obligors on the
Securities, as their interests may appear, or as a court of competent
jurisdiction may direct.
The Trustee, upon prior written notice to the Company, may fix
a record date and payment date for any payment to Holders pursuant to this
Section 6.10.
SECTION 6.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as a Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees and expenses,
against any party litigant in the suit, having due regard to the merits and
good faith of the claims or defenses made by the party litigant. This Section
6.11 does not apply to a suit by the Trustee, a suit by a Holder pursuant to
Section 6.07 or a suit by Holders of more than 10% in principal amount of the
Securities then outstanding.
SECTION 6.12. Parties May Be Restored to Former Position and
Rights in Certain Circumstances. In the event the Trustee shall have proceeded
to enforce any right under this Indenture by suit, foreclosure or otherwise and
such proceedings shall have been discontinued or abandoned for any reason, or
shall have been determined adversely to the Trustee, then in every such case,
the Company and the Trustee shall be restored without further act to their
respective former positions and rights hereunder, and all rights, remedies and
powers of the Trustee shall continue as though no such proceedings had been
taken, except to the extent determined in litigation adversely to the Trustee.
ARTICLE VII
Trustee
SECTION 7.01. Duties of Trustee. (a) If an Event of Default
has occurred and is continuing, the Trustee shall exercise such of the rights
and powers vested in it by this Indenture, and use the same degree of care and
skill in
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their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee need perform only those duties that are specifically set forth
in this Indenture and no implied covenants or obligations shall be read into
this Indenture against the Trustee, and (2) in the absence of bad faith on its
part, the Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of this
Indenture. However, in the case of any such certificates or opinions which by
any provision hereof are specifically required to be furnished to the Trustee,
the Trustee shall examine the certificates and opinions to determine whether or
not, on their face, 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 wilful
misconduct except that: (1) this paragraph does not limit the effect of
paragraph (b) of this Section 7.01, (2) the Trustee shall not be liable for any
error of judgment made in good faith by a Trust Officer or other officer,
unless it is proved that the Trustee was negligent in ascertaining the
pertinent facts, and (3) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) 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), (c) and (e) of this Section 7.01.
(e) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or incur any liability. The Trustee may refuse
to perform any duty or exercise any right or power unless it receives
indemnity satisfactory to it against any loss, liability, cost or expense
(including, without limitation, reasonable fees of counsel).
(f) The Trustee shall not be obligated to pay interest on any
money received by it unless otherwise agreed in writing with the Company.
Money held in trust by the
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Trustee need not be segregated from other funds except to the extent required
by law.
SECTION 7.02. Rights of Trustee. (a) The Trustee may rely
on any document believed by it to be genuine and to have been signed or
presented by the proper person. The Trustee need not investigate any fact or
matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on the Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through attorneys and agents and
shall not be responsible for the misconduct or negligence of any attorney or
agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes
or omits to take in good faith which it believes to be authorized or within the
rights or powers conferred upon it by this Indenture.
(e) The Trustee may consult with counsel of its selection and
the advice of such counsel as to matters of law shall be full and complete
authorization and protection in respect of any action taken, omitted or
suffered by it hereunder in good faith and in accordance with the advice or
opinion of such counsel.
(f) Unless otherwise specifically provided in this Indenture,
any demand, request, direction or notice from the Company shall be sufficient
if signed by an Officer of the Company.
SECTION 7.03. Individual Rights of Trustee. The Trustee in
its individual or any other capacity may become the owner or pledgee of
Securities and may otherwise deal with the Company or an Affiliate of the
Company with the same rights it would have if it were not Trustee. Any Agent
may do the same with like rights. However, the Trustee is subject to Sections
7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee makes no
representation as to the validity or adequacy of this Indenture, the
Securities; it shall not be accountable for the Company's use of the proceeds
from the Securities,
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or any money paid to the Company upon the Company's direction under any
provision hereof; it shall not be responsible for the use or application of any
money received by any Paying Agent other than the Trustee; and it shall
not be responsible for the recitals herein and in the Securities or any other
statement of the Company in this Indenture or any statement in the Securities
other than its certificate of authentication.
SECTION 7.05. Notice of Defaults. If a Default or Event of
Default occurs and is continuing and if it is known to the Trustee, the Trustee
shall mail to Holders a notice of the Default or Event of Default within 90
days after the occurrence thereof. Except in the case of a Default or Event of
Default in payment of any Security (including any failure to make any mandatory
redemption payment required hereunder), the Trustee may withhold the notice if
and so long as it in good faith determines that withholding the notice is in
the interests of the Holders.
SECTION 7.06. Reports by Trustee to Holders. Within 60 days
after each June 15 beginning with June 15, 1997, the Trustee shall mail to
Holders a brief report dated as of such reporting date that complies with TIA
Section 313(a) (but if no event described in TIA Section 313(a) has occurred
within the twelve months preceding the reporting date, no report need be
transmitted). Commencing at such time, the Trustee also shall comply with TIA
Section 313(b)(2). The Trustee shall also transmit reports required by TIA
Section 313 by mail as required by TIA Section 313(c).
A copy of each report at the time of its mailing to Holders
shall be filed with the SEC, if required, and each stock exchange, if any, on
which the Securities are listed. The Company shall promptly notify the Trustee
when the Securities are listed on any stock exchange.
SECTION 7.07. Compensation and Indemnity. The Company shall
pay to the Trustee from time to time such compensation as shall be agreed in
writing between the Company and the Trustee for its services hereunder. If the
Trustee acts as Paying Agent pursuant to Section 2.03 hereof, the Company shall
pay the Trustee additional compensation for so acting as paying agent. 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 by it,
including in particu-
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61
lar, but without limitation, those incurred in connection with the enforcement
of any remedies hereunder. Such expenses may include the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel.
Except as set forth in the next paragraph, the Company shall
indemnify and hold harmless each of the Trustee and any predecessor Trustee,
its directors, officers, employees and agents against any and all loss, damage,
claim, liability, cost, including taxes (other than taxes based on the income
of the Trustee), or expense (including, without limitation, fees and expenses
of counsel) incurred by it arising out of or in connection with the acceptance
or administration of the trust under this Indenture, including without
limitation the costs and expenses of defending itself against any claim of
liability in connection with the exercise or performance of, or failure to
exercise or perform, any of its powers or duties hereunder. The Trustee shall
notify the Company promptly of any claim for which it may seek indemnity. The
Company shall defend such claim and the Trustee shall cooperate in such
defense. The Trustee may have separate counsel and the Company shall pay the
reasonable fees and expenses of such counsel.
The Company need not reimburse any expense or indemnify against any loss,
liability, cost or expense incurred by the Trustee through negligence, wilful
misconduct or bad faith.
To secure the Company's payment obligations in this Section,
the Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee, except that held in trust to pay the
principal of and interest on particular Securities. Such obligations shall
survive the satisfaction and discharge of the Indenture.
When the Trustee incurs expenses or renders services after an
Event of Default specified in clause (vi) or (vii) of Section 6.01 occurs, the
expenses and the compensation for the services are intended to constitute
expenses of administration under any Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. A resignation or
removal of the Trustee and appointment of a successor Trustee shall become
effective only upon the successor
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Trustee's acceptance of appointment as provided in this Section.
The Trustee may resign and be discharged from the trust hereby
created by so notifying the Company. 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 may remove the Trustee if:
(i) the Trustee fails to comply with Section 7.10 or TIA Section 310; (ii) the
Trustee is adjudged a bankrupt or an insolvent or an order for relief is
entered with respect to the Trustee under any Bankruptcy Law; (iii) a Custodian
or public officer takes charge of the Trustee or its property; or (iv) the
Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of the Trustee for any reason, the Company shall promptly appoint a
successor Trustee. The Trustee shall be entitled to payment of its fees and
reimbursement of its expenses while acting as Trustee. Within one year after
the successor Trustee takes office, the Holders of at least a majority in
principal amount of then outstanding Securities may appoint a successor Trustee
to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 30 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holders of at least 10% in principal amount of the then
outstanding Securities may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
Any Holder may petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor Trustee if:
(i) the Trustee fails to comply with Section 7.10 or TIA Section 310; (ii) the
Trustee is adjudged a bankrupt or an insolvent or an order for relief is
entered with respect to the Trustee under any Bankruptcy Law; (iii) a Custodian
or public officer takes charge of the Trustee or its property; or (iv) the
Trustee becomes incapable of acting.
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
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Trustee under this Indenture. The Company shall mail a notice of the successor
Trustee's succession to Holders. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, subject to the
lien provided for in Section 7.07. Notwithstanding replacement of the Trustee
pursuant to this Section 7.08, the Company's obligations under Section 7.07
hereof shall continue for the benefit of the retiring Trustee with respect to
expenses, losses and liabilities incurred by it prior to such replacement.
SECTION 7.09. Successor Trustee by Merger, Etc. Subject to
Section 7.10, if the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation or national banking association, the successor entity without any
further act shall be the successor Trustee. In case any Securities have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation of 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.
SECTION 7.10. Eligibility; Disqualification. There shall at
all times be a Trustee hereunder which shall (i) be a corporation organized and
doing business under the laws of the United States of America or of any state
thereo for the District of Columbia, (ii) be authorized under such laws to
exercise corporate trust powers, (iii) be subject to supervision or examination
by Federal or state authority or a District of Columbia authority and (iv) have
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition.
Subject to the preceding paragraph, this Indenture shall
always have a Trustee who satisfies the requirements of TIA Section 310(a)(1)
and (5). The Trustee is subject to TIA Section 310(b).
SECTION 7.11. Preferential Collection of Claims Against the
Company. The Trustee is subject to 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 VIII
Discharge of Indenture
SECTION 8.01. Discharge of Liability on Securities;
Defeasance. (a) When (i) the Company delivers to the Trustee all outstanding
Securities (other than Securities replaced pursuant to Section 2.07, it being
understood that such Securities are no longer outstanding) for cancellation or
(ii) all outstanding Securities have become due and payable, and the Company
irrevocably deposits with the Trustee funds or U.S. Government Obligations
sufficient (without reinvestment thereof) to pay at maturity all outstanding
Securities, including all interest thereon to the date of such deposit (in the
case of Securities which have become due and payable) or to the stated maturity
or Redemption Date, as the case may be (other than Securities replaced pursuant
to Section 2.07, it being understood that such Securities are no longer
outstanding), and if in either case the Company pays all other sums payable
hereunder by the Company, then this Indenture shall, subject to Sections
8.01(c), 8.02 and 8.06, cease to be of further effect. The Trustee shall
acknowledge satisfaction and discharge of this Indenture on demand of the
Company accompanied by an Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent to the defeasance and discharge of the
Securities as contemplated by this Article VIII have been complied with, and at
the cost and expense of the Company.
(b) Subject to Sections 8.01(c), 8.02 and 8.06, the Company
at any time may terminate (i) all its obligations under the Securities and this
Indenture ("legal defeasance option") or (ii) its obligations under Sections
4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09 and 11.01 (the "covenant
defeasance option"). The Company may exercise its legal defeasance option
notwithstanding its prior exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment
of the Securities may not be accelerated because of an Event of Default. If
the Company exercises its covenant defeasance option, payment of the Securities
may not be accelerated because of an Event of Default arising from a violation
of any of Sections 4.02 through 4.09 or 11.01.
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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 clause (a) or the exercise of the legal
defeasance option as set forth above, the Company's obligations in Sections
2.03, 2.04, 2.05, 2.06, 2.07, 2.13, 7.07, 7.08, 8.04, 8.05 and 8.06 shall
survive until the Securities have been paid in full. Thereafter, the Company's
obligations in Sections 7.07, 8.04 and 8.05 shall survive.
SECTION 8.02 Conditions to Defeasance. The Company may
exercise its legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee
for the benefit of the Holders money or U.S. Government Obligations
maturing as to principal of and interest in such amounts and at such
times as are sufficient to pay principal of, premium, if any, and
interest on the then outstanding Securities to maturity or redemption,
as the case may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and
without reinvestment on the deposited U.S. Government Obligations plus
any deposited money without investment will provide cash at such
times and in such amounts as will be sufficient to pay principal of,
premium, if any, and interest when due on all the Securities to
maturity or redemption, as the case may be;
(3) 123 days pass after the deposit is made and during the
123-day period no Default specified in Section 6.01(vi) or (vii) with
respect to the Company occurs which is continuing at the end of the
period;
(4) no Default has occurred and is continuing on the date of
such deposit and after giving effect thereto;
(5) the deposit does not constitute a default under any other
agreement binding on the Company and is not prohibited by Article X;
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(6) in the case of the exercise of its legal defeasance
option, the Company shall have delivered to the Trustee an Opinion of
Counsel or the Company shall have received from, or there has been
published by, the Internal Revenue Service, a ruling, in each case
stating that, based on Federal income tax laws then in effect, Holders
shall not recognize income, gain or loss for Federal income tax
purposes as a result of the Company's exercise of such option and
shall be subject to Federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such
option had not been exercised; and
(7) the Company delivers to the Trustee promptly after the end
of the period referred to in clause (3) above an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
to the defeasance and, in the case of the legal defeasance option, the
discharge of the Securities as contemplated by this Article VIII, have
been complied with.
SECTION 8.03. Application of Trust Money. The Trustee shall
hold in trust the money or U.S. Government Obligations deposited with it
pursuant to this Article VIII. It shall apply the deposited money and the
money from U.S. Government Obligations through the Paying Agent and in
accordance with this Indenture to the payment of principal of and interest on
the Securities. Money and U.S. Government Obligations held in trust are not
subject to Article X.
SECTION 8.04. Repayment to Company. The Trustee and the
Paying Agent shall promptly pay to the Company upon written request any excess
money or securities held by them at any time, provided that such request need
not be honored if to do so would require the liquidation of any U.S. Government
Obligations held pursuant to this Article.
Subject to any applicable abandoned property law, the Trustee
and the Paying Agent shall pay to the Company upon written request of the
Company any money held by it for the payment of principal of or interest on the
Securities that remains unclaimed for two years, and, thereafter, Holders
entitled to the money must look to the Company for payment as general
creditors.
SECTION 8.05. Indemnity for Government Obligations. The
Company shall pay and shall indemnify the Trustee against any tax, fee or other
charge imposed on or
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assessed against deposited U.S. Government Obligations or the principal and
interest received on such U.S. Government Obligations.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent
is unable to apply any money in accordance with this Article VIII by reason of
any legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's obligations under this Indenture and the Securities
shall be revived and reinstated as though no deposit had occurred pursuant to
this Article VIII until such time as the Trustee or Paying Agent is permitted
to apply all such money or U.S. Government Obligations in accordance with this
Article VIII; provided, however, that, if the Company has made any payment of
principal of, or interest on, any Security because of the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Securities to receive such payment from the money or U.S. Government
Obligations held by the Trustee or Paying Agent.
ARTICLE IX
Amendments
SECTION 9.01. Without Consent of Holders. The Company and
the Trustee may amend this Indenture or the Securities without the consent of
any Holder: (i) to cure any ambiguity, defect or inconsistency or make any
change required to qualify the Indenture under the TIA; provided that such
change does not adversely affect the rights hereunder of any Holder; (ii) to
comply with Section 5.01; (iii) to provide for uncertificated Securities in
addition to certificated Securities; or (iv) to make any change that does not
adversely affect the rights hereunder of any Holder.
SECTION 9.02. With Consent of Holders. The Company and the
Trustee may amend this Indenture or the Securities or waive compliance in any
particular instance with any provision of this Indenture or the Securities, in
each case with the written consent of the Holders of at least a majority in
principal amount of the then outstanding Securities. Upon the request of the
Company, accompanied by a Board Resolution of the Company authorizing the
execution of any such supplemental indenture, and upon the filing with
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the Trustee of evidence of the consent of the Holders as aforesaid, the
Trustee, subject to Section 9.06, shall join with the Company in the execution
of such supplemental indenture.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment or waiver under this Section becomes
effective, the Company shall mail to the Holder of each Security affected
thereby and to the Agent Bank a notice briefly describing the amendment or
waiver. Any failure of the Company to mail such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of any such
amendment or waiver.
Without the consent of each Holder affected, an amendment or
waiver under this Section may not: (i) reduce the principal amount of
Securities whose Holders must consent to an amendment or waiver; (ii) reduce
the rate of or change the time for payment of interest, including Defaulted
Interest, on any Security; (iii) reduce the principal of or change the fixed
maturity of any Security or alter the redemption provisions with respect
thereto; (iv) make any Security payable in money other than that stated in the
Security; (v) make any change in Section 6.04, 6.07 or this sentence; (vi) make
any change in Article X that affects the rights of any Holder; or (vii) release
the Company from any of its Obligations hereunder.
SECTION 9.03. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Securities shall be set forth in a
supplemental indenture that complies with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents. Until an
amendment or waiver becomes effective, a consent to it by a Holder of a
Security is a continuing consent by the Holder and every subsequent Holder of a
Security or portion of a Security that evidences the same debt as the
consenting Holder's Security, even if notation of the consent is not made on
any Security. However, any such Holder or subsequent Holder may revoke the
consent as to his Security or portion of a Security if the Trustee receives
written notice of revocation before the date the amendment or waiver becomes
effective. An amendment or waiver becomes effective
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in accordance with its terms and thereafter binds every Holder.
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 or waiver. If a record date is fixed, then notwithstanding the
provisions 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 or waiver or to revoke
any consent previously given, whether or not such persons continue to be
Holders after such record date. The consent shall expire 90 days after such
record date unless prior to such date it becomes effective.
SECTION 9.05. Notation on or Exchange of Securities. The
Trustee may place an appropriate notation about an amendment or waiver on any
Security thereafter authenticated. The Company in exchange for all Securities
may issue, and the Trustee shall authenticate, new Securities that reflect the
amendment or waiver.
SECTION 9.06. Trustee To Sign Amendments, etc. The Trustee
shall sign any amendment authorized pursuant to this Article IX if the
amendment does not adversely affect the rights, duties, liabilities or
immunities of the Trustee. If it does, the Trustee may, but need not sign it.
In signing or refusing to sign such amendment, the Trustee shall be entitled to
receive and shall be fully protected in relying upon an Officers' Certificate
and an Opinion of Counsel as conclusive evidence that such amendment is
authorized or permitted by this Indenture.
ARTICLE X
Subordination
SECTION 10.01. Securities Subordinated to Senior
Indebtedness. Notwithstanding the provisions of Sections 6.02 and 6.03 hereof,
the Company covenants and agrees, and the Trustee and each Holder of the
Securities by his acceptance thereof likewise covenants and agrees, that all
payments of the principal of and interest on the Securities by the Company
shall be subordinated in accordance with the provisions of this Article X to
the prior and
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indefeasible payment in full, in cash or cash equivalents, of all Obligations
with respect to Senior Indebtedness.
SECTION 10.02. Priority and Payment Over of Proceeds in
Certain Events. (a) Upon any payment or distribution of assets or securities
of the Company, as the case may be, of any kind or character, whether in cash,
property or securities, upon any dissolution or winding up or total or partial
liquidation or reorganization of the Company, whether voluntary or involuntary
or in bankruptcy, insolvency, receivership or other proceedings, all
Obligations with respect to Senior Indebtedness shall first be indefeasibly
paid in full in cash, or payment provided for in cash or cash equivalents,
before the Holders or the Trustee on behalf of the Holders shall be entitled to
receive any payment of principal of or interest on the Securities or
distribution of any assets or securities. Before any payment may be made by
the Company of the principal of or interest on the Securities pursuant to the
provisions of the previous sentence, and upon any such dissolution or winding
up or liquidation or reorganization, any payment or distribution of assets or
securities of the Company of any kind or character, whether in cash, property
or securities, to which the Holders or the Trustee on their behalf would be
entitled, except for the provisions of this Article X, shall be made by the
Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent
or other person making such payment or distribution, directly to the holders of
the Senior Indebtedness or their Representatives to the extent necessary to pay
all such Senior Indebtedness in full after giving effect to any concurrent
payment or distribution to the holders of such Senior Indebtedness.
(b) No direct or indirect payment by or on behalf of the
Company of principal of or interest on the Securities whether pursuant to the
terms of the Securities or upon acceleration or otherwise shall be made if, at
the time of such payment, (i) there exists a default in the payment of any
Obligations with respect to Senior Indebtedness or the maturity of such Senior
Indebtedness has been accelerated or (ii) any judicial proceeding shall be
pending with respect to a default on Senior Indebtedness (and the Trustee has
received written notice thereof), and such default shall not have been cured or
waived or the benefits of this sentence waived by or on behalf of the holders
of such Senior Indebtedness. In addition, during the continuance of any other
event of default with respect to (i) the Senior Credit Agreements pursuant to
which the maturity thereof may be
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accelerated, upon (a) receipt by the Trustee of written notice from the Agent
Bank (or any Representative of any Senior Indebtedness under any agreement
which refinances or refunds any portion of the Indebtedness outstanding under
the Senior Credit Agreements so long as amounts outstanding under such
agreement are in excess of $50,000,000), or (b) if such event of default
results from the acceleration of the Securities, on the date of such
acceleration, no such payment may be made by the Company upon or in respect of
the Securities for a period ("Payment Blockage Period") commencing on the
earlier of the date of receipt of such notice or the date of such acceleration
and ending 119 days thereafter (unless such Payment Blockage Period shall be
terminated by written notice to the Trustee from the Agent Bank and any
Representative of any Senior Indebtedness under any agreement which refinances
or refunds any portion of the Indebtedness outstanding under the Senior Credit
Agreements so long as amounts outstanding under such agreement are in excess of
$50,000,000) or (ii) any other Specified Senior Indebtedness upon receipt by
the Company of written notice from the Representative for the holders of such
Specified Senior Indebtedness, no such payment may be made by the Company upon
or with respect to the Securities for a Payment Blockage Period commencing on
the date of the receipt of such notice and ending 119 days thereafter (unless
such Payment Blockage Period shall be terminated by written notice to the
Company from such Representative commencing such Payment Blockage Period).
Notwithstanding anything herein to the contrary, in no event will any one
Payment Blockage Period extend beyond 179 days from the date the payment on the
Securities was due. Not more than one Payment Blockage Period may be commenced
with respect to the Securities during any period of 360 consecutive days;
provided that as long as amounts outstanding under the Senior Credit Agreements
or any agreement which refinances or refunds any portion of the Indebtedness
outstanding under the Senior Credit Agreements are in excess of $50,000,000,
the commencement of a Payment Blockage Period by the holders of the Specified
Senior Indebtedness other than the Senior Credit Agreements shall not bar the
commencement of a Payment Blockage Period by the Agent Bank within such period
of 360 days. For all purposes of this Section 10.02(b), no event of default
which existed or was continuing on the date of the commencement of any Payment
Blockage Period with respect to the Specified Senior Indebtedness initiating
such Payment Blockage Period shall be, or be made, the basis for the
commencement of a second Payment Blockage Period by the Representative of such
Specified Senior Indebtedness whether
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or not within a period of 360 consecutive days unless such event of default
shall have been cured or waived for a period of not less than 90 consecutive
days.
If payments with respect to both the Securities and Senior
Indebtedness become due on the same day, then all Obligations with respect to
such Senior Indebtedness due on that date shall first be paid in full before
any payment is made with respect to the Securities.
(c) In the event that, notwithstanding the foregoing
provision prohibiting such payment or distribution, the Trustee or any Holder
shall have received any payment on account of the principal of or interest on
the Securities at a time when such payment is prohibited by this Section 10.02
and before all Obligations with respect to Senior Indebtedness are paid in
full, then, and in such event (subject to the provisions of Section 10.08),
such payment or distribution shall be received and held in trust for the
holders of Senior Indebtedness and, upon notice to the Trustee from the
Representative of the holders of the Senior Indebtedness and pursuant to the
directions of such Representative, shall be paid over or delivered to the
holders of the Senior Indebtedness remaining unpaid to the extent necessary to
pay in full in cash or cash equivalents all Obligations with respect to such
Senior Indebtedness in accordance with its terms after giving effect to any
concurrent payment or distribution to the holders of such Senior Indebtedness.
If there occurs an event referred to in Section 10.02(a) or
(b), the Company shall promptly give the Trustee an Officers' Certificate (on
which the Trustee may conclusively rely) identifying all holders of Senior
Indebtedness and the principal amount of Senior Indebtedness then outstanding
held by each such holder and stating the reasons why such Officers' Certificate
is being delivered to the Trustee.
Nothing contained in this Article X 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 Section 6.02 or to pursue any rights or
remedies hereunder; provided that all Obligations with respect to Senior
Indebtedness then or thereafter due or declared to be due shall first be paid
in full before the Holders or the Trustee are entitled to receive any payment
from the Company of principal of or interest on the Securities.
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Upon any payment or distribution of assets or securities
referred to in this Article X, the Trustee and the Holders shall be entitled to
rely upon any order or decree of a court of competent jurisdiction in which
such dissolution, winding up, liquidation or reorganization proceedings are
pending and upon a certificate of the receiver, trustee in bankruptcy,
liquidating trustee, agent or other person making any such payment or
distribution, delivered to the Trustee for the purpose of ascertaining the
persons entitled to participate in such distribution, the holders of Senior
Indebtedness and other Indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article X.
SECTION 10.03. Payments May Be Paid Prior to Dissolution.
Nothing contained in this Article X or elsewhere in this Indenture shall
prevent (i) the Company, except under the conditions described in Section
10.02, from making payments at any time for the purpose of making such payments
of principal of and interest on the Securities, or from depositing with the
Trustee any moneys for such payments, or (ii) without limiting the last
sentence of Section 8.03, the application by the Trustee of any moneys
deposited with it for the purpose of making such payments of principal of and
interest on the Securities, to the Holders entitled thereto unless at least two
Business Days prior to the date upon which such payment would otherwise become
due and payable, the Trustee shall have received the written notice provided
for in Section 10.02(b) or in Section 10.09. The Company shall give prompt
written notice to the Trustee of any dissolution, winding up, liquidation or
reorganization of the Company.
SECTION 10.04. Rights of Holders of Senior Indebtedness Not
To Be Impaired. No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act in good faith by
any such holder, or by any noncompliance by the Company, with the terms and
provisions and covenants herein regardless of any knowledge thereof any such
holder may have or otherwise be charged with.
The provisions of this Article X are intended to be for the
benefit of, and shall be enforceable directly by, the holders of the Senior
Indebtedness.
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SECTION 10.05. Authorization to Trustee To Take Action To
Effectuate Subordination. Each Holder of Securities by his acceptance thereof
authorizes and directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate, as between the holders of Senior
Indebtedness and the Holders, the subordination as provided in this Article X
and appoints the Trustee his attorney-in-fact for any and all such purposes.
SECTION 10.06. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders or owners of
Senior Indebtedness, the distribution may be made and the notice given to their
Representative.
SECTION 10.07. Subrogation. Subject to the subrogation
rights of the holders of the Subordinated Notes provided for in the indenture
relating thereto, upon the payment in full of all Obligations in respect of
Senior Indebtedness, the Holders shall be subrogated to the rights of the
holders of such Senior Indebtedness to receive payments or distributions of
assets of the Company to the holders of Senior Indebtedness until the principal
of and interest on the Securities shall be paid in full. For purposes of such
subrogation, no payments or distributions to the holders of the Senior
Indebtedness of any cash, property or securities to which the Holders would be
entitled except for the provisions of this Article X, and no payment over
pursuant to the provisions of this Article X to the holders of Senior
Indebtedness by the Holders, shall, as among the Company, its creditors other
than the holders of Senior Indebtedness and the Holders, be deemed to be a
payment or distribution by the Company to or on account of Senior Indebtedness.
The provisions of this Article X are and are intended solely
for the purpose of defining the relative rights of the Holders, on the one
hand, and the holders of Senior Indebtedness, on the other hand.
If any payment or distribution to which the Holders would
otherwise have been entitled but for the provisions of this Article X shall
have been applied, pursuant to the provisions of this Article X, to the payment
of all amounts payable under Senior Indebtedness, then and in such case, the
Holders, subject to the subrogation rights of the holders of the Subordinated
Notes provided for in the indenture relating thereto, shall be entitled to
receive
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from the holders of such Senior Indebtedness at the time outstanding any
payments or distributions received by such holders of Senior Indebtedness in
excess of the amount sufficient to pay all Obligations in respect of Senior
Indebtedness in full.
SECTION 10.08. Obligations of Company Unconditional. Nothing
contained in this Article X or elsewhere in this Indenture or in any Security
is intended to or shall impair, as between the Company and the Holders, the
obligations of the Company, which are absolute and unconditional, to pay to the
Holders the principal of and interest on the Securities as and when the same
shall become due and payable in accordance with their terms or is intended to
or shall affect the relative rights of the Holders and creditors of the Company
other than the holders of Senior Indebtedness, subject to the subrogation
rights of the holders of the Subordinated Notes provided for in the indenture
relating thereto, nor shall anything herein or therein prevent the Trustee or
any Holder from exercising all remedies otherwise permitted by applicable law
upon Default under this Indenture, subject to the rights, if any, under this
Article X of the holders of such Senior Indebtedness in respect of cash,
property or securities of the Company received upon the exercise of any such
remedy.
The failure to make a payment on account of principal of or
interest on the Securities by reason of any provision of this Article X shall
not be construed as preventing the occurrence of an Event of Default under
Section 6.01.
SECTION 10.09. Trustee Entitled To Assume Payments Not
Prohibited in Absence of Notice. The Company shall give prompt written notice
to the Trustee of any fact known to the Company which would prohibit the making
of any payment to or by the Trustee in respect of the Securities. Neither the
Trustee nor the Paying Agent shall at any time be charged with the knowledge of
the existence of any facts which would prohibit the making of any payment to or
by the Trustee or the Paying Agent, unless and until the Trustee or Paying
Agent shall have received written notice thereof from the Company or one or
more holders of Senior Indebtedness or from any Representative therefor; and,
prior to the receipt of any such written notice, the Trustee or Paying Agent
shall be entitled to assume conclusively that no such facts exist. Unless at
least two Business Days prior to the date on which by the terms of this
Indenture any moneys are to be
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deposited by the Company with the Trustee or any Paying Agent (whether or not
in trust) for any purpose (including, without limitation, the payment of the
principal of or the interest on any Security), the Trustee or Paying Agent
shall have received with respect to such moneys the notice provided for in the
preceding sentence, the Trustee or Paying Agent shall have full power and
authority to receive such moneys and to apply the same to the purpose for which
they were received and shall not be affected by any notice to the contrary
which may be received by it on or after such date. Without limiting the last
sentence of Section 8.03, nothing contained in this Section 10.09 or Section
10.03(ii) shall limit the right of the holders of Senior Indebtedness to
recover payments as contemplated by Section 10.02. The Trustee shall be
entitled to rely on the delivery to it of a written notice by a person
representing himself or itself to be a holder of such Senior Indebtedness (or a
trustee on behalf of, or Representative of, such holder) to establish that such
notice has been given by a holder of such Senior Indebtedness or a trustee or
Representative on behalf of any such holder. In the event that the Trustee
determines in good faith that further evidence is required with respect to the
right of any person as a holder of Senior Indebtedness to participate in any
payment or distribution pursuant to this Article X, the Trustee may request
such person to furnish evidence to the reasonable satisfaction of the Trustee
as to the amount of Senior Indebtedness held by such person, the extent to
which such person is entitled to participate in such payment or distribution
and any other facts pertinent to the rights of such person under this Article
X, and if such evidence is not furnished, the Trustee may defer any payment
which it may be required to make for the benefit of such person pursuant to the
terms of this Indenture pending judicial determination as to the rights of such
person to receive such payment.
The Trustee shall not be deemed to owe any duty to the holders
of Senior Indebtedness and shall not be liable to any such holders if the
Trustee shall in good faith mistakenly pay over or distribute to Holders of
Securities or to the Company or to any other person cash, property or
securities to which any holders of Senior Indebtedness shall be entitled by
virtue of this Article X or otherwise. With respect to the holders of Senior
Indebtedness, the Trustee undertakes to perform or to observe only such of its
covenants or obligations as are specifically set forth in this Article X and no
implied covenants or obligations with
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respect to holders of Senior Indebtedness shall be read into this Indenture
against the Trustee.
SECTION 10.10. Right of Trustee To Hold Senior Indebtedness.
The Trustee and any Agent shall be entitled to all of the rights set forth in
this Article X in respect of any Senior Indebtedness at any time held by it to
the same extent as any other holder of such Senior Indebtedness, and nothing in
this Indenture shall be construed to deprive the Trustee or any Agent of any of
its rights as such holder. Nothing in this Article X shall apply to claims of,
or payments to, this Trustee under or pursuant to Section 7.07.
ARTICLE XI
Right To Require Repurchase
SECTION 11.01. Repurchase of Securities at Option of the
Holder upon Change of Control Triggering Event. (a) Upon the occurrence of a
Change of Control Triggering Event, each Holder of Securities shall have the
right to require that the Company repurchase such Holder's Securities in whole
or in part in integral multiples of $1,000, at a purchase price (the "Purchase
Price") in cash in an amount equal to 101% of the principal amount thereof,
plus accrued and unpaid interest, if any, to the date of purchase, in
accordance with the procedures set forth in Subsections (b) and (c) of this
Section.
(b) Within 30 days following any Change of Control Triggering
Event, the Company shall send by first-class mail, postage prepaid, to the
Trustee and to each Holder of the Securities at his or her address appearing
in the Securities register, a notice stating:
(1) that a Change of Control Triggering Event has occurred and
that such Holder has the right to require the Company to repurchase
such Holder's Securities at the Purchase Price;
(2) the circumstances and relevant facts regarding such Change
of Control Triggering Event (including but not limited to information
with respect to pro forma historical income, cash flow and
capitalization after giving effect to such Change of Control
Triggering Event);
<PAGE> 84
78
(3) a purchase date (the "Purchase Date") which shall be no
fewer than 30 days nor more than 60 days from the date such notice is
mailed or if not a Business Day, the next following Business Day;
(4) the Purchase Price;
(5) the place at which Securities are to be presented and
surrendered for purchase;
(6) that interest accrued to the Purchase Date will be paid
upon such presentation and surrender and that, unless the Company
shall default in payment of the Purchase Price, after said Purchase
Date interest thereon will cease to accrue with respect to any
Securities presented and surrendered for purchase;
(7) that any Security not tendered will continue to accrue
interest;
(8) that Holders of Securities electing to have any Securities
purchased pursuant to a Change of Control Triggering Event will be
required to surrender the Securities to the Paying Agent on the 15th
day prior to the Purchase Date; and
(9) that Holders of Securities whose Securities are being
purchased only in part will be issued new Securities equal in
principal amount to the unpurchased portion of the Securities
surrendered; provided that each Security purchased and each such new
Security issued by the Company shall be, in a principal amount of
$1,000 or integral multiples thereof.
(c) Prior to the mailing by the Company of the notice
described in subsection (b) above and if any Senior Indebtedness under the
Senior Credit Agreements is outstanding, the Company shall either (i) repay in
full all such Senior Indebtedness under the Senior Credit Agreements or offer
to repay in full all such Senior Indebtedness under the Senior Credit
Agreements and repay the Senior Indebtedness of each Bank that has accepted
such offer or (ii) if any such Senior Indebtedness under the Senior Credit
Agreements is not repaid, obtain the requisite consent of the applicable Bank
or Banks under the Senior Credit Agreements, in both cases so as to permit the
repurchase of the Securities pursuant to this Section. The Company shall first
comply with the covenant in the preceding sentence
<PAGE> 85
79
before it shall be required to repurchase Securities pursuant to a Change of
Control Triggering Event; provided, however, that the failure to
repurchase Securities pursuant to a Change of Control Triggering Event because
of the failure to comply with such covenant shall not thereby be excused and
shall constitute a Default pursuant to Section 6.01. A failure to comply with
the covenant referred to in the preceding sentence shall also constitute a
Default pursuant to Section 6.01.
(d) Holders of Securities electing to have such Securities
purchased will be required to give notice thereof no fewer than 15 days before
the Purchase Date and to surrender such Securities to the Paying Agent at the
address specified in the Company's notice by the close of business on the
fifteenth day prior to the Purchase Date. Any such notice and surrender of
Securities for purchase by the Company shall be irrevocable. No such
Securities shall be deemed to have been presented and surrendered until such
Securities are actually received by the Company or its designated agent.
Holders of the Securities whose Securities are purchased only in part will be
issued new Securities equal in principal amount to the unpurchased portion of
the Securities surrendered.
(e) Notwithstanding anything to the contrary herein or in the
Securities, the Company shall not be obligated to give notice to Holders of
Securities or to purchase Securities with respect to more than one Change of
Control Triggering Event.
(f) Notwithstanding any other provisions of this Section,
there shall be no repurchase of any Securities pursuant to this Section if
there has occurred (prior to, on or after the giving, by the Holders of such
Securities, of the required notice) and is continuing an Event of Default or if
such repurchase is prohibited by Article X of this Indenture. The foregoing
shall in no way limit the occurrence of an Event of Default or the right to
demand payment of the Securities upon acceleration thereafter.
SECTION 11.02. Covenant To Comply with Securities Laws upon
Purchase of Securities. In connection with any purchase of Securities under
Section 11.01, the Company shall, to the extent then applicable and required by
law, (i) comply with Rule 13e-4 and Rule 14e-1 (which term, as used herein,
includes any successor provision thereto) under the Exchange Act and (ii)
otherwise comply with all Federal
<PAGE> 86
80
and state securities laws so as to permit the rights and obligations under
Section 11.01 to be exercised in the time and in the manner specified in
Section 11.01.
ARTICLE XII
Miscellaneous
SECTION 12.01. Trust Indenture Act Controls. If and to the
extent that any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by, or with another provision (an "incorporated provision")
included in this Indenture by operation of, Sections 310 to 318, inclusive, of
the TIA, such imposed duties or incorporated provision shall control.
SECTION 12.02. Notices. Any notice or communication to the
Company or the Trustee is duly given if in writing and delivered in person or
mailed by first-class mail to the address set forth below:
If to the Company:
Lear Corporation
21557 Telegraph Road
Southfield, Michigan 48086-5008
Attention of Chief Financial Officer or Treasurer
with a copy to:
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attention of Bruce Toth, Esq.
If to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention of Corporate Trust Trustee Administration
<PAGE> 87
81
The Company or the Trustee by notice to the other may designate additional or
different addresses for subsequent notices or communications.
Any notice or communication to a Holder shall be mailed by
first-class mail to his address shown on the register kept by the Registrar.
Failure to mail a notice or communication to a Holder or any defect in such
notice or communication shall not affect its sufficiency with respect to other
Holders.
If a notice or communication is mailed or sent in the manner
provided above within the time prescribed, it is duly given, whether or not the
addressee receives it, except that notice to the Trustee shall only be
effective upon receipt thereof by the Trustee.
If the Company mails a notice or communication to Holders, it
shall mail a copy to the Trustee and each Agent at the same time.
SECTION 12.03. Communication by Holders with Other Holders.
Holders may communicate pursuant to TIA Section 312(b) with other Holders with
respect to their rights under this Indenture or the Securities. The Company,
the Trustee, the Registrar and anyone else shall have the protection of TIA
Section 312(c).
SECTION 12.04. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Company to the Trustee to
take any action under this Indenture, the Company shall furnish to the Trustee:
(i) an Officers' Certificate (which shall include the statements set forth in
Section 12.05) stating that, in the opinion of the signers, all conditions
precedent and covenants, if any, provided for in this Indenture relating to the
proposed action have been complied with; and (ii) an Opinion of Counsel
reasonably satisfactory to the Trustee (which shall include the statements set
forth in Section 12.05) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been complied with.
SECTION 12.05. Statements Required in Certificate or Opinion.
Each certificate (other than certificates provided pursuant to Section 4.12(b))
or opinion with respect to compliance with a condition or covenant provided for
in this Indenture shall include: (i) a statement that the person making such
certificate or opinion has read and
<PAGE> 88
82
understands such covenant or condition; (ii) 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; (iii) a statement
that, in the opinion of such person, he has made such examination or
investigation as is necessary to enable him to express an informed opinion as
to whether or not such covenant or condition has been complied with; and (iv) a
statement as to whether or not, in the opinion of such person, such condition
or covenant has been complied with.
SECTION 12.06. Rules by Trustee and Agents. The Trustee may
make reasonable rules for action by or for a meeting of Holders. The Registrar
or Paying Agent may make reasonable rules and set reasonable requirements for
its functions.
SECTION 12.07. Legal Holidays. A "Legal Holiday" is a
Saturday, a Sunday or a day on which banking institutions in the City of New
York are not required or authorized to be open. If a payment date is a Legal
Holiday at a place of payment, payment may be made at that place on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue for
the intervening period.
SECTION 12.08. Duplicate Originals. The parties may sign any
number of copies of this Indenture. One signed copy is enough to prove this
Indenture.
SECTION 12.09. Governing Law. The internal laws of the State
of New York shall govern this Indenture and the Securities, without regard to
the conflicts of law rules thereof. Each of the parties hereto agrees to
submit to the jurisdiction of the courts of the State of New York in any action
or proceeding arising out of or relating to this Indenture.
SECTION 12.10. 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 12.11. Successors. All agreements of the Company in
this Indenture and the Securities shall bind their respective successors. All
agreements of the Trustee in this Indenture shall bind its successor.
<PAGE> 89
83
SECTION 12.12. 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.
SECTION 12.13. Counterpart Originals. This Indenture may be
signed in one or more counterparts. Each signed copy shall be an original, but
all of them together represent the same agreement.
<PAGE> 90
84
LEAR CORPORATION,
by
__________________________
Dated:
THE BANK OF NEW YORK, as Trustee,
by
__________________________
Authorized Signatory
Dated:
<PAGE> 91
EXHIBIT A
FORM OF FACE OF SECURITY
No. R-___________ $________________
CUSIP No. 521865 AA 3
LEAR CORPORATION
9-1/2% SUBORDINATED NOTE DUE 2006
LEAR CORPORATION, a Delaware corporation (the "Issuer", which
term includes any successor corporation), promises to pay to
or registered
assigns, the principal sum of
Dollars on July 15, 2006.
Interest Payment Dates: January 15 and July 15.
Record Dates: January 1 and July 1.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof which further provisions shall for all
purposes have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Issuer has caused this Security to be
signed manually or by facsimile by its duly authorized officers and a
facsimile of its corporate seal to be affixed hereto or imprinted hereon.
[SEAL] LEAR CORPORATION,
by
__________________________
Vice President, General
Counsel and Secretary
by
__________________________
Chairman of the Board and
Chief Executive Officer
<PAGE> 92
2
Dated:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities described in the within
mentioned Indenture.
THE BANK OF NEW YORK, as Trustee,
by
__________________________
Authorized Signatory
<PAGE> 93
FORM OF REVERSE OF SECURITY
LEAR CORPORATION
9-1/2% SUBORDINATED NOTE DUE 2006
(1) INTEREST. LEAR CORPORATION, a Delaware corporation (the
"Issuer"), promises to pay interest on the principal amount of this Security at
an interest rate per annum of 9-1/2%.
The Issuer shall pay interest semiannually, on January 15 and
July 15 of each year (each an "Interest Payment Date") commencing January 15,
1997. Interest on the Securities (as defined in the Indenture) shall accrue
from the most recent date to which interest has been paid or, if no interest
has been paid, from July 12, 1996. The Issuer shall pay interest on overdue
principal (including interest accruing on or after the filing of any petition
in bankruptcy or reorganization relating to the Issuer, whether or not a claim
for post-filing interest is allowed in such proceeding) at the rate then borne
by the Securities; it shall pay interest, to the extent permitted by law
(including interest accruing on or after filing of any petition in bankruptcy
or reorganization relating to the Issuer, whether or not a claim for
post-filing interest is allowed in such proceeding), on overdue installments of
interest at the rate then borne by the Securities. Interest shall be computed
on the basis of a 360-day year of twelve 30-day months.
(2) METHOD OF PAYMENT. The Issuer shall pay interest on this
Security (except Defaulted Interest) to the person who is the Holder of this
Security at the close of business on the record date next preceding the
Interest Payment Date (the "Record Date"). The Holder must surrender this
Security to a Paying Agent to collect payments of principal and premium.
Payments of interest may be mailed to the Holder's registered address. The
Issuer shall pay principal and interest in money of the United States that at
the time of payment is legal tender for payment of public and private debts.
The Issuer, however, may pay principal and interest by its check payable in
such money. If a payment date is a Legal Holiday at a place of payment,
payment may be made at that place on the next succeeding day that is not a
Legal Holiday, and no interest on the amount
<PAGE> 94
2
payable on such payment date shall accrue for the intervening period.
(3) PAYING AGENT AND REGISTRAR. Initially, the Trustee shall
act as Paying Agent and Registrar. The Issuer may change any Paying Agent,
Registrar and co-registrar without notice to any Holder. The Issuer or any of
its Affiliates may act in any such capacity.
(4) INDENTURE. This Security is one of the Securities that
may be issued by the Issuer under an Indenture dated as of July 1, 1996 (the
"Indenture"), between the Issuer and the Trustee. The terms of the Securities
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939 (15 U.S.C. Section Section
77aaa-77bbbb) (the "TIA") as in effect on the date of the Indenture. The
Securities are subject to all such terms, and Holders are referred to the
Indenture and such Act for a statement of such terms. All terms used in this
Security which are not defined herein shall have the meanings assigned to them
in the Indenture.
The Indenture imposes certain limitations on the ability of
the Issuer and its Restricted Subsidiaries to, among other things, make certain
Restricted Investments and other Restricted Payments, pay dividends and other
distributions, incur Indebtedness, enter into consensual restrictions upon the
payment of certain dividends and distributions by Restricted Subsidiaries,
enter into or permit certain transactions with Affiliates, create or incur
Liens, make Asset Sales and issue any preferred or preference stock. The
Indenture also imposes limitations on the ability of the Issuer to consolidate
or merge with or into any other person or permit any other person to merge with
or into the Issuer, or sell, convey, assign, transfer, lease or otherwise
dispose of all or substantially all of the assets of the Issuer to any other
person.
The Securities are direct obligations of the Issuer and
limited to $200,000,000 in aggregate principal amount.
(5) OPTIONAL REDEMPTION. On or after July 15, 2001, the
Issuer may redeem the Securities in whole or in part, from time to time, at the
following redemption prices (expressed in percentages of the principal amount
thereof), in each case together with accrued interest, if any, to the
<PAGE> 95
3
Redemption Date. If redeemed during the 12-month period commencing:
<TABLE>
<S> <C>
July 15, 2001 . . . . . . . . . . 104.75%
July 15, 2002 . . . . . . . . . . 103.16%
July 15, 2003 . . . . . . . . . . 101.58%
July 15, 2004 and thereafter . . . . . 100.00%
</TABLE>
(6) CHANGE OF CONTROL. In the event there shall occur any
Change of Control Triggering Event with respect to the Issuer, each Holder of
Securities shall have the right, at such Holder's option but subject to the
conditions set forth in the Indenture, to require the Issuer to purchase on the
Purchase Date all or any part of such Holder's Securities at a purchase price
equal to 101% of the principal amount thereof, together with accrued and unpaid
interest (subject to the right of Holders of record on each Record Date to
receive interest due on the related Interest Payment Date), if any, to the
Purchase Date and in the manner specified in the Indenture.
Notwithstanding anything to the contrary herein or in the
Indenture, the Issuer shall not be obligated to give notice to Holders of
Securities or to purchase Securities with respect to more than one Change of
Control Triggering Event.
(7) OFFER TO PURCHASE IN CONNECTION WITH SALES OF ASSETS. If
there are certain Net Cash Proceeds from Asset Sales, Section 4.08 of the
Indenture contains provisions under which the Issuer is required to commence an
offer to purchase Securities at a purchase price equal to 100% of their
principal amount plus accrued interest, if any.
(8) NOTICE OF REDEMPTION. Notice of redemption shall be
mailed at least 15 days but not more than 60 days before the Redemption Date to
each Holder of Securities to be redeemed at his registered address. Securities
in denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000. On and after the Redemption Date, interest ceases to
accrue on Securities or portions of them called for redemption unless the
Issuer defaults in making the redemption payment.
If the Redemption Date is subsequent to a Record Date with
respect to any Interest Payment Date and on or prior to such Interest Payment
Date, then such accrued
<PAGE> 96
4
interest, if any, shall be paid to the Holder of record at the close of
business on such Record Date and no other interest shall be payable thereon.
(9) DENOMINATIONS, TRANSFER, EXCHANGE. The Securities are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Securities may be registered and
Securities may be exchanged as provided in the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes and fees required by law or permitted
by the Indenture. The Registrar need not exchange or register the transfer of
any Security or portion of a Security selected for redemption, except the
unredeemed portion of any Security being redeemed in part. Also, it need not
exchange or register the transfer of any Securities for a period of 15 days
before the mailing of a notice of redemption of Securities to be redeemed.
(10) PERSONS DEEMED OWNERS. The Holder of a Security may be
treated as its owner for all purposes.
(11) UNCLAIMED MONEY. If money for the payment of principal
or interest remains unclaimed for two years, the Trustee and the Paying Agent
shall pay the money back to the Issuer at its written request. After that,
Holders entitled to the money must look to the Issuer for payment as general
creditors, subject to any applicable abandoned property law, and all liability
of the Trustee and such Paying Agent with respect to such money shall cease.
(12) DISCHARGE PRIOR TO REDEMPTION OR MATURITY. If the
Issuer deposits with the Trustee money or U.S. Government Obligations
sufficient to pay principal of, premium, if any, and accrued interest on the
Securities to redemption or maturity, as the case may be, the Issuer shall be
discharged from the Indenture and the Securities, except for certain sections
thereof.
(13) AMENDMENTS AND WAIVERS. Subject to certain exceptions,
the Indenture or the Securities may be amended, and any existing default may be
waived, with the consent of the Holders of at least a majority in principal
amount of the then outstanding Securities. Without the consent of any Holder,
the Indenture or the Securities may be amended to cure any ambiguity, defect or
inconsistency or make any change required to qualify the Indenture under the
TIA, to
<PAGE> 97
5
provide for the assumption of the obligations of the Issuer under the Indenture
by a successor corporation, to provide for uncertificated Securities in
addition to certificated Securities or to make any change that does not
adversely affect the rights of any Holder.
(14) SUBORDINATION. The Securities are subordinated in right
of payment, in the manner and to the extent set forth in the Indenture, to the
prior payment in full of all Senior Indebtedness of the Issuer whether
outstanding on the date of the Indenture or thereafter created, incurred,
assumed or guaranteed. To the extent and in the manner provided in the
Indenture, Senior Indebtedness must be paid before any payment may be made to
any Holder of this Security. Each Holder by his acceptance hereof agrees to be
bound by such provisions and authorizes and expressly directs the Trustee, on
his behalf, to take such action as may be necessary or appropriate to
effectuate the subordination provided for in the Indenture and appoints the
Trustee his attorney-in-fact for such purpose.
(15) DEFAULTS AND REMEDIES. An Event of Default is: default
for 30 days in payment of interest on the Securities; default in payment of
principal of the Securities at maturity, upon acceleration, redemption or
otherwise; failure by the Issuer for 30 days to comply with any of its other
agreements or covenants in, or provisions of, the Indenture or the Securities
after notice to it of such Default; certain events of acceleration prior to
maturity of certain other Indebtedness and certain failures of the Issuer or
any of its Significant Subsidiaries to pay the final scheduled principal
installment of certain Indebtedness on the stated maturity date thereof;
certain final judgments against the Issuer or any subsidiary which remain
undischarged and unbonded for 60 days; certain events of bankruptcy or
insolvency of the Issuer or any of its Significant Subsidiaries; and certain
other events. If an Event of Default occurs and is continuing, the Trustee or
the Holders of at least 25% in principal amount of the then outstanding
Securities may declare to be due and payable immediately 100% of the principal
amount of the Securities, except that in the case of an Event of Default
arising from certain events of bankruptcy or insolvency of the Issuer or any of
its Significant Subsidiaries, 100% of the principal amount of the Securities
becomes due and payable immediately without further action or notice. Holders
may not enforce the Indenture or the Securities except as provided in the
Indenture. The Trustee may require indemnity satisfactory
<PAGE> 98
6
to it before it enforces the Indenture or the Securities. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Securities may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders notice of any continuing Default (except a
Default in payment of principal or interest) if it determines that withholding
notice is in their interests. The Issuer must provide an annual compliance
certificate to the Trustee.
(16) TRUSTEE DEALINGS WITH ISSUER. The Trustee, in its
individual or any other capacity, may become the owner or pledgee of Securities
and may otherwise deal with the Issuer or its Affiliates, as if it were not
Trustee.
(17) NO RECOURSE AGAINST OTHERS. A director, officer,
employee or stockholder, as such, of the Issuer shall not have any liability
for any obligations of the Issuer under the Securities or the Indenture or for
any claim based on, in respect of or by reason of such obligations or their
creation. Each Holder by accepting a Security waives and releases all such
liability. The waiver and release are part of the consideration for the issue
of the Securities.
(18) AUTHENTICATION. This Security shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.
(19) ABBREVIATIONS. Customary abbreviations may be used in
the name of a Holder or an assignee, such as: TEN COM (= tenants in common),
TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
(20) CUSIP NUMBERS. Pursuant to a recommendation promulgated
by the Committee on Uniform Security Identification Procedures, the Issuer has
caused CUSIP numbers to be printed on the Securities as a convenience to the
Holders of such Securities. No representation is made as to the accuracy of
such numbers as printed on the Securities, and reliance may be placed only on
the other identification numbers printed hereon.
(21) GOVERNING LAW. The internal laws of the State of New
York shall govern the Indenture and the
<PAGE> 99
7
Securities, without regard to the conflicts of law rules thereof.
<PAGE> 100
ASSIGNMENT
(To be executed by the registered Holder
if such Holder desires to transfer this Security)
FOR VALUE RECEIVED __________________ hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
TAX IDENTIFYING NUMBER OF TRANSFEREE
________________________________________________________________________________
(Please print name and address of transferee)
this Security, together with all right, title and interest herein, and
does hereby irrevocably constitute and appoint
Attorney to transfer this Security
on the Security register, with full power of substitution.
Date: ____________
______________________________ ___________________________________
Signature of Holder Signature Guarantee:
Member of Securities Transfer Agent
Medallion Program
NOTICE: The signature to the foregoing Assignment must correspond to the name
as written upon the face of this Security in every particular, without
alteration or any change whatsoever.
<PAGE> 101
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Issuer pursuant to Section 4.08 of the Indenture, check the box: [ ]
If you want to elect to have only a part of this Security
purchased by the Issuer pursuant to Section 4.08 of the Indenture, state the
amount: $______________
If you want to elect to have this Security purchased by the
Issuer pursuant to Section 11.01 of the Indenture, check the box: [ ]
If you want to elect to have only a part of this Security
purchased by the Issuer pursuant to Section 11.01 of the Indenture, state the
amount: $______________
Date:______________________
Your Signature:____________________________________
(Sign exactly as your name appears on the other side of this
Security.)
Signature Guarantee:_______________________________________
Member of Securities Transfer Agent Medallion Program
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-28-1996
<CASH> 52
<SECURITIES> 0
<RECEIVABLES> 1,048
<ALLOWANCES> 8
<INVENTORY> 202
<CURRENT-ASSETS> 1,509
<PP&E> 1,086
<DEPRECIATION> 293
<TOTAL-ASSETS> 3,863
<CURRENT-LIABILITIES> 1,454
<BONDS> 1,241
0
0
<COMMON> 1
<OTHER-SE> 946
<TOTAL-LIABILITY-AND-EQUITY> 3,863
<SALES> 4,530
<TOTAL-REVENUES> 4,530
<CGS> 4,099
<TOTAL-COSTS> 4,099
<OTHER-EXPENSES> 187
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 76
<INCOME-PRETAX> 168
<INCOME-TAX> 67
<INCOME-CONTINUING> 101
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 101
<EPS-PRIMARY> 1.62
<EPS-DILUTED> 1.62
</TABLE>
