<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 30, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transaction period from to
Commission file number 1-12163
----------------
THE LOEWEN GROUP INC.
(Exact name of registrant as specified in its charter)
----------------
<TABLE>
<S> <C>
BRITISH COLUMBIA 98-0121376
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
4126 NORLAND AVENUE,
BURNABY, BRITISH COLUMBIA, CANADA V5G 3S8
(Address of principal executive offices)(Zip Code)
604-299-9321
Registrant's telephone number, including area code
N/A
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check /X/ whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
----------------
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check /X/ whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes / / No / /
----------------
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of outstanding Common shares as of November 1, 1997, was
73,425,546.
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<PAGE>
THE LOEWEN GROUP INC.
AND SUBSIDIARIES
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
as of September 30, 1997 and December 31, 1996........... 1
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
for the Three Months Ended September 30, 1997 and 1996
and the Nine Months Ended September 30, 1997 and 1996.... 2
CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
for the Nine Months Ended September 30, 1997 and 1996.... 3
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS............. 4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.... 18
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS................................... 28
ITEM 5. OTHER INFORMATION................................... 31
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.................... 32
SIGNATURES............................................................... 38
</TABLE>
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
THE LOEWEN GROUP INC.
CONSOLIDATED BALANCE SHEETS
EXPRESSED IN THOUSANDS OF U.S. DOLLARS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets
Cash and term deposits......................... $ 18,588 $ 18,059
Receivables, net of allowances................. 245,658 187,617
Inventories.................................... 34,247 32,008
Prepaid expenses............................... 11,907 11,545
------------- ------------
310,400 249,229
Prearranged funeral services..................... 380,705 334,420
Long-term receivables, net of allowances......... 485,059 288,579
Investments...................................... 287,694 266,228
Insurance invested assets........................ 303,412 296,249
Cemetery property, at cost....................... 903,223 615,192
Property and equipment........................... 766,566 686,285
Names and reputations............................ 606,367 558,710
Deferred income taxes............................ 116,675 67,904
Other assets..................................... 147,947 134,143
------------- ------------
$4,308,048 $3,496,939
------------- ------------
------------- ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities....... $ 163,246 $ 114,072
Long-term debt, current portion................ 73,472 79,580
------------- ------------
236,718 193,652
Long-term debt................................... 1,600,991 1,416,345
Other liabilities................................ 292,256 216,842
Insurance policy liabilities..................... 219,770 212,480
Deferred prearranged funeral services revenue.... 380,705 334,420
Preferred securities of subsidiary............... 75,000 75,000
Shareholders' equity
Common shares.................................. 1,257,573 796,431
Preferred shares............................... 157,146 157,146
Retained earnings.............................. 74,686 80,117
Foreign exchange adjustment.................... 13,203 14,506
------------- ------------
1,502,608 1,048,200
------------- ------------
$4,308,048 $3,496,939
------------- ------------
------------- ------------
</TABLE>
Commitments and contingencies (Notes 3, 4, 8, 11 and 12)
See accompanying notes to interim consolidated financial statements
-1-
<PAGE>
THE LOEWEN GROUP INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
EXPRESSED IN THOUSANDS OF U.S. DOLLARS EXCEPT PER SHARE AMOUNTS
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------- ----------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenue
Funeral........................................................ $ 140,400 $ 130,788 $ 442,510 $ 397,760
Cemetery....................................................... 109,559 77,706 313,974 198,912
Insurance...................................................... 24,177 22,959 67,997 51,021
---------- ---------- ---------- ----------
274,136 231,453 824,481 647,693
Costs and expenses
Funeral........................................................ 97,640 80,427 278,115 237,854
Cemetery....................................................... 81,614 51,852 216,769 136,192
Insurance...................................................... 20,885 16,987 55,975 39,922
---------- ---------- ---------- ----------
200,139 149,266 550,859 413,968
---------- ---------- ---------- ----------
73,997 82,187 273,622 233,725
Expenses
General and administrative..................................... 45,905 17,953 86,150 50,275
Restructuring costs............................................ 36,911 -- 36,911 --
Depreciation and amortization.................................. 17,709 14,303 51,109 39,005
---------- ---------- ---------- ----------
100,525 32,256 174,170 89,280
---------- ---------- ---------- ----------
Earnings (loss) from operations.................................. (26,528) 49,931 99,452 144,445
Interest on long-term debt....................................... 30,609 22,925 94,252 62,471
Loss on early extinguishment of debt............................. 7,673 -- 7,673 --
Other costs related to hostile takeover proposal................. -- 2,615 -- 2,615
---------- ---------- ---------- ----------
Earnings (loss) before undernoted items.......................... (64,810) 24,391 (2,473) 79,359
Dividends on preferred securities of subsidiary.................. 1,772 1,772 5,316 5,316
---------- ---------- ---------- ----------
Earnings (loss) before income taxes and
undernoted items............................................... (66,582) 22,619 (7,789) 74,043
Income taxes..................................................... (23,146) 6,498 (7,446) 22,232
---------- ---------- ---------- ----------
(43,436) 16,121 (343) 51,811
Equity and other earnings of associated companies................ 2,599 793 9,474 1,815
---------- ---------- ---------- ----------
Net earnings (loss) for the period............................... $ (40,837) $ 16,914 $ 9,131 $ 53,626
Retained earnings, beginning of period........................... 117,906 62,497 80,117 36,439
Common share dividends........................................... -- -- (7,370) (6,631)
Preferred share dividends........................................ (2,383) (2,410) (7,192) (6,433)
---------- ---------- ---------- ----------
Retained earnings, end of period................................. $ 74,686 $ 77,001 $ 74,686 $ 77,001
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Basic earnings (loss) per Common share........................... $ (0.59) $ 0.25 $ 0.03 $ 0.84
Fully diluted earnings (loss) per Common share................... $ (0.59) $ 0.25 $ 0.03 $ 0.84
Dividend per Common share........................................ $ -- $ -- $ 0.10 $ 0.12
</TABLE>
See accompanying notes to interim consolidated financial statements
-2-
<PAGE>
THE LOEWEN GROUP INC.
CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
EXPRESSED IN THOUSANDS OF U.S. DOLLARS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------------
1997 1996
------------- -----------
(UNAUDITED)
<S> <C> <C>
CASH PROVIDED BY (APPLIED TO)
Operations
Net earnings........................................................................ $ 9,131 $ 53,626
Items not affecting cash
Depreciation and amortization..................................................... 51,109 39,005
Gain on sale of investment........................................................ (1,845) (206)
Equity and other earnings of associated companies................................. (9,474) (1,815)
Restructuring..................................................................... 14,631 --
Common shares and debt issued for legal settlements................................. -- (112,000)
Other, including net changes in other non-cash balances............................. (184,528) (143,423)
------------- -----------
(120,976) (164,813)
------------- -----------
Investing
Business acquisitions............................................................... (425,947) (437,789)
Construction of new facilities...................................................... (11,754) (10,932)
Investments, net.................................................................... (12,501) (82,517)
Purchase of insurance invested assets............................................... (197,952) (44,649)
Proceeds on disposition and maturities of insurance invested assets................. 190,788 38,046
Purchase of property and equipment.................................................. (43,583) (18,207)
Proceeds on disposition of assets................................................... 20,738 2,855
Other............................................................................... (12,454) (15,365)
------------- -----------
(492,665) (568,558)
------------- -----------
Financing
Issue of Common shares, before income tax recovery.................................. 452,888 299,833
Issue of Preferred shares, before income tax recovery............................... -- 154,094
Increase in long-term debt.......................................................... 1,182,904 800,940
Reduction in long-term debt......................................................... (1,003,808) (465,664)
Common share dividends.............................................................. (7,370) (6,631)
Preferred share dividends........................................................... (7,192) (6,433)
Current note payable................................................................ -- (38,546)
Other............................................................................... (2,767) (18,864)
------------- -----------
614,655 718,729
------------- -----------
Increase (decrease) in cash and cash equivalents during the period.................... 1,014 (14,642)
Effect of foreign exchange adjustment................................................. (485) (427)
Cash and cash equivalents, beginning of period........................................ 18,059 39,454
------------- -----------
Cash and cash equivalents, end of period.............................................. $ 18,588 $ 24,385
------------- -----------
------------- -----------
</TABLE>
See accompanying notes to interim consolidated financial statements
-3-
<PAGE>
THE LOEWEN GROUP INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
TABULAR AMOUNTS EXPRESSED IN THOUSANDS OF U.S. DOLLARS EXCEPT PER SHARE AMOUNTS
1. BASIS OF PRESENTATION
The United States dollar is the principal currency of the Company's business
and accordingly the interim consolidated financial statements are expressed in
United States dollars. The interim consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in Canada.
The interim consolidated financial statements include the accounts of all
subsidiary companies and include all adjustments, consisting only of normal
recurring adjustments, which in management's opinion are necessary for a fair
presentation of the financial results for the interim periods. The financial
statements have been prepared consistent with the accounting policies described
in the Company's Annual Report on Form 10-K filed with the Securities and
Exchange Commission for the year ended December 31, 1996 and should be read in
conjunction therewith. Certain of the comparative figures have been reclassified
to conform to the presentation adopted in the current period.
USE OF ESTIMATES
The preparation of interim consolidated financial statements in accordance
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the consolidated financial statements and the reported amounts of revenue and
expenses during the reporting period. As a result, actual results could differ
from those estimates.
2. ACQUISITIONS
During the nine months ended September 30, 1997, the Company acquired 80
funeral homes and 145 cemeteries in the United States, and 22 funeral homes in
Canada.
During the nine months ended September 30, 1996, the Company acquired 115
funeral homes, 91 cemeteries and two insurance companies in the United States
and nine funeral homes and one cemetery in Canada. Included in these
acquisitions was the purchase of certain net assets of S.I. Acquisition
Associates L.P. ("S.I.") of Donaldsonville, Louisiana, for approximately
$155,800,000, including costs of acquisition. S.I. concurrently acquired all the
outstanding shares of Ourso Investment Corporation. The S.I. assets included 15
funeral homes, two cemeteries and two insurance companies.
-4-
<PAGE>
THE LOEWEN GROUP INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
TABULAR AMOUNTS EXPRESSED IN THOUSANDS OF U.S. DOLLARS EXCEPT PER SHARE AMOUNTS
2. ACQUISITIONS (CONTINUED)
All of the Company's acquisitions have been accounted for by the purchase
method. The preliminary purchase price allocation for certain of these
acquisitions has been estimated based on available information at the time and
is subject to revision. The effect of acquisitions at dates of purchase on the
consolidated balance sheet is shown below.
<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30,
1997 1996
------------- -------------
<S> <C> <C>
Current assets............................................................ $ 6,186 $ 8,793
Prearranged funeral services.............................................. 22,766 17,975
Long-term receivables, net of allowances.................................. 74,811 60,386
Insurance invested assets................................................. -- 185,971
Cemetery property, at cost................................................ 262,133 161,975
Property and equipment.................................................... 71,092 97,573
Names and reputations..................................................... 71,647 121,865
Other assets.............................................................. 193 2,747
------------- -------------
508,828 657,285
Current liabilities....................................................... (4,029) (10,511)
Long-term debt............................................................ (2,291) (22,330)
Other liabilities......................................................... (53,795) (44,195)
Insurance policy liabilities.............................................. -- (125,207)
Deferred income taxes..................................................... -- 722
Deferred prearranged funeral services revenue............................. (22,766) (17,975)
------------- -------------
$ 425,947 $ 437,789
------------- -------------
------------- -------------
Consideration
Cash, including assumed debt repaid at closing.......................... $ 399,677 $ 390,215
Debt.................................................................... 16,030 35,924
Common shares........................................................... 10,240 11,650
------------- -------------
Purchase Price............................................................ $ 425,947 $ 437,789
------------- -------------
------------- -------------
</TABLE>
The following table reflects, on an unaudited pro-forma basis, the combined
results of the Company's operations acquired during the period ended September
30, 1997 as if all such acquisitions had taken place at the beginning of the
respective periods presented. Appropriate adjustments have been made to reflect
the accounting basis used in recording these acquisitions. This pro-forma
information does not purport to be indicative of the results of operations that
would have resulted had the acquisitions been in effect for the entire periods
presented, and is not intended to be a projection of future results or trends.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------
1997 1996
---------- ----------
<S> <C> <C>
Revenues........................................................................ $ 860,576 $ 722,493
Net earnings.................................................................... $ 11,788 $ 58,456
Basic earnings per share........................................................ $ 0.06 $ 0.78
Fully diluted earnings per share................................................ $ 0.05 $ 0.78
</TABLE>
-5-
<PAGE>
THE LOEWEN GROUP INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
TABULAR AMOUNTS EXPRESSED IN THOUSANDS OF U.S. DOLLARS EXCEPT PER SHARE AMOUNTS
3. INVESTMENT IN PRIME SUCCESSION HOLDINGS, INC. ("PRIME")
On August 26, 1996, the Company acquired 235.2941 shares of Prime common
stock for $16,000,000, representing 23.5% of Prime's voting common stock, and
100% of Prime's non-voting preferred stock for $62,000,000. Blackstone Capital
Partners II Merchant Banking Fund L.P. and certain affiliates (together,
"Blackstone") acquired 764.7059 shares of Prime common stock, representing 76.5%
of Prime's voting common stock for $52,000,000. On February 14, 1997, the
Company and Blackstone agreed to adjust their respective ownership of Prime's
voting common stock retroactively to August 26, 1996. No adjustment to the
aggregate purchase price was made. After giving effect to the readjustment, the
Company has paid $14,500,000 for 213.2353 shares of Prime common stock and
Blackstone has paid $52,000,000 for 764.7059 shares of Prime common stock
representing 21.8% and 78.2% respectively of Prime's voting common stock. The
Company has acquired 100% of Prime's non-voting preferred stock. A 10%
cumulative annual payment-in-kind dividend is payable on the preferred stock.
Prime holds all of the outstanding common shares of Prime Succession, Inc.,
an operator of funeral homes and cemeteries in the United States. Prime
Succession, Inc. was purchased on August 26, 1996 for approximately $320,000,000
of which $130,000,000 was funded by Blackstone and the Company, and $190,000,000
was financed through bank borrowings and the issuance of senior subordinated
notes. The excess of the purchase price over the fair value of net assets of
approximately $230,000,000, was established as goodwill in Prime Succession,
Inc. and is being amortized over 40 years.
The Company accounts for its investment in Prime preferred stock by the cost
method. For the nine months ended September 30, 1997, income of $4,763,000 was
recorded representing the cumulative annual payment-in-kind dividend.
The Company accounts for its investment in Prime common stock by the equity
method. Under this method, the Company records its proportionate share of the
net earnings (loss) of Prime after deducting the payment-in-kind dividend. For
the nine months ended September 30, 1997, a loss of $1,938,000 was recorded
representing the Company's proportionate share of the loss attributable to the
Prime common stock.
Under a Put/Call Agreement entered into with Blackstone, the Company has the
option to acquire ("Call") Blackstone's Prime common stock commencing on the
fourth anniversary of the acquisition, and for a period of two years thereafter,
at a price determined pursuant to the Put/Call Agreement. Blackstone has the
option to sell ("Put") its Prime common stock to the Company commencing on the
sixth anniversary of the acquisition, and for a period of two years thereafter,
at a price determined pursuant to the Put/Call Agreement.
-6-
<PAGE>
THE LOEWEN GROUP INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
TABULAR AMOUNTS EXPRESSED IN THOUSANDS OF U.S. DOLLARS EXCEPT PER SHARE AMOUNTS
3. INVESTMENT IN PRIME SUCCESSION HOLDINGS, INC. ("PRIME") (CONTINUED)
Summarized financial data for Prime are presented as follows:
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1997
------------- -------------
<S> <C> <C>
Income statement information:
Revenue................................................................. $ 22,809 $ 71,368
Gross margin............................................................ 7,240 24,493
Earnings from operations................................................ 3,630 13,748
Payment-in-kind dividend................................................ 1,588 4,763
Net loss attributable to common shareholders............................ (4,043) (8,889)
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
<S> <C> <C>
Balance sheet information:
Current assets.......................................................... $ 20,215 $ 24,614
Non-current assets...................................................... 373,131 374,174
------------- ------------
Total assets............................................................ 393,346 398,788
Current liabilities..................................................... 24,726 22,531
Non-current liabilities................................................. 246,141 249,652
------------- ------------
Total liabilities....................................................... 270,867 272,183
Shareholders' equity.................................................... 122,479 126,605
</TABLE>
4. INVESTMENT IN ROSE HILLS HOLDING CORP. ("RH HOLDINGS")
On November 19, 1996, the Company acquired 204.5454 shares of RH Holdings
common stock for $9,000,000, representing 20.45% of RH Holdings' voting common
stock, and 100% of RH Holdings' non-voting preferred stock with a cumulative
annual payment-in-kind dividend of 10%, for $86,000,000. The Company's total
investment of $95,000,000 consisted of $72,000,000 in cash and a contribution by
the Company of 14 funeral homes and two combination funeral home and cemetery
properties located in California valued at $23,000,000. Blackstone acquired
795.4546 shares of RH Holdings common stock, representing 79.55% of RH Holdings'
voting common stock for $35,000,000.
RH Holdings holds all of the outstanding common stock of Rose Hills Company
("RHC") and the cemetery related assets of Rose Hills Memorial Park Association,
representing the largest single location cemetery in the United States. These
companies were purchased on November 19, 1996 for approximately $285,000,000 of
which $130,000,000 was funded by Blackstone and the Company, and $155,000,000
was financed through bank borrowings and the issuance of senior subordinated
notes. The excess of the purchase price over the fair value of net assets of
approximately $130,000,000 was established as goodwill in RH Holdings and is
being amortized over 40 years.
The Company accounts for its investment in RH Holdings preferred stock by
the cost method. For the nine months ended September 30, 1997, income of
$6,450,000 was recorded representing the cumulative annual payment-in-kind
dividend.
The Company accounts for its investment in RH Holdings common stock by the
equity method. Under the equity method, the Company records its proportionate
share of the net earnings (loss) of
-7-
<PAGE>
THE LOEWEN GROUP INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
TABULAR AMOUNTS EXPRESSED IN THOUSANDS OF U.S. DOLLARS EXCEPT PER SHARE AMOUNTS
4. INVESTMENT IN ROSE HILLS HOLDING CORP. ("RH HOLDINGS") (CONTINUED)
RH Holdings after deducting the payment-in-kind dividend. For the nine months
ended September 30, 1997, a loss of $1,425,000 was recorded representing the
Company's proportionate share of the loss attributable to the common stock of RH
Holdings. The properties contributed by the Company had a net carrying value of
$20,382,000. The Company has deferred a gain of $2,618,000 on the disposition of
these properties and will recognize the gain if and when the properties are
sold. The deferred gain is recorded in other liabilities on the interim
consolidated balance sheet.
Under a Put/Call Agreement entered into with Blackstone, the Company has the
option to acquire ("Call") Blackstone's RH Holdings common stock commencing on
the fourth anniversary of the acquisition, and for a period of two years
thereafter, at a price determined pursuant to the Put/Call Agreement. Blackstone
has the option to sell ("Put") its RH Holdings common stock to the Company
commencing on the sixth anniversary of the acquisition, and for a period of two
years thereafter, at a price determined pursuant to the Put/Call Agreement.
Summarized financial data for RH Holdings are presented as follows:
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1997
------------- -------------
<S> <C> <C>
Income statement information:
Revenue................................................................. $ 16,798 $ 52,664
Gross margin............................................................ 12,801 41,266
Earnings from operations................................................ 2,789 11,727
Payment-in-kind dividend................................................ 2,150 6,450
Net loss attributable to common shareholders............................ (3,277) (6,970)
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
<S> <C> <C>
Balance sheet information:
Current assets.......................................................... $ 17,170 $ 21,272
Non-current assets...................................................... 295,189 296,562
------------- ------------
Total assets............................................................ 312,359 317,834
Current liabilities..................................................... 11,570 15,510
Non-current liabilities................................................. 172,283 173,298
------------- ------------
Total liabilities....................................................... 183,853 188,808
Shareholders' equity.................................................... 128,506 129,026
</TABLE>
-8-
<PAGE>
THE LOEWEN GROUP INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
TABULAR AMOUNTS EXPRESSED IN THOUSANDS OF U.S. DOLLARS EXCEPT PER SHARE AMOUNTS
5. LONG-TERM DEBT
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
<S> <C> <C>
Bank revolving credit agreements.................................................... $ 37,847 $ 270,489
Management Equity Investment Plan bank term credit agreement
due in 2001....................................................................... 105,596 107,583
Canadian bank term credit agreement due in 2000 (Cdn. $35,000,000).................. -- 25,536
9.70% Series A and C senior amortizing notes due in 1998............................ 62,500 62,500
9.93% Series B senior amortizing notes due in 2001.................................. 35,700 35,700
9.62% Series D senior amortizing notes due in 2003.................................. 51,429 60,000
6.49% Series E senior amortizing notes due in 2004.................................. 50,000 50,000
7.50% Series 1 senior notes due in 2001............................................. 225,000 225,000
7.75% Series 3 senior notes due in 2001............................................. 125,000 125,000
8.25% Series 2 and 4 senior notes due in 2003....................................... 350,000 350,000
6.10% Series 5 senior notes due in 2002............................................. 144,812 --
6.70% PATS senior notes due in 2009................................................. 300,000 --
Present value of notes issued under legal settlements discounted at
an effective interest rate of 7.75%............................................... 39,115 40,000
Present value of contingent consideration payable on acquisitions
discounted at an effective interest rate of 8.0%.................................. 24,515 34,681
Other, principally arising from vendor financing of acquired operations
or long-term debt assumed on acquisitions, bearing interest at fixed
and floating rates varying from 4.8% to 14.0%, certain of which are
secured by assets of certain subsidiaries......................................... 122,949 109,436
------------- ------------
1,674,463 1,495,925
Less current portion................................................................ 73,472 79,580
------------- ------------
$ 1,600,991 $1,416,345
------------- ------------
------------- ------------
</TABLE>
(a) Certain of the Company's loan agreements contain various restrictive
provisions, including change of control provisions and provisions restricting
payment of dividends on Common and Preferred shares, restricting encumbrance of
assets, limiting redemption or repurchase of shares, limiting disposition of
assets, limiting the amount of additional debt, limiting the amount of capital
expenditures and requiring the Company to maintain specified financial ratios.
At September 30, 1997, none of the Company's retained earnings were restricted
or unavailable for payment of dividends under the most restrictive agreement.
(b) In September 1997, TLGI completed a public offering in Canada and a
private placement in the United States of Cdn. $200,000,000 of 6.10% Series 5
Senior Guaranteed Notes due 2002 (the "Series 5 Senior Notes"). The net proceeds
from the Series 5 Senior Notes offering will be used for working capital and
general corporate purposes, including acquisitions. Pending use for such
purposes, the net proceeds were used to reduce borrowings under bank revolving
credit agreements. The Series 5 Senior Notes are guaranteed by LGII.
(c) In September 1997, LGII expanded its $750,000,000 revolving credit
facility to $1,000,000,000 (the "Revolving Credit Facility"). The expanded
credit facility has two components, a $750,000,000 tranche which matures in
September 2002 and a $250,000,000 364 day tranche which matures in September
1998. Each of the tranches bears interest at alternative market rates selected
by LGII and has substantially the same terms and conditions as the previous
$750,000,000 credit facility.
-9-
<PAGE>
THE LOEWEN GROUP INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
TABULAR AMOUNTS EXPRESSED IN THOUSANDS OF U.S. DOLLARS EXCEPT PER SHARE AMOUNTS
5. LONG-TERM DEBT (CONTINUED)
(d) In September 1997, LGII completed a private placement in the United
States of $300 million in pass-through asset trust senior guaranteed notes, due
2009 (the "PATS Senior Notes"). The PATS Senior Notes bear interest at a rate of
6.70% until October 1, 1999, at which time the interest rate will be reset at a
fixed annual rate of 6.05% plus an adjustment equal to LGII's then current
credit spread to the ten year United States Treasury rate. The PATS Senior Notes
are redeemable at the election of the holder, in whole but not in part, at 100%
of the principal amount on October 1, 1999. The net proceeds from the PATS
Senior Notes offering will be used for working capital and general corporate
purposes including acquisitions. Pending use for such purposes, the net proceeds
were used to reduce borrowings under the Revolving Credit Facility and the
permanent repayment of three series of senior amortizing notes totaling
approximately $100 million. The PATS Senior Notes are guaranteed by Loewen.
COLLATERAL TRUST AGREEMENT
In 1996, Loewen, LGII and their senior lenders entered into a collateral
trust arrangement pursuant to which the senior lenders share certain collateral
on a pari passu basis. The collateral includes (i) a pledge for the benefit of
the senior lenders of the shares of capital stock held by Loewen of
substantially all of its subsidiaries and (ii) all of the financial assets of
LGII (including the shares of the capital stock held by LGII of various
subsidiaries) (collectively, the "Collateral"). The Collateral is held by a
trustee for the equal and ratable benefit of the various holders of pari passu
indebtedness. This senior lending group consists principally of the lenders
under the senior notes and bank revolving and term credit agreements as well as
the holders of certain letters of credit.
6. SHARE CAPITAL
In June 1997, the Company completed a public offering in the United States,
Canada and internationally of 13,800,000 Common shares, including 1,800,000
Common shares issued pursuant to the underwriters' over-allotment option, for
aggregate gross proceeds of approximately $455 million. The net proceeds of
approximately $437 million will be used for working capital and other general
corporate purposes, including acquisitions. Pending use for such purposes, the
net proceeds were used to repay existing indebtedness.
7. PREFERRED SECURITIES OF SUBSIDIARY
On August 15, 1994, 3,000,000 9.45% Cumulative Monthly Income Preferred
Securities, Series A ("MIPS") were issued by Loewen Group Capital, L.P. ("LGC")
in a public offering for an aggregate amount of $75,000,000. LGC is a limited
partnership and LGII as its general partner manages its business and affairs.
LGII serves as the holding company for all United States assets and operations
of the Company. The consolidated financial statements of LGII are prepared in
accordance with Canadian generally accepted accounting principles and are
presented in United States dollars.
-10-
<PAGE>
THE LOEWEN GROUP INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
TABULAR AMOUNTS EXPRESSED IN THOUSANDS OF U.S. DOLLARS EXCEPT PER SHARE AMOUNTS
7. PREFERRED SECURITIES OF SUBSIDIARY (CONTINUED)
Summarized financial data for LGII are presented as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------- ----------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Income statement information:
Revenue............................................... $ 255,359 $ 214,535 $ 766,406 $ 596,705
Gross margin.......................................... 65,041 74,060 243,009 212,183
Earnings (loss) from operations....................... (20,228) 43,043 90,682 131,275
Net earnings (loss)................................... (58,654) 1,399 (55,955) 12,311
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- -------------
<S> <C> <C>
Balance sheet information:
Current assets.......................................................... $ 275,704 $ 223,388
Non-current assets...................................................... 3,395,810 2,865,005
------------- -------------
Total assets............................................................ 3,671,514 3,088,393
Current liabilities..................................................... 206,047 156,290
Non-current liabilities................................................. 3,182,731 2,719,453
------------- -------------
Total liabilities....................................................... 3,388,778 2,875,743
Shareholders' equity.................................................... 282,736 212,650
</TABLE>
8. LEGAL PROCEEDINGS AND CONTINGENCIES
CLASS ACTIONS ALLEGING SECURITIES LAWS VIOLATIONS
On November 4, 1995, a class action lawsuit claiming violations of federal
securities laws was filed on behalf of a class of purchasers of Company
securities against the Company and five individuals who were officers of the
Company (four of whom were also directors) in the United States District Court
for the Eastern District of Pennsylvania. LGII, LGC, and the lead underwriters
(the "MIPS Underwriters") of LGC's 1994 offering of the MIPS, were subsequently
added as defendants. On November 7, 1995, a class action lawsuit was filed on
behalf of a class of purchasers of Common Shares against the Company and the
same individual defendants in the United States District Court for the Southern
District of Mississippi alleging Federal securities law violations and related
common law claims. On December 1, 1995, a class action lawsuit was filed on
behalf of a class of purchasers of the Company's securities against the Company,
LGII, LGC and the same individual defendants in the United States District Court
for the Eastern District of Pennsylvania. On June 11, 1996 all claims against
the MIPS Underwriters were dismissed without prejudice, by agreement of the
parties. The cases were consolidated before the District Court of the Eastern
District of Pennsylvania. A Consolidated and Amended Class Action Complaint was
filed on September 16, 1996.
On November 4, 1997, the defendants and counsel for the class action
plaintiffs reached an agreement in principle to settle the class actions. The
Company has agreed to pay $5 million, notice costs and 50% of the administration
costs, provided that the total notice and administration costs to be paid by the
Company does not exceed $100,000. The settlement is subject to certain
conditions, including review and approval by the Court.
-11-
<PAGE>
THE LOEWEN GROUP INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
TABULAR AMOUNTS EXPRESSED IN THOUSANDS OF U.S. DOLLARS EXCEPT PER SHARE AMOUNTS
8. LEGAL PROCEEDINGS AND CONTINGENCIES (CONTINUED)
ROE ET AL., PALLADINO ET AL., O'SULLIVAN AND SCHNEIDER
As previously reported in the Company's Report on Form 10-Q for the quarter
ended June 30, 1997, the Company has settled the claims described below.
In October 1995, Roe and 22 other families filed a lawsuit against LGII and
Osiris in Florida Circuit Court in Clearwater, Florida. In early 1996, a related
lawsuit, Palladino, et al. was filed by eight families and assigned to the same
judge handling the Roe matter. The Roe and Palladino lawsuits ultimately were
consolidated (the "Roe/Palladino Lawsuit"). In October 1996, a Fifth Amended
Complaint relating to the Roe/Palladino lawsuit was filed on behalf of a total
of 150 plaintiff families. Plaintiffs contended that in July 1992, employees of
the Royal Palm Cemetery facility who were installing a sprinkler line disturbed
the remains of infants in one section of the cemetery, and alleged various tort
claims.
In July 1997, the parties settled all claims made by plaintiff families
relating to graves located in the first row (the row closest to the sprinkler
line) ("First Row Plaintiffs"). Under the terms of the settlement, the Company
paid $300,000, the insurance carriers for Osiris and Loewen agreed to pay the
balance of the settlement and defense costs, and the claims by the First Row
Plaintiffs were dismissed. There are two families who remain as plaintiffs in
the Roe/Palladino Lawsuit. Neither of the remaining plaintiff families are First
Row Plaintiffs. The Company believes that any ultimate liability to the families
who remain as plaintiffs in the Roe/Palladino Lawsuit and associated costs will
not have a material adverse effect on the Company's business, financial
condition and results of operations.
ESNER ESTATE
On February 1, 1995, Stuart B. Esner and Sandra Esner (the "Executors") as
coexecutor for the Estate of Gerald F. Esner (the "Esner Estate") filed an
action in the Court of Common Pleas in Bucks County, Pennsylvania against Osiris
and a law firm (the "Law Firm") that previously represented Osiris and its
principal shareholders, Gerald F. Esner, Lawrence Miller and William R. Shane.
Messrs. Miller and Shane currently are executive officers of the Company and
LGII.
The complaint alleged that Osiris breached the terms of a Second Amended and
Restated Shareholders' Agreement among Messrs. Esner, Miller and Shane (the
"Shareholders' Agreement") by attempting to repurchase shares of Osiris held by
the Esner Estate (the "Esner Shares") without complying with the terms of the
Shareholders' Agreement, and that the Law Firm breached its fiduciary duty and
committed malpractice in connection with the drafting of the Shareholders'
Agreement and its representation of Esner and Osiris. The Executors asked the
Court (i) to have the value of Osiris reappraised pursuant to the terms of the
Shareholders' Agreement and (ii) to require Osiris to repurchase the Esner
Shares pursuant to a new appraisal and the alleged terms of the Shareholders'
Agreement or, alternatively, to pay the Esner Estate the fair value of the Esner
Shares as determined by the new appraisal.
In March 1995, LGII purchased all of the issued and outstanding shares of
Osiris, including the Esner Shares. In connection with the purchase, LGII
entered into an indemnification agreement whereby Messrs. Miller and Shane
agreed to indemnify and hold LGII harmless with respect to any claims,
liabilities, losses and expenses, including reasonable attorney's fees, in
connection with or arising from the Esner Estate litigation.
On April 9, 1996, the Executors filed a second complaint, which names
Messrs. Miller and Shane and LGII as defendants. The second complaint alleges
breach of contract, fraud and related claims against Messrs. Miller and Shane,
and that LGII joined a civil conspiracy by acquiring Osiris. The Executors
-12-
<PAGE>
THE LOEWEN GROUP INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
TABULAR AMOUNTS EXPRESSED IN THOUSANDS OF U.S. DOLLARS EXCEPT PER SHARE AMOUNTS
8. LEGAL PROCEEDINGS AND CONTINGENCIES (CONTINUED)
request compensatory damages of $24,300,000 against the various defendants, and
seek punitive damages from Messrs. Miller and Shane. The two cases were
consolidated by the Court.
On October 9, 1996, the Executors instituted a new civil action against the
Law Firm. On November 18, 1996 the Executors instituted a new civil action
against the individual partners of the Law Firm. In both complaints, the
Executors expanded upon the allegations against the Law Firm contained in the
previous complaints. By stipulation approved by the Court on February 24, 1997,
the parties agreed to consolidate all suits and to permit the Executors to file
a Third Amended Complaint, which was filed on February 10, 1997. The prayers for
relief remain unchanged. Osiris and Messrs. Miller and Shane filed, and the
Court granted, preliminary challenges to the Third Amended Complaint. The Court
also dismissed the claims against LGII for failure to state a claim upon which
relief can be granted, although the Third Amended Complaint does continue on
unaffected counts.
The Company has determined that it is not possible at this time to predict
the final outcome of these legal proceedings and that it is not possible to
establish a reasonable estimate of possible damages, if any, or reasonably to
estimate the range of possible damages that may be awarded to the plaintiffs.
Accordingly, no provision with respect to this lawsuit has been made in the
Company's interim consolidated financial statements.
FELDHEIM ET AL. V. SI-SIFH CORP. ET AL. AND DUFFY ET AL. V. SI-SIFH CORP. ET AL
Two complaints were filed in 1997 on behalf of individuals who claim damages
in connection with funeral insurance policies allegedly issued to them by
insurance companies owned, directly or indirectly, by S.I. Acquisition
Associates, L.P. ("S.I."). The Company acquired the assets of S.I. in March
1996.
In January 1997, Elmer C. Feldheim and four other individuals filed a
lawsuit on behalf of themselves and a class of similarly situated individuals
and/or entities against SI-SIFH Corp., SI-SI Insurance Company, Inc., Loewen
Louisiana Holdings, Inc., and LGII in the Parish of Jefferson, State of
Louisiana. Plaintiffs seek a class action. SI-SIFH Corp. and SI-SI Insurance
Company, Inc. are affiliates of S.I.
In June 1997, Lloyd Duffy, Sr. and four other individuals filed a lawsuit on
behalf of themselves and a class of similarly situated individuals and/or
entities against SI-SIFH Corp., SI-SI Insurance Company, Inc., Loewen Louisiana
Holdings, Inc., and LGII in the Parish of Orleans, State of Louisiana.
Plaintiffs seek a class action. The Duffy complaint was filed by the same
lawyers who filed the complaint in the Feldheim case, and is a virtually
identical copy of the Feldheim complaint. The Duffy case is pending in the trial
court and, as of the date hereof, no discovery has taken place.
The Feldheim and Duffy plaintiffs allegedly hold or held funeral insurance
policies issued by insurance companies owned, directly or indirectly, by the
defendants. The plaintiffs allege that (i) the defendants failed to provide the
funeral services purchased with the policies by, among other things, offering a
casket of inferior quality upon presentation of a policy, and (ii) in connection
with the sale of the insurance policy, the insurance companies negligently or
fraudulently represented and interpreted the scope and terms of the policies and
omitted to provide material information regarding the policy benefits and
limitations. Plaintiffs also alleged unfair trade practices in violation of
Louisiana's trade practices law.
Plaintiffs' petitions seek damages, penalties and attorneys' fees. Louisiana
law prohibits plaintiffs from alleging specific amounts of damages. Plaintiffs
also seek a declaratory judgment compelling defendants to honor the policies.
-13-
<PAGE>
THE LOEWEN GROUP INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
TABULAR AMOUNTS EXPRESSED IN THOUSANDS OF U.S. DOLLARS EXCEPT PER SHARE AMOUNTS
8. LEGAL PROCEEDINGS AND CONTINGENCIES (CONTINUED)
On June 13, 1997, the district court in Jefferson Parish dismissed the
Feldheim plaintiffs' claim to a class action, and plaintiffs have appealed.
Briefing of the appeal is expected to be completed in December 1997 and oral
argument is expected to be scheduled within a few months thereafter.
The Company has determined that it is not possible to predict the final
outcome of these legal proceedings and that it is not possible to establish a
reasonable estimate of possible damages, if any, or reasonably to estimate the
range of possible damages that may be awarded to the plaintiffs. Accordingly, no
provision with respect to these lawsuits has been made in the Company's interim
consolidated financial statements.
ENVIRONMENTAL CONTINGENCIES AND LIABILITIES
The Company's operations are subject to numerous environmental laws,
regulations and guidelines adopted by various governmental authorities in the
jurisdictions in which the Company operates. Liabilities are recorded when
environmental liabilities are either known or considered probable and can be
reasonably estimated. The Company policies are designated to control
environmental risk upon acquisition through extensive due diligence and
corrective measures taken prior to acquisition. The Company believes
environmental contingencies and liabilities to be immaterial individually and in
the aggregate.
OTHER
The Company is a party to other legal proceedings in the ordinary course of
its business but does not expect the outcome of any other proceedings,
individually or in the aggregate, to have a material adverse effect on the
Company's financial position, results of operation or liquidity.
9. RESTRUCTURING, STRATEGIC INITIATIVES AND OTHER COSTS
The Company recorded pre-tax charges of approximately $81 million ($55
million after tax), representing restructuring, strategic initiatives and other
costs. Such charges are associated with the Company's efforts to more fully
integrate its field and administrative operations and improve long-term
financial performance, and have been reflected in third quarter operating
results. The charges made consisted of restructuring costs of approximately $37
million, which included severance of approximately 600 employees, closure of the
Company's Cincinnati corporate office and asset write-downs related to
realignment or elimination of under-performing locations. The strategic
initiatives and other costs included approximately $17 million related to assets
no longer conforming with the Company's strategic business initiatives,
approximately $8 million in connection with early extinguishment of debt to
reduce the Company's cost of financing, approximately $10 million of other costs
including enhancement of centralization efficiencies, $6 million for litigation
and approximately $3 million for other costs associated with the change in the
Company's operating strategy.
10. HOSTILE TAKEOVER PROPOSAL
On January 7, 1997, Service Corporation International ("SCI") publicly
withdrew its unsolicited proposed offer to acquire the Company through an
exchange offer announced in October 1996. SCI had proposed to exchange $45 worth
of Common stock for each Common share of the Company tendered and $29.51 worth
of Common stock for each Series C Preferred share of the Company tendered. In
October 1996, the Board of Directors of the Company unanimously determined that
the offer was inadequate
-14-
<PAGE>
THE LOEWEN GROUP INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
TABULAR AMOUNTS EXPRESSED IN THOUSANDS OF U.S. DOLLARS EXCEPT PER SHARE AMOUNTS
10. HOSTILE TAKEOVER PROPOSAL (CONTINUED)
and not in the best interests of the Company or its shareholders and recommended
that, if the offer were commenced, the Company's shareholders should not tender
their shares.
11. SALE OF INVESTMENT IN ARBOR MEMORIAL SERVICES INC.
In August 1997, the Company announced that it had entered into an agreement
with Service Corporation International ("SCI") to sell its shareholdings in
Arbor Memorial Services Inc. for a gain of approximately $25,000,000. The
Canadian Competition Bureau's review of this transaction has been completed and
the transaction is expected to close on November 18, 1997.
12. SUBSEQUENT EVENTS
During the period from October 1, 1997 to November 1, 1997, the Company
acquired seven funeral homes and 13 cemeteries. The aggregate cost of these
transactions was approximately $33,000,000.
As of November 1, 1997, the Company had committed to acquire certain funeral
homes, cemeteries and related operations, subject in most instances to certain
conditions including approval by the Company's or LGII's Board of Directors. The
aggregate cost of these transactions, if completed, will be approximately
$178,000,000.
13. UNITED STATES ACCOUNTING PRINCIPLES
The interim consolidated financial statements have been prepared in
accordance with generally accepted accounting principles ("GAAP") in Canada.
These principles differ in the following material respects from those in the
United States as summarized below:
(a) EARNINGS AND EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------- --------------------
1997 1996 1997 1996
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
EARNINGS
Net earnings (loss) in accordance with Canadian GAAP................. $ (40,837) $ 16,914 $ 9,131 $ 53,626
Effects of differences in accounting for:
Insurance operations............................................. 1,482 (742) 1,726 (1,433)
Income taxes (d)................................................. 508 627 1,874 1,579
Stock options.................................................... -- -- (174) --
---------- --------- --------- ---------
Net earnings (loss) in accordance with United States GAAP............ $ (38,847) $ 16,799 $ 12,557 $ 53,772
---------- --------- --------- ---------
---------- --------- --------- ---------
EARNINGS PER COMMON SHARE
Earnings per Common share in accordance with United States GAAP, are
as follows:
Primary earnings (loss) per Common share......................... $ (0.56) $ 0.24 $ 0.08 $ 0.84
Fully diluted earnings (loss) per Common share................... $ (0.56) $ 0.24 $ 0.08 $ 0.82
</TABLE>
-15-
<PAGE>
THE LOEWEN GROUP INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
TABULAR AMOUNTS EXPRESSED IN THOUSANDS OF U.S. DOLLARS EXCEPT PER SHARE AMOUNTS
13. UNITED STATES ACCOUNTING PRINCIPLES (CONTINUED)
The following average number of shares were used for the computation of
primary and fully diluted earnings per Common share:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- --------------------
1997 1996 1997 1996
--------- --------- --------- ---------
THOUSANDS OF SHARES
<S> <C> <C> <C> <C>
Primary.................................................................... 73,289 60,141 66,700 56,604
Fully diluted.............................................................. 73,289 60,641 66,700 57,455
</TABLE>
(b) BALANCE SHEET
The amounts in the interim consolidated balance sheet that differ from those
reported under Canadian GAAP are as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997 DECEMBER 31, 1996
-------------------------- ------------------------
CANADIAN UNITED CANADIAN UNITED
GAAP STATES GAAP GAAP STATES GAAP
------------ ------------ ---------- ------------
<S> <C> <C> <C> <C>
Assets
Long-term receivables, net of allowances.............. $ 485,059 $ 496,025 $ 288,579 $ 288,579
Investments........................................... 287,694 250,354 266,228 230,911
Insurance invested assets............................. 303,412 306,997 296,249 297,340
Cemetery property..................................... 903,223 1,260,267 615,192 872,782
Names and reputations................................. 606,367 638,681 558,710 586,847
Other assets.......................................... 147,947 172,866 134,143 153,604
Liabilities and Shareholders' Equity
Insurance policy liabilities.......................... 219,770 246,793 212,480 234,909
Other liabilities..................................... 292,256 253,004 216,842 179,944
Deferred income taxes................................. (116,675) 298,307 (67,904) 239,617
Common shares......................................... 1,257,573 1,283,839 796,431 822,378
Retained earnings..................................... 74,686 59,819 80,117 61,824
Unrealized gains on securities available
for sale............................................ -- 7,976 -- 933
Foreign exchange adjustment........................... 13,203 (17,437) 14,506 (16,171)
</TABLE>
-16-
<PAGE>
THE LOEWEN GROUP INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
TABULAR AMOUNTS EXPRESSED IN THOUSANDS OF U.S. DOLLARS EXCEPT PER SHARE AMOUNTS
13. UNITED STATES ACCOUNTING PRINCIPLES (CONTINUED)
(c) STATEMENT OF CASH FLOWS
The statement of cash flows under United States GAAP would differ from the
statement of changes in financial position under Canadian GAAP as the following
non-cash transactions would not be reflected as cash flows:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------
1997 1996
--------- ----------
<S> <C> <C>
Non-cash debt and share consideration on acquisitions...................................... $ 26,270 $ 47,574
Note receivable from sale of subsidiaries.................................................. 15,725 --
Common shares and debt issued for legal settlements........................................ -- 112,000
Dividends payable on preferred shares...................................................... 2,383 2,410
</TABLE>
(d) ACCOUNTING FOR INCOME TAXES
Included in the net effects of accounting for income taxes is approximately
$1,138,000 additional gain related to the sale of subsidiaries and approximately
$300,000 related to the write-down of assets associated with the Company's
restructuring charge. Under United States GAAP, the gain on the sale of
subsidiaries is higher and the write-down of assets is lower than under Canadian
GAAP as a result of the Company's initial adoption of Financial Accounting
Standard ("FAS") 109, which resulted in a cumulative effect adjustment related
to properties acquired by the Company prior to January 1, 1993.
(e) RECENT UNITED STATES ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board ("FASB") issued
FAS 128, Earnings per Share, which the Company will adopt in its consolidated
financial statements for the three months and year ending December 31, 1997. The
effect of this pronouncement on the Company's consolidated financial statements
is not expected to be material.
In June 1997, the FASB issued FAS 130, Reporting Comprehensive Income, and
FAS 131, Disclosures About Segments of an Enterprise and Related Information.
These standards will affect the presentation but not the measurement of the
consolidated financial statements and the related notes.
-17-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Unless the context otherwise requires (i) "Loewen" refers to The Loewen
Group Inc., a company organized under the laws of British Columbia, Canada, (ii)
"LGII" refers to Loewen Group International, Inc., a Delaware corporation and a
wholly-owned subsidiary of Loewen, and (iii) the "Company" refers to Loewen
together with its subsidiaries and associated companies.
OVERVIEW
The Company is the second largest operator of funeral homes and cemeteries
in North America. In addition to providing services at the time of need, the
Company also makes funeral, cemetery and cremation arrangements on a pre-need
basis. As at November 1, 1997, the Company operated 1,042 funeral homes
throughout the United States and Canada. This included 900 funeral homes in the
United States and 142 funeral homes in Canada. In addition, as at such date, the
Company operated 464 cemeteries in the United States and six cemeteries in
Canada. As at November 1, 1997, the Company also operated four insurance
subsidiaries which sell a variety of life insurance products, primarily to fund
funerals purchased through a pre-need arrangement.
The funeral service industry has a number of attractive characteristics.
Historically the funeral service industry has had a low business failure risk
compared with most other businesses and has not been significantly affected by
economic or market cycles. According to the 1995 Business Failure Record
published by The Dun & Bradstreet Corporation, the average business failure rate
in the United States in 1995 was 82 per 10,000. The 1995 failure rate of the
funeral service and crematoria industry was 13 per 10,000, among the lowest of
all industries. In addition, future demographic trends are expected to
contribute to the continued stability of the funeral service industry. The U.S.
Department of Commerce, Bureau of the Census, projects that the number of deaths
in the United States will grow at approximately 1.0% annually from 1990 through
2010. Finally, the funeral service industry in North America is highly
fragmented, consisting primarily of small, stable, family-owned businesses.
Management estimates that notwithstanding the increasing trend toward
consolidation over the last few years, only approximately 11% of the 23,500
funeral homes and approximately 9% of the 10,500 cemeteries in North America are
currently owned or operated by the five largest publicly-traded North American
funeral service companies.
The Company capitalizes on these attractive industry fundamentals through a
growth strategy that emphasizes three principal components: (i) acquiring a
significant number of small, family-owned funeral homes and cemeteries; (ii)
acquiring "strategic" operations consisting predominantly of large,
multi-location urban properties that generally serve as platforms for acquiring
small, family-owned businesses in surrounding regions; and (iii) improving the
revenue and profitability of newly acquired and established operations. As a
result of the successful implementation of this strategy, the Company has grown
significantly. Managing the Company's growth is critical to profitability, and
will continue to be one of the most important responsibilities and challenges
facing the Company.
Due to the successful implementation of its business strategy, the Company
has grown from 489 locations at December 31, 1992 to 1,512 locations at November
1, 1997. However, the Company's dramatic growth has resulted in increased
regional infrastructure and field level staffing. After reviewing the Company's
operating performance for the first six months of 1997 and reviewing budgets for
the balance of 1997, it was determined that certain changes were necessary to
improve the long-term financial performance of the Company. In an effort to
reduce operating costs and reduce general and administrative expenses as a
percentage of revenue, the Company performed a detailed review of the principal
components of its operational, administrative and capital structure. On
September 15, 1997 the Company announced that it would record pre-tax charges of
approximately $80 million ($55 million after-tax) in the third quarter of 1997,
representing restructuring, strategic initiative and other costs, the impact of
which is reflected in the discussion of results of operation. The majority of
the anticipated future savings from these initiatives are associated with the
Company's efforts to more fully integrate its field and administrative
operations, including clustering of funeral home and cemetery locations, and are
expected to favorably impact gross margins in the Company's funeral and cemetery
divisions. These initiatives are also expected
-18-
<PAGE>
to produce savings, as a percentage of revenue, in general and administrative
expenses and interest costs. The Company believes that the benefits of the
initiatives should start to be realized in results for the fourth quarter of
1997.
RESULTS OF OPERATIONS
Detailed below are the Company's operating results for the three months and
the nine months ended September 30, 1997 and 1996, expressed in dollar amounts
as well as relevant percentages. The operating results are presented as a
percentage of total revenue except income taxes which are presented as a
percentage of earnings before income taxes and equity and other earnings of
associated companies. The operating results below for both the three month and
the nine month periods in 1997 include the impact of the restructuring and other
charges announced on September 15, 1997 and referred to in the overview.
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- --------------------
1997 1996 1997 1996
--------- --------- --------- ---------
(IN MILLIONS) (PERCENTAGES)
<S> <C> <C> <C> <C>
Revenue
Funeral.................................................................... $ 140.4 $ 130.8 51.2 56.5
Cemetery................................................................... 109.6 77.7 40.0 33.6
Insurance.................................................................. 24.2 22.9 8.8 9.9
--------- ---------
Total.................................................................... $ 274.2 $ 231.4 100.0 100.0
--------- ---------
--------- ---------
Gross margin
Funeral.................................................................... $ 42.8 $ 50.4 30.5 38.5
Cemetery................................................................... 27.9 25.8 25.5 33.3
Insurance.................................................................. 3.3 6.0 13.6 26.0
--------- ---------
Total.................................................................... $ 74.0 $ 82.2 27.0 35.5
--------- ---------
--------- ---------
Expenses
General and administrative................................................. 45.9 18.0 16.8 7.8
Restructuring costs........................................................ 36.9 -- 13.4 --
Depreciation and amortization.............................................. 17.7 14.3 6.5 6.2
--------- ---------
Earnings/(loss) from operations.............................................. (26.5) 49.9 (9.7) 21.6
Interest on long-term debt................................................... 30.6 22.9 11.2 9.9
Loss on early extinguishment of debt......................................... 7.7 -- 2.8 --
Other costs related to hostile takeover proposal............................. -- 2.6 -- 1.1
Dividends on preferred securities of subsidiary.............................. 1.8 1.8 0.6 0.8
Income taxes................................................................. (23.2) 6.5 n/a 28.7
--------- ---------
(43.4) 16.1 (15.8) 7.0
Equity and other earnings of associated companies............................ 2.6 0.8 0.9 0.3
--------- ---------
Net earnings/(loss).......................................................... $ (40.8) $ 16.9 (14.9) 7.3
--------- ---------
--------- ---------
</TABLE>
THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1996
Consolidated revenue increased 18% to $274.2 million in the three months
ended September 30, 1997 from $231.4 million during the same period in 1996.
Consolidated gross margin decreased 10% to $74.0 million in 1997 from $82.2
million during the same period in 1996. The reduction in gross margin was due to
the significantly lower margin contribution from the funeral division as well as
a decrease in the insurance division contribution. As a percentage of revenue,
consolidated gross margin percentage decreased to 27.0% in 1997 from 35.5% in
1996, due to declines in the gross margin percentages of the Company's funeral
home, cemetery and insurance businesses, which are discussed below.
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<PAGE>
Funeral revenue increased 7% to $140.4 million for the three months ended
September 30, 1997 compared to $130.8 million for the same period in 1996, due
to acquisitions. The number of funeral services performed at locations in
operation for the three months ended September 30, 1996 and 1997 ("Established
Locations") declined by 4.5% from 1996 to 1997; however, this was largely offset
by a higher average revenue per funeral service. Funeral gross margin as a
percentage of funeral revenue for Established Locations decreased to 30.7% in
1997 from 38.5% in 1996, as revenue decreased $0.7 million and costs increased
$8.2 million. The increase in cost of sales was primarily due to an additional
accounts receivable reserve of approximately $4.0 million as well as certain
other incremental charges in the third quarter of 1997 versus 1996, aggregating
approximately $2.0 million. Overall funeral gross margin as a percentage of
funeral revenue decreased to 30.5% in 1997 from 38.5% in 1996 as a result of the
decrease in funeral margin at Established Locations together with the lower
margins on acquired funeral locations.
Cemetery revenue increased 41% to $109.6 million for the three months ended
September 30, 1997 compared to $77.7 million during the same period in 1996,
primarily due to acquisitions. For Established Locations, cemetery gross margin
decreased to 31.3% in 1997 from 33.2% in 1996, primarily as a result of an
increase in revenue of $6.5 million, offset by a $2.7 million increase in costs.
Overall cemetery gross margin percentage decreased to 25.5% in 1997 from 33.3%
in 1996. The decrease in overall cemetery gross margin percentage was
principally a result of (i) lower cemetery revenue of $3.1 million attributable
to imputed interest on non-interest bearing installment contract sales in 1997,
(ii) $2.2 million in cemetery cost of sales related to the write-off of certain
costs related to the National Baptist Convention program initiated during 1995
and terminated in the third quarter of 1997, and (iii) $1.9 million in cemetery
cost of sales related to a write-down of cemetery accounts receivable.
Insurance revenue increased to $24.2 million for the three months ended
September 30, 1997 from $22.9 million during the same period in 1996. Insurance
gross margin decreased from 26.0% to 13.6% primarily due to the inclusion in
1996 of a revision to actuarial assumptions in the amount of $1.6 million.
For the three months ended September 30, 1997, general and administrative
expenses increased to $45.9 million from $18.0 million in 1996. Included in
general and administrative expenses for the three months ended September 30,
1997 are charges of (i) $9.9 million attributable to management's decision to
sever covenant not to compete agreements with former owners in regions where the
local marketplace has changed and the restrictive covenants no longer have value
to the Company, (ii) $6.0 million for litigation, (iii) $4.6 million for the
write-off of acquisition costs associated with acquisitions that management
determined during the third quarter to no longer pursue, and (iv) $3.5 million
of software and other costs associated with a change in the Company's operating
strategy. Without reflecting the impact of these charges, general and
administrative expenses for the three months ended September 30, 1997 increased
$3.9 million over the same period in 1996 due to the expansion of the Company's
infrastructure necessary to purchase, integrate and operate newly acquired
locations, but as a percentage of revenue remained at 7.8%.
The Company recognized a restructuring charge of $36.9 million for the third
quarter. After reviewing the Company's operating performance for the first six
months of 1997 and reviewing budgets for the balance of 1997, it was determined
that certain changes were necessary to improve the long-term financial
performance of the Company. In an effort to reduce operating costs and general
and administrative expenses as a percentage of revenue, the Company performed a
detailed review of the principal components of its operational, administrative
and capital structure. The majority of the anticipated future savings from these
initiatives are associated with the Company's efforts to more fully integrate
its field and administrative operations, including clustering of funeral home
and cemetery locations, and are expected to favorably impact gross margins in
the Company's funeral and cemetery divisions. These initiatives are also
expected to produce savings, as a percentage of revenue, in general and
administrative expenses. The charge is principally composed of (i) $22.7 million
related to the severance of 545 employees in operating locations where the
Company was not achieving the full benefits of local staffing synergies, (ii)
$6.3 million in fixed asset write-downs as a result of management's decision to
curtail or sell certain underperforming locations as part of the reorganization
strategy, and (iii) $7.3 million for lease termination, severance of 47
employees and other expenses related to the closure of the Company's Cincinnati
corporate office.
-20-
<PAGE>
Interest expense on long-term debt increased by $7.7 million for the three
months ended September 30, 1997 primarily as a result of additional borrowings
by the Company to finance its expansion programs.
Loss on early extinguishment of debt of $7.7 million relates to the
prepayment on September 26, 1997 of a Canadian $35 million term credit facility
and the prepayment on October 17, 1997 of three series of senior amortizing
notes totaling approximately $100 million pursuant to an irrevocable prepayment
notice dated September 23, 1997.
The income tax recovery of $23.2 million for the three months ending
September 30, 1997, due to the loss position for the 1997 quarter, compares to
an income tax expense of $6.5 million and an effective tax rate of 28.7% during
the same period in 1996.
Equity and other earnings of associated companies increased to $2.6 million
for the three months ended September 30, 1997 from $0.8 million in 1996 due to
the inclusion of payment-in-kind dividends and the Company's proportionate share
of the loss attributable to the Common shares of Prime Succession Holdings, Inc.
and Rose Hills Holding Corp., as described further in Notes 3 and 4 to the
Company's financial statements.
The net loss for the three months ended September 30, 1997 was $40.8 million
as compared to net earnings of $16.9 million during the same period in 1996. The
net loss for the period was due to the charges referred to in the above
discussion of the operating results for the three months ended September 30,
1997. Fully diluted loss per share was $0.59 per share in 1997 compared to net
earnings of $0.25 per share during the same period in 1996.
-21-
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- --------------------
1997 1996 1997 1996
--------- --------- --------- ---------
(IN MILLIONS) (PERCENTAGES)
<S> <C> <C> <C> <C>
Revenue
Funeral.................................................................... $ 442.5 $ 397.8 53.7 61.4
Cemetery................................................................... 314.0 198.9 38.1 30.7
Insurance.................................................................. 68.0 51.0 8.2 7.9
--------- ---------
Total.................................................................... $ 824.5 $ 647.7 100.0 100.0
--------- ---------
--------- ---------
Gross margin
Funeral.................................................................... $ 164.4 $ 159.9 37.2 40.2
Cemetery................................................................... 97.2 62.7 31.0 31.5
Insurance.................................................................. 12.0 11.1 17.7 21.8
--------- ---------
Total.................................................................... $ 273.6 $ 233.7 33.2 36.1
--------- ---------
--------- ---------
Expenses
General and administrative................................................. 86.1 50.3 10.4 7.8
Restructuring costs........................................................ 36.9 -- 4.5 --
Depreciation and amortization.............................................. 51.1 39.0 6.2 6.0
--------- ---------
Earnings from operations..................................................... 99.5 144.4 12.1 22.3
Interest on long-term debt................................................... 94.3 62.5 11.4 9.7
Loss on early extinguishment of debt......................................... 7.7 -- 0.9 --
Other costs related to hostile takeover proposal............................. -- 2.6 -- 0.4
Dividends on preferred securities of subsidiary.............................. 5.3 5.3 0.6 0.8
Income taxes................................................................. (7.5) 22.2 n/a 30.0
--------- ---------
(0.3) 51.8 0.0 8.0
Equity and other earnings of associated companies............................ 9.4 1.8 1.1 0.3
--------- ---------
Net earnings................................................................. $ 9.1 $ 53.6 1.1 8.3
--------- ---------
--------- ---------
</TABLE>
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1996
Consolidated revenue increased 27% to $824.5 million in the nine months
ended September 30, 1997 from $647.7 million during the same period in 1996.
Consolidated gross margin increased 17% to $273.6 million in 1997 from $233.7
million during the same period in 1996. As a percentage of revenue, consolidated
gross margin decreased to 33.2% in 1997 from 36.1% in 1996, primarily due to a
significant decline in the funeral division gross margin percentage.
Funeral revenue increased 11% to $442.5 million for the nine months ended
September 30, 1997 compared to $397.8 million for the same period in 1996, due
to acquisitions. The number of funeral services performed at locations in
operation for the nine months ended September 30, 1996 and 1997 ("Established
Locations") declined by 3.2% from 1996 to 1997; however, this was offset by a
higher average revenue per funeral service. Funeral gross margin as a percentage
of funeral revenue for Established Locations decreased to 37.8% in 1997 from
40.2% in 1996, as the $0.7 million increase in revenue was offset by a $10.3
million increase in costs. The increase in cost of sales was primarily due to an
additional accounts receivable reserve of $4.0 million as well as certain other
incremental charges in the third quarter of 1997 versus 1996, aggregating
approximately $2.0 million. Overall funeral gross margin as a percentage of
funeral revenue decreased to 37.2% in 1997 from 40.2% in 1996, as a result of
the decrease in funeral margin at Established Locations together with the lower
margins on acquired funeral locations.
Cemetery revenue increased 58% to $314.0 million for the nine months ended
September 30, 1997 compared to $198.9 million during the same period in 1996,
primarily due to acquisitions. Cemetery gross margin percentage decreased to
31.0% in 1997 from 31.5% in 1996 as a result of (i) lower cemetery
-22-
<PAGE>
revenue of $3.1 million attributable to imputed interest on non-interest bearing
installment contract sales in 1997, (ii) $2.2 million in cemetery cost of sales
related to the write-off of certain costs related to the National Baptist
Convention program initiated during 1995 and terminated in the third quarter of
1997, (iii) $1.9 million to cemetery cost of sales related to a write-down of
cemetery accounts receivable, and (iv) partially offset by an increase in
preneed sales. For Established Locations, cemetery gross margin increased to
31.6% in 1997 from 31.3% in 1996, primarily as a result of an increase in
revenue of $12.4 million, offset by an $8.0 million increase in costs.
Insurance revenue increased to $68.0 million for the nine months ended
September 30, 1997 from $51.0 million during the same period in 1996. The
increase was due primarily to the integration of the March 1996 acquisition of
certain net assets of S.I. Acquisition Associates, L.P. ("S.I.") for $156
million (including related costs), which assets included two insurance
companies. The full benefit of this acquired operation was not reflected in the
results for the nine month period ended September 30, 1996 because the
acquisition was consummated late in the first quarter of 1996. Insurance gross
margin decreased from 21.8% to 17.7% primarily due to the inclusion in 1996 of a
revision to actuarial assumptions in the amount of $1.6 million.
For the nine months ended September 30, 1997, general and administrative
expenses increased to $86.1 million from $50.3 million in 1996. Included in
general and administrative expenses for the 1997 period are charges of (i) $9.9
million attributable to management's decision to sever covenant not to compete
agreements with former owners in regions where the local marketplace has changed
and the restrictive covenants no longer have value to the Company, (ii) $6.0
million for litigation, (iii) $4.6 million for the write-off of acquisition
costs associated with acquisitions that management determined during the third
quarter to no longer pursue, and (iv) $3.5 million of software and other costs
associated with a change in the Company's operating strategy. Also included in
general and administrative expenses for the 1997 period is a $3.0 million gain
related to the sale of certain funeral home properties in Wisconsin (see --
Acquisitions, Investments and Capital Expenditures). Without reflecting the
impact of these charges and the gain, general and administrative expenses for
the nine months ended September 30, 1997 increased $14.8 million over the same
period in 1996 due to the expansion of the Company's infrastructure necessary to
purchase, integrate and operate newly acquired locations.
The Company recognized a restructuring charge of $36.9 million for the third
quarter. After reviewing the Company's operating performance for the first six
months of 1997 and reviewing budgets for the balance of 1997, it was determined
that certain changes were necessary to improve the long-term financial
performance of the Company. In an effort to reduce operating costs and reduce
general and administrative expenses as a percentage of revenue, the Company
performed a detailed review of the principal components of its operational,
administrative and capital structure. The majority of the anticipated future
savings from these initiatives are associated with the Company's efforts to more
fully integrate its field and administrative operations, including clustering of
funeral home and cemetery locations, and are expected to favorably impact gross
margins in the Company's funeral and cemetery divisions. These initiatives are
also expected to produce savings, as a percentage of revenue, in general and
administrative expenses. The charge is principally composed of (i) $22.7 million
related to the employee severance of 545 employees in operating locations where
the Company was not achieving the full benefits of local staffing synergies and
as a result operating costs were too high, (ii), $6.3 million in fixed asset
write-downs as a result of management's decision to curtail or sell certain
underperforming locations as part of the reorganization strategy, and (iii) $7.3
million for lease termination, severance of 47 employees and other expenses
related to the closure of the Company's Cincinnati corporate office.
Interest expense on long-term debt increased by $31.8 million for the nine
months ended September 30, 1997 primarily as a result of additional borrowings
by the Company to finance its expansion programs.
Loss on early extinguishment of debt of $7.7 million relates to the
prepayment on September 26, 1997 of a Canadian $35 million term credit facility
and the prepayment on October 17, 1997 of three series
-23-
<PAGE>
of senior amortizing notes totaling approximately $100 million pursuant to an
irrevocable prepayment notice dated September 23, 1997.
The income tax recovery of $7.5 million for the nine months ending September
30, 1997, due to the loss position for the 1997 quarter, compares to an income
tax expense of $22.2 million and an effective tax rate of 30.0% during the same
period in 1996.
Equity and other earnings of associated companies increased to $9.4 million
for the nine months ended September 30, 1997 from $1.8 million in 1996 due to
the inclusion of payment-in-kind dividends and the Company's proportionate share
of the loss attributable to the Common shares of Prime Succession Holdings, Inc.
and Rose Hills Holding Corp., as described further in Notes 3 and 4 to the
Company's financial statements.
Net earnings decreased to $9.1 million for the nine months ended September
30, 1997 from $53.6 million during the same period in 1996 due to the charges
incurred in the third quarter of 1997. Fully diluted earnings per share
decreased to $0.03 per share in 1997 from $0.84 per share during the same period
in 1996.
ACQUISITIONS, INVESTMENTS AND CAPITAL EXPENDITURES
During the nine months ended September 30, 1997 the Company acquired 80
funeral homes and 145 cemeteries in the United States and 22 funeral homes in
Canada for consideration of approximately $426 million. During the same period
in 1996, the Company acquired 124 funeral homes, 92 cemeteries and two insurance
companies for consideration of approximately $438 million. Included in the 1996
acquisitions was the purchase of certain net assets of S.I. Acquisition
Associates L.P., for $156 million.
As of November 1, 1997, the Company had signed agreements, some of which are
non-binding, for the acquisition of 55 additional funeral homes and 45
additional cemeteries for consideration of approximately $178 million. In
addition, in the ordinary course of its business, the Company continually is in
the process of evaluating or negotiating prospective acquisitions in competition
with other potential purchasers. From time to time, the Company may evaluate or
negotiate potential acquisitions, which, if consummated, may be considered
significant based on acquisition price.
From time to time, the Company may dispose of non-core assets or businesses
acquired in conjunction with the acquisition of funeral homes and cemeteries. In
addition, the Company expects to continue to combine or sell a small number of
locations in order to utilize its resources to produce a better return from its
assets.
On June 30, 1997, in order to comply with state law, the Company disposed of
all of its eighteen funeral homes in the state of Wisconsin. The aggregate
proceeds from the sale of these properties was $18.5 million, resulting in a
gain before taxes of $3.0 million. The Company continues to own cemeteries in
Wisconsin. However, in the future the Company will not purchase any funeral
homes in that state until such time as the regulatory issues related to
ownership of both funeral homes and cemeteries are resolved.
On August 8, 1997 the Company announced that it had entered into an
agreement with Service Corporation International ("SCI") to sell its
shareholdings in Arbor Memorial Services Inc., for a gain of approximately $25
million. The Canadian Competition Bureau's review of this transaction has been
completed and the transaction is expected to close on November 18, 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company intends to fund its ongoing expansion programs through a
combination of debt and equity offerings and borrowings under its credit
facilities. The Company plans to finance principal repayments on debt primarily
through the issuance of additional debt or equity or borrowings under revolving
credit facilities and plans to ensure financing is available well in advance of
scheduled principal repayment dates, thereby protecting the Company's liquidity
and maintaining its financial flexibility.
-24-
<PAGE>
The Company's balance sheet at September 30, 1997, as compared to December
31, 1996, reflects changes principally from acquisitions during 1997, as
described in Note 2 to the Company's financial statements, and the 1997
Financings (described below). In addition, during the past two years the Company
has significantly expanded its cemetery and funeral preneed sales programs. The
rapid growth in preneed sales has contributed to the negative cashflow from
operations. Preneed sales are typically structured with low initial cash
payments by the customers which do not offset the cash costs of establishing and
supporting a growing preneed sales program. For cemetery preneed sales, the
balance due is recorded as an installment contract receivable and the future
liability for merchandise as an other liability and, accordingly, the increase
in the level of preneed cemetery sales has resulted in an increase in both
current and long-term receivables and other liabilities.
The Company's objective is to maintain its long-term debt/equity ratio, on
average, in a range of 1.0:1 to 1.5:1. Due to the timing of its ongoing
acquisition program, the Company's long-term debt/equity ratio typically will
rise to the high end of the range, and then will be reduced substantially by an
equity issue. At December 31, 1996 the Company's long-term debt/equity ratio was
1.4:1 and at September 30, 1997 the Company's long-term debt/equity ratio was
1.1:1 largely due to the 1997 Common Share Offering (described below).
1997 FINANCINGS
In June 1997, Loewen completed a public offering in Canada, the United
States and internationally of 13,800,000 Common Shares (including 1,800,000
Common Shares issued pursuant to the underwriters' over-allotment option) for
aggregate gross proceeds of approximately $455 million (the "1997 Common Share
Offering"). The net proceeds from the 1997 Common Share Offering of
approximately $437 million were used for working capital and general corporate
purposes, including acquisitions.
On September 26, 1997, Loewen completed a public offering in Canada and a
private placement in the United States of Cdn. $200,000,000 of 6.10% Series 5
Senior Guaranteed Notes due 2002 (the "Series 5 Senior Notes"). The net proceeds
from the Series 5 Senior Notes offering will be used for working capital and
general corporate purposes, including acquisitions. Pending use for such
purposes, the net proceeds were used to reduce borrowings under LGII's Revolving
Credit Facility and the Canadian Revolving Credit Facility (defined below). The
Series 5 Senior Notes are guaranteed by LGII and secured in the manner described
below under "Collateral Trust Agreement."
On September 29, 1997 LGII expanded its $750,000,000 revolving credit
facility to $1,000,000,000 (the "Revolving Credit Facility"). The Revolving
Credit Facility has two components, a $750 million tranche which matures in
September 2002 and a $250 million 364-day tranche which matures in September
1998. Each of the tranches bears interest at alternative market rates selected
by LGII and has substantially the same terms and conditions as the previous $750
million credit facility. The Revolving Credit Facility is secured in the manner
described below under "Collateral Trust Agreement."
On September 30, 1997, LGII completed a private placement in the United
States of $300 million in pass-through asset trust senior guaranteed notes, due
2009 (the "PATS Senior Notes"). The PATS Senior Notes bear interest at a rate of
6.70% until October 1, 1999, at which time the interest rate will be reset at a
fixed annual rate of 6.05% plus an adjustment equal to LGII's then current
credit spread to the ten year United States Treasury rate. The PATS Senior Notes
are redeemable at the election of the holder, in whole but not in part, at 100%
of the principal amount on October 1, 1999. The net proceeds from the PATS
Senior Notes offering will be used for working capital and general corporate
purposes including acquisitions. Pending use for such purposes, the net proceeds
were used to reduce borrowings under the Revolving Credit Facility and for the
permanent repayment of three series of senior amortizing notes totaling
approximately $100 million. The PATS Senior Notes are guaranteed by Loewen and
secured in the manner described below under "Collateral Trust Agreement."
-25-
<PAGE>
INDEBTEDNESS
In addition to the Revolving Credit Facility and the PATS Senior Notes
described above, LGII has outstanding four series of senior guaranteed notes
aggregating $700 million (the "Series 1-4 Senior Notes") issued in March and
October of 1996. The Series 1-4 Senior Notes are guaranteed by Loewen and bear
interest rates ranging from 7.50% to 8.25% and have initial terms of five to
seven years. LGII also has outstanding one series of senior amortizing notes
(the "Series E Amortizing Notes") in the amount of $50 million. The Series E
Amortizing Notes are guaranteed by Loewen and bear an interest rate of 6.49% and
an initial term of ten years.
In addition to the Series 5 Senior Notes, Loewen also has outstanding one
series of senior amortizing notes (the "Series D Amortizing Notes") in the
amount of $51 million. The Series D Amortizing Notes are guaranteed by LGII and
bear an interest rate of 9.62% and an initial term of ten years. Loewen also has
a Cdn. $50 million revolving credit facility that matures in July 1999 (the
"Canadian Revolving Credit Facility"). A subsidiary of Loewen has a $106 million
secured term loan implemented in connection with the 1994 Management Equity
Investment Plan that will terminate in July 2001 (the "MEIP Loan").
COLLATERAL TRUST AGREEMENT
In 1996, Loewen, LGII and their senior lenders entered into a collateral
trust arrangement pursuant to which the senior lenders share certain collateral
on a pari passu basis (the "Collateral Trust Agreement"). The collateral
includes (i) a pledge for the benefit of the senior lenders of the shares of
capital stock held by Loewen of substantially all of its subsidiaries and (ii)
all of the financial assets of LGII (including the shares of the capital stock
held by LGII of various subsidiaries) (collectively, the "Collateral"). The
Collateral is held by a trustee for the equal and ratable benefit of the various
holders of pari passu indebtedness. This senior lending group consists
principally of the lenders under the Series 1-4 Senior Notes, the Series D
Amortizing Notes, the Series E Amortizing Notes, the Revolving Credit Facility,
the Canadian Revolving Credit Facility, the MEIP Loan, the PATS Senior Notes and
the Series 5 Senior Notes as well as the holders of certain letters of credit.
RESTRICTIONS ON PAYMENT OF DIVIDENDS
Certain of the Company's debt instruments and credit facilities contain
restrictions, including change of control provisions and provisions restricting
payment of dividends on Common and preferred shares, restricting encumbrance of
assets, limiting redemption or repurchase of shares, limiting disposition of
assets, limiting the amount of additional debt, limiting the amount of capital
expenditures and requiring the Company to maintain specified financial ratios.
At September 30, 1997, none of the Company's retained earnings were restricted
or unavailable for payment of dividends under the most restrictive agreement.
See Note 5 to the Company's financial statements.
In connection with the issuance of the MIPS by LGC in August 1994, Loewen is
guarantor of a Series A Junior Subordinated Debenture due August 31, 2024 issued
by LGII (the "Series A Debenture"). Under the terms of the Series A Debenture,
Loewen may not pay dividends on its Common shares if (i) there shall have
occurred any event that, with the giving of notice or the lapse of time or both,
would constitute an Event of Default (as defined in the Series A Debenture),
(ii) Loewen is in default with respect to payment of any obligations under
certain related guarantees or (iii) LGII shall have given notice of its election
to select an Extension Period (as defined in the Series A Debenture), and such
period, or any extension thereof, shall be continuing. For further information
regarding the MIPS, see Note 7 to the Company's financial statements.
Payments of dividends and loans and advances by subsidiaries to Loewen or
LGII are not restricted except that the Company's insurance subsidiaries are
subject to certain state regulations which restrict distributions, loans and
advances from such subsidiaries to the Company.
-26-
<PAGE>
SHARE REPURCHASE PROGRAM
On September 15, 1997 the Company announced that it may, from time to time
and subject to market and other conditions, repurchase up to approximately
3,600,000 of its Common Shares and up to 440,000 of its Series C Preferred
Shares, through the facilities of the Toronto Stock Exchange, the Montreal
Exchange and the New York Stock Exchange. As at November 1, 1997, no share
repurchases had been made.
INTEREST RATE RISK MANAGEMENT
The Company enters into derivative transactions with financial institutions
only as hedges of other financial transactions and not for speculative purposes.
The Company's policies do not allow leveraged transactions and are designed to
minimize credit and concentration risk with counterparties. The Company's
practice is to use swaps and options to manage its exposure to interest rate
movements. The Company's strategy is to maintain an average of between 60% and
80% of its debt subject to fixed interest rates, although at any point in time
during a period the percentage of debt subject to fixed interest rates may be
higher or lower. The Company also uses futures and options to fix the interest
rate of anticipated financing transactions in advance. All derivatives are
entered into as hedges based on several criteria, including the timing, size and
term of the anticipated transaction. Any gain or loss from an effective hedging
transaction is deferred and amortized over the life of the financing transaction
as an adjustment to interest expense.
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<PAGE>
PART II
ITEM 1. LEGAL PROCEEDINGS.
CLASS ACTIONS ALLEGING SECURITIES LAWS VIOLATIONS
On November 4, 1995, a class action lawsuit claiming violations of federal
securities laws was filed on behalf of a class of purchasers of Company
securities against the Company and five individuals who were officers of the
Company (four of whom were also directors) in the United States District Court
for the Eastern District of Pennsylvania. LGII, LGC, and the lead underwriters
(the "MIPS Underwriters") of LGC's 1994 offering of the MIPS, were subsequently
added as defendants. On November 7, 1995, a class action lawsuit was filed on
behalf of a class of purchasers of Common Shares against the Company and the
same individual defendants in the United States District Court for the Southern
District of Mississippi alleging Federal securities law violations and related
common law claims. On December 1, 1995, a class action lawsuit was filed on
behalf of a class of purchasers of the Company's securities against the Company,
LGII, LGC and the same individual defendants in the United States District Court
for the Eastern District of Pennsylvania. On June 11, 1996 all claims against
the MIPS Underwriters were dismissed without prejudice, by agreement of the
parties. The cases were consolidated before the District Court of the Eastern
District of Pennsylvania. A Consolidated and Amended Class Action Complaint was
filed on September 16, 1996.
On November 4, 1997, the defendants and counsel for the class action
plaintiffs reached an agreement in principle to settle the class actions. The
Company has agreed to pay $5 million, notice costs and 50% of the administration
costs, provided that the total notice and administration costs to be paid by the
Company does not exceed $100,000. The settlement is subject to certain
conditions, including review and approval by the Court.
ROE ET AL., PALLADINO ET AL., O'SULLIVAN AND SCHNEIDER
As previously reported in the Company's Report on Form 10-Q for the quarter
ended June 30, 1997, the Company has settled the claims described below.
In October 1995, Roe and 22 other families filed a lawsuit against LGII and
Osiris in Florida Circuit Court in Clearwater, Florida. In early 1996, a related
lawsuit, Palladino, et al. was filed by eight families and assigned to the same
judge handling the Roe matter. The Roe and Palladino lawsuits ultimately were
consolidated (the "Roe/Palladino Lawsuit"). In October 1996, a Fifth Amended
Complaint relating to the Roe/Palladino lawsuit was filed on behalf of a total
of 150 plaintiff families. Plaintiffs contended that in July 1992, employees of
the Royal Palm Cemetery facility who were installing a sprinkler line disturbed
the remains of infants in one section of the cemetery, and alleged various tort
claims.
In July 1997, the parties settled all claims made by plaintiff families
relating to graves located in the first row (the row closest to the sprinkler
line) ("First Row Plaintiffs"). Under the terms of the settlement, the Company
paid $300,000, the insurance carriers for Osiris and Loewen agreed to pay the
balance of the settlement and defense costs, and the claims by the First Row
Plaintiffs were dismissed. There are two families who remain as plaintiffs in
the Roe/Palladino Lawsuit. Neither of the remaining plaintiff families are First
Row Plaintiffs. The Company believes that any ultimate liability to the families
who remain as plaintiffs in the Roe/Palladino Lawsuit and associated costs will
not have a material adverse effect on the Company's business, financial
condition and results of operations.
ESNER ESTATE
On February 1, 1995, Stuart B. Esner and Sandra Esner (the "Executors") as
coexecutor for the Estate of Gerald F. Esner (the "Esner Estate") filed an
action in the Court of Common Pleas in Bucks County, Pennsylvania against Osiris
and a law firm (the "Law Firm") that previously represented Osiris and its
principal shareholders, Gerald F. Esner, Lawrence Miller and William R. Shane.
Messrs. Miller and Shane currently are executive officers of the Company and
LGII.
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<PAGE>
The complaint alleged that Osiris breached the terms of a Second Amended and
Restated Shareholders' Agreement among Messrs. Esner, Miller and Shane (the
"Shareholders' Agreement") by attempting to repurchase shares of Osiris held by
the Esner Estate (the "Esner Shares") without complying with the terms of the
Shareholders' Agreement, and that the Law Firm breached its fiduciary duty and
committed malpractice in connection with the drafting of the Shareholders'
Agreement and its representation of Esner and Osiris. The Executors asked the
Court (i) to have the value of Osiris reappraised pursuant to the terms of the
Shareholders' Agreement and (ii) to require Osiris to repurchase the Esner
Shares pursuant to a new appraisal and the alleged terms of the Shareholders'
Agreement or, alternatively, to pay the Esner Estate the fair value of the Esner
Shares as determined by the new appraisal.
In March 1995, LGII purchased all of the issued and outstanding shares of
Osiris, including the Esner Shares. In connection with the purchase, LGII
entered into an indemnification agreement whereby Messrs. Miller and Shane
agreed to indemnify and hold LGII harmless with respect to any claims,
liabilities, losses and expenses, including reasonable attorney's fees, in
connection with or arising from the Esner Estate litigation.
On April 9, 1996, the Executors filed a second complaint, which names
Messrs. Miller and Shane and LGII as defendants. The second complaint alleges
breach of contract, fraud and related claims against Messrs. Miller and Shane,
and that LGII joined a civil conspiracy by acquiring Osiris. The Executors
request compensatory damages of $24,300,000 against the various defendants, and
seek punitive damages from Messrs. Miller and Shane. The two cases were
consolidated by the Court.
On October 9, 1996, the Executors instituted a new civil action against the
Law Firm. On November 18, 1996 the Executors instituted a new civil action
against the individual partners of the Law Firm. In both complaints, the
Executors expanded upon the allegations against the Law Firm contained in the
previous complaints. By stipulation approved by the Court on February 24, 1997,
the parties agreed to consolidate all suits and to permit the Executors to file
a Third Amended Complaint, which was filed on February 10, 1997. The prayers for
relief remain unchanged. Osiris and Messrs. Miller and Shane filed, and the
Court granted, preliminary challenges to the Third Amended Complaint. The Court
also dismissed the claims against LGII for failure to state a claim upon which
relief can be granted, although the Third Amended Complaint does continue on
unaffected counts.
The Company has determined that it is not possible at this time to predict
the final outcome of these legal proceedings and that it is not possible to
establish a reasonable estimate of possible damages, if any, or reasonably to
estimate the range of possible damages that may be awarded to the plaintiffs.
Accordingly, no provision with respect to this lawsuit has been made in the
Company's interim consolidated financial statements.
FELDHEIM ET AL. V. SI-SIFH CORP. ET AL. AND DUFFY ET AL. V. SI-SIFH CORP. ET AL
Two complaints were filed in 1997 on behalf of individuals who claim damages
in connection with funeral insurance policies allegedly issued to them by
insurance companies owned, directly or indirectly, by S.I. Acquisition
Associates, L.P. ("S.I."). The Company acquired the assets of S.I. in March
1996.
In January 1997, Elmer C. Feldheim and four other individuals filed a
lawsuit on behalf of themselves and a class of similarly situated individuals
and/or entities against SI-SIFH Corp., SI-SI Insurance Company, Inc., Loewen
Louisiana Holdings, Inc., and LGII in the Parish of Jefferson, State of
Louisiana. Plaintiffs seek a class action. SI-SIFH Corp. and SI-SI Insurance
Company, Inc. are affiliates of S.I.
In June 1997, Lloyd Duffy, Sr. and four other individuals filed a lawsuit on
behalf of themselves and a class of similarly situated individuals and/or
entities against SI-SIFH Corp., SI-SI Insurance Company, Inc., Loewen Louisiana
Holdings, Inc., and LGII in the Parish of Orleans, State of Louisiana.
Plaintiffs seek a class action. The Duffy complaint was filed by the same
lawyers who filed the complaint in the Feldheim case, and is a virtually
identical copy of the Feldheim complaint. The Duffy case is pending in the trial
court and, as of the date hereof, no discovery has taken place.
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<PAGE>
The Feldheim and Duffy plaintiffs allegedly hold or held funeral insurance
policies issued by insurance companies owned, directly or indirectly, by the
defendants. The plaintiffs allege that (i) the defendants failed to provide the
funeral services purchased with the policies by, among other things, offering a
casket of inferior quality upon presentation of a policy, and (ii) in connection
with the sale of the insurance policy, the insurance companies negligently or
fraudulently represented and interpreted the scope and terms of the policies and
omitted to provide material information regarding the policy benefits and
limitations. Plaintiffs also alleged unfair trade practices in violation of
Louisiana's trade practices law.
Plaintiffs' petitions seek damages, penalties and attorneys' fees. Louisiana
law prohibits plaintiffs from alleging specific amounts of damages. Plaintiffs
also seek a declaratory judgment compelling defendants to honor the policies.
On June 13, 1997, the district court in Jefferson Parish dismissed the
Feldheim plaintiffs' claim to a class action, and plaintiffs have appealed.
Briefing of the appeal is expected to be completed in December 1997 and oral
argument is expected to be scheduled within a few months thereafter.
The Company has determined that it is not possible to predict the final
outcome of these legal proceedings and that it is not possible to establish a
reasonable estimate of possible damages, if any, or reasonably to estimate the
range of possible damages that may be awarded to the plaintiffs. Accordingly, no
provision with respect to these lawsuits has been made in the Company's interim
consolidated financial statements.
OTHER
The Company is a party to other legal proceedings in the ordinary course of
its business but does not expect the outcome of any other proceedings,
individually or in the aggregate, to have a material adverse effect on the
Company's financial position, results of operation or liquidity.
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ITEM 5. OTHER INFORMATION.
FORWARD-LOOKING STATEMENTS
Management believes that the aggregate purchase price for acquisitions in
1997 will approximate $500 million. The foregoing statement and certain other
statements made in this Form 10-Q, in other filings made with the Securities and
Exchange Commission, and elsewhere (including oral statements made on behalf of
the Company) are forward-looking statements within the meaning of Section
27-A(i) of the Securities Act of 1933 and Section 21E(i) of the Securities
Exchange Act of 1934. Shareholders and potential investors are hereby cautioned
that certain events or circumstances could cause actual results to differ
materially from those estimated, projected or predicted. In addition,
forward-looking statements are based on management's knowledge and judgment as
of the date that such statements are made. The Company undertakes no obligation
to publicly release the result of any revisions to these forward-looking
statements that may be made to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
CAUTIONARY STATEMENTS
In addition to other information in this Form 10-Q, the following important
factors, among others, could cause acquisition levels and other future results
to differ materially from estimates, predictions or projections.
1. ACQUISITION LEVELS. The funeral services industry acquisition market is
extremely competitive. The Company's competition for acquisitions includes four
publicly-traded companies with significant United States operations. Aggressive
pricing by the Company's competitors, particularly for strategic operations, may
result in increased acquisition costs. The timing and certainty of completion of
potential acquisitions are based on many factors, including the availability of
financing. There can be no assurance that funds will be available to complete
all future acquisitions, and there can be no assurance that the Company will
complete any specific number or dollar amount of acquisitions in a particular
year.
2. REVENUE AND MARGINS. The most significant component of increases in
revenue is the level of acquisitions, discussed above. Revenue is also affected
by the volume of services rendered, and the mix and pricing of services and
products sold. Margins are affected by the volume of services rendered, the mix
and pricing of services and products sold and related costs. Further, revenue
and margins may be affected by fluctuations in the number of deaths, competitive
pricing strategies, preneed sales and other sales programs implemented by the
Company.
3. LEGAL PROCEEDINGS. The Company's 1995 results were materially and
adversely affected by the unanticipated outcome of certain legal proceedings.
There currently are legal proceedings pending against the Company, the outcome
of which could be material. The Company is unable to predict the outcome of such
proceedings at this time.
4. OTHER. Consolidated financial results also may be affected by (i) the
ability of the Company to manage its growth by implementing appropriate
management and administrative support structures, (ii) the cost of the Company's
financing arrangements (including interest rates on long-term debt), (iii) the
number of Common shares outstanding, (iv) competition, (v) the Company's
effective tax rate, (vi) the accounting treatment of acquisitions and the
valuation of assets, (vii) the amount and growth rate of the Company's general
and administrative costs and (viii) changes in applicable accounting principles
and governmental regulations.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- -----------------------------------------------------------------------------------
<C> <S>
3 CHARTER DOCUMENTS
3.1 Certificate of Incorporation of The Loewen Group Inc. ("Loewen") issued by
the British Columbia Registrar of Companies (the "Registrar") on October
30, 1985(1)
3.2 Altered Memorandum of the Registrant, filed with the Registrar on June 21,
1996(2)
3.3 Articles of the Registrant, restated, filed with the Registrar on March 1,
1988, as amended on March 30, 1988, April 21, 1988, May 19, 1989, May
28, 1992, May 20, 1993, June 29, 1994, December 21, 1995 and February 7,
1996(3)
4 INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING INDENTURES
4.1.1 Note Agreement by Loewen and Loewen Group International, Inc. ("LGII") re
9.70% Senior Guaranteed Notes, Series A, due November 1, 1998, issued by
LGII ("Series A Notes"), 9.93% Senior Guaranteed Notes, Series B, due
November 1, 2001, issued by LGII ("Series B Notes"), and 9.70% Senior
Guaranteed Notes, Series C, due November 1, 1998, issued Loewen ("Series
C Notes"), dated for reference October 1, 1991(1)
4.1.2 Second Amendment, dated for reference May 15, 1996, to Note Agreements,
dated for reference October 1, 1991, among Loewen, LGII and institutions
named therein, re Series A Notes, Series B Notes and Series C Notes(4)
4.2 Guaranty Agreement by Loewen re Series A Notes and Series B Notes, dated
for reference October 1, 1991(1)
4.3 Guaranty Agreement by LGII re Series C Notes, dated for reference October
1, 1991(1)
4.4.1 Note Agreement, dated for reference September 1, 1993, by and between
Loewen and LGII re 9.62% Senior Guaranteed Notes, Series D, due
September 11, 2003, issued by Loewen ("Series D Notes"), as amended on
June 10, 1994(1)
4.4.2 Second Amendment, dated for reference May 15, 1996, to Note Agreements,
dated for reference September 1, 1993, among Loewen, LGII and
institutions named therein, re Series D Notes(4)
4.5 Guaranty Agreement by LGII re Series D Notes, dated for reference April 1,
1993(1)
4.6.1 Note Agreement by LGII and Loewen re 6.49% Senior Guaranteed Notes, Series
E, due February 25, 2004, issued by LGII ("Series E Notes"), dated for
reference February 1, 1994(1)
4.6.2 Second Amendment, dated for reference May 15, 1996, to Note Agreements,
dated for reference February 1, 1994, among Loewen, LGII and Teachers
Insurance and Annuity Association of America, re Series E Notes(4)
4.7 Guaranty Agreement by Loewen re Series E Notes, dated for reference
February 1, 1994(1)
4.8.1 Amended and Restated 1994 MEIP Credit Agreement, dated as of June 14,
1994, amended and restated as of May 15, 1996 (the "MEIP Credit
Agreement"), by and between Loewen Management Investment Corporation, in
its capacity as agent for LGII ("LMIC"), Loewen and the banks listed
therein (the "MEIP Banks") and Wachovia Bank of Georgia, N.A., as agent
for the MEIP Banks ("MEIP Agent")(1)
4.8.2 First Amendment to the MEIP Credit Agreement, dated as of December 2,
1996(5)
</TABLE>
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<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- -----------------------------------------------------------------------------------
<C> <S>
4.8.3 Second Amendment to the MEIP Credit Agreement, dated as of April 30,
1997(5)
4.9 Security Agreement, dated as of June 14, 1994, by and between LMIC and the
MEIP Agent(1)
4.10 Guaranty dated as of June 14, 1994, by LGII in favor of the MEIP Agent for
the ratable benefit of the MEIP Banks(1)
4.11 Guaranty dated as of June 14, 1994, by Loewen in favor of the MEIP Agent
for the ratable benefit of the MEIP Banks(1)
4.12 Exchange Acknowledgment by Loewen, with respect to the 1994 Exchangeable
Floating Rate Debentures due July 1, 2001 issued by LGII, dated June 15,
1994(1)
4.13 Indenture, dated as of August 15, 1994, by and between LGII, as issuer,
Loewen, as guarantor, and State Street Bank and Trust Company, as
trustee with respect to 9.45% Junior Subordinated Debentures, Series A,
due 2024, issued by LGII and guaranteed by Loewen(6)
4.14 MIPS Guarantee Agreement, dated August 15, 1994(6)
4.15 Zero Coupon Loan Agreement, dated as of November 1, 1994, by and between
WLSP Investment Partners I Neweol Finance B.V., Electrolux Holdings
B.V., Man Production Rotterdam B.V., Adinvest A.G., and Wachovia Bank of
Georgia, N.A.(1)
4.16 Indenture, dated as of March 20, 1996, by and between LGII, as issuer,
Loewen, as guarantor of the obligations of LGII under the Indenture, and
Fleet National Bank as Trustee, with respect to Senior Guaranteed Notes
of LGII(7)
4.17 Form of Global Series 1 and 2 Outstanding Note of LGII(7)
4.18 Form of Physical Series 1 and 2 Outstanding Note of LGII(7)
4.19 Form of Global Series 1 and 2 Exchange Note of LGII(4)
4.20 Form of Physical Series 1 and 2 Exchange Note of LGII(4)
4.21 Form of Senior Guarantee of LGII's Series 1 and 2 Notes(4)
4.22 Amended and Restated Credit Agreement, dated as of September 29, 1997
("BMO Credit Agreement"), among LGII, as borrower, Loewen, as a
guarantor, the lenders named therein, as the lenders, Goldman, Sachs &
Co., as the documentation agent and Bank of Montreal, as issuer,
swingline lender and administrative and syndication agent
4.23 Collateral Trust Agreement, dated as of May 15, 1996, among Bankers Trust
Company, as trustee, Loewen, LGII and various other pledgers(4)
4.24.1 Amended and Restated Operating Credit Agreement, dated for reference July
15, 1996, between Loewen and Royal Bank of Canada(9)
4.24.2 Third Amendment to Operating Credit Agreement, dated for reference July
15, 1996, among Loewen, LGII and Royal Bank of Canada(9)
4.25 Indenture, dated as of October 1, 1996, by and between LGII, Loewen and
Fleet National Bank, as Trustee, with respect to the Series 3 and 4
Notes(9)
4.26 Form of Global Series 3 and 4 Outstanding Note of LGII(9)
4.27 Form of Physical Series 3 and 4 Outstanding Note of LGII(9)
4.28 Form of Global Series 3 and 4 Exchange Note of LGII(10)
4.29 Form of Physical Series 3 and 4 Exchange Note of LGII(10)
4.30 Form of Senior Guarantee of LGII's Series 3 and 4 Notes(6)
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- -----------------------------------------------------------------------------------
<C> <S>
4.31 Indenture, dated as of September 26, 1997, between TLGI, as issuer, LGII,
as guarantor, and The Trust Company of Bank of Montreal, as trustee,
with respect to the Series 5 Notes
4.32 Form of Series 5 Senior Guaranteed Note of TLGI
4.33 Form of Senior Guarantee of TLGI's Series 5 Note
4.34 Indenture, dated as of September 30, 1997, between LGII, as issuer, TLGI,
as guarantor, and State Street Bank and Trust Company, as trustee, with
respect to the Senior Guaranteed Notes due 2009
4.35 Form of Physical Senior Guaranteed Note due 2009 of LGII
4.36 Form of Global Senior Guaranteed Note due 2009 of LGII
4.37 Form of Senior Guarantee of LGII's Senior Guaranteed Note due 2009
4.38 Shareholder Protection Rights Plan, dated as of April 20, 1990, as amended
on May 24, 1990 and April 7, 1994 and reconfirmed on May 17, 1995(1)
4.39 Form of Indenture by and between LGII, as issuer, Loewen, as guarantor,
and Fleet National Bank, as trustee(8)
4.40 Altered Memorandum of The Loewen Group Inc., filed with the British
Columbia Registrar of Companies (the "Registrar") on June 21, 1996(11)
4.41 Articles of Loewen, restated, filed with the Registrar on March 1, 1988,
as amended(7)
4.42 The Registrants hereby agree to furnish to the Commission, upon request, a
copy of the instruments which define the rights of holders of long-term
debt of the Registrants. None of such instruments not included as
exhibits herein collectively represents long-term debt in excess of 10%
of the consolidated total assets of LGII or Loewen.
10 MATERIAL CONTRACTS
10.1 Stock Purchase Agreement, dated as of March 16, 1995, by and between
Osiris Holding Corporation and LGII(12)
10.2 Receipt Agreement, dated as of January 3, 1996, for the Cumulative
Redeemable Convertible First Preferred Shares Series C of Loewen
("Series C Shares")(3)
10.3 Undertaking by Raymond L. Loewen and Anne Loewen, dated as of January 3,
1996, to vote in favor of the motion to subdivide the Series C Shares(3)
10.4 Settlement Agreement, dated as of February 1, 1996, by and between Loewen,
LGII and affiliated entities and J.J. O'Keefe, Sr., Gulf National Life
Insurance Company and affiliated entities(3)
10.5 Shareholders' Agreement, dated as of February 9, 1996 by and between
Loewen, LGII, J.J. O'Keefe, Sr., Gulf National Life Insurance Company
and affiliated entities, and certain individuals and law firms named
therein(3)
10.6 Settlement Agreement and Mutual General Release effective as of February
12, 1996, entered into on March 19, 1996, by and between Provident
American Corporation, Provident Indemnity Life Insurance Company, Loewen
and LGII(3)
10.7 Registration Rights Agreement, dated as of March 20, 1996, by and between
LGII, Loewen and the Initial Purchasers named therein(3)
10.8 Asset Purchase Agreement, dated as of March 26, 1996, by and between LLI,
Inc., and LLPC, Inc. and S.I. Acquisition Associates, L.P.(3)
10.9 Asset Purchase Agreement, dated as of March 26, 1996, by and between
Loewen Louisiana Holdings, Inc. and S.I. Acquisition Associates, L.P.(3)
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- -----------------------------------------------------------------------------------
<C> <S>
*10.10 Form of Indemnification Agreement with Outside Directors(13)
*10.11 Form of Indemnification Agreement with Officers(13)
*10.12 Form of The Loewen Group Inc. Severance Agreement(13)
*10.13 The Loewen Group Inc. Severance Pay Plan(13)
*10.14 Employment Agreement, dated August 19, 1988, by and between Loewen and Tim
Hogenkamp(1)
*10.15 Employment Agreement, dated March 6, 1990, by and between Loewen and Peter
S. Hyndman(1)
*10.16 Employment Agreement, dated March 21, 1990, by and between Loewen and
David FitzSimmon(1)
*10.17 Employment Agreement, and Covenant Not to Compete, dated November 14,
1990, by and between LGII and Albert S. Lineberry, Sr.(1)
*10.18 Employment Agreement, dated December 18, 1990, by and between Loewen and
Peter W. Roberts(1)
*10.19 Employment Agreement, dated April 12, 1991, by and between Loewen and
Dwight Hawes(1)
*10.20 Employment Agreement, dated October 9, 1991, by and between Loewen and
Timothy A. Birch(1)
*10.21 Consulting Agreement, dated July 18, 1994, by and between Loewen and
Charles B. Loewen, LGII, and Corporate Services International Inc.(1)
*10.22 Employment Letter, dated March 10, 1995, by Raymond L. Loewen to Paul
Wagler(6)
*10.23 Employment Agreement, dated March 17, 1995, by and between Loewen, LGII
and Lawrence Miller(1)
*10.24 Employment Agreement, dated March 17, 1995, by and between Loewen and
William R. Shane(1)
*10.25 1994 Management Equity Investment Plan (the "MEIP")(1)
*10.26 Form of Executive Agreement executed by participants in the MEIP(6)
*10.27 1994 Outside Director Compensation Plan as restated and amended as at
January 9, 1997(11)
*10.28 Severance Agreement, dated June 15, 1995, by and between Loewen and Robert
Garnett(3)
*10.29 Employee Stock Option Plan (United States), as restated and amended as at
April 2, 1996(11)
*10.30 Employee Stock Option Plan (Canada), as restated and amended as at April
2, 1996(14)
*10.31 Employment Agreement, dated April 30, 1996, by and between Loewen and
Grant Ballantyne(6)
*10.32 Employment Agreement, dated May 1, 1996, amended July 18, 1996 by and
between Loewen and Douglas J. McKinnon(6)
*10.33 Resignation and Release Agreement, effective June 10, 1996, by and between
Loewen, LGII and Robert O. Wienke(6)
11 STATEMENTS RE COMPUTATION OF PER SHARE EARNINGS
27 FINANCIAL DATA SCHEDULE
</TABLE>
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<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- -----------------------------------------------------------------------------------
<C> <S>
99 ADDITIONAL EXHIBITS
99.1 Stock Purchase Agreement, dated as of June 14, 1996, by and among Prime
Succession, Inc., the other individuals or entities listed on the
signature pages thereof, Loewen and Blackhawk Acquisition Corp.(15)
99.2 Put/Call Agreement, dated as of August 25, 1996, by and among Blackstone,
Blackstone Offshore Capital Partners II L.P. ("Blackstone Offshore"),
Blackstone Family Investment Partnership II L.P. ("Blackstone Family"),
PSI Management Direct L.P. ("PSI"), LGII and Loewen(15)
99.3 Stockholders' Agreement, dated as of August 26, 1996, by and among Prime
Succession, Inc. (to be renamed Prime Succession Holdings, Inc.),
Blackstone, Blackstone Offshore, Blackstone Family, PSI and LGII(15)
99.4 Subscription Agreement, dated as of November 19, 1996, by and among Rose
Hills Holdings Corp., Blackstone, Blackstone Rose Hills Offshore Capital
Partners L.P. ("Blackstone Rose Hills"), Blackstone Family, Roses
Delaware, Inc. ("RDI"), Loewen, LGII and RHI Management Direct, L.P.
("RHI")(16)
99.5 Put/Call Agreement, dated as of November 19, 1996, by and among
Blackstone, Blackstone Offshore, Blackstone Family, Blackstone Rose
Hills, LGII, RDI, Loewen and RHI(16)
99.6 Stockholders' Agreement, dated as of November 19, 1996, by and among Rose
Hills, Blackstone, Blackstone Rose Hills, Blackstone Family, RDI, LGII
and RHI(16)
</TABLE>
- ------------------------
* Compensatory plan or management contract
(1) Incorporated by reference from Loewen's Annual Report on Form 10-K for the
year ended December 31, 1994, filed on March 31, 1995 (File No. 0-18429)
(2) Incorporated by reference from Loewen's Quarterly Report on Form 10-Q for
the Quarter ended June 30, 1996, filed on August 15, 1996 (File No. 0-18429)
(3) Incorporated by reference from Loewen's Annual Report on Form 10-K for the
year ended December 31, 1994, filed on March 31, 1995 (File No. 0-18429)
(4) Incorporated by reference from the Registration Statement on Form S-4 filed
by Loewen on May 3, 1996, as amended (File No. 333-03135)
(5) Incorporated by reference from Loewen's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1997, filed on May 13, 1997 (File No. 1-12163)
(6) Incorporated by reference from the combined Registration Statement on Form
F-9/F-3 filed by LGII and Loewen on July 1, 1994, as amended (File Nos.
33-81032 and 33-81034)
(7) Incorporated by reference from Loewen's Annual Report on Form 10-K for the
year ended December 31, 1995, filed on March 28, 1996, as amended (File No.
0-18429)
(8) Incorporated by reference from the Registration Statement on Form S-3 filed
by Loewen and LGII on March 21, 1997, as amended (File No. 333-23747)
(9) Incorporated by reference from Loewen's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1996, filed on November 14, 1996 (File No.
1-12163)
(10) Incorporated by reference from the Registration Statement on Form S-4 filed
by LGII and Loewen on November 18, 1996, as amended (File Nos. 333-16319 and
333-16319-01)
(11) Incorporated by reference from Loewen's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1996, filed August 15, 1996 (File No. 0-18429)
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<PAGE>
(12) Incorporated by reference from Loewen's Periodic Report on Form 8-K/A No. 1
dated April 18, 1995, filed May 5, 1995 (File No. 0-18429)
(13) Incorporated by reference from Loewen's Solicitation/Recommendation
Statement on Schedule 14D-9, filed on October 10, 1996, as amended
(14) Incorporated by reference from Loewen's Annual Report on Form 10-K for the
year ended December 31, 1996, filed on March 31, 1997 (File No. 1-12163)
(15) Incorporated by reference from Loewen's Periodic Report on Form 8-K, dated
April 26, 1996, filed October 12, 1996, amended October 30, 1996 (File No.
0-18429)
(16) Incorporated by reference from Loewen's Periodic Report on Form 8-K, dated
November 19, 1996, filed December 27, 1996 (File No. 1-12163)
(b) REPORTS ON FORM 8-K
The following Current Reports on Form 8-K were filed by Loewen during the
subject quarter:
<TABLE>
<CAPTION>
DATE OF REPORT ITEM NUMBER DESCRIPTION
- ----------------------- ------------------------ ---------------------------------------------------------------
<S> <C> <C>
July 17, 1997 Item 5. Other Events Press release announcing Raymond L. Loewen's increase in share
(filed July 18, 1997) ownership of TLGI.
August 11, 1997 Item 5. Other Events (a) Press release announcing TLGI's sale of its minority
(filed August 14, 1997) interest in Arbor Memorial Services, Inc.
(b) Press release announcing financial results for the second
quarter of 1997.
September 5, 1997 Item 5. Other Events Press release announcing the scheduled quarterly cash dividend
(filed September 5, on TLGI's 6% Cumulative Redeemable Convertible First Preferred
1997) Shares, Series C.
September 9, 1997 Item 5. Other Events Press release announcing the filing of a preliminary prospectus
(filed September 9, with Canadian securities regulatory authorities for a public
1997) debt offering in Canada.
September 16, 1997 Item 5. Other Events Press release announcing a series of strategic initiatives
(filed September 16, designed to streamline operations, reduce costs and build a
1997) stronger foundation for future growth.
</TABLE>
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Loewen
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
THE LOEWEN GROUP INC.
Date: November 13, 1997 By: /s/ PAUL WAGLER
-----------------------------------------
Name: Paul Wagler
Title: SENIOR VICE-PRESIDENT, FINANCE
AND CHIEF FINANCIAL OFFICER
Date: November 13, 1997 By: /s/ WILLIAM G. BALLANTYNE
-----------------------------------------
Name: William G. Ballantyne
Title: SENIOR VICE-PRESIDENT, FINANCIAL CONTROL
AND ADMINISTRATION
(CHIEF ACCOUNTING OFFICER)
-38-
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INDEX TO EXHIBITS
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3 CHARTER DOCUMENTS
3.1 Certificate of Incorporation of The Loewen Group Inc. ("Loewen") issued by
the British Columbia Registrar of Companies (the "Registrar") on October
30, 1985(1)
3.2 Altered Memorandum of the Registrant, filed with the Registrar on June 21,
1996(2)
3.3 Articles of the Registrant, restated, filed with the Registrar on March 1,
1988, as amended on March 30, 1988, April 21, 1988, May 19, 1989, May
28, 1992, May 20, 1993, June 29, 1994, December 21, 1995 and February 7,
1996(3)
4 INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING INDENTURES
4.1.1 Note Agreement by Loewen and Loewen Group International, Inc. ("LGII") re
9.70% Senior Guaranteed Notes, Series A, due November 1, 1998, issued by
LGII ("Series A Notes"), 9.93% Senior Guaranteed Notes, Series B, due
November 1, 2001, issued by LGII ("Series B Notes"), and 9.70% Senior
Guaranteed Notes, Series C, due November 1, 1998, issued Loewen ("Series
C Notes"), dated for reference October 1, 1991(1)
4.1.2 Second Amendment, dated for reference May 15, 1996, to Note Agreements,
dated for reference October 1, 1991, among Loewen, LGII and institutions
named therein, re Series A Notes, Series B Notes and Series C Notes(4)
4.2 Guaranty Agreement by Loewen re Series A Notes and Series B Notes, dated
for reference October 1, 1991(1)
4.3 Guaranty Agreement by LGII re Series C Notes, dated for reference October
1, 1991(1)
4.4.1 Note Agreement, dated for reference September 1, 1993, by and between
Loewen and LGII re 9.62% Senior Guaranteed Notes, Series D, due
September 11, 2003, issued by Loewen ("Series D Notes"), as amended on
June 10, 1994(1)
4.4.2 Second Amendment, dated for reference May 15, 1996, to Note Agreements,
dated for reference September 1, 1993, among Loewen, LGII and
institutions named therein, re Series D Notes(4)
4.5 Guaranty Agreement by LGII re Series D Notes, dated for reference April 1,
1993(1)
4.6.1 Note Agreement by LGII and Loewen re 6.49% Senior Guaranteed Notes, Series
E, due February 25, 2004, issued by LGII ("Series E Notes"), dated for
reference February 1, 1994(1)
4.6.2 Second Amendment, dated for reference May 15, 1996, to Note Agreements,
dated for reference February 1, 1994, among Loewen, LGII and Teachers
Insurance and Annuity Association of America, re Series E Notes(4)
4.7 Guaranty Agreement by Loewen re Series E Notes, dated for reference
February 1, 1994(1)
4.8.1 Amended and Restated 1994 MEIP Credit Agreement, dated as of June 14,
1994, amended and restated as of May 15, 1996 (the "MEIP Credit
Agreement"), by and between Loewen Management Investment Corporation, in
its capacity as agent for LGII ("LMIC"), Loewen and the banks listed
therein (the "MEIP Banks") and Wachovia Bank of Georgia, N.A., as agent
for the MEIP Banks ("MEIP Agent")(1)
4.8.2 First Amendment to the MEIP Credit Agreement, dated as of December 2,
1996(5)
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4.8.3 Second Amendment to the MEIP Credit Agreement, dated as of April 30,
1997(5)
4.9 Security Agreement, dated as of June 14, 1994, by and between LMIC and the
MEIP Agent(1)
4.10 Guaranty dated as of June 14, 1994, by LGII in favor of the MEIP Agent for
the ratable benefit of the MEIP Banks(1)
4.11 Guaranty dated as of June 14, 1994, by Loewen in favor of the MEIP Agent
for the ratable benefit of the MEIP Banks(1)
4.12 Exchange Acknowledgment by Loewen, with respect to the 1994 Exchangeable
Floating Rate Debentures due July 1, 2001 issued by LGII, dated June 15,
1994(1)
4.13 Indenture, dated as of August 15, 1994, by and between LGII, as issuer,
Loewen, as guarantor, and State Street Bank and Trust Company, as
trustee with respect to 9.45% Junior Subordinated Debentures, Series A,
due 2024, issued by LGII and guaranteed by Loewen(6)
4.14 MIPS Guarantee Agreement, dated August 15, 1994(6)
4.15 Zero Coupon Loan Agreement, dated as of November 1, 1994, by and between
WLSP Investment Partners I Neweol Finance B.V., Electrolux Holdings
B.V., Man Production Rotterdam B.V., Adinvest A.G., and Wachovia Bank of
Georgia, N.A.(1)
4.16 Indenture, dated as of March 20, 1996, by and between LGII, Loewen, as
guarantor of the obligations of LGII under the Indenture, and Fleet
National Bank as Trustee, with respect to Senior Guaranteed Notes of
LGII(7)
4.17 Form of Global Series 1 and 2 Outstanding Note of LGII(7)
4.18 Form of Physical Series 1 and 2 Outstanding Note of LGII(7)
4.19 Form of Global Series 1 and 2 Exchange Note of LGII(4)
4.20 Form of Physical Series 1 and 2 Exchange Note of LGII(4)
4.21 Form of Senior Guarantee of LGII's Series 1 and 2 Notes(4)
4.22 Amended and Restated Credit Agreement, dated as of September 29, 1997
("BMO Credit Agreement"), among LGII, as borrower, Loewen, as a
guarantor, the lenders named therein, as the lenders, Goldman, Sachs &
Co., as the documentation agent and Bank of Montreal, as issuer,
swingline lender and agent(4)
4.23 Collateral Trust Agreement, dated as of May 15, 1996, among Bankers Trust
Company, as trustee, Loewen, LGII and various other pledgers(4)
4.24.1 Amended and Restated Operating Credit Agreement, dated for reference July
15, 1996, between Loewen and Royal Bank of Canada(9)
4.24.2 Third Amendment to Operating Credit Agreement, dated for reference July
15, 1996, among Loewen, LGII and Royal Bank of Canada(9)
4.25 Indenture, dated as of October 1, 1996, by and between LGII, Loewen and
Fleet National Bank, as Trustee, with respect to the Series 3 and 4
Notes(9)
4.26 Form of Global Series 3 and 4 Outstanding Note of LGII(9)
4.27 Form of Physical Series 3 and 4 Outstanding Note of LGII(9)
4.28 Form of Global Series 3 and 4 Exchange Note of LGII(10)
4.29 Form of Physical Series 3 and 4 Exchange Note of LGII(10)
4.30 Form of Senior Guarantee of LGII's Series 3 and 4 Notes(6)
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4.31 Indenture, dated as of September 26, 1997, between TLGI, as issuer, LGII,
as guarantor, and The Trust Company of Bank of Montreal, as trustee,
with respect to the Series 5 Notes
4.32 Form of Series 5 Senior Guaranteed Note of TLGI
4.33 Form of Senior Guarantee of TLGI's Series 5 Note
4.34 Indenture, dated as of September 30, 1997, between LGII, as issuer, TLGI,
as guarantor, and State Street Bank and Trust Company, as trustee, with
respect to the Senior Guaranteed Notes due 2009
4.35 Form of Physical Senior Guaranteed Note due 2009 of LGII
4.36 Form of Global Senior Guaranteed Note due 2009 of LGII
4.37 Form of Senior Guarantee of LGII's Senior Guaranteed Note due 2009
4.38 Shareholder Protection Rights Plan, dated as of April 20, 1990, as amended
on May 24, 1990 and April 7, 1994 and reconfirmed on May 17, 1995(1)
4.39 Form of Indenture by and between LGII, as issuer, Loewen, as guarantor,
and Fleet National Bank, as trustee(8)
4.40 Altered Memorandum of The Loewen Group Inc., filed with the British
Columbia Registrar of Companies (the "Registrar") on June 21, 1996(11)
4.41 Articles of Loewen, restated, filed with the Registrar on March 1, 1988,
as amended(7)
4.42 The Registrants hereby agree to furnish to the Commission, upon request, a
copy of the instruments which define the rights of holders of long-term
debt of the Registrants. None of such instruments not included as
exhibits herein collectively represents long-term debt in excess of 10%
of the consolidated total assets of LGII or Loewen.
10 MATERIAL CONTRACTS
10.1 Stock Purchase Agreement, dated as of March 16, 1995, by and between
Osiris Holding Corporation and LGII(12)
10.2 Receipt Agreement, dated as of January 3, 1996, for the Cumulative
Redeemable Convertible First Preferred Shares Series C of Loewen
("Series C Shares")(3)
10.3 Undertaking by Raymond L. Loewen and Anne Loewen, dated as of January 3,
1996, to vote in favor of the motion to subdivide the Series C Shares(3)
10.4 Settlement Agreement, dated as of February 1, 1996, by and between Loewen,
LGII and affiliated entities and J.J. O'Keefe, Sr., Gulf National Life
Insurance Company and affiliated entities(3)
10.5 Shareholders' Agreement, dated as of February 9, 1996 by and between
Loewen, LGII, J.J. O'Keefe, Sr., Gulf National Life Insurance Company
and affiliated entities, and certain individuals and law firms named
therein(3)
10.6 Settlement Agreement and Mutual General Release effective as of February
12, 1996, entered into on March 19, 1996, by and between Provident
American Corporation, Provident Indemnity Life Insurance Company, Loewen
and LGII(3)
10.7 Registration Rights Agreement, dated as of March 20, 1996, by and between
LGII, Loewen and the Initial Purchasers named therein(3)
10.8 Asset Purchase Agreement, dated as of March 26, 1996, by and between LLI,
Inc., and LLPC, Inc. and S.I. Acquisition Associates, L.P.(3)
10.9 Asset Purchase Agreement, dated as of March 26, 1996, by and between
Loewen Louisiana Holdings, Inc. and S.I. Acquisition Associates, L.P.(3)
</TABLE>
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*10.10 Form of Indemnification Agreement with Outside Directors(13)
*10.11 Form of Indemnification Agreement with Officers(13)
*10.12 Form of The Loewen Group Inc. Severance Agreement(13)
*10.13 The Loewen Group Inc. Severance Pay Plan(13)
*10.14 Employment Agreement, dated August 19, 1988, by and between Loewen and Tim
Hogenkamp(1)
*10.15 Employment Agreement, dated March 6, 1990, by and between Loewen and Peter
S. Hyndman(1)
*10.16 Employment Agreement, dated March 21, 1990, by and between Loewen and
David FitzSimmon(1)
*10.17 Employment Agreement, and Covenant Not to Compete, dated November 14,
1990, by and between LGII and Albert S. Lineberry, Sr.(1)
*10.18 Employment Agreement, dated December 18, 1990, by and between Loewen and
Peter W. Roberts(1)
*10.19 Employment Agreement, dated April 12, 1991, by and between Loewen and
Dwight Hawes(1)
*10.20 Employment Agreement, dated October 9, 1991, by and between Loewen and
Timothy A. Birch(1)
*10.21 Consulting Agreement, dated July 18, 1994, by and between Loewen and
Charles B. Loewen, LGII, and Corporate Services International Inc.(1)
*10.22 Employment Letter, dated March 10, 1995, by Raymond L. Loewen to Paul
Wagler(6)
*10.23 Employment Agreement, dated March 17, 1995, by and between Loewen, LGII
and Lawrence Miller(1)
*10.24 Employment Agreement, dated March 17, 1995, by and between Loewen and
William R. Shane(1)
*10.25 1994 Management Equity Investment Plan (the "MEIP")(1)
*10.26 Form of Executive Agreement executed by participants in the MEIP(6)
*10.27 1994 Outside Director Compensation Plan as restated and amended as at
January 9, 1997(11)
*10.28 Severance Agreement, dated June 15, 1995, by and between Loewen and Robert
Garnett(3)
*10.29 Employee Stock Option Plan (United States), as restated and amended as at
April 2, 1996(11)
*10.30 Employee Stock Option Plan (Canada), as restated and amended as at April
2, 1996(14)
*10.31 Employment Agreement, dated April 30, 1996, by and between Loewen and
Grant Ballantyne(6)
*10.32 Employment Agreement, dated May 1, 1996, amended July 18, 1996 by and
between Loewen and Douglas J. McKinnon(6)
*10.33 Resignation and Release Agreement, effective June 10, 1996, by and between
Loewen, LGII and Robert O. Wienke(6)
11 STATEMENTS RE COMPUTATION OF PER SHARE EARNINGS
27 FINANCIAL DATA SCHEDULE
</TABLE>
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99 ADDITIONAL EXHIBITS
99.1 Stock Purchase Agreement, dated as of June 14, 1996, by and among Prime
Succession, Inc., the other individuals or entities listed on the
signature pages thereof, Loewen and Blackhawk Acquisition Corp.(15)
99.2 Put/Call Agreement, dated as of August 25, 1996, by and among Blackstone,
Blackstone Offshore Capital Partners II L.P. ("Blackstone Offshore"),
Blackstone Family Investment Partnership II L.P. ("Blackstone Family"),
PSI Management Direct L.P. ("PSI"), LGII and Loewen(15)
99.3 Stockholders' Agreement, dated as of August 26, 1996, by and among Prime
Succession, Inc. (to be renamed Prime Succession Holdings, Inc.),
Blackstone, Blackstone Offshore, Blackstone Family, PSI and LGII(15)
99.4 Subscription Agreement, dated as of November 19, 1996, by and among Rose
Hills Holdings Corp., Blackstone, Blackstone Rose Hills Offshore Capital
Partners L.P. ("Blackstone Rose Hills"), Blackstone Family, Roses
Delaware, Inc. ("RDI"), Loewen, LGII and RHI Management Direct, L.P.
("RHI")(16)
99.5 Put/Call Agreement, dated as of November 19, 1996, by and among
Blackstone, Blackstone Offshore, Blackstone Family, Blackstone Rose
Hills, LGII, RDI, Loewen and RHI(16)
99.6 Stockholders' Agreement, dated as of November 19, 1996, by and among Rose
Hills, Blackstone, Blackstone Rose Hills, Blackstone Family, RDI, LGII
and RHI(16)
</TABLE>
- ------------------------
* Compensatory plan or management contract
(1) Incorporated by reference from Loewen's Annual Report on Form 10-K for the
year ended December 31, 1994, filed on March 31, 1995 (File No. 0-18429)
(2) Incorporated by reference from Loewen's Quarterly Report on Form 10-Q for
the Quarter ended June 30, 1996, filed on August 15, 1996 (File No. 0-18429)
(3) Incorporated by reference from Loewen's Annual Report on Form 10-K for the
year ended December 31, 1994, filed on March 31, 1995 (File No. 0-18429)
(4) Incorporated by reference from the Registration Statement on Form S-4 filed
by Loewen on May 3, 1996, as amended (File No. 333-03135)
(5) Incorporated by reference from Loewen's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1997, filed on May 13, 1997 (File No. 1-12163)
(6) Incorporated by reference from the combined Registration Statement on Form
F-9/F-3 filed by LGII and Loewen on July 1, 1994, as amended (File Nos.
33-81032 and 33-81034)
(7) Incorporated by reference from Loewen's Annual Report on Form 10-K for the
year ended December 31, 1995, filed on March 28, 1996, as amended (File No.
0-18429)
(8) Incorporated by reference from the Registration Statement on Form S-3 filed
by Loewen and LGII on March 21, 1997, as amended (File No. 333-23747)
(9) Incorporated by reference from Loewen's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1996, filed on November 14, 1996 (File No.
1-12163)
(10) Incorporated by reference from the Registration Statement on Form S-4 filed
by LGII and Loewen on November 18, 1996, as amended (File Nos. 333-16319 and
333-16319-01)
(11) Incorporated by reference from Loewen's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1996, filed August 15, 1996 (File No. 0-18429)
<PAGE>
(12) Incorporated by reference from Loewen's Periodic Report on Form 8-K/A No. 1
dated April 18, 1995, filed May 5, 1995 (File No. 0-18429)
(13) Incorporated by reference from Loewen's Solicitation/Recommendation
Statement on Schedule 14D-9, filed on October 10, 1996, as amended
(14) Incorporated by reference from Loewen's Annual Report on Form 10-K for the
year ended December 31, 1996, filed on March 31, 1997 (File No. 1-12163)
(15) Incorporated by reference from Loewen's Periodic Report on Form 8-K, dated
April 26, 1996, filed October 12, 1996, amended October 30, 1996 (File No.
0-18429)
(16) Incorporated by reference from Loewen's Periodic Report on Form 8-K, dated
November 19, 1996, filed December 27, 1996 (File No. 1-12163)
<PAGE>
EXECUTION COPY
U.S. $1,000,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of September 29, 1997
Among
LOEWEN GROUP INTERNATIONAL, INC.
as the Borrower,
THE LOEWEN GROUP INC.
as a Guarantor,
THE LENDERS NAMED HEREIN
as the Lenders,
GOLDMAN SACHS CREDIT PARTNERS L.P.
as the Documentation Agent,
and
BANK OF MONTREAL
as L/C Issuer, Swing Line Lender and Administrative and Syndication Agent
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1. Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II THE CREDITS . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.1. The Revolving Loans . . . . . . . . . . . . . . . . . . . . . . . 27
2.1.1 Facility A Revolving Loans . . . . . . . . . . . . . . . . 27
2.1.2 Facility B Revolving Loans . . . . . . . . . . . . . . . . 27
2.2. Repayment of the Revolving Loans . . . . . . . . . . . . . . . . 28
2.3. Ratable Revolving Loans; Types of Advances . . . . . . . . . . . 28
2.4. Minimum Amount of Each Advance . . . . . . . . . . . . . . . . . 28
2.5. Optional Prepayments of Revolving Loans . . . . . . . . . . . . . 28
2.6. Method of Selecting Types and Interest Periods for New Advances . 29
2.7. Conversion and Continuation of Outstanding Advances . . . . . . . 30
2.8. Payment of Interest on Revolving Loans and Advances . . . . . . . 30
2.9. Changes in Interest Rate, Etc. . . . . . . . . . . . . . . . . . 31
2.10. Commitment Fee; Mandatory and Voluntary Reductions in Aggregate
Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.10.1 Facility A Commitment Fee . . . . . . . . . . . . . . . . 31
2.10.2 Facility B Commitment Fee . . . . . . . . . . . . . . . . 32
2.10.3 Mandatory Reductions in Facility A Aggregate Commitment . 32
2.10.4 Voluntary Reductions in Aggregate Commitment . . . . . . 33
2.11. Rates Applicable After Default . . . . . . . . . . . . . . . . . 33
2.12. Method of Payment . . . . . . . . . . . . . . . . . . . . . . . . 33
2.13. Evidence of Debt; Telephonic Notices . . . . . . . . . . . . . . 34
2.14. Notification of Advances, Interest Rates, Prepayments and
Commitment Reductions . . . . . . . . . . . . . . . . . . . . . . 34
2.15. Lending Installations . . . . . . . . . . . . . . . . . . . . . . 35
2.16. Non-Receipt of Funds by the Agent . . . . . . . . . . . . . . . . 35
2.17. Withholding Tax Exemption; Gross Up . . . . . . . . . . . . . . . 35
2.18. Extension of Facility A Termination Date . . . . . . . . . . . . 37
2.19. Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . 38
2.19.1 Facility A Revolving Loans . . . . . . . . . . . . . . . 38
2.19.2 Facility B Revolving Loans . . . . . . . . . . . . . . . 38
2.20. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
2.21. Letter of Credit Facility . . . . . . . . . . . . . . . . . . . . 39
2.21.1 Letters of Credit . . . . . . . . . . . . . . . . . . . . 39
2.21.2 Letter of Credit Participation . . . . . . . . . . . . . 39
2.21.3 Reimbursement Obligation . . . . . . . . . . . . . . . . 40
i
<PAGE>
2.21.4 Cash Collateral . . . . . . . . . . . . . . . . . . . . . 42
2.21.5 Letter of Credit Fees . . . . . . . . . . . . . . . . . . 43
2.21.6 Indemnification; Exoneration . . . . . . . . . . . . . . 43
2.21.7 Letter of Credit Cancellation . . . . . . . . . . . . . . 45
2.22. Swing Line Commitment . . . . . . . . . . . . . . . . . . . . . . 45
2.23. Borrowing Procedures for Swing Line Loans . . . . . . . . . . . . 45
2.24. Refunding of Swing Line Loans . . . . . . . . . . . . . . . . . . 46
2.25. Participations in Swing Line Loans . . . . . . . . . . . . . . . 46
2.26. Swing Line Participation Obligations Unconditional . . . . . . . 47
2.27. Evidence of Swing Line Loans; Telephonic Notices . . . . . . . . 47
2.28. Conditions to Swing Line Loans . . . . . . . . . . . . . . . . . 48
ARTICLE III CHANGE IN CIRCUMSTANCES . . . . . . . . . . . . . . . . . . . . 48
3.1. Yield Protection . . . . . . . . . . . . . . . . . . . . . . . . 48
3.2. Changes in Capital Adequacy Regulations . . . . . . . . . . . . . 49
3.3. Availability of Types of Advances . . . . . . . . . . . . . . . . 50
3.4. Funding Indemnification . . . . . . . . . . . . . . . . . . . . . 50
3.5. Mitigation; Lender Statements; Survival of Indemnity . . . . . . 50
ARTICLE IV CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . 51
4. Conditions Precedent to Amendment and Restatement . . . . . . . . 51
4.1. Initial Advance, Swing Line Loan and Letter of Credit . . . . . . 51
4.2. Each Advance, Swing Line Loan and Letter of Credit . . . . . . . 53
ARTICLE V TLGI GUARANTY . . . . . . . . . . . . . . . . . . . . . . . . . . 54
5.1. The Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . 54
5.2. Guaranty Unconditional . . . . . . . . . . . . . . . . . . . . . 54
5.3. Discharge Only Upon Payment in Full; Reinstatement in Certain
Circumstances . . . . . . . . . . . . . . . . . . . . . . . . . . 55
5.4. Waiver by TLGI . . . . . . . . . . . . . . . . . . . . . . . . . 55
5.5. Waiver of Subrogation Rights . . . . . . . . . . . . . . . . . . 56
5.6. Stay of Acceleration . . . . . . . . . . . . . . . . . . . . . . 56
5.7. Gross-up . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE VI REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . 57
6. Representations and Warranties . . . . . . . . . . . . . . . . . 57
6.1. Corporate Existence and Standing . . . . . . . . . . . . . . . . 57
6.2. Authorization and Validity . . . . . . . . . . . . . . . . . . . 57
6.3. No Conflict; Government Consent . . . . . . . . . . . . . . . . . 58
6.4. Financial Statements . . . . . . . . . . . . . . . . . . . . . . 58
6.5. Material Adverse Change . . . . . . . . . . . . . . . . . . . . . 58
6.6. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
6.7. Litigation and Contingent Liabilities . . . . . . . . . . . . . . 59
6.8. Subsidiaries; Pledge of Stock . . . . . . . . . . . . . . . . . . 59
ii
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6.9. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
6.10. Accuracy of Information . . . . . . . . . . . . . . . . . . . . . 60
6.11. Regulation U . . . . . . . . . . . . . . . . . . . . . . . . . . 60
6.12. Material Agreements . . . . . . . . . . . . . . . . . . . . . . . 60
6.13. Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . 60
6.14. Ownership of Properties . . . . . . . . . . . . . . . . . . . . . 61
6.15. Investment Company Act . . . . . . . . . . . . . . . . . . . . . 61
6.16. Public Utility Holding Company Act . . . . . . . . . . . . . . . 61
6.17. Post-Retirement Benefits . . . . . . . . . . . . . . . . . . . . 61
6.18. Negative Pledge . . . . . . . . . . . . . . . . . . . . . . . . . 61
6.19. Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
6.20. Existing Letters of Credit . . . . . . . . . . . . . . . . . . . 62
6.21. No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE VII COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
7. Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
7.1. Financial Reporting . . . . . . . . . . . . . . . . . . . . . . . 62
7.2. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . 65
7.3. Notices of Default, Litigation, Etc. . . . . . . . . . . . . . . 66
7.4. Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . 66
7.5. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
7.6. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
7.7. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . 67
7.8. Maintenance of Properties . . . . . . . . . . . . . . . . . . . . 67
7.9. Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
7.10. Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . 67
7.11. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . 68
7.12. Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
7.13. Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . 70
7.14. Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
7.15. Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
7.16. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
7.17. Negative Pledge . . . . . . . . . . . . . . . . . . . . . . . . . 73
7.18. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
7.19. Minimum Consolidated Net Worth . . . . . . . . . . . . . . . . . 75
7.20. Minimum Consolidated Tangible Net Worth . . . . . . . . . . . . . 75
7.21. Maximum Consolidated Indebtedness to Consolidated
Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . 75
7.22. Interest Charges Coverage; Treatment of Gain on Sale of Arbor
Funeral Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 75
7.23. Maximum Consolidated Indebtedness to Adjusted EBITDA . . . . . . 76
7.24. Ownership of the Borrower . . . . . . . . . . . . . . . . . . . . 76
7.25. Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . 76
7.26. Pledge of Stock and Grant of Security Interest in Certain
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
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7.27. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 77
7.28. Subsidiaries' Stock . . . . . . . . . . . . . . . . . . . . . . 78
7.29. Deliveries by Pledgor Subsidiaries . . . . . . . . . . . . . . . 78
ARTICLE VIII DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
8. Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
ARTICLE IX ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES . . . . . . . . . 82
9.1. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . 82
9.2. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
9.3. Preservation of Rights . . . . . . . . . . . . . . . . . . . . . 84
ARTICLE X GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . 85
10.1. Survival of Representations . . . . . . . . . . . . . . . . . . 85
10.2. Governmental Regulation . . . . . . . . . . . . . . . . . . . . 85
10.3. Stamp Duties . . . . . . . . . . . . . . . . . . . . . . . . . . 85
10.4. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
10.5. Entire Agreement; Independence of Covenants . . . . . . . . . . 85
10.6. Several Obligations; Benefits of this Agreement . . . . . . . . 85
10.7. Expenses; Indemnification . . . . . . . . . . . . . . . . . . . 86
10.8. Numbers of Documents . . . . . . . . . . . . . . . . . . . . . . 87
10.9. Accounting; Currency Conversions . . . . . . . . . . . . . . . . 87
10.10. Severability of Provisions . . . . . . . . . . . . . . . . . . . 88
10.11. Nonliability of Lenders . . . . . . . . . . . . . . . . . . . . 88
10.12. CHOICE OF LAW . . . . . . . . . . . . . . . . . . . . . . . . . 88
10.13. CONSENT TO JURISDICTION . . . . . . . . . . . . . . . . . . . . 88
10.14. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . 89
10.15. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . 89
10.16. Judgment Currency . . . . . . . . . . . . . . . . . . . . . . . 89
10.17. Canadian Interest Antidotes . . . . . . . . . . . . . . . . . . 90
10.18. Counterparts; Effectiveness . . . . . . . . . . . . . . . . . . 90
ARTICLE XI THE AGENT AND THE DOCUMENTATION AGENT . . . . . . . . . . . . . 91
11.1. Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . 91
11.2. Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
11.3. General Immunity . . . . . . . . . . . . . . . . . . . . . . . . 91
11.4. No Responsibility for Revolving Loans, Swing Line Loans,
Recitals, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . 91
11.5. Action on Instructions of Lenders . . . . . . . . . . . . . . . 91
11.6. Employment of Agents and Counsel . . . . . . . . . . . . . . . . 92
11.7. Reliance on Documents; Counsel . . . . . . . . . . . . . . . . . 92
11.8. Agent's Reimbursement and Indemnification . . . . . . . . . . . 92
11.9. Rights as a Lender . . . . . . . . . . . . . . . . . . . . . . . 92
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11.10. Lenders' Credit Decisions . . . . . . . . . . . . . . . . . . . 93
11.11. Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . 93
11.12. Agent's Fee . . . . . . . . . . . . . . . . . . . . . . . . . . 93
11.13. Documentation Agent . . . . . . . . . . . . . . . . . . . . . . 93
ARTICLE XII SETOFF; RATABLE PAYMENTS. . . . . . . . . . . . . . . . . . . . 94
12.1. Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
12.2. Ratable Payments . . . . . . . . . . . . . . . . . . . . . . . . 94
ARTICLE XIII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS. . . . . . . 94
13.1. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . 94
13.2. Participations . . . . . . . . . . . . . . . . . . . . . . . . . 95
13.2.1 Permitted Participations; Effect . . . . . . . . . . . . 95
13.2.2 Voting Rights . . . . . . . . . . . . . . . . . . . . . 96
13.2.3 Setoff . . . . . . . . . . . . . . . . . . . . . . . . . 96
13.3. Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . 96
13.3.1 Permitted Assignments . . . . . . . . . . . . . . . . . 96
13.3.2 Effect; Effective Date of Assignments . . . . . . . . . 97
13.4. Dissemination of Information . . . . . . . . . . . . . . . . . . 98
13.5. Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . 98
ARTICLE XIV NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
14.1. Giving Notice . . . . . . . . . . . . . . . . . . . . . . . . . 99
14.2. Change of Address . . . . . . . . . . . . . . . . . . . . . . . 99
ARTICLE XV COLLATERAL TRUST AGREEMENT . . . . . . . . . . . . . . . . . . . 99
15.1. Appointment of Secured Party Representative . . . . . . . . . . 99
15.2. Appointment of Enforcement Representatives . . . . . . . . . . . 99
15.3. Actions of Lenders . . . . . . . . . . . . . . . . . . . . . . . 99
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ARTICLE XVI AMENDMENT AND RESTATEMENT . . . . . . . . . . . . . . . . . . . 100
16.1. Amendment and Restatement . . . . . . . . . . . . . . . . . . . 100
16.2 Departing Lenders . . . . . . . . . . . . . . . . . . . . . . . 101
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SCHEDULE 1 - Disclosure Schedule
SCHEDULE 2 - Applicable Margins and Applicable Commitment Fee and Letter of
Credit Fee Rates
SCHEDULE 3 - Senior Obligations
SCHEDULE 4 - Existing Letters of Credit
SCHEDULE 5 - Commitments of the Lenders
SCHEDULE 6 - Certain Pledged Shares Subject to Transfer Restrictions
SCHEDULE 7 - Departing Lenders
EXHIBIT A-1 - Form of Facility A Revolving Note
EXHIBIT A-2 - Form of Facility B Revolving Note
EXHIBIT B - Required Opinions
EXHIBIT C - Form of Compliance Certificate
EXHIBIT D - Form of Assignment Agreement
EXHIBIT E - Form of Revolving Loan/Swing Line Loan/Credit Related Money
Transfer Instruction
EXHIBIT F - Form of Revolving Loan Borrowing Notice
EXHIBIT G - Form of Prepayment Notice
EXHIBIT H - Form of Extension Request
EXHIBIT I - Form of Conversion/Continuation Notice
EXHIBIT J - Collateral Trust Agreement
EXHIBIT K - Form of Approved Sale Certificate
EXHIBIT L - Form of Swing Line Loan Borrowing Notice
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AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of September
29, 1997, is among LOEWEN GROUP INTERNATIONAL, INC., a Delaware corporation,
as the Borrower, THE LOEWEN GROUP INC., a corporation organized under the
laws of the Province of British Columbia, Canada, as a Guarantor, THE LENDERS
NAMED HEREIN, as the initial Lenders, GOLDMAN SACHS CREDIT PARTNERS L.P., as
the Documentation Agent, and BANK OF MONTREAL, as the L/C Issuer and the
Swing Line Lender and as the Administrative and Syndication Agent for the
Lenders.
W I T N E S S E T H:
WHEREAS, the Borrower, The Loewen Group Inc., Goldman, Sachs & Co.,
as the Documentation Agent, certain Lenders party thereto and Bank of
Montreal, as L/C Issuer, Swing Line Lender and Agent for the Lenders, have
entered into a Credit Agreement, dated as of May 15, 1996 (together with all
amendments thereto, the "Original Agreement"), pursuant to which the Lenders
made certain loans to the Borrower, and the L/C Issuer issued, upon the
application of the Borrower, certain letters of credit for the account of the
Borrower; and
WHEREAS, the Borrower, The Loewen Group Inc., certain of the
Lenders party thereto and Bank of Montreal desire to amend and restate the
Original Agreement to provide for, among other things, (i) an extension of
the term of the Commitments (as defined in the Original Agreement), (ii) new
Facility B Commitments from the Lenders, pursuant to which Facility B
Revolving Loans will be made to the Borrower, in a maximum aggregate
principal amount at any one time outstanding not to exceed the Facility B
Aggregate Commitment, from time to time prior to the Facility B Termination
Date, and (iii) certain other modifications, all on the terms and conditions
set forth herein; and
WHEREAS, the proceeds of the new Facility B Revolving Loans,
together with the proceeds of any Facility A Revolving Loans and Swing Line
Loans, will be used:
(a) to make payment in full of all Indebtedness identified on
ANNEX I of SCHEDULE 1 hereto under the heading "Indebtedness to be
Paid";
(b) for general corporate purposes and working capital
purposes of the Borrower and its Subsidiaries; and
(c) to finance non-contested acquisitions made by the
Borrower or its Subsidiaries under the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth, the parties hereto hereby
agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
1.1. CERTAIN DEFINED TERMS. As used in this Agreement the
following terms shall have the following meanings, such meanings being
equally applicable to both the singular and plural forms of the terms defined:
"ACQUISITION" means any transaction, or any series of related
transactions, by which TLGI or any of its Subsidiaries (a) acquires any going
business or all or substantially all of the assets of any firm, corporation,
limited liability company, partnership or other Person, or (as applicable)
any operation or division thereof which constitutes a going business, whether
through purchase of assets, merger or otherwise or (b) directly or indirectly
acquires (in one transaction or as the most recent transaction in a series of
transactions) at least a majority (in number of votes) of the securities of a
corporation which have ordinary voting power for the election of directors
(other than securities having such power only by reason of the happening of a
contingency) or a majority (by percentage or voting power) of the outstanding
partnership interests of a partnership, membership interests of a limited
liability company, or other ownership interests of any Person.
"ADJUSTED EBITDA" shall mean at any time for the four consecutive
fiscal quarter period then most recently ended the sum of (a) EBITDA of TLGI
and the Borrower and the other Subsidiaries for such four consecutive fiscal
quarter period determined on a consolidated basis, PLUS (b) EBITDA for such
four consecutive fiscal quarter period of all Persons acquired by TLGI, the
Borrower or the other Subsidiaries during the six-month period ending on the
last day of such four consecutive fiscal quarter period (but only to the
extent the Acquisitions of such Persons constituted Permitted Acquisitions),
LESS (c) all amounts included in the foregoing CLAUSE (b) to the extent such
amounts are included in the foregoing CLAUSE (a); provided that EBITDA of any
such acquired Person shall be determined on the basis of actual EBITDA for
such acquired Person as set forth in the financial statements of such
acquired Person, which financial statements shall be (x) audited for the
portion of such four consecutive fiscal quarter period which falls within the
most recently ended fiscal year of such acquired Person ended prior to the
date on which such Person became a Subsidiary of TLGI, the Borrower or
another Subsidiary and unaudited for the portion of such four consecutive
fiscal quarter period which falls after the end of the most recently ended
fiscal year of such acquired Person ended prior to the date on which such
Person became a Subsidiary of TLGI, the Borrower or another Subsidiary if the
total consideration payable in connection with such Acquisition is in excess
of $25,000,000, and (y) unaudited for such four consecutive fiscal quarter
period if the total consideration payable in connection with such Acquisition
is $25,000,000 or less.
"ADVANCE" means a Facility A Advance or a Facility B Advance, as
the context may require or allow, and "ADVANCES" means Facility A Advances
and Facility B Advances, taken together.
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"AFFILIATE" of any Person means any other Person directly or
indirectly controlling, controlled by or under common control with such
Person. A Person shall be deemed to control another Person if the controlling
Person owns 10% or more of any class of voting securities (or other ownership
interests) of the controlled Person or possesses, directly or indirectly, the
power to direct or cause the direction of the management or policies of the
controlled Person, whether through ownership of stock, by contract or
otherwise.
"AGENT" means Bank of Montreal in its capacity as Administrative
and Syndication Agent for the Lenders pursuant to ARTICLE XI, and not in its
capacity as the Swing Line Lender, the L/C Issuer or a Lender, and any
successor Agent appointed pursuant to ARTICLE XI.
"AGGREGATE COMMITMENT" means the aggregate of the Commitments of
all the Lenders, as reduced from time to time pursuant to the terms hereof.
"AGREEMENT" means this Amended and Restated Credit Agreement, as it
from time to time may be amended, restated, supplemented or otherwise
modified in accordance with the terms hereof.
"AGREEMENT ACCOUNTING PRINCIPLES" means GAAP as in effect from time
to time, applied in a manner consistent with that used in preparing the
financial statements referred to in SECTION 6.4.
"ALTERNATE BASE RATE" means, for any day, a floating rate of
interest per annum equal to the higher of (a) the Base Rate for such day and
(b) the sum of the Federal Funds Effective Rate for such day plus 0.50% per
annum. Changes in the rate of interest on that portion of any Revolving
Loans maintained as Floating Rate Advances and on all Swing Line Loans (and
in the rate of interest on any other Obligations from time to time bearing
interest at a rate determined by reference to the Alternate Base Rate) will
take effect simultaneously with each change in the Alternate Base Rate.
"APPLICABLE COMMITMENT FEE RATE" means the Facility A Applicable
Commitment Fee Rate or the Facility B Applicable Commitment Fee Rate, as the
context may require or allow.
"APPLICABLE LETTER OF CREDIT FEE RATE" means a per annum rate
determined from time to time by reference to TLGI's senior unsecured and
unenhanced (except, if applicable, pursuant to the Collateral Trust
Agreement) long-term debt rating as specified on SCHEDULE 2 hereto; PROVIDED,
HOWEVER, that the Applicable Letter of Credit Fee Rate will be adjusted as
specified on SCHEDULE 2 hereto whenever Excess Leverage Margin is applicable.
Any change in the Applicable Letter of Credit Fee Rate resulting from a
change in TLGI's debt ratings will take effect as of the date of the debt
ratings change and any change in the Applicable Letter of Credit
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Fee Rate resulting from the application of Excess Leverage Margin thereto
will take effect on the date specified in the definition of "Excess Leverage
Margin".
"APPLICABLE MARGIN" means a per annum rate determined from time to
time by reference to TLGI's senior unsecured and unenhanced (except, if
applicable, pursuant to the Collateral Trust Agreement) long-term debt rating
as specified on SCHEDULE 2 hereto. Any change in the Applicable Margin
resulting from a change in TLGI's debt ratings will take effect as of the
date of the debt ratings change.
"APPROVED SALE" means any sale of Property pledged to the
Collateral Agent under the terms of the Collateral Trust Agreement (i) which
is expressly permitted by the terms of SECTION 7.13 and with respect to which
TLGI and the Borrower shall have delivered to the Agent prior to consummation
of such sale a certificate from an Authorized Officer in the form of EXHIBIT
K hereto certifying that both immediately before and after giving effect to
such sale, no Default or Unmatured Default shall have occurred and be
continuing, or (ii) which is otherwise approved by the Required Lenders.
"ARTICLE" means a numbered article of this Agreement, unless
another document is specifically referenced.
"ASSESSMENT RATE" means, for any CD Interest Period, the assessment
rate per annum (rounded upwards to the next higher multiple of 1/100 of 1% if
the rate is not such a multiple) payable to the Federal Deposit Insurance
Corporation (or any successor) by a member of the Bank Insurance Fund which
is classified as adequately capitalized and within supervisory subgroup "A"
(or a comparable successor assessment risk classification) within the meaning
of 12 C.F.R. SECTION 327.4(a) (or any successor provision) for the insurance
of time deposits at the offices of such institution in the United States, as
estimated by the Agent on the first day of such Interest Period.
"AUTHORIZED OFFICER" means (a) with respect to TLGI, any of the
President, Executive Vice President, Senior Vice President and CFO or Vice
President, Finance of TLGI, or any Person designated by any two of the
foregoing, acting singly and (b) with respect to the Borrower, any of the
President, Executive Vice President, Senior Vice President and CFO or Vice
President, Finance of the Borrower, or any Person designated by any two of
the foregoing, acting singly.
"BANK OF MONTREAL" means Bank of Montreal in its individual
capacity, and its successors.
"BASE RATE" means, at any time, the floating rate per annum then
most recently announced by Bank of Montreal in Chicago, Illinois as the
reference rate of interest it will use to determine rates of interest for
loans in Dollars in the United States and referred to by it as its
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"U.S. base rate". The Base Rate is not necessarily intended to be the lowest
rate of interest determined by the Bank of Montreal in connection with
extensions of credit.
"BORROWER" means Loewen Group International, Inc., a Delaware
corporation, and its successors and assigns to the extent permitted under the
terms of this Agreement.
"BUSINESS DAY" means (a) with respect to any borrowing, payment or
rate selection of Eurodollar Advances, a day (other than a Saturday or Sunday
or other day on which banks are authorized or required to be closed) on which
banks generally are open in Chicago, New York and London for the conduct of
substantially all of their commercial lending activities and (b) for all
other purposes, a day (other than a Saturday or Sunday or other day on which
banks are authorized or required to be closed) on which banks generally are
open in Chicago and New York for the conduct of substantially all of their
commercial lending activities.
"CANADIAN DOLLARS" and "C$" means the lawful money of Canada.
"CANADIAN GAAP" means, at any time, generally accepted accounting
principles in Canada at such time.
"CANADIAN PLAN" means a pension plan provided by TLGI or any other
Subsidiary incorporated under the laws of Canada or any Province of Canada.
"CAPITALIZED LEASE" of a Person means any lease of Property by such
Person as lessee which would be capitalized on a balance sheet of such Person
prepared in accordance with Agreement Accounting Principles.
"CAPITALIZED LEASE OBLIGATIONS" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with
Agreement Accounting Principles.
"CD INTEREST PERIOD" means, with respect to a Fixed CD Rate
Advance, a period of 30, 60, 90 or 180 days commencing on a Business Day
selected by the Borrower pursuant to this Agreement. If such CD Interest
Period would end on a day which is not a Business Day, such CD Interest
Period shall end on the next succeeding Business Day.
"CHANGE OF CONTROL" means an event which shall be deemed to have
occurred if (a) the Borrower shall at any time cease to be a Wholly-Owned
Subsidiary of TLGI, or (b) any Person or "group" (within the meaning of
Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended)
shall either (x) acquire beneficial ownership of more than 50% of any
outstanding class of common stock of TLGI having ordinary voting power in the
election of directors of TLGI or (y) obtain the power (whether or not
exercised) to elect a majority of TLGI's directors, or (c) during any period
of 12 consecutive calendar months, individuals (i) who were directors of TLGI
on the first day of such period, or (ii) whose election or nomination for
election
5
<PAGE>
to the board of directors of TLGI was recommended or approved by at least a
majority of the directors then still in office who were directors of TLGI on
the first day of such period, or whose election or nomination for election
was so approved, shall cease to constitute a majority of the board of
directors of TLGI.
"CHIEF FINANCIAL OFFICER" means, at any time, the Person who
reports to the board of directors of TLGI on the financial affairs of TLGI
and the Subsidiaries.
"CLASS B INVESTED AMOUNT" has the meaning specified in the Pooling
and Servicing Agreement dated as of November 15, 1994, among The First
National Bank of Atlanta, d/b/a Wachovia Bank Card Services, as seller,
Wachovia Bank of Georgia, N.A., as servicer and Banc One Columbus, N.A., as
trustee.
"CODE" means the Internal Revenue Code of 1986, as amended,
reformed or otherwise modified from time to time.
"COLLATERAL AGENT" means Bankers Trust Company and its successors
in the capacity of collateral agent under the terms of the Collateral Trust
Agreement.
"COLLATERAL RELEASE DATE" has the meaning specified in SECTION 7.26.
"COLLATERAL TRUST AGREEMENT" means that certain Collateral Trust
Agreement, a copy of which is attached as EXHIBIT J hereto, dated as of May
15, 1996 and executed by TLGI, the Borrower, all Pledgor Subsidiaries, and
the Collateral Agent, as such Collateral Trust Agreement may be amended or
modified and is in effect from time to time.
"COMMITMENT" means, relative to any Lender, the obligation of such
Lender to make Facility A Revolving Loans and Facility B Revolving Loans, to
purchase participations in Swing Line Loans and to purchase participations in
Letters of Credit not exceeding the amount set forth opposite such Lender's
name on Schedule 5 hereto or as set forth in any Notice of Assignment
relating to any assignment that has become effective pursuant to Section
13.3.2, as such amount may be modified from time to time pursuant to the
terms hereof.
"CONDEMNATION" has the meaning specified in SECTION 8.8.
"CONSOLIDATED CAPITALIZATION" means at any time of determination,
the sum of (a) the Consolidated Indebtedness of TLGI at such time, and (b)
the Consolidated Net Worth of TLGI at such time.
"CONSOLIDATED DISTRIBUTABLE AMOUNT" means, at any time of
determination, the sum of,
(a) $10,000,000, plus
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(b) 50% of Consolidated Net Income (or if such Consolidated Net
Income is a deficit figure, then minus 100% of such deficit) determined
on a cumulative basis for the period commencing on January 1, 1996, and
ending on the date of determination, plus
(c) 33 1/3% of the aggregate amount of the net cash proceeds
received by TLGI and the Borrower and their respective Subsidiaries from
the issuance or sale on or after January 1, 1996 (other than sales or
issuances to TLGI or the Borrower or any of their respective
Subsidiaries, and other than the Equity Placement and the issuance, at
any time, of preferred stock by TLGI in exchange for the First
Preferred Series C Receipts) of the capital stock of TLGI or
Indebtedness of TLGI, the Borrower or any of their respective
Subsidiaries which has been converted into capital stock of TLGI.
"CONSOLIDATED FIXED CHARGES" means, for any period, without
duplication, the sum of the amounts for such period of (i) Consolidated
Interest Charges and (ii) the product of (a) the aggregate amount of
dividends and other distributions paid or accrued during such period in
respect of (1) preferred stock of TLGI, the Borrower or any other Subsidiary
(but exclusive of preferred stock issued to TLGI or an Affiliate of TLGI) and
(2) capital stock of TLGI which is or may be redeemable or convertible into
debt prior to the Facility A Termination Date and (b) for each such dividend
or distribution, a multiplier, the numerator of which is one and the
denominator of which is one minus the then current combined federal,
provincial, state and local statutory tax rate of TLGI and its Subsidiaries
determined on a consolidated basis, such multiplier to be expressed as a
decimal, PROVIDED, HOWEVER, that the multiplier in CLAUSE (ii)(b) shall be
deemed to be one if such dividend or other distribution described in the
preceding clause (ii)(a) is fully tax deductible.
"CONSOLIDATED FIXED CHARGES COVERAGE RATIO" means, with respect to
a Transaction Date (hereinafter defined), the ratio of (x) EBITDA for the
full fiscal quarter immediately preceding the date of the transaction (the
"TRANSACTION DATE") giving rise to the need to calculate the Consolidated
Fixed Charge Coverage Ratio (such full fiscal quarter period being referred
to herein as the "PRIOR QUARTER") to (y) the amount of Consolidated Fixed
Charges for the Prior Quarter. In addition to and without limitation of the
foregoing, for purposes of this definition, "EBITDA" and "Consolidated Fixed
Charges" shall be calculated after giving effect on a PRO FORMA basis for the
period of such calculation to, without duplication, the incurrence of any
Indebtedness of TLGI or any of its Subsidiaries (and the application of the
net proceeds thereof) during the period commencing on the first day of the
Prior Quarter to and including the Transaction Date (the "REFERENCE PERIOD"),
including, without limitation, the incurrence of the Indebtedness giving rise
to the need to make such calculation (and the application of the net proceeds
thereof), as if such incurrence (and application) occurred on the first day
of the Reference Period. Furthermore, in calculating "Consolidated Fixed
Charges" for purposes of determining the denominator (but not the numerator)
of "Consolidated Fixed Charges Coverage Ratio", (i) interest on outstanding
Indebtedness determined on a fluctuating basis as at the Transaction Date and
which will continue to be so determined thereafter shall be deemed to have
accrued at a fixed rate PER ANNUM equal to the rate of interest on such
Indebtedness in effect on
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the Transaction Date; and (ii) interest on any Indebtedness which is actually
incurred on the Transaction Date and which may optionally be determined at an
interest rate based upon a factor of a prime, base, reference or similar
rate, a eurocurrency interbank offered rate, or other rates, shall be deemed
to have been in effect during the Reference Period at the interest rate in
effect on the Transaction Date. If TLGI or any of its Subsidiaries directly
or indirectly guarantees Indebtedness of a third Person, this definition
shall give effect to the incurrence of such guaranteed Indebtedness as if
TLGI or such Subsidiary had directly incurred or otherwise assumed such
guaranteed Indebtedness.
"CONSOLIDATED INDEBTEDNESS" means, at any time of determination,
without duplication, all Indebtedness of TLGI, the Borrower and the
Subsidiaries of TLGI and the Borrower at such time determined on a
consolidated basis in accordance with GAAP (to the extent GAAP is applicable
thereto).
"CONSOLIDATED INTEREST CHARGES" for any period shall mean on a
consolidated basis all interest (including the interest component of
Capitalized Lease Obligations and Synthetic Lease Obligations), and all
amortization of debt discount and expense on all Indebtedness of TLGI and the
Borrower and their Subsidiaries for such period.
"CONSOLIDATED NET INCOME" for any period shall mean the gross
revenues of TLGI and the Borrower and the other Subsidiaries for such period
less all expenses and other proper charges (including taxes on income),
determined on a consolidated basis after eliminating earnings or losses
attributable to outstanding Minority Interests, but excluding in any event:
(a) any gains or losses on the sale or other disposition of
Investments or fixed or capital assets, and any taxes on such excluded
gains and any tax deductions or credits on account of any such excluded
losses;
(b) the proceeds of any life insurance policy;
(c) net earnings and losses of any Subsidiary accrued prior to the
date it became a Subsidiary;
(d) net earnings and losses of any corporation (other than a
Subsidiary) substantially all the assets of which have been acquired in
any manner by TLGI or any Subsidiary, realized by such corporation prior
to the date of such acquisition;
(e) net earnings and losses of any corporation (other than a
Subsidiary) with which TLGI or a Subsidiary shall have consolidated or
which shall have merged into or amalgamated with TLGI or a Subsidiary
prior to the date of such consolidation, merger or amalgamation;
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(f) net earnings of any business entity (other than a Subsidiary)
in which TLGI or any Subsidiary has an ownership interest unless such
net earnings shall have actually been received by TLGI or such
Subsidiary in the form of cash distributions;
(g) any portion of the net earnings of any Subsidiary which for
any reason is unavailable for payment of dividends to TLGI or any other
Subsidiary;
(h) earnings resulting from any reappraisal, revaluation or
write-up of assets;
(i) any deferred or other credit representing any excess of the
equity in any Subsidiary at the date of the acquisition thereof over the
amount invested in such Subsidiary;
(j) any gain or loss arising from the acquisition of any
securities of TLGI or any Subsidiary;
(k) any reversal of any contingency reserve, except to the extent
that provision for such contingency reserve shall have been made from
income arising during such period; and
(l) any other unusual or extraordinary gain.
PROVIDED for the purpose of calculating Consolidated Net Income for the
fiscal quarter ended September 30, 1997, but only to the extent that
Consolidated Net Income is calculated as part of the calculation of EBITDA
for such fiscal quarter to determine compliance with SECTIONS 7.22 and 7.23,
there shall be included in Consolidated Net Income for such fiscal quarter an
aggregate amount not to exceed $26,000,000 representing TLGI's pre-tax gain
from the sale of TLGI's Investment in Arbor Funeral Inc.
"CONSOLIDATED NET WORTH" means, as of the date of any determination
thereof, the sum of the amount of the shareholders' equity of TLGI and the
Borrower and the other Subsidiaries as would be shown on the consolidated
balance sheet of TLGI and the Borrower and the other Subsidiaries determined
on a consolidated basis in accordance with GAAP, which in any event shall
include (x) the MIPS and (y) the amount of all preferred stock of TLGI and
the Borrower and all Subsidiaries of TLGI and the Borrower to the extent such
preferred stock is not redeemable at the option of the holder for cash or
indebtedness for any reason, and which shall exclude the amount of all
preferred stock of TLGI and the Borrower and all Subsidiaries of TLGI and the
Borrower to the extent such preferred stock is redeemable at the option of
the holder for cash or indebtedness for any reason.
"CONSOLIDATED REVENUES" for any period shall mean the gross
revenues of TLGI and the Borrower and the other Subsidiaries for such period,
determined on a consolidated basis
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after eliminating revenues attributable to outstanding Minority Interests
determined in accordance with GAAP.
"CONSOLIDATED TANGIBLE NET WORTH" means, as of the date of any
determination thereof, as to any Person, the Consolidated Net Worth of such
Person, less the sum of the value, as set forth or reflected on the most
recent consolidated balance sheet of such Person and its consolidated
Subsidiaries, prepared in accordance with GAAP, of:
(a) any surplus resulting from any write-up of assets subsequent
to December 31, 1995;
(b) all assets which would be treated as intangible assets for
balance sheet presentation purposes under GAAP, including without
limitation goodwill (whether representing the excess of cost over book
value of assets acquired, or otherwise), trademarks, trade names,
service marks, copyrights, patents and technologies, names and
reputations, covenants not to compete, organization or developmental
expenses, and unamortized debt discount and expense;
(c) to the extent not included in CLAUSE (b) of this definition,
any amount at which shares of capital stock of such Person and its
consolidated Subsidiaries appear as an asset on the balance sheet of
such Person and its consolidated Subsidiaries;
(d) Revolving Loans or Advances or Swing Line Loans or proceeds of
Letters of Credit provided to stockholders, directors, officers or
employees of such Person or its Subsidiaries; and
(e) to the extent not included in CLAUSE (b) of this definition,
deferred expenses.
"CONTINGENT OBLIGATION" of a Person means any agreement,
undertaking or arrangement by which such Person assumes, guarantees,
endorses, contingently agrees to purchase or provide funds for the payment
of, or otherwise becomes or is contingently liable upon, the obligation or
liability of any other Person, or agrees to maintain the net worth or working
capital or other financial condition of any other Person, or otherwise
assures any creditor of such other Person against loss, including, without
limitation, any comfort letter, operating agreement, take-or-pay contract or
reimbursement obligation arising pursuant to a letter of credit (including
any Letter of Credit); PROVIDED, HOWEVER, that notwithstanding the foregoing,
the WLSP Contingent Obligation shall not constitute a Contingent Obligation
of TLGI, the Borrower or any other Subsidiary for any purpose under this
Agreement so long as the Class B Invested Amount at least equals $12,000,000.
"CONTROLLED GROUP" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together
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with the Borrower or any of its Subsidiaries, are treated as a single
employer under Section 414 of the Code.
"CONVERSION/CONTINUATION NOTICE" has the meaning specified in
SECTION 2.7.
"DEFAULT" means an event described in ARTICLE VIII.
"DISTRIBUTION" in respect of any corporation shall mean (a)
dividends or other distributions on capital stock of the corporation (except
dividends or other distributions payable solely in shares of capital stock),
and (b) the redemption, retirement or acquisition of such stock or of
warrants, rights or other options to purchase such stock (except when solely
in exchange for such stock).
"DISTRIBUTION DATE" has the meaning specified in SECTION 7.10(d).
"DOCUMENTATION AGENT" means Goldman Sachs Credit Partners L.P.
"DOLLARS" and "$" mean the lawful money of the United States.
"EAGLE" means Eagle Financial Associates, LLC, a Delaware limited
liability company and a Wholly-Owned Subsidiary of TLGI.
"EBITDA" for any period shall mean the sum of (a) Consolidated Net
Income during such period, plus (to the extent deducted in determining
Consolidated Net Income), (b) all provisions for any income or similar taxes
paid or accrued by TLGI and the Borrower and the other Subsidiaries during
such period, (c) depreciation, depletion and amortization for such period,
(d) other non-cash charges, and (e) Consolidated Interest Charges of TLGI and
the Borrower and the other Subsidiaries during such period determined in
accordance with GAAP.
"EFFECTIVE DATE" means the first date on which the Agent shall have
received counterparts of this Agreement duly executed by all parties hereto.
"EQUITY PLACEMENT" means the offering by TLGI during the first
calendar quarter of 1996 of common shares in TLGI pursuant to which not less
than C$150,000,000 of net proceeds was realized by TLGI.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any rule or regulation issued thereunder.
"EURODOLLAR ADVANCE" means an Advance that bears interest at a
Eurodollar Rate.
"EURODOLLAR BASE RATE" means, with respect to a Eurodollar Advance
for the relevant Eurodollar Interest Period, (a) the per annum rate for
deposits in Dollars for a period
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corresponding to the duration of the relevant Eurodollar Interest Period,
which appears on Telerate Page 3750 at approximately 11:00 a.m. (London time)
two Business Days prior to the first day of such Eurodollar Interest Period
and (b) if such rate does not appear on Telerate Page 3750 on such day, the
per annum rate at which deposits in Dollars are offered by Bank of Montreal
to first-class banks in the London interbank market at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such
Eurodollar Interest Period, in the approximate amount of Bank of Montreal's
relevant Eurodollar Loan and having a maturity approximately equal to such
Eurodollar Interest Period. The reference to Telerate Page 3750 in this
definition shall be construed to be a reference to the relevant page or any
other page that may replace such page on the Telerate service or any other
service that may be nominated by the British Bankers' Association as the
information vendor for the purpose of displaying British Bankers' Association
Interest Settlement Rates for deposits in Dollars.
"EURODOLLAR INTEREST PERIOD" means, with respect to a Eurodollar
Advance, a period of one, two, three or six months commencing on a Business
Day selected by the Borrower pursuant to this Agreement. Such Eurodollar
Interest Period shall end on (but exclude) the day which corresponds
numerically to such date one, two, three or six months thereafter, unless
there is no such numerically corresponding day in such next, second, third or
sixth succeeding month, in which case such Eurodollar Interest Period shall
end on the last Business Day of such next, second, third or sixth succeeding
month. If a Eurodollar Interest Period would otherwise end on a day which is
not a Business Day, such Eurodollar Interest Period shall end on the next
succeeding Business Day, unless said next succeeding Business Day falls in a
new calendar month, in which case such Eurodollar Interest Period shall end
on the immediately preceding Business Day.
"EURODOLLAR LOAN" means a Revolving Loan which bears interest at a
Eurodollar Rate.
"EURODOLLAR RATE" means, with respect to a Eurodollar Advance for
the relevant Eurodollar Interest Period, the sum of (a) the quotient of (i)
the Eurodollar Base Rate applicable to such Eurodollar Interest Period,
divided by (ii) one minus the Reserve Requirement (expressed as a decimal)
applicable to such Eurodollar Interest Period, plus (b) the Applicable Margin
in effect from time to time during such Eurodollar Interest Period, plus (c)
the Excess Leverage Margin in effect from time to time during such Eurodollar
Interest Period (which Excess Leverage Margin will be assessed by the Agent
retroactively to such Eurodollar Interest Period in accordance with, and with
effect from and after the date specified in, the definitions of "Excess
Leverage Margin" and "Excess Leverage Ratio"). The Eurodollar Rate shall be
rounded to the next higher multiple of 1/16 of 1% if the rate is not such a
multiple.
"EXCESS LEVERAGE MARGIN" means a per annum rate determined from
time to time by reference to SCHEDULE 2 hereto whenever the Excess Leverage
Ratio exceeds 5.00 to 1.00 as determined for the four consecutive fiscal
quarter period then most recently ended, such Excess
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Leverage Margin to be applicable with effect from the first day of the fourth
fiscal quarter in such four consecutive fiscal quarter period.
"EXCESS LEVERAGE RATIO" means, for any day, the ratio of
Consolidated Indebtedness to Adjusted EBITDA (but calculated without the
$35,800,000 adjustment for the fiscal quarter ended September 30, 1997 which
is contemplated by the last sentence of SECTION 7.23) determined for the four
consecutive fiscal quarter period then most recently ended for which TLGI or
the Borrower has delivered financial statements pursuant to which such ratio
can be determined.
"EXTENSION NOTIFICATION DATE" has the meaning specified in SECTION
2.18.
"EXTENSION REQUEST" has the meaning specified in SECTION 2.18.
"EXTENSION REQUEST DATE" has the meaning specified in SECTION 2.18.
"FACILITY A ADVANCE" means a borrowing consisting of simultaneous
Facility A Revolving Loans of the same Type made to the Borrower by each of
the Lenders pursuant to SECTION 2.1.1, for, in the case of Fixed Rate
Advances, the same Interest Period.
"FACILITY A AGGREGATE COMMITMENT" means the aggregate of the
Facility A Commitments of all the Lenders, as reduced from time to time
pursuant to the terms hereof.
"FACILITY A APPLICABLE COMMITMENT FEE RATE" means a per annum rate
determined from time to time by reference to TLGI's senior unsecured and
unenhanced (except, if applicable, pursuant to the Collateral Trust
Agreement) long-term debt rating as specified on SCHEDULE 2 hereto; PROVIDED,
HOWEVER, that the Facility A Applicable Commitment Fee Rate will be adjusted
as specified on SCHEDULE 2 hereto whenever Excess Leverage Margin is
applicable. Any change in the Facility A Applicable Commitment Fee Rate
resulting from a change in TLGI's debt ratings will take effect as of the
date of the debt ratings change and any change in the Facility A Applicable
Commitment Fee Rate resulting from the application of Excess Leverage Margin
thereto will take effect on the date specified in the definition of "Excess
Leverage Margin".
"FACILITY A COMMITMENT" means, for each Lender, the obligation of
such Lender to make Facility A Revolving Loans, to purchase participations in
Swing Line Loans and to purchase participations in Letters of Credit not
exceeding the amount set forth opposite its name on SCHEDULE 5 hereto or as
set forth in any Notice of Assignment relating to any assignment that has
become effective pursuant to SECTION 13.3.2, as such amount may be modified
from time to time pursuant to the terms hereof.
"FACILITY A REVOLVING LOANS" has the meaning specified in SECTION
2.1.1.
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"FACILITY A TERMINATION DATE" means September 29, 2002, or such
later date in effect from time to time as the Facility A Termination Date
determined in accordance with the procedures described in SECTION 2.18.
"FACILITY B ADVANCE" means a borrowing consisting of simultaneous
Facility B Revolving Loans of the same Type made to the Borrower by each of
the Lenders pursuant to SECTION 2.1.2, for, in the case of Fixed Rate
Advances, the same Interest Period.
"FACILITY B AGGREGATE COMMITMENT" means the aggregate of the
Facility B Commitments of all the Lenders, as reduced from time to time
pursuant to the terms hereof.
"FACILITY B APPLICABLE COMMITMENT FEE RATE" means a per annum rate
determined from time to time by reference to TLGI's senior unsecured and
unenhanced (except, if applicable, pursuant to the Collateral Trust
Agreement) long-term debt rating as specified on SCHEDULE 2 hereto; PROVIDED,
HOWEVER, that the Facility B Applicable Commitment Fee Rate will be adjusted
as specified on SCHEDULE 2 hereto whenever Excess Leverage Margin is
applicable. Any change in the Facility B Applicable Commitment Fee Rate
resulting from a change in TLGI's debt ratings will take effect as of the
date of the debt ratings change and any change in the Facility B Applicable
Commitment Fee Rate resulting from the application of Excess Leverage Margin
thereto will take effect on the date specified in the definition of "Excess
Leverage Margin".
"FACILITY B COMMITMENT" means, for each Lender, the obligation of
such Lender to make Facility B Revolving Loans not exceeding the amount set
forth opposite its name on SCHEDULE 5 hereto or as set forth in any Notice of
Assignment relating to any assignment that has become effective pursuant to
SECTION 13.3.2, as such amount may be modified from time to time pursuant to
the terms hereof.
"FACILITY B REVOLVING LOANS" has the meaning specified in SECTION
2.1.2.
"FACILITY B TERMINATION DATE" means September 28, 1998.
"FAIR VALUE" means the value of the relevant asset determined in an
arm's-length transaction conducted in good faith between an informed and
willing buyer, under no compulsion to buy, and an informed and willing
seller, under no compulsion to sell.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, an interest rate
per annum equal to the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published for such day (or, if such day
is not a Business Day, for the immediately preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations at
approximately 10:00 a.m. (Chicago time) on such
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day on such transactions received by the Agent from three Federal funds
brokers of recognized standing selected by the Agent in its sole discretion.
"FINANCE SUBSIDIARY" means any captive finance Subsidiary of TLGI
that engages in no material activity other than (i) buying accounts
receivable or other financial assets of any Affiliate of TLGI, (ii) making
loans or otherwise extending credit to any such Affiliates, (iii) succeeding
to (or having succeeded to) any or all of the business of LFW or Eagle or
otherwise engaging in finance activities similar to the finance activities
engaged in by LFW or Eagle from time to time, or (iv) making Investments in
other Finance Subsidiaries.
"FINANCIAL UNDERTAKING" of a Person means (a) any repurchase
obligation or liability of such Person or any of its Subsidiaries with
respect to accounts or notes receivable sold by such Person or any of its
Subsidiaries, (b) any liability under any sale and leaseback transactions
which do not create a liability on the consolidated balance sheet of such
Person and its Subsidiaries, (c) obligations arising with respect to any
other transaction which is the functional equivalent of or takes the place of
borrowing but which does not constitute a liability on the consolidated
balance sheet of such Person and its Subsidiaries, or (d) net liabilities
under any agreements, devices or arrangements designed to protect at least
one of the parties thereto from the fluctuations of interest rates, exchange
rates or forward rates applicable to such party's assets, liabilities or
exchange transactions, including, but not limited to, interest rate exchange
agreements, forward currency exchange agreements, interest rate cap or collar
protection agreements, forward rate currency or interest rate options.
"FIRST PREFERRED SERIES C RECEIPTS" means the 8,800,000 Convertible
First Preferred Shares Series C Receipts (C$220,000,000) issued by TLGI
pursuant to the terms of that certain Prospectus, dated December 21, 1995,
each such Receipt representing entitlement to 1/10 of a 6.00% Cumulative
Redeemable Convertible First Preferred Share, Series C, of TLGI.
"FIXED CD BASE RATE" means, with respect to a Fixed CD Rate Advance
for the relevant CD Interest Period, the rate determined by the Agent to be
the arithmetic average of the prevailing bid rates quoted to the Agent at or
before 10:00 a.m. (Chicago time) on the first day of such CD Interest Period
by three New York or Chicago certificate of deposit dealers of recognized
standing selected by the Agent in its sole discretion for the purchase at
face value of certificates of deposit of Bank of Montreal in the approximate
amount of Bank of Montreal's relevant Fixed CD Rate Loan and having a
maturity approximately equal to such CD Interest Period.
"FIXED CD RATE" means, with respect to a Fixed CD Rate Advance for
the relevant CD Interest Period, a rate per annum equal to the sum of (a) the
quotient of (i) the Fixed CD Base Rate applicable to such CD Interest Period,
divided by (ii) one minus the Reserve Requirement (expressed as a decimal)
applicable to such CD Interest Period, plus (b) the Assessment Rate
applicable to such CD Interest Period, plus (c) the Applicable Margin in
effect from time to time during such CD Interest Period, plus (d) the Excess
Leverage Margin in effect
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from time to time during such CD Interest Period (which Excess Leverage
Margin will be assessed by the Agent retroactively to such CD Interest Period
in accordance with, and with effect from and after the date specified in, the
definitions of "Excess Leverage Margin" and "Excess Leverage Ratio"). The
Fixed CD Rate shall be rounded to the next higher multiple of one-hundredths
of 1% if the rate is not such a multiple.
"FIXED CD RATE ADVANCE" means an Advance which bears interest at a
Fixed CD Rate.
"FIXED CD RATE LOAN" means a Revolving Loan which bears interest at
a Fixed CD Rate.
"FIXED RATE" means the Fixed CD Rate or the Eurodollar Rate.
"FIXED RATE ADVANCE" means an Advance which bears interest at a
Fixed Rate.
"FIXED RATE LOAN" means a Revolving Loan which bears interest at a
Fixed Rate.
"FLOATING RATE" means, for any day, a rate per annum equal to the
sum of (a) the Alternate Base Rate for such day, changing when and as the
Alternate Base Rate changes, plus (b) the Applicable Margin in effect for
such day, plus (c) the Excess Leverage Margin in effect for such day (which
Excess Leverage Margin will be assessed by the Agent retroactively to such
day in accordance with, and with effect from and after the date specified in,
the definitions of "Excess Leverage Margin" and "Excess Leverage Ratio").
"FLOATING RATE ADVANCE" means an Advance which bears interest at
the Floating Rate.
"FLOATING RATE LOAN" means, as applicable, a Revolving Loan or a
Swing Line Loan which bears interest at the Floating Rate.
"GAAP" means the generally accepted accounting principles generally
applied by TLGI as at December 31, 1995, and thereafter, Canadian GAAP until
such time as TLGI and the Borrower shall prepare their respective books of
record and account in accordance with U.S. GAAP, at which time and at all
times thereafter, "GAAP" shall mean U.S. GAAP.
"GOVERNMENTAL ACTS" has the meaning, specified in SECTION 2.21.6(A).
"GOVERNMENTAL AUTHORITY" means any country or nation, any political
subdivision of such country or nation, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government of any country or nation or political subdivision
thereof.
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"GUARANTOR" means each of TLGI and each Pledgor Subsidiary and
their respective successors and assigns.
"GUARANTY" means each of (a) the Guaranty of TLGI set forth in
ARTICLE V and (b) the Pledgor Subsidiary Guaranty.
"INDEBTEDNESS" of a Person means, without duplication, such
Person's (a) obligations for borrowed money, (b) obligations representing the
deferred purchase price of Property or services (other than accounts payable
arising in the ordinary course of such Person's business payable on terms
customary in the trade), (c) obligations, whether or not assumed, secured by
Liens on or payable out of the proceeds or production from Property now or
hereafter owned or acquired by such Person, (d) obligations which are
evidenced by notes, acceptances, or other instruments (but exclusive of
notes, bills and checks presented in the ordinary course of business by such
Person to banks for collection or deposit), (e) Capitalized Lease
Obligations, (f) Synthetic Lease Obligations, (g) Securitization Obligations,
(h) Financial Undertakings, (i) Contingent Obligations and (j) obligations
under or in connection with letters of credit (including, with respect to
TLGI or the Borrower, any Letter of Credit); but excluding, in any event, (x)
amounts payable by such Person in respect of covenants not to compete, (y)
with reference to TLGI, the Borrower and the other Subsidiaries, all
obligations of TLGI, the Borrower and the other Subsidiaries of the character
referred to in this definition to the extent owing to TLGI, the Borrower or
any other Subsidiary and (z) Securitization Obligations of such Person except
to the extent of the maximum contractual liability of such Person under the
documentation for the related securitization transaction giving rise to such
Securitization Obligations for losses or defaults which are attributable to
the obligors of the Receivables included in such securitization transaction.
"INTEREST PERIOD" means a CD Interest Period or a Eurodollar
Interest Period.
"INVESTMENT" of a Person means any loan, advance (other than
commission, travel and similar advances to officers and employees made in the
ordinary course of business), extension of credit (other than accounts
receivable arising in the ordinary course of business on terms customary in
the trade), deposit account or contribution of capital by such Person to any
other Person or any investment in, or purchase or other acquisition of, the
stock, partnership interests, notes, debentures or other securities of any
other Person made by such Person.
"L/C COMMITMENT AMOUNT" means $300,000,000.
"L/C DRAFT" means a draft drawn on the L/C Issuer pursuant to any
of the Letters of Credit.
"L/C INTEREST" has the meaning specified in SECTION 2.21.2.
"L/C ISSUER" means Bank of Montreal.
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"L/C OBLIGATIONS" means an amount equal to the sum (without
duplication) of (i) the aggregate of the amount then available for drawing
under each of the Letters of Credit, (ii) the face amounts of all outstanding
L/C Drafts corresponding to the Letters of Credit, which L/C Drafts have been
accepted by the L/C Issuer but not yet paid, (iii) the aggregate outstanding
amount of Reimbursement Obligations at such time and (iv) the aggregate face
amount of all Letters of Credit requested by the Borrower but not yet issued
(unless such request has been denied).
"LENDERS" means the lending institutions listed on the signature
pages of this Agreement (including the Swing Line Lender), and any other
lending institutions which may become party hereto pursuant to the terms
hereof, and their respective successors and assigns permitted in accordance
with the terms hereof.
"LENDING INSTALLATION" means, with respect to a Lender, any office,
branch, subsidiary or affiliate of such Lender.
"LETTER OF CREDIT" means each letter of credit identified on
SCHEDULE 4 hereto and any standby letter of credit issued pursuant to SECTION
2.21 hereof.
"LFC" means Loewen Financial Corporation, a company incorporated
under the laws of Barbados.
"LFW" means Loewen Finance (Wyoming) Limited Liability Company, a
previously existing Wyoming limited liability company which was a
Wholly-Owned Subsidiary of TLGI.
"LIEN" means any lien (statutory or other), mortgage, pledge,
hypothecation, security interest, charge, assignment, deposit arrangement,
encumbrance or other security agreement or arrangement of any kind or nature
whatsoever (including, without limitation, the interest of a vendor or lessor
under any conditional sale, Capitalized Lease or other title retention
agreement).
"LMIC" means Loewen Management Investment Corporation, a Delaware
corporation and a Wholly-Owned Subsidiary of the Borrower.
"LOAN DOCUMENTS" means this Agreement, the Letters of Credit, the
Collateral Trust Agreement, and the promissory notes (if any) issued pursuant
to SECTION 13.1.
"MAJOR ACQUISITION" means any Acquisition of any Person which had
either (x) gross revenues in excess of $5,000,000 for the fiscal year of such
Person most recently ended at the time of closing of such Acquisition or (y)
total assets in excess of $5,000,000 as of the end of the fiscal year of such
Person most recently ended at the time of closing of such Acquisition.
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"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, Property, financial condition, results of operations, or prospects of
TLGI, the Borrower and the other Subsidiaries taken as a whole, (b) the ability
of TLGI or the Borrower to perform its respective obligations under the Loan
Documents, or (c) the validity or enforceability of any of the Loan Documents or
the rights or remedies of the Agent, the L/C Issuer, the Collateral Agent or the
Lenders thereunder, and "MATERIAL ADVERSE EFFECT" shall include, without
limitation, the occurrence at any time of a Material Judgment Event.
"MATERIAL JUDGMENT EVENT" means a judgment, award or other order shall
be entered (whether or not such judgment, award or other order is bonded,
stayed, contested or appealable) against any of TLGI, the Borrower or any of
their respective Subsidiaries at any time when the amount of such judgment,
award or order, when added to the aggregate amount of all other judgments,
awards and orders which at such time shall have been entered against any of
TLGI, the Borrower or any of their respective Subsidiaries without having been
finally satisfied in full or vacated, shall be in excess of $100,000,000.
"MEIP CREDIT AGREEMENT" means that certain $121,300,000 1994 MEIP
Credit Agreement, dated as of June 14, 1994, as amended and restated as of May
15, 1996, among TLGI, the Borrower, LMIC, as agent for TLGI and the Borrower,
the lenders party thereto, and Wachovia Bank of Georgia, N.A., as agent for the
lenders, as it has been and may hereafter be amended, restated, supplemented or
otherwise modified from time to time.
"MINORITY INTERESTS" means any shares of stock of any class of a
Subsidiary (other than directors' qualifying shares as required by law or shares
of stock having no right to vote or receive dividends) that are not owned by
TLGI and/or one or more of its Subsidiaries. Minority Interests shall be valued
by valuing Minority Interests constituting preferred stock at the voluntary or
involuntary liquidating value of such preferred stock, whichever is greater, and
by valuing Minority Interests constituting common stock at the book value of
capital and surplus applicable thereto adjusted, if necessary, to reflect any
changes from the book value of such common stock required by the foregoing
method of valuing Minority Interests in preferred stock.
"MIPS" means the 9.45% Cumulative Monthly Income Preferred Securities,
Series A, issued by Loewen Group Capital, L.P. and the related Series A Junior
Subordinated Debentures issued by the Borrower and purchased by Loewen Group
Capital, L.P. with the proceeds of the sale of the 9.45% Cumulative Monthly
Income Preferred Securities, Series A.
"MOODY'S" means Moody's Investors Service, Inc.
"MULTIEMPLOYER PLAN" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which the Borrower or any
member of the Controlled Group is a party to which more than one employer is
obligated to make contributions.
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"NEWEOL" means Neweol Finance B.V., a company incorporated under the
laws of the Netherlands.
"NON-CONSENTING LENDER" has the meaning specified in SECTION 2.18.
"NOTE AGREEMENTS" means the agreements dated for reference October 1,
1991, September 1, 1993 and February 1, 1994, the indenture dated March 20,
1996, and any and all other warrant agreements and/or note agreements from time
to time entered into by TLGI, the Borrower, or either of them, and the relevant
holders of notes issued and sold thereunder, in each case as amended,
supplemented or otherwise modified from time to time.
"NOTICE OF ASSIGNMENT" has the meaning specified in SECTION 13.3.2.
"OBLIGATIONS" means all unpaid principal of and accrued and unpaid
interest on the Facility A Revolving Loans, the Facility B Revolving Loans and
the Swing Line Loans, all L/C Obligations, all accrued and unpaid fees and all
expenses, reimbursements, indemnities and other obligations of the Borrower to
the Lenders or to any Lender, the Agent or any indemnified party hereunder
arising under the Loan Documents.
"ORIGINAL AGREEMENT" has the meaning specified in the Recitals to this
Agreement.
"PARTICIPANT" has the meaning specified in SECTION 13.2.1.
"PAYMENT OFFICE" means the principal office of the Agent in Chicago,
Illinois, located on the date hereof at 115 South LaSalle Street, Chicago,
Illinois 60603, or such other office of the Agent as the Agent may from time to
time designate by written notice to the Borrower and the Lenders. All payments
to be made to the Agent at the Payment Office shall be made by wire transfer to
Harris Bank, Chicago, Illinois, ABA No. 071000288 for credit to Account No.
1248566 in the name of Bank of Montreal, with references to Loewen Group
International, Inc. and the type of payment being made, or to such other account
as the Agent may from time to time designate by written notice to the Borrower
and the Lenders.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.
"PERMITTED ACQUISITION" means any Acquisition (but only to the extent
such Acquisition does not involve lines of business which are outside of the
TLGI Lines of Business, unless the Acquisition of such lines which are outside
of the TLGI Lines of Business would, at the time of the Acquisition and after
giving effect thereto, be permitted as Investments under SECTION 7.16(o)) made
by TLGI, the Borrower or any other Subsidiary from a willing seller or other
willing transferor where such Acquisition is not contested by such seller or
transferor at any time during the pendency of such Acquisition; PROVIDED, that
(i) either (x) TLGI or the Borrower
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has in place before it executes any binding agreement or other binding writing
by which it agrees to proceed with the Acquisition (whether or not subject to
conditions) sufficient funds which are committed and available (which may
include the availability of Revolving Loans under this Agreement (but only to
the extent no Default or Unmatured Default would occur after then giving
effect to the borrowing necessary to fund such Acquisition), and provided that
for any third-party commitment such commitment is otherwise permitted under
this Agreement), to fund the full amount of the cash consideration for such
Acquisition, or (y) such agreement or other writing contains a condition to
closing of TLGI or the Borrower based upon the ability of TLGI or the Borrower
to raise funds for the Acquisition, and (ii) all contractual arrangements
evidencing such Acquisition include provisions subjecting the parties to
arbitration except to the extent the Board of Directors of TLGI or the Borrower
(or an authorized subcommittee thereof, a majority of whose members consist of
directors who are not employees of TLGI, the Borrower or any other Subsidiary)
shall either make an express determination to the contrary or shall approve the
Acquisition pursuant to valid action which expressly contemplates the absence
of such an arbitration provision in the contractual arrangements evidencing
such Acquisition.
"PERMITTED RECEIVABLES SECURITIZATION" means any transaction (or
series of transactions) effected by TLGI or the Borrower or any Subsidiary of
TLGI pursuant to which TLGI, the Borrower or such Subsidiary either (x) sells or
otherwise transfers (including sales or transfers using one or more SPV's), or
(y) grants a security interest in, assets of one or more of TLGI, the Borrower
and the other Subsidiaries consisting of Receivables and Receivables Related
Assets; PROVIDED, HOWEVER, that the aggregate Securitization Obligations
(without duplication) of TLGI, the Borrower, the Subsidiaries and any such SPV's
in connection with all Permitted Receivables Securitizations shall not exceed
$125,000,000 at any time outstanding.
"PERSON" means any natural person, corporation, limited liability
company, firm, joint venture, partnership, association, enterprise, trust or
other entity or organization, or any government or political subdivision or any
agency, department or instrumentality thereof.
"PLAN" means an employee pension benefit plan which is covered by
Title IV of ERISA or subject to the minimum funding standards under Section 412
of the Code as to which the Borrower or any member of the Controlled Group may
have any liability.
"PLEDGOR SUBSIDIARIES" means, at any time, but subject to SECTION
7.26, each Subsidiary of TLGI or the Borrower which at such time is party to the
Collateral Trust Agreement as a pledgor of capital stock or other equity
interests or, in the case of the Borrower, certain assets of the Borrower, held
by it on the terms specified in the Collateral Trust Agreement.
"PLEDGOR SUBSIDIARY GUARANTY" means the guaranty of each Pledgor
Subsidiary set forth in the Collateral Trust Agreement.
"PREPAYMENT NOTICE" has the meaning specified in SECTION 2.5.
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"PROCESS AGENT" has the meaning specified in SECTION 10.13.
"PROPERTY" of a Person means any and all property, whether real,
personal, tangible, intangible, or mixed, of such Person, or other assets owned,
leased or operated by such Person.
"PURCHASERS" has the meaning specified in SECTION 13.3.1(a).
"RECEIVABLES" means all rights of TLGI, the Borrower or any Subsidiary
to payments from Persons other than TLGI and its Subsidiaries (whether
constituting accounts, chattel paper, instruments, general intangibles or
otherwise, and including the right to payment of any interest or finance
charges).
"RECEIVABLES PROGRAM ASSETS" means (a) all Receivables which are
described as being transferred by TLGI or its Subsidiaries pursuant to a
Permitted Receivables Securitization, (b) all Receivables Related Assets, and
(c) all collections (including recoveries) and other proceeds of the assets
described in the foregoing clauses.
"RECEIVABLES RELATED ASSETS" means (i) any rights arising under the
documentation governing or relating to Receivables (including rights in respect
of liens securing such Receivables and other credit support in respect of such
Receivables), (ii) any collections, recoveries and proceeds of such Receivables
and any lockboxes or accounts in which such proceeds are deposited, (iii) spread
accounts and other similar accounts (and any amounts on deposit therein)
established in connection with a Permitted Receivables Securitization, (iv) any
warranty, indemnity, dilution and other intercompany claim arising out of
documents relating to a Permitted Receivables Securitization and (v) other
assets which are customarily transferred or in respect of which security
interests are customarily granted in connection with asset securitization
transactions involving accounts receivable.
"REGIONAL PARTNER" means any Subsidiary, all of the outstanding shares
entitled to receive dividends of which, shall at the time be owned or
controlled, directly or indirectly, by TLGI or a Subsidiary of TLGI.
"REGISTER" has the meaning specified in SECTION 13.3.2.
"REGULATION D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor thereto
or other regulation or official interpretation of said Board of Governors
relating to reserve requirements applicable to member banks of the Federal
Reserve System.
"REGULATION G", "REGULATION T", "REGULATION U" and "REGULATION X"
mean, respectively, Regulations G, T, U and X of the Board of Governors of the
Federal Reserve
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System as from time to time in effect and any successor thereto or other
regulation or official interpretation of said Board of Governors relating to
the subject matter thereof.
"REIMBURSEMENT OBLIGATION" is defined in SECTION 2.21.3.
"RELEVANT TAX" has the meaning specified in SECTION 5.7.
"RENTALS" of a Person means the aggregate fixed amounts payable by
such Person under any lease of Property having an original term (including any
required renewals or any renewals at the option of the lessor or lessee) of one
year or more.
"REPORTABLE EVENT" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event; PROVIDED, HOWEVER, that a failure to meet the
minimum funding standard of Section 412 of the Code and of Section 302 of ERISA
shall be a Reportable Event regardless of the issuance of any such waiver of the
notice requirement in accordance with either Section 4043(a) of ERISA or Section
412(d) of the Code.
"REQUIRED LENDERS" means Lenders in the aggregate having at least
66-2/3% of the Aggregate Commitment or, if the Aggregate Commitment has been
terminated, Lenders in the aggregate holding at least 66-2/3% of the aggregate
unpaid principal amount of the outstanding Advances, Swing Line Loans and the
L/C Obligations. For purposes of this definition the aggregate unpaid principal
amount of the outstanding Swing Line Loans held by Lenders at any time shall be
determined such that all Swing Line Loans outstanding at such time shall be
allocated among the Lenders ratably in accordance with their respective
Commitments, notwithstanding that the Swing Line Lender at such time may have
fully funded some or all of the outstanding Swing Line Loans.
"RESERVE REQUIREMENT" means, with respect to a CD Interest Period or a
Eurodollar Interest Period, the maximum aggregate reserve requirement (including
all basic, supplemental, marginal and other reserves) which is imposed under
Regulation D on new non-personal time deposits of $100,000 or more with a
maturity equal to that of such CD Interest Period (in the case of Fixed CD Rate
Advances) or on Eurodollar liabilities (in the case of Eurodollar Advances).
"RESTATEMENT EFFECTIVE DATE" has the meaning specified in
SECTION 16.1.
"REVOLVING LOAN" means a Facility A Revolving Loan or a Facility B
Revolving Loan, as the context may require or allow, and "REVOLVING LOANS" means
Facility A Revolving Loans and Facility B Revolving Loans, taken together.
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"REVOLVING LOAN BORROWING DATE" means a date on which an Advance is
made hereunder.
"REVOLVING LOAN BORROWING NOTICE" has the meaning specified in SECTION
2.6.
"SECTION" means a numbered section of this Agreement, unless another
document is specifically referenced.
"SECURED PARTIES" means the Lenders, the Persons specified on SCHEDULE
3 hereto as Secured Parties and, to the extent designated by the Borrower from
time to time in a writing delivered to the Agent and the Collateral Agent, all
other Persons who from time to time hold Senior Obligations which are secured
pursuant to the Collateral Trust Agreement; PROVIDED, HOWEVER, that no Secured
Parties shall be placed within the class to which the Lenders belong from time
to time under the terms of the Collateral Trust Agreement unless the Required
Lenders shall have given their affirmative approval thereof.
"SECURITIZATION OBLIGATIONS" of a Person means the outstanding
purchaser's investment or outstanding capital or other principal equivalent that
purchasers or other investors are entitled to receive in respect of any
securitization or other sale or asset-backed financing of Receivables of such
Person or its Affiliates effected by such Person.
"SENIOR OBLIGATIONS" means (i) the Obligations, (ii) the Indebtedness
described on SCHEDULE 3 hereto, (iii) the obligations of TLGI or the Borrower
under any and all interest rate or currency exchange swaps, caps, collars,
floors or other similar transactions, or options on any of the foregoing,
entered into by TLGI or the Borrower and having a term of at least two years
from the date of entry into, and (iv) the unpaid principal of and accrued and
unpaid interest on (together with all accrued and unpaid fees and expenses
related to) Indebtedness for borrowed money incurred by TLGI, the Borrower or
any Subsidiary with a maturity of at least two years from its date of issuance
(or, in the case of revolving Indebtedness, with a term of at least two years
from the date of execution of the documentation governing such revolving
Indebtedness), which in the case of Indebtedness described in this CLAUSE (iv)
is not secured except pursuant to the Collateral Trust Agreement and by its
terms is not subordinated (except as expressly provided in the Collateral Trust
Agreement) to the Obligations or any other senior indebtedness of TLGI, the
Borrower or such Subsidiary, respectively.
"SINGLE EMPLOYER PLAN" means a Plan maintained by the Borrower or any
member of the Controlled Group for employees of the Borrower or any member of
the Controlled Group.
"SPECIFIED REMITTANCE TIME" means (a) if the relevant Payment Office
is located in Chicago, 12:30 p.m. (Chicago time) and (b) if the relevant Payment
Office is located elsewhere, such time as the Agent shall specify after
consultation with the Borrower and the Lenders.
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"SPV" means a corporation, trust, partnership or other special purpose
Person established by TLGI and/or its Subsidiaries solely for the purpose of
implementing a Permitted Receivables Securitization.
"STANDARD & POOR'S" means Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc.
"STATED AMOUNT" means, when used with reference to a Letter of Credit,
(x) at the time of issuance, the face amount thereof, and (y) at any time
thereafter, the aggregate amount available to be drawn under such Letter of
Credit at such time.
"SUBSIDIARY" of a Person means (a) any corporation more than 50% of
the outstanding securities having ordinary voting power of which, or more than
50% of the economic benefits associated with all outstanding securities of
which, shall at the time be owned or controlled, directly or indirectly, by such
Person or by one or more of its Subsidiaries or by such Person and one or more
of its Subsidiaries, or (b) any partnership, association, limited liability
company, joint venture or similar business organization more than 50% of the
ownership interests having ordinary voting power of which, or more than 50% of
the economic benefits associated with all outstanding ownership interests of
which, shall at the time be so owned or controlled. Unless otherwise expressly
provided, all references herein to a "Subsidiary" shall mean a Subsidiary of
TLGI.
"SUBSTANTIAL PORTION" means, with respect to the Property of TLGI and
the Borrower and the other Subsidiaries, Property of TLGI, the Borrower and the
other Subsidiaries that has a Fair Value representing more than 5% of
Consolidated Tangible Net Worth of TLGI, the Borrower and the other Subsidiaries
determined as of the end of the fiscal quarter of TLGI most recently ended prior
to the date on which such determination is made.
"SWING LINE ASSIGNMENT" has the meaning specified in SECTION 13.3.1(b)
"SWING LINE COMMITMENT" means the commitment of the Swing Line Lender
to make Swing Line Loans hereunder.
"SWING LINE INTEREST" has the meaning specified in SECTION 2.25(a).
"SWING LINE LENDER" means Bank of Montreal.
"SWING LINE LOAN" has the meaning specified in SECTION 2.22.
"SWING LINE LOAN BORROWING DATE" means a date on which a Swing Line
Loan is made hereunder.
"SWING LINE LOAN BORROWING NOTICE" has the meaning specified in
SECTION 2.23.
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"SYNTHETIC LEASE" of a Person means any lease of Property by such
Person as lessee which under GAAP would or may be treated as a true operating
lease but which under tax law or commercial law is treated as secured
Indebtedness of such Person and not as a true lease.
"SYNTHETIC LEASE OBLIGATIONS" of a Person means the aggregate funded
amount under all Synthetic Leases to which such Person is party as lessee.
"TAXING JURISDICTION" has the meaning specified in SECTION 5.7.
"TLGI" means The Loewen Group Inc., a corporation incorporated under
the laws of the Province of British Columbia, Canada.
"TLGI LINES OF BUSINESS" means the lines of business conducted as of
the date of this Agreement by TLGI or the Borrower or any of their Subsidiaries
and shall include the making by TLGI, the Borrower or any of their Subsidiaries,
from time to time, of equity and debt investments in, or to, Persons which are
engaged primarily in any one or more of the funeral, funeral home, cemetery and
funeral-related insurance businesses.
"TRANSFEREE" has the meaning specified in SECTION 13.4.
"TYPE" means, (a) with respect to any Revolving Loan, its nature as a
Floating Rate Loan, Eurodollar Loan or Fixed CD Rate Loan, and (b) with respect
to any Advance, its nature as a Floating Rate Advance, Eurodollar Advance or
Fixed CD Rate Advance.
"UNFUNDED LIABILITIES" means the amount (if any) by which the present
value of all vested nonforfeitable benefits under all Single Employer Plans
exceeds the Fair Value of all Plan assets allocable to such benefits, all
determined as of the then most recent valuation date for such Plans.
"UNITED STATES" and "U.S." mean the United States of America.
"UNMATURED DEFAULT" means an event which but for the lapse of time or
the giving of notice, or both, would constitute a Default.
"U.S. GAAP" means, at any time, generally accepted accounting
principles in the United States at such time.
"WHOLLY-OWNED SUBSIDIARY" of a Person means (a) any Subsidiary all of
the outstanding voting securities of which shall at the time be owned or
controlled, directly or indirectly, by such Person or one or more Wholly-Owned
Subsidiaries of such Person, or by such Person and one or more Wholly-Owned
Subsidiaries of such Person, or (b) any partnership, association, joint venture
or similar business organization 100% of the ownership interests having ordinary
voting power of which shall at the time be so owned or controlled.
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"WLSP CONTINGENT OBLIGATION" means the joint and several liability
of Neweol to repay the $160,273,742 Zero Coupon Note dated November 1, 1994,
executed by WLSP Investment Partners I, a partnership formed under the laws
of Switzerland, and payable to Wachovia Bank of Georgia, N.A.
ARTICLE II
THE CREDITS
2.1. THE REVOLVING LOANS.
2.1.1 FACILITY A REVOLVING LOANS. From and including the
Effective Date and prior to the Facility A Termination Date, each Lender
severally agrees, on the terms and conditions set forth in this
Agreement (including, without limitation, the terms and conditions of
SECTIONS 2.10.3, 2.10.4 and 9.1 relating to the reduction, suspension or
termination of the Facility A Aggregate Commitment or the Aggregate
Commitment), to make Revolving Loans (relative to such Lender, its
"FACILITY A REVOLVING LOANS") in Dollars to the Borrower from time to
time in an aggregate amount, together with such Lender's L/C Interest
and Swing Line Interest, not to exceed (except as otherwise contemplated
by the last sentence of SECTION 2.19.1) at any one time outstanding the
amount of such Lender's Facility A Commitment; PROVIDED, HOWEVER, that
the Facility A Aggregate Commitment shall be deemed used for purposes of
determining the availability of Facility A Revolving Loans (but not for
purposes of determining each Lender's commitment fee pursuant to
SECTION 2.10.1, which commitment fee shall be determined for each Lender
as described in SECTION 2.10.1) from time to time to the extent of (x)
the aggregate L/C Obligations then outstanding and (y) the aggregate
principal amount of any Swing Line Loans then outstanding, and such
deemed use of the Facility A Aggregate Commitment shall be applied to
the Lenders ratably according to their respective Facility A
Commitments. Subject to the terms of this Agreement (including, without
limitation, the terms and conditions of SECTIONS 2.10.3, 2.10.4 and 9.1
relating to the reduction, suspension or termination of the Facility A
Aggregate Commitment or the Aggregate Commitment), the Borrower may
borrow, repay and reborrow Facility A Revolving Loans at any time prior
to the Facility A Termination Date. Unless earlier terminated in
accordance with the terms and conditions of this Agreement, the Facility
A Commitments of the Lenders to lend hereunder shall expire on the
Facility A Termination Date.
2.1.2 FACILITY B REVOLVING LOANS. From and including the
Effective Date and prior to the Facility B Termination Date, each Lender
severally agrees, on the terms and conditions set forth in this
Agreement (including, without limitation, the terms and conditions of
SECTIONS 2.10.4 and 9.1 relating to the reduction, suspension or
termination of the Aggregate Commitment), to make Revolving Loans
(relative to such Lender, its "FACILITY B REVOLVING LOANS") in Dollars
to the Borrower from time to time in an aggregate amount not to exceed
at any one time outstanding the amount of such Lender's
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Facility B Commitment. Subject to the terms of this Agreement
(including, without limitation, the terms and conditions of SECTIONS
2.10.4 and 9.1 relating to the reduction, suspension or termination of
the Aggregate Commitment), the Borrower may borrow, repay and reborrow
Facility B Revolving Loans at any time prior to the Facility B
Termination Date. Unless earlier terminated in accordance with the
terms and conditions of this Agreement, the Facility B Commitments of
the Lenders to lend hereunder shall expire on the Facility B Termination
Date.
2.2. REPAYMENT OF THE REVOLVING LOANS. Any outstanding Facility A
Revolving Loans shall be paid in full by the Borrower on the Facility A
Termination Date, and any outstanding Facility B Revolving Loans shall be paid
in full by the Borrower on the Facility B Termination Date; PROVIDED, HOWEVER,
that nothing in this SECTION 2.2 shall be construed as limiting or modifying the
obligation of the Borrower to repay any or all of the outstanding Revolving
Loans at any earlier time in accordance with the terms of this Agreement.
2.3. RATABLE REVOLVING LOANS; TYPES OF ADVANCES. Each Facility A
Advance hereunder shall consist of Facility A Revolving Loans made from the
several Lenders ratably in proportion to the ratio that their respective
Facility A Commitments bear to the Facility A Aggregate Commitment and each
Facility B Advance hereunder shall consist of Facility B Revolving Loans made
from the several Lenders ratably in proportion to the ratio that their
respective Facility B Commitments bear to the Facility B Aggregate
Commitment. Any Advance may be a Floating Rate Advance, a Fixed CD Rate
Advance or a Eurodollar Advance, as the Borrower shall select in accordance
with SECTIONS 2.6 and 2.7.
2.4. MINIMUM AMOUNT OF EACH ADVANCE. Each Advance shall be in a
minimum amount not less than $10,000,000 or an integral multiple of
$1,000,000 in excess thereof; PROVIDED, HOWEVER, that (x) any Facility A
Advance may be in the amount of the unused Facility A Aggregate Commitment,
and (y) any Facility B Advance may be in the amount of the unused Facility B
Aggregate Commitment.
2.5. OPTIONAL PREPAYMENTS OF REVOLVING LOANS. Subject to SECTION
3.4 and the requirements of SECTION 2.4, the Borrower may (a) following
notice given to the Agent by the Borrower, in the form attached hereto as
EXHIBIT G (a "PREPAYMENT NOTICE") by not later than 11:00 a.m. (Chicago time)
on the date of the proposed prepayment, such notice specifying the aggregate
principal amount of and the proposed date of the prepayment (and if such
notice is given the Borrower shall), prepay the outstanding principal amounts
of the Floating Rate Loans comprising part of the same Advance in whole or
ratably in part, together with accrued interest to but excluding the date of
such prepayment on the principal amount prepaid and (b) following a
Prepayment Notice given to the Agent by the Borrower by not later than 11:00
a.m. (Chicago time) on (i) if the Advance to be prepaid is a Fixed CD Rate
Advance, the second Business Day preceding the date of the proposed
prepayment, and (ii) if the Advance to be prepaid is a Eurodollar Advance,
the third Business Day preceding the date of the proposed prepayment, such
notice specifying the Advance to be prepaid and the proposed date of the
prepayment, and if such
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notice is given, the Borrower shall prepay the outstanding principal amounts
of the Fixed Rate Loans comprising a Fixed Rate Advance in whole (and not in
part), together with accrued interest to but excluding the date of such
prepayment on the principal amount prepaid. In the case of a Floating Rate
Advance, each partial prepayment shall be in an aggregate principal amount
not less than $10,000,000.
2.6. METHOD OF SELECTING TYPES AND INTEREST PERIODS FOR NEW
ADVANCES. The Borrower shall select the Type of each Advance and, in the case
of a Fixed Rate Advance, the Interest Period applicable to such Advance from
time to time. The Borrower shall give the Agent irrevocable notice, in the
form attached hereto as EXHIBIT F (a "REVOLVING LOAN BORROWING NOTICE"), not
later than 10:30 a.m. (Chicago time) (i) on the Revolving Loan Borrowing Date
for each Floating Rate Advance, (ii) at least two Business Days before the
Revolving Loan Borrowing Date for each Fixed CD Rate Advance, and (iii) at
least three Business Days before the Revolving Loan Borrowing Date for each
Eurodollar Advance specifying:
(a) the Revolving Loan Borrowing Date, which shall be a Business
Day, of such Advance,
(b) the aggregate amount of such Advance,
(c) whether such Advance is to be made pursuant to the Facility A
Aggregate Commitment as a Facility A Revolving Loan or pursuant to the
Facility B Aggregate Commitment as a Facility B Revolving Loan,
(d) the Type of such Advance, and
(e) in the case of each Fixed Rate Advance, the Interest Period
applicable thereto.
Not later than the Specified Remittance Time on each Revolving Loan Borrowing
Date, each Lender shall make available its Revolving Loan or Revolving Loans
to the Agent in immediately available funds at the relevant Payment Office.
To the extent that the Agent has received funds from the Lenders as specified
in the preceding sentence, the Agent will make such funds available to the
Borrower at the relevant Payment Office as promptly as reasonably practicable
(but in any event within two hours) following the Specified Remittance Time,
it being understood that if the relevant Payment Office is located in
Chicago, the Agent will make the applicable funds available to the Borrower
by depositing such funds to such account as the Borrower shall from time to
time designate in a notice delivered to the Agent executed by two Authorized
Officers.
2.7. CONVERSION AND CONTINUATION OF OUTSTANDING ADVANCES. Floating
Rate Advances shall continue as Floating Rate Advances unless and until such
Floating Rate Advances are converted into Fixed Rate Advances or prepaid
pursuant to SECTION 2.5. Each
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Fixed Rate Advance of any Type shall continue as a Fixed Rate Advance of such
Type until the end of the then applicable Interest Period therefor, at which
time such Fixed Rate Advance shall be automatically converted into a Floating
Rate Advance unless the Borrower shall have given the Agent a
Conversion/Continuation Notice requesting that, at the end of such Interest
Period, such Fixed Rate Advance either continue as a Fixed Rate Advance of
such Type for the same or another Interest Period or be converted into an
Advance of another Type. Subject to the terms of SECTION 2.6, the Borrower
may elect from time to time to convert all or any part of an Advance of any
Type into any other Type or Types of Advances; provided that any conversion
of any Fixed Rate Advance shall be made on, and only on, the last day of the
Interest Period applicable thereto. The Borrower shall give the Agent
irrevocable notice in the form of EXHIBIT I hereto (a
"CONVERSION/CONTINUATION NOTICE") of each conversion of an Advance or
continuation of a Fixed Rate Advance not later than 10:00 a.m. (Chicago time)
(i) in the case of a conversion into a Floating Rate Advance on the date of
such conversion, (ii) in the case of a conversion into or continuation of a
Fixed CD Rate Advance, at least two Business Days before the date of such
conversion or continuation, and (iii) in the case of a conversion into or
continuation of a Eurodollar Advance, at least three Business Days before the
date of such conversion or continuation specifying:
(a) the requested date, which shall be a Business Day, of such
conversion or continuation;
(b) the aggregate amount and Type of the Advance which is to be
converted or continued; and
(c) the amount and Type(s) of Advance(s) into which such Advance
is to be converted or continued and, in the case of a conversion
into or continuation of a Fixed Rate Advance, the duration of the
Interest Period applicable thereto.
2.8. PAYMENT OF INTEREST ON REVOLVING LOANS AND ADVANCES. Interest
accrued on each Floating Rate Advance shall be payable (i) on the last
Business Day of each calendar quarter for the calendar quarter then ending,
(ii) on the Facility A Termination Date for each Floating Rate Advance which
is a Facility A Revolving Loan, (iii) on the Facility B Termination Date for
each Floating Rate Advance which is a Facility B Revolving Loan, (iv) on the
date of the reduction to zero of the Facility A Aggregate Commitment or the
Aggregate Commitment pursuant to SECTIONS 2.10.3 or 2.10.4, (v) on the date
of any repayment of such Floating Rate Advance, and (vi) on the date of the
acceleration of the Obligations pursuant to SECTION 9.1. Interest accrued on
each Fixed Rate Advance shall be payable (i) on the last day of its
applicable Interest Period, (ii) on any date on which such Fixed Rate Advance
is prepaid, whether by acceleration or otherwise, and (iii) at maturity.
Interest accrued on each Fixed Rate Advance having an Interest Period longer
than three months or 90 days, as the case may be, shall also be payable on
the last day of each three-month or 90-day interval during such Interest
Period. Interest on Floating Rate Advances shall be calculated for actual
days elapsed on the basis of a 365/366-day year. Interest on Fixed Rate
Advances shall be calculated for actual days elapsed on
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the basis of a 360-day year. Interest shall be payable for the day an
Advance is made but not for the day of any payment on the amount paid if
payment is received prior to noon (Chicago time) at the place of payment. If
any payment of principal of or interest on an Advance shall become due on a
day which is not a Business Day, such payment shall be made on the next
succeeding Business Day and, in the case of a principal payment, such
extension of time shall be included in computing interest in connection with
such payment.
2.9. CHANGES IN INTEREST RATE, ETC. Each Floating Rate Advance
shall bear interest on the outstanding principal amount thereof, for each day
from and including the date such Advance is made or is converted from a Fixed
Rate Advance into a Floating Rate Advance pursuant to SECTION 2.7 to but
excluding the date it becomes due or is converted into a Fixed Rate Advance
pursuant to SECTION 2.7, at a rate per annum equal to the Floating Rate for
such day. Changes in the rate of interest on each Advance maintained as a
Floating Rate Advance will take effect simultaneously with each change in the
Alternate Base Rate. Each Fixed Rate Advance shall bear interest from and
including the first day of the Interest Period applicable thereto to (but not
including) the last day of such Interest Period at the interest rate
determined as applicable to such Fixed Rate Advance. No Interest Period for
a Fixed Rate Advance which is a Facility A Revolving Loan may end after the
Facility A Termination Date and no Interest Period for a Fixed Rate Advance
which is a Facility B Revolving Loan may end after the Facility B Termination
Date.
2.10. COMMITMENT FEE; MANDATORY AND VOLUNTARY REDUCTIONS IN
AGGREGATE COMMITMENT.
2.10.1 FACILITY A COMMITMENT FEE. The Borrower agrees to
pay to the Agent for the account of each Lender a commitment fee at
a rate per annum equal to the Facility A Applicable Commitment Fee
Rate in effect from time to time on the daily unused portion of such
Lender's Facility A Commitment from the Effective Date to but
excluding the earliest of the Facility A Termination Date, the date
of the reduction to zero of the Facility A Aggregate Commitment
pursuant to SECTION 2.10.3 or SECTION 2.10.4 and the date of the
termination of the Aggregate Commitment pursuant to SECTION 9.1;
PROVIDED, HOWEVER, that, solely for purposes of this SECTION 2.10.1,
(x) each Lender's Facility A Commitment (except the commitment of
the Swing Line Lender) shall be determined without regard to any
outstanding Swing Line Loans and (y) the Commitment of the Swing
Line Lender shall be determined assuming that all outstanding Swing
Line Loans have been made by the Swing Line Lender. Such commitment
fees shall be payable on the last Business Day of each calendar
quarter for the quarter then ending, and on the earliest of the
Facility A Termination Date, the date of the reduction to zero of
the Facility A Aggregate Commitment pursuant to SECTION 2.10.3 or
SECTION 2.10.4 and the date of the termination of the Aggregate
Commitment pursuant to SECTION 9.1. Commitment fees shall be
calculated for actual days elapsed on the basis of a 360-day year.
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2.10.2 FACILITY B COMMITMENT FEE. The Borrower agrees to pay
to the Agent for the account of each Lender a commitment fee at a
rate per annum equal to the Facility B Applicable Commitment Fee
Rate in effect from time to time on the daily unused portion of such
Lender's Facility B Commitment from the Effective Date to but
excluding the earliest of the Facility B Termination Date, the date
of the reduction to zero of the Facility B Aggregate Commitment
pursuant to SECTION 2.10.4 and the date of the termination of the
Aggregate Commitment pursuant to SECTION 9.1. Such commitment fees
shall be payable on the last Business Day of each calendar quarter
for the quarter then ending, and on the earliest of the Facility B
Termination Date, the date of the reduction to zero of the
Facility B Aggregate Commitment pursuant to SECTION 2.10.4 and the
date of the termination of the Facility B Aggregate Commitment
pursuant to SECTION 9.1. Commitment fees shall be calculated for
actual days elapsed on the basis of a 360-day year.
2.10.3 MANDATORY REDUCTIONS IN FACILITY A AGGREGATE
COMMITMENT. If as of the end of any fiscal year of TLGI, (x) the
aggregate Fair Value of all Property, whether of TLGI, the Borrower
or any Subsidiary of TLGI or the Borrower, sold during such fiscal
year pursuant to the exception for sales of Property provided under
SECTION 7.13(C) exceeds (y) the aggregate Fair Value, as determined
by the board of directors of TLGI, of all consideration actually
paid during such fiscal year in respect of Acquisitions, by at least
$5,000,000, then within ten Business Days following the date on
which TLGI delivers to the Agent financial statements in respect of
such fiscal year pursuant to SECTION 7.1(A), the Borrower will, by
written notice to the Agent given on or before the date such
financial statements are delivered, reduce the Facility A Aggregate
Commitment by an amount equal to such excess, rounded down to the
nearest $100,000; PROVIDED, HOWEVER, that any such reduction shall
be made equally and ratably with the repayment of any other
Indebtedness (if any) which by its terms must be repaid using the
proceeds of the sale of such Property. Any such reduction in the
Facility A Aggregate Commitment shall be allocated ratably among the
Lenders according to the Facility A Commitments. To the extent that
the amount of any such mandatory reduction of the Facility A
Aggregate Commitment exceeds the unused Facility A Aggregate
Commitment on the date of such mandatory reduction, the Borrower
shall, immediately prior to making such mandatory reduction of the
Facility A Aggregate Commitment, prepay (subject to the proviso to
the immediately preceding sentence) the outstanding Facility A
Advances (as selected by the Borrower) in an amount at least equal
to such excess; it being understood that the Borrower and each
Guarantor shall be liable pursuant to SECTION 3.4 to indemnify each
Lender against any loss or liability which that Lender incurs as a
consequence of any prepayment under this SECTION 2.10.3. If,
following any such prepayment of Facility A Advances, the amount of
any such mandatory reduction of the Facility A Aggregate Commitment
still exceeds the unused Facility A
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Aggregate Commitment on the date of such mandatory reduction, the
Borrower shall cash collateralize the outstanding L/C Obligations
as contemplated in SECTION 2.21.4 in an amount sufficient, together
with the prepayments of Facility A Advances, to eliminate such
excess.
2.10.4 VOLUNTARY REDUCTIONS IN AGGREGATE COMMITMENT. The
Borrower may permanently reduce the Facility A Aggregate Commitment
or the Facility B Aggregate Commitment in whole, or in part ratably
among the Lenders in integral multiples of $10,000,000, upon at
least three Business Days' written notice to the Agent, which notice
shall specify the amount of any such reduction; PROVIDED, HOWEVER,
that the amount of the Facility A Aggregate Commitment may not be
reduced below the sum of the aggregate principal amount of the
outstanding Facility A Advances and Swing Line Loans and the
aggregate outstanding L/C Obligations, and, PROVIDED FURTHER, that
the amount of the Facility B Aggregate Commitment may not be reduced
below the aggregate principal amount of the outstanding Facility B
Advances.
2.11. RATES APPLICABLE AFTER DEFAULT. Notwithstanding anything to
the contrary contained in SECTION 2.6 or 2.7, during the continuance of a
Default or Unmatured Default no Advance may be made as, converted into or
continued as a Fixed Rate Advance. During the continuance of a Default
pursuant to SECTION 8.2, (a) each Fixed Rate Advance shall bear interest
until paid in full or converted to a Floating Rate Advance at the Fixed Rate
then applicable to such Advance plus 2% per annum, and (b) each Floating Rate
Advance shall bear interest until paid in full at a rate per annum equal to
the Floating Rate plus 2% per annum.
2.12. METHOD OF PAYMENT. Without limiting the operation of the
first sentence of SECTION 2.21.3(b), and without limiting the scope of
SECTION 2.17(b), all payments of the Obligations hereunder shall be made,
without setoff, deduction, or counterclaim, in Dollars in immediately
available funds to the Agent at the Payment Office, by the Specified
Remittance Time on the date when due and shall be remitted by the Agent to
the Lenders according to their respective interests therein. Each payment
delivered to the Agent for the account of any Lender shall be delivered
promptly by the Agent to such Lender in the same type of funds that the Agent
received at such Lender's address specified pursuant to ARTICLE XIV or at any
Lending Installation specified in a notice received by the Agent from such
Lender. The Agent is hereby authorized, but is not obligated, to charge the
accounts of the Borrower maintained with Bank of Montreal into which proceeds
of Advances are remitted pursuant to SECTION 2.6 for each payment of interest
and fees as it becomes due hereunder, for each payment of principal, in
accordance with the applicable Prepayment Notice or when otherwise due and
payable in accordance with the terms hereof, and for each payment of
Obligations (including Reimbursement Obligations) when due and payable in
accordance with the terms hereof.
2.13. EVIDENCE OF DEBT; TELEPHONIC NOTICES. (a) Each Lender shall
maintain in accordance with its usual practice an account or accounts
evidencing the Obligations of the
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Borrower to the appropriate Lending Installation of such Lender resulting
from each Facility A Revolving Loan and each Facility B Revolving Loan made
by such Lending Installation of such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lending
Installation of such Lender from time to time under this Agreement.
(b) The Agent shall maintain a Register at the request of the
Borrower pursuant to SECTION 13.3.2, and a subaccount for each relevant
Lender, in which Register and subaccounts (taken together) shall be recorded
(i) the amount of each relevant Revolving Loan made hereunder, whether such
Revolving Loan is, as applicable, a Facility A Revolving Loan, a Facility B
Revolving Loan, a Fixed CD Rate Loan, a Eurodollar Loan, a Fixed Rate Loan or
a Floating Rate Loan, and the Interest Period applicable to any Fixed CD Rate
Loan or Eurodollar Loan, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each Lender
hereunder, and (iii) the amount of any sum received by the Agent hereunder
from the Borrower and each Lender's share thereof.
(c) The entries made in the Register, accounts and subaccounts
maintained pursuant to PARAGRAPHS (a) and (b) of this SECTION 2.13 shall, to
the extent permitted by applicable law, be PRIMA FACIE evidence of the
existence and amounts of the Obligations of the Borrower therein recorded;
PROVIDED, that the failure of any Lender or the Agent to maintain such
account, such Register or such subaccount, as applicable, or any error
therein, shall not in any manner affect the obligation of the Borrower to
repay the Revolving Loans (and all other amounts owing with respect thereto)
in accordance with the terms of this Agreement.
(d) The Borrower hereby authorizes the Lenders and the Agent to
extend, convert or continue Advances and effect selections of Types of
Advances based on telephonic notices made by any person or persons the Agent
in good faith believes to be acting on behalf of the Borrower, PROVIDED that
the proceeds of such Advances shall only be credited to such account as the
Borrower shall from time to time designate in a notice delivered to the Agent
executed by two Authorized Officers. The Borrower agrees to deliver promptly
to the Agent a written confirmation, if such confirmation is requested by the
Agent or any Lender, of each telephonic notice signed by an Authorized
Officer. If the written confirmation differs in any material respect from
the action taken by the Agent and the Lenders, the records of the Agent of
the relevant telephonic notice shall govern absent manifest error.
2.14. NOTIFICATION OF ADVANCES, INTEREST RATES, PREPAYMENTS AND
COMMITMENT REDUCTIONS. Promptly after receipt thereof, the Agent will notify
each Lender of the contents of each Aggregate Commitment reduction notice,
Revolving Loan Borrowing Notice, Swing Line Loan Borrowing Notice,
Conversion/Continuation Notice, and prepayment notice received by it
hereunder (including specifying whether such notice relates to a Facility A
Revolving Loan or a Facility B Revolving Loan). The Agent will notify the
Borrower and each Lender of the interest rate applicable to each Fixed Rate
Advance promptly upon determination of such interest rate and will give the
Borrower and each Lender prompt notice of each change in the Alternate Base
Rate.
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2.15. LENDING INSTALLATIONS. Each Lender may book its Revolving
Loans and its Swing Line Interest and its L/C Interest at any one or more
Lending Installations selected by such Lender and may change any such Lending
Installation from time to time. All terms of this Agreement shall apply to
any such Lending Installation and the Revolving Loans, the Swing Line
Interests and the L/C Interests shall be deemed held by each Lender for the
benefit of such Lending Installation. Each Lender may, by written or telex
notice to the Agent and the Borrower, designate a Lending Installation
through which Revolving Loans will be made by it and through which L/C
Interests and Swing Line Interests will be held by it and for whose account
Revolving Loan and Swing Line Loan payments and L/C Obligation payments are
to be made.
2.16. NON-RECEIPT OF FUNDS BY THE AGENT. Unless the Borrower or a
Lender, as the case may be, notifies the Agent prior to the date on which it
is scheduled to make payment to the Agent of (a) in the case of a Lender, the
proceeds of a Revolving Loan or (b) in the case of the Borrower, a payment of
principal, interest or fees to the Agent for the account of the Lenders, that
it does not intend to make such payment, the Agent may assume that such
payment has been made. The Agent may, but shall not be obligated to, make
the amount of such payment available to the intended recipient in reliance
upon such assumption. If such Lender or the Borrower, as the case may be,
has not in fact made such payment to the Agent, the recipient of such payment
shall, on demand by the Agent, repay to the Agent the amount so made
available together with interest thereon in respect of each day during the
period commencing on the date such amount was so made available by the Agent
until the date the Agent recovers such amount at a rate per annum equal to
(a) in the case of payment by a Lender, the Federal Funds Effective Rate for
such day or (b) in the case of payment by the Borrower, the interest rate
applicable to the relevant Revolving Loan.
2.17. WITHHOLDING TAX EXEMPTION; GROSS UP. (a) At least five
Business Days prior to the first date on which interest or fees are payable
hereunder for the account of any Lender, each Lender that is not incorporated
under the laws of the United States of America, or a state thereof, and which
has not previously delivered to the Borrower and the Agent under the terms of
the Original Agreement documentation which complies with this SECTION 2.17,
agrees that it will deliver to each of the Borrower and the Agent two duly
completed copies of United States Internal Revenue Service Form 1001 or 4224,
certifying in either case that such Lender is entitled to receive payments
under this Agreement without deduction or withholding of any United States
federal income taxes. Each Lender which so delivers a Form 1001 or 4224
further undertakes to deliver to each of the Borrower and the Agent two
additional copies of such form (or any successor form or related form as may
from time to time be required under applicable law) on or before the date
that such form expires (currently, three successive calendar years for Form
1001 and one calendar year for Form 4224) or becomes obsolete or after the
occurrence of any event requiring a change in the most recent forms so
delivered by it, and such amendments thereto or extensions or renewals
thereof as may be reasonably requested by the Borrower or the Agent, in each
case certifying that such Lender is entitled to receive payments under this
Agreement without deduction or withholding of any United States federal
income taxes, unless an event (including without limitation any change in
treaty, law or regulation) has occurred prior
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to the date on which any such delivery would otherwise be required which
renders all such forms inapplicable or which would prevent such Lender from
duly completing and delivering any such form with respect to it and such
Lender advises the Borrower and the Agent that it is not capable of receiving
payments without any deduction or withholding of United States federal income
tax.
(b) All payments made by the Borrower under or in connection with
this Agreement shall be made in full, without set-off or counterclaim, and free
of and without deduction or withholding for or on account of any present or
future tax, duty, assessment, impost, levy or other similar charge, or any
penalties, fines or interest thereon (a "RELEVANT TAX") imposed upon TLGI, the
Borrower, the Agent, any Lender or the L/C Issuer by the government of Canada
(or any Governmental Authority thereof), the government of the United States of
America (or any Governmental Authority thereof), or by the government of any
other country or jurisdiction (or any Governmental Authority thereof) from or
through which payments hereunder are actually made (each a "TAXING
JURISDICTION"). The Borrower, for the benefit of the Agent, the Lenders and the
L/C Issuer, agrees that in the event any payments made by the Borrower hereunder
or in connection herewith are subject to any deduction or withholding for or on
account of any Relevant Tax, the Borrower will pay to the Agent, such Lender or
the L/C Issuer such additional amounts as may be necessary in order that the net
amounts paid to the Agent, such Lender or the L/C Issuer pursuant to the terms
of this Agreement after imposition of any such Relevant Tax (including
deductions or withholdings applicable to additional amounts paid under this
SECTION 2.17(b)) shall be not less than the amounts specified in this Agreement
to be then due and payable, except that no such additional amounts shall be
payable hereunder to the Agent, any Lender or the L/C Issuer that is liable for
such Relevant Tax in respect of the relevant payment solely by reason of such
recipient (a) having a permanent establishment in the Taxing Jurisdiction, (b)
being organized under the laws of the Taxing Jurisdiction or any political
subdivision thereof, (c) being resident in the Taxing Jurisdiction by virtue of
its domicile or place of management being in the Taxing Jurisdiction, or (d)
having failed to comply with the terms and conditions of SECTION 2.17(a)
applicable to it. If the Agent, any Lender or the L/C Issuer pays any amount in
respect of a Relevant Tax, the Borrower shall indemnify the Agent, the Lender or
the L/C Issuer, as the case may be, for such payment within 15 days of demand
therefor by the Agent, such Lender or the L/C Issuer (in the case of such Lender
or the L/C Issuer, made through the Agent).
2.18. EXTENSION OF FACILITY A TERMINATION DATE. The Borrower may
request an extension of the Facility A Termination Date for a period of one year
on each of September 29, 1998, and, if such first extension shall have become
effective in accordance with the provisions of this SECTION 2.18, September 29,
1999 (each of September 29, 1998 and September 29, 1999, an "EXTENSION REQUEST
DATE"), by delivering a notice of such request in the form attached hereto as
EXHIBIT H (an "EXTENSION REQUEST") to the Agent no more than 90 days and no
fewer than 60 days preceding the relevant Extension Request Date. The Agent
shall promptly notify each Lender of a requested extension. On or before the
30th day (or if such day is not a Business Day, the next succeeding Business
Day) preceding the relevant Extension Request Date (such 30th day, the
"EXTENSION NOTIFICATION DATE"), each Lender shall notify the Agent whether that
Lender
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consents to the requested extension of the Facility A Termination Date, which
consent may be given or withheld by each Lender in its sole and absolute
discretion. Any Lender that fails to notify the Agent of its consent or
non-consent by the Extension Notification Date will be deemed to have
withheld consent (each such Lender together with each Lender that has
provided notice of its non-consent to be referred to herein as a
"NON-CONSENTING LENDER"). If as of the close of business on the Extension
Notification Date, any Lender is a Non-Consenting Lender, the Agent shall
immediately so advise the Borrower. During the period beginning on the first
day following the Extension Notification Date and ending on the relevant
Extension Request Date, each Non-Consenting Lender will, but only upon the
written request of the Borrower given in the sole discretion of the Borrower
(which request may be given by the Borrower to some, all or none of the
Non-Consenting Lenders in the Borrower's sole discretion), assign all of its
rights and obligations under this Agreement (i) first, to the Lenders who
have consented to the extension and are willing to accept such assignment,
subject to ratable allocation by the Agent among such Lenders and (ii)
second, to the extent such Non-Consenting Lender's rights and obligations
hereunder have not been assigned to an existing Lender as contemplated in the
foregoing CLAUSE (i), to one or more other financial institutions, nominated
by the Borrower and acceptable to the Agent, that are willing to become
Lenders hereunder through the Facility A Termination Date as extended in
accordance with the relevant Extension Request. The obligation of a
Non-Consenting Lender to assign its rights and obligations hereunder as
contemplated by this SECTION 2.18 is subject to the requirements that (x) all
amounts owing to that Non-Consenting Lender under the Loan Documents
(including, without limitation, pursuant to SECTION 3.4) are paid in full
upon the completion of such assignment and (y) any assignment is effected in
accordance with the terms of SECTION 13.3 and on terms otherwise satisfactory
to the Non-Consenting Lender. A requested extension of the Facility A
Termination Date shall be effective only with respect to Lenders which have
consented to such Extension Request in accordance with the terms of this
SECTION 2.18, and shall become effective only if Lenders holding not less
than 75% of the Aggregate Commitments shall have consented to such Extension
Request in accordance with the terms of this SECTION 2.18 (such determination
to be made without giving effect to any assignments contemplated by this
SECTION 2.18), and each Non-Consenting Lender which has been requested to do
so has assigned all of its rights and obligations hereunder to one or more
other Lenders or to one or more successor financial institutions. In any
other event, the requested extension will be deemed to have been denied and
the Facility A Termination Date and the Lenders' respective Facility A
Commitments will remain unchanged without any Non-Consenting Lender incurring
any liability. To the extent an Extension Request has been approved and a
Non-Consenting Lender has not been requested to assign all of its rights and
obligations under this Agreement, or the conditions to such a requested
assignment have not been satisfied as specified in this SECTION 2.18, then
(i) such Non-Consenting Lender's Facility A Commitment shall remain unchanged
and in effect through the Facility A Termination Date then in effect
(determined for such Non-Consenting Lender without giving effect to the
approval of the Extension Request) (such date, the "SCHEDULED TERMINATION
DATE" for such Non-Consenting Lender), and (ii) on the Scheduled Termination
Date for such Non-Consenting Lender, the Borrower shall pay to such
Non-Consenting Lender all amounts owing to such Non-Consenting Lender under
the Loan Documents as of the Scheduled
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Termination Date (including, without limitation, pursuant to SECTION 3.4),
and, from and after such Scheduled Termination Date, the Aggregate Commitment
shall be reduced by the amount of the Facility A Commitment of such
Non-Consenting Lender.
2.19. MANDATORY PREPAYMENTS.
2.19.1 FACILITY A REVOLVING LOANS. Without limitation to the
prepayment obligations of the Borrower under SECTION 2.10.3, if, at
any time, the aggregate principal amount of the then outstanding
Facility A Revolving Loans, Swing Line Loans and L/C Obligations, as
determined by the Agent, equals or exceeds the Facility A Aggregate
Commitment as of such time, the Borrower shall, following demand by
the Agent setting forth, in reasonable detail, the relevant
calculations, prepay outstanding Facility A Revolving Loans and Swing
Line Loans in accordance with the provisions of this Agreement until
the aggregate principal amount of all outstanding Facility A Revolving
Loans, Swing Line Loans and L/C Obligations does not exceed the
Facility A Aggregate Commitment. The Borrower and each Guarantor
shall be liable pursuant to SECTION 3.4 to indemnify each Lender
against any loss or liability which that Lender incurs as a
consequence of any prepayment under this SECTION 2.19.1. If,
following any such prepayment or repayment of Facility A Revolving
Loans and Swing Line Loans, the aggregate principal amount of all
outstanding Facility A Revolving Loans, Swing Line Loans and L/C
Obligations still exceeds the Facility A Aggregate Commitment, the
Borrower shall cash collateralize the outstanding L/C Obligations as
contemplated in SECTION 2.21.4 in an amount sufficient, together with
the prepayment and repayment of Facility A Revolving Loans and Swing
Line Loans, to eliminate such excess.
2.19.2 FACILITY B REVOLVING LOANS. If, at any time, the
aggregate principal amount of the then outstanding Facility B
Revolving Loans, as determined by the Agent, equals or exceeds the
Facility B Aggregate Commitment as of such time, the Borrower shall,
following demand by the Agent setting forth, in reasonable detail, the
relevant calculations, prepay outstanding Facility B Revolving Loans
in accordance with the provisions of this Agreement until the
aggregate principal amount of all outstanding Facility B Revolving
Loans does not exceed the Facility B Aggregate Commitment. The
Borrower and each Guarantor shall be liable pursuant to SECTION 3.4 to
indemnify each Lender against any loss or liability which that Lender
incurs as a consequence of any prepayment under this SECTION 2.19.2.
2.20. TERMINATION. All unpaid Obligations with respect to Facility B
Revolving Loans shall be paid in full by the Borrower on the Facility B
Termination Date, and all other unpaid Obligations shall be paid in full by the
Borrower on the Facility A Termination Date; PROVIDED, HOWEVER, that nothing in
this SECTION 2.20 shall be construed as limiting or modifying
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the obligation of the Borrower to repay any or all of the outstanding
Obligations at any earlier time in accordance with the terms of this
Agreement.
2.21. LETTER OF CREDIT FACILITY.
2.21.1 LETTERS OF CREDIT. Upon receipt of duly executed
applications therefor, and such other documents, instruments and
agreements as the L/C Issuer may reasonably require, and subject to
the provisions of ARTICLE IV, the L/C Issuer shall issue standby
Letters of Credit (but not trade letters of credit) for the account of
the Borrower, on terms as are satisfactory to the L/C Issuer;
PROVIDED, HOWEVER, that no Letter of Credit will be issued for the
account of the Borrower by the L/C Issuer if on the date of issuance,
before or after taking such Letter of Credit into account (i) the
amount of the Facility A Advances, Swing Line Loans and the L/C
Obligations at such time would exceed the Facility A Aggregate
Commitment or (ii) the aggregate outstanding amount of the L/C
Obligations would exceed the L/C Commitment Amount; and PROVIDED,
FURTHER, that no Letter of Credit shall be issued unless (A) it is
denominated in Dollars and (B) it has an expiration date that is (1)
no more than one year after the date of issuance of such Letter of
Credit (provided that a Letter of Credit, subject to the immediately
following CLAUSE (2), may provide for an annual renewal if such
renewal is consented to by the L/C Issuer at the time of issuance and
the conditions precedent to the issuance of such Letter of Credit are
met at the time of such renewal) and (2) no later than the date which
is five Business Days immediately preceding the Facility A Termination
Date.
2.21.2 LETTER OF CREDIT PARTICIPATION. Immediately upon
issuance of each Letter of Credit by the L/C Issuer hereunder, each
Lender shall be deemed to have automatically, irrevocably and
unconditionally purchased and received from the L/C Issuer an
undivided interest and participation in and to such Letter of Credit,
the obligations of the Borrower in respect thereof, and the liability
of the L/C Issuer thereunder (collectively, an "L/C INTEREST") in an
amount equal to the amount available for drawing under such Letters of
Credit multiplied by a fraction having as its numerator, such Lender's
Facility A Commitment, and as its denominator, the Facility A
Aggregate Commitment. The L/C Issuer will notify each Lender promptly
upon presentation to it of an L/C Draft or upon any other draw under
any Letter of Credit. On the Business Day on which the L/C Issuer
makes payment of any L/C Draft or, in the case of any other draw on
the Letter of Credit, on demand of the L/C Issuer (provided that the
Borrower has not prior thereto made payment therefor and no Floating
Rate Advance has been made pursuant to SECTION 2.21.3 with respect
thereto), each Lender shall make payment to the Agent, for credit to
the L/C Issuer, in immediately available funds in an amount equal to
such Lender's ratable share (determined in accordance with the
fraction described above) of the amount of such payment or draw.
Provided that
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each Letter of Credit is issued by the L/C Issuer in accordance with
the terms of this Agreement, the obligation of each Lender to
reimburse the L/C Issuer under this SECTION 2.21.2 shall be
unconditional, continuing, irrevocable and absolute and shall not be
affected or impaired by, among other things, the occurrence of the
Facility A Termination Date or the reduction, suspension or
termination (except pursuant to SECTION 2.18) of the Facility A
Aggregate Commitment or such Lender's Facility A Commitment in
accordance with the terms of this Agreement. In the event that any
Lender fails to make payment to the Agent of any amount due to the L/C
Issuer under this SECTION 2.21.2, the Agent shall be entitled to
receive for the benefit of the L/C Issuer, and the L/C Issuer shall be
entitled to receive, retain and apply against such obligation the
principal and interest and other amounts otherwise payable to such
Lender hereunder (whether in respect of Facility A Revolving Loans,
Facility B Revolving Loans, Swing Line Loans, Letters of Credit or
otherwise) until the Agent receives such payment from such Lender or
such obligation is otherwise fully satisfied; PROVIDED, HOWEVER, that
nothing contained in this sentence shall relieve such Lender of its
obligation to reimburse the L/C Issuer for such amount in accordance
with this SECTION 2.21.2.
2.21.3 REIMBURSEMENT OBLIGATION. (a) The Borrower agrees
unconditionally, irrevocably and absolutely to pay immediately to the
Agent, for the account of the L/C Issuer and the Lenders, the amount
of each L/C Draft or other demand which may be drawn under or pursuant
to a Letter of Credit (such obligation of the Borrower to pay the
Agent (for the account of the L/C Issuer and the Lenders) being
hereinafter referred to as a "REIMBURSEMENT OBLIGATION" with respect
to a Letter of Credit or L/C Draft). The obligations of the Borrower
under this Agreement and otherwise in respect of Letters of Credit and
L/C Drafts shall be absolute, unconditional and irrevocable and shall
be performed strictly in accordance with the terms of this Agreement
under all circumstances whatsoever, including the following
circumstances:
(i) any lack of validity or enforceability of any Letter of
Credit, this Agreement or any Loan Document;
(ii) any amendment or waiver of or any consent to departure
from this Agreement or any other Loan Document;
(iii) the existence of any claim, set-off, defense or other
right which the Borrower may have at any time against the L/C
Issuer, the Agent, any Lender, any beneficiary of any Letter of
Credit (or any Person for whom any such beneficiary may be
acting), or any other Person, whether in connection with this
Agreement, any other Loan Document or any unrelated
transactions;
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(iv) any statement in any certificate or any other document
presented under any Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any such
statement being untrue or inaccurate in any respect
whatsoever;
(v) payment by the L/C Issuer under any Letter of Credit
against presentation of a draft or certificate which does
not comply with the terms of such Letter of Credit (provided
that the L/C Issuer was not grossly negligent in connection
therewith); or
(vi) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing.
(b) If the Borrower at any time fails to repay a Reimbursement
Obligation pursuant to this SECTION 2.21.3, the Borrower shall be
deemed to have elected to borrow a Floating Rate Advance as a Facility
A Revolving Loan from the Lenders, as of the date of the L/C Draft or
other demand giving rise to the Reimbursement Obligation, equal in
amount to the amount of the unpaid Reimbursement Obligation, the
proceeds of which Facility A Advance shall be used to repay such
Reimbursement Obligation; PROVIDED, HOWEVER, that such Floating Rate
Advance shall be deemed to have been borrowed only to the extent that
(x) both immediately before and after giving effect thereto, no
Default or Unmatured Default under SECTION 8.6 or 8.7 shall have
occurred and be continuing, and (y) the Facility A Termination Date
(or the date of any earlier termination of the Facility A Aggregate
Commitment pursuant to this Agreement) shall not have occurred prior
thereto. For each Reimbursement Obligation for which a Floating Rate
Advance is not deemed to have been borrowed by the Borrower, each
Lender shall be deemed to have automatically purchased and received
from the L/C Issuer an undivided interest and participation in and to
such Reimbursement Obligation in an amount equal to such Reimbursement
Obligation multiplied by a fraction having as its numerator, such
Lender's Facility A Commitment, and as its denominator, the Facility A
Aggregate Commitment. If, for any reason, the Borrower fails to repay
a Reimbursement Obligation on the day such Reimbursement Obligation
arises, either directly or through a Floating Rate Advance, then such
Reimbursement Obligation shall bear interest from and after such day,
until paid in full, at the interest rate applicable to Floating Rate
Advances (including, during the continuance of a Default or Unmatured
Default, at the rates determined pursuant to SECTION 2.11).
2.21.4 CASH COLLATERAL. Notwithstanding anything to the
contrary herein or in any application for any Letter of Credit, (a)
after the occurrence and during the continuance of a Default or (b) to
the extent necessary in connection with any mandatory reduction of the
Facility A Aggregate Commitment pursuant to SECTION
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2.10.3 or any mandatory prepayment or repayment of Facility A
Revolving Loans pursuant to SECTION 2.19, the Borrower shall, upon
the demand of the Required Lenders or the Agent at the request of
the Required Lenders, or if earlier, at the time of the applicable
mandatory reduction of the Facility A Aggregate Commitment pursuant
to SECTION 2.10.3 or mandatory prepayment or repayment of Facility
A Revolving Loans pursuant to SECTION 2.19, as the case may be,
deliver to the Agent for the benefit of the L/C Issuer and the
Lenders, cash collateral in an amount equal to the aggregate
outstanding L/C Obligations, or in connection with a deposit made
pursuant to the foregoing CLAUSE (b), such lesser amount of the
outstanding L/C Obligations as shall satisfy the requirements of
SECTION 2.10.3 and SECTION 2.19, as applicable. Any such collateral
shall be held by the Agent in a separate account appropriately
designated as a cash collateral account in relation to this
Agreement and the Letters of Credit and retained by the Agent for
the benefit of the L/C Issuer and the Lenders as collateral
security for the Borrower's obligations in respect of this
Agreement and the Letters of Credit and L/C Drafts. Such amounts
shall be applied to reimburse the L/C Issuer for drawings or
payments under or pursuant to the Letters of Credit or L/C Drafts,
or if no such reimbursement is required, such amounts shall be
applied ratably to the payment of any other unpaid costs, fees,
expenses and other Obligations related to the Letters of Credit,
any L/C Drafts and such cash collateral account as the Agent shall
determine. If no Default shall be continuing, amounts remaining in
any cash collateral account established pursuant to CLAUSE (a) of
this SECTION 2.21.4 which are not to be applied to reimburse the
L/C Issuer or the Lenders for amounts actually paid or to be paid
by the L/C Issuer or the Lenders in respect of the Letters of
Credit or L/C Drafts, shall be returned to the Borrower (after
deduction of the Agent's expenses incurred in connection with such
cash collateral account) except to the extent such amounts (or
portions thereof) are necessary to satisfy the cash collateral
requirements of CLAUSE (b) of this SECTION 2.21.4. In addition, if
the conditions giving rise to a deposit of cash collateral pursuant
to CLAUSE (b) of this SECTION 2.21.4 cease to exist, any amounts
remaining in any cash collateral account established pursuant to
such CLAUSE (b) which are not to be applied to reimburse the L/C
Issuer or the Lenders for amounts actually paid or to be paid by
the L/C Issuer or the Lenders in respect of the Letters of Credit
or L/C Drafts, shall be returned to the Borrower (after deduction
of the Agent's expenses incurred in connection with such cash
collateral account) except to the extent such amounts (or portions
thereof) are necessary to satisfy the cash collateral requirements
of CLAUSE (a) of this SECTION 2.21.4. Investment earnings (net of
investment losses and any unpaid costs, fees, expenses and other
Obligations related to the Letters of Credit, any L/C Drafts and
such cash collateral account) on amounts on deposit in the cash
collateral account (which investments shall be limited to interest
bearing deposit accounts with the Agent) shall be for the account
of the Borrower, and, except at such time as a Default shall have
occurred
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and be continuing, the Agent shall remit any such accrued earnings to
the Borrower no less frequently than quarterly.
2.21.5 LETTER OF CREDIT FEES. The Borrower agrees to pay (a) to
the Agent for the ratable benefit of the Lenders, a letter of credit
fee equal to the Applicable Letter of Credit Fee Rate in effect from
time to time on the daily sum of (x) the aggregate outstanding amount
of L/C Obligations less (y) the aggregate outstanding amount of
Reimbursement Obligations, such fee to be paid in arrears on the last
Business Day of each calendar quarter for the quarter then ending, and
on the Facility A Termination Date, and such fee to be calculated for
actual days elapsed on the basis of a 360-day year, and (b) to the
Agent for the benefit of the L/C Issuer, as issuing bank, the fees
agreed to by the Borrower and Bank of Montreal pursuant to that
certain letter agreement dated as of May 15, 1996, as amended, or as
otherwise agreed from time to time, together with all customary fees
and other issuance, amendment, negotiation, presentment and payment
expenses and related charges in connection with the issuance,
amendment, negotiation, presentation and payment of L/C Drafts, and
the like customarily charged by the L/C Issuer with respect to standby
letters of credit, payable at the time of invoice of such amounts by
the L/C Issuer.
2.21.6 INDEMNIFICATION; EXONERATION. (a) In addition to
amounts payable as elsewhere provided in this Agreement, Borrower
hereby agrees to protect, indemnify, pay and save harmless the L/C
Issuer, each Lender and the Agent from and against any and all
liabilities and costs which the L/C Issuer, any Lender or the Agent
may incur or be subject to as a consequence, direct or indirect, of
(i) the issuance of any Letter of Credit other than, in the case of
the L/C Issuer, as a result of its gross negligence or willful
misconduct, as determined by the final judgment of a court of
competent jurisdiction, or (ii) the failure of the L/C Issuer to honor
a drawing under any Letter of Credit as a result of any act or
omission, whether rightful or wrongful, of any present or future de
jure or de facto governmental authority (all such acts or omissions
herein called "GOVERNMENTAL ACTS").
(b) As among the Borrower, the L/C Issuer, the Lenders and the
Agent, the Borrower assumes all risks of the acts and omissions of, or
misuse of a Letter of Credit by, the beneficiary of any Letter of
Credit. In furtherance and not in limitation of the foregoing,
subject to the provisions of the letter of credit application and any
letter of credit reimbursement agreement submitted or executed by the
Borrower in connection with any Letter of Credit (except to the extent
otherwise provided in PARAGRAPH (e) of this SECTION 2.21.6), the L/C
Issuer, the Lenders and the Agent shall not be responsible (in the
absence of gross negligence or willful misconduct in connection
therewith): (i) for the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party in
connection with the application for and issuance of any
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Letter of Credit, even if it should in fact prove to be in any or
all respects invalid, insufficient, inaccurate, fraudulent or
forged; (ii) for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any
Letter of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; (iii) for failure of the beneficiary of
any Letter of Credit to comply duly with conditions required in
order to draw upon any Letter of Credit; (iv) for errors,
omissions, interruptions or delays in transmission or delivery of
any messages, by mail, cable, telegraph, telecopy, telex or other
similar form of teletransmission or otherwise; (v) for errors in
interpretation of technical trade terms; (vi) for any loss or delay
in the transmission or otherwise of any document required in order
to make a drawing under any Letter of Credit or of the proceeds
thereof; (vii) for the misapplication by the beneficiary of any
Letter of Credit of the proceeds of any drawing under any Letter of
Credit; and (viii) for any consequences arising from causes beyond
the control of the L/C Issuer, the Lenders and the Agent including,
without limitation, any Governmental Acts. None of the above shall
affect, impair or prevent the vesting of any rights or powers of
the L/C Issuer under this SECTION 2.21.6.
(c) In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted
by the L/C Issuer under or in connection with a Letter of Credit
issued on behalf of the Borrower or any related certificates shall
not, in the absence of gross negligence or willful misconduct, as
determined by the final judgment of a court of competent jurisdiction,
put the L/C Issuer, any Lender or the Agent under any resulting
liability to the Borrower or relieve the Borrower of any of its
obligations hereunder to any such Person.
(d) Without prejudice to the survival of any other agreement of
the Borrower hereunder, the agreements and obligations of the Borrower
contained in this SECTION 2.21.6 shall survive the payment in full of
principal, interest and all other amounts hereunder, the termination
of the Letters of Credit and the termination of this Agreement.
(e) Notwithstanding anything therein to the contrary, in the
event any of the provisions of any letter of credit application or
letter of credit reimbursement agreement submitted or executed by the
Borrower in connection with any Letter of Credit conflict with the
provisions of this Agreement, the terms of this Agreement shall
govern.
2.21.7 LETTER OF CREDIT CANCELLATION. For all purposes
hereunder, including (without limitation) SECTION 2.21.5, a Letter of
Credit shall be deemed outstanding until the earlier to occur of (i)
the occurrence of the date expressly
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designated therein as the expiration date for such Letter of Credit
and (ii) the physical receipt by the L/C Issuer of such Letter of
Credit marked "canceled" accompanied by evidence from the
beneficiary thereof satisfactory to the L/C Issuer to such effect.
2.22. SWING LINE COMMITMENT. Subject to the terms and conditions of
this Agreement, the Swing Line Lender agrees to make loans to the Borrower on a
revolving basis (each such loan, a "SWING LINE LOAN") from time to time on any
Business Day during the period from and including the date of this Agreement to
the Facility A Termination Date in an aggregate principal amount at any one time
outstanding not to exceed $10,000,000; PROVIDED, HOWEVER, that (x) the sum of
the aggregate principal amount of all outstanding Swing Line Loans plus the
aggregate principal amount of all outstanding Facility A Revolving Loans plus
the aggregate outstanding L/C Obligations shall not at any time exceed the
Facility A Aggregate Commitment, and (y) the Swing Line Lender shall have no
obligation to make a Swing Line Loan if the principal amount of such Swing Line
Loan, when added to the aggregate principal amount of all Swing Line Loans then
outstanding, the L/C Obligations owing to the Swing Line Lender in its capacity
as a Lender and the aggregate principal amount of all Facility A Revolving Loans
made by the Swing Line Lender in its capacity as a Lender shall exceed the
Facility A Commitment applicable to the Swing Line Lender in its capacity as a
Lender. All Swing Line Loans shall be made in Dollars and maintained as
Floating Rate Loans with interest thereon payable under the terms of SECTIONS
2.8 and 2.11, and repayments to be made thereof under the terms of SECTIONS 2.5
(except for the last sentence thereof), 2.12, 2.14, and 2.20, in each case as if
such Swing Line Loan were a Floating Rate Advance made as a Facility A Revolving
Loan.
2.23. BORROWING PROCEDURES FOR SWING LINE LOANS. The Borrower shall
give the Agent and the Swing Line Lender irrevocable notice, in the form
attached hereto as EXHIBIT L (a "SWING LINE LOAN BORROWING NOTICE"), of each
proposed borrowing pursuant to this SECTION 2.23 not later than 10:30 a.m.
(Chicago time) on the proposed date of borrowing. Each such notice shall be
effective upon receipt by the Agent and the Swing Line Lender and shall specify
the date and amount of borrowing. Unless the Swing Line Lender has received
written notice prior to 8:00 a.m. (Chicago time) on the proposed Swing Line Loan
Borrowing Date (or at any time prior to the Swing Line Loan Borrowing Date) from
the Agent or any Lender that one or more of the conditions precedent set forth
in ARTICLE IV with respect to such borrowing is not then satisfied, the Swing
Line Lender shall pay over the requested amount to the Borrower on the requested
Borrowing Date. Each Swing Line Loan shall be made on a Business Day and shall
be in the amount of at least $500,000 and an integral multiple of $250,000. The
Swing Line Lender will promptly notify the Agent, and the Agent shall promptly
notify each Lender, of the making and amount of each Swing Line Loan and of the
maturity date thereof if it is later than the fourteenth (14th) day following
the Swing Line Loan Borrowing Date therefor.
2.24. REFUNDING OF SWING LINE LOANS. The Borrower shall repay each
Swing Line Loan on or before the earlier to occur of (x) the fourteenth (14th)
day following the Swing Line Loan Borrowing Date for such Swing Line Loan (or
such later date as the Borrower and the
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Swing Line Lender shall from time to time agree) or (y) the Facility A
Termination Date. If the Borrower fails to repay any Swing Line Loan when
due, the Swing Line Lender may, at any time thereafter in its sole and
absolute discretion, on behalf of the Borrower (which hereby irrevocably
directs the Swing Line Lender to act on its behalf), request each Lender to
make a Facility A Revolving Loan, ratably in proportion to the ratio that
such Lender's respective Facility A Commitment bears to the Facility A
Aggregate Commitment, of the principal amount of the Swing Line Loans
outstanding on the date such notice is given. Unless any of the events
described in SECTION 8.6 or 8.7 shall have occurred (in which event the
procedures of SECTION 2.25 shall apply), and regardless of whether the
conditions precedent set forth in this Agreement to the making of a Facility
A Revolving Loan are then satisfied or the aggregate amount of such Facility
A Revolving Loans is not in the minimum or integral amount otherwise required
hereunder, each Lender shall make the proceeds of its Facility A Revolving
Loan available to the Agent for the account of the Swing Line Lender at the
Payment Office in immediately available funds prior to 11:00 a.m. (Chicago
time) on the Business Day next succeeding the date such notice is given. The
proceeds of such Facility A Revolving Loans shall be immediately applied to
repay the outstanding Swing Line Loans. All Facility A Revolving Loans made
pursuant to this SECTION 2.24 shall be Floating Rate Loans.
2.25. PARTICIPATIONS IN SWING LINE LOANS. (a) If an event described
in SECTION 8.6 or 8.7 occurs (or for any reason the Lenders are prohibited from
making, or otherwise may not make, Facility A Revolving Loans pursuant to
SECTION 2.24), each Lender shall, upon notice from the Agent given at the
request of the Swing Line Lender, purchase from the Swing Line Lender (and the
Swing Line Lender shall sell to each such Lender) an undivided participation
interest in all Swing Line Loans then outstanding, ratably in proportion to the
ratio that such Lender's respective Facility A Commitment bears to the Facility
A Aggregate Commitment (and each Lender shall immediately transfer to the Agent,
for the account of the Swing Line Lender, in immediately available funds, the
principal amount reflecting its participation). The participation interest of
each Lender in the Swing Line Loans is referred to herein as such Lender's
"SWING LINE INTEREST".
(b) Whenever, at any time after the Swing Line Lender has received
payment for any Lender's Swing Line Interest pursuant to SUBSECTION 2.25(a), the
Swing Line Lender receives any payment on account thereof, the Swing Line Lender
will distribute promptly to the Agent for the account of such Lender its Swing
Line Interest in such amount (in the case of interest payments, appropriately
adjusted to reflect the period of time during which such Lender's Swing Line
Interest was outstanding and funded) in like funds as received; PROVIDED,
HOWEVER, that in the event that such payment received by the Swing Line Lender
is required to be returned, such Lender will return to the Agent for the account
of the Swing Line Lender any portion thereof previously distributed by the Swing
Line Lender to it in like funds as such payment is required to be returned by
the Swing Line Lender.
2.26. SWING LINE PARTICIPATION OBLIGATIONS UNCONDITIONAL. Provided
that each Swing Line Loan is made by the Swing Line Lender in accordance with
the terms of this
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Agreement, each Lender's obligation to make Facility A Revolving Loans
pursuant to SECTION 2.24 and/or to purchase participation interests in Swing
Line Loans pursuant to SECTION 2.25 shall be absolute and unconditional and
shall not be affected by any circumstance whatsoever, including (a) any
set-off, counterclaim, recoupment, defense or other right which such Lender
may have against the Swing Line Lender, TLGI, the Borrower or any of their
Affiliates, or any other Person for any reason whatsoever; (b) the occurrence
or continuance of a Default or Unmatured Default; (c) the occurrence of a
Material Adverse Effect or any adverse change in the condition (financial or
otherwise) of any other Person; (d) any breach of this Agreement by any
party; (e) any inability of the conditions precedent to borrowing set forth
in this Agreement to be satisfied on the date upon which any Swing Line Loan
is to be refunded or any participation interest therein is to be purchased;
or (f) any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing.
2.27. EVIDENCE OF SWING LINE LOANS; TELEPHONIC NOTICES. (a) The
Swing Line Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the Obligations of the Borrower to the
appropriate Lending Installation of such Swing Line Lender resulting from
each Swing Line Loan made by it from time to time, including the amounts of
principal thereof and interest thereon payable and paid to such Lending
Installation of the Swing Line Lender from time to time under this Agreement.
(b) The Agent shall maintain a Register pursuant to SECTION 13.3.2,
and a subaccount for the Swing Line Lender, in which Register and subaccount
(taken together) shall be recorded (i) the amount of each Swing Line Loan made
hereunder, (ii) the amount of any principal or interest due and payable or to
become due and payable from the Borrower to the Swing Line Lender in respect of
such Swing Line Loans, and (iii) the amount of any sum received by the Agent
hereunder from the Borrower in respect of such Swing Line Loans.
(c) The entries made in the Register, account and subaccount
maintained pursuant to PARAGRAPHS (a) and (b) of this SECTION 2.27 shall, to the
extent permitted by applicable law, be PRIMA FACIE evidence of the existence and
amounts of the Obligations of the Borrower therein recorded in respect of Swing
Line Loans; PROVIDED, that the failure of the Swing Line Lender or the Agent to
maintain such account, such Register or such subaccount, as applicable, or any
error therein, shall not in any manner affect the obligation of the Borrower to
repay the Swing Line Loans (and all other amounts owing with respect thereto) in
accordance with the terms of this Agreement.
(d) The Borrower hereby authorizes the Swing Line Lender and the
Agent to extend Swing Line Loans based on telephonic notices made by any person
or persons the Agent in good faith believes to be acting on behalf of the
Borrower, PROVIDED that the proceeds of such Swing Line Loans shall only be
credited to such account as the Borrower shall from time to time designate in a
notice delivered to the Agent and the Swing Line Lender executed by two
Authorized Officers. The Borrower agrees to deliver promptly to the Agent a
written confirmation, if such confirmation is requested by the Agent or the
Swing Line Lender, of each
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telephonic notice signed by an Authorized Officer. If the written
confirmation differs in any material respect from the action taken by the
Agent and the Swing Line Lender, the records of the Agent of the relevant
telephonic notice shall govern absent manifest error.
2.28. CONDITIONS TO SWING LINE LOANS. Notwithstanding any other
provision of this Agreement, the Swing Line Lender shall not be obligated to
make any Swing Line Loan (i) unless all of the conditions set forth in
ARTICLE IV applicable thereto shall have been satisfied and (ii) if a Default
or Unmatured Default would result therefrom.
ARTICLE III
CHANGE IN CIRCUMSTANCES
3.1. YIELD PROTECTION. If any change in law or any governmental or
quasi-governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law), or any interpretation thereof, or the compliance
of any Lender or the L/C Issuer therewith,
(a) subjects any Lender or the L/C Issuer or any applicable Lending
Installation to any tax, duty, charge or withholding on or from payments due
from the Borrower or TLGI or any other Person obligated hereunder to any Lender
or the L/C Issuer (excluding taxation of the overall net income of any Lender or
the L/C Issuer or any applicable Lending Installation or other taxes in lieu of
such taxes imposed by the United States or any jurisdiction in which such Lender
or the L/C Issuer has its principal office or applicable Lending Installation or
is engaged in business), or changes the basis of taxation of payments to any
Lender or the L/C Issuer in respect of its Facility A Revolving Loans, Facility
B Revolving Loans, Swing Line Loans, Swing Line Interests, L/C Interests, L/C
Obligations or other amounts due it hereunder, or
(b) imposes or increases or deems applicable any reserve, assessment,
insurance charge, special deposit or similar requirement against assets of,
deposits with, or for the account of, or credit extended by, any Lender or the
L/C Issuer or any applicable Lending Installation (other than reserves and
assessments taken into account in determining the interest rate applicable to
Fixed Rate Advances), or
(c) imposes any other condition the result of which is to increase
the cost to any Lender or the L/C Issuer or any applicable Lending Installation
of making, funding or maintaining loans or issuing or participating in letters
of credit or reduces any amount receivable by any Lender or the L/C Issuer or
any applicable Lending Installation in connection with loans or letters of
credit, or requires any Lender or the L/C Issuer or any applicable Lending
Installation to make any payment calculated by reference to the amount of loans
or letters of credit held, or interest received by it, by an amount deemed
material by such Lender or the L/C Issuer, as the case may be,
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then, within 15 days of demand by such Lender or the L/C Issuer, the Borrower
shall pay such Lender or the L/C Issuer that portion of such increased expense
incurred or reduction in an amount received which such Lender or the L/C Issuer
determines is attributable to making, funding and maintaining its Facility A
Revolving Loans, Facility B Revolving Loans, Swing Line Loans, Swing Line
Interests, L/C Interests, the Letters of Credit, the L/C Obligations and its
Commitment (and in the case of the Swing Line Lender, its Swing Line Commitment,
and in the case of the L/C Issuer, its commitment to issue Letters of Credit).
3.2. CHANGES IN CAPITAL ADEQUACY REGULATIONS. If a Lender or the L/C
Issuer determines that the amount of capital required or expected to be
maintained by such Lender or the L/C Issuer, any Lending Installation of such
Lender or any corporation controlling such Lender or the L/C Issuer is increased
as a result of a Change (as defined below in this SECTION 3.2), then, within 15
days of demand by such Lender or the L/C Issuer, the Borrower shall pay such
Lender or the L/C Issuer the amount necessary to compensate for any shortfall in
the rate of return on the portion of such increased capital which such Lender or
the L/C Issuer determines is attributable to this Agreement, its Facility A
Revolving Loans, Facility B Revolving Loans, Swing Line Loans, Swing Line
Interests, L/C Interests, the Letters of Credit, the L/C Obligations or its
obligation to make Facility A Revolving Loans, Facility B Revolving Loans (or in
the case of the Swing Line Lender, its obligations to make Swing Line Loans, or
in the case of the L/C Issuer, its commitment to issue Letters of Credit) or
participate in Swing Line Loans or Letters of Credit hereunder or to issue
Letters of Credit (after taking into account such Lender's or the L/C Issuer's
or such controlling corporation's policies as to capital adequacy). "CHANGE"
means (a) any change after the date of this Agreement in the Risk-Based Capital
Guidelines (as defined below in this SECTION 3.2) or (b) any adoption of or
change in any other law, governmental or quasi-governmental rule, regulation,
policy, guideline, interpretation or directive (whether or not having the force
of law) after the date of this Agreement which affects the amount of capital
required or expected to be maintained by any Lender or the L/C Issuer or any
Lending Installation or any corporation controlling any Lender or the L/C
Issuer. "RISK-BASED CAPITAL GUIDELINES" means (a) the risk-based capital
guidelines in effect in the United States on the date of this Agreement,
including transition rules, and (b) the corresponding capital regulations
promulgated by regulatory authorities outside the United States implementing the
July 1988 report of the Basle Committee on Banking Regulation and Supervisory
Practices Entitled "International Convergence of Capital Measurements and
Capital Standards," including transition rules, and any amendments to such
regulations adopted prior to the date of this Agreement.
3.3. AVAILABILITY OF TYPES OF ADVANCES. If any Lender determines that
maintenance of its Eurodollar Loans at a suitable Lending Installation would
violate any applicable law, rule, regulation or directive, whether or not having
the force of law, or if the Required Lenders determine that (a) deposits of a
type and maturity appropriate to match fund Fixed Rate Advances are not
available or (b) the interest rate applicable to a Type of Advance does not
accurately reflect the cost of making or maintaining such Advance, then the
Agent shall suspend the availability of the affected Type of Advance and require
any Fixed Rate Advances of the affected Type to be prepaid or converted into a
Floating Rate Advance.
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3.4. FUNDING INDEMNIFICATION. If (i) any payment of a Fixed Rate
Advance occurs on a date which is not the last day of the applicable Interest
Period, whether because of acceleration, prepayment or otherwise (including,
without limitation, as a result of a mandatory prepayment of a Fixed Rate
Advance pursuant to SECTION 2.10.3 or 2.19), or (ii) as a result of an
assignment of a Lender's Commitment and its outstanding Revolving Loans, Swing
Line Interest and L/C Interest by operation of SECTION 2.18 or SECTION 3.5, a
Fixed Rate Advance made by the assigning Lender is assigned on a date which is
not the last day of the applicable Interest Period, or (iii) a Fixed Rate
Advance is not made, continued or converted on the date specified by the
Borrower for any reason other than default by the Lenders, or (iv) an optional
prepayment, notice of which has been given in accordance with SECTION 2.5, is
not made on the date specified therefor in such notice, the Borrower will
indemnify each Lender for any loss or cost incurred by it resulting therefrom,
including, without limitation, any loss or cost in liquidating or employing
deposits acquired to fund or maintain the Fixed Rate Advance, or in liquidating
or terminating prior to scheduled maturity any foreign exchange contracts,
currency swaps or other similar hedging arrangements entered into in connection
with the Fixed Rate Advance.
3.5. MITIGATION; LENDER STATEMENTS; SURVIVAL OF INDEMNITY. (a) To
the extent reasonably possible, each Lender shall designate an alternate
Lending Installation with respect to its Fixed Rate Loans to reduce any
liability of the Borrower to such Lender under SECTIONS 3.1 and 3.2 or to
avoid the unavailability of a Type of Advance under SECTION 3.3, so long as
such designation is not disadvantageous to such Lender. If the obligation of
the Lenders to make Eurodollar Advances has been suspended pursuant to SECTION
3.3, as a consequence of a determination by any Lender that maintenance of its
Eurodollar Loans at a suitable Lending Installation would violate any
applicable law or any Lender has demanded compensation under SECTION 3.1 or
3.2, the Borrower may elect (i) subject to SECTION 3.4, to prepay any
outstanding Advances to the extent necessary to mitigate its liability under
SECTION 3.1 or 3.2, (ii) to terminate the applicable Lender's Commitment
hereunder or (iii) to require the applicable Lender to assign its outstanding
Facility A Revolving Loans, Facility B Revolving Loans, Swing Line Interests,
L/C Interests and Commitment hereunder to another financial institution
designated by the Borrower and reasonably acceptable to the Agent; PROVIDED,
HOWEVER, that the Borrower may make the elections described in the foregoing
CLAUSES (i) and (ii) only at such times as no Default or Unmatured Default
shall have occurred and be continuing. The obligation of a Lender to assign
its rights and obligations hereunder or terminate its Commitment hereunder as
contemplated by this SECTION 3.5(a) is subject to the requirements that (x)
all amounts owing to that Lender under the Loan Documents (including, without
limitation, pursuant to SECTION 3.4) are paid in full upon the completion of
such assignment or prior to such termination and (y) any assignment is
effected in accordance with the terms of SECTION 13.3 and on terms otherwise
satisfactory to that Lender.
(b) Each Lender or the L/C Issuer, as the case may be, shall deliver
a written statement of such Person as to the amount due, if any, under SECTION
3.1, 3.2 or 3.4. Such written statement shall set forth in reasonable detail
the calculations upon which such Person determined such amount and shall be
final, conclusive and binding on the Borrower in the absence of
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manifest error. Determination of amounts payable under such Sections in
connection with a Fixed Rate Loan shall be calculated as though each Lender
funded such Fixed Rate Loan through the purchase of a deposit of the type and
maturity corresponding to the deposit used as a reference in determining the
interest rate applicable to such Fixed Rate Loan, whether in fact that is the
case or not. Unless otherwise provided herein, the amount specified in the
written statement shall be payable on demand after receipt by the Borrower of
the written statement. The obligations of the Borrower under SECTIONS 3.1,
3.2 and 3.4 shall survive payment of the Obligations and termination of this
Agreement.
ARTICLE IV
CONDITIONS PRECEDENT
4. CONDITIONS PRECEDENT TO AMENDMENT AND RESTATEMENT. The
effectiveness of this Agreement and the consummation of the actions and deemed
actions contemplated by ARTICLE XVI hereof are subject to the satisfaction of
the conditions precedent set forth below in SECTIONS 4.1 and 4.2.
4.1. INITIAL ADVANCE, SWING LINE LOAN AND LETTER OF CREDIT. The
Lenders shall be obligated (subject to SECTION 4.2) to make the initial Facility
A Advance and the initial Facility B Advance and to purchase participations in
Swing Line Loans and the Letters of Credit hereunder, the L/C Issuer shall be
obligated (subject to SECTION 4.2) to issue the initial Letter of Credit
hereunder, and the Swing Line Lender shall be obligated (subject to SECTION 4.2)
to make the initial Swing Line Loan hereunder, only after (x) the Effective Date
shall have occurred, (y) the Agent shall have been paid in full for all fees,
costs and expenses payable by TLGI or the Borrower under this Agreement and the
other Loan Documents (including, without limitation, the fees and expenses of
Mayer, Brown & Platt, counsel for the Agent) to the extent then invoiced, and
(z) the Agent shall have received from the Borrower, with sufficient copies for
the Agent and each of the Lenders, each of the following items in form and
substance satisfactory to the Agent:
(a) copies of the articles of incorporation or comparable
constitutive documents of each of TLGI and the Borrower, together with all
amendments, and, to the extent applicable, a certificate of good standing, in
each case certified by the appropriate governmental officer in the relevant
jurisdiction of organization (except that the articles of incorporation and
comparable constitutive documents of each Pledgor Subsidiary instead may be
certified by the Secretary (or another authorized officer) of such Pledgor
Subsidiary), and copies of the by-laws (or any comparable constitutive laws,
rules or regulations) of each of TLGI and the Borrower as in effect on the
Effective Date certified by the Secretary, Assistant Secretary or other
appropriate officer or director of it;
(b) copies, certified by the Secretary, Assistant Secretary or other
appropriate officer or director of each of TLGI and the Borrower of its board of
directors' resolutions (and
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resolutions of other bodies, if any are deemed necessary by counsel for any
Lender) authorizing the execution and performance of the relevant Loan
Documents;
(c) incumbency certificates, executed by the Secretary or Assistant
Secretary or other appropriate officer or director of each of TLGI, the Borrower
and each Pledgor Subsidiary, which shall identify by name and title and bear the
signature of the officers of TLGI, the Borrower and such Pledgor Subsidiary
authorized to sign the relevant Loan Documents and to make borrowings and apply
for Letters of Credit hereunder, as applicable, upon which certificate the
Agent, the Lenders and the L/C Issuer shall be entitled to rely until informed
of any change in writing by TLGI, the Borrower or such Pledgor Subsidiary, as
applicable;
(d) a certificate, signed by the Chief Financial Officer, stating
that on the date hereof no Default or Unmatured Default has occurred and is
continuing;
(e) the following opinions of counsel to the Borrower, TLGI, the
other Guarantors and the Pledgor Subsidiaries regarding the matters set forth on
EXHIBIT B and such other matters as the Agent shall request:
(i) an opinion of Thelen, Marrin, Johnson & Bridges, United
States counsel to TLGI and the Borrower; and
(ii) an opinion of Russell & DuMoulin, Canadian counsel to TLGI;
(f) the Collateral Trust Agreement;
(g) evidence satisfactory to the Agent that the Borrower's
Obligations in respect of Facility A Revolving Loans and Facility B Revolving
Loans will each qualify as Class A Secured Indebtedness under the Collateral
Trust Agreement, which evidence shall include (i) an opinion of Thelen, Marrin,
Johnson & Bridges confirming that Facility A Revolving Loans and Facility B
Revolving Loans will each qualify as Class A Secured Indebtedness under the
Collateral Trust Agreement, (ii) action of the Board of Directors of the
Borrower or TLGI designating the Facility A Revolving Loans and the Facility B
Revolving Loans as Class A Secured Indebtedness under the Collateral Trust
Agreement, and (iii) a duly completed and executed certificate in the form of
Exhibit A to the Collateral Trust Agreement; and
(h) such other documents as the Agent or any Lender or its counsel
may reasonably request.
4.2. EACH ADVANCE, SWING LINE LOAN AND LETTER OF CREDIT. The Lenders
shall not be required to make any Facility A Advance or any Facility B Advance
or to purchase participations in any Swing Line Loan or Letter of Credit, the
Swing Line Lender shall not be required to make any Swing Line Loan, and the L/C
Issuer shall not be required to issue any
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Letter of Credit hereunder, unless on the applicable Revolving Loan Borrowing
Date, Swing Line Loan Borrowing Date or date for issuance of such Letter of
Credit (as applicable):
(a) there exists no Default or Unmatured Default;
(b) the representations and warranties contained in ARTICLE VI, the
Guaranties and the Collateral Trust Agreement are true and correct as of such
Revolving Loan Borrowing Date, Swing Line Loan Borrowing Date or date for
issuance of such Letter of Credit (as applicable) except to the extent any such
representation or warranty is stated to relate solely to an earlier date, in
which case such representation or warranty shall be true and correct on and as
of such earlier date, and except that from and after the Collateral Release
Date, this SECTION 4.2(b) shall not apply to the representations and warranties
set forth in the Pledgor Subsidiary Guaranties or in the Collateral Trust
Agreement;
(c) after giving effect to such Facility A Advance, the making of
such Swing Line Loan or the issuance of such Letter of Credit, the aggregate
outstanding principal amount of all Facility A Advances and Swing Line Loans and
the outstanding L/C Obligations does not exceed the Facility A Aggregate
Commitment (and, (i) in the case of Swing Line Loans, (x) the aggregate
outstanding principal amount of all such Swing Line Loans does not exceed
$10,000,000, and (y) the aggregate outstanding principal amount of all such
Swing Line Loans, together with the outstanding principal amount of all Facility
A Revolving Loans made by the Swing Line Lender in its capacity as a Lender and
the L/C Interest of the Swing Line Lender in its capacity as the L/C Issuer,
does not exceed the Facility A Commitment applicable to the Swing Line Lender in
its capacity as a Lender, and (ii) in the case of Letters of Credit, the
aggregate outstanding L/C Obligations do not exceed $300,000,000); and
(d) after giving effect to such Facility B Advance, the aggregate
outstanding principal amount of all Facility B Advances does not exceed the
Facility B Aggregate Commitment.
Each Revolving Loan Borrowing Notice with respect to an Advance, Swing Line Loan
Borrowing Notice with respect to a Swing Line Loan, and application with respect
to a Letter of Credit shall constitute a representation and warranty by the
Borrower that the conditions contained in SECTIONS 4.2(a), (b), (c) and (d) have
been satisfied.
ARTICLE V
TLGI GUARANTY
5.1. THE GUARANTY. TLGI hereby unconditionally and irrevocably
guarantees the due and punctual payment (whether at stated maturity, upon
acceleration or otherwise) of the principal of and interest on each Facility A
Revolving Loan, Facility B Revolving Loan and Swing Line Loan made to, and of
each Reimbursement Obligation owing by, the Borrower
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pursuant to this Agreement, and the due and punctual payment and performance
of all other Obligations (including, without limitation, interest accruing
following the filing of a bankruptcy petition by or against the Borrower, at
the applicable rate or rates specified herein, whether or not such interest
is allowed as a claim in bankruptcy). Upon failure by the Borrower to pay or
perform any Obligation, TLGI shall forthwith on demand pay or perform such
Obligation, at the place, in the manner and with the effect otherwise
specified in this Agreement. TLGI hereby agrees that its guaranty of the
Obligations pursuant to this ARTICLE V is an absolute guaranty of payment and
is not a guaranty of collection.
5.2. GUARANTY UNCONDITIONAL. The obligations of TLGI hereunder shall
be unconditional and absolute and, without limiting the generality of the
foregoing, shall not be released, discharged or otherwise affected by:
(a) any extension, renewal, settlement, compromise, waiver or release
in respect of any obligation of the Borrower under this Agreement or any Letter
of Credit or the exchange, release or non-perfection of any collateral security
therefor (including, without limitation, the collateral pledged under the
Collateral Trust Agreement);
(b) any modification or amendment of or supplement to this Agreement,
any Letter of Credit, the Collateral Trust Agreement, or any other Loan
Document, or the termination of the Collateral Trust Agreement or the release of
any collateral pledged thereunder;
(c) any change in the corporate existence, structure or ownership of
the Borrower or any other Subsidiary, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting the Borrower, any other
Subsidiary or their respective assets;
(d) the existence of any claim, set-off or other rights which TLGI
may have at any time against the Borrower, any other Guarantor, the Agent, any
Lender, the L/C Issuer or any other Person, whether in connection herewith or
with any unrelated transactions, PROVIDED that nothing herein shall prevent the
assertion of any such claim by separate suit or compulsory counterclaim;
(e) any invalidity or unenforceability relating to or against the
Borrower or any Pledgor Subsidiary for any reason of any provision or all of
this Agreement, the Collateral Trust Agreement, or any other Loan Document, or
any provision of applicable law or regulation purporting to prohibit the payment
by the Borrower of the principal of or interest on any Revolving Loan or Swing
Line Loan or Reimbursement Obligation or the payment or performance by the
Borrower of any other Obligation hereunder or under any of the other Loan
Documents or the payment or performance by any Guarantor of any of its
obligations under any Guaranty; or
(f) any other act or omission to act or delay of any kind by the
Borrower, any other Guarantor, the Agent, any Lender, the L/C Issuer or any
other Person or any other
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circumstance whatsoever which might, but for the provisions of this SECTION
5.2, constitute a legal or equitable discharge of TLGI's obligations
hereunder.
5.3. DISCHARGE ONLY UPON PAYMENT IN FULL; REINSTATEMENT IN CERTAIN
CIRCUMSTANCES. TLGI's obligations hereunder shall remain in full force and
effect until the principal of and interest on the Facility A Revolving Loans,
the Facility B Revolving Loans and the Swing Line Loans and all other
Obligations shall have been paid or performed in full and the Letters of Credit
shall have expired or otherwise been terminated and TLGI's obligations hereunder
shall survive the Facility A Termination Date and the Facility B Termination
Date. If at any time any payment of the principal of or interest on any
Facility A Revolving Loan, Facility B Revolving Loan or Swing Line Loan or
Reimbursement Obligation or any payment of any other Obligation hereunder is
rescinded or must be otherwise restored or returned upon the insolvency,
bankruptcy or reorganization of the Borrower or any other Person or otherwise,
TLGI's obligations hereunder with respect to such payment shall be reinstated at
such time as though such payment had been due but not made at such time.
5.4. WAIVER BY TLGI. TLGI irrevocably waives acceptance hereof,
presentment, demand, protest and any notice not provided for herein, as well as
any requirement that at any time any right be exhausted or any action be taken
by the Agent, any Lender, the L/C Issuer or any other Person against the
Borrower, any Guarantor or any other Person or any collateral security
(including, without limitation, the collateral pledged under the Collateral
Trust Agreement). In addition, the Lenders and the L/C Issuer, either
themselves or acting through the Agent, are hereby authorized, without notice or
demand and without affecting the liability of TLGI hereunder, from time to time,
(a) to renew, extend, accelerate or otherwise change the time for payment of, or
other terms relating to, all or any part of the Obligations, or to otherwise
modify, amend or change the terms of any of the Loan Documents; (b) to accept
partial payments on all or any part of the Obligations; (c) to take and hold
security or collateral (including, without limitation, the collateral pledged
under the Collateral Trust Agreement) for the payment of all or any part of the
Obligations, TLGI's obligations hereunder or any other guaranties of all or any
part of the Obligations or other liabilities of the Borrower; (d) to exchange,
enforce, waive and release any such security or collateral; (e) to apply such
security or collateral and direct the order or manner of sale thereof as in
their discretion they may determine; and (f) to settle, release, exchange,
enforce, waive, compromise or collect or otherwise liquidate all or any part of
the Obligations, TLGI's obligations hereunder, any other guaranty of all or any
part of the Obligations and any security or collateral for the Obligations or
for any such guaranty. Any of the foregoing may be done in any manner, without
affecting or impairing the obligations of TLGI hereunder.
5.5. WAIVER OF SUBROGATION RIGHTS. Until all Obligations shall have
been indefeasibly paid in full, the Commitments shall have terminated and all of
the Letters of Credit shall have expired or otherwise been terminated, TLGI
hereby waives all rights of subrogation (whether contractual, under Section 509
of the United States Bankruptcy Code, as amended, or otherwise) to the claims of
the Lenders, the L/C Issuer and the Agent against the Borrower and
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all contractual, statutory or common law rights of reimbursement,
contribution or indemnification from the Borrower and all "claims" (as such
term is defined in the United States Bankruptcy Code, as amended) against the
Borrower, which, in any such case, may otherwise have arisen in connection
with this Agreement and the other Loan Documents.
5.6. STAY OF ACCELERATION. In the event that acceleration of the time
for payment of any of the Obligations hereunder is stayed upon the insolvency,
bankruptcy or reorganization of the Borrower or any other Person, all such
Obligations otherwise subject to acceleration under the terms of this Agreement
shall nonetheless be payable by TLGI hereunder forthwith on demand by the Agent
for the account of the Lenders, the L/C Issuer and the Agent.
5.7. GROSS-UP. All payments made by TLGI under this ARTICLE V shall
be made in full, without set-off or counterclaim, and free of and without
deduction or withholding for or on account of any present or future tax, duty,
assessment, impost, levy or other similar charge, or any penalties, fines or
interest thereon (a "RELEVANT TAX") imposed upon TLGI, the Borrower, the Agent,
any Lender or the L/C Issuer by the government of Canada (or any Governmental
Authority thereof), the government of the United States of America (or any
Governmental Authority thereof) or by the government of any other country or
jurisdiction (or any Governmental Authority thereof) from or through which
payments hereunder are actually made (each a "TAXING JURISDICTION"). TLGI, for
the benefit of the Agent, the Lenders and the L/C Issuer, agrees that in the
event any payments made by TLGI hereunder are subject to any deduction or
withholding for or on account of any Relevant Tax, TLGI will pay to the Agent,
such Lender or the L/C Issuer such additional amounts as may be necessary in
order that the net amounts paid to the Agent, such Lender or the L/C Issuer
pursuant to the terms of this ARTICLE V after imposition of any such Relevant
Tax (including deductions or withholdings applicable to additional amounts paid
under this SECTION 5.7) shall be not less than the amounts specified in this
ARTICLE V to be then due and payable, except that no such additional amounts
shall be payable hereunder to the Agent, any Lender or the L/C Issuer that is
liable for such Relevant Tax in respect of the relevant payment solely by reason
of such recipient (a) having a permanent establishment in the Taxing
Jurisdiction, (b) being organized under the laws of the Taxing Jurisdiction or
any political subdivision thereof, (c) being resident in the Taxing Jurisdiction
by virtue of its domicile or place of management being in the Taxing
Jurisdiction, or (d) having failed to comply with the terms and conditions of
SECTION 2.17(a) applicable to it. If the Agent, any Lender or the L/C Issuer
pays any amount in respect of Relevant Tax, TLGI shall indemnify the Agent, the
Lender or the L/C Issuer, as the case may be, for such payment within 15 days of
demand therefor by the Agent, such Lender or the L/C Issuer (in the case of such
Lender or the L/C Issuer, made through the Agent).
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6. REPRESENTATIONS AND WARRANTIES. Each of TLGI and, with respect
to itself and its Subsidiaries, the Borrower represents and warrants to the
Lenders and the L/C Issuer that:
6.1. CORPORATE EXISTENCE AND STANDING. Each of TLGI, the Borrower and
the other Subsidiaries is a corporation duly incorporated, validly existing and
in good standing under the laws of its jurisdiction of incorporation and has all
requisite authority to conduct its business in each jurisdiction wherein such
qualification is required, except to the extent that, in the case of any
Subsidiary other than the Borrower or any Pledgor Subsidiary, the failure to be
in good standing or authorized to conduct business in any jurisdiction could
not, when taken together with all similar failures by such Subsidiary and each
other Subsidiary, reasonably be expected to have a Material Adverse Effect.
6.2. AUTHORIZATION AND VALIDITY. Each of TLGI, the Borrower and each
other Guarantor has the corporate power and authority and legal right to execute
and deliver the Loan Documents to which it is party and to perform its
obligations thereunder. The execution and delivery by each of TLGI, the
Borrower and each other Guarantor of the Loan Documents to which it is party and
the performance of its obligations thereunder have been duly authorized by
proper corporate proceedings, and each Loan Document to which TLGI, the Borrower
or any other Guarantor is party constitutes the legal, valid and binding
obligation of TLGI, the Borrower or such other Guarantor, as applicable,
enforceable against TLGI, the Borrower or such other Guarantor, as applicable,
in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally and general principles of equity, regardless of whether the
application of such principles is considered in a proceeding in equity or at
law.
6.3. NO CONFLICT; GOVERNMENT CONSENT. Neither the execution and
delivery by each of TLGI, the Borrower and each other Guarantor of the Loan
Documents to which it is party, nor the consummation of the transactions therein
contemplated, nor compliance with the provisions thereof, will violate any law,
rule, regulation, order, writ, judgment, injunction, decree or award binding on
TLGI, the Borrower or any Subsidiary or TLGI's, the Borrower's or any
Subsidiary's articles of incorporation or by-laws or comparable constitutive
documents or the provisions of any indenture, instrument or agreement to which
TLGI, the Borrower or any Subsidiary is a party or is subject, or by which it,
or its Property, is bound, or conflict with or constitute a default thereunder,
or result in the creation or imposition of any Lien in, of or on the Property of
TLGI, the Borrower or any Subsidiary pursuant to the terms of any such
indenture, instrument or agreement. No order, consent, approval, license,
authorization or validation of, or filing, recording or registration with, or
exemption by, any governmental or public body or authority, or any subdivision
thereof, is required to authorize, or is required in connection with the
execution, delivery and performance of, or the legality, validity, binding
effect or enforceability of, any of the Loan Documents, except for consents,
approvals, authorizations and
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filings which have already been duly obtained and made and which remain valid
and in full force and effect.
6.4. FINANCIAL STATEMENTS. Each of (a) the December 31, 1996,
consolidated financial statements of TLGI and its Subsidiaries and (b) the
December 31, 1996, consolidated financial statements of the Borrower and its
Subsidiaries, heretofore delivered to the Lenders, were prepared in accordance
with GAAP in effect on the date such statements were prepared and fairly present
the consolidated financial condition and operations of TLGI and its Subsidiaries
and of the Borrower and its Subsidiaries, respectively, at the date thereof and
the consolidated results of their respective operations for the period then
ended.
6.5. MATERIAL ADVERSE CHANGE. Since December 31, 1996, there has been
no change in the business, Property, prospects, financial condition or results
of operations of TLGI and its Subsidiaries (taken as a whole) or of the Borrower
and its Subsidiaries (taken as a whole) which could reasonably be expected to
have a Material Adverse Effect.
6.6. TAXES. All income tax returns required to be filed by TLGI, the
Borrower or any Subsidiary in any jurisdiction have, in fact, been filed, all
such tax returns have been prepared in accordance with applicable laws and all
taxes, assessments, fees and other governmental charges upon TLGI, the Borrower
or any Subsidiary or upon any of their respective properties, income or
franchises which are shown on such returns have been paid. For all taxable
years ending on or before December 31, 1989, the United States Federal income
tax liability of TLGI, the Borrower and the other Subsidiaries has been
satisfied and either the period of limitations on assessment of additional
United States Federal income tax has expired or TLGI, the Borrower or the
applicable other Subsidiary has entered into an agreement with the United States
Internal Revenue Service closing conclusively the total tax liability for the
taxable year. None of TLGI, the Borrower and the other Subsidiaries knows of
any proposed additional tax assessment against it or any of them for which
adequate provision has not been made on its or their accounts, and no material
controversy in respect of additional income or other taxes due or claimed to be
due to any Governmental Authority is pending or to the knowledge of TLGI, the
Borrower or the other Subsidiaries threatened. The charges, accruals and
reserves on the books of TLGI, the Borrower and the other Subsidiaries in
respect of any taxes or other governmental charges are adequate.
6.7. LITIGATION AND CONTINGENT LIABILITIES. Except as set forth on
SCHEDULE 1 hereto (but only to the extent described thereon), there is no
litigation, arbitration, governmental investigation, proceeding or inquiry
pending or, to the knowledge of any of their officers, threatened against or
affecting TLGI, the Borrower or any other Subsidiary which could have a Material
Adverse Effect, or for which there is a reasonable likelihood that TLGI, the
Borrower or any other Subsidiary would make a payment, whether in settlement or
otherwise, in excess of $50,000,000. Other than any liability incident to such
litigation, arbitration or proceedings, none of TLGI, the Borrower or any other
Subsidiary has any material contingent liabilities not provided for or disclosed
in the financial statements referred to in SECTION 6.4.
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6.8. SUBSIDIARIES; PLEDGE OF STOCK. SCHEDULE 1 hereto, together with
the most recent update, if any, delivered pursuant to SECTION 7.1(k), contains
an accurate list of all of the Subsidiaries (except for inactive Subsidiaries
with immaterial assets and liabilities) of each of TLGI and the Borrower,
setting forth their respective jurisdictions of incorporation and the percentage
of their respective capital stock owned by TLGI, the Borrower or other
Subsidiaries; PROVIDED, HOWEVER, that as of the Restatement Effective Date
SCHEDULE 1 reflects such Subsidiaries only to the extent acquired on or before
September 15, 1997. All of the issued and outstanding shares of capital stock
of the Subsidiaries of TLGI and the Borrower listed on SCHEDULE 1 hereto,
together with the most recent update, if any, delivered pursuant to SECTION
7.1(k), have been duly authorized and issued and are fully paid and non-
assessable and have been duly and validly pledged under the Collateral Trust
Agreement and delivered to the Collateral Agent pursuant to the terms of the
Collateral Trust Agreement; PROVIDED, HOWEVER, that as of the Restatement
Effective Date such shares of capital stock of such Subsidiaries which are
designated with an asterisk on SCHEDULE 1 need not have been duly and validly
pledged under the Collateral Trust Agreement and delivered to the Collateral
Agent pursuant to the terms of the Collateral Trust Agreement.
6.9. ERISA. The Unfunded Liabilities of all Single Employer Plans do
not in the aggregate exceed $1,000,000. Neither TLGI, the Borrower nor any
other member of the Controlled Group has incurred, or is reasonably expected to
incur, any withdrawal liability to Multiemployer Plans in excess of $5,000,000
in the aggregate. Each Plan complies in all material respects with all
applicable requirements of law and regulations, no Reportable Event has occurred
with respect to any Plan, none of TLGI, the Borrower or any other member of the
Controlled Group has withdrawn from any Plan or initiated steps to do so, and no
steps have been taken to reorganize or terminate any Plan. No contribution
failure has occurred with respect to any Single Employer Plan sufficient to give
rise to a lien under section 302(f) of ERISA. Each Canadian Plan is registered
under, and is in compliance with, the Income Tax Act (Canada), applicable
provincial pensions legislation and all other applicable requirements of law and
regulations and all reports, returns and filings required to be made thereunder
have been made. The Canadian Plans have been at all times administered in
accordance with their terms and the provisions of all applicable requirements of
law and regulations. There are no unfunded liabilities under the Canadian Plans
and, without limiting the generality of the foregoing, there is no going concern
unfunded actuarial liability, past service unfunded actuarial liability or
solvency deficiency. Neither TLGI nor any Subsidiary has received any payment
of surplus from any of the Canadian Plans, other than payments received after
January 1, 1988 with the approval of all necessary pension regulatory and
taxation authorities.
6.10. ACCURACY OF INFORMATION. No written information, exhibit or
report prepared and furnished by TLGI, the Borrower or any other Subsidiary to
the Agent, any Lender or the L/C Issuer in connection with the negotiation of,
or compliance with, the Loan Documents contained any material misstatement of
fact or omitted to state a material fact or any fact necessary to make the
statements contained therein not misleading.
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6.11. REGULATION U. Margin stock (as defined in Regulation U)
constitutes less than 25% of those assets of TLGI and the Borrower and other
Subsidiaries which are subject to any limitation on sale, pledge or other
restriction hereunder or under any other Loan Document. None of the
execution, delivery and performance of this Agreement and the other Loan
Documents by TLGI, the Borrowers, the other Guarantors and the Pledgor
Subsidiaries will violate Regulation G, T, U or X of the Board of Governors
of the Federal Reserve System.
6.12. MATERIAL AGREEMENTS. None of TLGI, the Borrower or any
Subsidiary is in default in the performance, observance or fulfillment of any
of the obligations, covenants or conditions contained in any agreement to
which it is a party, which default could have a Material Adverse Effect.
6.13. COMPLIANCE WITH LAWS. TLGI, the Borrower and the other
Subsidiaries have complied in all material respects with all applicable
statutes, rules, regulations, orders and restrictions of any Governmental
Authority having jurisdiction over the conduct of their respective businesses
or the ownership of their respective Property the failure with which to
comply could have a Material Adverse Effect. None of TLGI, the Borrower or
any Subsidiary has received any notice to the effect that, or is otherwise
aware that, its operations are not in material compliance with any of the
requirements of applicable environmental, health and safety statutes and
regulations of any Governmental Authority or the subject of any investigation
by any Governmental Authority evaluating whether any remedial action is
needed to respond to a release of any toxic or hazardous waste or substance
into the environment, which non-compliance or remedial action could have a
Material Adverse Effect.
6.14. OWNERSHIP OF PROPERTIES. Except as set forth on SCHEDULE 1
hereto, on the date of this Agreement, each of TLGI, the Borrower and each
other Subsidiary has good title, free of all Liens other than those permitted
by SECTION 7.18, to all of the Property and assets reflected as owned by it
in the financial statements delivered from time to time pursuant hereto.
6.15. INVESTMENT COMPANY ACT. None of TLGI, the Borrower or any
other Subsidiary is an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of
1940, as amended.
6.16. PUBLIC UTILITY HOLDING COMPANY ACT. None of TLGI, the
Borrower or any other Subsidiary is a "holding company" or a "subsidiary
company" of a "holding company," or an "affiliate" of a "holding company" or
of a "subsidiary company" of a "holding company," within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
6.17. POST-RETIREMENT BENEFITS. The present value of the expected
cost of post-retirement medical and insurance benefits payable by TLGI, the
Borrower and the other Subsidiaries to their employees and former employees,
as estimated by TLGI in accordance with procedures and assumptions specified
by the Required Lenders, or in the absence of such specification, deemed
prudent and reasonable by TLGI, does not exceed $1,000,000.
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6.18. NEGATIVE PLEDGE. None of TLGI, the Borrower nor any
Subsidiary of TLGI or the Borrower is party to any contract or other
arrangement under the terms of which TLGI, the Borrower or any such
Subsidiary is restricted from (i) performing its respective obligations under
the Collateral Trust Agreement or any other Loan Document to which it is a
party or (ii) providing a guaranty to the Agent, the Collateral Agent, the
Lenders or the L/C Issuer.
6.19. SOLVENCY. On the date of this Agreement, on the Effective
Date, and immediately prior to and after giving effect to the issuance of
each Letter of Credit and the making of each Advance and Swing Line Loan
hereunder and the application of the proceeds of each Advance and Swing Line
Loan, each of TLGI, the Borrower and each Pledgor Subsidiary is solvent, is
able to pay its debts as they mature, owns property with fair saleable value
greater than the amount required to pay its debts and has capital sufficient
to carry on its business as then constituted.
6.20. EXISTING LETTERS OF CREDIT. The Letters of Credit
identified on SCHEDULE 4 hereto were issued pursuant to the terms of the
Original Agreement and, as of the date of this Agreement, remain outstanding
in the maximum amounts available to be drawn and with the expiry dates
specified thereon, and no other Letters of Credit (as defined in the Original
Agreement) issued under the Original Agreement remain outstanding as of the
date of this Agreement.
6.21. NO DEFAULT. No Default or Unmatured Default (each term used
as defined in the Original Agreement) has occurred and is continuing as of
the date of this Agreement which has not been duly waived by the Lenders (as
defined in the Original Agreement) under the terms of the Original Agreement.
ARTICLE VII
COVENANTS
7. COVENANTS. During the term of this Agreement, unless the
Required Lenders shall otherwise consent in writing, TLGI and the Borrower
shall perform, and cause to be performed, the following:
7.1. FINANCIAL REPORTING. TLGI will maintain, and cause the
Borrower and each other Subsidiary to maintain, a system of accounting
established and administered in accordance with GAAP, and will furnish or
cause to be furnished to the Lenders:
(a) (i) within 120 days after the close of each of TLGI's fiscal
years, (x) together with an unqualified (except for qualifications relating
to changes in accounting principles or practices reflecting changes in GAAP
and required or approved by TLGI's independent chartered accountants or
independent public accountants) audit report certified by
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independent chartered accountants or independent public accountants,
acceptable to the Lenders, consolidated financial statements of TLGI prepared
in accordance with Agreement Accounting Principles on a consolidated basis
for itself and its Subsidiaries, including balance sheets as of the end of
such period, related statements of profit and loss, retained earnings and
changes in financial position, accompanied by a review engagement report of
said accountants in accordance with the standards of Section 8600 of the CICA
Handbook stating that, in connection with the foregoing, they have obtained
no knowledge of any failure of TLGI or its Subsidiaries to comply with the
requirements specified in each of SECTIONS 7.10 through 7.25, or if, in the
opinion of such accountants, TLGI or any of its Subsidiaries has failed to
comply with the requirements specified in any such Section, stating the
nature and status of such failure, and (y) consolidating financial statements
of TLGI certified by the Chief Financial Officer that separately present
TLGI's Canadian operations, United States operations and other material
financial operations prepared in accordance with Agreement Accounting
Principles, including balance sheets as of the end of such period, and
related statements of profit and loss, retained earnings and changes in
financial position; and (ii) within 180 days after the close of each of
TLGI's fiscal years, the management letter prepared by the applicable
accountants in connection with the financial statements for such fiscal year
delivered pursuant to the foregoing CLAUSE (i)(x);
(b) (i) within 120 days after the close of each of the Borrower's
fiscal years, together with an unqualified (except for qualifications
relating to changes in accounting principles or practices reflecting changes
in GAAP and required or approved by the Borrower's independent chartered
accountants or independent public accountants) audit report certified by
independent chartered accountants or independent public accountants,
acceptable to the Lenders, consolidated financial statements of the Borrower
prepared in accordance with Agreement Accounting Principles on a consolidated
basis for itself and its Subsidiaries, including balance sheets as of the end
of such period, and related statements of profit and loss, retained earnings
and changes in financial position;
(c) within 60 days after the close of each of the first three
quarterly periods of each of TLGI's fiscal years, for TLGI and its
Subsidiaries, consolidated unaudited balance sheets as at the close of such
period and consolidated statements of profit and loss, retained earnings and
changes in financial position for the period from the beginning of such
fiscal year to the end of such period, all certified by the Chief Financial
Officer;
(d) within 60 days after the close of each of the first three
quarterly periods of each of the Borrower's fiscal years, for the Borrower
and its Subsidiaries, consolidated unaudited balance sheets as at the close
of such period and consolidated statements of profit and loss, retained
earnings and changes in financial position for the period from the beginning
of such fiscal year to the end of such period, all certified by the Chief
Financial Officer;
(e) together with the financial statements required pursuant to
the foregoing CLAUSES (a), (b), (c) and (d), a compliance certificate in
substantially the form of EXHIBIT C hereto signed by the Chief Financial
Officer showing in reasonable detail the calculations necessary to
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determine compliance with this Agreement, stating that no Default or
Unmatured Default exists or if any Default or Unmatured Default exists,
stating the nature and status thereof, and otherwise providing the
information required thereby;
(f) within 270 days after the close of each fiscal year of TLGI, a
statement of the Unfunded Liabilities of each Single Employer Plan, certified
as correct by an actuary enrolled under ERISA;
(g) as soon as possible and in any event within ten days after
TLGI or the Borrower knows that any Reportable Event has occurred with
respect to any Plan or that a withdrawal has occurred from any Multiemployer
Plan, the occurrence of either of which may reasonably be expected to give
rise to a Material Adverse Effect, or that a contribution failure has
occurred with respect to any Single Employer Plan sufficient to give rise to
a lien under section 302(f) of ERISA, a statement, signed by the Chief
Financial Officer, describing said Reportable Event or contribution failure
and the action which TLGI and the Borrower propose to take with respect
thereto;
(h) as soon as possible and in any event within 30 days after
receipt by TLGI or any of its Subsidiaries, a copy of (i) any notice or claim
to the effect that TLGI or any of its Subsidiaries is or may reasonably be
expected to be liable for $2,000,000 or more of potential liability (when
aggregated with other similar potential liability) to any Person as a result
of the release by TLGI, any of its Subsidiaries or any other Person of any
toxic or hazardous waste or substance into the environment and (ii) any
notice alleging any violation of any federal, state or local environmental,
health or safety law or regulation by TLGI or any of its Subsidiaries, which
violation could reasonably be expected to give rise to a Material Adverse
Effect;
(i) promptly upon the furnishing thereof to the shareholders of
TLGI, copies of all financial statements, reports and proxy statements so
furnished;
(j) promptly upon their becoming available, one copy of each
financial statement, report, notice or proxy statement sent by TLGI or the
Borrower to stockholders generally (excluding those statements, reports and
notices sent by the Borrower to TLGI which are not sent to TLGI solely in its
capacity as a stockholder) and of each regular report and any registration
statement or prospectus filed by TLGI, the Borrower or any other Subsidiary
with the Ontario Securities Commission, the Toronto Stock Exchange, the
British Columbia Securities Commission, the United States Securities and
Exchange Commission or any successor agency to any of the foregoing or any
other Canadian or United States federal or state or provincial securities
exchange or securities trading system or with any United States or Canadian
national stock exchange and one copy of each periodic report filed by TLGI
with any Canadian regulatory authority, in all cases without duplication;
PROVIDED, HOWEVER, that neither TLGI nor the Borrower shall be obligated to
provide to the Lenders routine reports which are required to be provided to
any of the above-listed entities concerning the management of employee
benefit
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plans, including, without limitation, stock purchases or the exercise of
stock options made under any such employee benefit plan;
(k) together with the financial statements delivered pursuant to
SECTION 7.1(a), a current list of all of the Subsidiaries of each of TLGI and
the Borrower, setting forth their respective jurisdictions of incorporation,
the percentage of their respective capital stock owned by TLGI, the Borrower
and the other Subsidiaries, and the net worth (after adjustments for
intercompany balances) determined by TLGI on a consistent basis of each such
Subsidiary as of a date reasonably proximate to the date of such list (which
list shall note with respect to each Subsidiary any changes of greater than
$5,000,000 in such net worth of such Subsidiary since the date of the last
list of Subsidiaries delivered pursuant to this SECTION 7.1(k));
(l) so long as the WLSP Contingent Obligation shall be
outstanding, together with the financial statements delivered pursuant to
SECTIONS 7.1(a), 7.1(b), 7.1(c) and 7.1(d), a report specifying the Class B
Invested Amount as of the end of such calendar quarter;
(m) together with the financial statements delivered pursuant to
SECTIONS 7.1(a), (b), (c) and (d), a summary prepared by an Authorized
Officer of TLGI setting forth the status of all Acquisitions by TLGI, the
Borrower or any of their respective Subsidiaries for which (i) a letter of
intent (or other documentation evidencing the intent of the parties to
proceed with such Acquisition, including, without limitation, a definitive
purchase agreement) has been executed by the parties during the period
covered by such financial statements and continuing through the date of such
summary, or (ii) such Acquisition has closed or otherwise been consummated
during the period covered by such financial statements and continuing through
the date of such summary, which summary shall include (x) a statement of the
aggregate consideration paid to date and expected to be paid at any time
thereafter in connection with such Acquisitions, calculated separately for
the matters described in the foregoing CLAUSES (i) and (ii), and (y) a list
of all Acquisitions for which a provision subjecting the parties to
arbitration was not contained in the documentation governing the Acquisition;
(n) together with the financial statements delivered pursuant to
SECTIONS 7.1(a), (b), (c) and (d), a detailed summary prepared by an
Authorized Officer of TLGI (x) specifying all committed lines of credit to
which any of TLGI, the Borrower or any Subsidiary of TLGI or the Borrower is
party as of the date of such summary, identifying the total commitment and
total outstandings under each such line of credit and the purpose thereof,
and stating whether such lines of credit are purportedly secured under the
terms of the Collateral Trust Agreement or otherwise, and (y) identifying
each Finance Subsidiary which has been formed since the date of the last
summary delivered pursuant to this SECTION 7.1(n), and describing any
material changes in the capitalization, assets, or business and activities of
each Finance Subsidiary since the date of the last summary delivered pursuant
to this SECTION 7.1(n); and
(o) promptly, such other information (including non-financial
information) as the Agent or any Lender may from time to time reasonably
request.
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7.2. USE OF PROCEEDS. The Borrower will, and will cause each of
its Subsidiaries to, use the proceeds of the Advances and the Swing Line
Loans to repay all Indebtedness identified on Annex 1 of SCHEDULE 1 hereto
under the heading "Indebtedness to be Paid", to repay Advances and Swing Line
Loans, to make Permitted Acquisitions or for general corporate and working
capital purposes. The Borrower will not, nor will it permit any of its
Subsidiaries to, use any of the proceeds of the Advances or the Swing Line
Loans to purchase or carry any "margin stock" (as defined in Regulation U).
TLGI will not, nor will it permit any Subsidiary, to use proceeds of the
Advances or the Swing Line Loans other than as contemplated in this SECTION
7.2.
7.3. NOTICES OF DEFAULT, LITIGATION, ETC. TLGI and the Borrower
will give notice in writing to the Lenders of the occurrence of (a) any
Default or Unmatured Default, (b) any payment, or any group of payments
(whether or not related), whether in settlement or otherwise, in excess of
$50,000,000, which at any time are expected to be made at or after such time
by TLGI, the Borrower or any Subsidiary in connection with any litigation,
arbitrations, governmental investigations, proceedings or inquiries, whether
individually or in the aggregate (it being understood that TLGI and the
Borrower, in lieu of separately identifying each such expected payment, may
group such payments to the extent deemed necessary to protect
confidentiality), (c) any development, financial or otherwise, which could
reasonably be expected to have a Material Adverse Effect, and (d) any change
in the practices and procedures of TLGI and the Borrower in effect on the
date of this Agreement regarding acquisitions and litigation (which practices
and procedures have been described prior to the date of this Agreement by
representatives of TLGI and the Borrower to the Agent and the Lenders) which
notice, in each of the foregoing cases, shall be given promptly and in any
event within five Business Days after TLGI, the Borrower or the relevant
Subsidiary becomes aware of the Default, Unmatured Default, payment,
development, determination or change. Together with the financial statements
delivered pursuant to SECTIONS 7.1(a), (b), (c) and (d), TLGI and the
Borrower shall provide to the Agent (with sufficient copies for each Lender)
a report, prepared as of the last day of each calendar quarter, (x)
identifying in reasonable detail all litigation, arbitrations, governmental
investigations and proceedings pending or, to the knowledge of any Authorized
Officer, threatened against or affecting TLGI, the Borrower or any other
Subsidiary for which the claim or matter involves an amount in excess of
$1,000,000, (y) for all such litigation, arbitrations, governmental
investigations and proceedings for which the claim or matter involves an
amount in excess of $10,000,000, briefly summarizing the matter (including
whether resolution of the matter could come before a jury), identifying the
relief sought and the amount of the claim, and specifying whether the claim
is covered by insurance, and (z) identifying in reasonable detail each
payment in excess of $1,000,000 made during such calendar quarter, or
expected to be made thereafter, in settlement of, or otherwise in
satisfaction of, any litigation, arbitrations, governmental investigations,
proceedings or inquiries. TLGI and the Borrower agree to discuss with the
Agent and the Lenders, upon the request of the Agent or any Lender, the
status of any litigation, arbitrations, governmental investigations,
proceedings and inquiries and any settlements thereof.
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7.4. CONDUCT OF BUSINESS. TLGI and the Borrower will, and will
cause each respective Subsidiary of it to, carry on and conduct its business
in substantially the same manner and in substantially the same fields of
enterprise as it is conducted on the date of this Agreement and to do all
things necessary to remain duly incorporated, validly existing and in good
standing as a domestic corporation in its jurisdiction of incorporation and
maintain all requisite authority to conduct its business in each jurisdiction
in which its business requires it to be so authorized. Nothing in this
SECTION 7.4 shall prohibit any merger, amalgamation, or consolidation which
is permitted by SECTION 7.12.
7.5. TAXES. TLGI and the Borrower will, and will cause each
respective Subsidiary of it to, pay when due all taxes, assessments and
governmental charges and levies upon it or its income, profits or Property,
except those which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves have been set aside
in accordance with GAAP.
7.6. INSURANCE. TLGI and the Borrower will, and will cause each
respective Subsidiary of it to, maintain with financially sound and reputable
insurance companies insurance on all their Property in such amounts and
covering such risks as is customary in the industries in which TLGI, the
Borrower and such Subsidiaries are engaged and which is consistent with sound
business practice; PROVIDED, HOWEVER, that, in any event, TLGI and the
Borrower will maintain, and cause each respective Subsidiary of it to
maintain, at all times insurance which, in the aggregate, is not materially
less comprehensive in scope and policy amount than the insurance maintained
by them collectively as of the date hereof. TLGI and the Borrower will
furnish to any Lender upon request from time to time full information as to
the insurance carried.
7.7. COMPLIANCE WITH LAWS. TLGI and the Borrower will, and will
cause each respective Subsidiary of it to, comply in all material respects
with all laws, rules, regulations, orders, writs, judgments, injunctions,
decrees or awards to which it or its Properties may be subject.
7.8. MAINTENANCE OF PROPERTIES. TLGI and the Borrower will, and
will cause each respective Subsidiary of it to, do all things necessary to
maintain, preserve, protect and keep its Property in good repair, working
order and condition, ordinary wear and tear excepted, and make all necessary
and proper repairs, renewals and replacements so that its business carried on
in connection therewith may be properly conducted at all times.
7.9. INSPECTION. TLGI and the Borrower will, and will cause each
respective Subsidiary of it to, permit the Agent and any or each Lender, by
its respective representatives and agents, to inspect any of the Property,
corporate books and financial records of TLGI, the Borrower and each such
Subsidiary, to examine and make copies of the books of accounts and other
financial records of TLGI, the Borrower and each such Subsidiary, and to
discuss the affairs, finances and accounts of TLGI, the Borrower and each
such Subsidiary with, and to be
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advised as to the same by, their respective officers at such reasonable times
and intervals as the Agent or such Lender may designate.
7.10. DISTRIBUTIONS. TLGI and the Borrower will not, nor will
either permit any Subsidiary of it to, declare or make or incur any liability
to make any Distribution, except:
(a) dividends payable in the capital stock of TLGI, the Borrower
or such Subsidiary;
(b) Distributions to TLGI, a Regional Partner or a Wholly-Owned
Subsidiary of TLGI or a Regional Partner;
(c) Distributions made by an SPV to TLGI, the Borrower or a
Subsidiary in connection with a Permitted Receivables Securitization; and
(d) other Distributions (in addition to those described in the
foregoing CLAUSES (A) and (B)) so long as, immediately after giving effect to
the declaration thereof in the case of dividends or the making thereof in the
case of other proposed Distributions (the date of such event being referred
to hereinafter as the "DISTRIBUTION DATE"), (i) the aggregate amount of
Distributions declared in the case of dividends or made in the case of other
Distributions pursuant to this CLAUSE (D), during the period from and after
January 1, 1996, to and including the Distribution Date, would not exceed the
Consolidated Distributable Amount as of the Distribution Date, and (ii) no
Default or Unmatured Default shall have occurred and be continuing.
For the purposes of making the foregoing computations, the amount of any
Distribution declared, paid or distributed in property or assets of TLGI or
the Borrower or any other Subsidiary shall be deemed to be the greater of the
book value or Fair Value (as determined in good faith by the board of
directors of TLGI) of such property or assets as of the date of declaration
in the case of a dividend and the date of payment in the case of any other
Distribution.
7.11. INDEBTEDNESS. TLGI and the Borrower will not, nor will either
permit any Subsidiary of it to, create, incur or suffer to exist any
Indebtedness, except:
(a) the Facility A Revolving Loans, the Facility B Revolving
Loans, the Swing Line Loans and the L/C Obligations;
(b) Indebtedness (i) existing as of the close of business on June
30, 1997, and described in SCHEDULE 1 hereto or (ii) incurred on or after July
1, 1997, but only to the extent expressly described on SCHEDULE 1 hereto;
(c) Rentals other than Capitalized Lease Obligations and Synthetic
Lease Obligations;
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(d) Indebtedness of TLGI, the Borrower or any Subsidiary of TLGI
owing to TLGI, the Borrower or any Subsidiary of TLGI;
(e) subject to the final paragraph of this SECTION 7.11 (measured
at the time of initial investment by a purchaser or other investor in
Receivables Program Assets, but not at the time of reinvestment of proceeds
thereof in other Receivables Program Assets), Indebtedness of TLGI, the
Borrower or any Subsidiary in connection with a Permitted Receivables
Securitization;
(f) subject to the final paragraph of this SECTION 7.11,
additional Indebtedness of any Subsidiaries of TLGI (other than the
Borrower), provided that such Indebtedness, when added to the aggregate
outstanding Indebtedness of all such Subsidiaries which is described on
SCHEDULE 1 hereto, does not at any time exceed 10.0% of Consolidated Net
Worth at such time; and
(g) subject to the final paragraph of this SECTION 7.11,
additional Indebtedness issued or incurred by TLGI or the Borrower, provided
that after giving effect thereto and to the application of the proceeds
thereof, Consolidated Indebtedness would not exceed 60% of Consolidated
Capitalization.
Notwithstanding the foregoing, but subject to the last two sentences
of this paragraph, any Indebtedness otherwise permitted under any of the
foregoing SECTIONS 7.11(e), (f) and (g) shall not be permitted unless at the
time of the incurrence of such Indebtedness, and after giving PRO FORMA effect
thereto, the Borrower and TLGI will be in compliance with Section 4.07 of the
Indenture dated as of March 20, 1996, among the Borrower, TLGI and Fleet
National Bank of Connecticut, as Trustee, relating to the Borrower's
$500,000,000 Senior Guaranteed Notes, as such Indenture may be amended,
modified, supplemented or waived from time to time. (The acquisition by TLGI
or any of its Subsidiaries of a new Subsidiary which is obligated in respect
of any Indebtedness shall be deemed for purposes of this Section to be the
incurrence of such Indebtedness by such new Subsidiary on the date it becomes
a Subsidiary of TLGI.) During any period of time that (i) the ratings
assigned to the senior unsecured and unenhanced (other than, if applicable,
pursuant to the Collateral Trust Agreement) long-term Indebtedness of TLGI by
each of Standard & Poor's and Moody's (collectively, the "RATING AGENCIES")
are no less than BBB- and Baa3, respectively (the "INVESTMENT GRADE RATINGS"),
and (ii) no Default or Unmatured Default has occurred and is continuing, the
restriction contained in the first sentence of this paragraph shall not be
applicable. If one or both Rating Agencies withdraws its rating or downgrades
its Investment Grade Rating, then thereafter the restriction contained in the
first sentence of this paragraph shall be applicable on a prospective basis
until both of the Rating Agencies thereafter assign Investment Grade Ratings
to the senior unsecured and unenhanced (other than, if applicable, pursuant to
the Collateral Trust Agreement) long-term Indebtedness of TLGI.
7.12. MERGER. TLGI and the Borrower will not, nor will either
permit any Subsidiary of it to, merge, amalgamate or consolidate with or into
any other Person, except that
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(a) a Subsidiary (other than the Borrower) may merge with TLGI, the Borrower,
a Regional Partner or a Wholly-Owned Subsidiary of TLGI or a Regional
Partner, subject to the further condition that if TLGI or the Borrower is a
party to any such permitted merger, TLGI or the Borrower, as applicable,
shall be the surviving corporation and (b) a Regional Partner or a
Wholly-Owned Subsidiary of TLGI or a Regional Partner incorporated under the
laws of Canada or any Province thereof may amalgamate with another Regional
Partner or Wholly-Owned Subsidiary of TLGI or a Regional Partner incorporated
under the laws of Canada or any Province thereof, it being understood that
neither TLGI nor the Borrower may so amalgamate.
7.13. SALE OF ASSETS. TLGI and the Borrower will not, nor will
either permit any Subsidiary of it to, lease, sell or otherwise dispose of its
Property to any other Person except for (a) sales of inventory in the ordinary
course of business, (b) leases, sales or other dispositions of its Property to
a Regional Partner or a Wholly-Owned Subsidiary of TLGI or a Regional Partner
(provided that if any such Property is subject to the Collateral Trust
Agreement, then such lease, sale or other disposition shall be permissible
hereunder only to the extent that the lessee or transferee thereof shall have
executed documentation satisfactory to the Agent maintaining the security
interest in the Property in favor of the Collateral Agent for the benefit of
the Secured Parties), (c) subject to the requirements of SECTION 2.10.3
hereof, other sales or other dispositions of its Property subject to the
requirement that the net proceeds of each such sale or other disposition of
Property are reinvested, within 180 days following consummation of such sale
or other disposition, in the business of TLGI, the Borrower and the
Subsidiaries of either as conducted in accordance with the requirements of
SECTION 7.4, and that immediately before and after giving effect to such sale,
no Default or Unmatured Default shall have occurred and be continuing, (d)
Permitted Receivables Securitizations, and (e) sales of cemetery properties
(provided that such sales (i) are on commercially reasonable terms, (ii) occur
within 30 days of the acquisition by TLGI, the Borrower or a Subsidiary of
such cemetery property, (iii) give rise to an Investment of the type described
in, and permitted by, SECTION 7.16(m), and (iv) do not involve cemetery
properties with an aggregate Fair Value in excess of $50,000,000 for all such
cemetery properties sold in any calendar year).
7.14. PREPAYMENTS. TLGI and the Borrower will not, nor will either
permit any Subsidiary of it to, either directly or indirectly, voluntarily
redeem, retire or otherwise pay prior to its scheduled maturity, or accelerate
the maturity of, Indebtedness of TLGI or the Borrower or any such Subsidiary,
other than (a) Indebtedness arising hereunder or under other credit facilities
or Permitted Receivables Securitizations of a revolving nature, (b)
Indebtedness between or among TLGI, the Borrower or any Subsidiary, (c)
Indebtedness arising under the MEIP Credit Agreement (but only to the extent
prepayments or redemptions thereof are made in accordance with the
requirements of the MEIP Credit Agreement which are contained in the MEIP
Credit Agreement as in effect on the date hereof), (d) Indebtedness which
ranks PARI PASSU with the Obligations, and (e) other Indebtedness so long as
such Indebtedness either (i) (A) was incurred in connection with an
Acquisition and (B) is prepaid within 180 days of the closing of such
Acquisition or (ii) (A) is prepaid in full and (B) does not exceed $10,000,000
(such limitation to apply to each individual prepayment pursuant to this
clause (ii) and not in the aggregate).
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7.15. AFFILIATES. TLGI and the Borrower will not, nor will either
permit any Subsidiary of it to, enter into any transaction (including, without
limitation, the purchase or sale of any Property or service) with, or make any
payment or transfer to, any Affiliate except in the ordinary course of business
and pursuant to the reasonable requirements of TLGI's, the Borrower's or such
Subsidiary's business and upon fair and reasonable terms no less favorable to
TLGI, the Borrower or such Subsidiary than TLGI, the Borrower or such Subsidiary
would obtain in a comparable arm's-length transaction; PROVIDED, HOWEVER, that
the foregoing terms of this SECTION 7.15 shall not apply to (i) transactions
between or among TLGI, any Wholly-Owned Subsidiary of TLGI and any Regional
Partner and (ii) transactions with an SPV which are related to a Permitted
Receivables Securitization.
7.16. INVESTMENTS. TLGI and the Borrower will not, nor will
either permit any Subsidiary of it to, make or suffer to exist any Investments,
or commitments therefor, except:
(a) Investments (i) in existence as of the close of business on June
30, 1997, and described in SCHEDULE 1 hereto or (ii) arising on or after July 1,
1997, but only to the extent expressly described on SCHEDULE 1 hereto;
(b) Investments by TLGI or the Borrower or any Subsidiary in and to
(i) any Subsidiary (other than LMIC or any other Subsidiary not engaged in one
or more of the TLGI Lines of Business), including any Investment in a
corporation which, after giving effect to such Investment, will become a
Subsidiary (other than as specified in the foregoing parenthetical), (ii) LMIC,
but only to the extent of the aggregate initial par value of the capital stock
thereof issued to the Borrower upon the incorporation of LMIC, and (iii) any
other Person provided that such Person is engaged primarily in one or more of
the TLGI Lines of Business;
(c) Investments in property or assets to be used in the ordinary
course of business of TLGI and the Borrower and the other Subsidiaries conducted
as described in SECTION 7.4 of this Agreement;
(d) Investments in commercial paper maturing in 270 days or less from
the date of issuance which, at the time of acquisition by TLGI or the Borrower
or any other Subsidiary, is accorded one of the two highest commercial paper
ratings by Standard & Poor's or Moody's or any other United States nationally
recognized credit rating agency of similar standing;
(e) Investments in direct obligations of the United States, any
agency or instrumentality of the United States, the federal government of Canada
or any agency or instrumentality of the federal government of Canada, the
payment or guarantee of which constitutes a full faith and credit obligation of
the United States or Canada, as the case may be, in either case maturing in
three years or less from the date of acquisition thereof;
(f) Investments in direct obligations of any Province of Canada or
any municipality within a Province of Canada or any State or municipality within
the United States
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maturing in three years or less from the date of acquisition thereof which,
in any such case, at the time of acquisition by TLGI or the Borrower or any
other Subsidiary, is accorded one of the two highest long-term debt ratings
by Standard & Poor's or Moody's or any other United States nationally
recognized credit rating agency of similar standing;
(g) Investments in certificates of deposit or bankers' acceptances
with a maturity of under one year issued by a bank or trust company organized
under the laws of the United States or any State thereof, Canada or any Province
thereof, Japan or any member of the European Union, having capital, surplus and
undivided profits aggregating at least $100,000,000 and having a short-term
unsecured debt rating of at least "P-1" by Moody's or "A-1" by Standard &
Poor's;
(h) Investments in money market and auction rate preferred stock
issued by Persons organized under the laws of the United States of America or
any State thereof or of Canada or any Province thereof rated "A" or better by
Standard & Poor's or "A" or better by Moody's, or an equivalent rating by any
other United States nationally recognized credit rating agency of similar
standing;
(i) Investments in mutual funds investing in assets described in
CLAUSE (d), (e), (f) or (g) above which in any such case would be classified as
a current asset in accordance with U.S. GAAP and which are managed by a fund
manager of recognized United States or Canadian national standing and having
share capital of at least $100,000,000 or having at least $250,000,000 under
management;
(j) Investments of funds received by TLGI or the Borrower or any
other Subsidiary in the ordinary course of business, which funds are required to
be held in trust for the benefit of others by TLGI, the Borrower or such
Subsidiary, as the case may be, and which funds do not constitute assets or
liabilities of TLGI or the Borrower or any other Subsidiary;
(k) Investments of funds by any Subsidiary which is engaged in the
insurance business which are invested and managed by such Subsidiary in the
ordinary course of its regulated insurance business and insurance operations;
(l) Investments constituting Permitted Acquisitions;
(m) Investments in promissory notes issued and options granted by
purchasers of cemetery properties sold by the Borrower or any of its Affiliates
(but only to the extent permitted by SECTION 7.13(e)); PROVIDED, HOWEVER, that
such promissory notes are issued and such options are granted on commercially
reasonable terms and the aggregate outstanding principal amount of such
promissory notes at any time shall not exceed $100,000,000, and PROVIDED,
FURTHER, that for each such Investment, the related sale and such Investment
have not been challenged, or threatened to be challenged, by any Governmental
Authority;
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(n) Investments in SPV's and in Receivables Program Assets in
connection with Permitted Receivables Securitizations; and
(o) other Investments (in addition to those permitted by CLAUSES (a)
through (n) above) so long as immediately after giving effect to the making of
any such Investment the aggregate amount of all outstanding Investments made
pursuant to this Section 7.16(o) would not exceed 5% of Consolidated Net Worth;
PROVIDED, HOWEVER, that notwithstanding any provision to the contrary herein,
none of TLGI, the Borrower or any Subsidiary of either shall make any Investment
in any Person effectively located outside of the United States or Canada if
after giving effect to such Investment, the aggregate amount of Investments of
TLGI, the Borrower or any Subsidiary of either in any Persons effectively
located outside of the United States or Canada, excluding Investments in Finance
Subsidiaries which are Wholly-Owned Subsidiaries, would exceed an amount equal
to 25% of Consolidated Revenues for the period of four consecutive fiscal
quarters ended immediately prior to the date of such Investment; PROVIDED
FURTHER, HOWEVER, that the immediately preceding proviso shall not apply from
and after the Collateral Release Date. For the purpose of any computation
required to be made pursuant to this Agreement, Investments shall be valued at
lower of the cost or Fair Value thereof as of the date of computation.
7.17. NEGATIVE PLEDGE. TLGI and the Borrower will not, nor will
either permit any Subsidiary of it (other than an SPV in connection with a
Permitted Receivables Securitization) to, enter into any agreement or other
arrangement under the terms of which TLGI, the Borrower or any Subsidiary of
TLGI or the Borrower (other than any such SPV) would be restricted from (i)
performing its respective obligations under the Collateral Trust Agreement or
any other Loan Document to which it is a party or (ii) providing a guaranty to
the Agent, the Collateral Agent, the Lenders or the L/C Issuer.
7.18. LIENS. TLGI and the Borrower will not, nor will either
permit any Subsidiary of either to, create, incur or suffer to exist any Lien
in, of or on the Property of TLGI, the Borrower or such Subsidiary, as
applicable, except:
(a) Liens granted to the Agent or the Collateral Agent for the
benefit of the Lenders, the L/C Issuer and the other Secured Parties pursuant to
the Loan Documents;
(b) Liens for taxes, assessments or governmental charges or levies on
its Property if the same shall not at the time be delinquent or thereafter can
be paid without penalty, or are being contested in good faith and by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall have
been set aside on its books;
(c) Liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the ordinary course of
business which secure payment of
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obligations not more than 60 days past due or which are being contested in
good faith by appropriate proceedings and for which adequate reserves shall
have been set aside on its books;
(d) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions or other social
security or retirement benefits, or similar legislation (except ERISA);
(e) utility easements, building restrictions and such other
encumbrances or charges against real property as are of a nature generally
existing with respect to properties of a similar character and which do not in
any material way affect the same or interfere with the use thereof in the
business of TLGI, the Borrower or any other Subsidiary;
(f) Liens existing as of the close of business on June 30, 1997, and
described in SCHEDULE 1 hereto or (ii) created or incurred on or after July 1,
1997, but only to the extent expressly described on SCHEDULE 1 hereto;
(g) Liens created or incurred after June 30, 1997, given to secure
Indebtedness incurred or assumed by TLGI or any Subsidiary of TLGI in connection
with the acquisition or construction of property or assets useful and intended
to be used in carrying on the business of TLGI or such Subsidiary, including
Liens existing on such property or assets at the time of acquisition or
construction thereof or at the time of acquisition by TLGI or such Subsidiary of
an interest in any business entity then owning such property or assets, whether
or not such existing Liens were given to secure the consideration for the
property or assets to which they attach, subject to the requirements that (i)
the Lien shall attach solely to the fixed assets acquired or purchased by TLGI
or such Subsidiary, (ii) the Lien shall have been created or incurred within 180
days after the date of acquisition or completion of construction of such
property or assets, and (iii) all such Indebtedness shall have been incurred or
assumed within the limitations provided in SECTION 7.11, and provided that Liens
shall be permitted under this SECTION 7.18(g) only to the extent that the
aggregate amount of Indebtedness of TLGI and its Subsidiaries outstanding at any
time which is secured by Liens described in either SECTION 7.18(f) or this
SECTION 7.18(g) shall not exceed 10.0% of Consolidated Net Worth at such time;
(h) Liens on Receivables and Receivables Related Assets arising in
connection with any Permitted Receivables Securitization;
(i) Liens granted to TLGI, a Regional Partner or a Wholly-Owned
Subsidiary of TLGI or a Regional Partner by any Subsidiary (other than the
Borrower);
(j) Liens on certain intercompany Indebtedness of the Borrower
granted under the terms of the MEIP Credit Agreement as in effect on the date of
this Agreement;
(k) in addition to Liens permitted by the preceding CLAUSE (g), Liens
given to secure Indebtedness of TLGI, the Borrower or any Subsidiary of TLGI,
PROVIDED that the
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aggregate amount of Indebtedness outstanding at any time which is secured
thereby shall not exceed $5,000,000; and
(l) any extension, renewal or replacement of any Lien permitted by
the preceding CLAUSES (f) and (g) hereof in respect of the same property or
assets theretofore subject to such Lien in connection with the extension,
renewal or refunding of the Indebtedness secured thereby; PROVIDED that (i)
such Lien shall attach solely to the same property or assets and (ii) such
extension, renewal or refunding of such Indebtedness shall be without
increase in the principal remaining unpaid as of the date of such extension,
renewal or refunding.
7.19. MINIMUM CONSOLIDATED NET WORTH. TLGI will maintain at
all times a Consolidated Net Worth (excluding the cumulative effect of
currency translation adjustments) of at least the sum of
(a) Consolidated Net Worth (excluding the cumulative effect of
currency translation adjustments) as of December 31, 1995, plus
(b) the net proceeds to the Borrower from consummation of the
Equity Placement and the issuance by TLGI from time to time of preferred
stock in exchange for the First Preferred Series C Receipts pursuant to the
terms thereof, plus
(c) the sum of 50% of Consolidated Net Income for each fiscal
quarter ended after January 1, 1996 (but only to the extent that, in the case
of any such fiscal quarter, Consolidated Net Income for such fiscal quarter
is at least $1.00), plus
(d) 66-2/3% of the aggregate amount of the net cash proceeds
received by TLGI and the Borrower and the other Subsidiaries from the
issuance or sale on and after January 1, 1996 (other than sales or issuances
to TLGI or the Borrower or any other Subsidiary, and other than pursuant to
the Equity Placement or in connection with the issuance by TLGI from time to
time of preferred stock in exchange for the First Preferred Series C Receipts
pursuant to the terms thereof) of capital stock of TLGI or Indebtedness of
TLGI, the Borrower or any other Subsidiary which has been converted into
capital stock of TLGI.
7.20. MINIMUM CONSOLIDATED TANGIBLE NET WORTH. TLGI will maintain
at all times a Consolidated Tangible Net Worth (excluding the cumulative effect
of currency translation adjustments) of at least $150,000,000.
7.21. MAXIMUM CONSOLIDATED INDEBTEDNESS TO CONSOLIDATED
CAPITALIZATION. TLGI will not permit the ratio of Consolidated Indebtedness
to Consolidated Capitalization at any time to exceed 0.60 to 1.00.
7.22. INTEREST CHARGES COVERAGE; TREATMENT OF GAIN ON SALE OF
ARBOR FUNERAL INC. TLGI will at all times maintain (i) a ratio of EBITDA for
the most recently ended period of
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four consecutive fiscal quarters of TLGI to Consolidated Interest Charges for
such period of four consecutive fiscal quarters of not less than 2.750 to
1.00 and (ii) a ratio of EBITDA for the most recently ended fiscal quarter to
Consolidated Interest Charges for such fiscal quarter of not less than 1.50
to 1.00. For purposes of the foregoing calculations, $35,800,000 will be
added to EBITDA for the fiscal quarter ended September 30, 1997 whenever
EBITDA for such fiscal quarter is included in such calculations. For
purposes of this SECTION 7.22, any costs and expenses incurred by TLGI in
contesting the 1996 tender offer for TLGI by Service Corporation
International, Inc., which are reflected in the audited financial statements
of TLGI as at December 31, 1996 which have been delivered to the Agent and
the Lenders, up to an aggregate amount not to exceed $18,678,000 for all such
costs and expenses, shall be excluded from the calculation of Consolidated
Net Income in determining EBITDA for the respective periods in which such
costs were incurred.
7.23. MAXIMUM CONSOLIDATED INDEBTEDNESS TO ADJUSTED EBITDA.
TLGI will not permit, at any time, (x) the ratio of Consolidated Indebtedness
determined at such time to Adjusted EBITDA determined for the period of four
consecutive fiscal quarters then most recently ended to be greater than 5.50
to 1.00 or (y) the ratio of Consolidated Indebtedness (determined as of the
last day of the then most recently ended fiscal quarter) to Adjusted EBITDA
(determined for the period of four consecutive fiscal quarters then most
recently ended) to be greater than 5.00 to 1.00 if the ratios of Consolidated
Indebtedness (determined as of the last day of each of the two fiscal
quarters immediately preceding such most recently ended fiscal quarter) to
Adjusted EBITDA (determined for each of the two preceding periods of four
consecutive fiscal quarters ending on such days, respectively) are each
greater than 5.00 to 1.00. For purposes of the foregoing calculations,
$35,800,000 will be added to EBITDA for the fiscal quarter ended September
30, 1997 whenever EBITDA for such fiscal quarter is included in such
calculations.
7.24. OWNERSHIP OF THE BORROWER. TLGI will at all times
maintain the Borrower as a Wholly-Owned Subsidiary of TLGI.
7.25. ACQUISITIONS. TLGI and the Borrower will not, nor will
either permit any Subsidiary of either to, make any Acquisition of any Person
other than a Permitted Acquisition.
7.26. PLEDGE OF STOCK AND GRANT OF SECURITY INTEREST IN CERTAIN
ASSETS. TLGI and the Borrower will, and will cause each respective Pledgor
Subsidiary of it to, pledge (or, for any shares or other equity interests
pledged prior to the date hereof pursuant to the terms of the Collateral
Trust Agreement, TLGI and the Borrower will, and will cause each respective
Pledgor Subsidiary of it to, maintain such pledge in) all outstanding shares
of capital stock and other equity interests of any Subsidiary of TLGI or the
Borrower (other than any SPV which engages in a Permitted Receivables
Securitization but including, without limitation, those Subsidiaries which
are designated on SCHEDULE 1 with an asterisk) held by it or held by any
Subsidiary (other than any SPV which engages in a Permitted Receivables
Securitization but including, without limitation, those Subsidiaries which
are designated on SCHEDULE 1 with an asterisk) of it from
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time to time (including, in the case of TLGI, the Borrower), and the Borrower
shall grant a security interest (or, for any security interests granted prior
to the date hereof pursuant to the Collateral Trust Agreement, the Borrower
shall maintain such security interest) in all of its financial assets
(including, without limitation, accounts receivable and bank accounts), in
each case pursuant to the terms of the Collateral Trust Agreement. All such
shares of capital stock and other equity interests shall be pledged, and all
such security interests shall be granted, solely to secure the Obligations
and any other Senior Obligations outstanding from time to time; PROVIDED,
HOWEVER, that such pledges of capital stock and other equity interests, and
such grants of security interests, shall secure the Senior Obligations (other
than the Obligations and the other Senior Obligations identified on SCHEDULE
3 hereto) only to the extent that the Borrower shall have so elected and
given notice thereof to the Collateral Agent and the Agent. Within 60 days of
the date of closing for each Major Acquisition of a Person, TLGI and the
Borrower shall deliver to the Agent an opinion of counsel addressed to the
Agent and the Lender to the effect that all ownership interests in such
Person acquired in such Major Acquisition have been duly and validly
subjected to the lien granted to the Collateral Agent under the terms of the
Collateral Trust Agreement and that all actions to perfect such lien have
been duly and validly taken, such opinions to be satisfactory to the Agent in
form and substance.
TLGI and the Borrower shall, and shall cause their respective
Subsidiary Pledgors to, complete all actions necessary to comply with the
requirements of the first paragraph of this SECTION 7.26 and the Collateral
Trust Agreement with respect to pledges of shares of capital stock and other
equity interests of their Subsidiaries (including without limitation delivery
of the applicable shares and other instruments to the Collateral Agent) no
later than the dates set forth below:
(i) With respect to the shares of capital stock and other equity
interests of those Subsidiaries which are designated on Schedule I with an
asterisk (other than Loewen Group Acquisition Corporation and shares of
capital stock and other equity interests owned by Loewen Group Acquisition
Corporation) December 31, 1997;
(ii) With respect to the shares of capital stock and other equity
interests of Loewen Group Acquisition Corporation (if then in existence)
or of Subsidiaries at any time owned by Loewen Group Acquisition
Corporation, January 15, 1998; and
(iii) With respect to any shares of capital stock or other equity
interests of any other Subsidiaries, whether now owned or hereafter
acquired, within ninety days from the date of acquisition thereof by TLGI,
the Borrower or any of their respective Subsidiaries.
Notwithstanding the foregoing terms of this SECTION 7.26, on such
first date (the "COLLATERAL RELEASE DATE") on which (a) the Borrower shall have
provided written evidence to the Agent that (x) the rating assigned to the
senior unsecured and unenhanced long-term Indebtedness of TLGI by Standard &
Poor's is BBB- (or higher) and such rating assigned by Moody's is Baa3 (or
higher), (y) all other Indebtedness secured pursuant to the Collateral Trust
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Agreement has ceased (or on the Collateral Release Date will cease) to be
secured pursuant to the Collateral Trust Agreement, and (z) after giving
effect to this paragraph, the Obligations will be senior to, or PARI PASSU
with, all other Indebtedness which was secured pursuant to the Collateral
Trust Agreement immediately prior to the Collateral Release Date, (b) no
Default or Unmatured Default shall exist and be continuing, and (c) the Agent
shall have provided written notice to each of the Lenders that the conditions
set forth in the foregoing CLAUSES (a) and (b) have been satisfied, THEN (i)
the pledge and security interest described in this SECTION 7.26 and granted
pursuant to the Collateral Trust Agreement will automatically terminate, and
TLGI, the Borrower and the Pledgor Subsidiaries shall have no further
obligations in respect of such pledge and security interest, and (ii) the
Pledgor Subsidiary Guaranty of each Pledgor Subsidiary will automatically
terminate and the Pledgor Subsidiaries shall have no further obligations in
respect of such Pledgor Subsidiary Guaranties, in each case without any
further action or requirement. In connection with the foregoing, the Agent
agrees to take, and to cause the Collateral Agent to take, in each case at
the Borrower's expense, all such actions as may be reasonably requested by
the Borrower to give effect to this paragraph.
7.27. SUBSIDIARIES. TLGI and the Borrower will not permit any of
their respective Subsidiaries (other than the Borrower in the case of TLGI's
Subsidiaries) at any time to (i) issue any preferred stock of any type or nature
(provided that such limitation shall not apply to any Subsidiary which has no
operations and exists solely as a special purpose finance entity, and provided
further that such limitation shall not prohibit the issuance of preferred stock
to TLGI or any Wholly-Owned Subsidiary of TLGI), or (ii) except in the case of
an SPV which engages in a Permitted Receivables Securitization, agree by
contract or otherwise to any restriction on the right and ability of such
Subsidiary to declare and pay dividends and make other distributions to its
shareholders (other than the restrictions set forth in this Agreement and the
other Loan Documents). TLGI and the Borrower will not permit any Indebtedness
owed by them to any Subsidiaries to be secured pursuant to the Collateral Trust
Agreement unless (a) the Subsidiary to which such Indebtedness is owed is a
Finance Subsidiary which is a Wholly-Owned Subsidiary, (b) the security interest
securing such Indebtedness is subordinated in accordance with the terms and
conditions of the Collateral Trust Agreement, (c) all shares of capital stock or
other equity interests of such Subsidiary are pledged under the terms of the
Collateral Trust Agreement, (d) such Subsidiary has no obligations other than
Indebtedness owed to TLGI or the Borrower or an Affiliate of TLGI, and other
than obligations to purchase accounts receivable or other financial assets of an
Affiliate of TLGI, (e) such Subsidiary has no material assets other than (i)
Indebtedness owed to it by TLGI or the Borrower or an Affiliate of TLGI, (ii)
Investments in other Finance Subsidiaries which are Wholly-Owned Subsidiaries
and (iii) the accounts receivable and other financial assets described in the
foregoing CLAUSE (d), and (f) such Subsidiary has no activities or operations
other than the issuance of its capital stock or other equity interests and the
purchase and administration of the accounts receivable and other financial
assets described in the foregoing CLAUSE (d), and other than the holding by it
of Indebtedness, accounts receivable and other financial assets described in the
foregoing CLAUSE (e).
7.28. SUBSIDIARIES' STOCK. TLGI and the Borrower will cause:
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(a) each Canadian Subsidiary incorporated under the laws of British
Columbia, the shares of which are Pledged Shares under the Collateral Trust
Agreement, to ensure that its constating documents do not contain any
restrictions on a transfer of such Pledged Shares pursuant to the due exercise
of the Trustee's powers under the Collateral Trust Agreement;
(b) the board of directors of each Canadian Subsidiary incorporated
under the laws of Nova Scotia or Prince Edward Island, the shares of which are
Pledged Shares under the Collateral Trust Agreement, to pass a resolution
consenting to a transfer of such Pledged Shares pursuant to the due exercise of
the Trustee's powers under the Collateral Trust Agreement; and
(c) the directors and shareholders of each Canadian Subsidiary
incorporated under the federal laws of Canada, or the laws of Quebec, Ontario,
Manitoba, Saskatchewan or Alberta, the share of which are Pledged Shares under
the Collateral Trust Agreement, to execute and deliver an unanimous shareholders
agreement to the Trustee providing for the consent of the shareholders to a
transfer of such Pledged Shares pursuant to the due exercise of the Trustee's
powers under the Collateral Trust Agreement.
Except as set out in clauses (d) and (e) below or as otherwise consented to by
the Agent in its sole discretion, TLGI and the Borrower will, and will cause
each Subsidiary (other than a Canadian Subsidiary), the shares or other equity
interests of which are Pledged Shares under the Collateral Trust Agreement, to
take any and all actions necessary to ensure that there are no restrictions on a
transfer of such Pledged Shares pursuant to the due exercise of the Trustee's
powers under the Collateral Trust Agreement, except with respect to any and all
restrictions under applicable law. The foregoing sentence does not apply to:
(d) the interests of TLGI, the Borrower or any Pledgor Subsidiary in
any limited partnership or limited liability company where the restriction is
required to preserve the tax status of the entity; and
(e) the shares listed in SCHEDULE 6 hereto.
The actions described in this SECTION 7.28 must be completed with
respect to any Subsidiary no later than 90 days after any of such Subsidiary's
shares become Pledged Shares under the Collateral Trust Agreement.
The terms "Pledged Shares", "Trustee" and "Applicable Law", as used in
this SECTION 7.28, have the meanings specified in the Collateral Trust
Agreement.
7.29. DELIVERIES REGARDING PLEDGOR SUBSIDIARIES. TLGI and the
Borrower shall deliver to the Agent on or before November 30, 1997 a copy,
with respect to each Pledgor Subsidiary, of such Pledgor Subsidiary's (i)
articles of incorporation or comparable constitutive documents, together with
all material amendments, and, to the extent applicable, a certificate of
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good standing, in each case certified by the appropriate governmental officer
in the relevant jurisdiction of organization, (ii) by-laws or comparable
constitutive laws, rules or regulations as in effect on the Effective Date
certified by the Secretary, Assistant Secretary or other appropriate officer
or director of it, and (iii) board of directors' resolutions, certified by
the Secretary, Assistant Secretary or other appropriate officer or director
of such Pledgor Subsidiary (and resolutions of other bodies, if any are
deemed necessary by counsel for any Lender) authorizing the execution and
performance of the Collateral Trust Agreement, in each case (of CLAUSES (i),
(ii) and (iii)) to the extent not previously delivered to the Agent or the
Collateral Agent under the Original Agreement or the Collateral Trust
Agreement.
ARTICLE VIII
DEFAULTS
8. DEFAULTS. The occurrence of any one or more of the following
events shall constitute a Default:
8.1. Any representation or warranty made or deemed made by or
on behalf of TLGI, the Borrower or any Pledgor Subsidiary to the Lenders or
the Agent under or in connection with this Agreement, any Revolving Loan, any
Swing Line Loan, any Letter of Credit, any Guaranty, the Collateral Trust
Agreement, any other Loan Document or any certificate or information
delivered in connection with this Agreement or any other Loan Document shall
be materially false on the date as of which made or deemed made.
8.2. Nonpayment of principal of any Revolving Loan or Swing
Line Loan when due, or nonpayment of interest upon any Revolving Loan or
Swing Line Loan or of any commitment fee or other obligations (including,
without limitation, Reimbursement Obligations) under any of the Loan
Documents within three Business Days after the same becomes due.
8.3. The breach by TLGI, the Borrower or any Subsidiary of
either of any of the terms or provisions of SECTION 7.2, SECTION 7.3(a),
SECTIONS 7.10 through 7.14, or SECTIONS 7.16 through 7.27; PROVIDED, HOWEVER,
any failure to provide notice of any Unmatured Default pursuant to SECTION
7.3(a) shall not give rise to a Default under this SECTION 8.3 if such
Unmatured Default may be cured pursuant to the terms of this Agreement and is
in fact cured prior to maturing into a Default.
8.4. The breach by TLGI, the Borrower or any Subsidiary of
either (other than a breach which constitutes a Default under SECTION 8.1,
8.2 or 8.3) of any of the terms or provisions of this Agreement or any other
Loan Document which is not remedied within the earlier to occur of (x) 30
days after written notice from the Agent or any Lender or (y) 30 days after
any Executive Officer first has knowledge thereof.
8.5. Failure of TLGI, the Borrower or any Subsidiaries of
either to pay any Indebtedness equal to or exceeding $5,000,000 in the
aggregate for TLGI, the Borrower and such
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Subsidiaries when due; or the default by TLGI, the Borrower or any
Subsidiaries of either in the performance of any term, provision or condition
contained in any agreement under which any Indebtedness equal to or exceeding
$5,000,000 in the aggregate for TLGI, the Borrower and such Subsidiaries was
created or is governed, or any other event shall occur or condition exist the
effect of which is to cause, or to permit the holder or holders of such
Indebtedness to cause, such Indebtedness to become due prior to its stated
maturity; or any Indebtedness of TLGI, the Borrower or any Subsidiaries of
either equal to or exceeding $5,000,000 in the aggregate for all such Persons
shall be declared to be due and payable or required to be prepaid (other than
by a regularly scheduled payment) prior to the stated maturity thereof; or
TLGI, the Borrower or any Subsidiary of either shall not pay, or shall admit
in writing its inability to pay, its debts generally as they become due.
8.6. TLGI, the Borrower or any Subsidiary of either shall (a) have
an order for relief entered with respect to it under the United States
bankruptcy laws as now or hereafter in effect or cause or allow any similar
event to occur under any bankruptcy or similar law or laws for the relief of
debtors as now or hereafter in effect in any other jurisdiction, (b) make an
assignment for the benefit of creditors, (c) apply for, seek, consent to or
acquiesce in the appointment of a receiver, custodian, trustee, examiner,
liquidator, monitor or similar official for it or any of its Property, (d)
institute any proceeding seeking an order for relief under the United States
bankruptcy laws as now or hereafter in effect or seeking to adjudicate it a
bankrupt or insolvent, or seeking dissolution, winding up, liquidation,
reorganization, arrangement, adjustment or composition of it or any of its
Property or its debts under any law relating to bankruptcy, insolvency or
reorganization or compromise of debt or relief of debtors as now or hereafter
in effect in any jurisdiction including, without limitation, any application
under The Bankruptcy and Insolvency Act (Canada) or The Companies' Creditors
Arrangement Act (Canada), the filing of a proposal or notice under The
Bankruptcy and Insolvency Act (Canada) or any organization, arrangement or
compromise of debt under the laws of its jurisdiction of incorporation or
fail to promptly file an answer or other pleading denying the material
allegations of any such proceeding filed against it, (e) take any corporate
action to authorize or effect any of the foregoing actions set forth in this
SECTION 8.6, or (f) fail to contest in good faith any appointment or
proceeding described in SECTION 8.7.
8.7. Without the application, approval or consent of TLGI, the
Borrower or any Subsidiary of either, a receiver, custodian, trustee,
examiner, liquidator or similar official shall be appointed (either privately
or by a court) for TLGI, the Borrower or any Subsidiary or any of its
Property, or a proceeding described in SECTION 8.6(d) shall be instituted
against TLGI, the Borrower or any Subsidiary and such appointment continues
undischarged or such proceeding continues undismissed or unstayed for a
period of 30 consecutive days.
8.8. Any court, government or Governmental Authority shall condemn,
seize or otherwise appropriate, or take custody or control of (each a
"CONDEMNATION"), all or any portion of the Property of TLGI, the Borrower or
any of the Subsidiaries of either which, when taken together with all other
Property of TLGI, the Borrower and such Subsidiaries so
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condemned, seized, appropriated or taken custody or control of, during the
twelve-month period ending with the month in which any such Condemnation
occurs, constitutes a Substantial Portion.
8.9. TLGI, the Borrower or any Subsidiary of either shall fail
within 30 days to pay, bond or otherwise discharge any judgment or order for
the payment of money in excess of $5,000,000, unless such judgment or order
has been stayed on appeal or otherwise is being appropriately contested in
good faith and against which appropriate reserves have been established in
accordance with GAAP (provided that, in any event, execution of such judgment
or order has been effectively stayed and no execution thereof has commenced
and is continuing).
8.10. The Unfunded Liabilities of all Single Employer Plans shall
exceed in the aggregate $5,000,000 or any Reportable Event, the occurrence of
which may reasonably be expected to give rise to a Material Adverse Effect,
shall occur in connection with any Plan, or a contribution failure sufficient to
give rise to a lien under section 302(f) of ERISA shall occur with respect to
any Single Employer Plan.
8.11. TLGI or any other member of the Controlled Group shall have
been notified by the sponsor of a Multiemployer Plan that it has incurred
withdrawal liability to such Multiemployer Plan in an amount which, when
aggregated with all other amounts required to be paid to Multiemployer Plans by
TLGI or any other member of the Controlled Group as withdrawal liability
(determined as of the date of such notification), exceeds $5,000,000 or requires
payments exceeding $1,000,000 per annum.
8.12. TLGI or any other member of the Controlled Group shall have
been notified by the sponsor of a Multiemployer Plan that such Multiemployer
Plan is in reorganization or is being terminated, within the meaning of Title IV
of ERISA, if as a result of such reorganization or termination the aggregate
annual contributions of TLGI and the other members of the Controlled Group
(taken as a whole) to all Multiemployer Plans which are then in reorganization
or being terminated have been or will be increased over the amounts contributed
to such Multiemployer Plans for the respective plan years of each such
Multiemployer Plan immediately preceding the plan year in which the
reorganization or termination occurs by an amount exceeding $1,000,000.
8.13. TLGI, the Borrower or any Subsidiary of either shall be the
subject of any proceeding or investigation pertaining to the release by TLGI,
the Borrower or any such Subsidiary or any other Person of any toxic or
hazardous waste or substance into the environment, or any violation of any
environmental, health or safety law or regulation of any Governmental Authority,
which, in either case, could reasonably be expected to have a Material Adverse
Effect.
8.14. Any Change of Control shall occur.
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8.15. Any Guaranty shall fail to remain in full force or effect,
or any action shall be taken to discontinue or to assert the invalidity or
unenforceability of any Guaranty, or any Guarantor shall fail to perform its
obligations under or otherwise comply with any of the terms or provisions of
any Guaranty to which it is a party, or any Guarantor shall deny that it has
any further liability under any Guaranty to which it is a party, or shall
give notice to such effect.
8.16. Except as contemplated by the last paragraph of SECTION
7.26, the Collateral Trust Agreement shall fail to remain in full force or
effect, or any action shall be taken to discontinue or to assert the
invalidity or unenforceability of the Collateral Trust Agreement, or any
pledgor thereunder shall fail to perform its obligations under or otherwise
comply with any of the terms or provisions of the Collateral Trust Agreement,
or any pledgor thereunder shall deny that it has any further liability under
the Collateral Trust Agreement, or shall give notice to such effect, or any
portion of the shares of stock pledged, or security interests granted,
pursuant to the Collateral Trust Agreement shall cease to be validly
perfected in favor of the Collateral Agent for the benefit of the Secured
Parties, or (except as otherwise provided in the Collateral Trust Agreement
and except to the extent such pledged shares represent Minority Interests)
such pledged shares shall fail to represent 100% of the outstanding shares of
stock of the Subsidiaries whose shares of stock are subject to the Collateral
Trust Agreement.
8.17. A Material Judgment Event shall have occurred and 90 days
shall have passed without one or more of the judgments, awards or other
orders giving rise to such Material Judgment Event having been vacated such
that on such 90th day the aggregate amount of all judgments, awards and
orders entered against any of TLGI, the Borrower or any of their respective
Subsidiaries which shall have been outstanding for at least 90 days without
having been finally satisfied in full or vacated shall be in excess of
$100,000,000.
ARTICLE IX
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
9.1. ACCELERATION. If any Default described in SECTION 8.6 or 8.7
occurs with respect to TLGI or the Borrower (but not with respect to any
other Subsidiary), the obligations of the Lenders to make Revolving Loans or
purchase participations in Swing Line Loans and Letters of Credit hereunder
and the obligation of the Swing Line Lender to make Swing Line Loans and the
obligation of the L/C Issuer to issue Letters of Credit hereunder shall
automatically terminate and the Obligations shall immediately become due and
payable without any election or action on the part of the Agent, the L/C
Issuer, the Swing Line Lender or any Lender. If any other Default occurs,
the Required Lenders may (a) terminate or suspend the obligations of the
Lenders to make Revolving Loans and purchase participations in Swing Line
Loans and Letters of Credit hereunder, whereupon the obligation of the Swing
Line Lender to make Swing Line Loans and the obligation of the L/C Issuer to
issue Letters of Credit hereunder shall also terminate or be suspended, or
(b) declare the Obligations to be due and payable, whereupon the Obligations
shall become immediately due and payable, without presentment, demand,
protest or notice of any
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kind, all of which TLGI and the Borrower hereby expressly waive, or (c) take
the action described in both the preceding CLAUSE (A) and the preceding
CLAUSE (B).
If, within 30 days after acceleration of the maturity of the
Obligations or termination of the obligations of the Lenders to make
Revolving Loans hereunder as a result of any Default (other than any Default
as described in SECTION 8.6 or 8.7 with respect to TLGI, the Borrower or any
other Subsidiary) and before any judgment or decree for the payment of the
Obligations due shall have been obtained or entered, the Required Lenders (in
their sole discretion) shall so direct, the Agent shall, by notice to TLGI
and the Borrower, rescind and annul such acceleration and/or termination.
9.2. AMENDMENTS. Subject to the provisions of this ARTICLE IX,
the Required Lenders (or the Agent with the consent in writing of the
Required Lenders), TLGI and the Borrower may enter into agreements
supplemental hereto for the purpose of adding or modifying any provisions to
the Loan Documents or changing in any manner the rights of the Lenders, TLGI
or the Borrower hereunder or waiving any Default hereunder; PROVIDED,
HOWEVER, that no such supplemental agreement shall, without the consent of
each Lender affected thereby:
(a) extend the Facility A Commitment or the Facility B Commitment
of any Lender, extend the maturity of any Revolving Loan, extend the final
maturity beyond the Facility A Termination Date of any Swing Line Loan or
Reimbursement Obligation, extend the expiry date of any Letter of Credit
beyond the date which is five Business Days immediately preceding the
Facility A Termination Date, or forgive all or any portion of the principal
amount of any Revolving Loan, Swing Line Loan or Reimbursement Obligation or
any interest or fees, or reduce the rate or extend the time of payment of
interest or fees on any Revolving Loan, Swing Line Loan, Reimbursement
Obligation, Commitment or Letter of Credit;
(b) reduce the percentage specified in the definition of Required
Lenders;
(c) reduce the amount or extend the payment date for the mandatory
payments required under SECTION 2.2, 2.19 or 2.20, reduce the amount of or
extend the reduction date for any mandatory reduction of the Facility A
Aggregate Commitment required by SECTION 2.10.3, or increase the amount of
the Commitment of any Lender hereunder, or permit TLGI or the Borrower to
assign its rights under this Agreement;
(d) amend this SECTION 9.2 or SECTION 13.1(a);
(e) release any Guarantor other than in connection with an
Approved Sale or other than as contemplated by the last paragraph of SECTION
7.26 or as set forth in the Collateral Trust Agreement; or
(f) prior to the appointment of Enforcement Representatives under
(and as defined in) the Collateral Trust Agreement, release any collateral
pledged pursuant to the
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Collateral Trust Agreement other than in connection with an Approved Sale or
as contemplated by the last paragraph of SECTION 7.26.
Following the appointment of any Enforcement Representatives under (and as
defined in) the Collateral Trust Agreement, the Lenders and the Agent agree
that any instructions or directions to be given by the Lenders to the
Enforcement Representatives appointed by the Lender shall be valid if given
by action of the Required Lenders and any action to be taken by them with
respect to enforcement or other remedies shall be taken solely in accordance
with the terms of the Collateral Trust Agreement. The Lenders and the Agent
agree (unless otherwise approved by all of the Lenders) that any vote to be
taken by the Lenders under the terms of the Collateral Trust Agreement
(whether involving the release of collateral pledged thereunder, enforcement
actions, amendments, waivers or otherwise) shall be taken solely by the Agent
casting votes on behalf of each Lender, such votes to be cast identically by
the Agent on behalf of each Lender and to be based upon the actions (if any)
of the Lenders taken pursuant to, and in accordance with, the terms of this
Agreement. No amendment of any provision of this Agreement relating in any
way to the Agent shall be effective without the written consent of the Agent.
No amendment of any provision of this Agreement relating in any way to the
L/C Issuer or any or all of the Letters of Credit shall be effective without
the written consent of the L/C Issuer and the Agent. No amendment of any
provision of this Agreement relating in any way to the Swing Line Lender, the
Swing Line Commitment or any or all of the Swing Line Loans shall be
effective without the written consent of the Swing Line Lender and the Agent.
No amendment of any provision of this Agreement relating in any way to the
Documentation Agent shall be effective without the written consent of the
Documentation Agent. The Agent may waive payment of the fee required under
SECTION 13.3.2 without obtaining the consent of any other party to this
Agreement.
9.3. PRESERVATION OF RIGHTS. No delay or omission of the Lenders
or any of them or the Agent, the Documentation Agent, the L/C Issuer or the
Collateral Agent to exercise any right under the Loan Documents shall impair
such right or be construed to be a waiver of any Default or an acquiescence
therein, and the making of a Revolving Loan or a Swing Line Loan or the
issuance of a Letter of Credit notwithstanding the existence of a Default or
the inability of the Borrower to satisfy the conditions precedent to such
Revolving Loan or Swing Line Loan or Letter of Credit shall not constitute
any waiver or acquiescence. Any single or partial exercise of any such right
shall not preclude other or further exercise thereof or the exercise of any
other right, and no waiver, amendment or other variation of the terms,
conditions or provisions of the Loan Documents whatsoever shall be valid
unless in writing signed by (or with the consent of) the Lenders required
pursuant to SECTION 9.2, and then only to the extent specifically set forth
in such writing. All remedies contained in the Loan Documents or afforded by
law shall be cumulative and all shall be available to the Agent, the Lenders,
the L/C Issuer and the Collateral Agent (and to the extent expressly set
forth, the Documentation Agent) until the Obligations have been paid in full.
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ARTICLE X
GENERAL PROVISIONS
10.1. SURVIVAL OF REPRESENTATIONS. All representations and
warranties of TLGI and the Borrower contained in this Agreement shall survive
the occurrence of the effectiveness of this Agreement and the making of the
Revolving Loans and the Swing Line Loans and the issuance of the Letters of
Credit herein contemplated.
10.2. GOVERNMENTAL REGULATION. Anything contained in this
Agreement to the contrary notwithstanding, no Lender shall be obligated to
extend credit to the Borrower and the L/C Issuer shall not be obligated to
issue any Letter of Credit in violation of any limitation or prohibition
provided by any applicable statute or regulation.
10.3. STAMP DUTIES. The Borrower shall pay and forthwith on
demand indemnify each of the Agent, each Lender and the L/C Issuer against
any liability it incurs in respect of any stamp, registration and similar tax
which is or becomes payable in connection with the entry into, performance or
enforcement of any Loan Document.
10.4. HEADINGS. Section headings in the Loan Documents are for
convenience of reference only and shall not govern the interpretation of any
of the provisions of the Loan Documents.
10.5. ENTIRE AGREEMENT; INDEPENDENCE OF COVENANTS. The Loan
Documents (together with the fee letter agreement described herein) embody
the entire agreement and understanding among TLGI, the Borrower, the Agent,
the Lenders, the L/C Issuer and the Collateral Agent and supersede all prior
agreements and understandings among TLGI, the Borrower, the Agent, the
Lenders, the L/C Issuer and the Collateral Agent relating to the subject
matter thereof. Except as otherwise expressly provided herein, no provision
of this Agreement shall be construed as waiving, negating or otherwise
qualifying any restriction, limitation or other condition imposed by any
other provision of this Agreement.
10.6. SEVERAL OBLIGATIONS; BENEFITS OF THIS AGREEMENT. The
respective obligations of the Lenders hereunder are several and not joint and
no Lender shall be the partner or agent of any other (except to the extent to
which the Agent is authorized to act as such). The failure of any Lender to
perform any of its obligations hereunder shall not relieve any other Lender
from any of its obligations hereunder. This Agreement shall not be construed
so as to confer any right or benefit upon any Person other than the parties
to this Agreement and their respective successors and assigns.
10.7. EXPENSES; INDEMNIFICATION. The Borrower shall reimburse the
Agent and the Documentation Agent for any costs, internal charges and out-of-
pocket expenses (including reasonable attorneys' fees and time charges of
attorneys for the Agent) paid or incurred by the Agent or the Documentation
Agent in connection with the preparation, negotiation, execution,
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delivery, review, amendment, modification and administration of the Loan
Documents. Such costs, charges and out-of-pocket expenses shall include,
without limitation, those arising in connection with the litigation audit
conducted by the Agent and its counsel, and all such costs, charges and
out-of-pocket expenses shall be payable regardless of whether the
transactions contemplated by this Agreement and the other Loan Documents
shall ever be consummated. TLGI and the Borrower also agree to reimburse the
Agent, the L/C Issuer and the Lenders for any costs, internal charges and
out-of-pocket expenses (including reasonable attorneys' fees and time charges
of attorneys for the Agent, the L/C Issuer and the Lenders, which attorneys
may be employees of the Lenders) paid or incurred by the Agent, the L/C
Issuer or any Lender in connection with the collection and enforcement of the
Loan Documents. TLGI and the Borrower further agree to indemnify the Agent,
the Documentation Agent, the L/C Issuer and each Lender, and their respective
directors, officers, partners and employees, against all losses, claims,
damages, penalties, judgments, liabilities and expenses (including, without
limitation, all expenses of litigation or preparation therefor whether or not
the Agent, the Documentation Agent, the L/C Issuer or any Lender is a party
thereto) which any of them may pay or incur arising out of or relating to
this Agreement, the other Loan Documents, the transactions contemplated
hereby or the direct or indirect application or proposed application of the
proceeds of any Revolving Loan, Swing Line Loan or Letter of Credit
hereunder. Without limiting the generality of the foregoing, in the event
that any of the Agent, the Documentation Agent, the L/C Issuer or any Lender
(each an "INDEMNIFIED PARTY") becomes involved in any capacity in any action,
proceeding or investigation brought by or against any Person, including
stockholders of TLGI, in connection with or as a result of either the
arrangements evidenced by this Agreement and the other Loan Documents or any
matter referred to herein or therein, TLGI and the Borrower, jointly and
severally, periodically will reimburse such Indemnified Party for its
reasonable legal and other expenses (including the cost of any investigation
and preparation) incurred in connection therewith. TLGI and the Borrower,
jointly and severally, also will indemnify and hold such Indemnified Party
harmless against any and all losses, claims, damages or liabilities to any
such Person in connection with or as a result of either the arrangements
evidenced by this Agreement and the other Loan Documents or any matter
referred to herein or therein, except to the extent that any such loss,
claim, damage or liability results from the gross negligence or bad faith of
such Indemnified Party in performing the services that are the subject
hereof. If for any reason the foregoing indemnification is unavailable to an
Indemnified Party or insufficient to hold it harmless, then TLGI and the
Borrower, jointly and severally, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect the relative
economic interests of TLGI, the Borrower and their stockholders on the one
hand and such Indemnified Party on the other hand in the matters contemplated
herein as well as the relative fault of TLGI, the Borrower and such
Indemnified Party with respect to such loss, claim, damage or liability and
any other relevant equitable considerations. The reimbursement, indemnity
and contribution obligations of TLGI and the Borrower hereunder shall be in
addition to any liability which TLGI and the Borrower may otherwise have,
shall extend upon the same terms and conditions to any Affiliate of any
Indemnified Party and the partners, directors, agents, employees and
controlling Persons (if any), as the case may be, of such Indemnified Party
and any such Affiliate, and shall
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be binding upon and inure to the benefit of any successors, assigns, heirs
and personal representatives of TLGI, the Borrower, the Indemnified Parties,
any such Affiliate and any such Person. TLGI and the Borrower also agree
that neither any Indemnified Party nor any of such Affiliates, partners,
directors, agents, employees or controlling Persons shall have any liability
to TLGI, the Borrower, any Person asserting claims on behalf of or in right
of TLGI or the Borrower or any other Person in connection with or as a result
of either the arrangements evidenced by this Agreement and the other Loan
Documents or any matter referred to herein or therein except to the extent
that any losses, claims, damages, liabilities or expenses incurred by TLGI or
the Borrower result from the gross negligence or bad faith of such
Indemnified Party in performing the services that are the subject hereof.
The obligations of TLGI and the Borrower under this SECTION 10.7 shall
survive the termination of this Agreement.
10.8. NUMBERS OF DOCUMENTS. All statements, notices, closing
documents and requests hereunder shall be furnished to the Agent with
sufficient counterparts so that the Agent may retain one and furnish one to
each of the Lenders.
10.9. ACCOUNTING; CURRENCY CONVERSIONS. Except as provided to the
contrary herein, all accounting terms used herein shall be interpreted and
all accounting determinations hereunder shall be made in accordance with
Agreement Accounting Principles; PROVIDED, HOWEVER, that (a) to the extent
that any change in GAAP shall alter the result of any financial covenant or
test or any other accounting determination to be computed or made hereunder,
TLGI and the Borrower agree that such covenant, test or other determination
shall continue to be computed or made on the basis of Agreement Accounting
Principles as in effect prior to such change in GAAP, unless the Required
Lenders shall otherwise consent and (b) the MIPS shall be deemed to
constitute capital stock of TLGI for purposes of this Agreement. To the
extent that for purposes of computing any financial covenant or test or
making any other accounting determination hereunder, any amount denominated
in one currency must be converted into another currency, such conversion
shall be made in a manner that accords with the currency conversion policies
and procedures used in preparing the financial statements of TLGI, the
Borrower and the other Subsidiaries on the basis of which the relevant
computations or determinations are or will be made, unless the Required
Lenders shall have specified an alternative basis for making such conversions.
10.10. SEVERABILITY OF PROVISIONS. Any provision in any Loan
Document that is held to be inoperative, unenforceable or invalid in any
jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable or
invalid without affecting the remaining provisions in that jurisdiction or
the operation, enforceability or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are
declared to be severable.
10.11. NONLIABILITY OF LENDERS. The relationship between the
Borrower, on the one hand, and the Lenders, the L/C Issuer and the Agent, on
the other hand, shall be solely that of borrower and lender and the
relationship between TLGI and the Subsidiaries (other than the Borrower), on
the one hand, and the Lenders, the L/C Issuer and the Agent, on the other
hand,
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shall be construed accordingly. None of the Agent, the L/C Issuer or any
Lender shall have any fiduciary responsibilities to TLGI, the Borrower or any
other Subsidiary. None of the Agent, the L/C Issuer or any Lender undertakes
any responsibility to TLGI, the Borrower or any other Subsidiary to review or
inform TLGI, the Borrower or any other Subsidiary of any matter in connection
with any phase of the business or operations of TLGI, the Borrower or any
other Subsidiary.
10.12. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE
CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, BUT GIVING EFFECT
TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
10.13. CONSENT TO JURISDICTION. EACH OF TLGI AND THE BORROWER
HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED
STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK CITY IN ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND EACH OF
TLGI AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND
IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE
OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH
COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE
AGENT, THE L/C ISSUER OR ANY LENDER TO BRING PROCEEDINGS AGAINST TLGI OR THE
BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY
TLGI OR THE BORROWER AGAINST THE AGENT, THE L/C ISSUER OR ANY LENDER OR ANY
AFFILIATE OF THE AGENT, THE L/C ISSUER OR ANY LENDER INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO OR CONNECTED
WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A FEDERAL OR STATE COURT
SITTING IN NEW YORK CITY.
EACH OF THE BORROWER AND TLGI HEREBY IRREVOCABLY APPOINTS THELEN,
MARRIN, JOHNSON & BRIDGES (THE "PROCESS AGENT"), WITH AN OFFICE ON THE DATE
HEREOF AT 330 MADISON AVENUE, 11TH FLOOR, NEW YORK, NEW YORK 10017, ATTENTION:
DAVID P. GRAYBEAL, ESQ., AS ITS AGENT TO RECEIVE ON BEHALF OF THE BORROWER OR
TLGI, AS APPLICABLE, AND ITS PROPERTY SERVICE OF COPIES OF THE SUMMONS AND
COMPLAINT AND ANY OTHER PROCESS WHICH MAY BE SERVED IN ANY SUCH ACTION OR
PROCEEDING. SUCH SERVICE MAY BE MADE BY MAILING OR DELIVERING A COPY OF SUCH
PROCESS TO THE BORROWER OR TLGI, AS APPLICABLE, IN CARE OF THE PROCESS AGENT AT
THE PROCESS AGENT'S ABOVE ADDRESS WITH A COPY TO THE BORROWER OR TLGI, AS
APPLICABLE, AT ITS ADDRESS FOR NOTICES
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HEREUNDER, AND THE BORROWER OR TLGI, AS APPLICABLE, HEREBY IRREVOCABLY
AUTHORIZES AND DIRECTS THE PROCESS AGENT TO ACCEPT SUCH SERVICE ON ITS
BEHALF. AS AN ALTERNATIVE METHOD OF SERVICE, EACH OF TLGI AND THE BORROWER
ALSO IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH
ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO ITS ADDRESS
FOR NOTICES HEREUNDER. EACH OF TLGI AND THE BORROWER AGREES THAT A FINAL
JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER
MANNER PROVIDED BY LAW.
10.14. WAIVER OF JURY TRIAL. TLGI, THE BORROWER, THE AGENT, THE
L/C ISSUER AND EACH LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL
PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO OR
CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.
10.15. CONFIDENTIALITY. Each of the Agent, each Lender and the
L/C Issuer agrees to hold any confidential information identified in writing
as such which it may receive from TLGI, the Borrower or any other Subsidiary
pursuant to this Agreement in confidence, except for disclosure (a) to other
Lenders, the L/C Issuer and the Agent and their respective Affiliates, (b) to
legal counsel, accountants and other professional advisors to the Agent, the
L/C Issuer or that Lender or to a Transferee, (c) to regulatory officials and
examiners, (d) to any Person as requested pursuant to or as required by law,
regulation or legal process, (e) to any Person in connection with any legal
proceeding to which the Agent, the L/C Issuer or that Lender is a party, and
(f) permitted by SECTION 13.4.
10.16. JUDGMENT CURRENCY. If the Agent, the L/C Issuer or any
Lender receives an amount in respect of the Borrower's or TLGI's liability
under the Loan Documents or if that liability is converted into a claim,
proof, judgment or order in a currency other than the currency (the
"contractual currency") in which the amount is expressed to be payable under
the relevant Loan Document, (a) TLGI and the Borrower, as applicable, shall
indemnify the Agent, the L/C Issuer or such Lender, as applicable, as an
independent obligation against any loss, cost, expense or liability arising
out of or as a result of the conversion; (b) if the amount received by the
Agent, the L/C Issuer or such Lender, as applicable, when converted into the
contractual currency at a market rate on the date of receipt by the Agent,
the L/C Issuer or such Lender in the usual course of its business, is less
than the amount owed in the contractual currency, the Borrower or TLGI, as
applicable, shall forthwith on demand pay to the Agent, the L/C Issuer or
such Lender, as applicable, an amount in the contractual currency equal to
the deficit; and (c) TLGI or the Borrower, as applicable, shall pay to the
Agent, the L/C Issuer or such Lender, as applicable, on demand any exchange
costs and taxes payable in connection with any such conversion. Each of the
Borrower and TLGI waives any right it may have in any jurisdiction to the
extent permitted
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by law to pay any amount under the Loan Documents in a currency other than
that in which it is expressed to be payable.
10.17. CANADIAN INTEREST ANTIDOTES. (a) Notwithstanding any
other provision of this Agreement, if and to the extent that the laws of
Canada are applicable to interest payable under this Agreement, no interest
on the credit advanced will be payable in excess of that permitted by the
laws of Canada. If the effective annual rate of interest, calculated in
accordance with generally accepted actuarial practices and principles, would
exceed 60% (or such other rate as the Parliament of Canada may determine from
time to time as the criminal rate) on the credit advanced, then: (i) the
amount of any charges for the use of money, expenses, fees, bonuses,
commissions or other charges payable in connection therewith will be reduced
to the extent necessary to eliminate such excess; (ii) any remaining excess
that has been paid will be credited towards repayment of the principal
amount; and (iii) any overpayment that may remain after such crediting will
be returned forthwith on demand. In this paragraph the terms "interest,"
"criminal rate" and "credit advanced" have the meaning ascribed to them in
Section 347 of the Criminal Code (Canada).
(b) If and to the extent that the laws of Canada are applicable
to interest payable under this Agreement, for the purpose of the Interest Act
(Canada) the yearly rate of interest to which interest calculated on the
basis of a 360- or 365-day year is equivalent is the rate of interest
determined as herein provided multiplied by the number of days in such year
and divided by 360 or 365, as the case may be.
10.18. COUNTERPARTS; EFFECTIVENESS. This Agreement may be
executed in any number of counterparts, all of which taken together shall
constitute one agreement, and any of the parties hereto may execute this
Agreement by signing any such counterpart. This Agreement shall become
effective on the Effective Date.
ARTICLE XI
THE AGENT AND THE DOCUMENTATION AGENT
11.1. APPOINTMENT. Bank of Montreal is hereby appointed Agent
hereunder and under each other Loan Document, and each of the Lenders
irrevocably authorizes the Agent to act as the agent of such Lender. The
Agent agrees to act as such upon the express conditions contained in this
ARTICLE XI. The Agent shall not have a fiduciary relationship in respect of
TLGI, the Borrower, any other Subsidiary or any Lender by reason of this
Agreement.
11.2. POWERS. The Agent shall have and may exercise such powers
under the Loan Documents as are specifically delegated to the Agent by the
terms of each thereof, together with such powers as are reasonably incidental
thereto. The Agent shall have no implied duties to the Lenders, or any
obligation to the Lenders to take any action thereunder except any action
specifically provided by the Loan Documents to be taken by the Agent.
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11.3. GENERAL IMMUNITY. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to any or all of TLGI, the
Borrower, any other Subsidiary, the Lenders or the L/C Issuer for any action
taken or omitted to be taken by it or them hereunder or under any other Loan
Document or in connection herewith or therewith except for its or their own
gross negligence or willful misconduct.
11.4. NO RESPONSIBILITY FOR REVOLVING LOANS, SWING LINE LOANS,
RECITALS, ETC. Neither the Agent nor any of its directors, officers, agents or
employees shall be responsible for or have any duty to ascertain, inquire into,
or verify (a) any statement, warranty or representation made in connection with
any Loan Document or any extension of credit hereunder; (b) the performance or
observance of any of the covenants or agreements of any obligor under any Loan
Document, including, without limitation, any agreement by an obligor to furnish
information directly to each Lender; (c) the satisfaction of any condition
specified in ARTICLE IV, except receipt of items required to be delivered to the
Agent; or (d) the validity, effectiveness or genuineness of any Loan Document or
any other instrument or writing furnished in connection therewith. The Agent
shall have no duty to disclose to the Lenders or the L/C Issuer information that
is not required to be furnished by TLGI or the Borrower to the Agent at such
time, but is voluntarily furnished by TLGI or the Borrower to the Agent (either
in its capacity as Agent or in its individual capacity).
11.5. ACTION ON INSTRUCTIONS OF LENDERS. The Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder and
under any other Loan Document in accordance with written instructions signed by
the Required Lenders or, in the case of any act or failure to act calculated to
give rise to any of the events or circumstances described in CLAUSES (a) through
(f) of SECTION 9.2, each affected Lender, and such instructions and any action
taken or failure to act pursuant thereto shall be binding on all of the Lenders
and on all holders of Revolving Loans and participations in Swing Line Loans,
Reimbursement Obligations and Letters of Credit. The Agent shall be fully
justified in failing or refusing to take any action hereunder and under any
other Loan Document unless it shall first be indemnified to its satisfaction by
the Lenders PRO RATA against any and all liability, cost and expense that it may
incur by reason of taking or continuing to take any such action.
11.6. EMPLOYMENT OF AGENTS AND COUNSEL. The Agent may execute any
of its duties as Agent hereunder and under any other Loan Document by or
through employees, agents and attorneys-in-fact and shall not be answerable
to the Lenders or the L/C Issuer, except as to money or securities received
by it or its authorized agents, for the default or misconduct of any such
agents or attorneys-in-fact selected by it with reasonable care. The Agent
shall be entitled to advice of counsel concerning all matters pertaining to
the agency hereby created and its duties hereunder and under any other Loan
Document.
11.7. RELIANCE ON DOCUMENTS; COUNSEL. The Agent shall be entitled
to rely upon any record, notice, consent, certificate, affidavit, letter,
telegram, statement, paper or document believed by it to be genuine and
correct and to have been signed or sent by the proper
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person or persons and, with respect to legal matters, upon the opinion of
counsel selected by the Agent, which counsel may be employees of the Agent.
11.8. AGENT'S REIMBURSEMENT AND INDEMNIFICATION. The Lenders agree
to reimburse and indemnify the Agent ratably in proportion to their respective
Commitments (a) for any amounts not reimbursed by the Borrower for which the
Agent is entitled to reimbursement by the Borrower under the Loan Documents, (b)
for any other expenses incurred by the Agent on behalf of the Lenders, in
connection with the preparation, execution, delivery, administration and
enforcement of the Loan Documents to the extent not otherwise reimbursed by the
Borrower and (c) for any liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind and
nature whatsoever which may be imposed on, incurred by or asserted against the
Agent in any way relating to or arising out of the Loan Documents or any other
document delivered in connection therewith or the transactions contemplated
thereby, or the enforcement of any of the terms thereof or of any such other
documents, PROVIDED that no Lender shall be liable for any of the foregoing to
the extent they arise from the gross negligence or willful misconduct of the
Agent. The obligations of the Lenders under this SECTION 11.8 shall survive
payment of the Obligations and termination of this Agreement.
11.9. RIGHTS AS A LENDER. In the event the Agent or the
Documentation Agent is a Lender, the Agent and the Documentation Agent shall
each have the same rights and powers hereunder and under any other Loan Document
as any Lender and may exercise the same as though it were not the Agent or the
Documentation Agent, respectively, and the term "Lender" or "Lenders" shall, at
any time when the Agent or the Documentation Agent is a Lender, unless the
context otherwise indicates, include the Agent or the Documentation Agent in its
individual capacity. The Agent and the Documentation Agent may accept deposits
from, lend money to, and generally engage in any kind of trust, debt, equity or
other transaction, in addition to those contemplated by this Agreement or any
other Loan Document, with TLGI, the Borrower or any other Subsidiary in which
TLGI, the Borrower or any such other Subsidiary is not restricted hereby from
engaging with any other Person.
11.10. LENDERS' CREDIT DECISIONS. Each Lender acknowledges that it
has, independently and without reliance upon the Agent, the Documentation Agent
or any other Lender and based on the financial statements prepared by TLGI and
the Borrower and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement and the other Loan Documents. Each Lender also acknowledges that it
will, independently and without reliance upon the Agent, the Documentation Agent
or any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement and the other Loan Documents.
11.11. SUCCESSOR AGENT. The Agent may resign at any time by giving
written notice thereof to the Lenders, the L/C Issuer and the Borrower, such
resignation to be effective
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upon the appointment of a successor Agent or, if no successor Agent has been
appointed, 45 days after the resigning Agent gives notice of its intention to
resign. The Agent shall so resign if at any time it ceases to be a Lender.
Upon any such resignation the Required Lenders shall have the right to
appoint, on behalf of the Lenders, a successor Agent. If no successor Agent
shall have been so appointed by the Required Lenders within 30 days after the
resigning Agent's giving notice of its intention to resign, then the
resigning Agent may appoint, on behalf of the Lenders, a successor Agent. If
the Agent has resigned and no successor Agent has been appointed, the Lenders
may perform all the duties of the Agent hereunder and the Borrower shall make
all payments in respect of the Obligations to the applicable Lender (except for
payments required to be made directly to the L/C Issuer) and for all other
purposes shall deal directly with the Lenders and the L/C Issuer. No successor
Agent shall be deemed to be appointed hereunder until such successor Agent has
accepted the appointment. Any such successor Agent shall be a commercial bank
having capital and retained earnings of at least $500,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the resigning Agent. Upon the
effectiveness of the resignation of the Agent, the resigning Agent shall be
discharged from its duties and obligations hereunder and under the Loan
Documents. After the effectiveness of the resignation of an Agent, the
provisions of this ARTICLE XI shall continue in effect for the benefit of such
Agent in respect of any actions taken or omitted to be taken by it while it was
acting as the Agent hereunder and under the other Loan Documents.
11.12. AGENT'S FEE. The Borrower agrees to pay to the Agent, for
its own account, the fees agreed to by the Borrower and the Agent pursuant to
that certain letter agreement dated as of May 15, 1996, or as otherwise agreed
from time to time.
11.13. DOCUMENTATION AGENT. The Documentation Agent shall have no
rights, duties, liabilities or obligations under or in connection with this
Agreement except for such rights as are expressly granted to it in this
Agreement, including in SECTION 10.7, and the Documentation Agent shall not have
any fiduciary relationship in respect of TLGI, the Borrower, any other
Subsidiary or any Lender by reason of this Agreement.
ARTICLE XII
SETOFF; RATABLE PAYMENTS
12.1. SETOFF. In addition to, and without limitation of, any rights
of the Lenders and the L/C Issuer under applicable law, if TLGI or the Borrower
becomes insolvent, however evidenced, or any Default occurs, any and all
deposits (including all account balances, whether provisional or final and
whether or not collected or available) and any other Indebtedness at any time
held or owing by any Lender or the L/C Issuer to or for the credit or account of
TLGI or the Borrower may be offset and applied toward the payment of the
Obligations owing to such Lender or the L/C Issuer, whether or not the
Obligations, or any part hereof, shall then be due.
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12.2. RATABLE PAYMENTS. If any Lender, whether by setoff or
otherwise, has payment made to it upon its Facility A Revolving Loans or its
Facility B Revolving Loans or its participation in Swing Line Loans,
Reimbursement Obligations or Letters of Credit (other than payments received
pursuant to SECTION 3.1, 3.2 or 3.4) in a greater proportion than that received
by any other Lender, such Lender agrees, promptly upon demand, to purchase a
portion of the Facility A Revolving Loans and the Facility B Revolving Loans and
the participations in Swing Line Loans, Reimbursement Obligations and Letters of
Credit held by the other Lenders so that after such purchase each Lender will
hold its ratable proportion of Facility A Revolving Loans and Facility B
Revolving Loans and its ratable participation in Swing Line Loans, Reimbursement
Obligations and Letters of Credit. If any Lender, whether in connection with
setoff or amounts which might be subject to setoff or otherwise, receives
collateral or other protection for its Obligations or such amounts which may be
subject to setoff, such Lender agrees, promptly upon demand, to take such action
necessary such that all Lenders share in the benefits of such collateral ratably
in proportion to their Facility A Revolving Loans, Facility B Revolving Loans,
L/C Interest and Swing Line Interest. In case any such payment is disturbed by
legal process, or otherwise, appropriate further adjustments shall be made.
ARTICLE XIII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
13.1. SUCCESSORS AND ASSIGNS. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of TLGI, the Borrower,
the Agent, the Documentation Agent, the Collateral Agent, the L/C Issuer and the
Lenders and their respective successors and assigns, except that (a) neither
TLGI nor the Borrower shall have the right to assign its rights or obligations
under the Loan Documents and (b) any assignment by any Lender (including the
Swing Line Lender) must be made in compliance with SECTION 13.3.
Notwithstanding CLAUSE (b) of the preceding sentence, any Lender may at any
time, without the consent of TLGI, the Borrower, the Agent, the Collateral Agent
or the L/C Issuer, assign all or any portion of its rights under this Agreement
to a Federal Reserve Bank; PROVIDED, HOWEVER, that no such assignment to a
Federal Reserve Bank shall release the transferor Lender from its obligations
hereunder. In order to facilitate such assignment, the Borrower hereby agrees
that, upon request of any Lender at any time and from time to time after the
Borrower has made its initial borrowing hereunder, the Borrower shall provide to
such Lender, at the Borrower's own expense, a promissory note, substantially in
the form of EXHIBITS A-1 and A-2 hereto, evidencing the Facility A Revolving
Loans and the Facility B Revolving Loans, respectively, owing to such Lender.
The Agent may treat the payee of any Revolving Loan as the owner thereof for all
purposes hereof unless and until such payee complies with SECTION 13.3 in the
case of an assignment thereof or, in the case of any other transfer, a written
notice of the transfer is filed with the Agent. Any assignee or transferee of a
Revolving Loan, a Swing Line Loan, a participation in a Swing Line Loan, a
participation in a Letter of Credit or a participation in a Reimbursement
Obligation agrees by acceptance thereof to be bound by all the terms and
provisions of the Loan Documents, and any request, authority or consent of any
Person, who at
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the time of making such request or giving such authority or consent is the
holder of any Revolving Loan, Swing Line Loan, participation in a Swing Line
Loan, participation in a Letter of Credit or participation in a Reimbursement
Obligation, shall be conclusive and binding on any subsequent holder,
transferee or assignee of such Revolving Loan, Swing Line Loan, participation
in a Swing Line Loan, participation in a Letter of Credit or participation in
a Reimbursement Obligation.
13.2. PARTICIPATIONS.
13.2.1 PERMITTED PARTICIPATIONS; EFFECT. Any Lender may, in
the ordinary course of its business and in accordance with applicable
law, at any time sell to one or more banks or other entities (each
such bank or other entity being referred to herein as a "PARTICIPANT")
participating interests in any Revolving Loan owing to such Lender,
any Swing Line Interest or L/C Interest held by such Lender, the
Commitment of such Lender or any other interest of such Lender under
the Loan Documents; PROVIDED, HOWEVER, that no Lender shall grant a
participating interest to any entity which is engaged in any business
which is competitive in any material respect with the business of
TLGI, the Borrower or any of the Subsidiaries of TLGI. In the event
of any such sale by a Lender of participating interests to a
Participant, such Lender's obligations under the Loan Documents shall
remain unchanged, such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, such
Lender shall remain the holder of any such Revolving Loan, Swing Line
Interest or L/C Interest for all purposes under the Loan Documents,
all amounts payable by the Borrower under this Agreement shall be
determined as if such Lender had not sold such participating interests
and TLGI, the Borrower, the L/C Issuer and the Agent shall continue to
deal solely and directly with such Lender in connection with such
Lender's rights and obligations under the Loan Documents. The
participation agreement effecting the sale of any participating
interest shall contain a representation by the Participant to the
effect that none of the consideration used to make the purchase of the
participating interest in the Commitment, Revolving Loans, the Swing
Line Loans, the Swing Line Interests and the L/C Interests under such
participation agreement are "plan assets" as defined under ERISA and
that the rights and interests of the Participant in and under the Loan
Documents will not be "plan assets" under ERISA.
13.2.2 VOTING RIGHTS. Each Lender shall retain the sole right
to approve, without the consent of any Participant, any amendment,
modification or waiver of any provision of the Loan Documents other
than any amendment, modification or waiver with respect to any
Revolving Loan, Swing Line Loan, Swing Line Interest, L/C Interest or
Commitment in which such Participant has an interest which forgives
principal, interest or fees or reduces the interest rate or fees
payable with respect to any such Revolving Loan, Swing Line Loan,
Swing
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Line Interest, L/C Interest or Commitment, or postpones any date
fixed for any regularly scheduled payment of principal of, or interest
or fees on, any such Revolving Loan, Swing Line Loan, Swing Line
Interest, L/C Interest or Commitment.
13.2.3 SETOFF. Each Lender's right to exercise its right of
setoff provided in SECTION 12.1 shall not be reduced or impaired by
any grant by such Lender of a participating interest to a Participant.
13.3. ASSIGNMENTS.
13.3.1 PERMITTED ASSIGNMENTS. (a) Any Lender may, in the
ordinary course of its business and in accordance with applicable law,
at any time assign to one or more banks or other entities
("PURCHASERS") all or any part of its Commitment and outstanding
Revolving Loans, Swing Line Interests and L/C Interests, together with
its rights and obligations under the Loan Documents with respect
thereto; PROVIDED, HOWEVER, that (i) each such assignment shall be of
a constant, and not a varying, percentage of all of the assigning
Lender's rights and obligations so assigned; (ii) any such assignment
by such Lender of its Facility A Revolving Loans, Facility A
Commitment, Swing Line Interest or L/C Interest shall include a PRO
rata assignment of such Lender's Facility B Revolving Loans and
Facility B Commitment, and any such assignment by such Lender of its
Facility B Revolving Loans or Facility B Commitment shall include a
PRO RATA assignment of such Lender's Facility A Revolving Loans,
Facility A Commitment, Swing Line Interest and L/C Interest; (iii) the
amount of the Commitment of the assigning Lender being assigned
pursuant to each such assignment (determined as of the date of such
assignment) may be in the amount of such Lender's entire Commitment
but otherwise shall not be less than $5,000,000 or an integral
multiple of $1,000,000 in excess of that amount; and (iv)
notwithstanding the foregoing CLAUSE (iii), (x) if the assignment is
made to a Lender or an Affiliate of the assigning Lender, the amount
of the Commitment assigned shall not be less than $1,000,000 and (y)
if the assignment is made pursuant to SECTION 2.18(a)(ii), the
Commitment assigned may be in the amount of the relevant Non-
Consenting Lender's entire remaining Commitment after giving effect to
all assignments pursuant to SECTION 2.18(a)(i). Such assignment shall
be substantially in the form of EXHIBIT D hereto or in such other form
as may be agreed to by the parties thereto. The consent of TLGI, the
Borrower, the L/C Issuer and the Agent shall be required prior to an
assignment becoming effective with respect to a Purchaser which is not
a Lender; PROVIDED, HOWEVER, that if a Default has occurred and is
continuing, the consent of neither TLGI nor the Borrower shall be
required. Such consents shall not be unreasonably withheld.
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(b) The Swing Line Lender may, in accordance with applicable
law, at any time assign to a single Purchaser all (but not less than
all) of the Swing Line Commitment and the outstanding Swing Line
Loans, together with the rights and obligations of the Swing Line
Lender under the Loan Documents with respect thereto; PROVIDED,
HOWEVER, that the consent of the Agent, the Required Lenders and the
Borrower shall be required prior to such assignment becoming
effective. Such assignment shall be in such form as the Agent, the
Borrower and the Swing Line Lender shall agree. Such assignment shall
become effective on the date agreed to by the Agent and the Swing Line
Lender. Any such assignment pursuant to this SECTION 13.3.1(b) shall
be a "SWING LINE ASSIGNMENT". All provisions of SECTION 13.3.2 shall
be applicable to any Swing Line Assignment, except for the first two
sentences thereof, and except that each reference therein to
"assignment", "Lender", "Commitment" and "Revolving Loans" shall be
deemed to be references to the Swing Line Assignment, Swing Line
Lender, Swing Line Commitment and Swing Line Loans, respectively.
13.3.2 EFFECT; EFFECTIVE DATE OF ASSIGNMENTS. Solely with
respect to assignments under SECTION 13.3.1(a), upon (a) delivery to
the Agent of a notice of assignment, substantially in the form
attached to EXHIBIT D hereto (a "NOTICE OF ASSIGNMENT"), together with
any consents required by SECTION 13.1, and (b) payment of a $3,500 fee
to the Agent for processing such assignment, such assignment shall
become effective on the date for effectiveness specified in such
Notice of Assignment. If any such assignment is made as contemplated
by the terms of SECTION 2.18 or SECTION 3.5 at the request of the
Borrower, or is otherwise made at the request of the Borrower, the
$3,500 fee shall be paid by the Borrower. The Notice of Assignment
shall contain a representation by the Purchaser to the effect that
none of the consideration used to make the purchase of the Commitment,
Revolving Loans, Swing Line Interest and L/C Interest under the
applicable assignment agreement are "plan assets" as defined under
ERISA and that the rights and interests of the Purchaser in and under
the Loan Documents will not be "plan assets" under ERISA. On and
after the date such assignment becomes effective, such Purchaser shall
for all purposes be a Lender party to this Agreement and any other
Loan Document executed by or on behalf of the Lenders and shall have
all the rights and obligations of a Lender under the Loan Documents,
to the same extent as if it were an original party hereto and thereto,
and the transferor Lender shall be released with respect to the
percentage of the Aggregate Commitment, Revolving Loans, Swing Line
Interest and L/C Interest assigned to such Purchaser without any
further consent or action by TLGI, the Borrower, the Lenders, the L/C
Issuer or the Agent being required. Upon the consummation of any
assignment to a Purchaser pursuant to this SECTION 13.3.2, the
transferor Lender, the Agent and the Borrower shall make appropriate
notations in their respective records to reflect the principal amounts
of the Commitments of the transferor Lender and the Purchaser, as
adjusted pursuant to
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such assignment. In connection with the foregoing, the Agent shall
maintain at its address referred to in SECTION 14.1 a copy of each
Notice of Assignment delivered to it and a register (the "REGISTER")
for the recordation of the names and addresses of the Lenders, the
Commitments of such Lenders, the principal amount of each Type of
Revolving Loan owing to each such Lender from time to time and the
principal amount of each Swing Line Loan owing to the Swing Line
Lender from time to time. The entries in the Register shall be
conclusive, in the absence of clearly demonstrable error, and TLGI,
the Borrower, the Agent and the Lenders may treat each Person whose
name is recorded in the Register as the owner of the Revolving
Loans and the Swing Line Loans recorded therein for all purposes of
this Agreement. The Register shall be available for inspection by
TLGI, the Borrower, or any Lender at any reasonable time and from
time to time upon reasonable prior notice. The Agent shall give
prompt written notice to the Borrower of the making of any entry
in the Register or any change in any such entry.
13.4. DISSEMINATION OF INFORMATION. Each of TLGI and the Borrower
authorizes each Lender to disclose to any Participant or Purchaser or any other
Person acquiring an interest in the Loan Documents by operation of law (each a
"TRANSFEREE") and any prospective Transferee any and all information in such
Lender's possession concerning the creditworthiness of TLGI and the Borrower and
the other Subsidiaries; provided that each Transferee and prospective Transferee
agrees to be bound by SECTION 10.15.
13.5. TAX TREATMENT. If any interest in any Loan Document is
transferred to any Transferee which is organized under the laws of any
jurisdiction other than the United States or any State thereof, the transferor
Lender shall cause such Transferee, concurrently with the effectiveness of such
transfer, to comply with the provisions of SECTION 2.17.
ARTICLE XIV
NOTICES
14.1. GIVING NOTICE. Except as otherwise permitted by SECTION
2.13(d) with respect to Revolving Loans and SECTION 2.27(d) with respect to
Swing Line Loans, all notices and other communications provided to any party
hereto under this Agreement or any other Loan Document shall be in writing or by
telex or by facsimile and addressed or delivered to such party at its address
set forth below its signature hereto or at such other address as may be
designated by such party in a notice to the other parties. Any notice, if
mailed and properly addressed with postage prepaid, shall be deemed given when
received; any notice, if transmitted by telex or facsimile, shall be deemed
given when transmitted (answerback confirmed in the case of telexes).
14.2. CHANGE OF ADDRESS. The Borrower, TLGI, the Agent, the L/C
Issuer and any Lender may each change the address for service of notice upon it
by a notice in writing to the
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other parties hereto.
ARTICLE XV
COLLATERAL TRUST AGREEMENT
15.1. APPOINTMENT OF SECURED PARTY REPRESENTATIVE. Each Lender
hereby irrevocably appoints the Agent as its Secured Party Representative under
(and as defined in) the Collateral Trust Agreement to serve for so long as the
Agent shall be the Agent hereunder.
15.2. APPOINTMENT OF ENFORCEMENT REPRESENTATIVES. Whenever the
Lenders shall be entitled to vote on the selection of one or more Enforcement
Representatives under (and as defined in) the Collateral Trust Agreement, the
Agent shall cast on behalf of all of the Lenders all of the votes to which the
Lenders are entitled for (x) such natural person as the Agent shall select (who
may be, but need not be, an employee or officer of the Agent), and (y) such
other natural persons, if any, as shall have been selected by a vote of the
Required Lenders; provided that by a vote of the Required Lenders any such
Enforcement Representative (including the Enforcement Representative selected by
the Agent) may be replaced.
15.3. ACTIONS OF LENDERS. Any actions, including votes, to be taken
by the Lenders under the terms of the Collateral Trust Agreement (whether in
respect of releases of collateral, enforcement actions, amendments, waivers or
otherwise) shall in all respects be subject to the terms of this Agreement
(including, without limitation, SECTION 9.2).
ARTICLE XVI
AMENDMENT AND RESTATEMENT
16.1. AMENDMENT AND RESTATEMENT. On the date that all of the
conditions precedent to the effectiveness of this Agreement have been satisfied
(the "RESTATEMENT EFFECTIVE DATE") (i) the full principal balance of all of the
Revolving Loans (as defined in the Original Agreement) outstanding under the
Original Agreement on such date (the "PRIOR LOANS") shall be converted into and
continued as Facility A Revolving Loans hereunder; (ii) all Letters of Credit
(as defined in the Original Agreement) issued and outstanding under the Original
Agreement shall remain issued and outstanding in accordance with their
respective terms and all L/C Obligations (as defined in the Original Agreement)
whenever arising in connection therewith (the "PRIOR L/C OBLIGATIONS") shall
become L/C Obligations hereunder and all L/C Interests (as defined in the
Original Agreement) outstanding on such date in connection therewith shall be
converted into and continued as L/C Interests hereunder; (iii) the full
principal balance of all Swing Line Loans (as defined in the Original Agreement)
outstanding under the Original Agreement on such date (the "PRIOR SWING LINE
LOANS") shall be converted into and continued as Swing Line Loans hereunder and
all Swing Line Interests (as defined in the Original Agreement) outstanding on
such date in connection therewith shall be converted into and continued as Swing
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Line Interests hereunder; and (iv) all fees and other obligations of the
Borrower which shall have accrued but which shall remain unpaid on the
Restatement Effective Date (the "ACCRUED FEES") shall be converted into and
continued as obligations of the Borrower hereunder. The Prior Loans, Prior L/C
Obligations, Prior Swing Line Loans and Accrued Fees outstanding on the
Restatement Effective Date shall not be deemed to have been repaid as a result
of this amendment and restatement or the operation of this ARTICLE XVI. The
parties hereto agree that this Agreement shall not be deemed to be a novation of
the Obligations (as defined in the Original Agreement) or any other obligations
of the Borrower, TLGI or any other Guarantor arising under the Original
Agreement or the other Loan Documents (as defined in the Original Agreement).
Each Lender which has received a note or notes evidencing the Prior Loans made
by such Lender agrees to return to the Borrower such note or notes marked
"replaced and superseded," which note or notes, but only upon the express
request of such Lender, shall be replaced by a promissory note substantially in
the form of EXHIBIT A-1 hereto issued on the terms and conditions set forth in
this Agreement. On the Restatement Effective Date, to the extent necessary to
properly reflect the Commitments of the Lenders and the interest rates, fees and
other charges applicable to the Advances and the other Obligations, the Agent
shall cause some or all of the Lenders to purchase or sell Facility A Revolving
Loans, L/C Interests and/or Swing Line Interests from one or more other Lenders
(which purchases and sales shall be deemed to have occurred concurrently with
the execution and delivery of this Agreement by all such purchasing and selling
Lenders, without any further action or evidence thereof), and the Agent shall
reset interest rates and assess charges for the costs and expenses of the type
described in ARTICLE III to the extent necessary to permit such purchases and
sales of Facility A Revolving Loans, L/C Interests and/or Swing Line Interests,
and the Agent shall assess whatever other amounts may be due from the Borrower
in connection with the foregoing (which resets of rates and assessments shall
become effective upon the giving by the Agent of notice thereof, without any
further action or evidence thereof).
16.2. DEPARTING LENDERS. Upon the Restatement Effective Date, each
of the Lenders (as defined in the Original Agreement) identified on SCHEDULE 7
shall cease to be a "Lender" under and for all purposes of the Original
Agreement as amended and restated by this Agreement and shall have no further
rights or obligations thereunder, except for (i) the right to receive payment on
the Restatement Effective Date of all principal, accrued interest, accrued fees
and other amounts then payable to it under the Original Agreement, and (ii)
rights which by the terms of the Original Agreement expressly survive the
termination thereof.
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IN WITNESS WHEREOF, the Borrower, TLGI, the Lenders, the L/C Issuer
and the Agent have executed this Agreement as of the date first above written.
LOEWEN GROUP INTERNATIONAL, INC.
By:___________________________________________
Print Name: Paul Wagler
Title: Senior Vice President, Finance
and Chief Financial Officer
Address:
Loewen Group International, Inc.
3190 Tremont Avenue
Philadelphia, Pennsylvania 19053-6693
U.S.A.
Attention: Senior Vice President, Finance
and Chief Financial Officer
Facsimile No.: (215) 396-3630
with a copy to:
The Loewen Group Inc.
4126 Norland Avenue
Burnaby, British Columbia V5G 3S8
Canada
Attention: Vice President, Finance
Facsimile No.: (604) 473-7305
THE LOEWEN GROUP INC.
By:___________________________________________
Print Name: Paul Wagler
Title: Senior Vice President, Finance
and Chief Financial Officer
Address:
The Loewen Group Inc.
4126 Norland Avenue
Burnaby, British Columbia V5G 3S8
Canada
Attention: Senior Vice President, Finance
and Chief Financial Officer
S-1
<PAGE>
Facsimile No.: (604) 473-7330
BANK OF MONTREAL, as L/C Issuer, Swing Line
Lender and Administrative and Syndication
Agent
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
Address:
115 South LaSalle Street
12th Floor
Chicago, Illinois 60603
Attention: Michael D. Pincus
Facsimile No.: (312) 750-6057
GOLDMAN SACHS CREDIT PARTNERS L.P., as
Documentation Agent
By:___________________________________________
Print Name: Stephen B. King
Title: Authorized Signatory
Address:
85 Broad Street
New York, New York 10004
Attention: Stephen B. King
Facsimile No.: (212) 902-2417
S-2
<PAGE>
LENDERS
ALLIED IRISH BANKS, P.L.C., CAYMAN ISLANDS
BRANCH
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
Address:
405 Park Avenue
New York, New York 10022
Facsimile: (212) 339-8007
BANK BRUSSELS LAMBERT, NEW YORK BRANCH
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
Address:
630 Fifth Avenue
New York, New York 10111
Facsimile: (212) 333-5786
S-3
<PAGE>
BANKERS TRUST COMPANY
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
Address:
One Bankers Trust Plaza
130 Liberty Street
34th Floor, Mail Stop 2344
New York, New York 10006
Facsimile: (212) 250-7218
with a copy to:
Attention: Loan Portfolio
Royal Bank Plaza, North Tower
Suite 1700, 200 Bay Street
Toronto, Ontario M5J 2J2
Facsimile: (416) 865-0148
BANK ONE, NA
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
Address:
8044 Montgomery Road
Suite 350
Cincinnati, Ohio 45236
Facsimile: (513) 985-5030
S-4
<PAGE>
BANK OF HAWAII
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
Address:
1850 North Central Avenue
Suite 400
Phoenix, Arizona 85004
Facsimile: (602) 257-2235
BANK OF MONTREAL
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
Address:
115 South LaSalle Street
11th Floor
Chicago, Illinois 60603
Facsimile: (312) 750-6057
THE BANK OF NEW YORK
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
Address:
10990 Wilshire Boulevard
Suite 1125
Los Angeles, California 90024
Facsimile: (310) 996-8667
S-5
<PAGE>
BANK OF TOKYO-MITSUBISHI, LTD.
CHICAGO BRANCH
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
Address:
227 West Monroe
Suite 2300
Chicago, Illinois 60606
Facsimile: (312) 696-4535
with a copy to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Jeffrey Rothstein
Facsimile: (312) 853-7036
BANK POLSKA KASA OPIEKI, S.A.
PEKAO S.A. GROUP NEW YORK BRANCH
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
Address:
470 Park Avenue South
15th Floor
New York, New York 10016
Facsimile: (212) 679-5910
S-6
<PAGE>
CAISSE NATIONALE DE CREDIT AGRICOLE
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
Address:
55 East Monroe Street
Suite 4700
Chicago, Illinois 60603
Facsimile: (312) 372-3724
CIBC INC.
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
Address:
425 Lexington Avenue
8th Floor
New York, New York 10017
Facsimile: (212) 856-3761
CITIBANK CANADA
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
Address:
4210-400 3rd Avenue SW
Calgary AB Canada T2P442
S-7
<PAGE>
COMERICA BANK
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
Address:
500 Woodward Avenue
23rd Floor
Detroit, Michigan 48226
Facsimile: (313) 222-3377
CORESTATES BANK, N.A.
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
Address:
1339 Chestnut Street
FC 1-8-3-16
Philadelphia, Pennsylvania 19107
Facsimile: (215) 973-6745
THE DAI-ICHI KANGYO BANK, LIMITED
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
Address:
One World Trade Center
48th Floor
New York, New York 10048
Facsimile: (212) 488-8955
S-8
<PAGE>
DEUTSCHE BANK AG, NEW YORK BRANCH
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
Address:
31 West 52nd Street
New York, New York 10025
Attention: Stephan Wiedemann
Facsimile: (212) 474-8212
FIRST NATIONAL BANK OF COMMERCE
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
Address:
201 St. Charles Avenue
28th Floor
New Orleans, Los Angeles 70170
Facsimile: (504) 623-1864
FIRST HAWAIIAN BANK
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
Address:
999 Bishop Street
11th Floor
Honolulu, Hawaii 96813
Facsimile: (808) 525-6372
S-9
<PAGE>
THE FUJI BANK, LIMITED
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
Address:
225 West Wacker Drive
Suite 2000
Chicago, Illinois 60606
Facsimile: (312) 621-0539
GOLDMAN SACHS CREDIT PARTNERS L.P.
By:___________________________________________
Print Name: Stephen B. King
Title: Authorized Signatory
Address:
85 Broad Street
New York, New York 10004
Attention: Stephen King
Facsimile: (212) 902-2417
with a copy to:
Goldman Sachs Credit Partners L.P.
85 Broad Street
New York, New York 10004
Attention: Maureen Carpenter
Facsimile: (212) 357-4597
S-10
<PAGE>
HIBERNIA NATIONAL BANK
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
Address:
313 Carondelet Street
New Orleans, Louisiana 70130
Facsimile: (504) 533-5344
KREDIETBANK N.V.
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
Address:
550 South Hope Street
Suite 1775
Los Angeles, California 90071
Facsimile: (213) 629-5801
with a copy to:
Kredietbank N.V.
125 West 55th Street
10th Floor
New York, New York 10019
Attention: Michael V. Curran or
Diane M. Grimmin
Facsimile: (212) 956-5580
S-11
<PAGE>
MELLON BANK, N.A.
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
Address:
One Mellon Bank Center
500 Grant Street
Room 4502
Pittsburgh, Pennsylvania 15258
Facsimile: (412) 234-0110
with a copy to:
Mellon Bank Canada
77 King Street West
P.O. Box 320, Suite 3200
Royal Trust Tower
Toronto, Ontario M5K 1K2
CANADA
Attention: J.L. Cavanaugh
Facsimile: (416) 860-2409
THE MITSUBISHI TRUST AND BANKING CORPORATION,
CHICAGO BRANCH
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
Address:
311 South Wacker Drive
Suite 6300
Chicago, Illinois 60606
Facsimile: (312) 663-0863
S-12
<PAGE>
PT BANK NEGARA INDONESIA (PERSERO)
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
Address:
55 Broadway
5th Floor
New York, New York 10006
Facsimile: (212) 344-5723
COOPERATIVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A.
RABOBANK NEDERLAND
NEW YORK BRANCH
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
Address:
245 Park Avenue
New York, New York 10167
Facsimile:
with a copy to:
Cooperative Centrale Raiffeisen-
Boerenleenbank B.A.
Rabobank Nederland
300 South Wacker Drive, Suite 3500
Chicago, Illinois 60606
Attention: David Thompson, Vice President
Facsimile: (312) 408-8240
S-13
<PAGE>
REPUBLIC NATIONAL BANK OF
NEW YORK
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
Address:
452 Fifth Avenue, Tower 25
New York, New York 10018
Attention: Monisha Khadse
Facsimile: (212) 525-8370
with a copy to:
Republic National Bank of New York
452 Fifth Avenue, Tower 9
New York, New York 10018
Attention: Cheryl Gaskins
Facsimile: (212) 525-5736
ROYAL BANK OF CANADA
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
Address:
One North Franklin Street, Suite 700
Chicago, Illinois 60606
Facsimile: (312) 551-0805
S-14
<PAGE>
THE SAKURA BANK, LIMITED,
NEW YORK BRANCH
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
Address:
277 Park Avenue
45th Floor
New York, New York 10172
Facsimile: (212) 888-7651
THE SANWA BANK, LIMITED, ATLANTA AGENCY
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
Address:
Georgia-Pacific Center, Suite 4950
133 Peachtree Street, N.E.
Atlanta, Georgia 30303
Facsimile: (404) 589-1629
with a copy to:
The Sanwa Bank Canada
BCE Place, Canada Trust Tower
P.O. Box 525, Suite 4400
161 Bay Street
Toronto, Ontario M5J 2S1 CANADA
Attention: Ming Chang, Account Manager
Facsimile: (416) 366-8599
S-15
<PAGE>
THE SUMITOMO BANK LTD.
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
Address:
777 S. Figueroa St. #2600
Los Angeles, CA 90071
Facsimile: (213) 623-6832
with a copy to:
The Sumitomo Bank Ltd.
1201 Third Avenue
Suite 5320
Seattle, WA 98101
Attention: Bruce Kendrex, AVP
Facsimile: (206) 623-8551
THE TOYO TRUST & BANKING CO., LTD.
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
Address:
666 Fifth Avenue
33rd Floor
New York, New York 10103-3395
Facsimile: (212) 307-3498
S-16
<PAGE>
U.S. BANCORP
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
Address:
1420 Fifth Avenue-WWH 276
Seattle, Washington 98101
Facsimile: (206) 587-5259
UNION BANK OF SWITZERLAND, NEW YORK BRANCH
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
Address:
299 Park Avenue
New York, New York 10171
Facsimile: (212) 821-3878
with a copy to:
Union Bank of Switzerland
154 University Avenue
S-17
<PAGE>
Toronto, Ontario M5H 3Z4
Attention: Ruth Preston, Assistant
Vice President Structured Finance
Facsimile: (416) 343-1700
WACHOVIA BANK, N.A.
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
Address:
191 Peachtree Street
28th Floor
Atlanta, Georgia 30303
Facsimile: (404) 332-6898
WESTDEUTSCHE LANDESBANK GIROZENTRALE, NEW YORK
BRANCH
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
Address:
1211 Avenue of the Americas
New York, New York 10103
Facsimile: (212) 852-6148
S-18
<PAGE>
THE YASUDA TRUST AND BANKING CO. LTD., NEW YORK
BRANCH
By:___________________________________________
Print Name:___________________________________
Title:________________________________________
Address:
666 Fifth Avenue
Suite #801
New York, New York 10103
Facsimile: (212) 373-5796
<PAGE>
- -------------------------------------------------------------------------------
-------------
THE LOEWEN GROUP INC., as Issuer
LOEWEN GROUP INTERNATIONAL, INC., as Guarantor
and
THE TRUST COMPANY OF BANK OF MONTREAL, as Trustee
-------------
INDENTURE
Dated as of September 26, 1997
-------------
$500,000,000
Senior Guaranteed Notes
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
1.1 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 RULES OF CONSTRUCTION. . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE 2
THE SENIOR NOTES
2.1 ISSUANCE OF SENIOR NOTES . . . . . . . . . . . . . . . . . . . . . 11
2.2 EXECUTION AND AUTHENTICATION . . . . . . . . . . . . . . . . . . . 12
2.3 NOTEHOLDER LISTS . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.4 TRANSFER AND EXCHANGE. . . . . . . . . . . . . . . . . . . . . . . 12
2.5 REPLACEMENT NOTES. . . . . . . . . . . . . . . . . . . . . . . . . 13
2.6 OUTSTANDING SENIOR NOTES . . . . . . . . . . . . . . . . . . . . . 13
2.7 TREASURY NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.8 TEMPORARY NOTES. . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.9 CANCELLATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.10 DEFAULTED INTEREST . . . . . . . . . . . . . . . . . . . . . . . . 14
2.11 DEPOSIT OF MONEYS. . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 3
REDEMPTION OR PURCHASE OF SENIOR NOTES
3.1 NOTICES TO THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . 15
3.2 SELECTION OF SENIOR NOTES TO BE REDEEMED . . . . . . . . . . . . . 15
3.3 NOTICE OF REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . 15
3.4 EFFECT OF NOTICE OF REDEMPTION . . . . . . . . . . . . . . . . . . 16
3.5 DEPOSIT OF REDEMPTION PRICE. . . . . . . . . . . . . . . . . . . . 17
3.6 PURCHASE FOR CANCELLATION. . . . . . . . . . . . . . . . . . . . . 17
3.7 SENIOR NOTES REDEEMED OR PURCHASED IN PART . . . . . . . . . . . . 17
ARTICLE 4
COVENANTS
4.1 PAYMENT OF SENIOR NOTES. . . . . . . . . . . . . . . . . . . . . . 18
4.2 MAINTENANCE OF OFFICE OR AGENCY. . . . . . . . . . . . . . . . . . 18
4.3 CORPORATE EXISTENCE. . . . . . . . . . . . . . . . . . . . . . . . 19
4.4 PAYMENT OF TAXES AND OTHER CLAIMS. . . . . . . . . . . . . . . . . 19
4.5 MAINTENANCE OF PROPERTIES; INSURANCE; BOOKS AND RECORDS;
COMPLIANCE WITH LAW. . . . . . . . . . . . . . . . . . . . . . . . 19
Note: This table of contents shall not, for any purpose,
be deemed to be a part of the Indenture.
<PAGE>
- ii -
4.6 COMPLIANCE CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . 20
4.7 LIMITATION ON LIENS. . . . . . . . . . . . . . . . . . . . . . . . 21
4.8 LIMITATIONS ON SALE-LEASEBACK TRANSACTIONS . . . . . . . . . . . . 21
4.9 REPORTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.10 WAIVER OF STAY, EXTENSION OR USURY LAWS. . . . . . . . . . . . . . 22
ARTICLE 5
SUCCESSOR CORPORATION
5.1 WHEN TLGI MAY MERGE, ETC.. . . . . . . . . . . . . . . . . . . . . 22
5.2 SUCCESSOR SUBSTITUTED. . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE 6
REMEDIES
6.1 EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . 23
6.2 ACCELERATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.3 OTHER REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.4 WAIVER OF PAST DEFAULTS. . . . . . . . . . . . . . . . . . . . . . 26
6.5 CONTROL BY MAJORITY. . . . . . . . . . . . . . . . . . . . . . . . 27
6.6 LIMITATION ON SUITS. . . . . . . . . . . . . . . . . . . . . . . . 27
6.7 RIGHT OF HOLDERS TO RECEIVE PAYMENT. . . . . . . . . . . . . . . . 28
6.8 COLLECTION SUIT BY TRUSTEE . . . . . . . . . . . . . . . . . . . . 28
6.9 TRUSTEE MAY FILE PROOFS OF CLAIMS. . . . . . . . . . . . . . . . . 28
6.10 PRIORITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.11 UNDERTAKING FOR COSTS. . . . . . . . . . . . . . . . . . . . . . . 29
6.12 RESTORATION OF RIGHTS AND REMEDIES . . . . . . . . . . . . . . . . 29
ARTICLE 7
TRUSTEE
7.1 DUTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.2 RIGHTS OF TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . 30
7.3 INDIVIDUAL RIGHTS OF TRUSTEE . . . . . . . . . . . . . . . . . . . 31
7.4 TRUSTEE'S DISCLAIMER . . . . . . . . . . . . . . . . . . . . . . . 31
7.5 NOTICE OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . 32
7.6 MONEY HELD IN TRUST. . . . . . . . . . . . . . . . . . . . . . . . 32
7.7 COMPENSATION AND INDEMNITY . . . . . . . . . . . . . . . . . . . . 32
7.8 REPLACEMENT OF TRUSTEES. . . . . . . . . . . . . . . . . . . . . . 33
7.9 SUCCESSOR TRUSTEE BY MERGER, ETC.. . . . . . . . . . . . . . . . . 34
7.10 ELIGIBILITY; DISQUALIFICATION. . . . . . . . . . . . . . . . . . . 34
ARTICLE 8
Note: This table of contents shall not, for any purpose,
be deemed to be a part of the Indenture.
<PAGE>
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SATISFACTION AND DISCHARGE OF INDENTURE
8.1 TERMINATION OF THE OBLIGATIONS OF TLGI AND THE GUARANTOR . . . . . 34
8.2 LEGAL DEFEASANCE AND COVENANT DEFEASANCE . . . . . . . . . . . . . 35
8.3 APPLICATION OF TRUST MONEY . . . . . . . . . . . . . . . . . . . . 39
8.4 REPAYMENT TO TLGI OR GUARANTOR . . . . . . . . . . . . . . . . . . 39
8.5 REINSTATEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE 9
AMENDMENTS, SUPPLEMENTS AND WAIVERS
9.1 WITHOUT CONSENT OF HOLDERS . . . . . . . . . . . . . . . . . . . . 40
9.2 WITH CONSENT OF HOLDERS. . . . . . . . . . . . . . . . . . . . . . 40
9.3 COMPLIANCE WITH TRUST INDENTURE LEGISLATION. . . . . . . . . . . . 42
9.4 REVOCATION AND EFFECT OF CONSENTS. . . . . . . . . . . . . . . . . 42
9.5 NOTATION ON OR EXCHANGE OF SENIOR NOTES. . . . . . . . . . . . . . 42
9.6 TRUSTEE MAY SIGN AMENDMENTS, ETC.. . . . . . . . . . . . . . . . . 42
ARTICLE 10
GUARANTEE OF SENIOR NOTES
10.1 GUARANTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.2 EXECUTION AND DELIVERY OF GUARANTEE. . . . . . . . . . . . . . . . 44
ARTICLE 11
MISCELLANEOUS
11.1 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
11.2 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. . . . . . . . 46
11.3 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. . . . . . . . . . . 46
11.4 RULES BY TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.5 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.6 INTEREST ACT (CANADA). . . . . . . . . . . . . . . . . . . . . . . 47
11.7 NO INTERPRETATION OF OTHER AGREEMENT . . . . . . . . . . . . . . . 47
11.8 NO RECOURSE AGAINST OTHERS . . . . . . . . . . . . . . . . . . . . 47
11.9 SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.10 DUPLICATE ORIGINALS. . . . . . . . . . . . . . . . . . . . . . . . 48
11.11 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
11.12 TABLE OF CONTENTS, HEADING, ETC. . . . . . . . . . . . . . . . . . 48
11.13 BENEFITS OF INDENTURE. . . . . . . . . . . . . . . . . . . . . . . 48
SIGNATURES
EXHIBIT A
Note: This table of contents shall not, for any purpose,
be deemed to be a part of the Indenture.
<PAGE>
- iv -
EXHIBIT B
Note: This table of contents shall not, for any purpose,
be deemed to be a part of the Indenture.
<PAGE>
THIS INDENTURE, dated as of September 26, 1997, between The Loewen
Group Inc., a body corporate organized under and governed by the laws of
the Province of British Columbia, Canada ("TLGI"), Loewen Group
International, Inc., a Delaware corporation (the "Guarantor") and The
Trust Company of Bank of Montreal, a trust company incorporated under
the laws of Canada, as trustee (the "Trustee").
Each party hereto agrees as follows for the benefit of each other
party and, except as otherwise provided herein, for the equal and rateable
benefit of the Holders of Senior Notes.
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
1.1 DEFINITIONS.
"Affiliate" means, with respect to any specified Person, any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person.
"Attributable Value" means, as to any particular lease under which any
Person is at the time liable other than a Capitalized Lease Obligation, and at
any date as of which the amount thereof is to be determined, the total net
amount of rent required to be paid by such Person under such lease during the
initial term thereof as determined in accordance with GAAP, discounted from the
last date of such initial term to the date of determination at a rate per annum
equal to the discount rate which would be applicable to a Capitalized Lease
Obligation with a like term in accordance with GAAP. The net amount of rent
required to be paid under any such lease for any such period shall be the
aggregate amount of rent payable by the lessee with respect to such period after
excluding amounts required to be paid on account of insurance, taxes,
assessments, utility, operating and labour costs and similar charges. In the
case of any lease which is terminable by the lessee upon the payment of a
penalty, such net amount shall also include the amount of such penalty, but no
rent shall be considered as required to be paid under such lease subsequent to
the first date upon which it may be so terminated. "Attributable Value" means,
as to a Capitalized Lease Obligation under which any Person is at the time
liable and at any date as of which the amount thereof is to be determined, the
capitalized amount thereof that would appear on the face of a balance sheet of
such Person in accordance with GAAP.
"Bankruptcy and Insolvency Act" means Bankruptcy and Insolvency Act,
R.S.C. 1985, c.B-3.
"Bankruptcy Law" means the Bankruptcy and Insolvency Act, the
Companies Creditors Arrangement Act, R.S.C., 1985, c.C-25 or any similar law in
Canada, the United States or other relevant jurisdiction for the relief of
debtors.
"Board of Directors" means the board of directors of TLGI or the
Guarantor, as the case may be, or any duly authorized committee of such board.
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"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of TLGI or the Guarantor, as the case may
be, to have been duly adopted by the Board of Directors of TLGI or the
Guarantor, as the case may be, and to be in full force and effect on the date of
such certification, and delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in Vancouver, British
Columbia, are closed.
"Canada Yield Price" means a price equal to the price of the Senior
Note calculated to provide a yield to maturity, compounded semi-annually and
calculated in accordance with generally accepted financial practice accepted in
Canada from time to time, equal to the Government of Canada Yield on the
Business Day preceding the date on which TLGI gives notice of redemption
pursuant to this Indenture, plus 0.20%.
"Canadian Government Obligations" shall have the meaning set forth in
Section 8.2.
"Capitalized Lease Obligation" means any obligation under a lease of
(or other agreement conveying the right to use) any property (whether real,
personal or mixed) that is required to be classified and accounted for as a
capital lease obligation under GAAP, and the amount of any such obligation at
any date shall be the capitalized amount thereof at such date, determined in
accordance with GAAP.
"Collateral Agreement" means the Collateral Trust Agreement, dated as
of May 15, 1996, among Bankers Trust Company, as trustee, TLGI, the Guarantor
and various other Subsidiaries, as amended and supplemented from time to time.
"Consolidated Net Worth" means, with respect to any Person at any
date, the consolidated shareholders' equity of such Person less the amount of
such shareholders' equity attributable to Redeemable Share Capital of such
Person and its Restricted Subsidiaries, as determined in accordance with GAAP.
"control" means, with respect to any specified Person, the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of Voting Shares, by contract or otherwise; and
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"covenant defeasance" shall have the meaning set forth in Section 8.2.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement designed to protect
TLGI or any of its Restricted Subsidiaries against fluctuations in currency
values.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" mean any event that is, or after notice or passage of time
or both would be, an Event of Default.
<PAGE>
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"Event of Default" shall have the meaning set forth in Section 6.1
herein.
"Fair Market Value" means, with respect to any asset, the price which
could be negotiated in an arm's-length free market transaction, for cash,
between a willing seller and a willing buyer, neither of which is under pressure
or compulsion to complete the transaction; provided, however, that with respect
to any transaction which involves an asset or assets in excess of
U.S.$5,000,000, such determination shall be evidenced by a Board Resolution of
TLGI delivered to the Trustee.
"GAAP" means accounting principles generally accepted in Canada
consistently applied until such time as TLGI or the Guarantor shall prepare its
books of record in accordance with accounting principles generally accepted in
the United States ("U.S. GAAP") at which time and all times thereafter GAAP
shall mean U.S. GAAP consistently applied.
"Government of Canada Yield" means, on any date, the average of the
yields determined by two registered Canadian investment dealers selected by
TLGI, as being the yield to maturity on such date, compounded semi-annually and
calculated in accordance with generally accepted financial practice accepted in
Canada from time to time, which a non-callable Government of Canada bond would
carry if issued in Canadian dollars in Canada at 100% of its principal amount on
such date with a term to maturity approximately equal to the remaining term to
maturity of the Senior Notes.
"Guarantee" shall mean the guarantee of the Senior Notes by the
Guarantor created pursuant to Article 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 and (ii) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, the
payment of amounts drawn down by letters of credit.
"Guarantor" shall mean Loewen Group International, Inc., and shall
include any successor replacing such Guarantor pursuant to the provisions
hereof, and thereafter means such successor.
"Holder" or "Noteholder" means the Person in whose name a Senior Note
is registered on the Trustee's books.
"Indebtedness" means, with respect to any Person, without duplication,
(a) all liabilities of such Person for borrowed money or for the deferred
purchase price of property or services, excluding any trade payables and other
accrued current liabilities incurred in the ordinary course of business and
which are not overdue by more than 90 days, but excluding, without limitation,
all obligations, contingent or otherwise, of such Person in connection with any
undrawn letters of credit, banker's acceptance or other similar credit
transaction, (b) all obligations of such Person evidenced by bonds, notes,
debentures or other similar instruments, (c) all indebtedness
<PAGE>
- 4 -
created or arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person (even if the
rights and remedies of the seller or lender under such agreement in the event
of default are limited to repossession or sale of such property), but
excluding trade accounts payable arising in the ordinary course of business,
(d) all Capitalized Lease Obligations of such Person, (e) all Indebtedness
referred to in the preceding clauses of other Persons and all dividends of
other Persons, the payment of which is secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien upon property (including, without limitation, accounts
and contract rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Indebtedness (the amount of
such obligation being deemed to be the lesser of the value of such property
or asset and the amount of the obligation so secured), (f) all guarantees of
Indebtedness referred to in this definition by such Person, (g) all
Redeemable Share Capital of such Person valued at the greater of its
voluntary or involuntary maximum fixed repurchase price plus accrued
dividends, (h) all obligations under or in respect of Currency Agreements and
Interest Rate Protection Obligations of such Person, (i) any Preferred Shares
of any Restricted Subsidiary of such Person valued at the sum of (without
duplication) (A) the liquidation preference thereof, (B) any mandatory
redemption payment obligations in respect thereof and (C) accrued dividends
thereon, and (j) any amendment, supplement, modification, deferral, renewal,
extension or refunding of any liability of the types referred to in clauses
(a) through (i) above. For purposes hereof, the "maximum fixed repurchase
price" of any Redeemable Share Capital which does not have a fixed repurchase
price shall be calculated in accordance with the terms of such Redeemable
Share Capital as if such Redeemable Share Capital were purchased on any date
on which Indebtedness shall be required to be determined pursuant to the
provisions hereof, and if such price is based upon, or measured by, the fair
market value of such Redeemable Share Capital, such fair market value shall
be determined in good faith by the board of directors of the issuer of such
Redeemable Share Capital. For purposes of this definition, the term
"Indebtedness" shall not include (i) Indebtedness of a Wholly-Owned
Subsidiary owed to and held by TLGI, the Guarantor or another Wholly-Owned
Subsidiary, in each case which is not subordinate in right of payment to any
Indebtedness of such Subsidiary, except that (a) any transfer of such
Indebtedness by TLGI, the Guarantor or a Wholly-Owned Subsidiary (other than
to TLGI, the Guarantor or to a Wholly-Owned Subsidiary) and (b) the sale,
transfer or other disposition by TLGI, the Guarantor or any Restricted
Subsidiary of TLGI or the Guarantor of Share Capital of a Wholly-Owned
Subsidiary which is owed Indebtedness of another Wholly-Owned Subsidiary such
that it ceases to be a Wholly-Owned Subsidiary of TLGI or the Guarantor
shall, in each case, be an incurrence of Indebtedness by such Restricted
Subsidiary subject to the other provisions hereof; and (ii) Indebtedness of
TLGI or the Guarantor owed to and held by a Wholly-Owned Subsidiary of TLGI
or the Guarantor which is unsecured and subordinate in right of payment to
the payment and performance of TLGI's or the Guarantor's obligations under
the provisions hereof and the Senior Notes except that (a) any transfer of
such Indebtedness by a Wholly-Owned Subsidiary of TLGI or the Guarantor
(other than to another Wholly-Owned Subsidiary of TLGI or the Guarantor) and
(b) the sale, transfer or other disposition by TLGI or the Guarantor or any
Restricted Subsidiary of TLGI or the Guarantor of Share Capital of a
Wholly-Owned Subsidiary which holds Indebtedness of TLGI or the Guarantor
such that it ceases to be a Wholly-Owned Subsidiary shall, in each case, be
an incurrence of Indebtedness by TLGI or the Guarantor, as the case may be,
subject to the other provisions hereof.
<PAGE>
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"Indenture" means this Indenture, as amended, modified or supplemented
from time to time, and shall include the form and terms of particular series of
Senior Notes established as contemplated hereby.
"interest" means, with respect to any Senior Note, the amount of all
interest accruing on such Senior Note, including all interest accruing
subsequent to the occurrence of any events specified in Sections 6.1(g) and (h)
or which would have accrued but for any such event, whether or not such claims
are allowable under applicable law.
"Interest Payment Date" means the Stated Maturity of an instalment of
interest on the Senior Notes, as set forth therein.
"Interest Rate Protection Agreement" means any arrangement with any
other Person whereby, directly or indirectly, such Person is entitled to receive
from time to time periodic payments calculated by applying either a floating or
a fixed rate of interest on a stated notional amount in exchange for periodic
payments made by such Person calculated by applying a fixed or a floating rate
of interest on the same notional amount and shall include, without limitation,
interest rate swaps, caps, floors, collars and similar agreements.
"Interest Rate Protection Obligations" means the obligations of any
Person under any Interest Rate Protection Agreement.
"Issue Date" means the issue date specified in the securities of each
series except as otherwise provided in Section 2.1.
"legal defeasance" shall have the meaning given in Section 8.2.
"Lien" means any mortgage, charge, pledge, lien (statutory or other),
security interest, hypothecation, assignment for security, claim, or preference
or priority or other encumbrance upon or with respect to any property of any
kind. A Person shall be deemed to own subject to a Lien any property which such
Person has acquired or holds subject to the interest of a vendor or lessor under
any conditional sale agreement, capital lease or other title retention
agreement.
"Maturity Date" means, with respect to any Senior Note, the date on
which any principal of such Senior Note becomes due and payable as therein or
herein provided, whether at the Stated Maturity with respect to such principal
or by declaration of acceleration, call for redemption or purchase or otherwise.
"Measurement Date" means September 26, 1997.
"Officer" means the Chairman of the Board, the Chief Executive
Officer, the Chief Operating Officer, the President, any Executive Vice
President, any Senior Vice President, any Vice President, the Chief Financial
Officer, the Treasurer, the Secretary or the Controller of TLGI or the
Guarantor, as the case may be.
<PAGE>
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"Officers' Certificate" means a certificate signed by two Officers or
by an Officer and an Assistant Treasurer or Assistant Secretary of TLGI or the
Guarantor, as the case may be, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to TLGI.
"Pari Passu Indebtedness" means Indebtedness of TLGI or the Guarantor
which ranks pari passu in right of payment with the Senior Notes or the
Guarantee, as the case may be.
"Permitted Liens" means the following types of Liens:
(a) Liens for taxes, assessments or governmental charges or claims
either (a) not delinquent or (b) contested in good faith by appropriate
proceedings and as to which TLGI or any of its Restricted Subsidiaries
(including, without limitation, the Guarantor) shall have set aside on its
books such reserves as may be required pursuant to GAAP;
(b) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen and other Liens imposed by law
incurred in the ordinary course of business for sums not yet delinquent or
being contested in good faith, if such reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made in
respect thereof;
(c) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social insurance, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases,
governmental contracts, performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment of borrowed
money);
(d) judgment Liens not giving rise to an Event of Default so long as
such Lien is adequately bonded and any appropriate legal proceedings which
may have been duly initiated for the review of such judgment shall not have
been finally terminated or the period within which such proceedings may be
initiated shall not have expired;
(e) easements, rights-of-way, zoning restrictions and other similar
charges or encumbrances in respect of real property not interfering in any
material respect with the ordinary conduct of the business of TLGI or any
of its Restricted Subsidiaries;
(f) any interest or title of a lessor under any Capitalized Lease
Obligation or operating lease;
(g) any Lien existing on any asset of any corporation at the time
such corporation becomes a Restricted Subsidiary and not created in
contemplation of such event;
(h) any Lien on any asset securing Indebtedness incurred or assumed
for the purpose of financing all or any part of the cost of acquiring or
constructing such asset;
<PAGE>
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provided that such Lien attaches to such asset concurrently with or
within 18 months after the acquisition or completion thereof;
(i) any Lien on any asset of any corporation existing at the time
such corporation is amalgamated, merged or consolidated with or into TLGI
or a Restricted Subsidiary and not created in contemplation of such event;
(j) any Lien existing on any asset prior to the acquisition thereof
by TLGI or a Restricted Subsidiary and not created in contemplation of such
acquisition;
(k) Liens in favour of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods; and
(l) any extension, renewal or replacement of any Lien permitted by
the preceding clauses (g), (h), (i) or (j) hereof in respect of the same
property or assets theretofore subject to such Lien in connection with the
extension, renewal or refunding of the Indebtedness secured thereby;
provided that (l) such Lien shall attach solely to the same property or
assets and (2) such extension, renewal or refunding of such Indebtedness
shall be without increase in the principal remaining unpaid as at the date
of such extension, renewal or refunding.
"Permitted Sale-Leaseback Transactions" shall have the meaning given
to it in Section 4.8.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust, charitable
foundation, unincorporated organization, government or any agency or political
subdivision thereof.
"Predecessor Notes" means, with respect to any particular Senior Note,
every previous Senior Note evidencing all or a portion of the same debt as that
evidenced by such particular Senior Note; and, for the purposes of this
definition, any Senior Note authenticated and delivered under Section 2.5 hereof
in exchange for mutilated Notes or in lieu of lost, destroyed or stolen Senior
Notes, shall be deemed to evidence the same debt as the mutilated, lost,
destroyed or stolen Senior Notes.
"Preferred Securities" means, with respect to a Special Finance
Subsidiary, any securities of such Subsidiary treated for accounting purposes as
an equity security that has preferential rights to any other security of such
Person with respect to dividends or redemptions or upon liquidation.
"Preferred Shares" means, with respect to any Person, any Share
Capital of such Person that has preferential rights to any other Share Capital
of such Person with respect to dividends or redemptions or upon liquidation and
any Preferred Securities.
"principal" means, with respect to any debt security, the principal of
the security plus, when appropriate, the premium, if any, on the security and
any interest on overdue principal.
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- 8 -
"Redeemable Share Capital" means any shares of any class or series of
Share Capital that, either by the terms thereof, by the terms of any security
into which it is convertible or exchangeable or by contract or otherwise, is of
upon the happening of an event or passage of time would be, required to be
redeemed prior to the Stated Maturity with respect to the principal of any
Senior Note or is redeemable at the option of the holder thereof at any time
prior to any such Stated Maturity or is convertible into or exchangeable for
debt securities at any time prior to any such Stated Maturity.
"Redemption Date" means, with respect to any Senior Note to be
redeemed, the date fixed by TLGI for such redemption pursuant to this Indenture
and the terms of the Senior Notes.
"Redemption Price" means, with respect to any Senior Note to be
redeemed, the price fixed for such redemption pursuant to the terms of this
Indenture and the Senior Notes.
"Restricted Subsidiary" means any Subsidiary of TLGI other than an
Unrestricted Subsidiary.
"Sale-Leaseback Transaction" of any Person means an arrangement with
any lender or investor or to which such lender or investor is a party providing
for the leasing by such Person of any property or asset of such Person which has
been or is being sold or transferred by such Person after the acquisition
thereof or the completion of construction or commencement of operation thereof
to such lender or investor or to any Person to whom funds have been or are to be
advanced by such lender or investor on the security of such property or asset.
The stated maturity of such arrangement shall be the date of the last payment of
rent or any other amount due under such arrangement prior to the first date on
which such arrangement may be terminated by the lessee without payment of a
penalty.
"Securities Act" means the Securities Act of 1933 (United States), as
amended from time to time.
"Senior Notes" means the securities that are issued under this
Indenture, as amended or supplemented from time to time pursuant to this
Indenture.
"Series 5 Senior Notes" means the $200,000,000 aggregate principal
amount of TLGI's 6.10% Series 5 Senior Guaranteed Notes due 2002 issued pursuant
to this Indenture on September 26, 1997.
"Share Capital" means, with respect to any Person, any and all shares,
interests, participations, rights in or other equivalents (however designated)
of such Person's share capital, and any rights (other than debt securities
convertible into share capital), warrants or options exchangeable for or
convertible into such share capital.
"Significant Subsidiary" shall mean a Restricted Subsidiary which is a
"Significant Subsidiary" as defined in Rule 1.02(v) of Regulation S-X under the
Securities Act.
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"Special Finance Subsidiary" means a Restricted Subsidiary whose sole
assets are debt obligations of TLGI or the Guarantor and whose sole liabilities
are Preferred Securities the proceeds from the sale of which are or have been
advanced to TLGI or the Guarantor.
"Stated Maturity" means, when used with respect to any Senior Note or
any instalment of interest thereon, the date specified in such Senior Note as
the fixed date on which the principal of such Senior Note or such instalment of
interest is due and payable, and when used with respect to any other
Indebtedness, means the date specified in the instrument governing such
Indebtedness as the fixed date on which the principal of such Indebtedness, or
any instalment of interest thereon, is due and payable.
"Subsidiary" means, with respect to any Person, (i) a corporation a
majority of whose Voting Shares is at the time, directly or indirectly, owned by
such Person, by one or more Subsidiaries of such Person or by such Person and
one or more Subsidiaries thereof and (ii) any other Person (other than a
corporation), including, without limitation, a joint venture, in which such
Person, one or more Subsidiaries thereof or such Person and one or more
Subsidiaries thereof, directly or indirectly, at the date of determination
thereof, has at least majority ownership interest entitled to vote in the
election of directors, managers or trustees thereof (or other Person performing
similar functions). For purposes of this definition, any directors' qualifying
shares or investments by foreign nationals (other than nationals of the United
States) mandated by applicable law shall be disregarded in determining the
ownership of a Subsidiary.
"Surviving Entity" shall have the meaning set forth in Section 5.1.
"Trust Indenture Legislation" means, at any time, the provisions of
(i) the Company Act (British Columbia) and the regulations thereunder as amended
or re-enacted from time to time, and (ii) the provisions of any other applicable
statute of Canada, in each case relating to trust indentures and the rights,
duties and obligations of trustees under trust indentures and of corporations
issuing debt obligations under trust indentures to the extent that such
provisions are at such time in force and applicable to this Indenture.
"Trustee" means the party named as such in this Indenture until a
successor replaces such party (or any previous successor) in accordance with the
provisions of this Indenture, and thereafter means such successor.
"Unrestricted Subsidiary" means (i) First Capital Life Insurance
Company of Louisiana, National Capital Life Insurance Company, Security
Industrial Insurance Company, Security Industrial Fire Insurance Company or any
successors to such Subsidiaries or (ii) a Subsidiary of TLGI declared by the
Board of Directors of TLGI to be an Unrestricted Subsidiary; provided, that no
such Subsidiary shall be declared to be an Unrestricted Subsidiary unless (x)
none of its properties or assets were owned by TLGI or any of its Subsidiaries
prior to the Issue Date, (y) its properties and assets, to the extent that they
secure Indebtedness, secure only Non-Recourse Indebtedness and (z) it has no
Indebtedness other than Non-Recourse Indebtedness. As used above, "Non-Recourse
Indebtedness" means Indebtedness as to which (i) neither TLGI nor any of its
Subsidiaries (other than the relevant Unrestricted Subsidiary or another
Unrestricted Subsidiary) (1) provides credit support (including any undertaking,
agreement or instrument which would constitute Indebtedness), (2) guarantees or
is otherwise directly or indirectly liable or (3) constitutes the lender,
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and (ii) no default with respect to such Indebtedness (including any rights
which the holders thereof may have to take enforcement action against the
relevant Unrestricted Subsidiary or its assets) would permit (upon notice,
lapse of time or both) any holder of any other Indebtedness of TLGI or its
Subsidiaries (other than Unrestricted Subsidiaries) to declare a default on
such other Indebtedness or cause the payment thereof to be accelerated or
payable prior to its stated maturity.
"Voting Shares" means any class or classes of Share Capital pursuant
to which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of directors, managers,
or trustees of any Person (irrespective of whether or not, at the time, Share
Capital of any other class or classes shall have, or might have, voting power
by reason of the happening of any contingency).
"Wholly-Owned Subsidiary" means (i) any Restricted Subsidiary of TLGI
of which 100% of the outstanding Share Capital is owned by TLGI or one or more
Wholly-Owned Subsidiaries of TLGI or by TLGI and one or more Wholly-Owned
Subsidiaries of TLGI, including the Guarantor, or (ii) any Subsidiary, at least
66 2/3 % of the outstanding voting securities of which, and all of the
outstanding shares entitled to receive dividends or other distributions of
which, shall at the time be owned or controlled, directly or indirectly, by TLGI
or one or more Wholly-Owned Subsidiaries of TLGI or by TLGI and one or more
Wholly-Owned Subsidiaries of TLGI, including the Guarantor. For purposes of
this definition, any directors' qualifying shares or investments by foreign
nationals (other than nationals of the United States) mandated by applicable law
shall be disregarded in determining the ownership of a Subsidiary.
1.2 RULES OF CONSTRUCTION.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(a) words in the singular include the plural, and words in the plural
include the singular;
(b) "or" is not exclusive;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
(d) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision; and
(e) all references to "$" or "dollar" shall refer to the lawful
currency of Canada and all references to "U.S.$" shall refer to the lawful
currency of the United States of America.
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ARTICLE 2
THE SENIOR NOTES
2.1 ISSUANCE OF SENIOR NOTES.
The aggregate principal amount of Senior Notes which may be
outstanding at any time under this Indenture may not exceed $500,000,000 at any
time, except to the extent permitted by Section 2.6. The Senior Notes may be
issued in one or more series. Upon the execution and delivery of this Indenture
and the Guarantee, Series 5 Senior Notes in an aggregate principal amount of
$500,000,000 may be executed by TLGI and delivered to the Trustee for
authentication.
The Series 5 Senior Notes are 6.10% Series 5 Senior Guaranteed Notes
due 2002, issued on September 26, 1997.
The Senior Notes of each series and the Trustee's certificate of
authentication thereon shall be in substantially the form of Exhibit A, with
such appropriate insertions, omissions, substitutions and other variations as
are required or permitted by this Indenture and may have such letters, numbers
or other marks of identification and such legends or endorsements placed
thereon as may be required to comply with any applicable law or with the rules
of any securities exchange or as may, consistently herewith, be determined by
the Officer executing such Senior Notes, as evidenced by their execution
thereof. The Senior Notes of each series shall be issuable only in registered
form without coupons and only in denominations of $1,000 and integral multiples
thereof.
The definitive Senior Notes and the Guarantee shall be printed,
typewritten, lithographed or engraved or produced by any combination of these
methods or may be produced in any other manner all as determined by the Officer
executing such Senior Notes, as evidenced by their execution of such Senior
Notes. Each Senior Note shall be dated the date of its authentication.
The Series 5 Senior Notes shall be issued in the form of permanent
certificated Senior Notes in registered form in substantially the form set forth
in Exhibit A hereto duly executed by TLGI and authenticated by the Trustee as
hereinafter provided.
The terms and provisions contained in the form of the Senior Notes,
annexed hereto as Exhibit A, shall constitute, and are hereby expressly made, a
part of this Indenture and, to the extent applicable TLGI and the Trustee, by
their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby.
2.2 EXECUTION AND AUTHENTICATION.
Any one Officer shall execute the Senior Notes of each series on
behalf of TLGI by either manual or facsimile signature.
If an Officer whose signature is on a Senior Note no longer holds that
office at the time the Trustee authenticates the Senior Notes or at any time
thereafter, the Senior Note shall be valid nevertheless.
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A Senior Note shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Senior Note.
Such signature shall be conclusive evidence that the Senior Note has been
authenticated under this Indenture.
The Trustee shall authenticate Senior Notes for original issue upon
receipt of an Officers' Certificate signed by any one Officer of TLGI directing
the Trustee to authenticate the Senior Notes and certifying that all conditions
precedent to the issuance of the Senior Notes contained herein have been
complied with.
With the prior written approval of TLGI, the Trustee may appoint an
authenticating agent acceptable to TLGI to authenticate Senior Notes. Unless
limited by the terms of such appointment, an authenticating agent may
authenticate Senior Notes whenever the Trustee may do so. Each reference in
this Indenture to authentication by the Trustee includes authentication by such
agent. Such authenticating agent shall have the same rights as the Trustee in
any dealings hereunder with TLGI or with any of TLGI's Affiliates.
2.3 NOTEHOLDER 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.
2.4 TRANSFER AND EXCHANGE.
When Senior Notes of any series are presented to the Trustee with a
request to register the transfer of such Senior Notes or to exchange such Senior
Notes for an equal principal amount of Senior Notes of other authorized
denominations, the Trustee shall register the transfer or make the exchange as
requested if its requirements for such transaction are met; PROVIDED, HOWEVER,
that the Senior Notes surrendered for transfer or exchange shall be duly
endorsed or accompanied by a written instrument of transfer in form satisfactory
to TLGI and the Trustee, duly executed by the Holder thereof or his attorney
duly authorized in writing. To permit registrations of transfers and exchanges,
TLGI shall execute and the Trustee shall authenticate Senior Notes at the
Trustee's request. No service charge shall be made for any transfer, exchange
or redemption, but TLGI may require payment of a sum sufficient to cover any
transfer tax or similar governmental charge payable in connection therewith
(other than any such transfer taxes or similar governmental charge payable upon
exchanges or transfers pursuant to this Section 2.4). The Trustee shall not be
required to register the transfer of or exchange of any Senior Note (i) during a
period beginning at the opening of business 15 days before the mailing of a
notice of redemption of Senior Notes and ending at the close of business on the
day of such mailing and (ii) selected for redemption in whole or in part
pursuant to Article 3, except the unredeemed portion of any Senior Note being
redeemed in part.
2.5 REPLACEMENT NOTES.
If a mutilated Senior Note is surrendered to the Trustee or if the
Holder of a Senior Note claims that the Senior Note has been lost, destroyed
or wrongfully taken, TLGI shall issue and the Trustee shall authenticate a
replacement Senior Note if the Trustee's requirements are satisfied. If
required by the Trustee or TLGI such Holder must provide an indemnity,
sufficient in the judgment of both TLGI and the Trustee, to protect TLGI and
the Trustee from any loss which either
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of them may suffer if a Senior Note is replaced. TLGI may charge such Holder
for its reasonable, out-of-pocket expenses in replacing a Senior Note,
including reasonable fees and expenses of counsel. Every replacement Senior
Note is an additional obligation of TLGI and the Guarantor.
2.6 OUTSTANDING SENIOR NOTES.
Senior Notes outstanding at any time are all the Senior Notes that
have been authenticated by the Trustee except those cancelled by it, those
delivered to it for cancellation and those described in this Section as not
outstanding. A Senior Note does not cease to be outstanding because TLGI or any
of its Affiliates holds the Senior Note.
If a Senior Note is replaced pursuant to Section 2.4 (other than a
mutilated Senior Note surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Senior
Note is held by a bona fide purchaser. A mutilated Senior Note ceases to be
outstanding upon surrender of such Senior Note and replacement thereof pursuant
to Section 2.4.
If on a Redemption Date or a Maturity Date the Trustee holds cash or
Canadian Government Obligations sufficient to pay all of the principal and
interest due on the Senior Notes payable on that date, and is not prohibited
from paying such cash or Canadian Government Obligations to the Holders of such
Senior Notes pursuant to the terms of this Indenture, then on and after that
date, such Senior Notes cease to be outstanding and interest on them shall cease
to accrue.
2.7 TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Senior Notes have concurred in any direction, waiver or consent, Senior Notes
owned by TLGI or any of its Affiliates shall be disregarded, except that, for
the purposes of determining whether the Trustee shall be protected in relying on
any such direction, waiver or consent, only Senior Notes that the Trustee knows
or has reason to know are so owned shall be disregarded.
2.8 TEMPORARY NOTES.
Until definitive Senior Notes are prepared and ready for delivery,
TLGI may prepare and the Trustee shall authenticate temporary Senior Notes.
Temporary Senior Notes shall be substantially in the form of definitive Senior
Notes but may have variations that TLGI considers appropriate for temporary
Senior Notes. Without unreasonable delay, TLGI shall prepare and the Trustee
shall authenticate definitive Senior Notes in exchange for temporary Senior
Notes. Until such exchange, temporary Senior Notes shall be entitled to the
same rights, benefits and privileges as definitive Senior Notes.
2.9 CANCELLATION.
TLGI at any time may deliver Senior Notes to the Trustee for
cancellation. The Trustee, and no one else, shall promptly cancel and, at the
written direction of TLGI, shall dispose of all Senior Notes surrendered for
transfer, exchange, payment or cancellation. Subject to Section 2.5, TLGI may
not issue new Senior Notes to replace Senior Notes that it has paid or delivered
to
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the Trustee for cancellation. If TLGI shall acquire any of the Senior Notes,
such acquisition shall not operate as a redemption or satisfaction of the
Indebtedness represented by such Senior Notes unless and until the same are
surrendered to the Trustee for cancellation pursuant to this Section 2.9.
2.10 DEFAULTED INTEREST.
If TLGI defaults on a payment of interest on the Senior Notes of any
series, it shall pay the defaulted interest, plus (to the extent permitted by
law) any interest payable on the defaulted interest, in accordance with the
terms hereof, to the Persons who are Holders on a subsequent special record
date, which date shall be at least five Business Days prior to the payment
date. TLGI shall fix such special record date and payment date in a manner
satisfactory to the Trustee. At least 15 days before such special record date,
TLGI shall mail to each Holder a notice that states the special record date, the
payment date and the amount of defaulted interest, and interest payable on such
defaulted interest, if any, to be paid.
2.11 DEPOSIT OF MONEYS.
On or before each Interest Payment Date and Maturity Date, TLGI shall
deposit with the Trustee in immediately available funds money sufficient to make
cash payments, if any, due on such Interest Payment Date or Maturity Date, as
the case may be, in a timely manner which permits the Trustee to remit payment
to the Holders on such Interest Payment Date or Maturity Date, as the case may
be.
ARTICLE 3
REDEMPTION OR PURCHASE OF SENIOR NOTES
3.1 NOTICES TO THE TRUSTEE.
Each series of Senior Notes may provide that such series of Senior
Notes is redeemable in whole or in part at the option of TLGI. If TLGI is
permitted to redeem Senior Notes of any series pursuant to the terms of such
series of Senior Notes, it shall notify the Trustee of the Redemption Date and
principal amount of Senior Notes to be redeemed.
TLGI shall notify the Trustee by an Officers' Certificate, stating
that such redemption will comply with the provisions hereof and of such series
of Senior Notes, of any redemption at least 45 days before the Redemption Date.
3.2 SELECTION OF SENIOR NOTES TO BE REDEEMED.
If less than all the Senior Notes of any series are to be redeemed,
the particular Senior Notes or portions thereof to be redeemed shall be selected
from the outstanding Senior Notes of such series not previously called for
redemption pro rata, by lot or by such other method as the Trustee considers to
be fair and appropriate. The amounts to be redeemed shall be equal to $1,000 or
any integral multiple thereof.
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The Trustee shall promptly notify TLGI in writing of the Senior Notes
selected for redemption and, in the case of any Senior Notes selected for
partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to redemption of Senior Notes shall relate, in
the case of any Senior Note redeemed or to be redeemed only in part, to the
portion of the principal amount of such Senior Note which has been or is to be
redeemed.
3.3 NOTICE OF REDEMPTION.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Senior Notes to be redeemed, at the address of such
Holder appearing in the Senior Note register maintained by the Trustee.
All notices of redemption shall identify the Senior Notes to be
redeemed and shall state:
(a) the Redemption Date;
(b) the Redemption Price and the amount of accrued interest, if any,
to be paid;
(c) that, unless TLGI defaults in making the redemption payment,
interest on Senior Notes called for redemption ceases to accrue
on and after the Redemption Date, and the only remaining right of
the Holders of such Senior Notes is to receive payment of the
Redemption Price and accrued interest upon surrender to the
Trustee of the Senior Notes redeemed;
(d) if any Senior Note is to be redeemed in part, the portion of the
principal amount (equal to $1,000 or any integral multiple
thereof) of such Senior Note to be redeemed and that on and after
the Redemption Date, upon surrender for cancellation of such
original Senior Note to the Trustee a new Senior Note or Senior
Notes in the aggregate principal amount equal to the unredeemed
portion thereof will be issued without charge to the Holder;
(e) that Senior Notes called for redemption must be surrendered to
the Trustee to collect the Redemption Price and the name and
address of the Trustee; and
(f) the paragraph of the Senior Notes pursuant to which the Senior
Notes are being redeemed.
Notice of redemption of Senior Notes to be redeemed at the election of
TLGI shall be given by TLGI or, at TLGI's written request, by the Trustee in the
name and at the expense of TLGI.
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3.4 EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed, Senior Notes called for
redemption become due and payable on the Redemption Date and at the Redemption
Price. Upon surrender to the Trustee, such Senior Notes called for redemption
shall be paid at the Redemption Price plus accrued and unpaid interest to the
Redemption Date.
3.5 DEPOSIT OF REDEMPTION PRICE.
On or prior to any Redemption Date, TLGI shall deposit with the
Trustee an amount of money in same day funds sufficient to pay the Redemption
Price of, and accrued interest on, all the Senior Notes or portions thereof
which are to be redeemed on that date, other than Senior Notes or portions
thereof called for redemption on that date which have been delivered by TLGI to
the Trustee for cancellation.
If TLGI complies with the preceding paragraph, then, unless TLGI
defaults in the payment of such Redemption Price, interest on the Senior Notes
to be redeemed will cease to accrue on and after the applicable Redemption Date,
whether or not such Senior Notes are presented for payment. If any Senior Note
called for redemption shall not be so paid upon surrender thereof for
redemption, the principal, premium, if any, and, to the extent lawful, accrued
and unpaid interest thereon shall, until paid, bear interest from the Redemption
Date at the rate provided in the Senior Notes.
3.6 PURCHASE FOR CANCELLATION.
TLGI may, in whole at any time and in part from time to time, purchase
for cancellation the Senior Notes in the market (including purchases from or
through an investment dealer or a firm holding membership on a recognized stock
exchange) or by invitation for tender or by private contract at any time and at
any price. Any Senior Notes so purchased will be delivered to the Trustee and
will be cancelled by it and no Senior Note will be issued in substitution
therefor.
If, upon an invitation for tenders, more Senior Notes are tendered at
the same lowest price than TLGI is prepared to accept, the Senior Notes to be
purchased by TLGI will be selected by the Trustee by lot or on a PRO RATA basis
or in such other manner as the Trustee may deem equitable, from the Senior Notes
tendered by each tendering Noteholder who tendered at such lowest price. For
this purpose the Trustee may make, and from time to time amend, regulations with
respect to the manner in which Senior Notes may be so selected and regulations
so made will be valid and binding upon all Noteholders, notwithstanding the fact
that, as a result thereof, one or more of such Senior Notes become subject to
purchase in part only. The Holder of any Senior Note of which a part only is
purchased, upon surrender of such Senior Note for payment, shall be entitled to
receive without expense to such Holder one or more new Senior Notes for the
unpurchased part so surrendered and the Trustee shall certify and deliver such
new Senior Note or Senior Notes upon receipt of the Senior Note so surrendered.
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3.7 SENIOR NOTES REDEEMED OR PURCHASED IN PART.
Upon surrender to the Trustee of a Senior Note which is to be redeemed
or purchased in part, TLGI shall execute, the Guarantor shall guarantee and the
Trustee shall authenticate and deliver to the Holder of such Senior Note without
service charge, a new Senior Note or Senior Notes (accompanied by a notation of
Guarantee duly endorsed by the Guarantor), of any authorized denomination as
requested by such Holder in aggregate principal amount equal to, and in exchange
for, the unredeemed portion of the principal of the Senior Note so surrendered
that is not redeemed or purchased.
ARTICLE 4
COVENANTS
Each of TLGI and the Guarantor hereby jointly and severally covenant
as follows, from and after the Closing Date and continuing so long as any amount
remains unpaid on any Senior Note:
4.1 PAYMENT OF SENIOR NOTES.
Each of TLGI and the Guarantor will pay, or cause to be paid, the
principal of and interest on the Senior Notes of each series on the day and in
the manner provided in the Senior Notes and this Indenture. An instalment of
principal or interest shall be considered paid on the date due if the Trustee
holds on that date money designated and set aside for and sufficient to pay the
instalment in a timely manner and is not prohibited from paying such money to
the Holders of the Senior Notes pursuant to the terms of this Indenture.
TLGI or the Guarantor, as the case may be, will pay interest on
overdue principal at the rate and in the manner provided in the Senior Notes; it
shall pay interest on overdue instalments of interest at the same rate and in
the same manner, to the extent lawful.
4.2 MAINTENANCE OF OFFICE OR AGENCY.
TLGI will maintain in Vancouver, British Columbia, an office or agency
where Senior Notes of each series may be surrendered for registration of
transfer or exchange or for presentation for payment and where notices and
demands to or upon TLGI in respect of the Senior Notes and this Indenture may be
served. TLGI will give prompt written notice to the Trustee of the location,
and any change in the location, of such office or agency. If at any time TLGI
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the address of the Trustee as set
forth in Section 11.1.
TLGI may also from time to time designate one or more other offices or
agencies where the Senior Notes may be presented or surrendered for any or all
such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve TLGI
of its obligation to maintain an office or agency in Vancouver,
<PAGE>
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British Columbia for such purposes. TLGI will give prompt written notice to
the Trustee of any such designation or rescission and of any change in the
location of any such other office or agency.
4.3 CORPORATE EXISTENCE.
Subject to Article Five, each of TLGI and the Guarantor shall do or
cause to be done all things necessary to, and will cause each Restricted
Subsidiary to, preserve and keep in full force and effect the corporate or
partnership existence and rights (charter and statutory), licenses and/or
franchises of TLGI, the Guarantor and the Restricted Subsidiaries; provided,
however, that TLGI, the Guarantor and the Restricted Subsidiaries shall not be
required to preserve any such rights, licenses or franchises if the Board of
Directors of TLGI shall reasonably determine that (x) the preservation thereof
is no longer desirable in the conduct of the business of TLGI and its
Subsidiaries taken as a whole and (y) the loss thereof is not materially adverse
to either the Guarantor and its Subsidiaries taken as a whole or to the ability
of TLGI or the Guarantor to otherwise satisfy its obligations hereunder.
4.4 PAYMENT OF TAXES AND OTHER CLAIMS.
Each of TLGI and the Guarantor will pay or discharge or cause to be
paid or discharged, before the same shall become delinquent, (a) all taxes,
assessments and governmental charges levied or imposed upon TLGI or any of its
Restricted Subsidiaries or upon the income, profits or property of TLGI or any
of its Restricted Subsidiaries, and (b) all lawful claims for labour, materials
and supplies which, if unpaid, might by law become a Lien upon the property of
TLGI or any Restricted Subsidiary of TLGI, PROVIDED, HOWEVER, that neither TLGI
nor the Guarantor shall be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim 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 effect
such payment or discharge is not adverse in any material respect to TLGI.
4.5 MAINTENANCE OF PROPERTIES; INSURANCE; BOOKS AND RECORDS; COMPLIANCE
WITH LAW.
(a) Each of TLGI and the Guarantor shall, and shall cause each of its
Restricted Subsidiaries to, cause all properties and assets to be maintained and
kept in good condition, repair and working order (reasonable wear and tear
excepted) and supplied with all necessary equipment, and shall cause to be made
all necessary repairs, renewals, replacements, additions, betterments, and
improvements thereto, as shall be reasonably necessary for the proper conduct of
its business; provided, however, that nothing in this Section 4.5(a) shall
prevent TLGI or any of its Restricted Subsidiaries from discontinuing the
operation and maintenance of any of its properties or assets if such
discontinuance is, in the judgment of the Board of Directors of TLGI or such
Restricted Subsidiary, desirable in the conduct of its business and if such
discontinuance is not materially adverse to either TLGI and its Subsidiaries
taken as a whole or the ability of TLGI or the Guarantor to satisfy its
obligations hereunder.
(b) Each of TLGI and the Guarantor shall, and shall cause each of its
Restricted Subsidiaries to, maintain with financially sound and reputable
insurers such insurance as may be required by law (other than with respect to
any environmental impairment liability insurance not commercially available) and
such other insurance to such extent and against such hazards and
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liabilities, as is customarily maintained by companies similarly situated
(which may include self-insurance in the same form as is customarily
maintained by companies similarly situated.)
(c) Each of TLGI and the Guarantor shall, and shall cause each of its
Restricted Subsidiaries to, keep proper books of record and account, in which
full and correct entries shall be made of all business and financial
transactions of TLGI and each Restricted Subsidiary of TLGI and reflect on its
financial statements adequate accruals and appropriations to reserves, all in
accordance with GAAP consistently applied to TLGI and its Subsidiaries taken as
a whole.
(d) Each of TLGI and the Guarantor shall and shall cause each of its
Restricted Subsidiaries to comply with all statutes, laws, ordinances, or
government rules and regulations to which it is subject, non-compliance with
which would materially adversely affect the earnings, properties, assets or
condition (financial or otherwise) of TLGI and its Subsidiaries taken as a
whole.
4.6 COMPLIANCE CERTIFICATE.
(a) Each of TLGI and the Guarantor will deliver to the Trustee within
60 days after the end of each of TLGI's first three fiscal quarters and within
90 days after the end of TLGI's fiscal year an Officers' Certificate stating
whether or not the signers know of any Default or Event of Default under this
Indenture by TLGI or the Guarantor or an event which, with notice or lapse of
time or both, would constitute a default by TLGI or the Guarantor under any Pari
Passu Indebtedness that occurred during such fiscal period. If they do know of
such a Default, Event of Default or default, the certificate shall describe any
such Default, Event of Default or default and its status. The first certificate
to be delivered pursuant to this Section 4.6(a) shall be for the first fiscal
quarter of TLGI beginning after the Measurement Date. TLGI shall also deliver a
certificate to the Trustee at least annually from its principal executive,
financial or accounting officer as to his or her knowledge of TLGI's and the
Guarantor's compliance with all conditions and covenants under this Indenture,
such compliance to be determined without regard to any period of grace or
requirement of notice provided herein or therein.
(b) TLGI shall deliver to the Trustee within 90 days after the end of
each fiscal year a written statement by TLGI's and the Guarantor's independent
chartered accountants stating (A) that their audit examination has included a
review of the terms of this Indenture and the Senior Notes as they relate to
accounting matters, and (B) whether, in connection with their audit examination,
any Default or Event of Default under this Indenture or an event which, with
notice or lapse of time or both, would constitute a default under any Pari Passu
Indebtedness has come to their attention and, if such a Default, Event of
Default or a default under any Pari Passu Indebtedness has come to their
attention, specifying the nature and period of existence thereof; provided,
however, that, without any restriction as to the scope of the audit examination,
such independent chartered accountants shall not be liable by reason of any
failure to obtain knowledge of any such Default, Event of Default or a default
under any Pari Passu Indebtedness that would not be disclosed in the course of
an audit examination conducted in accordance with GAAP.
(c) Each of TLGI and the Guarantor will deliver to the Trustee as
soon as possible, and in any event within 10 days after TLGI and/or the
Guarantor, as the case may be, becomes aware or should reasonably have become
aware of the occurrence of any Default, Event of Default or an event which, with
notice or lapse of time or both, would constitute a default by TLGI
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and/or the Guarantor, as the case may be, under any Indebtedness, an
Officers' Certificate specifying such Default, Event of Default or default and
what action TLGI and/or the Guarantor, as the case may be, is taking or
proposes to take with respect thereto.
4.7 LIMITATION ON LIENS.
TLGI will not, and will not permit any of its Restricted Subsidiaries
to, create, incur, assume or suffer to exist any Liens of any kind against or
upon any of its property or assets, or any proceeds therefrom, where the
aggregate amount of Indebtedness secured by any such Liens, together with the
aggregate amount of property subject to any Sale-Leaseback Transactions of TLGI
and its Restricted Subsidiaries (other than Permitted Sale-Leaseback
Transactions), exceeds 10% of TLGI's Consolidated Net Worth, unless (x) in the
case of Liens securing Indebtedness that is subordinate or junior in right of
payment to the Senior Notes, the Senior Notes are secured by a Lien on such
property, assets or proceeds that is senior in priority to such Liens and (y) in
all other cases, the Senior Notes are equally and rateably secured except for
(a) Liens existing as at the Measurement Date; (b) Liens securing the Senior
Notes or the Guarantee; (c) Liens in favour of TLGI, the Guarantor or any
Wholly-Owned Subsidiary; (d) Liens securing Indebtedness which is incurred to
refinance Indebtedness which has been secured by a Lien permitted under the
provisions of this Indenture and which has been incurred in accordance with the
provisions of the Indenture; provided, however, that such Liens do not extend to
or cover any property or assets of TLGI or any of its Restricted Subsidiaries
not securing the Indebtedness so refinanced, and provided further that the
principal amount of the Indebtedness so incurred does not exceed the principal
amount of the Indebtedness so refinanced as of the date of such refinancing; and
(e) Permitted Liens.
4.8 LIMITATIONS ON SALE-LEASEBACK TRANSACTIONS.
TLGI will not, and will not permit any of its Restricted Subsidiaries
to, enter into any Sale-Leaseback Transaction with respect to any property of
TLGI or any of its Restricted Subsidiaries where the aggregate amount of
property subject to such Sale-Leaseback Transactions, together with the
aggregate amount of Liens securing Indebtedness of TLGI and its Restricted
Subsidiaries (other than Permitted Liens), exceeds 10% of TLGI's Consolidated
Net Worth. Notwithstanding the foregoing, TLGI and its Restricted Subsidiaries
may enter into Sale-Leaseback Transactions ("Permitted Sale-Leaseback
Transactions") with respect to property acquired or constructed after the
Measurement Date; provided that the Attributable Value of such Sale-Leaseback
Transactions shall be deemed to be Indebtedness of TLGI or such Restricted
Subsidiary, as the case may be.
4.9 REPORTS.
TLGI shall cause its annual reports to shareholders and any quarterly
or other financial reports furnished by it to shareholders generally to be filed
with the Trustee and mailed no later than the date such materials are mailed or
made available to TLGI's shareholders, to the Holders at their addresses as set
forth in the register of securities maintained by the Trustee.
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4.10 WAIVER OF STAY, EXTENSION OR USURY LAWS.
Each of TLGI and the Guarantor covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, or plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law which would prohibit or forgive TLGI
or the Guarantor, as the case may be, from paying all or any portion of the
principal of, premium, if any, or interest on the Senior Notes as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this Indenture; and (to the extent
that it may lawfully do so) each of TLGI and the Guarantor hereby expressly
waives all benefit or advantage of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
ARTICLE 5
SUCCESSOR CORPORATION
5.1 WHEN TLGI MAY MERGE, ETC.
(a) TLGI will not, and will not permit the Guarantor to, in any
transaction or series of transactions, amalgamate or merge or consolidate with
or into, or sell, assign, convey, transfer, lease or otherwise dispose of all or
substantially all of its properties and assets as an entirety to, any Person or
Persons, and TLGI will not permit any of its Restricted Subsidiaries to enter
into any such transaction or series of transactions if such transaction or
series of transactions, in the aggregate, would result in a sale, assignment,
conveyance, transfer, lease or other disposition of all or substantially all of
the properties and assets of TLGI or the Guarantor or TLGI and its Restricted
Subsidiaries, taken as a whole, or the Guarantor and its Restricted
Subsidiaries, taken as a whole, to any other Person or Persons, unless at the
time of and after giving effect thereto (a) either (i) if the transaction or
series of transactions is a merger or consolidation, TLGI or the Guarantor or a
Restricted Subsidiary, as the case may be, shall be the surviving Person of such
merger or consolidation, or (ii) the Person formed by such consolidation or into
which TLGI, the Guarantor or such Restricted Subsidiary, as the case may be, is
amalgamated or merged or to which the properties and assets of TLGI, the
Guarantor or such Restricted Subsidiary, as the case may be, are transferred
(any surviving Person, amalgamated Person or transferee Person being the
"Surviving Entity") shall be a corporation organized and existing under the laws
of the United States of America, any state thereof, the District of Columbia,
Canada or any province or territory thereof (and, in the case of TLGI, if the
Surviving Entity is a corporation organized or existing under the laws of the
United States of America or any state thereof or the District of Columbia,
counsel to TLGI has provided an opinion to the effect that there is no material
disadvantage to the holders of the Senior Notes that are residents of Canada
under applicable tax legislation as a result of the Senior Notes being
obligations of a corporation organized or existing under the laws of the United
States of America or any state thereof or the District of Columbia), and shall
expressly assume by a supplemental indenture executed and delivered to the
Trustee, in form reasonably satisfactory to the Trustee, the due and punctual
payment of the principal of, premium, if any, and interest on all the Senior
Notes and the performance and observance of every covenant and obligation of
this Indenture and the Senior Notes on the part of TLGI or the Guarantor, as the
case may be, to be performed or
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observed and, in each case, this Indenture shall remain in full force and
effect; (b) immediately before and after giving affect to such transaction or
series of transactions on a PRO FORMA basis, no Default or Event of Default
shall have occurred and be continuing; (c) immediately after giving effect to
such transaction or series of transactions on a PRO FORMA basis (including,
without limitation, any Indebtedness incurred or anticipated to be incurred in
connection with or in respect of such transaction or series of transactions)
the Consolidated Net Worth of TLGI, the Guarantor or the Surviving Entity, as
the case may be, is at least equal to the Consolidated Net Worth of TLGI or
the Guarantor, as the case may be, immediately before such transaction or
series of transactions; and (d) TLGI, the Guarantor or the Surviving Entity,
as the case may be, shall have delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each in form and substance reasonably satisfactory to
the Trustee, each stating that such consolidation, amalgamation, merger, sale,
assignment, conveyance, transfer, lease or other disposition and, if a
supplemental indenture is required in connection with such transaction or series
of transactions, such supplemental indenture, complies with this Indenture and
that all conditions precedent herein provided for relating to such transaction
or series of transactions have been complied with.
5.2 SUCCESSOR SUBSTITUTED.
Upon any amalgamation, consolidation or merger, or any sale,
assignment, conveyance, transfer, lease or disposition of all or substantially
all of the properties and assets of TLGI or the Guarantor in accordance with
Section 5.1 hereof, the Person or Persons formed by such amalgamation,
consolidation or into which TLGI or the Guarantor is merged or the successor
Person to which such sale, assignment, conveyance, transfer, lease or other
disposition is made, shall succeed to, and be substituted for, and may exercise
every right and power of, TLGI or the Guarantor, as the case may be, under this
Indenture and the Senior Notes with the same effect as if such successor had
been named as TLGI or the Guarantor, as the case may be.
ARTICLE 6
REMEDIES
6.1 EVENTS OF DEFAULT.
An "Event of Default" with respect to each series of Senior Notes
means any of the following events:
(a) default in the payment of the principal of or premium, if any, on
any Senior Note of such series when the same becomes due and payable (upon
Stated Maturity, acceleration, optional redemption, required purchase,
scheduled principal payment or otherwise); or
(b) default in the payment of an instalment of interest on any of the
Senior Notes of such series, when the same becomes due and payable, and any
such Default continues for a period of 30 days; or
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(c) failure to perform or observe any other term, covenant or
agreement contained in the Senior Notes of such series or the Guarantee
with respect to Senior Notes of such series or pursuant to the provisions
of this Indenture (other than Defaults specified in clause (a) or (b)
above) and such Default continues for a period of 30 days after written
notice of such Default requiring TLGI and the Guarantor to remedy the same
shall have been given (i) to TLGI and the Guarantor by the Trustee or (ii)
to TLGI, the Guarantor and the Trustee by Holders of at least 25% in
aggregate principal amount of the Senior Notes of such series then
outstanding; or
(d) default or defaults under one or more agreements, instruments,
mortgages, bonds, debentures or other evidences of Indebtedness under which
TLGI or any Restricted Subsidiary of TLGI then has outstanding Indebtedness
in excess of U.S.$50,000,000 (including Senior Notes of another series),
individually or in the aggregate, and either (i) such Indebtedness is
already due and payable in full or (ii) such default or defaults have
resulted in the acceleration of the maturity of such Indebtedness; or
(e) one or more judgments, orders or decrees of any court or
regulatory or administrative agency of competent jurisdiction for the
payment of money in excess of U.S.$50,000,000, either individually or in
the aggregate, shall be entered against TLGI or any Restricted Subsidiary
of TLGI or any of their respective properties and shall not be discharged
or bonded against or stayed and there shall have been a period of 60 days
after the date on which any period for appeal has expired and during which
a stay of enforcement of such judgment, order or decree, shall not be in
effect; or
(f) either (i) the collateral agent under the Collateral Agreement or
(ii) any holder of at least U.S.$50,000,000 in aggregate principal amount
of Indebtedness of TLGI or any of its Restricted Subsidiaries shall
commence judicial proceedings to foreclose upon assets of TLGI or any of
its Restricted Subsidiaries having an aggregate Fair Market Value,
individually or in the aggregate, in excess of U.S.$50,000,000 or shall
have exercised any right under applicable law or applicable security
documents to take ownership of any such assets in lieu of foreclosure; or
(g) TLGI or any Significant Subsidiary of TLGI pursuant to or under
or within the meaning of any Bankruptcy Law:
(1) consents to the entry of a receiving order;
(2) files a proposal or a notice of intention to file a proposal
or otherwise seeks protection from creditors or any of them;
(3) consents to the appointment of a Custodian of it or for all
or substantially all of its property;
(4) makes a general assignment for the benefit of its creditors;
or
(5) shall generally not pay its debts when such debts become due
or shall admit in writing its inability to pay its debts generally; or
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(h) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(1) is for relief against TLGI or any Significant Subsidiary of
TLGI;
(2) appoints a Custodian, interim receiver or receiver of TLGI
or any Significant Subsidiary of TLGI for all or substantially all of
its properties; or
(3) orders the liquidation of TLGI or any Significant Subsidiary
of TLGI;
and in each case the order or decree remains unstayed and in effect for 60
days; or
(i) the Guarantee with respect to such series ceases to be in full
force and effect or is declared null and void, or the Guarantor denies that
it has any further liability under the Guarantee with respect to such
series, or gives notice to such effect and such condition shall have
continued for a period of 60 days after written notice of such failure
(which notice shall specify the Default, demand that it be remedied and
state that it is a "Notice of Default") requiring TLGI and the Guarantor to
remedy the same shall have been given (x) to TLGI and the Guarantor by the
Trustee or (y) to TLGI, the Guarantor and the Trustee by Holders of at
least 25% in aggregate principal amount of the Senior Notes of any series
then outstanding.
Subject to the provisions of Section 7.1 and 7.2, the Trustee shall
not be charged with knowledge of any Default or Event of Default unless written
notice thereof shall have been given to the Trustee by TLGI, the Guarantor, any
Holder, any holder of Indebtedness or any of their respective agents.
6.2 ACCELERATION.
If an Event of Default (other than as specified in Section 6.1(g) or
6.1(h)) occurs and is continuing with respect to the Senior Notes of any series,
the Trustee, by written notice to TLGI and the Guarantor, or the Holders of at
least 25% in aggregate principal amount of the Senior Notes of such series then
outstanding, by written notice to the Trustee, TLGI and the Guarantor, may
declare the principal of, premium, if any, and accrued and unpaid interest, if
any, on all of the Senior Notes of such series to be due and payable
immediately, upon which declaration, all amounts payable in respect of the
Senior Notes of such series shall be a immediately due and payable. If an Event
of Default specified in Section 6.1(g) or 6.1(h) occurs and is continuing, then
the principal of, premium, if any, and accrued and unpaid interest, if any, on
all of the Senior Notes 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 of Senior Notes.
After a declaration of acceleration hereunder with respect to the
Senior Notes of any series, but before a judgment or decree for payment of the
money due has been obtained by the Trustee, the Holders of a majority in
aggregate principal amount of the outstanding Senior Notes of such series, by
written notice to TLGI, the Guarantor and the Trustee, may rescind such
declaration if (a) TLGI or the Guarantor has paid or deposited with the Trustee
a sum sufficient to pay (i) all amounts due the Trustee under Section 7.7 and
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, (ii) all overdue interest on all
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Senior Notes of such series, (iii) the principal of and premium, if any, on any
Senior Notes of such series which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate borne by the
Senior Notes of such series, and (iv) to the extent that payment of such
interest is lawful, interest upon overdue interest and overdue principal which
has become due otherwise than by such declaration of acceleration at the rate
borne by the Senior Notes of such series; (b) the rescission would not conflict
with any judgment or decree of a court of competent jurisdiction; and (c) all
Events of Default, other then the non-payment of principal of, premium, if any,
and interest on the Senior Notes of such series that has become due solely by
such declaration of acceleration, have been cured or waived as provided in
Section 6.4.
No such rescission shall affect any subsequent Default or Event of
Default or impair any right therein.
6.3 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, premium, if any, or interest on the Senior Notes or to
enforce the performance of any provision of the Senior Notes or this Indenture.
All rights of action and claims under this Indenture or the Senior
Notes may be enforced by the Trustee even if it does not possess any of the
Senior Notes 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 an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. No remedy is exclusive of
any other remedy. All available remedies are cumulative to the extent permitted
by law.
6.4 WAIVER OF PAST DEFAULTS.
Subject to the provisions of Section 6.7 and 9.2, the Holders of not
less than a majority in aggregate principal amount of the outstanding Senior
Notes of any series by notice to the Trustee may, on behalf of the Holders of
all the Senior Notes of any such series, waive any existing Default or Event of
Default and its consequences, except a Default or Event of Default specified in
Section 6.1 (a) or (b) or in respect of any provision hereof which cannot be
modified or amended without the consent of the Holder so affected pursuant to
Section 9.2. When a Default or Event of Default is so waived, it shall be
deemed cured and shall cease to exist.
6.5 CONTROL BY MAJORITY.
The Holders of not less than a majority in aggregate principal amount
of the outstanding Senior Notes shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred on the Trustee, provided, however,
that the Trustee may refuse to follow any direction (a) that conflicts with any
rule of law or this Indenture, (b) that the Trustee determines may be unduly
prejudicial to the rights of another Noteholder, or (c) that may expose the
Trustee to personal liability unless the Trustee has been provided reasonable
indemnity against any loss or expense caused by its following
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such direction; and provided, further, that the Trustee may take any other
action deemed proper by the Trustee that is not inconsistent with such
direction.
6.6 LIMITATION ON SUITS.
No Holder of any Senior Notes of any series shall have any right to
institute any proceeding or pursue any remedy with respect to this Indenture or
the Senior Notes of such series unless:
(a) the Holder gives written notice to the Trustee of a continuing
Event of Default;
(b) the Holders of at least 25% in aggregate principal amount of the
outstanding Senior Notes of such series make a written request to the
Trustee to pursue the remedy;
(c) such Holder or Holders offer and, if requested, provide to the
Trustee reasonable indemnity against any loss, liability or expense;
(d) the Trustee does not comply with the request within 30 days after
receipt of the request and the offer and, if requested, provision of
indemnity; and
(e) during such 30-day period the Holders of a majority in aggregate
principal amount of the outstanding Senior Notes do not give the Trustee a
direction which is inconsistent with the request.
The foregoing limitations shall not apply to an action or suit
instituted by a Holder for the enforcement of the payment of principal of,
premium, if any, or accrued interest on, such Senior Note on or after the
respective due date set forth in such Senior Note.
A Holder may not use this Indenture to prejudice the rights of any
other Holders or to obtain priority or preference over such other Holders.
6.7 RIGHT OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision in this Indenture, the right of
any Holder of a Senior Note to receive payment of the principal of, premium, if
any, and interest on such Senior Note, on or after the respective Stated
Maturities expressed in such Senior Notes, or to bring suit for the enforcement
of any such payment on or after the respective Stated Maturities, is absolute
and unconditional and shall not be impaired or affected without the consent of
the Holder.
6.8 COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in clause (a) or (b) of Section 6.1
occurs and is continuing, the Trustee may recover judgment in its own name and
as trustee of an express trust against TLGI, the Guarantor or any other obligor
on the Senior Notes for the whole amount of principal of, premium, if any, and
accrued interest remaining unpaid, together with interest, to the extent that
payment of such interest is lawful, on overdue principal and interest on overdue
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instalments of interest, in each case at the rate per annum borne by the Senior
Notes and such further amount as shall be sufficient to cover the costs and
expenses of collection, the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
6.9 TRUSTEE MAY FILE PROOFS OF CLAIMS.
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 (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceedings relative to TLGI, the Guarantor or
the Subsidiaries of TLGI and the Guarantor (or any other obligor upon the Senior
Notes), their creditors or their property and shall be entitled and empowered to
collect and receive any monies 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 agent and counsel, and any other amounts due the Trustee under
Section 7.7. Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or composition affecting the Senior
Notes 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.
6.10 PRIORITIES.
If the Trustee collects any money pursuant to this Article 6, it shall
pay out such money in the following order:
First: to the Trustee for amounts due under Section 7.7;
Second: to the Holders for interest accrued on the Senior Notes,
rateably, without preference or priority of any kind, according to the
amounts due and payable on the Senior Notes for interest;
Third: to the Holders for principal amounts (including any premium)
owing under the Senior Notes, rateably, without preference or priority of
any kind, according to the amounts due and payable on the Senior Notes for
principal (including any premium); and
Fourth: the balance, if any, to TLGI or the Guarantor, as the case may
be.
The Trustee, upon prior written notice to TLGI, may fix a record date
and payment date for any payment to Noteholders pursuant to this Section 6.10.
6.11 UNDERTAKING FOR COSTS.
In any action or suit for the enforcement of any right or remedy under
this Indenture or in any action or suit against the Trustee for any action taken
or omitted by it as Trustee, a court
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may in its discretion require the filing by any party litigant in the action or
suit of an undertaking to pay the costs of the action or suit, and the court in
its discretion may assess reasonable costs, including reasonable counsel or
solicitors' fees, against any party litigant in the action or action or suit,
having due regard to the merits and good faith of the claims or defences made
by the party litigant. This Section 6.11 does not apply to any action or suit
by the Trustee, any action or suit by a Holder pursuant to Section 6.7, or an
action or suit by Holders of more than 10% in aggregate principal amount of the
outstanding Senior Notes.
6.12 RESTORATION OF RIGHTS AND REMEDIES
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture or any Senior Note or the Guarantee and
such proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such Holder, then and in every such
case TLGI, the Guarantor, the Trustee and or Holders shall, subject to any
determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding had been
instituted.
ARTICLE 7
TRUSTEE
7.1 DUTIES.
(a) In case 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 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 in which
case the duties set out in paragraph (a) of this Section 7.1 shall also apply:
(1) the Trustee need perform only such duties as are specifically set
forth in this Indenture, and no implied covenants or obligations shall be
read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture; but 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
be under a duty to examine the same to determine whether or not they
conform to the requirements of this Indenture.
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(c) No provision of this Indenture shall be construed to relieve the
Trustee 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 7.1;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by the Trustee, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts;
(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 6.5;
(d) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section 7.1.
7.2 RIGHTS OF TRUSTEE.
Subject to Section 7.1 hereof:
(a) the Trustee may rely on any document reasonably believed by it to
be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document;
(b) before the Trustee acts or refrains from acting, it may consult
with counsel and may require an Officers' Certificate or an Opinion of
Counsel, which shall conform to Sections 11.2 and 11.3. The Trustee shall
not be liable for any action it takes or omits to take in good faith in
reliance on such certificate or opinion;
(c) the Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed
with due care;
(d) the Trustee shall not be liable for any action taken or omitted
to be taken by it in good faith and reasonably believed by it to be
authorized or within the discretion, rights or powers conferred upon it by
this Indenture other than any liabilities arising out of its own
negligence;
(e) the Trustee may consult with counsel of its own choosing and the
advice or opinion 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;
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(f) the Trustee shall not be bound to make any investigation into the
facts or stated in any resolution, certificate, statement, instrument,
opinion, notice, request, direction, consent, order, bond, debenture, or
other paper or document, but the Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may see
fit; and
(g) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders pursuant to the provisions of this
Indenture, unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may
be incurred therein or thereby.
7.3 INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee or any other agent of TLGI or the Guarantor, in its
individual or any other capacity, may become the owner or pledgee of Senior
Notes and, subject to Section 7.10, may otherwise deal with TLGI, the Guarantor
and their Subsidiaries with the same rights it would have if it were not the
Trustee or such other agent.
7.4 TRUSTEE'S DISCLAIMER.
The Trustee makes no representations as to the validity or sufficiency
of this Indenture or of the Senior Notes or of the Guarantee, it shall not be
accountable for TLGI's use or application of the proceeds from the Senior Notes,
it shall not be responsible for the use or application of any money received by
any Person other than the Trustee and it shall not be responsible for any
statement in the Senior Notes other than the Trustee's certificate of
authentication.
7.5 NOTICE OF DEFAULT.
If a Default or an Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to each Holder notice of the
Default or Event of Default within 30 days thereafter; provided, however, that,
except in the case of a Default in the payment of the principal of, premium, if
any, or interest on any Senior Note, the Trustee shall be protected in
withholding such notice if and so long as the Trustee in good faith determines
that the withholding of such notice is in the interest of the Holders.
7.6 MONEY HELD IN TRUST.
All moneys received by the Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for which they were received,
but need not be segregated from other funds except to the extent required
herein, or by law. The Trustee shall not be under any liability for interest on
any moneys received by it hereunder, except as the Trustee may agree with TLGI.
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7.7 COMPENSATION AND INDEMNITY.
TLGI and the Guarantor covenant and agree to pay the Trustee from time
to time reasonable compensation for its services. The Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. TLGI and the Guarantor shall reimburse the Trustee upon request for all
reasonable disbursements, expenses and advances incurred or made by it. Such
expenses shall include the reasonable compensation, disbursements and expenses
of the Trustee's agents and counsel.
TLGI and the Guarantor shall indemnify the Trustee, and its officers,
directors, employees and agents, for, and hold them harmless against, any loss
or liability incurred by it arising out of or in connection with the
administration of this trust and its rights or duties hereunder, including the
costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder. The Trustee shall notify TLGI and the Guarantor promptly of any
claim asserted against the Trustee for which it may seek indemnity. TLGI and
the Guarantor shall defend the claim and the Trustee shall cooperate in the
defence. The Trustee may have separate counsel and TLGI and the Guarantor shall
pay the reasonable fees and expenses of such counsel. TLGI and the Guarantor
need not pay for any settlement made without its prior written consent. TLGI
and the Guarantor need not reimburse any expense of indemnify against any loss
or liability to the extent incurred by the Trustee through its negligence, bad
faith or wilful misconduct.
To secure the payment obligations of TLGI and the Guarantor in this
Section 7.7, the Trustee shall have a Lien prior to the Senior Notes on all
assets held or collected by the Trustee, in its capacity as Trustee, except
assets held in trust to pay principal of, premium, if any, or interest on
particular Senior Notes.
When the Trustee incurs expenses or renders services in connection
with an Event of Default in Section 6.1(g) or (h), the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The obligations of TLGI and the Guarantor under this Section 7.7 and
any Lien arising hereunder shall survive the resignation or removal of any
trustee, the discharge of the obligations of TLGI and the Guarantor pursuant to
Article 8 and/or the termination of this Indenture.
7.8 REPLACEMENT OF TRUSTEES.
The Trustee may resign by so notifying TLGI provided that any
resignation of the Trustee (or any successor trustee) shall become effective
only upon the appointment of a successor trustee and such successor's acceptance
of its appointment. The Holders of a majority in principal amount of the
outstanding Senior Notes may remove the Trustee by so notifying TLGI and the
Trustee and may appoint a successor trustee with TLGI's prior written consent.
TLGI may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
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(b) the Trustee is adjudged a bankrupt or an insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a receiver or other public officer takes charge of the Trustee or
its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, TLGI shall notify each Holder of such event
and 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, and to the extent such amounts remain unpaid, the Trustee that has
resigned or has been removed shall retain the Lien afforded by Section 7.7.
Within one year after the successor Trustee takes office, the Holders of a
majority in principal amount of the outstanding Senior Notes may, with TLGI's
prior written consent, appoint a successor Trustee to replace the successor
Trustee appointed by TLGI.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to TLGI. Immediately after that, the
retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee, subject to the Lien provided in Section 7.7, the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. A successor Trustee shall mail notice of its succession to each
Noteholder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, or TLGI or the
Holders of at least 10% in principal amount of the outstanding Senior Notes may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this
Section 7.8, the obligations of TLGI and the Guarantor under Section 7.7 shall
continue for the benefit of the retiring Trustee.
7.9 SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates with, merges, amalgamates or converts
into, or transfers all or substantially all of its corporate trust business to,
another corporation, the resulting, surviving or transferee corporation without
any further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be successor Trustee.
7.10 ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder which shall be
eligible to act as Trustee under Trust Indenture Legislation. If at any time
the Trustee shall cease to be eligible in accordance
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with the provisions of this Section, the Trustee shall resign immediately in
the manner and with the effect hereinafter specified in this Article, and shall
duly and timely give notice to the Registrar of Companies (British Columbia),
or other duly authorized Person performing his duties, as may from time to time
be required by Trust Indenture Legislation.
ARTICLE 8
SATISFACTION AND DISCHARGE OF INDENTURE
8.1 TERMINATION OF THE OBLIGATIONS OF TLGI AND THE GUARANTOR.
Each of TLGI and the Guarantor may terminate its obligations under the
Senior Notes of any series and this Indenture, except those obligations referred
to in the penultimate paragraph of this Section 8.1, if all Senior Notes of such
series previously authenticated and delivered (other than destroyed, lost or
stolen Senior Notes which have been replaced or paid or Senior Notes for whose
payment money has theretofore been deposited with the Trustee in trust or
segregated and held in trust by TLGI and thereafter repaid to TLGI, as provided
in Section 8.4) have been delivered to the Trustee for cancellation and TLGI or
the Guarantor has paid all sums payable by it hereunder, or if:
(a) either (i) pursuant to Article 3, TLGI shall have given notice to
the Trustee and mailed a notice of redemption to each Holder of the
redemption of all of the Senior Notes of such series under arrangements
satisfactory to the Trustee for the giving of such notice or (ii) all
Senior Notes of such series have otherwise become due and payable
hereunder;
(b) TLGI or the Guarantor shall have irrevocably deposited or caused
to be deposited with the Trustee or a trustee reasonably satisfactory to
the Trustee, under the terms of an irrevocable trust agreement in form and
substance satisfactory to the Trustee, as trust funds in trust solely for
the benefit of the Holders for that purpose, cash in Canadian dollars,
Canadian Government Obligations, or a combination thereof, in such amount
as is sufficient without consideration of reinvestment of such interest, to
pay principal of, premium, if any, and interest on the outstanding Senior
Notes of such series to maturity or redemption, as certified in a
certificate of a nationally recognized firm of independent chartered
accountants; provided that the Trustee shall have been irrevocably
instructed to apply such money to the payment of said principal, premium,
if any, and interest with respect to the Senior Notes of such series;
(c) no Default or Event of Default with respect to this Indenture or
the Senior Notes of such series shall have occurred and be continuing on
the date of such deposit or shall occur as a result of such deposit and
such deposit will not result in a breach or violation of, or constitute a
default under. any other instrument to which TLGI or the Guarantor is a
party or by which it is bound;
(d) TLGI or the Guarantor shall have paid all other sums payable by
it hereunder; and
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(e) TLGI or the Guarantor shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent providing for the termination of TLGI's and the
Guarantor's obligation under the Senior Notes of such series, the related
Guarantee and this Indenture have been complied with.
Notwithstanding the foregoing paragraph, TLGI's obligations in
Sections 2.3, 2.4, 2.5, 4.1, 4.2 and 7.7 and the Guarantor's obligations in
respect thereof shall survive until the Senior Notes of such series are no
longer outstanding pursuant to Section 2.6. After the Senior Notes of such
series are no longer outstanding, TLGI's obligations in Sections 7.7, 8.3, 8.4
and 8.5 and the Guarantor's obligations in respect thereof shall survive.
After such delivery or irrevocable deposit the Trustee upon request
shall acknowledge in writing the discharge of TLGI's and the Guarantor's
obligations under the Senior Notes of such series except for those surviving
obligations specified above.
8.2 LEGAL DEFEASANCE AND COVENANT DEFEASANCE.
(a) Each of TLGI and the Guarantor may, at its option by Board
Resolution of the Board of Directors of TLGI or the Guarantor, as the case may
be, at any time, with respect to the Senior Notes of any series, elect to have
either paragraph (b) or paragraph (c) below be applied to the outstanding Senior
Notes of such series upon compliance with the conditions set forth in paragraph
(d).
(b) Upon TLGI's or the Guarantor's exercise under paragraph (a) of
the option applicable to this paragraph (b), TLGI and the Guarantor shall be
deemed to have been released and discharged from its obligations with respect to
the outstanding Senior Notes of any series on the date the conditions set forth
below are satisfied (hereinafter, "legal defeasance"). For this purpose, such
legal defeasance means that TLGI shall be deemed to have paid and discharged the
entire indebtedness represented by the outstanding Senior Notes of such series,
which shall thereafter be deemed to be "outstanding" only for the purposes of
paragraph (e) below and the other sections of and matters under this Indenture
referred to in (i) and (ii) below, and to have satisfied all its other
obligations under such Senior Notes and this Indenture insofar as such Senior
Notes are concerned (and the Trustee, at the expense of TLGI, shall execute
proper instruments acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder: (i) the rights of
Holders of outstanding Senior Notes of such series to receive solely from the
trust fund described in paragraph (d) below and as more fully set forth in such
paragraph, payments in respect of the principal of, premium, if any, and
interest on such Senior Notes when such payments are due, (ii) TLGI's
obligations with respect to such Senior Notes under Sections 2.3, 2.4 and 4.2.
and, with respect to the Trustee, under Section 7.7 and the Guarantor's
obligations in respect thereof, (iii) the rights, powers, trusts, duties and
immunities of the Trustee hereunder and (iv) this Article 8. Subject to
compliance with this Section 8.2, TLGI may exercise its option under this
paragraph (b) notwithstanding the prior exercise of its option under paragraph
(c) below with respect to the Senior Notes of such series.
(c) Upon the exercise by TLGI and the Guarantor under paragraph (a)
of the option applicable to this paragraph (c), each of TLGI and the Guarantor
shall be released and discharged from its obligations under any covenant
contained in Article 5 and in Sections 4.7
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through 4.9 with respect to the outstanding Senior Notes of any series on and
after the date the conditions set forth below are satisfied (hereinafter,
"covenant defeasance"), and the Senior Notes of such series shall thereafter be
deemed to be not "outstanding" for the purpose of any direction, waiver,
consent or declaration or act of Holders (and the consequences of any thereof)
in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder. For this purpose, such
covenant defeasance means that, with respect to the outstanding Senior Notes,
TLGI and the Guarantor may omit to comply with and shall have no liability in
respect of any term, condition or limitation set forth in any such covenant,
whether directly or indirectly, by reason of any reference elsewhere herein to
any such covenant or by reason of any reference in any such covenant to any
other provision herein or in any other document and such omission to comply
shall not constitute a Default or an Event of Default under Section 6.1(c),
but, except as specified above, the remainder of this Indenture and such
Senior Notes shall be unaffected thereby.
(d) The following shall be the conditions to application of either
paragraph, (b) or paragraph (c) above to the outstanding Senior Notes of any
series:
(1) TLGI shall irrevocably have deposited or caused to be deposited
with the Trustee (or another trustee satisfying the requirements of Section
7.10 who shall agree to comply with the provisions of this Section 8.2
applicable to it) as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of such Senior Notes, (x) cash, in
Canadian dollars, in an amount or (y) direct non-callable obligations of,
or non-callable obligations guaranteed by, the Government of Canada
("Canadian Government Obligations") maturing as to principal, premium, if
any, and interest in such amounts of cash, in Canadian dollars, and at such
times as are sufficient without consideration of any reinvestment of such
interest, to pay principal of, premium, if any, and interest on the
outstanding Senior Notes of such series not later than one day before the
due date of any payment, or (z) a combination thereof, sufficient, in the
opinion of a nationally recognized firm of independent chartered
accountants expressed in a written certification thereof delivered to the
Trustee, to pay and discharge, and which shall be applied by the Trustee
(or other qualifying trustee) to pay and discharge, principal of, premium,
if any, and interest on the outstanding Senior Notes of such series (except
lost, stolen or destroyed Senior Notes which have been replaced or repaid)
on the Maturity Date thereof or otherwise in accordance with the term of
this Indenture and of such Senior Notes; provided, however, that the
Trustee (or other qualifying trustee) shall have received an irrevocable
written order from TLGI instructing the Trustee (or other qualifying
trustee) to apply such money or the proceeds of such Canadian Government
Obligations to said payments with respect to the Senior Notes of such
series;
(2) no Default or Event of Default or event which with notice or
lapse of time or both would become a Default or an Event of Default with
respect to the Senior Notes of such series shall have occurred and be
continuing on the date of such deposit or, insofar as Section 6.1(a) is
concerned, at any time during the period ending on the later of the end of
three months and the 91st day after the date of such deposit (it being
understood that this condition shall not be deemed satisfied until the
expiration of such period);
(3) such legal defeasance or covenant defeasance shall not cause the
Trustee to have a conflicting interest with respect to any securities of
TLGI or the Guarantor;
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(4) such legal defeasance or covenant defeasance shall not result in
a breach or violation of, or constitute a Default or Event of Default
under, this Indenture or any other material agreement or instrument to
which TLGI or the Guarantor is a party or by which it is bound;
(5) in the case of an election under paragraph (b) above, TLGI shall
have delivered to the Trustee an Opinion of Counsel stating that the
Holders of the outstanding Senior Notes of such series will not recognize
income, gain or loss for Canadian federal income tax purposes as a result
of such legal defeasance and will be subject to Canadian federal income tax
on the same amounts, in the same manner and at the same times as would have
been the case if such legal defeasance had not occurred;
(6) in the case of an election under paragraph (c) above, TLGI shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of the outstanding Senior Notes of such series will not recognize
income, gain or loss for Canadian federal income tax purposes as a result
of such covenant defeasance and will be subject to Canadian federal income
tax on the same amounts, in the same manner and at the same times as would
have been the case if such covenant defeasance had not occurred;
(7) in the case of an election under either paragraph (b) or (c)
above, an Opinion of Counsel in the United States, satisfactory to the
Trustee, to the effect that, (x) the trust funds will not be subject to any
rights of any other holders of Indebtedness of TLGI or the Guarantor, and
(y) after the 91st day following the deposit, the trust funds will not be
subject to the effect of any applicable Bankruptcy Law; PROVIDED, HOWEVER,
that if a court were to rule under any such law in any case or proceeding
that the trust funds remained property of TLGI or the Guarantor, no opinion
needs to be given as to the effect of such laws on the trust funds except
the following: (A) assuming such trust funds remained in the Trustee's
possession prior to such court ruling to the extent not paid to Holders of
Senior Notes of such series, the Trustee will hold, for the benefit of the
Holders of Senior Notes of such series, a valid and enforceable security
interest in such trust funds that is not avoidable or invalid in bankruptcy
or otherwise, subject only to principles of equitable subordination, (B)
the Holders of Senior Notes of such series will be entitled to receive
adequate protection of their interests in such trust funds if such trust
funds are used, and (C) no property, rights in property or other interests
granted to the Trustee or the Holders of Senior Notes of such series in
exchange for or with respect to any of such funds will be subject to any
prior rights of any other Person, subject only to prior Liens granted under
Section 364 of Title 11 of the U.S. Bankruptcy Code or any section of
another Bankruptcy Law having the same effect, but still subject to the
foregoing clause (B);
(8) in the case of an election under either paragraph (b) or (c)
above, an Opinion of Counsel in Canada, satisfactory to the Trustee, to
substantially the same effect as the opinion referred to in subsection (7)
above, subject to such changes as may be reasonably necessary to reflect
any applicable Canadian Bankruptcy Law; and
(9) TLGI shall have delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that (x) all conditions precedent
provided for relating to either the legal defeasance under paragraph (b)
above or the covenant defeasance under
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paragraph (c) above, as the case may be, have been complied with and (y)
if any other Indebtedness of TLGI or the Guarantor shall then be
outstanding or committed, such legal defeasance or covenant defeasance
will not violate the provisions of the agreements or instruments
evidencing such Indebtedness.
(e) All money and Canadian Government Obligations (including the
proceeds thereof) deposited with the Trustee (or other qualifying trustee,
collectively for the purposes of this paragraph (e), the "Trustee") pursuant to
paragraph (d) above in respect of the outstanding Senior Notes of such series
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Senior Notes and this Indenture, to the payment to the
Holders of such Senior Notes of all sums due and to become due thereon in
respect of principal, premium, if any, and interest, but such money need not be
segregated from other funds except to the extent required by law.
TLGI shall, and TLGI shall cause the Guarantor, to pay and indemnify
the Trustee against any tax, fee or other charge imposed on or assessed against
the Canadian Government Obligations deposited pursuant to paragraph (d) above or
the principal, premium, if any, and interest received in respect thereof other
than any such tax, fee or other charge which by law is for the account of the
Holders of the outstanding Senior Notes of such series.
Anything in this Section 8.2 to the contrary notwithstanding, the
Trustee shall deliver or pay to TLGI from time to time upon the request, in
writing, by TLGI any money or Canadian Government Obligations held by it as
provided in paragraph (d) above which, in the opinion of a nationally recognized
firm of independent chartered accountants expressed in a written certification
thereof delivered to the Trustee, are in excess of the amount thereof which
would then be required to be deposited to effect an equivalent legal defeasance
or covenant defeasance.
8.3 APPLICATION OF TRUST MONEY.
The Trustee shall hold in trust money or Canadian Government
Obligations deposited with it pursuant to Sections 8.1 and 8.2, and shall apply
the deposited money and the money from Canadian Government Obligations in
accordance with this Indenture to the payment of principal of, premium, if any,
and interest on the Senior Notes of each series for which such deposit is made.
8.4 REPAYMENT TO TLGI OR GUARANTOR.
Subject to Sections 7.7, 8.1 and 8.2, the Trustee shall promptly pay
to TLGI or if deposited with the Trustee by the Guarantor, to the Guarantor,
upon receipt by the Trustee of an Officers' Certificate, any excess money,
determined in accordance with Section 8.2, held by it at any time. The Trustee
shall pay to TLGI or the Guarantor, upon receipt by the Trustee of an Officers'
Certificate, any money held by it for the payment of principal, premium, if any,
or interest that remains unclaimed for two years after payment to the Holder is
required; PROVIDED, HOWEVER, that the Trustee before being required to make any
payment may, but need not, at the expense of TLGI cause to be published once in
a newspaper of general circulation in Vancouver and Toronto or mail to each
Holder entitled to such money notice that such money remains unclaimed and that
after a date specified therein, which shall be at less 30 days from the date of
such publication or mailing, any unclaimed balance of such money then remaining
will be repaid to TLGI. After payment to TLGI
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or the Guarantor, Holders entitled to money must look solely to TLGI and the
Guarantor for payment as general creditors unless an applicable abandoned
property law designates another Person, and all liability of the Trustee with
respect to such money shall thereupon cease.
8.5 REINSTATEMENT.
If the Trustee is unable to apply any money or Canadian Government
Obligations in accordance with this Indenture 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, then and only
then TLGI's and the Guarantor's obligations under this Indenture and the Senior
Notes of such series shall be revived and reinstated as though no deposit had
been made pursuant to this Indenture until such time as the Trustee is permitted
to apply all such money or Canadian Government Obligations in accordance with
this Indenture; provided, however, that if TLGI or the Guarantor has made any
payment of principal of, premium, if any, or interest on any Senior Notes of
such series because of the reinstatement of its obligations, TLGI or the
Guarantor, as the case may be, shall be subrogated to the rights of the Holders
of such Senior Notes to receive such payment from the money or Canadian
Government Obligations held by the Trustee.
ARTICLE 9
AMENDMENTS, SUPPLEMENTS AND WAIVERS
9.1 WITHOUT CONSENT OF HOLDERS.
TLGI, when authorized by a Board Resolution of its Board of Directors,
and the Trustee may amend, waive or supplement this Indenture or the Senior
Notes without notice to or consent of any Holder:
(a) to cure any ambiguity, defect or inconsistency;
(b) to comply with Article 5;
(c) to provide for uncertificated Senior Notes in addition to
certificated Senior Notes; or
(d) to make any change that would provide any additional benefit or
rights to the Holders or that does not adversely affect the rights of any
Holder.
Notwithstanding the above, the Trustee and TLGI may not make any
change that adversely affects the rights of any Holder hereunder. TLGI shall be
required to deliver to the Trustee an Opinion of Counsel stating that any such
change made pursuant to paragraph (a) or (d) of this Section 9.1 does not
adversely affect the rights of any Holder.
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9.2 WITH CONSENT OF HOLDERS.
Subject to Section 6.4, TLGI, when authorized by a Board Resolution of
its Board of Directors, and the Trustee may amend this Indenture or the Senior
Notes with the written consent of the Holders of not less than a majority in
aggregate principal amount of each series of the Senior Notes then outstanding,
and the Holders of not less than a majority in aggregate principal amount of the
Senior Notes of such series then outstanding by written notice to the Trustee
may waive future compliance by TLGI or the Guarantor with any provision of this
Indenture, the Guarantee or the Senior Notes.
Notwithstanding the provisions of this Section 9.2, without the
consent of each Holder affected, an amendment or waiver, including a waiver
pursuant to Section 6.4, may not:
(a) reduce the percentage in outstanding aggregate principal amount
of such series of Senior Notes the Holders of which must consent to an
amendment, supplement or waiver of any provision of this Indenture, the
Guarantee or the Senior Notes;
(b) reduce or change the rate or time for payment of interest on any
Senior Note;
(c) change the currency in which any Senior Note, or any premium or
interest thereon, is payable;
(d) reduce the principal amount outstanding of or extend the fixed
maturity of any Senior Note or alter the redemption provisions with respect
thereto;
(e) waive a default in the payment of the principal of, premium, if
any, or interest on, or redemption or an offer to purchase required
hereunder with respect to, any Senior Note;
(f) make the principal of, premium, if any, or interest on any Senior
Note payable in money other than that stated in the Senior Note;
(g) modify this Section 9.2 or Section 6.4 or Section 6.7;
(h) modify or change any provision of this Indenture affecting the
subordination or ranking of the Senior Notes or the Guarantee in a manner
adverse to the Holders; or
(i) impair the right to institute suit for the enforcement of any
payment on or with respect to the Senior Notes of such series.
It shall not be necessary for the consent of the Holders under this
Section 9.2 to approve the particular form of any proposed amendment, supplement
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 9.2
becomes effective, TLGI shall mail to the Holder of each Senior Note affected
thereby, with a copy to the Trustee, a notice briefly describing the amendment,
supplement or waiver. Any failure of TLGI to mail such
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notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any amendment, supplement or waiver.
9.3 COMPLIANCE WITH TRUST INDENTURE LEGISLATION.
Every amendment of or supplement to this Indenture, the Guarantee or
each series of the Senior Notes shall comply with the Trust Indenture
Legislation as then in effect.
9.4 REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder is a continuing consent by such Holder and every subsequent
Holder of that Senior Note or portion of that Senior Note that evidences the
same debt as the consenting Holder's Senior Note, even if notation of the
consent is not made on any Senior Note. However, any such Holder or subsequent
Holder may revoke the consent as to his or her Senior Note or portion of a
Senior Note prior to such amendment, supplement or waiver becoming effective.
Such revocation shall be effective only if the Trustee receives the notice of
revocation before the date the amendment, supplement or waiver becomes
effective.
TLGI may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then notwithstanding the
second and third sentences of the immediately preceding paragraph, those Persons
who were Holders at such record date (or their duly designated proxies), and
only those Persons, shall be entitled to consent to such amendment, supplement
or waiver or to revoke any consent previously given, whether or not such Persons
continue to be Holders after such record date. Such consent shall be effective
only for actions taken within 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Holder, unless it makes a change described in any of clauses (a)
through (i) of Section 9.2; if it makes such a change, the amendment, supplement
or waiver shall bind every subsequent Holder of a Senior Note or portion of a
Senior Note that evidences the same debt as the consenting Holder's Senior Note.
9.5 NOTATION ON OR EXCHANGE OF SENIOR NOTES.
If an amendment, supplement or waiver changes the terms of a Senior
Note of any series, the Trustee shall (in accordance with the specific direction
of TLGI) request the Holder of the Senior Note to deliver it to the Trustee.
The Trustee shall (in accordance with the specific direction of TLGI) place an
appropriate notation on the Senior Note about the changed terms and return it to
the Holder. Alternatively, if TLGI or the Trustee so determines, TLGI in
exchange for the Senior Note shall issue and the Trustee shall authenticate a
new Senior Note that reflects the changed terms. Failure to make the
appropriate notation or issue a new Senior Note shall not affect the validity
and effect of such amendment, supplement or waiver.
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9.6 TRUSTEE MAY SIGN AMENDMENTS. ETC.
The Trustee shall sign any amendment, supplement or waiver authorized
pursuant to this Article 9 if the amendment, supplement or waiver 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, supplement or waiver, the Trustee shall be entitled to
receive, and shall be fully protected in relying upon, an Officers' Certificate
and an Opinion of Counsel stating that the execution of any amendment,
supplement or waiver is authorized or permitted by this Indenture, that it is
not inconsistent herewith and that it will be valid and binding upon TLGI in
accordance with its terms.
ARTICLE 10
GUARANTEE OF SENIOR NOTES
10.1 GUARANTEE.
Subject to the provisions of this Article 10, the Guarantor hereby
unconditionally guarantees to each Holder of a Senior Note authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the Senior
Notes or the obligations of TLGI to the Holders or the Trustee hereunder or
thereunder, that: (a) the principal of, premium, if any, and interest on the
Senior Notes will be duly and punctually paid in full when due, whether at
maturity, by acceleration or otherwise, and interest on the overdue principal
and (to the extent permitted by law) interest, if any, on the Senior Notes and
all other obligations of TLGI to the Holders or the Trustee hereunder or
thereunder (including fees, expenses or other) will be promptly paid in full or
performed, all in accordance with the terms hereof and thereof; and (b) in case
of any extension of time of payment or renewal of any Senior Notes, the same
will be promptly paid in full when due or performed in accordance with the term
of the extension or renewal, whether at Stated Maturity, by acceleration or
otherwise failing payment when due of any amount so guaranteed, or failing
performance of any other obligation of TLGI to the Holders, for whatever reason,
the Guarantor will be obligated to pay, or to perform or cause the payment or
performance of, the same immediately. An Event of Default under this Indenture
or the Senior Notes shall constitute an event of default under this Guarantee,
and shall entitle the Holders of Senior Notes to accelerate the obligations of
the Guarantor hereunder in the same manner and to the same extent as the
obligations of TLGI.
The Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Senior Notes or this Indenture, the absence of any action to enforce the same,
any waiver or consent by any holder of the Senior Notes with respect to any
provisions hereof or thereof, the recovery of any judgment against TLGI, any
action to enforce the same whether or not a Guarantee is affixed to any
particular Senior Note, or any other circumstance which might otherwise
constitute a legal or equitable discharge or defence of a guarantor. The
Guarantor hereby waives the benefit of diligence, presentment, demand of
payment, filing of claim with a court in the event of insolvency or bankruptcy
of TLGI, any right to require a proceeding first against TLGI, protest, notice
and all demands whatsoever and covenants that its Guarantee will not be
discharged except by complete performance of the obligations contained in
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the Senior Notes, this Indenture and this Guarantee. If any Holder or the
Trustee is required by any court or otherwise to return to TLGI, or any
custodian, trustee, receiver, liquidator or other similar official acting in
relation to TLGI, any amount paid by the Guarantor to the Trustee or such
Holder, this Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect. The Guarantor further agrees that, as
between it, on the one hand, and the Holders of Senior Notes and the Trustee,
on the other hand, (a) subject to this Article 10, the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6
hereof for the purposes of this Guarantee, notwithstanding any stay, injunction
or other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (b) in the event of any acceleration of such obligations
as provided in Article 6 hereof, such obligations (whether or not due and
payable) shall forthwith become due and payable by the Guarantor for the
purpose of this Guarantee.
This Guarantee shall remain in full force and effect and continue to
be effective should any petition be filed by or against TLGI for liquidation,
bankruptcy or reorganization, should TLGI become insolvent or make an assignment
for the benefit of creditors or should a receiver or trustee be appointed for
all or any significant part of TLGI's assets, and shall, to the fullest extent
permitted by law, continue to be effective or be reinstated, as the case may be,
if at any time payment and performance of the Senior Notes are, pursuant to
applicable law, rescinded or reduced in amount, or must otherwise be restored or
returned by any obligee on the Senior Notes, whether as a "fraudulent
preference", "fraudulent conveyance" or otherwise, all as though such payment or
performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Senior Notes shall, to
the fullest extent permitted by law, be reinstated and deemed reduced only by
such amount paid and not so rescinded, reduced, restored or returned.
No shareholder, officer, director, employer or incorporator, past,
present or future, as such, shall have any personal liability under this
Guarantee by reason of his, her or its status as such shareholder, officer,
director, employer or incorporator.
The Guarantee constitutes a guarantee of payment and ranks pari passu
in right of payment to all senior indebtedness of the Guarantor.
10.2 EXECUTION AND DELIVERY OF GUARANTEE.
To further evidence the Guarantee set forth in Section 10.1, the
Guarantor hereby agrees that a notation of the Guarantee, substantially in the
form included in Exhibit B hereto, shall be endorsed on each Senior Note
authenticated and delivered by the Trustee after the Guarantee is executed by
either manual or facsimile signature of any Officer of the Guarantor. The
validity and enforceability of the Guarantee shall not be affected by the fact
that it is not affixed to any particular Senior Note.
The Guarantor hereby agrees that its Guarantee set forth in Section
10.1 shall remain in full force and effect notwithstanding any failure to
endorse on each Senior Note a notation of the Guarantee.
<PAGE>
- 43 -
If an Officer of the Guarantor whose signature is on this Indenture or
a Senior Note no longer holds that office at the time the Trustee authenticates
the Senior Note or at any time thereafter, the Guarantor's Guarantee of such
Senior Note shall be valid nevertheless.
The delivery of any Senior Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the Guarantee
set forth in this Indenture on behalf of the Guarantor.
ARTICLE 11
MISCELLANEOUS
11.1 NOTICES.
Any notice or communication shall be sufficiently given if in writing
and delivered in Person or mailed by first class mail, postage prepaid,
addressed as follows:
If to TLGI or the Guarantor to:
The Loewen Group Inc.
4126 Norland Avenue
Burnaby, BC V5G 3S8
Canada
Attention: Chief Financial Officer
With a copy to:
Loewen Group International, Inc.
3190 Tremont Avenue
Trevose, Pennsylvania
USA 19053
Attention: Chief Financial Officer
If to the Trustee to;
The Trust Company of Bank of Montreal
6th Floor, First Bank Tower
595 Burrard Street
P.O. Box 49500, Bentall Centre Postal Station
Vancouver, BC V7X 1L7
Attention: Director, Client Relations
<PAGE>
- 44 -
The parties hereto by notice to the other parties may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed, postage prepaid, to a Holder shall
be mailed by first class mail to such Holder at the address of such Holder as it
appears on the Senior Notes register maintained by the Trustee and shall be
sufficiently given to such Holder if so mailed within the time prescribed.
Copies of any such communication or notice to a Holder shall also be mailed to
the Trustee.
Failure to mail a notice or communication to a Noteholder or any
defect in it shall not affect its sufficiency with respect to other Holders.
Except for a notice to the Trustee, which is deemed given only when received, if
a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
11.2 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by TLGI or the Guarantor to the
Trustee to take any action under this Indenture, such obligor shall furnish to
the Trustee:
(a) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(b) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
11.3 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(a) a statement that the person making such certificate or opinion
has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statement or opinions contain in such
certificate or opinion are based;
(c) a statement that, in the opinion of such person, he or she has
made such examination or investigation as is necessary to enable him or her
to express an opinion as to whether or not such covenant or condition has
been complied with; and
(d) a statement as to whether or not, in the opinion of such person,
such condition or covenant has been complied with; PROVIDED, HOWEVER, that
with respect to matters of fact in Opinion of Counsel may rely on an
Officers' Certificate or certificates of public officials.
<PAGE>
- 45 -
11.4 RULES BY TRUSTEE.
The Trustee may make reasonable rules for action by or at a meeting of
Noteholders.
11.5 GOVERNING LAW.
This Indenture shall be construed in accordance with and governed by
the laws of British Columbia and the laws of Canada applicable therein and the
parties hereto agree that any legal action or proceedings against any of them
with respect to this Indenture may be brought in the courts of British Columbia
and by execution and delivery of this Indenture, each of the said parties hereby
irrevocably attorns and submits to the non-exclusive jurisdiction of the courts
of British Columbia.
11.6 INTEREST ACT (CANADA).
For the purposes of the Interest Act (Canada), the yearly rate of
interest to which the interest rate applicable to any of the Senior Notes (the
"said rate") is equivalent, where such interest is to be computed on the basis
of a year (the "deemed year") consisting of fewer days than the actual number of
days in the one year period which commences on the first day of the period of
computation ("actual year") is equal to the said rate multiplied by the number
of days in the actual year and divided by the number of days in the deemed year.
11.7 NO INTERPRETATION OF OTHER AGREEMENT.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of TLGI, the Guarantor or any of its Subsidiaries. Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.
11.8 NO RECOURSE AGAINST OTHERS.
A director, officer, employee, shareholder or Affiliate, as such, of
TLGI or the Guarantor shall not have any liability for any obligations of TLGI
under the Senior Notes or this Indenture or for any obligations of the Guarantor
under the Guarantee or for any claim based on, in respect of or by reason of,
such obligations or their creation. Each Holder by accepting a Senior Note
waives and releases all such liability. Nothing in this Section 11.8 waives or
releases any liability created by a term of this Indenture or any agreement
collateral thereto or any security which secures any obligation under this
Indenture.
11.9 SUCCESSORS.
All agreements of each of TLGI and the Guarantor in this Indenture and
the Senior Notes and the Guarantee shall bind its successors. All agreements of
the Trustee in this Indenture shall bind its successors.
<PAGE>
- 46 -
11.10 DUPLICATE ORIGINALS.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all such executed copies together
represent the same agreement.
11.11 SEVERABILITY.
In case any provision in this Indenture, the Guarantee or the Senior
Notes shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby, and a Holder shall have no claim therefor against any party
hereto.
11.12 TABLE OF CONTENTS, HEADING, ETC.
The Table of Contents and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not to
be considered a part hereof, and shall in no way modify or restrict any of the
terms or provisions hereof.
11.13 BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Senior Notes, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder, and the Holders, any benefit or any legal or equitable right, remedy
or claim under this Indenture.
IN WITNESS WHEREOF, the Parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
THE LOEWEN GROUP INC. LOEWEN GROUP INTERNATIONAL, INC.
By: ___________________________ c/s By: _______________________________ c/s
Name: Name:
Title: Title:
THE TRUST COMPANY OF BANK OF
MONTREAL, as Trustee
By: ___________________________
Name:
Title:
By: ___________________________
Name:
Title:
<PAGE>
EXHIBIT A
THE LOEWEN GROUP INC.
% SERIES 5 SENIOR GUARANTEED NOTES DUE [ ]
NO.____ CDN. $__________
THE LOEWEN GROUP INC., a corporation incorporated under the laws of
the Province of British Columbia, Canada (herein called the "Company", which
term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to [ ] or
registered assigns, the principal sum of __________________ Cdn. Dollars on
[ ], at the offices or agencies of the Company referred to below, and to
pay interest thereon on _________ and _______________, in each year,
commencing on ____________________, accruing from the most recent Interest
Payment Date to which interest has been paid or duly provided for or, if no
interest has been paid, from the original date of issuance, at the rate of
% per annum, until the principal hereof is paid or duly provided for.
The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, as provided in the Indenture, as defined
below, be paid to the person in who name this Note is registered at the close
of business on the Regular Record Date for such interest, which shall be
[ ]or [ ] (whether or not a Business Day), as the case may be,
next preceding such Interest Payment Date (each a "Regular Record Date").
Any such interest not so punctually paid, or duly provided for, and interest
on such unpaid interest at the rate borne by the Notes, to the extent lawful,
shall forthwith cease to be payable to the Holder on such Regular Record
Date, and shall be paid to the person in whose name this Note is registered
at the close of business on a special record date for the payment of such
defaulted interest to be fixed by the Trustee, notice of which shall be given
to Holders of Senior Notes not less than 10 days prior to such special record
date.
Payment of the principal of, premium, if any, and interest on this
Note will be made at the offices or agencies of the Company maintained for
that purpose in Vancouver, British Columbia, Toronto, Ontario and Montreal,
Quebec or at such other office or agency of the Company as may be maintained
for such purpose, in lawful money of Canada; PROVIDED, HOWEVER, that payment
of interest may be made at the option of the Company by cheque mailed to the
address of the person entitled thereto as such address shall appear on the
security register maintained by the Trustee.
Reference is hereby made to the further provisions of this Note set
forth on the reverse.
<PAGE>
Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof by manual
signature, and a seal has been affixed hereon, this Note shall not be
entitled to any benefit under the Indenture, or be valid or obligatory for
any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its Corporate seal.
Dated:
THE LOEWEN GROUP INC.
By: __________________________________ C/S
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes of the series designated therein referred
to in the within-mentioned Indenture.
THE TRUST COMPANY OF BANK OF
MONTREAL as TRUSTEE
By: _______________________________________
Authorized Officer
(No writing on this panel except by the Trustee or other Registrar)
_______________________________________________________________________________
Date of Registration In Whose Name Registered Signature of Trustee or
other Registrar
______________________ __________________________ __________________________
______________________ __________________________ __________________________
______________________ __________________________ __________________________
______________________ __________________________ __________________________
<PAGE>
[Reverse of note]
The further provisions of this note are as follows:
1. INDENTURE. This Note is one of a duly authorized series of
Senior Notes of the Company designated as its -% Senior Guaranteed Notes due
[ ](the "Senior Notes"), which are issued under an indenture (herein
called the "Indenture") dated as of [ ], among The Loewen Group Inc.,
a British Columbia corporation, as issuer (the "Company"), Loewen Group
International, Inc., a Delaware corporation, as guarantor of the obligations
of the Company under the Indenture (the "Guarantor") and The Trust Company of
Bank of Montreal, a -, as trustee (herein called the "Trustee," which term
includes any successor Trustee under the Indenture), to which this Indenture
and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties,
obligations and immunities thereunder of the Company, the Trustee, the
Guarantor and the Holders of the Senior Notes, and of the terms upon which
the Senior Notes are, and are to be, authenticated and delivered.
All capitalized terms used in this Note which are defined in the
Indenture and not otherwise defined herein shall have the meanings given to
them in the Indenture.
No reference herein to the Indenture and no provisions of this Note
or of the Indenture shall alter or impair the obligation of the Company or
the Guarantor, which is absolute and unconditional, to pay the principal of,
premium, if any, and interest on this Note at the times, place and rate, and
in the coin or currency, herein prescribed.
2. REDEMPTION. [The Senior Notes will not be redeemable at the
option of the Company.]
[(a) OPTIONAL REDEMPTION. The Senior Notes are subject to
redemption, at the option of the Company, as a whole or in part, in
principal amounts of CDN$1,000 or any integral multiple of CDN$1,000,
at any time and in part from time to time upon not less than 30 nor
more than 60 days' prior notice at a Redemption Price equal to the
higher of Canada Yield Price and par, plus, in each case, accrued
and unpaid interest, if any, to (but excluding) the Redemption Date,
all a sprovided in the Indenture.
(b) PARTIAL REDEMPTION. In the event of redemption of this Note
in part only, a new Senior Note or Senior Notes for the unredeemed
portion hereof shall be issued in the name of the Holder hereof upon
the cancellation hereof.]
3. GUARANTEE. This Note is entitled to a senior Guarantee made
for the benefit of the Holders. Reference is hereby made to the Guarantee
set out below and the Indenture (including, without limitation, Article 10
thereof) for the terms of the Guarantee.
4. DEFAULTS AND REMEDIES. If an Event of Default shall occur and
be continuing, the principal of all of the outstanding Senior Notes, plus all
accrued and unpaid interest, if any, to and including the date the Senior
Notes are paid, may be declared due and payable in the manner and with the
effect provided in the Indenture.
5. DEFEASANCE. The Indenture contains provisions (which
provisions apply to this Note) for defeasance at any time of (a) the entire
indebtedness of the Company and the Guarantor under this Note and (b) certain
restrictive covenants and related Defaults and Events of Default, in each
case upon compliance by the Company with certain conditions set forth therein.
6. AMENDMENTS AND WAIVERS. The Indenture permits, with certain
exceptions as therein provided, the amendment thereof and the modification of
the rights and obligations of the Company and the rights of the Holders under
the Indenture at any time by the Company and the Trustee with the consent of
the Holders of not less than a majority in aggregate principal amount of the
Senior Notes of each series at the time outstanding. The Indenture also
contains provisions permitting the Holders of specified percentages in
aggregate principal amount of each series of the Senior Notes at the time
outstanding, on behalf of the Holders of all the Senior Notes of such series,
to waive compliance by the Company with certain provisions of the Indenture
and certain past Defaults under the Indenture and this Senior Note and their
consequences. Any such consent or waiver by or on behalf of the Holder of
this Note shall be conclusive and binding upon such Holder and upon all
future Holders of this Note and of any Senior Note issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof
whether or not notation of such consent or waiver is made upon this Note.
7. DENOMINATIONS, TRANSFER AND EXCHANGE. The Senior Notes are
issuable only in registered form without coupons in denominations of
CDN$1,000 and any integral multiple thereof. As provided in the Indenture
and
<PAGE>
subject to certain limitations therein set forth, the Senior Notes are
exchangeable for a like aggregate principal amount of Senior Notes of a
different authorized denomination, as requested by the Holder surrendering
the same.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Note is registrable on the security
register of the Company, upon surrender of this Note for registration of
transfer at the office or agency of the Company maintained for such purpose
in Vancouver, British Columbia or at such other office or agency of the
Company as may be maintained for such purpose, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder hereof or his or her
attorney duly authorized in writing, and thereupon one or more new Senior
Notes, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.
No service charge shall be made for any registration of transfer or
exchange or redemption of Senior Notes, but the Company may require payment
of a sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
8. PERSONS DEEMED OWNERS. Prior to and at the time of due
presentment of this Note for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat the person in
whose name this Note is registered as the owner hereof for all purposes,
whether or not this Note shall be overdue, and neither the Company, the
Trustee nor any agent shall be affected by notice to the contrary.
9. GOVERNING LAW. This Note and the Guarantee shall be governed
by and construed in accordance with the laws of British Columbia and the laws
of Canada applicable therein.
ASSIGNMENT FORM
If you the holder want to assign this Senior Note, fill in the form below and
have your signature guaranteed:
I or we assign and transfer this Senior Note to
______________________________________________________________________________
(Insert assignee's social insurance, social security or tax ID number) _______
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Print or type assignee's name, address and postal or zip code) and
irrevocably appoint
______________________________________________________________________________
<PAGE>
agent to transfer this Senior Note on the books of the Company. The agent
may substitute another to act for him. _______________________________________
Date: ______________ Your signature: ______________________________
(Sign exactly as your name appears on the
other side of this Senior Note)
Signature Guarantee: _________________________________________________________
<PAGE>
EXHIBIT B
SENIOR GUARANTEE
For value received, the undersigned hereby unconditionally
guarantees to the Holder of this Senior Note the payments of principal of,
premium, if any, and interest on this Senior Note in the amounts and at the
time when due, and interest on the overdue principal, premium, if any, and
interest, if any, of this Senior Note, if lawful, and the payment or
performance of all other obligations of The Loewen Group Inc. under the
Indenture or the Senior Notes, to the Holder of this Senior Note and the
Trustee, all in accordance with and subject to the terms and limitations of
this Senior Note, the Indenture (including, without limitation, Article 10
thereof) and this Guarantee. This Guarantee will become effective in
accordance with Article 2 of the Indenture and its terms shall be evidenced
therein. The validity and enforceability of the Guarantee shall not be
affected by the fact that it is not affixed to any particular Senior Note.
The obligations of the undersigned to the Holders of Senior Notes
and to the Trustee pursuant to the Guarantee and the Indenture are expressly
set forth in the Indenture (including, without limitation, Article 10
thereof) and reference is hereby made to the Indenture for the precise terms
of the Guarantee and all of the other provisions of the Indenture to which
this Guarantee relates. Each Holder of a Senior Note, by accepting the same,
agrees to and shall be bound by such provisions.
IN WITNESS WHEREOF, the Guarantor has caused this instrument to be
duly executed and sealed as a deed.
Dated:
LOEWEN GROUP INTERNATIONAL, INC.
By: ______________________________________
Name:
Title:
<PAGE>
- -------------------------------------------------------------------------------
LOEWEN GROUP INTERNATIONAL, INC., as Issuer
THE LOEWEN GROUP INC., as Guarantor
and
STATE STREET BANK AND TRUST COMPANY, as Trustee
INDENTURE
Dated as of September 30, 1997
$300,000,000
Senior Guaranteed Notes
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE ONE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION. . . . . . . . . . . . 1
1.01. Definitions.. . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02. Incorporation by Reference of Trust Indenture Act.. . . . . . .19
1.03. Rules of Construction.. . . . . . . . . . . . . . . . . . . . .20
ARTICLE TWO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
THE NOTES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
2.01. Issuance of Notes.. . . . . . . . . . . . . . . . . . . . . . .20
2.02. Restrictive Legends . . . . . . . . . . . . . . . . . . . . . .21
2.03. Execution and Authentication. . . . . . . . . . . . . . . . . .22
2.04. Registrar and Paying Agent. . . . . . . . . . . . . . . . . . .23
2.05. Paying Agent To Hold Money in Trust.. . . . . . . . . . . . . .23
2.06. Noteholder Lists. . . . . . . . . . . . . . . . . . . . . . . .24
2.07. Transfer and Exchange.. . . . . . . . . . . . . . . . . . . . .24
2.08. Replacement Notes.. . . . . . . . . . . . . . . . . . . . . . .24
2.09. Book-Entry Provisions for Global Note.. . . . . . . . . . . . .24
2.10. Special Transfer Provisions.. . . . . . . . . . . . . . . . . .26
2.11. Outstanding Notes.. . . . . . . . . . . . . . . . . . . . . . .27
2.12. Treasury Notes. . . . . . . . . . . . . . . . . . . . . . . . .27
2.13. Temporary Notes.. . . . . . . . . . . . . . . . . . . . . . . .27
2.14. Cancellation. . . . . . . . . . . . . . . . . . . . . . . . . .27
2.15. Defaulted Interest. . . . . . . . . . . . . . . . . . . . . . .28
2.16. CUSIP Number. . . . . . . . . . . . . . . . . . . . . . . . . .28
2.17. Deposit of Moneys.. . . . . . . . . . . . . . . . . . . . . . .28
ARTICLE THREE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
PUT OPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
3.01. Put Option. . . . . . . . . . . . . . . . . . . . . . . . . . .28
3.02. Effect of Put Option Notice.. . . . . . . . . . . . . . . . . .29
3.03. Deposit of Put Option Price.. . . . . . . . . . . . . . . . . .29
<PAGE>
ARTICLE FOUR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
4.01. Payment of Notes. . . . . . . . . . . . . . . . . . . . . . . .29
4.02. Maintenance of Office or Agency.. . . . . . . . . . . . . . . .29
4.03. Corporate Existence.. . . . . . . . . . . . . . . . . . . . . .30
4.04. Payment of Taxes and Other Claims.. . . . . . . . . . . . . . .30
4.05. Maintenance of Properties; Insurance; Books and Records;
Compliance with Law.. . . . . . . . . . . . . . . . . . . . . .31
4.06. Compliance Certificate. . . . . . . . . . . . . . . . . . . . .31
4.07. Limitation on Indebtedness. . . . . . . . . . . . . . . . . . .32
4.08. Limitation on Restricted Payments.. . . . . . . . . . . . . . .33
4.09. Limitation on Issuances and Sale of Preferred Stock by
Restricted Subsidiaries.. . . . . . . . . . . . . . . . . . . .35
4.10. Limitation on Liens.. . . . . . . . . . . . . . . . . . . . . .35
4.11. Change of Control.. . . . . . . . . . . . . . . . . . . . . . .36
4.12. Disposition of Proceeds of Asset Sales. . . . . . . . . . . . .38
4.13. Limitation on Transactions with Interested Persons. . . . . . .40
4.14. Limitation on Dividends and Other Payment Restrictions
Affecting Subsidiaries. . . . . . . . . . . . . . . . . . . . .41
4.15. Limitations on Sale-Leaseback Transactions. . . . . . . . . . .42
4.16. Limitation on Applicability of Certain Covenants. . . . . . . .42
4.17. Commission Reports. . . . . . . . . . . . . . . . . . . . . . .43
4.18. Rule 144A Information Requirement.. . . . . . . . . . . . . . .43
4.19. Waiver of Stay, Extension or Usury Laws.. . . . . . . . . . . .43
ARTICLE FIVE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
SUCCESSOR CORPORATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
5.01. When LGII May Merge, Etc. . . . . . . . . . . . . . . . . . . .44
5.02. Successor Substituted.. . . . . . . . . . . . . . . . . . . . .45
ARTICLE SIX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45
REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45
6.01. Events of Default.. . . . . . . . . . . . . . . . . . . . . . .45
6.02. Acceleration. . . . . . . . . . . . . . . . . . . . . . . . . .47
6.03. Other Remedies. . . . . . . . . . . . . . . . . . . . . . . . .48
6.04. Waiver of Past Defaults.. . . . . . . . . . . . . . . . . . . .48
6.05. Control by Majority.. . . . . . . . . . . . . . . . . . . . . .48
6.06. Limitation on Suits.. . . . . . . . . . . . . . . . . . . . . .49
Note: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
- ii -
<PAGE>
6.07. Right of Holders to Receive Payment.. . . . . . . . . . . . . .49
6.08. Collection Suit by TRUSTEE. . . . . . . . . . . . . . . . . . .49
6.09. Trustee May File Proofs of Claims.. . . . . . . . . . . . . . .50
6.10. Priorities. . . . . . . . . . . . . . . . . . . . . . . . . . .50
6.11. Undertaking for Costs.. . . . . . . . . . . . . . . . . . . . .51
6.12. Restoration of Rights and Remedies. . . . . . . . . . . . . . .51
ARTICLE SEVEN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
7.01. Duties. . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
7.02. Rights of Trustee.. . . . . . . . . . . . . . . . . . . . . . .52
7.03. Individual Rights of Trustee. . . . . . . . . . . . . . . . . .53
7.04. Trustee's Disclaimer. . . . . . . . . . . . . . . . . . . . . .53
7.05. Notice of Default.. . . . . . . . . . . . . . . . . . . . . . .53
7.06. Money Held in Trust.. . . . . . . . . . . . . . . . . . . . . .54
7.07. Reports by Trustee to Holders.. . . . . . . . . . . . . . . . .54
7.08. Compensation and Indemnity. . . . . . . . . . . . . . . . . . .54
7.09. Replacement of Trustee. . . . . . . . . . . . . . . . . . . . .55
7.10. Successor Trustee by Merger, Etc. . . . . . . . . . . . . . . .56
7.11. Eligibility; Disqualification.. . . . . . . . . . . . . . . . .56
7.12. Preferential Collection of Claims Against LGII. . . . . . . . .56
ARTICLE EIGHT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56
SATISFACTION AND DISCHARGE OF INDENTURE. . . . . . . . . . . . . . . . . . . .56
8.01. Termination of the Obligations of LGII and Loewen.. . . . . . .57
8.02. Legal Defeasance and Covenant Defeasance. . . . . . . . . . . .58
8.03. Application of Trust Money. . . . . . . . . . . . . . . . . . .61
8.04. Repayment to LGII or Guarantor. . . . . . . . . . . . . . . . .61
8.05. Reinstatement.. . . . . . . . . . . . . . . . . . . . . . . . .62
ARTICLE NINE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63
AMENDMENTS, SUPPLEMENTS AND WAIVERS. . . . . . . . . . . . . . . . . . . . . .63
9.01. Without Consent of Holders. . . . . . . . . . . . . . . . . . .63
9.02. With Consent of Holders.. . . . . . . . . . . . . . . . . . . .63
9.03. Compliance with Trust Indenture Act.. . . . . . . . . . . . . .64
9.04. Revocation and Effect of Consents.. . . . . . . . . . . . . . .65
9.05. Notation on or Exchange of Notes. . . . . . . . . . . . . . . .65
9.06. Trustee May Sign Amendments, etc. . . . . . . . . . . . . . . .65
Note: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
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ARTICLE TEN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .66
GUARANTEE OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .66
10.01. Guarantee.. . . . . . . . . . . . . . . . . . . . . . . . . . .66
10.02. Execution and Delivery of Guarantee.. . . . . . . . . . . . . .67
10.03. Interest Act (Canada).. . . . . . . . . . . . . . . . . . . . .68
ARTICLE ELEVEN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .68
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .68
11.01. Trust Indenture Act of 1939.. . . . . . . . . . . . . . . . . .68
11.02. Notices.. . . . . . . . . . . . . . . . . . . . . . . . . . . .68
11.03. Communication by Holders with Other Holders.. . . . . . . . . .69
11.04. Certificate and Opinion as to Conditions Precedent. . . . . . .69
11.05. Statements Required in Certificate or Opinion.. . . . . . . . .70
11.06. Rules by Trustee, Paying Agent, Registrar.. . . . . . . . . . .70
11.07. Governing Law.. . . . . . . . . . . . . . . . . . . . . . . . .70
11.08. Consent to Service of Process.. . . . . . . . . . . . . . . . .70
11.09. No Interpretation of Other Agreements.. . . . . . . . . . . . .71
11.10. No Recourse Against Others. . . . . . . . . . . . . . . . . . .71
11.11. Successors. . . . . . . . . . . . . . . . . . . . . . . . . . .71
11.12. Duplicate Originals.. . . . . . . . . . . . . . . . . . . . . .71
11.13. Separability. . . . . . . . . . . . . . . . . . . . . . . . . .71
11.14. Table of Contents, Headings, Etc. . . . . . . . . . . . . . . .72
11.15. Benefits of Indenture.. . . . . . . . . . . . . . . . . . . . .72
Note: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
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INDENTURE, dated as of September 30, 1997, between Loewen Group
International, Inc., a Delaware corporation ("LGII"), The Loewen Group Inc.,
a body corporate organized under and governed by the laws of the Province of
British Columbia, Canada ("Loewen") and State Street Bank and Trust Company,
a Massachusetts chartered trust company, as trustee (the "Trustee").
Each party hereto agrees as follows for the benefit of each other
party and, except as otherwise provided herein, for the equal and ratable
benefit of the Holders of Senior Guaranteed Notes due 2009 (the "Notes")
issued by LGII in connection with the offer and sale of 6.70% Pass-Through
Asset Trust Certificates issued by the Loewen Pass-Through Asset Trust 1997-1.
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
1.01. DEFINITIONS.
"Acquired Indebtedness" means Indebtedness of a person (a) assumed
or created in connection with an Asset Acquisition from such person or (b)
existing at the time such person becomes a Restricted Subsidiary of any other
person.
"Affiliate" means, with respect to any specified person, any other
person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified person.
"Agent Members" shall have the meaning set forth in Section 2.09.
"Asset Acquisition" means (a) an Investment by Loewen or any
Restricted Subsidiary of Loewen (including, without limitation, LGII) in any
other person pursuant to which such person shall become a Restricted
Subsidiary of Loewen, or shall be merged with or into Loewen or any
Restricted Subsidiary of Loewen, (b) the acquisition by Loewen or any
Restricted Subsidiary of Loewen of the assets of any person (other than a
Restricted Subsidiary of Loewen) which constitute all or substantially all of
the assets of such person or (c) the acquisition by Loewen or any Restricted
Subsidiary of Loewen of any division or line of business of any person (other
than a Restricted Subsidiary of Loewen).
"Asset Sale" means any direct or indirect sale, issuance,
conveyance, transfer, lease or other disposition to any person other than
Loewen or a Restricted Subsidiary of Loewen (including, without limitation,
LGII), in one or a series of related transactions, of (a) any Capital Stock
of any Restricted Subsidiary of Loewen (other than in respect of directors'
qualifying shares or investments by foreign nationals mandated by applicable
law) or of First Capital Life Insurance Company of Louisiana, National
Capitol Life Insurance Company, Security Industrial Insurance Company,
Security Industrial Fire Insurance Company or any successors to such
Subsidiaries; (b) all or substantially all of the properties and assets of
any division or line of business of Loewen or any Restricted Subsidiary of
Loewen; or (c) any other properties or assets of Loewen or any Restricted
Subsidiary of Loewen other than properties and assets sold in the
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ordinary course of business. For the purposes of this definition, the term
"Asset Sale" shall not include (i) any sale, transfer or other disposition of
equipment, tools or other assets (including Capital Stock of any Restricted
Subsidiary of Loewen) by Loewen or any of its Restricted Subsidiaries in one
or a series of related transactions in respect of which Loewen or such
Restricted Subsidiary receives cash or property with an aggregate Fair Market
Value of $2,000,000 or less; and (ii) any sale, issuance, conveyance,
transfer, lease or other disposition of properties or assets that is governed
by the provisions of Article IV.
"Asset Sale Offer" shall have the meaning set forth in Section 4.12.
"Asset Sale Offer Price" shall have the meaning set forth in
Section 4.12.
"Asset Sale Purchase Date" shall have the meaning set forth in
Section 4.12.
"Attributable Value" means, as to any particular lease under which
any person is at the time liable other than a Capitalized Lease Obligation,
and at any date as of which the amount thereof is to be determined, the total
net amount of rent required to be paid by such person under such lease during
the initial term thereof as determined in accordance with GAAP, discounted
from the last date of such initial term to the date of determination at a
rate per annum equal to the discount rate which would be applicable to a
Capitalized Lease Obligation with a like term in accordance with GAAP. The
net amount of rent required to be paid under any such lease for any such
period shall be the aggregate amount of rent payable by the lessee with
respect to such period after excluding amounts required to be paid on account
of insurance, taxes, assessments, utility, operating and labor costs and
similar charges. In the case of any lease which is terminable by the lessee
upon the payment of a penalty, such net amount shall also include the amount
of such penalty, but no rent shall be considered as required to be paid under
such lease subsequent to the first date upon which it may be so terminated.
"Attributable Value" means, as to a Capitalized Lease Obligation under which
any person is at the time liable and at any date as of which the amount
thereof is to be determined, the capitalized amount thereof that would appear
on the face of a balance sheet of such person in accordance with GAAP.
"Bankruptcy Law" means Title 11 of the United States Code or any
similar law for the relief of debtors.
"Board of Directors" means the board of directors of LGII or
Loewen, as the case may be, or any duly authorized committee of such board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of LGII or Loewen, as the case may be, to
have been duly adopted by the Board of Directors of LGII or Loewen, as the
case may be, and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in The City of New
York, State of New York or the city in which the Corporate Trust Office is
located, are authorized or obligated by law, regulation or executive order to
close.
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"Call Option" means the option held by the Callholder pursuant to
which the Callholder has the right to purchase the Notes from the Trust on
the Final Distribution Date at the Call Price.
"Call Price" means 100% of the principal amount of the Notes on the
Final Distribution Date.
"Callholder" means Union Bank of Switzerland, London Branch.
"Canadian Revolver" means the CDN $50,000,000 Operating Credit
Agreement dated August 15, 1994, among The Loewen Group Inc., Loewen Group
International, Inc. and Royal Bank of Canada, as amended and supplemented
from time to time.
"Canadian Term Loan" means the CDN $35,000,000 Credit Agreement
dated as of January 12, 1995 between The Loewen Group Inc. and Loewen Group
International, Inc. and Dresdner Bank Canada, as amended and supplemented
from time to time.
"Capital Stock" means, with respect to any person, any and all
shares, interests, participations, rights in or other equivalents (however
designated) of such person's capital stock, and any rights (other than debt
securities convertible into capital stock), warrants or options exchangeable
for or convertible into such capital stock.
"Capitalized Lease Obligation" means any obligation under a lease
of (or other agreement conveying the right to use) any property (whether
real, personal or mixed) that is required to be classified and accounted for
as a capital lease obligation under GAAP, and the amount of any such
obligation at any date shall be the capitalized amount thereof at such date,
determined in accordance with GAAP.
"Cash Equivalents" means, at any time, (i) any evidence of
Indebtedness with a maturity of 180 days or less issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof); (ii) certificates of deposit
or acceptances with a maturity of 180 days or less of any financial institution
that is a member of the Federal Reserve System having combined capital and
surplus and undivided profits of not less than $500,000,000; (iii) certificates
of deposit with a maturity of 180 days or less of any financial institution that
is not organized under the laws of the United States, any state thereof or the
District of Columbia that are rated at least A-1 by S&P or at least P-1 by
Moody's or at least an equivalent rating category of another nationally
recognized securities rating agency; (iv) repurchase agreements and reverse
repurchase agreements relating to marketable direct obligations issued or
unconditionally guaranteed by the government of the United States of America or
issued by any agency thereof and backed by the full faith and credit of the
United States of America, in each case maturing within 180 days from the date of
acquisition; provided that the terms of such agreements comply with the
guidelines set forth in the Federal Financial Agreements of Depository
Institutions With Securities Dealers and Others, as adopted by the Comptroller
of the Currency on October 31, 1985; and (v) notes held by Loewen or any
Restricted Subsidiary (including, without limitation, LGII) which were obtained
by Loewen or
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such Restricted Subsidiary in connection with Asset Sales (x) in the ordinary
course of its funeral home, cemetery or cremation businesses or (y) which
were required to be made pursuant to applicable federal or state law.
"Certificate Trustee" means State Street Bank and Trust Company, as
Trustee, under that certain Trust Agreement dated September 25, 1997 between
LGII and State Street Bank and Trust Company.
"Change of Control" means the occurrence on or after the
Measurement Date of any of the following events: (a) any "person" or "group"
(as such terms are used in Sections 13(d) and 14(d) of the Exchange Act),
excluding Permitted Holders, is or becomes the "beneficial owner" (as defined
in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall
be deemed to have "beneficial ownership" of all securities that such person
has the right to acquire, whether such right is exercisable immediately or
only after the passage of time, upon the happening of an event or otherwise),
directly or indirectly, of more than 35% of the total Voting Stock of Loewen
or LGII, under circumstances where the Permitted Holders (i) "beneficially
own" (as so defined) a lower percentage of the Voting Stock than such other
"person" or "group" and (ii) do not have the right or ability by voting
power, contract or otherwise to elect or designate for election a majority of
the Board of Directors of Loewen or LGII; (b) Loewen or LGII consolidates
with, or merges with or into, another person or sells, assigns, conveys,
transfers, leases or otherwise disposes of all or substantially all of its
assets to another person, or another person consolidates with, or merges with
or into, Loewen or LGII, in any such event pursuant to a transaction in which
the outstanding Voting Stock of Loewen or LGII is converted into or exchanged
for cash, securities or other property, other than any such transaction where
(i) the outstanding Voting Stock of Loewen or LGII is converted into or
exchanged for (1) Voting Stock (other than Redeemable Capital Stock) of the
surviving or transferee corporation or (2) cash, securities and other
property in an amount which could then be paid by Loewen or LGII as a
Restricted Payment under the provisions hereof, and (ii) immediately after
such transaction no "person" or "group" (as such terms are used in Sections
13(d) and 14(d) of the Exchange Act), excluding Permitted Holders, is 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 securities that such person has the right to acquire, whether such right
is exercisable immediately or only after the passage of time, upon the
happening of an event or otherwise), directly or indirectly, of more than 50%
of the total Voting Stock of the surviving or transferee corporation; (c) at
any time during any consecutive two-year period, individuals who at the
beginning of such period constituted the Board of Directors of Loewen or LGII
(together with any new directors whose election by such Board of Directors
or whose nomination for election by the shareholders or stockholders of
Loewen or LGII 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 (including the failure of such individuals to be elected in a proxy
contest involving a solicitation of proxies) to constitute a majority of the
Board of Directors of Loewen or LGII then in office; or (d) Loewen or LGII is
liquidated or dissolved or adopts a plan of liquidation other than a
liquidation of LGII into Loewen.
"Change of Control Offer" shall have the meaning set forth in
Section 4.11.
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"Change of Control Purchase Date" shall have the meaning set forth in
Section 4.11.
"Collateral Trust Agreement" means the Collateral Trust Agreement,
dated as of May 15, 1996, among Bankers Trust Company, as trustee, Loewen, LGII
and various other Subsidiaries.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, or if at any time after the execution of the Indenture
such Commission is not existing and performing the applicable duties now
assigned to it, then the body or bodies performing such duties at such time.
"Common Stock" means, with respect to any person, any and all shares,
interests or other participations in, and other equivalents (however designated
and whether voting or nonvoting) of, such person's common stock, whether
outstanding at the Issue Date or issued after the Issue Date, and includes,
without limitation, all series and classes of such common stock.
"Consolidated Cash Flow Available for Fixed Charges" means, with
respect to any person for any period, (A) the sum of, without duplication, the
amounts for such period, taken as a single accounting period, of (a)
Consolidated Net Income, (b) depreciation, depletion, amortization and other
non-cash charges for such period, (c) Consolidated Interest Expense and (d)
Consolidated Income Tax Expense LESS (B) any non-cash items increasing
Consolidated Net Income for such period.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to any
person, the ratio of the aggregate amount of Consolidated Cash Flow Available
for Fixed Charges of such person for the full fiscal quarter immediately
preceding the date of the transaction (the "Transaction Date") giving rise to
the need to calculate the Consolidated Fixed Charge Coverage Ratio (such full
fiscal quarter period being referred to herein as the "Prior Quarter") to the
aggregate amount of Consolidated Fixed Charges of such person for the Prior
Quarter. In addition to and without limitation of the foregoing, for purposes
of this definition, "Consolidated Cash Flow Available for Fixed Charges" and
"Consolidated Fixed Charges" shall be calculated after giving effect on a PRO
FORMA basis for the period of such calculation to, without duplication, (a) the
incurrence of any Indebtedness of such person or any of its Restricted
Subsidiaries (and the application of the net proceeds thereof) during the period
commencing on the first day of the Prior Quarter to and including the
Transaction Date (the "Reference Period"), including, without limitation, the
incurrence of the Indebtedness giving rise to the need to make such calculation
(and the application of the net proceeds thereof), as if such incurrence (and
application) occurred on the first day of the Reference Period, and (b) any
Material Asset Sales or Material Asset Acquisitions (including, without
limitation, any Material Asset Acquisition giving rise to the need to make such
calculation as a result of such person or one of its Restricted Subsidiaries
(including any person who becomes a Restricted Subsidiary as a result of the
Material Asset Acquisition) incurring, assuming or otherwise being liable for
Acquired Indebtedness) occurring during the Reference Period, as if such
Material Asset Sale or Material Asset Acquisition occurred on the first day of
the Reference Period. Furthermore, in calculating "Consolidated Fixed Charges"
for purposes of determining the denominator (but not the numerator) of this
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"Consolidated Fixed Charge Coverage Ratio," (i) interest on outstanding
Indebtedness determined on a fluctuating basis as at the Transaction Date and
which will continue to be so determined thereafter shall be deemed to have
accrued at a fixed rate PER ANNUM equal to the rate of interest on such
Indebtedness in effect on the Transaction Date; and (ii) if interest on any
Indebtedness actually incurred on the Transaction Date may optionally be
determined at an interest rate based upon a factor of a prime or similar rate, a
eurocurrency interbank offered rate, or other rates, then the interest rate in
effect on the Transaction Date will be deemed to have been in effect during the
Reference Period. If such person or any of its Restricted Subsidiaries directly
or indirectly guarantees Indebtedness of a third person, the above clause shall
give effect to the incurrence of such guaranteed Indebtedness as if such person
or such Restricted Subsidiary had directly incurred or otherwise assumed such
guaranteed Indebtedness. For purposes of this calculation, a Material Asset
Acquisition is an Asset Acquisition which is deemed by such person to be
material for such purposes or which has a purchase price of $30,000,000 or more
and a Material Asset Sale is one or more Asset Sales which relate to assets with
an aggregate value of more than $30,000,000.
"Consolidated Fixed Charges" means, with respect to any person for any
period, the sum of, without duplication, the amounts for such period of
(i) Consolidated Interest Expense and (ii) the product of (a) the aggregate
amount of dividends and other distributions paid or accrued during such period
in respect of Preferred Stock and Redeemable Capital Stock of such person and
its Restricted Subsidiaries on a consolidated basis and (b) a multiplier, the
numerator of which is one and the denominator of which is one minus the then
current combined federal, state and local statutory tax rate of such person,
expressed as a decimal; PROVIDED, HOWEVER, that the multiplier in clause (b)
shall be one if such dividend or other distribution is fully tax deductible.
"Consolidated Income Tax Expense" means, with respect to any person
for any period, the provision for federal, state, local and foreign income taxes
of such person and its Restricted Subsidiaries for such period as determined on
a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, with respect to any person for
any period, without duplication, the sum of (i) the interest expense of such
person and its Restricted Subsidiaries for such period as determined on a
consolidated basis in accordance with GAAP, including, without limitation,
(a) any amortization of debt discount, (b) the net cost under Interest Rate
Protection Obligations, (c) the interest portion of any deferred payment
obligation, (d) all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing and (e) all
accrued interest and (ii) the interest component of Capitalized Lease
Obligations paid, accrued and/or scheduled to be paid or accrued by such person
and its Restricted Subsidiaries during such period as determined on a
consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, with respect to any person, for any
period, the consolidated net income (or loss) of such person and its Restricted
Subsidiaries for such period as determined in accordance with GAAP, adjusted, to
the extent included in calculating such net income, by excluding, without
duplication, (i) all extraordinary gains or losses, (ii) the portion of
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net income (but not losses) of such person and its Restricted Subsidiaries
allocable to minority interests in unconsolidated persons to the extent that
cash dividends or distributions have not actually been received by such person
or one of its Restricted Subsidiaries, (iii) net income (or loss) of any person
combined with such person or one of its Restricted Subsidiaries on a "pooling of
interests" basis attributable to any period prior to the date of combination,
(iv) any gain or loss realized upon the termination of any employee pension
benefit plan, on an after-tax basis, (v) gains or losses in respect of any Asset
Sales by such person or one of its Restricted Subsidiaries, and (vi) the net
income of any Restricted Subsidiary of such person to the extent that the
declaration of dividends or similar distributions by that Restricted Subsidiary
of that income is not at the time permitted, directly or indirectly, by
operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
Restricted Subsidiary or its stockholders.
"Consolidated Net Tangible Assets" of Loewen as at any date means the
total amount of assets of Loewen and its Restricted Subsidiaries, less
applicable reserves, on a consolidated basis as of the end of the fiscal quarter
immediately preceding such date, as determined in accordance with GAAP, less:
(i) Intangible Assets and (ii) appropriate adjustments on account of minority
interests of other persons holding equity investments in Restricted
Subsidiaries, in the case of each of clauses (i) and (ii) above as reflected on
the consolidated balance sheet of Loewen and its Restricted Subsidiaries as at
the end of the fiscal quarter immediately preceding such date.
"Consolidated Net Worth" means, with respect to any person at any
date, the consolidated stockholders' equity of such person less the amount of
such stockholders' equity attributable to Redeemable Capital Stock of such
person and its Restricted Subsidiaries, as determined in accordance with GAAP.
"Consolidation" means, with respect to any person, the consolidation
of the accounts of such person and each of its Subsidiaries if and to the extent
the accounts of such person and each of its Restricted Subsidiaries would
normally be consolidated with those of such person, all in accordance with GAAP.
The term "consolidated" shall have a meaning correlative to the foregoing.
"Control" means, with respect to any specified person, the power to
direct the management and policies of such person, directly or indirectly,
whether through the ownership of Voting Stock, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Corporate Trust Office" means the corporate trust office of the
Trustee at which at any particular time its corporate trust business shall be
principally administered, which on the date hereof is located in Hartford,
Connecticut.
"covenant defeasance" shall have the meaning set forth in Section
8.02.
"Credit Agreements" means the Revolving Credit Facility, the Canadian
Revolver, the MEIP Facility and the Canadian Term Loan; in each case as any such
instrument may be
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amended, supplemented or otherwise modified from time to time, and any
successor or replacement facility.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement designed to protect
Loewen or any of its Restricted Subsidiaries against fluctuations in currency
values.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means any event that is, or after notice or passage of time
or both would be, an Event of Default.
"Depositary" means The Depositary Trust Company, its nominees and
their respective successors.
"Event of Default" has the meaning set forth under Section 6.01
herein.
"Excess Proceeds" shall have the meaning set forth in Section 4.12.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means, with respect to any asset, the price which
could be negotiated in an arm's-length free market transaction, for cash,
between a willing seller and a willing buyer, neither of which is under
pressure or compulsion to complete the transaction; PROVIDED, HOWEVER, that with
respect to any transaction which involves an asset or assets in excess of
$5,000,000, such determination shall be evidenced by a Board Resolution of
Loewen delivered to the Trustee.
"Final Distribution Date" means October 1, 1999.
"GAAP" means accounting principles generally accepted in Canada
consistently applied until such time as Loewen or LGII shall prepare their
respective books of record in accordance with accounting principles generally
accepted in the United States ("U.S. GAAP") at which time and all times
thereafter GAAP shall mean U.S. GAAP consistently applied.
"Global Note" has the meaning set forth in Section 2.01.
"Guarantee" shall mean the guarantee of the Notes (including the Put
Option) by Loewen created pursuant to Article 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 and (ii) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any
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part of such obligation, including, without limiting the foregoing, the payment
of amounts drawn down by letters of credit.
"Guarantor" shall mean Loewen, and shall include any successor
replacing Loewen pursuant to the provisions hereof, and thereafter means such
successor.
"Holder" or "Noteholder" means the person in whose name a Note is
registered on the Registrar's books.
"Indebtedness" means, with respect to any person, without duplication,
(a) all liabilities of such person for borrowed money or for the deferred
purchase price of property or services, excluding any trade payables and other
accrued current liabilities incurred in the ordinary course of business and
which are not overdue by more than 90 days, but excluding, without limitation,
all obligations, contingent or otherwise, of such person in connection with any
undrawn letters of credit, banker's acceptance or other similar credit
transaction, (b) all obligations of such person evidenced by bonds, notes,
debentures or other similar instruments, (c) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such person (even if the rights and remedies of
the seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), but excluding trade accounts payable
arising in the ordinary course of business, (d) all Capitalized Lease
Obligations of such person, (e) all Indebtedness referred to in the preceding
clauses of other persons and all dividends of other persons, the payment of
which is secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien upon
property (including, without limitation, accounts and contract rights) owned by
such person, even though such person has not assumed or become liable for the
payment of such Indebtedness (the amount of such obligation being deemed to be
the lesser of the value of such property or asset or the amount of the
obligation so secured), (f) all guarantees of Indebtedness referred to in this
definition by such person, (g) all Redeemable Capital Stock of such person
valued at the greater of its voluntary or involuntary maximum fixed repurchase
price plus accrued dividends, (h) all obligations under or in respect of
Currency Agreements and Interest Rate Protection Obligations of such person,
(i) any Preferred Stock of any Restricted Subsidiary of such person valued at
the sum of (without duplication) (A) the liquidation preference thereof, (B) any
mandatory redemption payment obligations in respect thereof and (C) accrued
dividends thereon, and (j) any amendment, supplement, modification, deferral,
renewal, extension or refunding of any liability of the types referred to in
clauses (a) through (i) above. For purposes hereof, the "maximum fixed
repurchase price" of any Redeemable Capital Stock which does not have a fixed
repurchase price shall be calculated in accordance with the terms of such
Redeemable Capital Stock as if such Redeemable Capital Stock were purchased on
any date on which Indebtedness shall be required to be determined pursuant to
the provisions hereof, and if such price is based upon, or measured by, the fair
market value of such Redeemable Capital Stock, such fair market value shall be
determined in good faith by the board of directors of the issuer of such
Redeemable Capital Stock. For purposes of this definition, the term
"Indebtedness" shall not include (i) Indebtedness of a Wholly-Owned Subsidiary
owed to and held by Loewen, LGII or another Wholly-Owned Subsidiary, in each
case which is not subordinate in right of payment to any Indebtedness of such
Subsidiary, except that (a) any transfer of such Indebtedness by Loewen, LGII or
a Wholly-Owned Subsidiary (other
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than to Loewen, LGII or to a Wholly-Owned Subsidiary) and (b) the sale,
transfer or other disposition by Loewen, LGII or any Restricted Subsidiary of
Loewen or LGII of Capital Stock of a Wholly-Owned Subsidiary which is owed
Indebtedness of another Wholly-Owned Subsidiary such that it ceases to be a
Wholly-Owned Subsidiary of Loewen or LGII shall, in each case, be an
incurrence of Indebtedness by such Restricted Subsidiary subject to the other
provisions hereof; and (ii) Indebtedness of Loewen or LGII owed to and held
by a Wholly-Owned Subsidiary of Loewen or LGII which is unsecured and
subordinate in right of payment to the payment and performance of Loewen's or
LGII's obligations under the provisions hereof and the Notes except that (a) any
transfer of such Indebtedness by a Wholly-Owned Subsidiary of Loewen or LGII
(other than to another Wholly-Owned Subsidiary of Loewen or LGII) and (b) the
sale, transfer or other disposition by Loewen or LGII or any Restricted
Subsidiary of Loewen or LGII of Capital Stock of a Wholly-Owned Subsidiary which
holds Indebtedness of Loewen or LGII such that it ceases to be a Wholly-Owned
Subsidiary shall, in each case, be an incurrence of Indebtedness by Loewen or
LGII, as the case may be, subject to the other provisions hereof.
"Indenture" means this Indenture, as amended, modified or supplemented
from time to time, and shall include the form and terms of the Notes established
hereby.
"Independent Financial Advisor" means a firm (i) which does not, and
whose directors, officers and employees or Affiliates do not, have a direct or
indirect financial interest in Loewen or LGII and (ii) which, in the judgment of
the Board of Directors of Loewen, is otherwise independent and qualified to
perform the task for which it is to be engaged.
"Initial Notes" means the Notes initially issued under this Indenture
to the Certificate Trustee.
"interest" means, with respect to any Note, the amount of all interest
accruing on such Note, including all interest accruing subsequent to the
occurrence of any events specified in Sections 6.01(f) and (g) or which would
have accrued but for any such event, whether or not such claims are allowable
under applicable law.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Notes, as set forth therein.
"Interest Rate Protection Agreement" means any arrangement with any
other person whereby, directly or indirectly, such person is entitled to receive
from time to time periodic payments calculated by applying either a floating or
a fixed rate of interest on a stated notional amount in exchange for periodic
payments made by such person calculated by applying a fixed or a floating rate
of interest on the same notional amount and shall include, without limitation,
interest rate swaps, caps, floors, collars and similar agreements.
"Interest Rate Protection Obligations" means the obligations of any
person under any Interest Rate Protection Agreement.
"Investment" means, with respect to any person, any direct or indirect
loan or other extension of credit or capital contribution to (by means of any
transfer of cash or other
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property to others or any payment for property or services for the account or
use of others), or any purchase or acquisition by such person of any Capital
Stock, bonds, notes, debentures or other securities or evidences of
Indebtedness issued by, any other person. "Investments" shall exclude
extensions of trade credit by Loewen and its Restricted Subsidiaries
(including, without limitation, LGII) in the ordinary course of business in
accordance with normal trade practices of Loewen or such Restricted Subsidiary,
as the case may be.
"Issue Date" means October 1, 1997.
"legal defeasance" shall have the meaning set forth in Section 8.02.
"Lien" means any mortgage, charge, pledge, lien (statutory or other),
security interest, hypothecation, assignment for security, claim, or preference
or priority or other encumbrance upon or with respect to any property of any
kind. A person shall be deemed to own subject to a Lien any property which such
person has acquired or holds subject to the interest of a vendor or lessor under
any conditional sale agreement, capital lease or other title retention
agreement.
"Maturity Date" means, with respect to any Note, the date on which any
principal of such Note becomes due and payable as therein or herein provided,
whether at the Stated Maturity with respect to such principal or by declaration
of acceleration, exercise of the Put Option or otherwise.
"Measurement Date" means March 20, 1996.
"MEIP Facility" means the 1994 Management Equity Investment Plan
("MEIP") Credit Agreement, dated as of June 14, 1994, by and between Loewen
Management Investment Corporation, in its capacity as agent for LGII Loewen, the
banks listed therein and Wachovia Bank of Georgia, N.A., as agent, as amended
and supplemented from time to time.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds thereof in the form of cash or Cash Equivalents including payments in
respect of deferred payment obligations when received in the form of cash or
Cash Equivalents (except to the extent that such obligations are financed or
sold with recourse to Loewen or any Restricted Subsidiary of Loewen (including,
without limitation, LGII) net of (i) brokerage commissions and other fees and
expenses (including, without limitation, fees and expenses of legal counsel and
investment bankers) related to such Asset Sale, (ii) provisions for all taxes
payable as a result of such Asset Sale, (iii) amounts required to be paid to any
person (other than Loewen or any Restricted Subsidiary of Loewen) owning a
beneficial interest in the assets subject to the Asset Sale and (iv) appropriate
amounts to be provided by Loewen or any Restricted Subsidiary of Loewen, as the
case may be, as a reserve required in accordance with GAAP against any
liabilities associated with such Asset Sale and retained by Loewen or any
Restricted Subsidiary of Loewen, as the case may be, after such Asset Sale,
including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities
under any
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indemnification obligations associated with such Asset Sale, all as
reflected in an officers' certificate delivered to the Trustee.
"Note" shall have the meaning set forth in the second paragraph of
this Indenture and, unless the context otherwise requires, shall refer to a
Global Note, an Initial Note or a Physical Note issued hereunder.
"Officer" means the Chairman of the Board, the Chief Executive
Officer, the Chief Operating Officer, the President, any Executive Vice
President, any Senior Vice President, any Vice President, the Chief Financial
Officer, the Treasurer, the Secretary or the Controller of LGII or Loewen, as
the case may be.
"Officers' Certificate" means a certificate signed by two Officers or
by an Officer and an Assistant Treasurer or Assistant Secretary of LGII or
Loewen, as the case may be, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to LGII.
"Pari Passu Indebtedness" means Indebtedness of LGII or Loewen which
ranks PARI PASSU in right of payment with the Notes or the Guarantee, as the
case may be.
"Paying Agent" has the meaning set forth in Section 2.04, except that,
for the purposes of Section 4.11 and Section 4.12 and Articles Three and Eight,
the Paying Agent shall not be LGII or a Subsidiary of LGII or any of their
respective Affiliates.
"Permitted Holders" mean (i) Raymond Loewen and Anne Loewen, taken
together, and (ii) in the case of LGII, Loewen.
"Permitted Indebtedness" means, without duplication, each of the
following:
(a) the Notes and Indebtedness of Loewen evidenced by its
Guarantee with respect to the Notes;
(b) Indebtedness of Loewen and its Restricted Subsidiaries
(including, without limitation, LGII) outstanding on the Issue Date (other
than Indebtedness under the Credit Agreements);
(c) Indebtedness of Loewen or LGII, as the case may be, under
the Credit Agreements in an aggregate principal amount at any one time
outstanding not to exceed $750,000,000 less the Net Proceeds of any Asset
Sale that are applied to repay, and permanently reduce the commitments
under, the Credit Agreements (as required by the terms thereof);
(d) (i) Interest Rate Protection Obligations of Loewen covering
Indebtedness of Loewen and its Restricted Subsidiaries (including, without
limitation, LGII); (ii) Interest Rate Protection Obligations of any
Restricted Subsidiary of Loewen
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covering Indebtedness of such Restricted Subsidiary; provided, however,
that, in the case of either clause (i) or (ii), (x) any Indebtedness to
which any such Interest Rate Protection Obligations relate bears interest
at fluctuating interest rates and is otherwise permitted to be incurred
under this covenant and (y) the notional principal amount of any such
Interest Rate Protection Obligations does not exceed the principal amount
of the Indebtedness to which such Interest Rate Protection Obligations
relate;
(e) Indebtedness under Currency Agreements; provided, however,
that in the case of Currency Agreements which relate to Indebtedness, such
Currency Agreements do not increase the Indebtedness of Loewen and its
Restricted Subsidiaries (including, without limitation, LGII) outstanding
other than as a result of fluctuations in foreign currency exchange rates
or by reason of fees, indemnities and compensation payable thereunder;
(f) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient
funds in the ordinary course of business; provided, however, that such
Indebtedness is extinguished within two business days of incurrence;
(g) Indebtedness incurred in respect of performance bonds or
letters of credit in lieu thereof provided in the ordinary course of
business;
(h) Indebtedness of Loewen and its Restricted Subsidiaries
(including, without limitation, LGII) represented by letters of credit for
the account of Loewen and its Restricted Subsidiaries in order to provide
security for workers' compensation claims, payment obligations in
connection with self-insurance or similar requirements in the ordinary
course of business;
(i) Indebtedness of Loewen and its Restricted Subsidiaries
(including, without limitation, LGII) in addition to that described in
clauses (a) through (h) above, in an aggregate principal amount outstanding
at any time not exceeding $5,000,000; and
(j) (i) Indebtedness of Loewen the proceeds of which are used
solely to refinance (whether by amendment, renewal, extension or refunding)
Indebtedness of Loewen and its Restricted Subsidiaries (including, without
limitation, LGII) and (ii) Indebtedness of any Restricted Subsidiary of
Loewen the proceeds of which are used solely to refinance (whether by
amendment, renewal, extension or refunding) Indebtedness of such Restricted
Subsidiary, in each case other than the Indebtedness refinanced, redeemed
or retired on the Issue Date or Indebtedness incurred under clause (c),
(d), (e), (f), (g), (h), or (i) of this covenant; PROVIDED, HOWEVER, that
(x) the principal amount of Indebtedness incurred pursuant to this clause
(j) (or, if such Indebtedness provides for an amount less than the
principal amount thereof to be due and payable upon a declaration of
acceleration of the maturity thereof, the original issue price of such
Indebtedness) shall not exceed the sum of the principal amount of
Indebtedness so refinanced, plus the amount of any premium required to be
paid in connection with such
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refinancing pursuant to the terms of such Indebtedness or the amount of
any premium reasonably determined by the Board of Directors of Loewen as
necessary to accomplish such refinancing by means of a tender offer or
privately negotiated purchase, plus the amount of expenses in connection
therewith, (y) in the case of Indebtedness incurred by Loewen pursuant to
this clause (j) to refinance Pari Passu Indebtedness, such Indebtedness
constitutes Pari Passu Indebtedness.
"Permitted Investments" means any of the following: (i) Investments
in any Wholly-Owned Subsidiary of Loewen (including (a) LGII and (b) any person
that pursuant to such Investment becomes a Wholly-Owned Subsidiary of Loewen)
and any person that is merged or consolidated with or into, or transfers or
conveys all or substantially all of its assets to, Loewen or any Wholly-Owned
Subsidiary of Loewen at the time such Investment is made; (ii) Investments in
Cash Equivalents; (iii) Investments in Currency Agreements on commercially
reasonable terms entered into by Loewen or any of its Restricted Subsidiaries in
the ordinary course of business in connection with the operations of the
business of Loewen or its Restricted Subsidiaries to hedge against fluctuations
in foreign exchange rates; (iv) loans or advances to officers, employees or
consultants of Loewen and its Restricted Subsidiaries for travel and moving
expenses in the ordinary course of business for bona fide business purposes of
Loewen and its Restricted Subsidiaries; (v) other loans or advances to officers,
employees or consultants of Loewen and its Restricted Subsidiaries in the
ordinary course of business for bona fide business purposes of Loewen and its
Restricted Subsidiaries not in excess of $10,000,000 in the aggregate at any one
time outstanding; (vi) Investments in evidences of Indebtedness, securities or
other property received from another person by Loewen or any of its Restricted
Subsidiaries in connection with any bankruptcy proceeding or by reason of a
composition or readjustment of debt or a reorganization of such person or as a
result of foreclosure, perfection or enforcement of any Lien in exchange for
evidences of Indebtedness, securities or other property of such person held by
Loewen or any of its Restricted Subsidiaries, or for other liabilities or
obligations of such other person to Loewen or any of its Restricted Subsidiaries
that were created, in accordance with the terms of this Indenture;
(vii) Investments in Interest Rate Protection Agreements on commercially
reasonable terms entered into by Loewen or any of its Restricted Subsidiaries in
the ordinary course of business in connection with the operations of Loewen and
its Restricted Subsidiaries to hedge against fluctuations in interest rates; and
(viii) Investments of funds received by Loewen or its Restricted Subsidiaries
(including, without limitation, LGII) in the ordinary course of business, which
funds are required to be held in trust for the benefit of others by Loewen or
such Restricted Subsidiary, as the case may be, and which funds do not
constitute assets or liabilities of Loewen or such Restricted Subsidiary; (ix)
Investments not in excess of $50,000,000 in the aggregate in other Unrestricted
Subsidiaries which are engaged in the insurance business; and (x) Investments
not in excess of $50,000,000 in persons (other than Wholly-Owned Subsidiaries)
engaged in businesses incidental to the funeral home, cemetery and cremation
businesses of Loewen and its Restricted Subsidiaries.
"Permitted Liens" means the following types of Liens:
(a) Liens for taxes, assessments or governmental charges or
claims either (a) not delinquent or (b) contested in good faith by
appropriate proceedings and as to which Loewen or any of its Restricted
Subsidiaries (including, without limitation,
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LGII) shall have set aside on its books such reserves as may be required
pursuant to GAAP;
(b) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens
imposed by law incurred in the ordinary course of business for sums not yet
delinquent or being contested in good faith, if such reserve or other
appropriate provision, if any, as shall be required by GAAP shall have been
made in respect thereof;
(c) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases,
governmental contracts, performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment of borrowed
money);
(d) judgment Liens not giving rise to an Event of Default so
long as such Lien is adequately bonded and any appropriate legal
proceedings which may have been duly initiated for the review of such
judgment shall not have been finally terminated or the period within which
such proceedings may be initiated shall not have expired;
(e) easements, rights-of-way, zoning restrictions and other
similar charges or encumbrances in respect of real property not interfering
in any material respect with the ordinary conduct of the business of Loewen
or any of its Restricted Subsidiaries (including, without limitation,
LGII);
(f) any interest or title of a lessor under any Capitalized
Lease Obligation or operating lease;
(g) any Lien existing on any asset of any corporation at the
time such corporation becomes a Restricted Subsidiary and not created in
contemplation of such event;
(h) any Lien on any asset securing Indebtedness incurred or
assumed for the purpose of financing all or any part of the cost of
acquiring or constructing such asset; provided, that such Lien attaches to
such asset concurrently with or within 18 months after the acquisition or
completion thereof;
(i) any Lien on any asset of any corporation existing at the
time such corporation is merged or consolidated with or into Loewen or a
Restricted Subsidiary and not created in contemplation of such event;
(j) any Lien existing on any asset prior to the acquisition
thereof by Loewen or a Restricted Subsidiary and not created in
contemplation of such acquisition;
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(k) Liens in favor of customs and revenue authorities arising
as a matter of law to secure payment of customs duties in connection
with the importation of goods; and
(l) any extension, renewal or replacement of any Lien
permitted by the preceding clauses (g), (h), (i) or (j) hereof in
respect of the same property or assets theretofore subject to such Lien
in connection with the extension, renewal or refunding of the
Indebtedness secured thereby; provided that (1) such Lien shall attach
solely to the same property or assets and (2) such extension, renewal or
refunding of such Indebtedness shall be without increase in the
principal remaining unpaid as at the date of such extension, renewal or
refunding.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
charitable foundation, unincorporated organization, government or any agency
or political subdivision thereof.
"Physical Note" shall have the meaning set forth in Section 2.01.
"Predecessor Notes" means, with respect to any particular Note,
every previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note; and, for the purposes of this definition,
any Notes authenticated and delivered under Section 2.08 hereof in exchange
for mutilated Notes or in lieu of lost, destroyed or stolen Notes, shall be
deemed to evidence the same debt as the mutilated, lost, destroyed or stolen
Notes.
"Preferred Securities" means, with respect to a Special Finance
Subsidiary, any securities of such Subsidiary treated for accounting purposes
as an equity security that has preferential rights to any other security of
such person with respect to dividends or redemptions or upon liquidation.
"Preferred Stock" means, with respect to any person, any Capital
Stock of such person that has preferential rights to any other Capital Stock
of such person with respect to dividends or redemptions or upon liquidation
and any Preferred Securities.
"principal" means, with respect to any debt security, the principal
of the security plus, when appropriate, the premium, if any, on the security
and any interest on overdue principal.
"Private Placement Legend" shall have the meaning set forth in
Section 2.02.
"Put Option" means the Certificate Trustee's right to require LGII
to repurchase all but not less than all of the Notes at the Put Option Price.
"Put Option Notice" means the notice, delivered by the Certificate
Trustee to LGII not less than one day nor more than 15 days' prior to the
Final Settlement Date, to the effect that the Certificate Trustee shall
exercise the Put Option.
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"Put Option Price" means 100% of the principal amount of the Notes
on the Final Distribution Date.
"QIB" means a "Qualified Institutional Buyer" under Rule 144A.
"Redeemable Capital Stock" means any shares of any class or series
of Capital Stock that, either by the terms thereof, by the terms of any
security into which it is convertible or exchangeable or by contract or
otherwise, is or upon the happening of an event or passage of time would be,
required to be redeemed prior to the Stated Maturity with respect to the
principal of any Note or is redeemable at the option of the holder thereof at
any time prior to any such Stated Maturity, or is convertible into or
exchangeable for debt securities at any time prior to any such Stated
Maturity.
"Registrar" has the meaning set forth in Section 2.04.
"Related Obligor" has the meaning set forth in Section 4.08.
"Restricted Payments" has the meaning set forth in Section 4.08.
"Restricted Subsidiary" means any Subsidiary of Loewen other than
an Unrestricted Subsidiary.
"Revolving Credit Facility" means the $750,000,000 Credit
Agreement, dated as of May 15, 1996, among LGII, as borrower, TLGI, as
guarantor, the lenders named therein, as the lenders, Goldman, Sachs & Co.,
as the documentation agent and Bank of Montreal, as issuer, swingline lender
and agent, as amended and supplemented from time to time.
"Rule 144A" means Rule 144A under the Securities Act.
"Sale-Leaseback Transaction" of any person means an arrangement
with any lender or investor or to which such lender or investor is a party
providing for the leasing by such person of any property or asset of such
person which has been or is being sold or transferred by such person after
the acquisition thereof or the completion of construction or commencement of
operation thereof to such lender or investor or to any person to whom funds
have been or are to be advanced by such lender or investor on the security of
such property or asset. The stated maturity of such arrangement shall be the
date of the last payment of rent or any other amount due under such
arrangement prior to the first date on which such arrangement may be
terminated by the lessee without payment of a penalty.
"S&P" means Standard & Poor's Rating Services, a Division of the
McGraw-Hill Companies, and its successors.
"Securities Act" means the Securities Act of 1933, as amended from
time to time.
"Seller Financing Indebtedness" means a purchase money Indebtedness
issued to the seller of a business or other assets for, and not in excess of,
the purchase price thereof.
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"Notes" means the securities that are issued under this Indenture,
as amended or supplemented from time to time pursuant to this Indenture.
"Significant Subsidiary" shall mean a Restricted Subsidiary which
is a "Significant Subsidiary" as defined in Rule 1.02(v) of Regulation S-X
under the Securities Act.
"Special Finance Subsidiary" means a Restricted Subsidiary whose
sole assets are debt obligations of LGII or Loewen and whose sole liabilities
are Preferred Securities the proceeds from the sale of which are or have been
advanced to LGII or Loewen.
"Stated Maturity" means, when used with respect to any Note or any
installment of interest thereon, the date specified in such Note as the fixed
date on which the principal of such Note or such installment of interest is
due and payable, and when used with respect to any other Indebtedness, means
the date specified in the instrument governing such Indebtedness as the fixed
date on which the principal of such Indebtedness, or any installment of
interest thereon, is due and payable.
"Subsidiary" means, with respect to any person, (i) a corporation a
majority of whose Voting Stock is at the time, directly or indirectly, owned
by such person, by one or more Subsidiaries of such person or by such person
and one or more Subsidiaries thereof and (ii) any other person (other than a
corporation), including, without limitation, a joint venture, in which such
person, one or more Subsidiaries thereof or such person and one or more
Subsidiaries thereof, directly or indirectly, at the date of determination
thereof, has at least majority ownership interest entitled to vote in the
election of directors, managers or trustees thereof (or other person
performing similar functions). For purposes of this definition, any
directors' qualifying shares or investments by foreign nationals mandated by
applicable law shall be disregarded in determining the ownership of a
Subsidiary.
"Surviving Entity" shall have the meaning set forth in Section 5.01.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Sections
77aaa-77bbbb) as in effect on the Issue Date.
"Trust Officer" means any officer in the Corporate Trust
Administration of the Trustee or any other officer of the Trustee customarily
performing functions similar to those performed by any of the
above-designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular subject.
"Trustee" means the party named as such in this Indenture until a
successor replaces such party (or any previous successor) in accordance with
the provisions of this Indenture, and thereafter means such successor.
"U.S. Government Obligations" shall have the meaning set forth in
Section 8.02.
"Unrestricted Subsidiary" means (i) First Capital Life Insurance
Company of Louisiana, National Capital Life Insurance Company, Security
Industrial Insurance Company,
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Security Industrial Fire Insurance Company or any successors to such
Subsidiaries or (ii) a Subsidiary of Loewen declared by the Board of
Directors of Loewen to be an Unrestricted Subsidiary; PROVIDED, that no such
Subsidiary shall be declared to be an Unrestricted Subsidiary unless (x) none
of its properties or assets were owned by Loewen or any of its Subsidiaries
prior to the Issue Date, other than any such assets as are transferred to
such Unrestricted Subsidiary in accordance with the covenant contained in
Section 4.08, (y) its properties and assets, to the extent that they secure
Indebtedness, secure only Non-Recourse Indebtedness and (z) it has no
Indebtedness other than Non-Recourse Indebtedness. As used above,
"Non-Recourse Indebtedness" means Indebtedness as to which (i) neither Loewen
nor any of its Subsidiaries (other than the relevant Unrestricted Subsidiary
or another Unrestricted Subsidiary) (1) provides credit support (including
any undertaking, agreement or instrument which would constitute
Indebtedness), (2) guarantees or is otherwise directly or indirectly liable
or (3) constitutes the lender (in each case, other than pursuant to and in
compliance with the covenant contained in Section 4.08 and (ii) no default
with respect to such Indebtedness (including any rights which the holders
thereof may have to take enforcement action against the relevant Unrestricted
Subsidiary or its assets) would permit (upon notice, lapse of time or both)
any holder of any other Indebtedness of Loewen or its Subsidiaries (other
than Unrestricted Subsidiaries) to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior
to its stated maturity.
"Voting Stock" means any class or classes of Capital Stock pursuant
to which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of directors,
managers or trustees of any person (irrespective of whether or not, at the
time, Capital Stock of any other class or classes shall have, or might have,
voting power by reason of the happening of any contingency).
"Wholly-Owned Subsidiary" means (i) any Restricted Subsidiary of
Loewen of which 100% of the outstanding Capital Stock is owned by Loewen or
one or more Wholly-Owned Subsidiaries of Loewen or by Loewen and one or more
Wholly-Owned Subsidiaries of Loewen, including LGII, or (ii) any Subsidiary,
at least 66 2/3% of the outstanding voting securities of which, and all of
the outstanding shares entitled to receive dividends or other distributions
of which, shall at the time be owned or controlled, directly or indirectly,
by Loewen or one or more Wholly-Owned Subsidiaries of Loewen or by Loewen and
one or more Wholly-Owned Subsidiaries of Loewen, including LGII. For
purposes of this definition, any directors' qualifying shares or investments
by foreign nationals mandated by applicable law shall be disregarded in
determining the ownership of a Subsidiary.
1.02. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"INDENTURE SECURITIES" means the Notes and the Guarantee;
"INDENTURE SECURITY HOLDER" means a Noteholder or Holder;
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"INDENTURE TO BE QUALIFIED" means this Indenture;
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee;
and
"OBLIGOR" on the indenture securities means LGII, Loewen or any
other obligor on the Notes or the Guarantee.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission
rule and not otherwise defined herein have the meanings assigned to them
therein.
1.03. RULES OF CONSTRUCTION.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(a) words in the singular include the plural, and words in
the plural include the singular.
(b) "or" is not exclusive;
(c) all accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with GAAP;
(d) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision; and
(e) all references to "$" or "dollars" shall refer to the
lawful currency of the United States of America, and all references
to "CDN $" shall refer to the lawful currency of Canada.
ARTICLE TWO
THE NOTES
2.01. ISSUANCE OF NOTES.
The aggregate principal amount of Notes which may be outstanding at
any time under this Indenture may not exceed $300,000,000 at any time, except
to the extent permitted by Section 2.08. Upon the execution and delivery of
this Indenture and the Guarantee, Notes in an aggregate principal amount of
$300,000,000 may be executed by LGII and delivered to the Trustee for
authentication.
The Notes and the Trustee's certificate of authentication thereon
shall be in substantially the form of Exhibits A and B hereto, with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture and may have
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such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with any applicable
law or with the rules of any securities exchange or as may, consistently
herewith, be determined by the Officers executing such Notes, as evidenced by
their execution thereof. The Notes shall be issuable only in registered form
without coupons and only in denominations of $1,000 and integral multiples
thereof.
The definitive Notes and the Guarantee shall be printed,
typewritten, lithographed or engraved or produced by any combination of these
methods or may be produced in any other manner permitted by the rules of any
securities exchange on which the Notes may be listed, all as determined by
the officers executing such Notes, as evidenced by their execution of such
Notes. Each Note shall be dated the date of its authentication.
The Initial Notes shall be issued in the form of permanent
certificated Notes in registered form in substantially the form set forth in
Exhibit A hereto (the "Physical Notes"). The Initial Notes may be exchanged
for (i) Physical Notes or (ii) Notes in the form of one or more permanent
global Notes substantially in the form set forth in Exhibit B hereto (the
"Global Note") deposited with, or on behalf of, the Depositary or with the
Trustee, as custodian for the Depositary, duly executed by the Company and
authenticated by the Trustee as hereinafter provided. The aggregate
principal amount of the Global Note may from time to time be increased or
decreased by adjustments made on the records of the Depositary or its
nominee, or of the trustee, as custodian for the Depositary or its nominee,
as hereinafter provided.
Notes issued pursuant to Section 2.09 in exchange for interests in
the Global Note shall be in the form of Physical Notes.
The terms and provisions contained in the form of the Notes,
annexed hereto as Exhibits A and B, shall constitute, and are hereby
expressly made, a part of this Indenture and, to the extent applicable, LGII,
Loewen and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby.
2.02. RESTRICTIVE LEGENDS. Until October 1, 1999, each Note shall
bear the legend set forth below (the "Private Placement Legend") on the face
thereof:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT), (2) AGREES THAT IT WILL NOT WITHIN TWO
YEARS AFTER THE ORIGINAL ISSUANCE OF THIS NOTE RESELL OR OTHERWISE TRANSFER
THIS NOTE EXCEPT (A) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (B) INSIDE
THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH
RULE 144A UNDER THE SECURITIES ACT, (C) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE)
OR (D) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT AND
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(3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS NOTE IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
Each Global Note shall also bear the following legend on the face
thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT HEREON IS MADE TO CEDE & CO. TO SUCH OTHER ENTITY AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTIONS 2.09 AND 2.10 OF THE INDENTURE.
2.03. EXECUTION AND AUTHENTICATION.
Two Officers shall execute the Notes on behalf of LGII by either
manual or facsimile signature. LGII's seal shall be impressed, affixed,
imprinted or reproduced on the Notes.
If an Officer whose signature is on a Note no longer holds that
office at the time the Trustee authenticates the Note or at any time
thereafter, the Note shall be valid nevertheless.
A Note shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Note. Such
signature shall be conclusive evidence that the Note has been authenticated
under this Indenture.
The Trustee shall authenticate Notes for original issue upon
receipt of an Officers' Certificate signed by two Officers of LGII directing
the Trustee to authenticate the Notes and certifying that all conditions
precedent to the issuance of the Notes contained herein have been complied
with.
With the prior written approval of LGII, the Trustee may appoint an
authenticating agent acceptable to LGII to authenticate Notes. Unless
limited by the terms of such appointment,
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an authenticating agent may authenticate Notes whenever the Trustee may do
so. Each reference in this Indenture to authentication by the Trustee
includes authentication by such agent. Such authenticating agent shall have
the same rights as the Trustee in any dealings hereunder with LGII or with
any of LGII's Affiliates.
2.04. REGISTRAR AND PAYING AGENT.
LGII shall maintain an office or agency (which shall be located in
the Borough of Manhattan, The City of New York, State of New York) where
Notes may be presented for registration of transfer or for exchange (the
"Registrar"), an office or agency (which shall be located in the Borough of
Manhattan, The City of New York, State of New York) where Notes may be
presented for payment of principal, premium, if any, and interest (the
"Paying Agent") and an office or agency where notices and demands to or upon
LGII in respect of the Notes and this Indenture may be served. The Registrar
shall keep a register of the Notes and of their transfer and exchange. LGII
may have one or more co-Registrars and one or more additional paying agents.
The term "Paying Agent" includes any additional paying agent. Except as
otherwise expressly provided in this Indenture, LGII or any Affiliate thereof
may act as Paying Agent.
LGII shall enter into an appropriate agency agreement with any
Registrar or Paying Agent not a party to this Indenture, which shall
incorporate the provisions of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such Registrar or Paying Agent.
LGII shall notify the Trustee of the name and address of any such Registrar
or Paying Agent. If LGII fails to maintain a Registrar, Paying Agent or
agent for service of notices and demands, or fails to give the foregoing
notice, the Trustee shall act as such and shall be entitled to appropriate
compensation in accordance with Section 7.08.
LGII initially appoints the Trustee as Registrar, Paying Agent and
agent for service of notices and demands in connection with the Notes.
2.05. PAYING AGENT TO HOLD MONEY IN TRUST.
Each 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, or interest on, the Notes (whether such money has been distributed to it
by LGII or any other obligor on the Notes), and LGII (or any other obligor on
the Notes) and the Paying Agent shall notify the Trustee of any default by
LGII (or any other obligor on the Notes) in making any such payment. If LGII
or an Affiliate of LGII acts as Paying Agent, it shall segregate the money
and hold it as a separate trust fund. LGII at any time may require a Paying
Agent to distribute all money held by it to the Trustee and account for any
funds disbursed and the Trustee may at any time during the continuance of any
Payment Default with respect to the Notes, upon written request to a Paying
Agent, require such Paying Agent to pay all money held by it to the Trustee
and to account for any funds distributed. Upon doing so, the Paying Agent
(other than an obligor on the Notes or the Guarantee) shall have no further
liability for the money so paid over to the Trustee.
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2.06. NOTEHOLDER 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 and shall otherwise comply with TIA Section 312(a). If the
Trustee is not the Registrar, LGII shall furnish to the Trustee at least ten
Business Days before each Interest Payment Date and at such other times as
the Trustee may request in writing a list in such form and as of such date as
the Trustee may reasonably require of the names and addresses of Holders,
which list may be conclusively relied upon by the Trustee.
2.07. TRANSFER AND EXCHANGE.
When Notes are presented to the Registrar or a co-Registrar with a
request to register the transfer of such Notes or to exchange such Notes for
an equal principal amount of Notes of other authorized denominations, the
Registrar or co-Registrar shall register the transfer or make the exchange as
requested if its requirements for such transaction are met; PROVIDED,
HOWEVER, that the Notes surrendered for transfer or exchange shall be duly
endorsed or accompanied by a written instrument of transfer in form
satisfactory to LGII and the Registrar or co-Registrar, duly executed by the
Holder thereof or his attorney duly authorized in writing. To permit
registrations of transfers and exchanges, LGII shall execute and the Trustee
shall authenticate Notes at the Registrar's or co-Registrar's request. No
service charge shall be made for any transfer, exchange or redemption, but
LGII may require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith (other than any
such transfer taxes or similar governmental charge payable upon exchanges or
transfers pursuant to Sections 2.02, 2.07, 2.10, 4.11 or 4.12).
Any Holder of the Global Note shall, by acceptance of such Global
Note, agree that transfers of beneficial interests in such Global Note may be
effected only through a book-entry system maintained by the Holder of such
Global Note (or its agent), and that ownership of a beneficial interest in
the Note shall be required to be reflected in a book entry.
2.08. REPLACEMENT NOTES.
If a mutilated Note is surrendered to the Trustee or if the Holder
of a Note claims that the Note has been lost, destroyed or wrongfully taken,
LGII shall issue and the Trustee shall authenticate a replacement Note if the
Trustee's requirements are satisfied. If required by the Trustee or LGII,
such Holder must provide an indemnity bond or other indemnity, sufficient in
the judgment of both LGII and the Trustee, to protect LGII, the Trustee or
any Paying Agent or Registrar from any loss which any of them may suffer if a
Note is replaced. LGII may charge such Holder for its reasonable,
out-of-pocket expenses in replacing a Note, including reasonable fees and
expenses of counsel. Every replacement Note is an additional obligation of
LGII and Loewen.
2.09. BOOK-ENTRY PROVISIONS FOR GLOBAL NOTE.
(a) If a Global Note is issued pursuant to Section 2.01, such
Global Note initially shall (i) be registered in the name of the Depositary
for such Global Note or the nominee
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of such Depositary, (ii) be deposited with, or on behalf of, the Depositary or
with the Trustee, as custodian for such Depositary, and (iii) bear legends as
set forth in Section 2.02. Members of, or participants in, the Depositary
("Agent Members") shall have no rights under this Indenture with respect to
any Global Note held on their behalf by the Depositary, or the Trustee as its
custodian, or under the Global Note, and the Depositary may be treated by
LGII, the Trustee and any agent of LGII or the Trustee as the absolute owner
of such Global Note for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent LGII, the Trustee or any agent of LGII
or the Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or shall impair, as between the
Depositary and its Agent Members, the operation of customary practices
governing the exercise of the rights of a Holder of any Note.
(b) Transfers of the Global Note shall be limited to transfers of
such Global Note in whole, but not in part, to the Depositary, its successors
or their respective nominees. Interests of beneficial owners in the Global
Note may be transferred in accordance with the rules and procedures of the
Depositary and the provisions of Section 2.10. In addition, Physical Notes
shall be issued to all beneficial owners in exchange for their beneficial
interests in the Global Note if (i) the Depositary notifies LGII that it is
unwilling or unable to continue as Depositary for the Global Note and a
successor depositary is not appointed by LGII within 90 days of such notice or
(ii) an Event of Default has occurred and is continuing and the Registrar has
received a request from the Depositary.
(c) In connection with any transfer of a portion of the
beneficial interest in the Global Note pursuant to Section 2.09(b) to
beneficial owners who are required to hold Physical Notes, the Registrar shall
reflect on its books and records the date and a decrease in the principal
amount of the Global Note in an amount equal to the principal amount of the
beneficial interest in the Global Note to be transferred, and LGII shall
execute, and the Trustee shall authenticate and deliver, one or more Physical
Notes of like tenor and amount.
(d) In connection with the transfer of the entire Global Note to
beneficial owners pursuant to Section 2.09(b), the Global Note shall be deemed
to be surrendered to the Trustee for cancellation, and LGII shall execute, and
the Trustee shall authenticate and deliver, to each beneficial owner
identified by the Depositary in exchange for its beneficial interest in the
Global Note an equal aggregate principal amount of Physical Notes of
authorized denominations.
(e) Any Physical Note delivered in exchange for an interest in
the Global Note pursuant to subsection (c) or subsection (d) of this Section
shall, except as otherwise provided by paragraph (d) of Section 2.10, bear
the applicable legend regarding transfer restrictions applicable to the
Physical Notes set forth in Section 2.02.
(f) The Holder of the Global Note may grant proxies and otherwise
authorize any person, including Agent Members and persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Notes.
(g) QIBs that are beneficial owners of interests in a Global Note
may receive Physical Notes (which shall bear the Private Placement Legend if
required by Section 2.02) in accordance with the procedures of the Depositary.
In connection with the execution,
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authentication and delivery of such Physical Notes, the Registrar shall
reflect on its books and records a decrease in the principal amount of the
relevant Global Note equal to the principal amount of such Physical Notes and
LGII shall execute and the Trustee shall authenticate and deliver one or more
Physical Notes having an equal aggregate principal amount.
2.10. SPECIAL TRANSFER PROVISIONS.
(a) Prior to October 1, 1999, the Registrar shall register the
transfer if such transfer is being made by a proposed transferor who has
checked the box provided for on the form of Note stating, or has otherwise
advised LGII and the Registrar in writing, that the sale has been made in
compliance with the provisions of Rule 144A to a transferee who has signed the
certification provided for on the form of Note stating, or has otherwise
advised LGII and the Registrar in writing, that it is a QIB, that it is
purchasing the Note for its own account or an account with respect to which it
exercises sole investment discretion (the beneficial owner of which is a QIB)
and that it and any such sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding LGII as it has
requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon its
foregoing representations in order to claim the exemption from registration
provided by Rule 144A.
(b) On and after October 1, 1999, the following provisions shall
apply with respect to the registration of any proposed transfer of a Note. If
the Note to be transferred consists of a Physical Note, the Registrar shall
register the transfer and if the Note to be transferred consists of an
interest in the Global Note, the transfer may be affected only through the
book entry system maintained by the Depositary.
(c) Upon the registration of transfer, exchange or replacement of
Notes not bearing the Private Placement Legend, the Registrar shall deliver
Notes that do not bear the Private Placement Legend. Upon the registration of
transfer, exchange or replacement of Notes bearing the Private Placement
Legend, the Registrar shall deliver only Notes that bear the Private Placement
Legend there is delivered to the Registrar an Opinion of Counsel reasonably
satisfactory to LGII and the Trustee to the effect that neither such legend
nor the related restrictions on transfer are required in order to maintain
compliance with the provisions of the Securities Act.
(d) By its acceptance of any Note bearing the Private Placement
Legend, each Holder of such a Note acknowledges the restrictions on transfer
of such Note set forth in this Indenture and in the Private Placement Legend
and agrees that it will transfer such Note only as provided in this Indenture.
(e) The Registrar shall retain until such time as no Notes remain
Outstanding copies of all letters, notices and other written communications
received pursuant to this Section 2.10. LGII shall have the right to inspect
and make copies of all such letters, notices or other written communications
at any reasonable time upon the giving of reasonable written notice to the
Registrar.
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2.11. OUTSTANDING NOTES.
Notes outstanding at any time are all the Notes that have been
authenticated by the Trustee except those canceled by it, those delivered to
it for cancellation and those described in this Section as not outstanding. A
Note does not cease to be outstanding because LGII or any of its Affiliates
holds the Note.
If a Note is replaced pursuant to Section 2.07 (other than a
mutilated Note surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Note is
held by a BONA FIDE purchaser. A mutilated Note ceases to be outstanding upon
surrender of such Note and replacement thereof pursuant to Section 2.07.
If on a Maturity Date the Paying Agent (other than LGII or an
Affiliate of LGII) holds cash or U.S. Government Obligations sufficient to pay
all of the principal and interest due on the Notes payable on that date, and
is not prohibited from paying such cash or U.S. Government Obligations to the
Holders of such Notes pursuant to the terms of this Indenture, then on and
after that date such Notes cease to be outstanding and interest on them shall
cease to accrue.
2.12. TREASURY NOTES.
In determining whether the Holders of the required principal amount
of Notes have concurred in any direction, waiver or consent, Notes owned by
LGII or any of its Affiliates shall be disregarded, except that, for the
purposes of determining whether the Trustee shall be protected in relying on
any such direction, waiver or consent, only Notes that the Trustee knows or
has reason to know are so owned shall be disregarded.
2.13. TEMPORARY NOTES.
Until definitive Notes are prepared and ready for delivery, LGII may
prepare and the Trustee shall authenticate temporary Notes. Temporary Notes
shall be substantially in the form of definitive Notes but may have variations
that LGII considers appropriate for temporary Notes. Without unreasonable
delay, LGII shall prepare and the Trustee shall authenticate definitive Notes
in exchange for temporary Notes. Until such exchange, temporary Notes shall
be entitled to the same rights, benefits and privileges as definitive Notes.
2.14. CANCELLATION.
LGII at any time may deliver Notes to the Trustee for cancellation.
The Registrar and the Paying Agent shall forward to the Trustee any Notes
surrendered to them for transfer, exchange or payment. The Trustee, or at the
direction of the Trustee, the Registrar or the Paying Agent (other than LGII or
an Affiliate of LGII), and no one else, shall promptly cancel and, at the
written direction of LGII, shall dispose of all Notes surrendered for transfer,
exchange, payment or cancellation. Subject to Section 2.08, LGII may not issue
new Notes to replace Notes that it has paid or delivered to the Trustee for
cancellation. If LGII shall acquire any of the Notes, such acquisition shall
not operate as a redemption or satisfaction of the Indebtedness represented by
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such Notes unless and until the same are surrendered to the Trustee for
cancellation pursuant to this Section 2.15.
2.15. DEFAULTED INTEREST.
If LGII defaults on a payment of interest on the Notes, it shall pay
the defaulted interest, plus (to the extent permitted by law) any interest
payable on the defaulted interest, in accordance with the terms hereof, to the
persons who are Holders on a subsequent special record date, which date shall
be at least five Business Days prior to the payment date. LGII shall fix such
special record date and payment date in a manner satisfactory to the Trustee.
At least 15 days before such special record date, LGII shall mail to each
Holder a notice that states the special record date, the payment date and the
amount of defaulted interest, and interest payable on such defaulted interest,
if any, to be paid.
2.16. CUSIP NUMBER.
LGII in issuing the Notes may use a "CUSIP" number, and if so, the
Trustee may use the CUSIP numbers in notices of exchange as a convenience to
Holders; PROVIDED, HOWEVER, that any such notice may state that no
representation is made as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Notes, and that reliance may be placed only on
the other identification numbers printed on the Notes. LGII will promptly
notify the Trustee of any change in the CUSIP number.
2.17. DEPOSIT OF MONEYS.
On or before each Interest Payment Date and Maturity Date, LGII shall
deposit with the Trustee or Paying Agent in immediately available funds money
sufficient to make cash payments, if any, due on such Interest Payment Date or
Maturity Date, as the case may be, in a timely manner which permits the Paying
Agent to remit payment to the Holders on such Interest Payment Date or Maturity
Date, as the case may be.
ARTICLE THREE
PUT OPTION
3.01. PUT OPTION.
In the event that the Callholder has not given the Certificate
Trustee notice on or before September 15, 1999 that it intends to exercise the
Call Option, or if the Callholder fails to make payment of the Call Price on
the date required under the Call Option, then the Certificate Trustee shall
deliver the Put Option Notice, wherein the Certificate Trustee shall have
exercised the Put Option.
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3.02. EFFECT OF PUT OPTION NOTICE.
Once the Put Option Notice is mailed, all of the Notes become due
and payable on the Final Distribution Date and at the Put Option Price.
3.03. DEPOSIT OF PUT OPTION PRICE.
On or prior to the Final Distribution Date, LGII shall deposit with
the Paying Agent an amount of money in same day funds sufficient to pay the
Put Option Price.
ARTICLE FOUR
COVENANTS
Each of LGII and Loewen hereby jointly and severally covenant as
follows, from and after the Closing Date and continuing so long as any amount
remains unpaid on any Note:
4.01. PAYMENT OF NOTES.
Each of LGII and Loewen will pay, or cause to be paid, the principal
of and interest on the Notes on the dates and in the manner provided in the
Notes and this Indenture. An installment of principal or interest shall be
considered paid on the date due if the Trustee or Paying Agent (other than
LGII, Loewen, a Subsidiary of LGII, Loewen or any Affiliate thereof) holds on
that date money designated and set aside for and sufficient to pay the
installment in a timely manner and is not prohibited from paying such money to
the Holders of the Notes pursuant to the terms of this Indenture.
LGII or Loewen, as the case may be, will pay interest on overdue
principal at the rate and in the manner provided in the Notes; it shall pay
interest on overdue installments of interest at the same rate and in the same
manner, to the extent lawful.
4.02. MAINTENANCE OF OFFICE OR AGENCY.
LGII will maintain in the Borough of Manhattan, The City of New
York, an office or agency where Notes may be surrendered for registration of
transfer or exchange or for presentation for payment and where notices and
demands to or upon LGII in respect of the Notes and this Indenture may be
served. LGII will give prompt written notice to the Trustee of the location,
and any change in the location, of such office or agency. If at any time LGII
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the address of the Trustee as set
forth in Section 11.02.
LGII may also from time to time designate one or more other offices or
agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; PROVIDED, HOWEVER,
that no such designation or rescission shall in any manner relieve LGII of its
obligation to maintain an office or agency in the Borough of
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Manhattan, The City of New York, for such purposes. LGII will give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
LGII hereby initially designates the office of the Trustee located
at Shawmut Trust Company of New York, c/o First Chicago Trust Co. of New York,
14 Wall Street, 8th Floor, Window No. 2, in the Borough of Manhattan, City of
New York 10005, as such office of LGII in accordance with this Section 4.02.
4.03. CORPORATE EXISTENCE.
Subject to Article Five, each of LGII and Loewen shall do or cause
to be done all things necessary to and will cause each Restricted Subsidiary
to, preserve and keep in full force and effect the corporate or partnership
existence and rights (charter and statutory), licenses and/or franchises of
Loewen and the Restricted Subsidiaries (including, without limitation, LGII);
PROVIDED, HOWEVER, that Loewen and the Restricted Subsidiaries shall not be
required to preserve any such rights, licenses or franchises if the Board of
Directors of Loewen shall reasonably determine that (x) the preservation
thereof is no longer desirable in the conduct of the business of Loewen and
its Subsidiaries taken as a whole and (y) the loss thereof is not materially
adverse to either Loewen and its Subsidiaries taken as a whole or to the
ability of LGII or Loewen to otherwise satisfy its obligations hereunder.
4.04. PAYMENT OF TAXES AND OTHER CLAIMS.
Each of LGII and Loewen will pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (a) all taxes,
assessments and governmental charges levied or imposed upon Loewen or any of
its Restricted Subsidiaries (including, without limitation, LGII) or upon the
income, profits or property of Loewen or any of its Restricted Subsidiaries,
and (b) all lawful claims for labor, materials and supplies which, if unpaid,
might by law become a Lien upon the property of Loewen or any Restricted
Subsidiary of Loewen; PROVIDED, HOWEVER, that neither LGII nor Loewen shall be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim 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 effect such payment
or discharge is not adverse in any material respect to Loewen.
4.05. MAINTENANCE OF PROPERTIES; INSURANCE; BOOKS AND RECORDS;
COMPLIANCE WITH LAW.
(a) Each of LGII and Loewen shall, and shall cause each of its
Restricted Subsidiaries (including, without limitation, LGII) to, cause all
properties and assets to be maintained and kept in good condition, repair and
working order (reasonable wear and tear excepted) and supplied with all
necessary equipment, and shall cause to be made all necessary repairs, renewals,
replacements, additions, betterments and improvements thereto, as shall be
reasonably necessary for the proper conduct of its business; PROVIDED, HOWEVER,
that nothing in this Section 4.05(a) shall prevent Loewen or any of its
Restricted Subsidiaries from discontinuing
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the operation and maintenance of any of its properties or assets if such
discontinuance is, in the judgment of the Board of Directors of Loewen or such
Restricted Subsidiary, desirable in the conduct of its business and if such
discontinuance is not materially adverse to either Loewen and its Subsidiaries
taken as a whole or the ability of LGII or Loewen to otherwise satisfy its
obligations hereunder.
(b) Each of LGII and Loewen shall, and shall cause each of its
Restricted Subsidiaries (including, without limitation, LGII) to, maintain
with financially sound and reputable insurers such insurance as may be
required by law (other than with respect to any environmental impairment
liability insurance not commercially available) and such other insurance to
such extent and against such hazards and liabilities, as is customarily
maintained by companies similarly situated (which may include self-insurance
in the same form as is customarily maintained by companies similarly situated).
(c) Each of LGII and Loewen shall, and shall cause each of its
Restricted Subsidiaries (including, without limitation, LGII) to, keep proper
books of record and account, in which full and correct entries shall be made
of all business and financial transactions of Loewen and each Restricted
Subsidiary of Loewen and reflect on its financial statements adequate accruals
and appropriations to reserves, all in accordance with GAAP consistently
applied to Loewen and its Subsidiaries taken as a whole.
(d) Each of LGII and Loewen shall and shall cause each of its
Restricted Subsidiaries (including, without limitation, LGII) to comply with
all statutes, laws, ordinances, or government rules and regulations to which
it is subject, non-compliance with which would materially adversely affect the
business, earnings, properties, assets or condition (financial or otherwise)
of Loewen and its Subsidiaries taken as a whole.
4.06. COMPLIANCE CERTIFICATE.
(a) Each of LGII and Loewen will deliver to the Trustee within 60
days after the end of each of Loewen's first three fiscal quarters and within
90 days after the end of Loewen's fiscal year an Officers' Certificate stating
whether or not the signers know of any Default or Event of Default under this
Indenture by LGII or Loewen or an event which, with notice or lapse of time or
both, would constitute a default by LGII or Loewen under any Pari Passu
Indebtedness that occurred during such fiscal period. If they do know of such
a Default, Event of Default or default, the certificate shall describe any
such Default, Event of Default or default and its status. The first
certificate to be delivered pursuant to this Section 4.06(a) shall be for the
first fiscal quarter of Loewen beginning after the Issue Date. The Guarantor
shall also deliver a certificate to the Trustee at least annually from its
principal executive, financial or accounting officer as to his or her
knowledge of LGII's and Loewen's compliance with all conditions and covenants
under this Indenture and LGII's, such compliance to be determined without
regard to any period of grace or requirement of notice provided herein or
therein.
(b) The Guarantor shall deliver to the Trustee within 90 days
after the end of each fiscal year a written statement by LGII's and Loewen's
independent chartered accountants stating (A) that their audit examination has
included a review of the terms of this Indenture and
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the Notes as they relate to accounting matters, and (B) whether, in connection
with their audit examination, any Default or Event of Default under this
Indenture or an event which, with notice or lapse of time or both, would
constitute a default under any Pari Passu Indebtedness has come to their
attention and, if such a Default, Event of Default or a default under any Pari
Passu Indebtedness has come to their attention, specifying the nature and
period of existence thereof; PROVIDED, HOWEVER, that, without any restriction
as to the scope of the audit examination, such independent certified public
accountants shall not be liable by reason of any failure to obtain knowledge
of any such Default, Event of Default or a default under any Pari Passu
Indebtedness that would not be disclosed in the course of an audit examination
conducted in accordance with GAAP.
(c) Each of LGII and Loewen will deliver to the Trustee as soon
as possible, and in any event within 10 days after LGII and/or Loewen, as the
case may be, becomes aware or should reasonably have become aware of the
occurrence of any Default, Event of Default or an event which, with notice or
lapse of time or both, would constitute a default by LGII and/or Loewen, as
the case may be, under any Indebtedness, an Officers' Certificate specifying
such Default, Event of Default or default and what action LGII and/or Loewen,
as the case may be, is taking or proposes to take with respect thereto.
4.07. LIMITATION ON INDEBTEDNESS.
The Guarantor will not, and will not permit any of its Restricted
Subsidiaries (including, without limitation, LGII) to, directly or indirectly,
create, incur, issue, assume, guarantee or in any manner become directly or
indirectly liable, contingently or otherwise, for the payment of
(collectively, to "incur") any Indebtedness (including, without limitation,
any Acquired Indebtedness) other than Permitted Indebtedness. Notwithstanding
the foregoing limitations, Loewen and LGII (and any Wholly-Owned Subsidiary
with respect to Seller Financing Indebtedness) will be permitted to incur
Indebtedness (including, without limitation, Acquired Indebtedness) if at the
time of such incurrence, and after giving PRO FORMA effect thereto, the
Consolidated Fixed Charge Coverage Ratio of Loewen is at least equal to 2.25:1.
4.08. LIMITATION ON RESTRICTED PAYMENTS.
The Guarantor will not, and will not permit any of its Restricted
Subsidiaries (including, without limitation, LGII) to, directly or indirectly:
(a) declare or pay any dividend or make any other distribution
or payment on or in respect of Capital Stock of Loewen or any of its
Restricted Subsidiaries or any payment made to the direct or indirect
holders (in their capacities as such) of Capital Stock of Loewen or any of
its Restricted Subsidiaries (other than (x) dividends or distributions
payable solely in Capital Stock of Loewen (other than Redeemable Capital
Stock) or in options, warrants or other rights to purchase Capital Stock of
Loewen (other than Redeemable Capital Stock) and (y) dividends or other
distributions to the extent declared or paid to Loewen or any Wholly-Owned
Subsidiary of Loewen),
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(b) purchase, redeem, defease or otherwise acquire or retire for
value any Capital Stock of Loewen or any of its Restricted Subsidiaries
(other than any such Capital Stock of a Wholly-Owned Subsidiary of Loewen),
(c) make any principal payment on, or purchase, defease,
repurchase, redeem or otherwise acquire or retire for value, prior to any
scheduled maturity, scheduled repayment, scheduled sinking fund payment or
other Stated Maturity, any Indebtedness that is subordinate or junior in
right of payment to the Notes or Pari Passu Indebtedness (other than any
such subordinated or Pari Passu Indebtedness owned by Loewen or a
Wholly-Owned Subsidiary of Loewen), or
(d) make any Investment (other than any Permitted Investment) in
any person,
(such payments or Investments described in the preceding clauses (a), (b), (c)
and (d) are collectively referred to as "Restricted Payments"), unless, at the
time of and after giving effect to the proposed Restricted Payment (the amount
of any such Restricted Payment, if other than cash, shall be the Fair Market
Value on the date of such Restricted Payment of the asset(s) proposed to be
transferred by Loewen or such Restricted Subsidiary, as the case may be,
pursuant to such Restricted Payment), (A) no Default or Event of Default shall
have occurred and be continuing, (B) immediately prior to and after giving
effect to such Restricted Payment, Loewen would be able to incur $1.00 of
additional Indebtedness pursuant to Section 4.07 (assuming a market rate of
interest with respect to such additional Indebtedness) and (C) the aggregate
amount of all Restricted Payments declared or made from and after the
Measurement Date would not exceed the sum of (1) 50% of the aggregate
Consolidated Net Income of Loewen accrued on a cumulative basis during the
period beginning on the first day of the fiscal quarter of Loewen during which
the Measurement Date occurs and ending on the last day of the fiscal quarter of
Loewen immediately preceding the date of such proposed Restricted Payment, which
period shall be treated as a single accounting period (or, if such aggregate
cumulative Consolidated Net Income of Loewen for such period shall be a deficit,
minus 100% of such deficit) plus (2) the aggregate net cash proceeds received by
Loewen or LGII (without duplication) either (x) as capital contributions to
Loewen or LGII (without duplication) after the Measurement Date from any person
(other than Loewen, LGII or a Restricted Subsidiary of Loewen or LGII, as the
case may be) or (y) from the issuance or sale of Capital Stock (excluding
Redeemable Capital Stock, but including Capital Stock issued upon the conversion
of convertible Indebtedness or from the exercise of options, warrants or rights
to purchase Capital Stock (other than Redeemable Capital Stock)) of Loewen or
LGII (without duplication) to any person (other than to Loewen, LGII or a
Restricted Subsidiary of Loewen or LGII, as the case may be) after the
Measurement Date plus (3) in the case of the disposition or repayment of any
Investment constituting a Restricted Payment made after the Measurement Date
(excluding any Investment described in clause (v) of the following paragraph),
an amount equal to the lesser of the return of capital with respect to such
Investment and the cost of such Investment less, in either case, the cost of the
disposition of such Investment plus (4) the sum of $15,000,000. For purposes of
the preceding clause (C)(2), the value of the aggregate net proceeds received by
Loewen or LGII (without duplication) upon the issuance of Capital Stock upon the
conversion of convertible Indebtedness or upon the exercise of options, warrants
or rights will be the net cash proceeds received upon the issuance of
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such Indebtedness, options, warrants or rights plus the incremental cash amount
received by Loewen or LGII (without duplication) upon the conversion or exercise
thereof.
None of the foregoing provisions will prohibit (i) the payment of any
dividend within 60 days after the date of its declaration, if at the date of
declaration such payment would be permitted by the foregoing paragraph; (ii) so
long as no Default or Event of Default shall have occurred and be continuing,
the redemption, repurchase or other acquisition or retirement of any shares of
any class of Capital Stock of Loewen, LGII or any Restricted Subsidiary of
Loewen or LGII in exchange for, or out of the net cash proceeds of, a
substantially concurrent (x) capital contribution to Loewen or LGII from any
person (other than a Related Obligor) or (y) issue and sale of other shares of
Capital Stock (other than Redeemable Capital Stock) of Loewen or LGII to any
person (other than to a Related Obligor); (iii) so long as no Default or Event
of Default shall have occurred and be continuing, any redemption, repurchase or
other acquisition or retirement of Indebtedness that is subordinate or junior in
right of payment to the Notes and the Guarantee by exchange for, or out of the
net cash proceeds of, a substantially concurrent (x) capital contribution to
Loewen or LGII from any person (other than a Related Obligor) or (y) issue and
sale of (1) Capital Stock (other than Redeemable Capital Stock) of Loewen or
LGII to any person (other than a Related Obligor); PROVIDED, HOWEVER, that the
amount of any such net proceeds that are utilized for any such redemption,
repurchase or other acquisition or retirement shall be excluded from clause
(C)(2) of the preceding paragraph; or (2) Indebtedness of Loewen or LGII issued
to any person (other than a Related Obligor), so long as such Indebtedness is
Pari Passu Indebtedness or Indebtedness that is subordinate or junior in right
of payment to the Notes and the Guarantee in the same manner and at least to the
same extent as the Indebtedness so purchased, exchanged, redeemed, acquired or
retired; (iv) so long as no Default or Event of Default shall have occurred and
be continuing, any redemption, repurchase or other acquisition or retirement of
Pari Passu Indebtedness by exchange for, or out of the net cash proceeds of, a
substantially concurrent (x) capital contribution to Loewen or LGII from any
person (other than a Related Obligor) or (y) issue and sale of (1) Capital Stock
(other than Redeemable Capital Stock) of Loewen or LGII to any person (other
than a Related Obligor); PROVIDED, HOWEVER, that the amount of any such net
proceeds that are utilized for any such redemption, repurchase or other
acquisition or retirement shall be excluded from clause (C)(2) of the preceding
paragraph; or (2) Indebtedness of Loewen or LGII issued to any person (other
than a Related Obligor), so long as such Indebtedness is Pari Passu Indebtedness
or Indebtedness that is subordinate or junior in right of payment to the Notes
and the Guarantee in the same manner and at least to the same extent as the
Indebtedness so purchased, exchanged, redeemed, acquired or retired; (v)
Investments constituting Restricted Payments made as a result of the receipt of
consideration that consists of cash or Cash Equivalents from any Asset Sale made
pursuant to and in compliance with Section 4.12; (vi) so long as no Default or
Event of Default has occurred and is continuing, repurchases by Loewen of Common
Stock of Loewen from employees of Loewen or their authorized representatives
upon the death, disability or termination of employment of such employees, in an
aggregate amount not exceeding $10,000,000 in any calendar year; (vii)
Investments constituting Restricted Payments that are permitted by subparagraphs
(iv) and (v) of the proviso to Section 4.13; and (viii) the declaration or the
payment of dividends on, or the scheduled purchase or redemption of, the
Preferred Securities of a Special Finance Subsidiary or the Series C Preferred
Shares, of Loewen. In computing the amount of Restricted Payments
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previously made for purposes of clause (C) of the preceding paragraph,
Restricted Payments made under the preceding clauses (v), (vi) and (vii) shall
be included and those under clauses (i), (ii), (iii), (iv) and (viii) shall not
be so included. For purposes of this Section 4.08 only, the term "Related
Obligor" shall mean Loewen, LGII or a Restricted Subsidiary of Loewen or LGII.
4.09. LIMITATION ON ISSUANCES AND SALE OF PREFERRED STOCK BY
RESTRICTED SUBSIDIARIES.
The Guarantor (a) will not permit any of its Restricted Subsidiaries
(including, without limitation, LGII) to issue any Preferred Stock (other than
(i) Preferred Stock issued to Loewen or a Wholly-Owned Subsidiary of Loewen and
(ii) Preferred Securities of a Special Finance Subsidiary); and (b) will not
permit any person to own any Preferred Stock of any Restricted Subsidiary of
Loewen (other than (i) Preferred Stock owned by Loewen or a Wholly-Owned
Subsidiary of Loewen and (ii) Preferred Securities of a Special Finance
Subsidiary); PROVIDED, HOWEVER, that this covenant shall not prohibit the
issuance and sale of (x) all, but not less than all, of the issued and
outstanding Capital Stock of any Restricted Subsidiary of Loewen owned by Loewen
or any of its Restricted Subsidiaries in compliance with the other provisions of
this Indenture or (y) directors' qualifying shares or investments by foreign
nationals mandated by applicable law.
4.10. LIMITATION ON LIENS.
The Guarantor will not, and will not permit any of its Restricted
Subsidiaries (including, without limitation, LGII) to, create, incur, assume or
suffer to exist any Liens of any kind against or upon any of its property or
assets, or any proceeds therefrom where the aggregate amount of Indebtedness
secured by any such Liens, together with the aggregate amount of property
subject to any Sale-Leaseback Transactions of Loewen and its Restricted
Subsidiaries (other than Permitted Sale-Leaseback Transactions), exceeds 10% of
Loewen's Consolidated Net Worth, unless (x) in the case of Liens securing
Indebtedness that is subordinate or junior in right of payment to the Notes, the
Notes are secured by a Lien on such property, assets or proceeds that is senior
in priority to such Liens and (y) in all other cases, the Notes are equally and
ratably secured except for (a) Liens existing as at the Measurement Date;
(b) Liens securing the Notes or the Guarantee; (c) Liens in favor of Loewen,
LGII or any Wholly-Owned Subsidiary; (d) Liens securing Indebtedness which is
incurred to refinance Indebtedness which has been secured by a Lien permitted
under the provisions of this Indenture and which has been incurred in accordance
with the provisions of the Indenture; PROVIDED, HOWEVER, that such Liens do not
extend to or cover any property or assets of Loewen or any of its Restricted
Subsidiaries not securing the Indebtedness so refinanced; and (e) Permitted
Liens.
4.11. CHANGE OF CONTROL.
Upon the occurrence of a Change of Control, LGII will be, and Loewen
will ensure that LGII will be, obligated to make an offer to purchase (a "Change
of Control Offer"), and shall purchase, on a Business Day (the "Change of
Control Purchase Date") not more than 60 nor less than 30 days following the
occurrence of the Change of Control, all of the then outstanding Notes properly
tendered and not withdrawn at a purchase price (the "Change of
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Control Purchase Price") equal to 101% of the principal amount thereof plus
accrued and unpaid interest, if any, to the Change of Control Purchase Date.
The Change of Control Offer is required to remain open for at least 20
Business Days and until the close of business on the Change of Control
Purchase Date.
Notice of a Change of Control Offer shall be mailed by LGII not later
than the 30th day after the date of occurrence of the Change of Control to the
Holders of Notes at their last registered addresses with a copy to the Trustee
and the Paying Agent. The Change of Control Offer shall remain open from the
time of mailing for at least 20 Business Days and until 5:00 p.m., New York City
time, on the Change of Control Purchase Date. The notice, which shall govern
the terms of the Change of Control Offer, shall include such disclosures as are
required by law and shall state:
(a) that the Change of Control Offer is being made pursuant to
this Section 4.11 and that all Notes validly tendered into the Change of
Control Offer and not withdrawn will be accepted for payment;
(b) the purchase price (including the amount of accrued
interest, if any) for each Note, the Change of Control Purchase Date and
the date on which the Change of Control Offer expires;
(c) that any Note not tendered for payment will continue to
accrue interest in accordance with the terms thereof;
(d) that, unless LGII shall default in the payment of the
purchase price, any Note accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after the Change of Control
Purchase Date;
(e) that Holders electing to have Notes purchased pursuant to a
Change of Control Offer will be required to surrender their Notes to the
Paying Agent at the address specified in the notice prior to 5:00 p.m.,
New York City time, on the Change of Control Purchase Date and must
complete any form of letter of transmittal proposed by LGII and reasonably
acceptable to the Trustee and the Paying Agent;
(f) that Holders of Notes will be entitled to withdraw their
election if the Paying Agent receives, not later than 5:00 p.m., New York
City time, on the Change of Control Purchase Date, a tested telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of Notes the Holder delivered for purchase, the Note
certificate number (if any) and a statement that such Holder is withdrawing
its election to have such Notes purchased;
(g) that Holders whose Notes are purchased only in part will be
issued Notes equal in principal amount to the unpurchased portion of the
Notes surrendered;
(h) the instructions that Holders must follow in order to tender
their Notes; and
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(i) information concerning the business of LGII and Loewen, the
most recent annual and quarterly reports of Loewen filed with the
Commission pursuant to the Exchange Act (or, if Loewen is not then
permitted to file any such reports with the Commission, the comparable
reports prepared pursuant to Section 4.17), a description of material
developments in the business of LGII and Loewen, information with respect
to PRO FORMA historical financial information after giving effect to such
Change of Control and such other information concerning the circumstances
and relevant facts regarding such Change of Control Offer as would be
material to a Holder of Notes in connection with the decision of such
Holder as to whether or not it should tender Notes pursuant to the Change
of Control Offer.
On the Change of Control Purchase Date, LGII shall (i) accept for
payment Notes or portions thereof validly tendered pursuant to the Change of
Control Offer, (ii) deposit with the Paying Agent money, in immediately
available funds, sufficient to pay the purchase price of all Notes or portions
thereof so tendered and accepted and (iii) deliver to the Trustee the Notes so
accepted together with an Officers' Certificate setting forth the Notes or
portions thereof tendered to and accepted for payment by LGII. The Paying Agent
shall promptly mail or deliver to the Holders of Notes so accepted payment in an
amount equal to the purchase price, and the Trustee shall promptly authenticate
and mail or deliver to such Holders a new Note equal in principal amount to any
unpurchased portion of the Note surrendered. Any Notes not so accepted shall be
promptly mailed or delivered by LGII to the Holder thereof. LGII will publicly
announce the results of the Change of Control Offer not later than the first
Business Day following the Change of Control Purchase Date.
If a Change of Control occurs and LGII fails to pay the Purchase Price
for all Notes properly tendered and not withdrawn, Loewen will be obliged to
purchase all such Notes at the Change of Control Purchase Price on the Change of
Control Purchase Date in compliance with the requirements applicable to a Change
of Control Offer made by LGII.
LGII shall not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in a
manner, at the times and otherwise in compliance with the requirements
applicable to a Change of Control Offer made by LGII and purchases all Notes
validly tendered and not withdrawn under such Change of Control Offer.
LGII and Loewen will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act, and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to a Change
of Control Offer.
4.12. DISPOSITION OF PROCEEDS OF ASSET SALES.
(a) The Guarantor will not, and will not permit any of its Restricted
Subsidiaries (including, without limitation, LGII) or First Capital Life
Insurance Company of Louisiana, National Capital Life Insurance Company,
Security Industrial Insurance Company, Security Industrial Fire Insurance
Company or any successors to such Subsidiaries to, make any Asset Sale unless
(a) Loewen or such Restricted Subsidiary, as the case may be, receives
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consideration at the time of such Asset Sale at least equal to the Fair Market
Value of the shares or assets sold or otherwise disposed of and (b) at least 75%
of such consideration consists of cash or Cash Equivalents. To the extent the
Net Cash Proceeds of any Asset Sale are not required to be applied to repay, and
permanently reduce the commitments under, the Credit Agreements (as required by
the terms thereof) or any other Pari Passu Indebtedness, or are not so applied,
Loewen or such Restricted Subsidiary, as the case may be, may, within 180 days
of such Asset Sale, apply such Net Cash Proceeds to an investment in properties
and assets that replace the properties and assets that were the subject of such
Asset Sale or in properties and assets that will be used in the business of
Loewen and its Restricted Subsidiaries existing on the Issue Date or in
businesses reasonably related thereto ("Replacement Assets"). Any Net Cash
Proceeds from any Asset Sale that are neither used to repay, and permanently
reduce the commitments under, the Credit Agreements nor invested in Replacement
Assets within the 180-day period described above constitute "Excess Proceeds"
subject to disposition as provided below.
(b) When the aggregate amount of Excess Proceeds equals or exceeds
$10,000,000, Loewen shall cause LGII to make an offer to purchase (an "Asset
Sale Offer"), from all holders of the Notes, not more than 40 Business Days
thereafter, an aggregate principal amount of Notes equal to such Excess
Proceeds, at a price in cash equal to 100% of the outstanding principal amount
thereof plus accrued and unpaid interest, if any, to the purchase date (the
"Asset Sale Offer Price").
(c) Notice of an Asset Sale Offer shall be mailed by LGII to all
Holders of Notes not less than 20 Business Days nor more than 40 Business Days
before the Asset Sale Purchase Date at their last registered address with a copy
to the Trustee and the Paying Agent. The Asset Sale Offer shall remain open
from the time of mailing for at least 20 Business Days and until at least 5:00
p.m., New York City time, on the Asset Sale Purchase Date. The notice, which
shall govern the terms of the Asset Sale Offer, shall include such disclosures
as are required by law and shall state:
(1) that the Asset Sale Offer is being made pursuant to this
Section 4.12;
(2) the Asset Sale Offer Price (including the amount of accrued
interest, if any) for each Note, the Asset Sale Purchase Date and the date
on which the Asset Sale Offer expires;
(3) that any Note not tendered or accepted for payment will
continue to accrue interest in accordance with the terms thereof;
(4) that, unless LGII shall default in the payment of the Asset
Sale Offer Price, any Note accepted for payment pursuant to the Asset Sale
Offer shall cease to accrue interest after the Asset Sale Purchase Date;
(5) that Holders electing to have Notes purchased pursuant to an
Asset Sale Offer will be required to surrender their Notes to the Paying
Agent at the address specified in the notice prior to 5:00 p.m., New York
City time, on the Asset Sale Purchase
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Date and must complete any form of letter of transmittal proposed by LGII
and reasonably acceptable to the Trustee and the Paying Agent;
(6) that Holders will be entitled to withdraw their election if
the Paying Agent receives, not later than 5:00 p.m., New York City time, on
the Asset Sale Purchase Date, a tested telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of Notes
the Holder delivered for purchase, the Note certificate number (if any) and
a statement that such Holder is withdrawing its election to have such Notes
purchased;
(7) that if Notes in a principal amount in excess of the
Holder's PRO RATA share of the amount of Excess Proceeds are tendered
pursuant to the Asset Sale Offer, LGII shall purchase Notes on a PRO RATA
basis among the Notes tendered (with such adjustments as may be deemed
appropriate by LGII so that only Notes in denominations of $1,000 or
integral multiples of $1,000 shall be acquired);
(8) that Holders whose Notes are purchased only in part will be
issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered;
(9) the instructions that Holders must follow in order to tender
their Notes; and
(10) information concerning the business of LGII and Loewen, the
most recent annual and quarterly reports of Loewen filed with the
Commission pursuant to the Exchange Act (or, if Loewen is not permitted to
file any such reports with the Commission, the comparable reports prepared
pursuant to Section 4.17), a description of material developments in the
business of LGII and Loewen, information with respect to PRO FORMA
historical financial information after giving effect to such Asset Sale and
Asset Sale Offer and such other information concerning the circumstances
and relevant facts regarding such Asset Sale Offer as would be material to
a Holder of Notes in connection with the decision of such Holder as to
whether or not it should tender Notes pursuant to the Asset Sale Offer.
(11) On the Asset Sale Purchase Date, LGII shall (i) accept for
payment, on a PRO RATA basis, Notes or portions thereof tendered pursuant
to the Asset Sale Offer, (ii) deposit with the Paying Agent money, in
immediately available funds, in an amount sufficient to pay the Asset Sale
Offer Price of all Notes or portions thereof so tendered and accepted and
(iii) deliver to the Trustee the Notes so accepted together with an
Officers' Certificate setting forth the Notes or portions thereof tendered
to and accepted for payment by LGII. The Paying Agent shall promptly mail
or deliver to Holders of Notes so accepted payment in an amount equal to
the Asset Sale Offer Price, and the Trustee shall promptly authenticate and
mail or deliver to such Holders a new Note equal in principal amount to any
unpurchased portion of the Note surrendered. Any Notes not so accepted
shall be promptly mailed or delivered by LGII to the Holder thereof. LGII
will publicly announce the results of the Asset Sale Offer not later than
the first Business
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Day following the Asset Sale Purchase Date. To the extent that the
aggregate principal amount of Notes tendered pursuant to an Asset Sale
Offer is less than the Excess Proceeds, LGII or Loewen, as the case may
be, may use such deficiency for general corporate purposes. Upon
completion of such Asset Sale Offer, the amount of Excess Proceeds shall
be reset to zero. For purposes of this Section 4.12, the Trustee shall
act as Paying Agent.
(12) LGII and Loewen will comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other
securities laws or regulations in connection with the repurchase of Notes
pursuant to the Asset Sale Offer.
4.13. LIMITATION ON TRANSACTIONS WITH INTERESTED PERSONS.
The Guarantor will not, and will not permit any of its Restricted
Subsidiaries (including, without limitation, LGII) to, directly or indirectly,
enter into or suffer to exist any transaction or series of related transactions
(including, without limitation, the sale, transfer, disposition, purchase,
exchange or lease of assets, property or services) with, or for the benefit of,
any Affiliate of Loewen or any 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 securities that such person has the right to
acquire, whether such right is exercisable immediately, after the passage of
time or upon the happening of an event) of 5% or more of the Common Shares at
any time outstanding ("Interested Persons"), unless (a) such transaction or
series of related transactions are on terms that are no less favorable to Loewen
or such Restricted Subsidiary, as the case may be, than those which could have
been obtained in a comparable transaction at such time from persons who are not
Affiliates of Loewen or Interested Persons, (b) with respect to a transaction or
series of transactions involving aggregate payments or value equal to or greater
than $10,000,000, Loewen has obtained a written opinion from an Independent
Financial Advisor stating that the terms of such transaction or series of
transactions are fair to Loewen or its Restricted Subsidiary, as the case may
be, from a financial point of view and (c) with respect to a transaction or
series of transactions involving aggregate payments or value equal to or greater
than $2,500,000, Loewen shall have delivered an Officer's Certificate to the
Trustee certifying that such transaction or series of transactions comply with
the preceding clause (a) and, if applicable, certifying that the opinion
referred to in the preceding clause (b) has been delivered and that such
transaction or series of transactions has been approved by a majority of the
Board of Directors of Loewen (including a majority of the disinterested
directors); PROVIDED, HOWEVER, that this covenant will not restrict Loewen from
(i) paying dividends in respect of its Capital Stock permitted under Section
4.08, (ii) paying reasonable and customary fees to directors of Loewen or any
Restricted Subsidiary who are not employees of Loewen or any Restricted
Subsidiary, (iii) entering into transactions with its Wholly-Owned Subsidiaries
or permitting its Wholly-Owned Subsidiaries from entering into transactions with
other Wholly-Owned Subsidiaries of Loewen, (iv) making loans or advances to
senior officers and directors of Loewen or any Restricted Subsidiary not in
excess of $6,000,000 in the aggregate at any one time outstanding, (v)
guaranteeing loans made to officers and other employees of Loewen or any
Restricted Subsidiaries in connection with Loewen's 1994 Management Equity
Investment Plan not in excess of $6,000,000 in the aggregate at any tone time
outstanding, (vi) making loans or advances to officers, employees or
consultants of Loewen and its Restricted Subsidiaries for
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travel and moving expenses in the ordinary course of business for bona fide
business purposes of Loewen and its Restricted Subsidiaries, (vii) making
other loans or advances to officers, employees or consultants of Loewen and
its Restricted Subsidiaries in the ordinary course of business for bona fide
business purposes of Loewen and its Restricted Subsidiaries not in excess of
$10,000,000 in the aggregate at any one time outstanding, (viii) making
payments to officers or employees of Loewen or its Restricted Subsidiaries
pursuant to obligations undertaken, at a time when such persons were not
officers or employees of Loewen or its Restricted Subsidiaries, in connection
with arms' length Asset Acquisitions or (ix) declaring or paying dividends
on, or purchasing or redeeming, the Preferred Securities of a Special Finance
Subsidiary.
4.14. LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS
AFFECTING SUBSIDIARIES.
The Guarantor will not, and will not permit any of its Restricted
Subsidiaries (including, without limitation, LGII) to, directly or indirectly,
create or otherwise cause or suffer to exist or become effective any encumbrance
or restriction on the ability of any Restricted Subsidiary of Loewen to (a) pay
dividends, in cash or otherwise, or make any other distributions on or in
respect of its Capital Stock or any other interest or participation in, or
measured by, its profits, (b) pay any Indebtedness owed to Loewen or any other
Restricted Subsidiary of Loewen, (c) make loans or advances to, or any
Investment in, Loewen or any other Restricted Subsidiary of Loewen, (d) transfer
any of its properties or assets to Loewen or any other Restricted Subsidiary of
Loewen or (e) guarantee any Indebtedness of Loewen or any other Restricted
Subsidiary of Loewen, except for such encumbrances or restrictions existing
under or by reason of (i) applicable law, (ii) customary non-assignment
provisions of any contract or any lease governing a leasehold interest of Loewen
or any Restricted Subsidiary of Loewen, (iii) customary restrictions on
transfers of property subject to a Lien permitted under the provisions of this
Indenture which could not materially adversely affect Loewen's ability to
satisfy its obligations under the provisions of this Indenture and the Notes,
(iv) any agreement or other instrument of a person acquired by Loewen or any
Restricted Subsidiary of Loewen (or a Restricted Subsidiary of such person) in
existence at the time of such acquisition (but not created in contemplation
thereof), which encumbrance or restriction is not applicable to any person, or
the properties or assets of any person, other than the person, or the properties
or assets of the person, so acquired, (v) provisions contained in any agreement
or instrument relating to Indebtedness which prohibit the transfer of all or
substantially all of the assets of the obligor thereunder unless the transferee
shall assume the obligations of the obligor under such agreement or instrument
and (vi) encumbrances and restrictions under Indebtedness in effect on the Issue
Date (including under the Notes) and encumbrances and restrictions in permitted
refinancings or replacements thereof which are no less favorable to the holders
of the Notes than those contained in the Indebtedness so refinanced or replaced.
4.15. LIMITATIONS ON SALE-LEASEBACK TRANSACTIONS.
The Guarantor will not, and will not permit any of its Restricted
Subsidiaries (including, without limitation, LGII) to, enter into any
Sale-Leaseback Transaction with respect to any property of Loewen or any of its
Restricted Subsidiaries where the aggregate amount of property subject to such
Sale- Leaseback Transactions, together with the aggregate amount of
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Liens securing Indebtedness of Loewen and its Restricted Subsidiaries (other
than Permitted Liens), exceeds 10% of Loewen's Consolidated Net Worth.
Notwithstanding the foregoing, Loewen and its Restricted Subsidiaries may enter
into Sale-Leaseback Transactions ("Permitted Sale-Leaseback Transactions") with
respect to property acquired or constructed after the Issue Date; PROVIDED that
(a) the Attributable Value of such Sale-Leaseback Transaction shall be deemed to
be Indebtedness of Loewen or such Restricted Subsidiary, as the case may be, and
(b) after giving PRO FORMA effect to any such Sale-Leaseback Transaction and the
foregoing clause (a), Loewen would be able to incur $1.00 of additional
Indebtedness pursuant to 4.07 (assuming a market rate of interest with respect
to such additional Indebtedness).
4.16. LIMITATION ON APPLICABILITY OF CERTAIN COVENANTS.
During any period of time that (i) the ratings assigned to the Notes
by each of S&P and Moody's (collectively, the "Rating Agencies") are no less
than BBB-and Baa3, respectively (the "Investment Grade Ratings"), and (ii) no
Default or Event of Default has occurred and is continuing, Loewen and its
Restricted Subsidiaries (including, without limitation, LGII) will not be
subject to the covenants contained in Sections 4.07, 4.08, 4.09, 4.12, 4.13 and
4.14 (collectively, the "Suspended Covenants"). If one or both Rating Agencies
withdraws its rating or downgrades its Investment Grade Rating, then thereafter
Loewen and its Restricted Subsidiaries will be subject, on a prospective basis,
to the Suspended Covenants (until the Rating Agencies have again assigned
Investment Grade Ratings to the Notes) and compliance with the Suspended
Covenants with respect to Restricted Payments made after the time of such
withdrawal or downgrade will be calculated in accordance with the covenant
contained in Section 4.07 as if such covenant had been in effect at all times
after the Measurement Date.
4.17. COMMISSION REPORTS.
The Guarantor shall file with the Commission, or if not permitted or
required to so file will deliver to the Trustee, the annual reports, quarterly
reports and the information, documents and other reports required to be filed
with the Commission pursuant to Sections 13 and 15 of the Exchange Act, whether
or not Loewen has a class of securities registered under the Exchange Act. In
accordance with the provisions of TIA Section 314(a), Loewen shall file with the
Trustee and provide to each Holder, within 15 days after it files them with the
Commission (or if such filing is not permitted under the Exchange Act, 15 days
after Loewen would have been required to make such filing), copies of such
reports. The Guarantor also shall comply with the other provisions of TIA
Section 314(a). In addition, Loewen shall cause its annual reports to
stockholders and any quarterly or other financial reports furnished by it to
stockholders generally to be filed with the Trustee and mailed no later than
the date such materials are mailed or made available to Loewen's stockholders,
to the Holders at their addresses as set forth in the register of securities
maintained by the Registrar.
4.18. RULE 144A INFORMATION REQUIREMENT.
If at any time Loewen is no longer subject to the reporting
requirements of the Exchange Act, it will furnish to the Holders or beneficial
holders of the Notes and prospective
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purchasers of the Notes designated by the holders of the Notes, upon their
request, any information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act.
4.19. WAIVER OF STAY, EXTENSION OR USURY LAWS.
Each of LGII and Loewen covenants (to the extent that it may lawfully
do so) that it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law
or any usury law or other law which would prohibit or forgive LGII or Loewen, as
the case may be, from paying all or any portion of the principal of, premium, if
any, or interest on the Notes as contemplated herein, wherever enacted, now or
at any time hereafter in force, or which may affect the covenants or the
performance of this Indenture; and (to the extent that it may lawfully do so)
each of LGII and Loewen hereby expressly waives all benefit or advantage of any
such law, and covenants that it will not hinder, delay or impede the execution
of any power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.
ARTICLE FIVE
SUCCESSOR CORPORATION
5.01. WHEN LGII MAY MERGE, ETC.
(a) The Guarantor will not, and will not permit LGII to, in any
transaction or series of transactions, merge or consolidate with or into, or
sell, assign, convey, transfer, lease or otherwise dispose of all or
substantially all of its properties and assets as an entirety to, any person or
persons, and Loewen will not permit any of its Restricted Subsidiaries
(including, without limitation, LGII) to enter into any such transaction or
series of transactions if such transaction or series of transactions, in the
aggregate, would result in a sale, assignment, conveyance, transfer, lease or
other disposition of all or substantially all of the properties and assets of
Loewen or LGII or Loewen and its Restricted Subsidiaries, taken as a whole, or
LGII and its Restricted Subsidiaries, taken as a whole, to any other person or
persons, unless at the time of and after giving effect thereto (a) either (i) if
the transaction or series of transactions is a merger or consolidation, Loewen
or LGII or the Restricted Subsidiary, as the case may be, shall be the surviving
person of such merger or consolidation, or (ii) the person formed by such
consolidation or into which Loewen, LGII or such Restricted Subsidiary, as the
case may be, is merged or to which the properties and assets of Loewen, LGII or
such Restricted Subsidiary, as the case may be, are transferred (any such
surviving person or transferee person being the "Surviving Entity") shall be a
corporation organized and existing under the laws of the United States of
America, any state thereof, the District of Columbia, Canada or any province
thereof and shall expressly assume by a supplemental indenture executed and
delivered to the Trustee, in form reasonably satisfactory to the Trustee, the
due and punctual payment of the principal of, premium, if any, and interest on
all the Notes and the performance and observance of every covenant and
obligation of this Indenture and the Notes on the part of Loewen or LGII, as the
case may be, to be performed or observed and, in each case, this Indenture shall
remain in full
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force and effect; (b) immediately before and immediately after giving effect
to such transaction or series of transactions on a PRO FORMA basis (including,
without limitation, any Indebtedness incurred or anticipated to be incurred
in connection with or in respect of such transaction or series of
transactions), no Default or Event of Default shall have occurred and be
continuing and Loewen, LGII or the Surviving Entity, as the case may be, after
giving effect to such transaction or series of transactions on a PRO FORMA basis
(including, without limitation, any Indebtedness incurred or anticipated to be
incurred in connection with or in respect of such transaction or series of
transactions), could incur $1.00 of additional Indebtedness pursuant to Section
4.07 (assuming a market rate of interest with respect to such additional
Indebtedness); (c) immediately after giving effect to such transaction or series
of transactions on a PRO FORMA basis (including, without limitation, any
Indebtedness incurred or anticipated to be incurred in connection with or in
respect of such transaction or series of transactions), the Consolidated Net
Worth of Loewen, LGII or the Surviving Entity, as the case may be, is at least
equal to the Consolidated Net Worth of Loewen or LGII, as the case may be,
immediately before such transaction or series of transactions; and (d) Loewen,
LGII or the Surviving Entity, as the case may be, shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each in form and
substance reasonably satisfactory to the Trustee, each stating that such
consolidation, merger, sale, assignment, conveyance, transfer, lease or other
disposition and, if a supplemental indenture is required in connection with such
transaction or series of transactions, such supplemental indenture, complies
with this Indenture and that all conditions precedent herein provided for
relating to such transaction or series of transactions have been complied with;
PROVIDED, HOWEVER, that solely for purposes of computing amounts described in
subclause (C) of Section 4.08, any such successor person shall only be deemed to
have succeeded to and be substituted for Loewen or LGII, as the case may be,
with respect to periods subsequent to the effective time of such merger,
consolidation or transfer of assets.
5.02. SUCCESSOR SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, conveyance,
transfer, lease or disposition of all or substantially all of the properties and
assets of Loewen or LGII in accordance with Section 5.01 hereof, the successor
person or persons formed by such consolidation or into which Loewen or LGII is
merged or the successor person to which such sale, assignment, conveyance,
transfer, lease or other disposition is made, shall succeed to, and be
substituted for, and may exercise every right and power of, Loewen or LGII, as
the case may be, under this Indenture and the Notes with the same effect as if
such successor had been named as Loewen or LGII, as the case may be, herein;
PROVIDED, HOWEVER, that solely for purposes of computing amounts described in
subclause (C) of Section 4.08, any such successor person shall only be deemed to
have succeeded to and be substituted for Loewen or LGII, as the case may be,
with respect to periods subsequent to the effective time of such merger,
consolidation or transfer of assets.
ARTICLE SIX
REMEDIES
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6.01. EVENTS OF DEFAULT.
An "Event of Default" with respect to the Notes means any of the
following events:
(a) default in the payment of the principal of or premium, if
any, on any Note when the same becomes due and payable (upon Stated
Maturity, acceleration, required purchase, scheduled principal payment or
otherwise); or
(b) default in the payment of an installment of interest on any
of the Notes, when the same becomes due and payable, and any such Default
continues for a period of 30 days; or
(c) failure to perform or observe any other term, covenant or
agreement contained in the Notes or the Guarantee with respect to Notes or
pursuant to the provisions of this Indenture (other than Defaults specified
in clause (a) or (b) above) and such Default continues for a period of 30
days after written notice of such Default requiring Loewen and LGII to
remedy the same shall have been given (i) to Loewen and LGII by the Trustee
or (ii) to Loewen, LGII and the Trustee by Holders of at least 25% in
aggregate principal amount of the Notes then outstanding; or
(d) default or defaults under one or more agreements,
instruments, mortgages, bonds, debentures or other evidences of
Indebtedness under which Loewen or any Restricted Subsidiary of Loewen
(including, without limitation, LGII) then has outstanding Indebtedness in
excess of $20,000,000 individually or in the aggregate, and either
(i) such Indebtedness is already due and payable in full or (ii) such
default or defaults have resulted in the acceleration of the maturity of
such Indebtedness; or
(e) one or more judgments, orders or decrees of any court or
regulatory or administrative agency of competent jurisdiction for the
payment of money in excess of $20,000,000, either individually or in the
aggregate, shall be entered against Loewen or any Restricted Subsidiary of
Loewen (including, without limitation, LGII) or any of their respective
properties and shall not be discharged or bonded against or stayed and
there shall have been a period of 60 days after the date on which any
period for appeal has expired and during which a stay of enforcement of
such judgment, order or decree, shall not be in effect; or
(f) either (i) the collateral agent under the Collateral Trust
Agreement or (ii) any holder of at least $20,000,000 in aggregate principal
amount of Indebtedness of Loewen or any of its Restricted Subsidiaries
(including, without limitation, LGII) shall commence judicial proceedings
to foreclose upon assets of Loewen or any of its Restricted Subsidiaries
having an aggregate Fair Market Value, individually or in the aggregate, in
excess of $20,000,000 or shall have exercised any right under applicable
law or applicable security documents to take ownership of any such assets
in lieu of foreclosure; or
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(g) Loewen or any Significant Subsidiary of Loewen pursuant to
or under or within the meaning of any Bankruptcy Law:
(1) commences a voluntary case or proceeding;
(2) consents to the entry of an order for relief against
it in an involuntary case or proceeding;
(3) consents to the appointment of a Custodian of it or
for all or substantially all of its property;
(4) makes a general assignment for the benefit of its
creditors; or
(5) shall generally not pay its debts when such debts
become due or shall admit in writing its inability to pay its debts
generally; or
(h) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(1) is for relief against Loewen or any Significant
Subsidiary of Loewen in an involuntary case or proceeding,
(2) appoints a Custodian of Loewen or any Significant
Subsidiary of Loewen for all or substantially all of its properties,
or
(3) orders the liquidation of Loewen or any Significant
Subsidiary of Loewen,
and in each case the order or decree remains unstayed and in effect for 60
days; or
(i) the Guarantee ceases to be in full force and effect or is
declared null and void, or Loewen denies that it has any further liability
under the Guarantee with respect to the Notes (including the Put Option),
or gives notice to such effect and such condition shall have continued for
a period of 60 days after written notice of such failure (which notice
shall specify the Default, demand that it be remedied and state that it is
a "Notice of Default") requiring Loewen and LGII to remedy the same shall
have been given (x) to Loewen and LGII by the Trustee or (y) to Loewen,
LGII and the Trustee by Holders of at least 25% in aggregate principal
amount of the Notes of any series then outstanding.
Subject to the provisions of Sections 7.01 and 7.02, the Trustee
shall not be charged with knowledge of any Default or Event of Default unless
written notice thereof shall have been given to a Trust Officer at the
Corporate Trust Office of the Trustee by LGII, Loewen, the Paying Agent, any
Holder, any holder of Indebtedness or any of their respective agents.
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6.02. ACCELERATION.
If an Event of Default (other than as specified in Section 6.01(g)
or 6.01(h)) occurs and is continuing with respect to the Notes of any series,
the Trustee, by written notice to Loewen and LGII, or the Holders of at least
25% in aggregate principal amount of the Notes then outstanding, by written
notice to the Trustee, Loewen and LGII, may declare the principal of, premium,
if any, and accrued and unpaid interest, if any, on all of the Notes to be due
and payable immediately, upon which declaration, all amounts payable in
respect of the Notes shall be immediately due and payable. If an Event of
Default specified in Section 6.01(g) or 6.01(h) occurs and is continuing, then
the principal of, premium, if any, and accrued and unpaid interest, if any, on
all of the Notes 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
of Notes.
After a declaration of acceleration hereunder with respect to the
Notes, but before a judgment or decree for payment of the money due has been
obtained by the Trustee, the Holders of a majority in aggregate principal
amount of the outstanding Notes, by written notice to Loewen, LGII and the
Trustee, may rescind such declaration if (a) Loewen or LGII has paid or
deposited with the Trustee a sum sufficient to pay (i) all amounts due the
Trustee under Section 7.08 and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, (ii) all
overdue interest on all Notes, (iii) the principal of and premium, if any, on
any Notes which have become due otherwise than by such declaration of
acceleration and interest thereon at the rate borne by the Notes, and (iv) to
the extent that payment of such interest is lawful, interest upon overdue
interest and overdue principal which has become due otherwise than by such
declaration of acceleration at the rate borne by the Notes; (b) the rescission
would not conflict with any judgment or decree of a court of competent
jurisdiction; and (c) all Events of Default, other than the non-payment of
principal of, premium, if any, and interest on the Notes that has become due
solely by such declaration of acceleration, have been cured or waived as
provided in Section 6.04.
No such rescission shall affect any subsequent Default or Event of
Default or impair any right subsequent therein.
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, premium, if any, or interest on the Notes or to
enforce the performance of any provision of the Notes or this Indenture.
All rights of action and claims under this Indenture or the Notes
may be enforced by the Trustee even if it does not possess any of the Notes or
does not produce any of them in the proceeding. A delay or omission by the
Trustee or any Holder in exercising any right or remedy accruing upon an Event
of Default shall not impair the right or remedy or constitute a waiver of or
acquiescence in the Event of Default. No remedy is exclusive of any other
remedy. All available remedies are cumulative to the extent permitted by law.
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6.04. WAIVER OF PAST DEFAULTS.
Subject to the provisions of Section 6.07 and 9.02, the Holders of
not less than a majority in aggregate principal amount of the outstanding
Notes of any series by notice to the Trustee may, on behalf of the Holders of
all the Notes of any such series, waive any existing Default or Event of
Default and its consequences, except a Default or Event of Default specified
in Section 6.01(a) or (b) or in respect of any provision hereof which cannot
be modified or amended without the consent of the Holder so affected pursuant
to Section 9.02. When a Default or Event of Default is so waived, it shall be
deemed cured and shall cease to exist.
6.05. CONTROL BY MAJORITY.
The Holders of not less than a majority in aggregate principal
amount of the outstanding Notes shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee, PROVIDED,
HOWEVER, that the Trustee may refuse to follow any direction (a) that
conflicts with any rule of law or this Indenture, (b) that the Trustee
determines may be unduly prejudicial to the rights of another Noteholder, or
(c) that may expose the Trustee to personal liability unless the Trustee has
been provided reasonable indemnity against any loss or expense caused by its
following such direction; and PROVIDED, FURTHER, that the Trustee may take any
other action deemed proper by the Trustee that is not inconsistent with such
direction.
6.06. LIMITATION ON SUITS.
No Holder of any Notes shall have any right to institute any
proceeding or pursue any remedy with respect to this Indenture or the Notes
unless:
(1) the Holder gives written notice to the Trustee of a
continuing Event of Default;
(2) the Holders of at least 25% in aggregate principal amount
of the outstanding Notes make a written request to the Trustee to pursue
the remedy;
(3) such Holder or Holders offer and, if requested, provide to
the Trustee reasonable indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 30 days
after receipt of the request and the offer and, if requested, provision of
indemnity; and
(5) during such 30-day period the Holders of a majority in
aggregate principal amount of the outstanding Notes do not give the Trustee
a direction which is inconsistent with the request;
The foregoing limitations shall not apply to a suit instituted by a
Holder for the enforcement of the payment of principal of, premium, if any, or
accrued interest on, such Note on or after the respective due dates set forth
in such Note.
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A Holder may not use this Indenture to prejudice the rights of any
tother Holders or to obtain priority or preference over such other Holders.
6.07. RIGHT OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision in this Indenture, the right of
any Holder of a Note to receive payment of the principal of, premium, if any,
and interest on such Note, on or after the respective Stated Maturities
expressed in such Note, or to bring suit for the enforcement of any such
payment on or after the respective Stated Maturities, is absolute and
unconditional and shall not be impaired or affected without the consent of the
Holder.
6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in clause (a) or (b) of Section
6.01 occurs and is continuing, the Trustee may recover judgment in its own
name and as trustee of an express trust against LGII, Loewen or any other
obligor on the Notes for the whole amount of principal of, premium, if any,
and accrued interest remaining unpaid, together with interest on overdue
principal and, to the extent that payment of such interest is lawful, interest
on overdue installments of interest, in each case at the rate per annum borne
by the Notes and such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
6.09. TRUSTEE MAY FILE PROOFS OF CLAIMS.
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 (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceedings relative to Loewen, LGII or the
Subsidiaries of the of Loewen and LGII (or any other obligor upon the Notes),
their creditors or their property and shall be entitled and empowered to
collect and receive any monies 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 agent and counsel, and any other amounts due the Trustee under
Section 7.08. Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting
the Notes or the rights of any Holder thereof, or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article Six, it
shall pay out such money in the following order:
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First: to the Trustee for amounts due under Section 7.08;
Second: to the Holders for interest accrued on the Notes, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for interest;
Third: to the Holders for principal amounts (including any premium)
owing under the Notes, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for principal (including
any premium); and
Fourth: the balance, if any, to LGII or Loewen, as the case may be.
The Trustee, upon prior written notice to LGII, may fix a record
date and payment date for any payment to Noteholders pursuant to this Section
6.10.
6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted
by it as Trustee, a court may in its discretion require the filing by any
party litigant in the suit of an undertaking to pay the costs of the suit, and
the court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party
litigant. This Section 6.11 does not apply to any suit by the Trustee, any
suit by a Holder pursuant to Section 6.07, or a suit by Holders of more than
10% in aggregate principal amount of the outstanding Notes.
6.12. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture or any Note or the Guarantee
and such proceeding has been discontinued or abandoned for any reason, or has
been determined adversely to the Trustee or to such Holder, then and in every
such case LGII, Loewen, the Trustee and the Holders shall, subject to any
determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of
the Trustee and the Holders shall continue as though no such proceeding had
been instituted.
ARTICLE SEVEN
TRUSTEE
7.01. DUTIES.
(a) In case 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
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degree of care and skill in their exercise, as a prudent person would exercise
or use under the circumstances in the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default,
(1) the Trustee need perform only such duties as are
specifically set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture; but 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
be under a duty to examine the same to determine whether or not they
conform to the requirements of this Indenture.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful 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, unless it is proved that the Trustee
was negligent in ascertaining the pertinent facts;
(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) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability
is not reasonably assured to it.
(e) Every provision of this Indenture that in any way relates to
the Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section
7.01.
7.02. RIGHTS OF TRUSTEE.
Subject to Section 7.01 hereof and the provisions of TIA Section 315:
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(a) the Trustee may rely on any document reasonably believed by
it to be genuine and to have been signed or presented by the proper person.
The Trustee need not investigate any fact or matter stated in the document.
(b) before the Trustee acts or refrains from acting, it may
consult with counsel and may require an Officers' Certificate or an Opinion
of Counsel, which shall conform to Sections 11.04 and 11.05. The Trustee
shall not be liable for any action it takes or omits to take in good faith
in reliance on such certificate or opinion.
(c) the Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent
appointed with due care.
(d) the Trustee shall not be liable for any action taken or
omitted by it in good faith and reasonably believed by it to be authorized
or within the discretion, rights or powers conferred upon it by this
Indenture other than any liabilities arising out of its own negligence.
(e) the Trustee may consult with counsel of its own choosing
and the advice or opinion 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) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, notice, request, direction, consent, order, bond,
debenture, or other paper or document, but the Trustee, in its discretion,
may make such further inquiry or investigation into such facts or matters
as it may see fit.
(g) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request, order
or direction of any of the Holders pursuant to the provisions of this
Indenture, unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may
be incurred therein or thereby.
7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee, any Paying Agent, Registrar or any other agent of LGII
or Loewen, in its individual or any other capacity, may become the owner or
pledgee of Notes and, subject to Sections 7.11 and 7.12 and TIA Sections 310
and 311, may otherwise deal with LGII, Loewen and their Subsidiaries with the
same rights it would have if it were not the Trustee, Paying Agent, Registrar
or such other agent.
7.04. TRUSTEE'S DISCLAIMER.
The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Notes or of the Guarantee, it shall
not be accountable for LGII's use or application of the proceeds from the
Notes, it shall not be responsible for the use or application
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of any money received by any Paying Agent other than the Trustee and it shall
not be responsible for any statement in the Notes other than the Trustee's
certificate of authentication.
7.05. NOTICE OF DEFAULT.
If a Default or an Event of Default occurs and is continuing and if
it is known to the Trustee, the Trustee shall mail to each Holder notice of
the Default or Event of Default within 30 days thereafter; PROVIDED, HOWEVER,
that, except in the case of a Default in the payment of the principal of,
premium, if any, or interest on any Note, the Trustee shall be protected in
withholding such notice if and so long as the board of directors, the
executive committee of the board of directors or a committee of the directors
of the Trustee and/or Trust Officers in good faith determines that the
withholding of such notice is in the interest of the Holders.
7.06. MONEY HELD IN TRUST.
All moneys received by the Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for which they were
received, but need not be segregated from other funds except to the extent
required herein or by law. The Trustee shall not be under any liability for
interest on any moneys received by it hereunder, except as the Trustee may
agree with LGII.
7.07. REPORTS BY TRUSTEE TO HOLDERS.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, the Trustee shall, to the extent that any of the
events described in TIA Section 313(a) shall have occurred within the previous
twelve months, but not otherwise, mail to each Holder a brief report dated as
of such May 15 that complies with TIA Section 313(a). The Trustee also shall
comply with TIA Sections 313(b) and 313(c).
A copy of each report at the time of its mailing to Holders shall be
mailed to LGII and filed with the Commission and each securities exchange, if
any, on which the Notes are listed.
LGII shall notify the Trustee in writing if the Notes become listed
on any securities exchange.
7.08. COMPENSATION AND INDEMNITY.
LGII and Loewen covenant and agree to pay the Trustee from time to
time reasonable compensation for its services. The Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. LGII and Loewen shall reimburse the Trustee upon request for all
reasonable disbursements, expenses and advances incurred or made by it. Such
expenses shall include the reasonable compensation, disbursements and expenses
of the Trustee's agents and counsel.
LGII and Loewen shall indemnify the Trustee for, and hold it
harmless against, any loss or liability incurred by it arising out of or in
connection with the administration of this
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trust and its rights or duties hereunder, including the costs and expenses of
defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder. The Trustee
shall notify LGII and Loewen promptly of any claim asserted against the
Trustee for which it may seek indemnity. LGII and Loewen shall defend the
claim and the Trustee shall cooperate in the defense. The Trustee may have
separate counsel and LGII and Loewen shall pay the reasonable fees and
expenses of such counsel. LGII and Loewen need not pay for any settlement
made without its prior written consent. LGII and Loewen need not reimburse
any expense or indemnify against any loss or liability to the extent incurred
by the Trustee through its negligence, bad faith or willful misconduct.
To secure the payment obligations of LGII and Loewen in this Section
7.08, the Trustee shall have a Lien prior to the Notes on all assets held or
collected by the Trustee, in its capacity as Trustee, except assets held in
trust to pay principal of, premium, if any, or interest on particular Notes.
When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 6.01(g) or (h), the expenses and
the compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The obligations of LGII and Loewen under this Section 7.08 and any
Lien arising hereunder shall survive the resignation or removal of any
trustee, the discharge of the obligations of LGII and Loewen pursuant to
Article Eight and/or the termination of this Indenture.
7.09. REPLACEMENT OF TRUSTEE.
The Trustee may resign by so notifying LGII. The Holders of a
majority in principal amount of the outstanding Notes may remove the Trustee
by so notifying LGII and the Trustee and may appoint a successor trustee with
LGII's prior written consent. LGII may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.11;
(b) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(c) a receiver or other public officer takes charge of the
Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, LGII shall notify each Holder of such event
and 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, and to the extent such amounts remain unpaid, the Trustee that has
resigned or has been removed shall retain the Lien afforded by Section 7.08.
Within one year after the successor Trustee takes office, the Holders of a
majority in principal amount of the
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outstanding Notes may, with LGII's prior written consent, appoint a successor
Trustee to replace the successor Trustee appointed by LGII.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to LGII. Immediately after that, the
retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee, subject to the Lien provided in Section 7.08, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. A successor Trustee shall mail notice of its succession
to each Noteholder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, of LGII or the
Holders of at least 10% in principal amount of the outstanding Notes may
petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee fails to comply with Section 7.11, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section
7.09, the obligations of LGII and Loewen under Section 7.08 shall continue for
the benefit of the retiring Trustee.
7.10. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation or national banking association, the resulting, surviving or
transferee corporation or national banking association without any further act
shall, if such resulting, surviving or transferee corporation or national
banking association is otherwise eligible hereunder, be the successor Trustee.
7.11. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder which shall be
eligible to act as Trustee under TIA Sections 310(a)(1) and 310(a)(5) and
which shall have a combined capital and surplus of at least $50,000,000. If
such corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of federal, state, territorial or District of
Columbia supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such corporation shall be deemed
to be its combined capital and surplus as set forth in its most recent report
of condition so published. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, the Trustee shall
resign immediately in the manner and with the effect hereinafter specified in
this Article.
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7.12. PREFERENTIAL COLLECTION OF CLAIMS AGAINST LGII.
The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). If the present or any
future Trustee shall resign or be removed, it shall be subject to TIA Section
311(a) to the extent provided therein.
ARTICLE EIGHT
SATISFACTION AND DISCHARGE OF INDENTURE
8.01. TERMINATION OF THE OBLIGATIONS OF LGII AND LOEWEN.
Each of LGII and Loewen may terminate its obligations under the
Notes and this Indenture, except those obligations referred to in the
penultimate paragraph of this Section 8.01, if all Notes previously
authenticated and delivered (other than destroyed, lost or stolen Notes which
have been replaced or paid or Notes for whose payment money has theretofore
been deposited with the Trustee or the Paying Agent in trust or segregated and
held in trust by LGII and thereafter repaid to LGII, as provided in Section
8.04) have been delivered to the Trustee for cancellation and Loewen or LGII
has paid all sums payable by it hereunder, or if:
(a) pursuant to Article Three, LGII shall have been required to
repurchase the Notes;
(b) Loewen or LGII shall have irrevocably deposited or caused
to be deposited with the Trustee or a trustee reasonably satisfactory to
the Trustee, under the terms of an irrevocable trust agreement in form and
substance satisfactory to the Trustee, as trust funds in trust solely for
the benefit of the Holders for that purpose, money in such amount as is
sufficient without consideration of reinvestment of such interest, to pay
principal of, premium, if any, and interest on the outstanding Notes to
maturity, as certified in a certificate of a nationally recognized firm of
independent public accountants; PROVIDED that the Trustee shall have been
irrevocably instructed to apply such money to the payment of said
principal, premium, if any, and interest with respect to the Notes;
(c) no Default or Event of Default with respect to this
Indenture or the Notes shall have occurred and be continuing on the date
of such deposit or shall occur as a result of such deposit and such deposit
will not result in a breach or violation of, or constitute a default under,
any other instrument to which LGII or Loewen is a party or by which it is
bound;
(d) LGII or Loewen shall have paid all other sums payable by it
hereunder;
(e) LGII or Loewen shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent
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providing for the termination of LGII's and Loewen's obligation under
the Notes, the related Guarantee and this Indenture have been complied
with.
Notwithstanding the foregoing paragraph, LGII's obligations in Sections
2.05, 2.06, 2.07, 2.08, 4.01, 4.02 and 7.08 and Loewen's obligations in
respect thereof shall survive until the Notes are no longer outstanding
pursuant to Section 2.12. After the Notes are no longer outstanding, LGII
obligations in Sections 7.08, 8.03, 8.04 and 8.05 and Loewen's obligations in
respect thereof Guarantor or LGII, as the case may be, shall survive.
After such delivery or irrevocable deposit the Trustee upon request
shall acknowledge in writing the discharge of LGII's and Loewen's obligations
under the Notes except for those surviving obligations specified above.
8.02. LEGAL DEFEASANCE AND COVENANT DEFEASANCE.
(a) Each of LGII and Loewen may, at its option by Board Resolution
of the Board of Directors of Loewen or LGII, as the case may be, at any time,
with respect to the Notes, elect to have either paragraph (b) or paragraph (c)
below be applied to the outstanding Notes upon compliance with the conditions
set forth in paragraph (d).
(b) Upon LGII's or Loewen's exercise under paragraph (a) of the
option applicable to this paragraph (b), LGII and Loewen shall be deemed to
have been released and discharged from its obligations with respect to the
outstanding Notes of any series on the date the conditions set forth below are
satisfied (hereinafter, "legal defeasance"). For this purpose, such legal
defeasance means that LGII shall be deemed to have paid and discharged the
entire indebtedness represented by the outstanding Notes, which shall
thereafter be deemed to be "outstanding" only for the purposes of paragraph
(e) below and the other Sections of and matters under this Indenture referred
to in (i) and (ii) below, and to have satisfied all its other obligations
under such Notes and this Indenture insofar as such Notes are concerned (and
the Trustee, at the expense of LGII, shall execute proper instruments
acknowledging the same), except for the following which shall survive until
otherwise terminated or discharged hereunder: (i) the rights of Holders of
outstanding Notes to receive solely from the trust fund described in paragraph
(d) below and as more fully set forth in such paragraph, payments in respect
of the principal of, premium, if any, and interest on such Notes when such
payments are due, (ii) LGII's obligations with respect to such Notes under
Sections 2.06, 2.07 and 4.02, and, with respect to the Trustee, under Section
7.08 and Loewen's obligations in respect thereof, (iii) the rights, powers,
trusts, duties and immunities of the Trustee hereunder and (iv) this Article
Eight. Subject to compliance with this Section 8.02, LGII may exercise its
option under this paragraph (b) notwithstanding the prior exercise of its
option under paragraph (c) below with respect to the Notes.
(c) Upon the exercise by LGII and Loewen under paragraph (a) of the
option applicable to this paragraph (c), each of LGII and Loewen shall be
released and discharged from its obligations under any covenant contained in
Article Five and in Sections 4.07 through 4.17 with respect to the outstanding
Notes on and after the date the conditions set forth below are satisfied
(hereinafter, "covenant defeasance"), and the Notes shall thereafter be deemed
to be not "outstanding" for the purpose of any direction, waiver, consent or
declaration or act of Holders
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(and the consequences of any thereof) in connection with such covenants, but
shall continue to be deemed "outstanding" for all other purposes hereunder.
For this purpose, such covenant defeasance means that, with respect to the
outstanding Notes, LGII and Loewen may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any
such covenant, whether directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of any reference in any
such covenant to any other provision herein or in any other document and such
omission to comply shall not constitute a Default or an Event of Default under
Section 6.01(c), but, except as specified above, the remainder of this
Indenture and such Notes shall be unaffected thereby.
(d) The following shall be the conditions to application of either
paragraph (b) or paragraph (c) above to the outstanding Notes:
(1) LGII shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements
of Section 7.11 who shall agree to comply with the provisions of this
Section 8.02 applicable to it) as trust funds in trust for the purpose of
making the following payments, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of such Notes, (x) cash, in
United States dollars, in an amount or (y) direct non-callable obligations
of, or non-callable obligations guaranteed by, the United States of America
for the payment of which guarantee or obligation the full faith and credit
of the United States is pledged ("U.S. Government Obligations") maturing as
to principal, premium, if any, and interest in such amounts of cash, in
United States dollars, and at such times as are sufficient without
consideration of any reinvestment of such interest, to pay principal of,
premium, if any, and interest on the outstanding Notes not later than one
day before the due date of any payment, or (z) a combination thereof,
sufficient, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered
to the Trustee, to pay and discharge and which shall be applied by the
Trustee (or other qualifying trustee) to pay and discharge principal of,
premium, if any, and interest on the outstanding Notes (except lost, stolen
or destroyed Notes which have been replaced or repaid) on the Maturity Date
thereof or otherwise in accordance with the terms of this Indenture and of
such Notes; PROVIDED, HOWEVER, that the Trustee (or other qualifying
trustee) shall have received an irrevocable written order from LGII
instructing the Trustee (or other qualifying trustee) to apply such money
or the proceeds of such U.S. Government Obligations to said payments with
respect to the Notes;
(2) no Default or Event of Default or event which with notice
or lapse of time or both would become a Default or an Event of Default with
respect to the Notes shall have occurred and be continuing on the date of
such deposit or, insofar as Section 6.01(a) is concerned, at any time
during the period ending on the 91st day after the date of such deposit (it
being understood that this condition shall not be deemed satisfied until
the expiration of such period);
(3) such legal defeasance or covenant defeasance shall not
cause the Trustee to have a conflicting interest with respect to any
securities of LGII or Loewen;
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(4) such legal defeasance or covenant defeasance shall not
result in a breach or violation of, or constitute a Default or Event of
Default under, this Indenture or any other material agreement or instrument
to which LGII or Loewen is a party or by which it is bound;
(5) in the case of an election under paragraph (b) above, LGII
shall have delivered to the Trustee an Opinion of Counsel stating that
(x) LGII has received from, or there has been published by, the Internal
Revenue Service a ruling or (y) since the date of this Indenture, there has
been a change in the applicable Federal income tax law, in either case to
the effect that, and based thereon such opinion shall confirm that, the
Holders of the outstanding Notes will not recognize income, gain or loss
for Federal income tax purposes as a result of such legal defeasance and
will be subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such legal
defeasance had not occurred;
(6) in the case of an election under paragraph (c) above, LGII
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Holders of the outstanding Notes will not recognize income, gain
or loss for Federal income tax purposes as a result of such covenant
defeasance and will be subject to Federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if
such covenant defeasance had not occurred;
(7) in the case of an election under either paragraph (b) or
(c) above, an Opinion of Counsel to the effect that, (x) the trust funds
will not be subject to any rights of any other holders of Indebtedness of
LGII or Loewen, and (y) after the 91st day following the deposit, the trust
funds will not be subject to the effect of any applicable Bankruptcy Law;
PROVIDED, HOWEVER, that if a court were to rule under any such law in any
case or proceeding that the trust funds remained property of LGII or
Loewen, no opinion needs to be given as to the effect of such laws on the
trust funds except the following: (A) assuming such trust funds remained
in the Trustee's possession prior to such court ruling to the extent not
paid to Holders of Notes, the Trustee will hold, for the benefit of the
Holders of Notes, a valid and enforceable security interest in such trust
funds that is not avoidable in bankruptcy or otherwise, subject only to
principles of equitable subordination, (B) the Holders of Notes will be
entitled to receive adequate protection of their interests in such trust
funds if such trust funds are used, and (C) no property, rights in property
or other interests granted to the Trustee or the Holders of Notes in
exchange for or with respect to any of such funds will be subject to any
prior rights of any other person, subject only to prior Liens granted under
Section 364 of Title 11 of the U.S. Bankruptcy Code (or any section of any
other Bankruptcy Law having the same effect), but still subject to the
foregoing clause (B); and
(8) LGII shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that (x) all conditions
precedent provided for relating to either the legal defeasance under
paragraph (b) above or the covenant defeasance under paragraph (c) above,
as the case may be, have been complied with and (y) if any other
Indebtedness of LGII or Loewen shall then be outstanding or committed, such
legal
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defeasance or covenant defeasance will not violate the provisions of
the agreements or instruments evidencing such Indebtedness.
(e) All money and U.S. Government Obligations (including the
proceeds thereof) deposited with the Trustee (or other qualifying trustee,
collectively for purposes of this paragraph (e), the "Trustee") pursuant to
paragraph (d) above in respect of the outstanding Notes shall be held in trust
and applied by the Trustee, in accordance with the provisions of such Notes
and this Indenture, to the payment, either directly or through any Paying
Agent (other than LGII or any Affiliate of LGII) as the Trustee may determine,
to the Holders of such Notes of all sums due and to become due thereon in
respect of principal, premium and interest, but such money need not be
segregated from other funds except to the extent required by law.
LGII shall, and Loewen shall cause LGII to pay and indemnify the
Trustee against any tax, fee or other charge imposed on or assessed against
the U.S. Government Obligations deposited pursuant to paragraph (d) above or
the principal, premium, if any, and interest received in respect thereof other
than any such tax, fee or other charge which by law is for the account of the
Holders of the outstanding Notes.
Anything in this Section 8.02 to the contrary notwithstanding, the
Trustee shall deliver or pay to LGII from time to time upon the request, in
writing, by LGII any money or U.S. Government Obligations held by it as
provided in paragraph (d) above which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, are in excess of the amount
thereof which would then be required to be deposited to effect an equivalent
legal defeasance or covenant defeasance.
8.03. APPLICATION OF TRUST MONEY.
The Trustee shall hold in trust money or U.S. Government Obligations
deposited with it pursuant to Sections 8.01 and 8.02, and shall apply the
deposited money and the money from U.S. Government Obligations in accordance
with this Indenture to the payment of principal of, premium, if any, and
interest on the Notes.
8.04. REPAYMENT TO LGII OR GUARANTOR.
Subject to Sections 7.08, 8.01 and 8.02, the Trustee shall promptly
pay to LGII or if deposited with the Trustee by Loewen, to Loewen, upon receipt
by the Trustee of an Officers' Certificate, any excess money, determined in
accordance with Section 8.02, held by it at any time. The Trustee and the
Paying Agent shall pay to LGII or Loewen, upon receipt by the Trustee or the
Paying Agent, as the case may be, of an Officers' Certificate, any money held by
it for the payment of principal, premium, if any, or interest that remains
unclaimed for two years after payment to the Holders is required; PROVIDED,
HOWEVER, that the Trustee and the Paying Agent before being required to make any
payment may, but need not, at the expense of LGII cause to be published once in
a newspaper of general circulation in The City of New York or mail to each
Holder entitled to such money notice that such money remains unclaimed and that
after a date specified therein, which shall be at least 30 days from the date of
such publication or mailing, any unclaimed balance of such money then remaining
will be repaid to LGII. After
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payment to LGII or Loewen, Holders entitled to money must look solely to LGII
and Loewen for payment as general creditors unless an applicable abandoned
property law designates another person, and all liability of the Trustee or
Paying Agent with respect to such money shall thereupon cease.
8.05. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with this Indenture 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, then and only then LGII's and Loewen's obligations under this
Indenture and the Notes shall be revived and reinstated as though no deposit
had been made pursuant to this Indenture until such time as the Trustee is
permitted to apply all such money or U.S. Government Obligations in accordance
with this Indenture; PROVIDED, HOWEVER, that if LGII or Loewen has made any
payment of principal of, premium, if any, or interest on any Notes because of
the reinstatement of its obligations, LGII or Loewen, as the case may be,
shall be subrogated to the rights of the Holders of such Notes to receive such
payment from the money or U.S. Government Obligations held by the Trustee or
Paying Agent.
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ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
9.01. WITHOUT CONSENT OF HOLDERS.
LGII, when authorized by a Board Resolution of its Board of Directors,
and the Trustee may amend, waive or supplement this Indenture or the Notes
without notice to or consent of any Holder:
(a) to cure any ambiguity, defect or inconsistency;
(b) to comply with Article Five;
(c) to provide for uncertificated Notes in addition to
certificated Notes;
(d) to comply with any requirements of the Commission in order
to effect or maintain the qualification of this Indenture under the TIA;
(e) to make any change that would provide any additional benefit
or rights to the Holders or that does not adversely affect the rights of
any Holder.
Notwithstanding the above, the Trustee and LGII may not make any
change that adversely affects the rights of any Holders hereunder. LGII shall
be required to deliver to the Trustee an Opinion of Counsel stating that any
such change made pursuant to paragraph (a) or (e) of this Section 9.01 does not
adversely affect the rights of any Holder.
9.02. WITH CONSENT OF HOLDERS.
Subject to Section 6.04, LGII, when authorized by a Board Resolution
of its Board of Directors, and the Trustee may amend this Indenture or the Notes
with the written consent of the Holders of not less than a majority in aggregate
principal amount of each series of the Notes then outstanding, and the Holders
of not less than a majority in aggregate principal amount of the Notes then
outstanding by written notice to the Trustee may waive future compliance by LGII
or Loewen with any provision of this Indenture, the Guarantee or the Notes.
Notwithstanding the provisions of this Section 9.02, without the
consent of each Holder affected, an amendment or waiver, including a waiver
pursuant to Section 6.04, may not:
(a) reduce the percentage in outstanding aggregate principal
amount of Notes the Holders of which must consent to an amendment,
supplement or waiver of any provision of this Indenture, the Guarantee or
the Notes;
(b) reduce or change the rate or time for payment of interest on
any Note;
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(c) change the currency in which any Note, or any premium or
interest thereon, is payable;
(d) reduce the principal amount outstanding of or extend the
fixed maturity of any Note or alter the redemption provisions with respect
thereto;
(e) waive a default in the payment of the principal of, premium,
if any, or interest on, or redemption or an offer to purchase required
hereunder with respect to, any Note;
(f) make the principal of, premium, if any, or interest on any
Note payable in money other than that stated in the Note;
(g) modify this Section 9.02 or Section 6.04 or Section 6.07;
(h) amend, alter, change or modify the obligation of LGII to
make and consummate a Change of Control Offer in the event of a Change of
Control or make and consummate the offer with respect to any Asset Sale or
modify any of the provisions or definitions with respect thereto;
(i) modify or change any provision of this Indenture affecting
the subordination or ranking of the Notes or the Guarantee in a manner
adverse to the Holders;
(j) impair the right to institute suit for the enforcement of
any payment on or with respect to the Notes.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, LGII shall mail to the Holder of each Note affected thereby,
with a copy to the Trustee, a notice briefly describing the amendment,
supplement or waiver. Any failure of LGII to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
amendment, supplement or waiver.
9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment of or supplement to this Indenture, the Guarantee of
the Notes shall comply with the TIA as then in effect.
9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder is a continuing consent by such Holder and every subsequent
Holder of that Note or portion of that Note that evidences the same debt as the
consenting Holder's Note, even if
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notation of the consent is not made on any Note. However, any such Holder or
subsequent Holder may revoke the consent as to his Note or portion of a Note
prior to such amendment, supplement or waiver becoming effective. Such
revocation shall be effective only if the Trustee receives the notice of
revocation before the date the amendment, supplement or waiver becomes
effective. Notwithstanding the above, nothing in this paragraph shall impair
the right of any Holder under Section 316(b) of the TIA.
LGII may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then notwithstanding the
second and third sentences of the immediately preceding paragraph, those persons
who were Holders at such record date (or their duly designated proxies), and
only those persons, shall be entitled to consent to such amendment, supplement
or waiver or to revoke any consent previously given, whether or not such persons
continue to be Holders after such record date. Such consent shall be effective
only for actions taken within 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Holder; unless it makes a change described in any of clauses (a)
through (j) of Section 9.02; if it makes such a change, the amendment,
supplement or waiver shall bind every subsequent Holder of a Note or portion of
a Note that evidences the same debt as the consenting Holder's Note.
9.05. NOTATION ON OR EXCHANGE OF NOTES.
If an amendment, supplement or waiver changes the terms of a Note, the
Trustee shall (in accordance with the specific direction of LGII) request the
Holder of the Note to deliver it to the Trustee. The Trustee shall (in
accordance with the specific direction of LGII) place an appropriate notation on
the Note about the changed terms and return it to the Holder. Alternatively, if
LGII or the Trustee so determines, LGII in exchange for the Note shall issue and
the Trustee shall authenticate a new Note that reflects the changed terms.
Failure to make the appropriate notation or issue a new Note shall not affect
the validity and effect of such amendment, supplement or waiver.
9.06. TRUSTEE MAY SIGN AMENDMENTS, ETC.
The Trustee shall sign any amendment, supplement or waiver authorized
pursuant to this Article Nine if the amendment, supplement or waiver 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, supplement or waiver, the Trustee shall be entitled to
receive, and shall be fully protected in relying upon, an Officers' Certificate
and an Opinion of Counsel stating that the execution of any amendment,
supplement or waiver is authorized or permitted by this Indenture, that it is
not inconsistent herewith and that it will be valid and binding upon LGII in
accordance with its terms.
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ARTICLE TEN
GUARANTEE OF NOTES
10.01. GUARANTEE.
Subject to the provisions of this Article Ten, Loewen hereby
unconditionally guarantees to each Holder of a Note authenticated and delivered
by the Trustee and to the Trustee and its successors and assigns, irrespective
of the validity and enforceability of this Indenture, the Notes or the
obligations of LGII to the Holders or the Trustee hereunder or thereunder,
that: (a) the principal of, premium, if any, and interest on the Notes
(including, if applicable, the Put Option Price) will be duly and punctually
paid in full when due, whether at maturity, by acceleration or otherwise, and
interest on the overdue principal and (to the extent permitted by law)
interest, if any, on the Notes and all other obligations of LGII to the
Holders or the Trustee hereunder or thereunder (including fees, expenses or
other) will be promptly paid in full or performed, all in accordance with the
terms hereof and thereof; and (b) in case of any extension of time of payment
or renewal of any Notes, the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at
Stated Maturity, by acceleration or otherwise. Failing payment when due of
any amount so guaranteed, or failing performance of any other obligation of
LGII to the Holders, for whatever reason, Loewen will be obligated to pay, or
to perform or cause the performance of, the same immediately. An Event of
Default under this Indenture or the Notes shall constitute an event of default
under this Guarantee, and shall entitle the Holders of Notes to accelerate the
obligations of Loewen hereunder in the same manner and to the same extent as
the obligations of LGII.
The Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against LGII, any action to
enforce the same, whether or not a Guarantee is affixed to any particular Note,
or any other circumstance which might otherwise constitute a legal or equitable
discharge or defense of a guarantor. The Guarantor hereby waives the benefit of
diligence, presentment, demand of payment, filing of claims with a court in the
event of insolvency or bankruptcy of LGII, any right to require a proceeding
first against LGII, protest, notice and all demands whatsoever and covenants
that its Guarantee will not be discharged except by complete performance of the
obligations contained in the Notes, this Indenture and this Guarantee. If any
Holder or the Trustee is required by any court or otherwise to return to LGII,
or any custodian, trustee, liquidator or other similar official acting in
relation to LGII, any amount paid by LGII to the Trustee or such Holder, this
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect. The Guarantor further agrees that, as between it, on the one
hand, and the Holders of Notes and the Trustee, on the other hand, (a) subject
to this Article Ten, the maturity of the obligations guaranteed hereby may be
accelerated as provided in Article Six hereof for the purposes of this
Guarantee, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the obligations guaranteed hereby, and (b) in
the event of any acceleration of such obligations as provided in Article Six
hereof, such obligations (whether or
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not due and payable) shall forthwith become due and payable by Loewen for the
purpose of this Guarantee.
This Guarantee shall remain in full force and effect and continue to
be effective should any petition be filed by or against LGII for liquidation or
reorganization, should LGII become insolvent or make an assignment for the
benefit of creditors or should a receiver or trustee be appointed for all or any
significant part of LGII's assets, and shall, to the fullest extent permitted by
law, continue to be effective or be reinstated, as the case may be, if at any
time payment and performance of the Notes are, pursuant to applicable law,
rescinded or reduced in amount, or must otherwise be restored or returned by any
obligee on the Notes, whether as a "voidable preference," "fraudulent transfer"
or otherwise, all as though such payment or performance had not been made. In
the event that any payment, or any part thereof, is rescinded, reduced, restored
or returned, Notes shall, to the fullest extent permitted by law, be reinstated
and deemed reduced only by such amount paid and not so rescinded, reduced,
restored or returned.
No stockholder, officer, director, employer or incorporation, past,
present or future, as such, shall have any personal liability under this
Guarantee by reason of his, her or its status as such stockholder, officer,
director, employer or incorporation.
The Guarantee constitutes a guarantee of payment and ranks PARI PASSU
in right of payment to all unsecured senior indebtedness of Loewen.
10.02. EXECUTION AND DELIVERY OF GUARANTEE.
To further evidence the Guarantee set forth in Section 10.01, Loewen
hereby agrees that a notation on the Guarantee, substantially in the form
included in Exhibit C hereto, shall be endorsed on each Note authenticated and
delivered by the Trustee after the Guarantee is executed by either manual or
facsimile signature of Officers of Loewen. The validity and enforceability of
the Guarantee shall not be affected by the fact that it is not affixed to any
particular Note.
The Guarantor hereby agrees that its Guarantee set forth in Section
10.01 shall remain in full force and effect notwithstanding any failure to
endorse on each Note a notation of the Guarantee.
If an Officer of Loewen whose signatures is on this Indenture or a
Note no longer holds that office at the time the Trustee authenticates the Note
or at any time thereafter, Loewen's Guarantee of such Note shall be valid
nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Guarantee set forth in
this Indenture on behalf of Loewen.
10.03. INTEREST ACT (CANADA).
If and to the extent that the laws of Canada are applicable to any
amounts payable by Loewen under this Indenture that are characterized as
interest by any applicable authority, for
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purposes of disclosure under the Interest Act (Canada), the yearly rate of
interest for any period less than one year to which interest at a stated rate
computed on the basis of a year of 360 days consisting of twelve 30-day months
is equivalent is the stated rate multiplied by a fraction of which (a) the
numerator is the product of (i) the actual number of days in the calendar year
in which the first day of the relevant period falls and (ii) the sum of (A)
the product of (x) 30 and (y) the number of complete months elapsed in the
relevant period and (B) the actual number of days elapsed in any incomplete
month in the relevant period, and (b) the denominator is the product of (i)
360 and (ii) the actual number of days in the relevant period.
ARTICLE ELEVEN
MISCELLANEOUS
11.01. TRUST INDENTURE ACT OF 1939.
This Indenture is subject to the provisions of the TIA that are
required to be a part of this Indenture, and shall, to the extent applicable, be
governed by such provisions.
If any provision of this Indenture modifies or excludes any provision
of the Trust Indenture Act that may be so modified or excluded, the latter
provision shall be deemed to apply to this Indenture as so modified or excluded,
as the case may be.
11.02. NOTICES.
Any notice or communication shall be sufficiently given if in writing
and delivered in person or mailed by first class mail, postage prepaid,
addressed as follows:
If to LGII to:
Loewen Group International, Inc.
4126 Norland Ave.
Burnaby, British Columbia
Canada V5G 3S8
If to Loewen to:
The Loewen Group Inc.
4126 Norland Ave.
Burnaby, British Columbia
Canada V5G 3S8
If to the Trustee to:
State Street Bank and Trust Company
777 Main Street, 11th Floor
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<PAGE>
Hartford, CT 06115
Attention: Corporate Trust Administration
The parties hereto by notice to the other parties may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed, postage prepaid, to a Holder,
including any notice delivered in connection with TIA Section 310(b), TIA
Section 313(c), TIA Section 314(a) and TIA Section 315(b), shall be mailed by
first class mail to such Holder at the address of such Holder as it appears on
the Notes register maintained by the Registrar and shall be sufficiently given
to such Holder if so mailed within the time prescribed. Copies of any such
communication or notice to a Holder shall also be mailed to the Trustee.
Failure to mail a notice or communication to a Noteholder or any
defect in it shall not affect its sufficiency with respect to other Holders.
Except for a notice to the Trustee, which is deemed given only when received, if
a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
11.03. 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 Notes. The
obligors, the Trustee, the Registrar and any other person shall have the
protection of TIA Section 312(c).
11.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by LGII or Loewen to the Trustee to
take any action under this Indenture, such obligor shall furnish to the Trustee:
(a) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(b) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
11.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(a) a statement that the person making such certificate or
opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statement or opinions contained
in such certificate or opinion are based;
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(c) 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 opinion as to whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with; PROVIDED,
HOWEVER, that with respect to matters of fact an Opinion of Counsel may
rely on an Officers' Certificate or certificates of public officials.
11.06. RULES BY TRUSTEE, PAYING AGENT, REGISTRAR.
The Trustee may make reasonable rules for action by or at a meeting of
Noteholders. The Paying Agent or Registrar may make reasonable rules for its
functions.
11.07. GOVERNING LAW.
The laws of the State of New York shall govern this Indenture, the
Guarantees and the Notes without regard to principles of conflicts of law. The
Trustee, LGII, Loewen and the Holders agree 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, the Guarantee or the Notes.
11.08. CONSENT TO SERVICE OF PROCESS.
Each of LGII and Loewen irrevocably (a) agrees that any legal suit,
action or proceeding arising out of or based upon this Indenture and the Notes
issued hereunder may be instituted in any federal or state court located in the
City of New York, (b) waives, to the fullest extent it may effectively do so,
any objection which it may now or hereafter have to the laying of venue of any
such proceeding, and (c) submits to the nonexclusive jurisdiction of such courts
in any such suit, action or proceeding. Each of LGII and Loewen has appointed
Thelen, Marrin, Johnson & Bridges LLP, 330 Madison Avenue, New York, New York
10017, Attention: David P. Graybeal, Esq., as its authorized agent (the
"Authorized Agent") upon whom process may be served in any suit, action or
proceeding arising out of or based on this Indenture which may be instituted in
any federal or state court located in The City of New York, expressly consents
to the jurisdiction of any such court in respect of any suit, action or
proceeding, and waives any other requirements of or objections to personal
jurisdiction with respect thereto. Such appointment shall be irrevocable. Each
of LGII and Loewen agrees to take any and all action, including the filing of
any and all documents and instruments, that may be necessary to continue such
appointment in full force and effect as aforesaid. Service of process upon the
Authorized Agent and written notice of such service to LGII and Loewen shall be
deemed, in every respect, effective service of process upon LGII and Loewen.
Notwithstanding the foregoing, designation of an authorized agent does not
constitute submission to jurisdiction or consent to service or process in any
legal action or proceeding predicated on United States federal or state
securities laws.
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11.09. NO INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of LGII, Loewen or any of its Subsidiaries. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
11.10. NO RECOURSE AGAINST OTHERS.
A director, officer, employee, stockholder or Affiliate, as such, of
LGII or Loewen shall not have any liability for any obligations of LGII under
the Notes or this Indenture or for any obligations of Loewen under the Guarantee
or for any claim based on, in respect of or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability.
11.11. SUCCESSORS.
All agreements of each of LGII and Loewen in this Indenture and the
Notes and the Guarantee shall bind its successors. All agreements of the
Trustee in this Indenture shall bind its successors.
11.12. DUPLICATE ORIGINALS.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all such executed copies together
represent the same agreement.
11.13. SEPARABILITY.
In case any provision in this Indenture, the Guarantee or the Notes
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby, and a Holder shall have no claim therefor against any party
hereto.
11.14. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not to
be considered a part hereof, and shall in no way modify or restrict any of the
terms or provisions hereof.
11.15. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Notes, express or implied, shall
give to any person, other than the parties hereto and their successors
hereunder, and the Holders, any benefit or any legal or equitable right, remedy
or claim under this Indenture.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
LOEWEN GROUP INTERNATIONAL, INC.
By:___________________________________
Name:
Title:
[CORPORATE SEAL]
Attest:
By:__________________________________
Title:
THE LOEWEN GROUP INC.
By:___________________________________
Name:
Title:
[CORPORATE SEAL]
Attest:
By:__________________________________
Title:
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:___________________________________
Name:
Title:
[CORPORATE SEAL]
Attest:
By:__________________________________
Title:
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EXHIBIT A
[FORM OF PHYSICAL NOTE]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS
SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT IT
IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), (2) AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE
ORIGINAL ISSUANCE OF THIS NOTE RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT
(A) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL
BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) PURSUANT TO
THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE) OR (D) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM
THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
THIS NOTE IS SUBJECT TO DEPARTMENT OF TREASURY REGULATIONS SECTION 1.1275-4(b)
(THE "CONTINGENT PAYMENT REGULATIONS") AND IS THEREFORE ISSUED WITH ORIGINAL
ISSUE DISCOUNT. THE ISSUE PRICE OF THIS NOTE IS $306,603,000, AND THE ISSUE
DATE OF THIS NOTE IS SEPTEMBER 30, 1997. THE AMOUNT OF ORIGINAL ISSUE
DISCOUNT IS $215,097,000. THE YIELD TO MATURITY OF THIS NOTE AND THE
COMPARABLE YIELD PURSUANT TO THE CONTINGENT PAYMENT REGULATIONS ARE 5.933%.
THE PROJECTED PAYMENT SCHEDULE PROVIDES FOR A NON-CONTINGENT PAYMENT OF
$10,050,000 PER INTEREST ACCRUAL PERIOD PRIOR TO THE INTEREST RESET DATE AND A
CONTINGENT PAYMENT OF $9,075,000 PER INTEREST ACCRUAL PERIOD THEREAFTER.
LOEWEN GROUP INTERNATIONAL, INC.
SENIOR GUARANTEED NOTES DUE 2009
No. ______ $__________
CUSIP No.
LOEWEN GROUP INTERNATIONAL, INC., a corporation incorporated under the
laws of the State of Delaware (herein called the "Company", which term includes
any successor corporation under the Indenture hereinafter referred to), for
value received, hereby promises to pay to [ ] or registered assigns, the
principal sum of ________________________ ($___________) on October 1, 2009, at
the office or agency of the Company referred to below, and to pay interest
thereon on April 1 and October 1, in each year, commencing on April 1, 1998,
accruing from the most recent Interest Payment Date to which
<PAGE>
interest has been paid or duly provided for or, if no interest has been paid,
from the original date of issuance. For the period from September 30, 1997 to
(and including) September 30, 1999, interest shall be paid at the rate per
annum of 6.70% per annum, and for the period from (and including) October 1,
1999, until payment of said principal sum has been made or duly provided for,
interest shall be paid at the rate per annum to be reset on September 28,
1999, effective October 1, 1999, pursuant to and subject to the terms of the
Calculation Agency Agreement dated September 30, 1997 among the Company, UBS
Securities LLC, a limited liability company organized under the laws of the
State of New York, and Union Bank of Switzerland, London branch. Interest
shall be computed on the basis of a 360-day year of twelve 30-day months.
The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, as provided in the Indenture referred to on
the reverse hereof, be paid to the person in whose name this Physical Note (or
one or more predecessor Notes) is registered at the close of business on the
Regular Record Date for such interest, which shall be March 31 or September 30
(whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date (each a "Regular Record Date"). Any such interest not
so punctually paid, or duly provided for, and interest on such defaulted
interest at the rate borne by the Physical Notes, to the extent lawful, shall
forthwith cease to be payable to the Holder on such Regular Record Date, and
may be paid to the person in whose name this Physical Note (or one or more
predecessor Notes) is registered at the close of business on a special record
date for the payment of such defaulted interest to be fixed by the Trustee,
notice of which shall be given to Holders of Notes not less than 10 days prior
to such special record date, or may be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange on
which the Notes may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in such Indenture.
Pursuant to that certain Confirmation dated September 30, 1997, and
the agreements, provisions and definitions incorporated by referenced therein
(the "Call Option"), between Loewen Pass-Through Asset Trust 1997-1, a trust
formed under the laws of the State of New York ("Trust"), and Union Bank of
Switzerland, London branch (the "Callholder"), upon delivery of irrevocable
notice by the Callholder to the Trust on or before September 15, 1999 (or if
that day is not a Business Day, the preceding Business Day), the Callholder
has the right to purchase the Notes from the Trust on October 1, 1999 (the
"Call Settlement Date") (or if that day is not a Business Day, the preceding
Business Day), for a purchase price equal to 100% of the aggregate face amount
thereof (the "Call Price"). Pursuant to that certain Trust Agreement (the
"Trust Agreement") dated as of September 25, 1997, between the Company and the
Trust, the Trust has the right and obligation to require the Company to
repurchase all of the Notes (the "Put Option") at a purchase price equal to
100% of the aggregate face amount thereof on the Call Settlement Date, if (i)
the Trustee (as defined in the Trust Agreement, initially State Street Bank
and Trust Company) has not received irrevocable notice from the Callholder on
or before September 15, 1999, that the Callholder intends to exercise the Call
Option, or (ii) the Callholder fails to make payment of the Call Price on the
Business Day prior to the Call Settlement Date. Notwithstanding the
foregoing, the Trust Agreement may be amended under certain circumstances to
provide that the Trustee will not exercise the Put Option and to provide for
such other changes to the Trust Agreement as may be consequential thereto.
In the event that the Call Option is exercised, then under the terms of the
Confirmation between the Company and the
<PAGE>
Callholder dated September 30, 1997 (the "Company Call Option"), the Company
has the right and option, upon delivery by it of irrevocable notice to the
Callholder during the period from September 15, 1999 to and including
September 21, 1999 (or the first following day that is a Business Day), to
purchase from the Callholder all of the Callholder's right, title and interest
and obligations in, to and under the Call Option in consideration for a
payment to the Callholder on the Call Settlement Date (or if that day is not a
business Day, the first following day that is a Business Day) in an amount
calculated pursuant to the terms of the Company Call Option.
Payment of the principal of, premium, if any, and interest on this
Physical Note will be made at the office or agency of the Company maintained
for that purpose in the Borough of Manhattan in The City of New York, or at
such other office or agency of the Company as may be maintained for such
purpose, in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts;
PROVIDED, HOWEVER, that payment of interest may be made at the option of the
Company by check mailed to the address of the person entitled thereto as such
address shall appear on the security register maintained by the Registrar.
Reference is hereby made to the further provisions of this Physical
Note set forth on the reverse hereof.
Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof by manual signature,
and a seal has been affixed hereon, this Physical Note shall not be entitled
to any benefit under the Indenture, or be valid or obligatory for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
Dated:
LOEWEN GROUP INTERNATIONAL, INC.
By:______________________________
Name:
Title:
[SEAL]
Attest:
By:______________________
Title:
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Physical Notes designated therein referred to in
the within-mentioned Indenture.
STATE STREET BANK AND TRUST COMPANY
as TRUSTEE
By:______________________________
Authorized Officer
Title:
<PAGE>
(Reverse of Note)
1. INDENTURE. This Note is one of a duly authorized series of
Notes of the Company designated as its Senior Guaranteed Notes due 2009 (the
"Notes"), which may be issued under an indenture (herein called the
"Indenture") dated as of September 30, 1997, among Loewen Group International,
Inc., a Delaware corporation, as issuer (the "Company"), The Loewen Group
Inc., as guarantor of the obligations of the Company under the Indenture
("Loewen") and State Street Bank and Trust Company, a Massachusetts chartered
trust company, as trustee (herein called the "Trustee," which term includes
any successor Trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of
the respective rights, limitations of rights, duties, obligations and
immunities thereunder of the Company, the Trustee, Loewen and the Holders of
the Notes, and of the terms upon which the Notes are, and are to be,
authenticated and delivered.
All capitalized terms used in this Note which are defined in the
Indenture and not otherwise defined herein shall have the meanings assigned to
them in the Indenture.
No reference herein to the Indenture and no provisions of this Note
or of the Indenture shall alter or impair the obligation of the Company or
Loewen, which is absolute and unconditional, to pay the principal of, premium,
if any, and interest on this Note at the times, place and rate, and in the
coin or currency, herein prescribed.
2. PUT OPTION. Pursuant to the Put Option, the Company is required
to repurchase the Notes in certain circumstances described in Article 3 of the
Indenture.
3. GUARANTEE. This Note is entitled to a senior Guarantee made for
the benefit of the Holders. Reference is hereby made to the Guarantee attached
hereto and the Indenture (including, without limitation, Article 10 thereof) for
the terms of the Guarantee.
4. OFFERS TO PURCHASE. Sections 4.11 and 4.12 of the Indenture
provide that upon the occurrence of a Change of Control and following certain
Asset Sales, and subject to further limitations contained therein, the Company
shall make an offer to purchase certain amounts of the Notes in accordance with
the procedures set forth in the Indenture.
5. DEFAULTS AND REMEDIES. If an Event of Default shall occur and
be continuing, the principal of all of the outstanding Notes, plus all accrued
and unpaid interest, if any, to and including the date the Notes are paid, may
be declared due and payable in the manner and with the effect provided in the
Indenture.
6. DEFEASANCE. The Indenture contains provisions (which provisions
apply to this Note) for defeasance at any time of (a) the entire indebtedness
of the Company and Loewen under this Note and (b) certain restrictive
covenants and related Defaults and Events of Default, in each case upon
compliance by the Company with certain conditions set forth therein.
7. AMENDMENTS AND WAIVERS. The Indenture permits, with certain
exceptions as therein provided, the amendment thereof and the modification of
the rights and obligations of
<PAGE>
the Company and the rights of the Holders under the Indenture at any time by
the Company and the Trustee with the consent of the Holders of not less than a
majority in aggregate principal amount of the Notes of each series at the time
outstanding. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of each series of the
Notes at the time outstanding, on behalf of the Holders of all the Notes, to
waive compliance by the Company with certain provisions of the Indenture and
certain past Defaults under the Indenture and this Note and their
consequences. Any such consent or waiver by or on behalf of the Holder of
this Note shall be conclusive and binding upon such Holder and upon all future
Holders of this Note and of any Note issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of
such consent or waiver is made upon this Note.
8. DENOMINATIONS, TRANSFER AND EXCHANGE. The Notes are issuable
only in registered form without coupons in denominations of $1,000 and any
integral multiple thereof. As provided in the Indenture and subject to
certain limitations therein set forth, the Notes are exchangeable for a like
aggregate principal amount of Notes of a different authorized denomination, as
requested by the Holder surrendering the same.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Note is registrable on the security
register of the Company, upon surrender of this Note for registration of
transfer at the office or agency of the Company maintained for such purpose in
the Borough of Manhattan in The City of New York or at such other office or
agency of the Company as may be maintained for such purpose, duly endorsed by,
or accompanied by a written instrument of transfer in form satisfactory to the
Company and the Registrar duly executed by, the Holder hereof or his attorney
duly authorized in writing, and thereupon one or more new Notes, of authorized
denominations and for the same aggregate principal amount, will be issued to
the designated transferee or transferees.
No service charge shall be made for any registration of transfer or
exchange or redemption of Notes, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
9. PERSONS DEEMED OWNERS. Prior to and at the time of due
presentment of this Note for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat the person in
whose name this Note is registered as the owner hereof for all purposes,
whether or not this Note shall be overdue, and neither the Company, the
Trustee nor any agent shall be affected by notice to the contrary.
10. GOVERNING LAW. This Note and the Guarantee shall be governed by
and construed in accordance with the laws of the State of New York, without
regard to conflicts of law principles.
<PAGE>
EXHIBIT B
[FORM OF GLOBAL NOTE]
THIS GLOBAL NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT), (2) AGREES THAT IT WILL NOT WITHIN TWO YEARS
AFTER THE ORIGINAL ISSUANCE OF THIS GLOBAL NOTE RESELL OR OTHERWISE TRANSFER
THIS GLOBAL NOTE EXCEPT (A) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (B) TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY
RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (D) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT
IT WILL GIVE TO EACH PERSON TO WHOM THIS GLOBAL NOTE IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
THIS NOTE IS SUBJECT TO DEPARTMENT OF TREASURY REGULATIONS SECTION 1.1275-4(b)
(THE "CONTINGENT PAYMENT REGULATIONS") AND IS THEREFORE ISSUED WITH ORIGINAL
ISSUE DISCOUNT. THE ISSUE PRICE OF THIS NOTE IS $306,603,000, AND THE ISSUE
DATE OF THIS NOTE IS SEPTEMBER 30, 1997. THE AMOUNT OF ORIGINAL ISSUE
DISCOUNT IS $215,097,000. THE YIELD TO MATURITY OF THIS NOTE AND THE
COMPARABLE YIELD PURSUANT TO THE CONTINGENT PAYMENT REGULATIONS ARE 5.933%.
THE PROJECTED PAYMENT SCHEDULE PROVIDES FOR A NON-CONTINGENT PAYMENT OF
$10,050,000 PER INTEREST ACCRUAL PERIOD PRIOR TO THE INTEREST RESET DATE AND A
CONTINGENT PAYMENT OF $9,075,000 PER INTEREST ACCRUAL PERIOD THEREAFTER.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT
IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF
<PAGE>
OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN SECTIONS 2.09 AND 2.10 OF THE INDENTURE.
LOEWEN GROUP INTERNATIONAL, INC.
SENIOR GUARANTEED NOTES DUE 2009
No. ______ $__________
CUSIP No.
LOEWEN GROUP INTERNATIONAL, INC., a corporation incorporated under
the laws of the State of Delaware (herein called the "Company", which term
includes any successor corporation under the Indenture hereinafter referred
to), for value received, hereby promises to pay to CEDE & Co. or registered
assigns, the principal sum of _______________ Dollars on [ ], at the
office or agency of the Company referred to below, and to pay interest thereon
on April 1 and October 1, in each year, commencing on April 1, 1998, accruing
from the most recent Interest Payment Date to which interest has been paid or
duly provided for or, if no interest has been paid, from the original date of
issuance. For the period from September 30, 1997 to (and including) September
30, 1999, interest shall be paid at the rate per annum of 6.70% per annum, and
for the period from (and including) October 1, 1999, until payment of said
principal sum has been made or duly provided for, interest shall be paid at
the rate per annum to be reset on September 28, 1999, effective October 1,
1999, pursuant to and subject to the terms of the Calculation Agency Agreement
dated September 30, 1997 among the Company, UBS Securities LLC, a limited
liability company organized under the laws of the State of New York, and Union
Bank of Switzerland, London Branch. Interest shall be computed on the basis
of a 360-day year of twelve 30-day months.
Pursuant to that certain Confirmation dated September 30, 1997, and
the agreements, provisions and definitions incorporated by referenced therein
(the "Call Option"), between Loewen Pass-Through Asset Trust 1997-1, a trust
formed under the laws of the State of New York ("Trust"), and Union Bank of
Switzerland, London Branch (the "Callholder"), upon delivery of irrevocable
notice by the Callholder to the Trust on or before September 15, 1999 (or if
that day is not a Business Day, the preceding Business Day), the Callholder
has the right to purchase the Notes from the Trust on October 1, 1999 (the
"Call Settlement Date") (or if that day is not a Business Day, the preceding
Business Day), for a purchase price equal to 100% of the aggregate face amount
thereof (the "Call Price"). Pursuant to that certain Trust Agreement (the
"Trust Agreement") dated as of September 25, 1997, between the Company and the
Trust, the Trust has the right and obligation to require the Company to
repurchase all of the Notes (the "Put Option") at a purchase price equal to
100% of the aggregate face amount thereof on the Call Settlement Date, if (i)
the Trustee (as defined in the Trust Agreement, initially State Street Bank
and Trust Company) has not received irrevocable notice from the Callholder on
or before September 15, 1999, that the Callholder intends to exercise the Call
Option, or (ii) the Callholder fails to make payment of the Call Price on the
Business Day prior to the Call Settlement Date.
<PAGE>
Notwithstanding the foregoing, the Trust Agreement may be amended under
certain circumstances to provide that the Trustee will not exercise the Put
Option and to provide for such other changes to the Trust Agreement as may be
consequential thereto. In the event that the Call Option is exercised, then
under the terms of the Confirmation between the Company and the Callholder
dated September 30, 1997 (the "Company Call Option"), the Company has the
right and option, upon delivery by it of irrevocable notice to the Callholder
during the period from September 15, 1999 to and including September 21, 1999
(or the first following day that is a Business Day), to purchase from the
Callholder all of the Callholder's right, title and interest and obligations
in, to and under the Call Option in consideration for a payment to the
Callholder on the Call Settlement Date (or if that day is not a business Day,
the first following day that is a Business Day) in an amount calculated
pursuant to the terms of the Company Call Option.
Payment of the principal of, premium, if any, and interest on this
Global Note will be made at the office or agency of the Company maintained for
that purpose in the Borough of Manhattan in The City of New York, or at such
other office or agency of the Company as may be maintained for such purpose,
in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts; PROVIDED,
HOWEVER, that payment of interest may be made at the option of the Company by
check mailed to the address of the person entitled thereto as such address
shall appear on the security register maintained by the Registrar.
Reference is hereby made to the further provisions of this Global
Note set forth on the reverse hereof.
Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof by manual signature,
and a seal has been affixed hereon, this Global Note shall not be entitled to
any benefit under the Indenture, or be valid or obligatory for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
Dated:
LOEWEN GROUP INTERNATIONAL, INC.
By:______________________________
Name:
Title:
[SEAL]
Attest:
By:_____________________________
Title:
<PAGE>
(Reverse of Note)
1. INDENTURE. This Note is one of a duly authorized series of
Notes of the Company designated as its % Senior Guaranteed Notes due
2009 (the "Notes"), which may be issued under an indenture (herein called the
"Indenture") dated as of September 30, 1997, among Loewen Group International,
Inc., a Delaware corporation, as issuer (the "Company"), The Loewen Group
Inc., as guarantor of the obligations of the Company under the Indenture
("Loewen") and State Street Bank and Trust Company, a Massachusetts chartered
trust company, as trustee (herein called the "Trustee," which term includes
any successor Trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of
the respective rights, limitations of rights, duties, obligations and
immunities thereunder of the Company, the Trustee, Loewen and the Holders of
the Notes, and of the terms upon which the Notes are, and are to be,
authenticated and delivered.
All capitalized terms used in this Note which are defined in the
Indenture and not otherwise defined herein shall have the meanings assigned to
them in the Indenture.
No reference herein to the Indenture and no provisions of this Note
or of the Indenture shall alter or impair the obligation of the Company or
Loewen, which is absolute and unconditional, to pay the principal of, premium,
if any, and interest on this Note at the times, place and rate, and in the
coin or currency, herein prescribed.
2. PUT OPTION. Pursuant to the Put Option, the Company is required
to repurchase the Notes in certain circumstances described in Article 3 of the
Indenture.
3. GUARANTEE. This Note is entitled to a senior Guarantee made for
the benefit of the Holders. Reference is hereby made to the Guarantee
attached hereto and the Indenture (including, without limitation, Article 10
thereof) for the terms of the Guarantee.
4. OFFERS TO PURCHASE. Sections 4.11 and 4.12 of the Indenture
provide that upon the occurrence of a Change of Control and following certain
Asset Sales, and subject to further limitations contained therein, the Company
shall make an offer to purchase certain amounts of the Notes in accordance with
the procedures set forth in the Indenture.
5. DEFAULTS AND REMEDIES. If an Event of Default shall occur and be
continuing, the principal of all of the outstanding Notes, plus all accrued and
unpaid interest, if any, to and including the date the Notes are paid, may be
declared due and payable in the manner and with the effect provided in the
Indenture.
6. DEFEASANCE. The Indenture contains provisions (which provisions
apply to this Note) for defeasance at any time of (a) the entire indebtedness of
the Company and Loewen under this Note and (b) certain restrictive covenants and
related Defaults and Events of Default, in each case upon compliance by the
Company with certain conditions set forth therein.
7. AMENDMENTS AND WAIVERS. The Indenture permits, with certain
exceptions as therein provided, the amendment thereof and the modification of
the rights and obligations of
<PAGE>
the Company and the rights of the Holders under the Indenture at any time by
the Company and the Trustee with the consent of the Holders of not less than a
majority in aggregate principal amount of the Notes of each series at the time
outstanding. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of each series of the
Notes at the time outstanding, on behalf of the Holders of all the Notes, to
waive compliance by the Company with certain provisions of the Indenture and
certain past Defaults under the Indenture and this Note and their
consequences. Any such consent or waiver by or on behalf of the Holder of
this Note shall be conclusive and binding upon such Holder and upon all future
Holders of this Note and of any Note issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of
such consent or waiver is made upon this Note.
8. DENOMINATIONS, TRANSFER AND EXCHANGE. The Notes are issuable
only in registered form without coupons in denominations of $1,000 and any
integral multiple thereof. As provided in the Indenture and subject to
certain limitations therein set forth, the Notes are exchangeable for a like
aggregate principal amount of Notes of a different authorized denomination, as
requested by the Holder surrendering the same.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Note is registrable on the security
register of the Company, upon surrender of this Note for registration of
transfer at the office or agency of the Company maintained for such purpose in
the Borough of Manhattan in The City of New York or at such other office or
agency of the Company as may be maintained for such purpose, duly endorsed by,
or accompanied by a written instrument of transfer in form satisfactory to the
Company and the Registrar duly executed by, the Holder hereof or his attorney
duly authorized in writing, and thereupon one or more new Notes, of authorized
denominations and for the same aggregate principal amount, will be issued to
the designated transferee or transferees.
No service charge shall be made for any registration of transfer or
exchange or redemption of Notes, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
9. PERSONS DEEMED OWNERS. Prior to and at the time of due
presentment of this Note for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat the person in
whose name this Note is registered as the owner hereof for all purposes,
whether or not this Note shall be overdue, and neither the Company, the
Trustee nor any agent shall be affected by notice to the contrary.
10. GOVERNING LAW. This Note and the Guarantee shall be governed by
and construed in accordance with the laws of the State of New York, without
regard to conflicts of law principles.
<PAGE>
SCHEDULE A
Exchange of (a) portions of this Global Note for
Physical Notes or (b) Physical Notes
for an interest in this Global Note.
Principal Amount of Physical Notes Issued in Exchange for, or Exchanged
for an Interest in, the Notation
REMAINING PRINCIPAL
AMOUNT OF THIS
DATE GLOBAL NOTE GLOBAL NOTE MADE BY
_________________ _________________ __________________ _________________
_________________ _________________ __________________ _________________
_________________ _________________ __________________ _________________
_________________ _________________ __________________ _________________
_________________ _________________ __________________ _________________
_________________ _________________ __________________ _________________
_________________ _________________ __________________ _________________
_________________ _________________ __________________ _________________
_________________ _________________ __________________ _________________
_________________ _________________ __________________ _________________
_________________ _________________ __________________ _________________
_________________ _________________ __________________ _________________
_________________ _________________ __________________ _________________
_________________ _________________ __________________ _________________
<PAGE>
EXHIBIT C
SENIOR GUARANTEE
For value received, the undersigned hereby unconditionally
guarantees to the Holder of this Note the payments of principal of, premium,
if any, and interest on this Note (including the Put Option Price) in the
amounts and at the time when due and interest on the overdue principal,
premium, if any, and interest, if any, of this Note, if lawful, and the
payment or performance of all other obligations of the Company under the
Indenture or the Notes, to the Holder of this Note and the Trustee, all in
accordance with and subject to the terms and limitations of this Note, the
Indenture (including, without limitation, Article 10 thereof) and this
Guarantee. This Guarantee will become effective in accordance with Article
Ten of the Indenture and its terms shall be evidenced therein. The validity
and enforceability of the Guarantee shall not be affected by the fact that it
is not affixed to any particular Note.
The obligations of the undersigned to the Holders of Notes and to
the Trustee pursuant to the Guarantee and the Indenture are expressly set
forth in the Indenture (including, without limitation, Article 10 thereof) and
reference is hereby made to the Indenture for the precise terms of the
Guarantee and all of the other provisions of the Indenture to which this
Guarantee relates. Each Holder of a Note, by accepting the same, agrees to
and shall be bound by such provisions.
<PAGE>
IN WITNESS WHEREOF, Loewen has caused this instrument to be duly
executed under its corporate seal.
Dated:
THE LOEWEN GROUP INC.
By:______________________________
Name:
Title:
[CORPORATE SEAL]
Attest:
By:_____________
Title:
<PAGE>
ASSIGNMENT FORM
If you the holder want to assign this Note, fill in the form below
and have your signature guaranteed:
I or we assign and transfer this Note to
(Insert assignee's social security or tax ID number)________________
(Print or type assignee's name, address and zip code) and
irrevocably appoint
agent to transfer this Note on the books of the Company. The agent
may substitute another to act for him.
Date: _____________ Your signature:_______________________
(Sign exactly as your name
appears on the other side of
this Note)
Signature Guarantee:________________________________________________
<PAGE>
The Loewen Group Inc.
EXHIBIT 11
Computation of Per Share Earnings
Expressed in thousands of U.S. dollars except per share amounts
<TABLE>
<CAPTION>
Three months ended September 30, Nine months ended September 30,
-------------------------------- -------------------------------
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
BASIC
Net earnings (loss) $ (40,837) $ 16,914 $ 9,131 $ 53,626
Less: Preferred share dividends 2,383 2,410 7,192 6,433
------------- ------------- ------------- -------------
Net earnings (loss) available to Common
shareholders (43,220) 14,504 1,939 47,193
Weighted average shares outstanding 73,289 58,956 65,188 55,960
Basic earnings (loss) per Common share $ (0.59) $ 0.25 $ 0.03 $ 0.84
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
FULLY DILUTED
Net earnings (loss) available to Common
shareholders $ (43,220) $ 14,504 $ 1,939 $ 47,193
Add: imputed earnings from dilutive options,
net of tax effect -- 138 -- 431
------------- ------------- ------------- -------------
Fully diluted net earnings (loss) $ (43,220) $ 14,642 $ 1,939 $ 47,624
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Weighted average shares outstanding 73,289 58,956 65,188 55,960
Shares issuable upon assumed conversion
of dilutive options -- 704 -- 731
------------- ------------- ------------- -------------
Fully diluted shares 73,289 59,660 65,188 56,691
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Fully diluted earnings (loss) per Common share $ (0.59) $ 0.25 $ 0.03 $ 0.84
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
Page 17
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE LOEWEN
GROUP INC. FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 18,588
<SECURITIES> 0
<RECEIVABLES> 297,141
<ALLOWANCES> 51,483
<INVENTORY> 34,247
<CURRENT-ASSETS> 310,400
<PP&E> 898,615
<DEPRECIATION> 132,049
<TOTAL-ASSETS> 4,308,048
<CURRENT-LIABILITIES> 236,718
<BONDS> 1,600,991
75,000
157,146
<COMMON> 1,257,573
<OTHER-SE> 87,889
<TOTAL-LIABILITY-AND-EQUITY> 4,308,048
<SALES> 824,481
<TOTAL-REVENUES> 824,481
<CGS> 550,859
<TOTAL-COSTS> 550,859
<OTHER-EXPENSES> 164,696
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 101,925
<INCOME-PRETAX> (1,685)
<INCOME-TAX> (7,446)
<INCOME-CONTINUING> 9,131
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,131
<EPS-PRIMARY> 0.03
<EPS-DILUTED> 0.03
</TABLE>
