<PAGE>
===========================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
____________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): MAY 20, 1998
CB RICHARD ELLIS SERVICES, INC.
(Exact name of registrant as specified in its charter)
STATE OF DELAWARE 001-12231 52-1616016
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
533 SOUTH FREMONT AVENUE LOS ANGELES, CALIFORNIA 90071-1712
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (213) 613-3123
CB COMMERCIAL REAL ESTATE SERVICES GROUP, INC.
(Former Name or Former Address, if Changed Since Last Report)
===========================================================================
<PAGE>
Item 5. Other Events.
------------
CB Richard Ellis Services, Inc. (the "Company") is issuing and selling
pursuant to its registration statement on Form S-3 filed with the Securities and
Exchange Commission on March 30, 1998 (Commission File Number 333-48875) (the
"Registration Statement"), as supplemented by a Prospectus Supplement thereto
dated May 20, 1998 (the "Prospectus Supplement"), $175,000,000 aggregate
principal amount of Senior Subordinated Notes due 2006. The closing of the sale
is scheduled to occur on May 26, 1998.
Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits.
----------------------------------------------------------------
(c) Exhibits
1.1 Underwriting Agreement dated as of May 20, 1998 among CB
Richard Ellis Services, Inc., CB Richard Ellis, Inc. and
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated and the Terms Agreement dated as of May 20, 1998
Richard Ellis Services, Inc., CB Richard Ellis, Inc. and
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated (acting on behalf of itself and the other named
Underwriters).
3.1(i) Fifth Restated Certificate of Incorporation of the Company.
4.1 First Supplemental Indenture between CB Richard Ellis
Services, Inc. and State Street Bank and Trust Company of
California, N.A., as Trustee, dated as of May 26, 1998 for 8
7/8 percent Senior Subordinated Notes due 2006, containing
the Form of 8 7/8 percent Senior Subordinated Note due 2006
as an Exhibit thereto.
25.1 Form T-1 - Statement of eligibility under the Trust Indenture
Act of 1939 of State Street Bank and Trust Company of
California, N.A.*
* Previously filed.
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<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: May 26, 1998.
CB RICHARD ELLIS SERVICES, INC.
By /s/ Walter V. Stafford
----------------------------------
Walter V. Stafford
Senior Executive Vice President
and General Counsel
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<PAGE>
INDEX TO EXHIBITS
FORM 8-K
<TABLE>
<CAPTION>
Exhibit
Sequential
Number Descriptions Page No.
--------- ------------ --------
<S> <C> <C>
1.1 Underwriting Agreement dated as of May 20, 1998 among CB
Richard Ellis Services, Inc., CB Richard Ellis, Inc. and
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated and the Terms Agreement dated as of May 20, 1998
Richard Ellis Services, Inc., CB Richard Ellis, Inc. and
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated (acting on behalf of itself and the other named
Underwriters).
3.1(i) Fifth Restated Certificate of Incorporation of the Company.
4.1 First Supplemental Indenture between CB Richard Ellis
Services, Inc. and State Street Bank and Trust Company of
California, N.A., as Trustee, dated as of May 26, 1998 for 8
7/8 percent Senior Subordinated Notes due 2006, containing
the Form of 8 7/8 percent Senior Subordinated Note due 2006
as an Exhibit thereto.
25.1 Form T-1 - Statement of eligibility under the Trust
Indenture Act of 1939 of State Street Bank and Trust Company
of California, N.A.*
</TABLE>
* Previously filed.
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<PAGE>
============================================================
CB Richard Ellis Services, Inc.
(a Delaware corporation)
UNDERWRITING AGREEMENT
----------------------
Dated: May 20, 1998
============================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
UNDERWRITING AGREEMENT...................................................................... -1-
SECTION 1. Representations and Warranties................................................... -3-
------------------------------
a. Representations and Warranties by the Company................................ -3-
i. Compliance with Registration Requirements.......................... -3-
ii. Incorporated Documents............................................. -5-
iii. Independent Accountants............................................ -5-
iv. Financial Statements............................................... -5-
v. No Material Adverse Change in Business............................. -6-
vi. Good Standing of the Company....................................... -6-
vii. Good Standing of Subsidiaries...................................... -6-
viii. Capitalization..................................................... -7-
ix. Authorization of this Underwriting Agreement and
Terms Agreement.................................................... -7-
x. Authorization of Debt Securities................................... -7-
xi. Authorization of the Indenture..................................... -7-
xii. Descriptions of the Debt Securities................................ -8-
xiii. Absence of Defaults and Conflicts.................................. -8-
xiv. Absence of Labor Dispute........................................... -9-
xv. Absence of Proceedings............................................. -9-
xvi. Accuracy of Exhibits............................................... -9-
xvii. Absence of Further Requirements.................................... -9-
xviii. Possession of Intellectual Property................................ -10-
xix. Possession of Licenses and Permits................................. -10-
xx. Title to Property.................................................. -10-
xxi. Commodity Exchange Act............................................. -11-
xxii. Investment Company Act............................................. -11-
xxiii. Environmental Laws................................................. -11-
xxiv. Registration Rights................................................ -12-
xxv. Solvency........................................................... -12-
xxvi. Stabilization...................................................... -12-
xxvii. Distribution of Offering Material.................................. -12-
b. Officers' Certificates....................................................... -13-
2. Sale and Delivery to Underwriters; Closing....................................... -13-
------------------------------------------
a. Debt Securities.............................................................. -13-
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
b. Payment...................................................................... -13-
c. Denominations; Registration.................................................. -13-
3. Covenants of the Company.......................................................... -14-
------------------------
a. Compliance with Securities Regulations and Commission Requests............... -14-
b. Filing of Amendments......................................................... -14-
c. Delivery of Registration Statements.......................................... -15-
d. Delivery of Prospectuses..................................................... -15-
e. Continued Compliance with Securities Laws.................................... -15-
f. Blue Sky Qualifications...................................................... -16-
g. Earnings Statement........................................................... -16-
h. Use of Proceeds.............................................................. -16-
i. Restriction on Sale of Securities............................................ -16-
j. Reporting Requirements....................................................... -17-
4. Payment of Expenses............................................................... -17-
-------------------
a. Expenses..................................................................... -17-
b. Termination of Agreement..................................................... -18-
5. Conditions of Underwriters' Obligations........................................... -18-
---------------------------------------
a. Effectiveness of Registration Statement...................................... -18-
b. Opinions of Counsel for Company and General Counsel.......................... -18-
c. Opinion of Counsel for Underwriters.......................................... -19-
d. Officers' Certificate........................................................ -19-
e. Accountant's Comfort Letter.................................................. -19-
f. Bring-down Comfort Letter.................................................... -20-
g. Ratings...................................................................... -20-
h. Lock-up Agreements........................................................... -20-
i. Officer's Certificate........................................................ -20-
j. Credit Agreements............................................................ -20-
k. Additional Documents......................................................... -21-
l. Termination of Terms Agreement............................................... -21-
6. Indemnification................................................................... -21-
---------------
a. Indemnification of Underwriters.............................................. -21-
b. Indemnification of Company, Directors and Officers........................... -23-
c. Actions against Parties; Notification........................................ -23-
d. Settlement without Consent if Failure to Reimburse........................... -24-
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
7. Contribution...................................................................... -24-
------------
8. Representations, Warranties and Agreements
------------------------------------------
to Survive Delivery............................................................... -26-
-------------------
9. Termination....................................................................... -26-
-----------
a. Underwriting Agreement........................................................ -26-
b. Terms Agreement............................................................... -26-
c. Liabilities................................................................... -27-
10. Default by One or More of the Underwriters........................................ -27-
------------------------------------------
11. Notices........................................................................... -28-
--------
12. Parties........................................................................... -28-
-------
13. GOVERNING LAW AND TIME............................................................ -29-
----------------------
14. Effect of Headings................................................................ -29-
------------------
</TABLE>
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<PAGE>
CB RICHARD ELLIS SERVICES, INC.
(a Delaware corporation)
UNDERWRITING AGREEMENT
-----------------------
May 20, 1998
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
CB Richard Ellis Services, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell up to $175,000,000 aggregate principal amount of
senior subordinated debt securities (the "Debt Securities") as described in more
detail in the attached Terms Agreement (as defined below).
The Debt Securities will be issued under an indenture as supplemented by
the First Supplemental Indenture (the "Indenture") between the Company and a
trustee to be named therein (the "Trustee").
Whenever the Company determines to make an offering of Debt Securities
pursuant to the attached Terms Agreement through Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), or through an
underwriting syndicate managed by Merrill Lynch, the Company will enter into the
attached Terms Agreement (the "Terms Agreement") providing for the sale of such
Debt Securities to, and the purchase and offering thereof by, Merrill Lynch and
such other underwriters, set forth in such Terms Agreement (the "Underwriters,"
which
<PAGE>
term shall include any Underwriter substituted pursuant to Section 10 hereof).
The Terms Agreement shall specify the aggregate principal amount of Debt
Securities to be issued, the name of each Underwriter participating in such
offering (subject to substitution as provided in Section 10 hereof) and the name
of any Underwriter other than Merrill Lynch acting as co-manager in connection
with such offering, the aggregate principal amount, of Debt Securities which
each such Underwriter severally agrees to purchase, whether such offering is on
a fixed or variable price basis and, if on a fixed price basis, the initial
offering price, the price at which the Debt Securities are to be purchased by
the Underwriters, the form, time, date and place of delivery and payment of the
Debt Securities and any other material variable terms of the Debt Securities.
The Terms Agreement, which shall be substantially in the form of Exhibit A
hereto, may take the form of an exchange of any standard form of written
telecommunication between the Company and Merrill Lynch acting as representative
of any other Underwriters.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-48875) for the
registration of among other securities the Debt Securities under the Securities
Act of 1933, as amended (the "1933 Act"), and the offering thereof from time to
time in accordance with Rule 415 of the rules and regulations of the Commission
under the 1933 Act (the "1933 Act Regulations"), and the Company has filed such
post-effective amendments thereto as may be required prior to the execution of
the Terms Agreement. Such registration statement (as so amended, if applicable)
has been declared effective by the Commission and the Indenture has been duly
qualified under the Trust Indenture Act of 1939, as amended (the "1939 Act").
Such registration statement (as so amended, if applicable), including the
information, if any, deemed to be a part thereof pursuant to Rule 430A(b) of the
1933 Act Regulations (the "Rule 430A Information") or Rule 434(d) of the 1933
Act Regulations (the "Rule 434 Information"), is referred to herein as the
"Registration Statement"; and the final prospectus and the final prospectus
supplement relating to the offering of the Debt Securities, in the form first
furnished to the Underwriters by the Company for use in connection with the
offering of the Debt Securities, are collectively referred to herein as the
"Prospectus"; provided, however, that all references to the "Registration
theStatement" and the "Prospectus" shall also be deemed to include all documents
incorporated therein by reference pursuant to the Securities Exchange Act of
1934, as amended (the "1934 Act"), prior to the execution of the Terms
Agreement; provided, further, that if the Company files a registration statement
with the Commission pursuant to Rule 462(b) of the 1933 Act Regulations (the
"Rule 462 Registration Statement"), then, after such filing, all references to
"Registration Statement" shall also be deemed to include the Rule 462
Registration Statement; and
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<PAGE>
provided, further, that if the Company elects to rely upon Rule 434 of the 1933
Act Regulations, then all references to "Prospectus" shall also be deemed to
include the final or preliminary prospectus and the applicable term sheet or
abbreviated term sheet (the "Term Sheet"), as the case may be, in the form first
furnished to the Underwriters by the Company in reliance upon Rule 434 of the
1933 Act Regulations, and all references in this Underwriting Agreement to the
date of the Prospectus shall mean the date of the Term Sheet. A "preliminary
prospectus" shall be deemed to refer to any prospectus used before the
registration statement became effective and any prospectus that omitted, as
applicable, the Rule 430A Information, the Rule 434 Information or other
information to be included upon pricing in a form of prospectus filed with the
Commission pursuant to Rule 424(b) of the 1933 Act Regulations, that was used
after such effectiveness and prior to the execution and delivery of the Terms
Agreement. For purposes of this Underwriting Agreement, all references to the
Registration Statement, Prospectus, Term Sheet or preliminary prospectus or to
any amendment or supplement to any of the foregoing shall be deemed to include
any copy filed with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval system ("EDGAR").
All references in this Underwriting Agreement to financial statements and
schedules and other information which is "contained," "included" or "stated" (or
other references of like import) in the Registration Statement, Prospectus or
preliminary prospectus shall be deemed to mean and include all such financial
statements and schedules and other information which is incorporated by
reference in the Registration Statement, Prospectus or preliminary prospectus,
as the case may be; and all references in this Underwriting Agreement to
amendments or supplements to the Registration Statement, Prospectus or
preliminary prospectus shall be deemed to mean and include the filing of any
document under the 1934 Act which is incorporated by reference in the
Registration Statement, Prospectus or preliminary prospectus, as the case may
be.
1. Representations and Warranties.
------------------------------
a. Representations and Warranties by the Company. Each of the Company
and CB Richard Ellis, Inc., a Delaware corporation and wholly owned subsidiary
of the Company ("CB Richard Ellis"), represents and warrants to Merrill Lynch,
as of the date hereof, and to each Underwriter named in the Terms Agreement, as
of the date thereof, as of the Closing Time (as defined below), as follows:
i. Compliance with Registration Requirements. The Company meets the
-----------------------------------------
requirements for use of Form S-3 under the 1933 Act pursuant to the
-3-
<PAGE>
standards for that form prior to October 21, 1992. Each of the Registration
Statement and any Rule 462(b) Registration Statement has become effective under
the 1933 Act and no stop order suspending the effectiveness of the Registration
Statement or any Rule 462(b) Registration Statement has been issued under the
1933 Act and no proceedings for that purpose have been instituted or are pending
or, to the knowledge of the Company, are contemplated by the Commission, and any
request on the part of the Commission for additional information has been
complied with. In addition, the Indenture has been duly qualified under the 1939
Act.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto (including the
filing of the Company's most recent Annual Report on Form 10-K with the
Commission (the "Annual Report on Form 10-K")) became effective and at the
Closing Time, the Registration Statement, any Rule 462(b) Registration Statement
and any amendments and supplements thereto complied and will comply in all
material respects with the requirements of the 1933 Act and the 1933 Act
Regulations and the 1939 Act and the rules and regulations of the Commission
under the 1939 Act (the "1939 Act Regulations") and did not and will not contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading.
At the date of the Prospectus, at the Closing Time, the Prospectus and any
amendments and supplements thereto did not and will not include an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading. If the Company elects to rely upon Rule 434 of
the 1933 Act Regulations, the Company will comply with the requirements of Rule
434. Notwithstanding the foregoing, the representations and warranties in this
subsection shall not apply to statements in or omissions from the Registration
Statement or the Prospectus made in reliance upon and in conformity with
information furnished to the Company in writing by any Underwriter through
Merrill Lynch expressly for use in the Registration Statement or the Prospectus.
Each preliminary prospectus and prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment thereto,
or filed pursuant to Rule 424 under the 1933 Act, complied when so filed in all
material respects with the 1933 Act Regulations and each preliminary prospectus
and the Prospectus delivered to the Underwriters for use in connection with the
offering of Debt Securities will, at the time of such delivery, be identical to
any electronically transmitted copies thereof filed with the Commission pursuant
to EDGAR, except to the extent permitted by Regulation S-T.
-4-
<PAGE>
ii. Incorporated Documents. The documents incorporated or deemed to
----------------------
be incorporated by reference in the Registration Statement and the Prospectus,
when they became effective or at the time they were or hereafter are filed with
the Commission, complied and will comply in all material respects with the
requirements of the 1934 Act and the rules and regulations of the Commission
thereunder (the "1934 Act Regulations") and, when read together with the other
information in the Prospectus, at the date of the Prospectus and at the Closing
Time, did not and will not include an untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
iii. Independent Accountants. The accountants who certified the
-----------------------
financial statements and any supporting schedules thereto included in the
Registration Statement and the Prospectus are independent public accountants as
required by the 1933 Act and the 1933 Act Regulations.
iv. Financial Statements. The historical financial statements of the
--------------------
Company included in the Registration Statement and the Prospectus, together with
the related schedules and notes, as well as those financial statements,
schedules and notes of any other entity included therein, present fairly the
financial position of the Company and its consolidated subsidiaries, or such
other entity, as the case may be, at the dates indicated and the statement of
operations, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries, or such other entity, as the case may be, for the
periods specified. Such financial statements have been prepared in conformity
with generally accepted accounting principles ("GAAP") applied on a consistent
basis throughout the periods involved. The supporting schedules, if any,
included in the Registration Statement and the Prospectus present fairly in
accordance with GAAP the information required to be stated therein. The
selected financial data and the summary financial information included in the
Prospectus present fairly the information shown therein and have been compiled
on a basis consistent with that of the audited financial statements included in
the Registration Statement and the Prospectus. In addition, any pro forma
financial statements of the Company and its consolidated subsidiaries or such
other entity, as the case may be, and the related notes thereto included in the
Registration Statement and the Prospectus present fairly the information shown
therein, have been prepared in accordance with the Commission's rules and
guidelines with respect to pro forma financial statements and have been properly
compiled on the bases described therein, and the assumptions used in the
preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions and circumstances referred to
therein.
-5-
<PAGE>
v. No Material Adverse Change in Business. Since the respective
--------------------------------------
dates as of which information is given in the Registration Statement and the
Prospectus, and with respect to information as to which no date is given, since
the date of the Prospectus, except as otherwise stated therein, (A) there has
been no material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business (a "Material Adverse Effect"), (B) there have been
no transactions entered into by the Company or any of its subsidiaries, other
than those arising in the ordinary course of business, which are material with
respect to the Company and its subsidiaries considered as one enterprise and (C)
except for regular dividends on the Company's Common Stock or preferred stock,
in amounts per share that are consistent with past practice or the applicable
charter document or supplement thereto, respectively, there has been no dividend
or distribution of any kind declared, paid or made by the Company on any class
of its capital stock.
vi. Good Standing of the Company. The Company has been duly
----------------------------
organized and is validly existing as a corporation in good standing under the
laws of the State of Delaware and has corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under, or as
contemplated under, this Underwriting Agreement and the Terms Agreement. The
Company is duly qualified as a foreign corporation to transact business and is
in good standing in each other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to so qualify or be in good
standing would not result in a Material Adverse Effect.
vii. Good Standing of Subsidiaries. Each "significant subsidiary" of
-----------------------------
the Company (as such term is defined in Rule 1-02 of Regulation S-X promulgated
under the 1933 Act) (each, a "Subsidiary" and, collectively, the "Subsidiaries")
has been duly organized and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has corporate
power and authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus and is duly qualified as a foreign
corporation to transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure to so
qualify or be in good standing would not result in a Material Adverse Effect.
Except as otherwise stated in the Registration Statement and the Prospectus, all
of the issued and outstanding capital stock of each
-6-
<PAGE>
Subsidiary has been duly authorized and is validly issued, fully paid and non-
assessable and is owned by the Company, directly or through subsidiaries, free
and clear of any security interest, mortgage, pledge, lien, encumbrance, claim
or equity. None of the outstanding shares of capital stock of any Subsidiary was
issued in violation of preemptive rights of any securityholder of such
Subsidiary.
viii. Capitalization. The authorized, issued and outstanding shares
--------------
of capital stock of the Company is as set forth in the column entitled "Actual"
under such section entitled "Capitalization" (except for subsequent issuances
thereof, if any, contemplated under this Underwriting Agreement, pursuant to
reservations, agreements or employee benefit plans or compensation programs
referred to in the Prospectus or pursuant to the exercise of convertible
securities or options referred to in the Prospectus). Such shares of capital
stock have been duly authorized and validly issued by the Company and are fully
paid and non-assessable, and none of such shares of capital stock was issued in
violation of preemptive rights of any securityholder of the Company.
ix. Authorization of this Underwriting Agreement and Terms
------------------------------------------------------
Agreement. Each of the Underwriting Agreement and the Terms Agreement has been
duly authorized, executed and delivered by the Company and CB Richard Ellis.
x. Authorization of Debt Securities. The Debt Securities have been
--------------------------------
duly authorized by the Company for issuance and sale pursuant to this
Underwriting Agreement and the Terms Agreement. The Debt Securities, when
issued and authenticated in the manner provided for in the Indenture and
delivered against payment of the consideration therefor specified in the Terms
Agreement, will constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors' rights
generally or by general equitable principles. The Debt Securities will be in
the form contemplated by, and each registered holder thereof is entitled to the
benefits of, the Indenture.
xi. Authorization of the Indenture. The Indenture has been, or
------------------------------
prior to the issuance of the Debt Securities thereunder will have been, duly
authorized, executed and delivered by the Company and, upon such authorization,
execution and delivery, will constitute a valid and legally binding agreement of
the Company, enforceable against the Company in accordance with its terms,
except as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization,
-7-
<PAGE>
moratorium or other similar laws relating to or affecting creditors' rights
generally or by general equitable principles.
xii. Descriptions of the Debt Securities. The Debt Securities and
-----------------------------------
Indenture, as of the date of the Prospectus, will conform in all material
respects to the statements relating thereto contained in the Prospectus and will
be in substantially the form filed or incorporated by reference, as the case may
be, as an exhibit to the Registration Statement.
xiii. Absence of Defaults and Conflicts. Neither the Company nor any
---------------------------------
of its subsidiaries is in violation of its charter or by-laws or in default in
the performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which it or any of them may
be bound, or to which any of the property or assets of the Company or any of its
subsidiaries is subject (collectively, "Agreements and Instruments"), except for
such violations and defaults that would not result in a Material Adverse Effect.
The execution, delivery and performance of this Underwriting Agreement, the
Terms Agreement and the Indenture, and any other agreement or instrument entered
into or issued or to be entered into or issued by the Company in connection with
the transactions contemplated hereby or thereby or in the Registration Statement
and the Prospectus, and the consummation of the transactions contemplated herein
and in the Registration Statement and the Prospectus (including the issuance and
sale of the Debt Securities and the use of the proceeds from the sale of the
Debt Securities as described under the caption "Use of Proceeds") and compliance
by the Company with its obligations hereunder and thereunder have been duly
authorized by all necessary corporate action and do not and will not, whether
with or without the giving of notice or passage of time or both, conflict with
or constitute a breach of, or default or Repayment Event (as defined below)
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any assets, properties or operations of the Company or any of
its subsidiaries pursuant to, any Agreements and Instruments (except for such
conflicts, breaches, defaults or liens, charges or encumbrances that would not
result in a Material Adverse Effect) nor will any such action result in any
violation of the provisions of the charter or by-laws of the Company or any of
its subsidiaries or any applicable law, statute, rule, regulation, judgment,
order, writ or decree of any government, government instrumentality or court,
domestic or foreign, having jurisdiction over the Company or any if its
subsidiaries or any of their assets, properties or operations (except for such
violations that would not result in a Material Adverse Effect). As used herein,
a "Repayment Event" means any event or
-8-
<PAGE>
condition which gives the holder of any note, debenture or other evidence of
indebtedness (or any person acting on such holder's behalf) the right to require
the repurchase, redemption or repayment of all or a portion of such indebtedness
by the Company or any of its subsidiaries.
xiv. Absence of Labor Dispute. (a) No labor dispute with the
------------------------
employees of the Company or any of its subsidiaries exists or, to the knowledge
of the Company, is imminent, and (b) the Company is not aware of any existing or
imminent labor disturbance by the employees of any of its or any subsidiary's
principal customers or contractors, which, in either (a) or (b) above, may
reasonably be expected to result in a Material Adverse Effect.
xv. Absence of Proceedings. There is no action, suit, proceeding,
----------------------
inquiry or investigation before or brought by any court or governmental agency
or body, domestic or foreign, now pending, or, to the knowledge of the Company,
threatened, against or affecting the Company or any of its subsidiaries which is
required to be disclosed in the Registration Statement and the Prospectus (other
than as disclosed therein), or which might reasonably be expected to result in a
Material Adverse Effect, or which might reasonably be expected to materially and
adversely affect the assets, properties or operations thereof or the
consummation of the transactions contemplated under this Underwriting Agreement,
the Terms Agreement or the Indenture, or the performance by the Company of its
obligations hereunder and thereunder. The aggregate of all pending legal or
governmental proceedings to which the Company or any of its subsidiaries is a
party or of which any of their respective assets, properties or operations is
the subject which are not described in the Registration Statement and the
Prospectus, including ordinary routine litigation incidental to the business,
could not reasonably be expected to result in a Material Adverse Effect.
xvi. Accuracy of Exhibits. There are no contracts or documents which
--------------------
are required to be described in the Registration Statement, the Prospectus or
the documents incorporated by reference therein or to be filed as exhibits
thereto which have not been so described and filed as required.
xvii. Absence of Further Requirements. No filing with, or
-------------------------------
authorization, approval, consent, license, order registration, qualification or
decree of, any court or governmental authority or agency, domestic or foreign,
is necessary or required for the performance by the Company of its obligations
under this Underwriting Agreement or the Terms Agreement or in connection with
the transactions contemplated under this Underwriting Agreement, the Terms
Agreement or the
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<PAGE>
Indenture, except such as have been already obtained or as may be required under
the 1933 Act or the 1933 Act Regulations, the 1934 Act or the 1934 Act
Regulations, or state securities laws.
xviii. Possession of Intellectual Property. The Company, either in
-----------------------------------
its own right or through its subsidiaries, owns or possesses, or can acquire on
reasonable terms, copyrights, licenses, trademarks, service marks, trade names
or other intellectual property (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures) (collectively, "Intellectual Property") necessary to carry on the
business now operated by the Company and its subsidiaries, and neither the
Company nor any of its subsidiaries has received any notice or is otherwise
aware of any infringement of or conflict with asserted rights of others with
respect to any Intellectual Property or of any facts or circumstances which
would render any Intellectual Property invalid or inadequate to protect the
interest of the Company or any of its subsidiaries therein, and which
infringement or conflict (if the subject of any unfavorable decision, ruling or
finding) or invalidity or inadequacy, singly or in the aggregate, would result
in a Material Adverse Effect.
xix. Possession of Licenses and Permits. The Company, either in its
----------------------------------
own right or through its subsidiaries, possesses such permits, licenses,
approvals, consents and other authorizations (collectively, "Governmental
Licenses") issued by the appropriate federal, state, local or foreign regulatory
agencies or bodies necessary to conduct the business now operated by the Company
and its subsidiaries. The Company and its subsidiaries are in compliance with
the terms and conditions of all such Governmental Licenses, except where the
failure so to comply would not, singly or in the aggregate, result in a Material
Adverse Effect. All of the Governmental Licenses are valid and in full force
and effect, except where the invalidity of such Governmental Licenses or the
failure of such Governmental Licenses to be in full force and effect would not
result in a Material Adverse Effect. Neither the Company nor any of its
subsidiaries has received any notice of proceedings relating to the revocation
or modification of any such Governmental Licenses which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
result in a Material Adverse Effect.
xx. Title to Property. The Company, either in its own right or
-----------------
through its subsidiaries, has good and marketable title to all real property
owned by the Company or its subsidiaries and good title to all other properties
owned by any of them, in each case, free and clear of all mortgages, pledges,
liens, security interests, claims, restrictions or encumbrances of any kind,
except (A) as otherwise stated in
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<PAGE>
the Registration Statement and the Prospectus or (B) those which do not, singly
or in the aggregate, materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the
Company or any of its subsidiaries. All of the leases and subleases material to
the business of the Company and its subsidiaries considered as one enterprise,
and under which the Company or any of its subsidiaries holds properties
described in the Prospectus, are in full force and effect, and neither the
Company nor any of its subsidiaries has received any notice of any material
claim of any sort that has been asserted by anyone adverse to the rights of the
Company or any of its subsidiaries under any of the leases or subleases
mentioned above, or affecting or questioning the rights of the Company or such
subsidiary of the continued possession of the leased or subleased premises under
any such lease or sublease.
xxi. Commodity Exchange Act. The Debt Securities, upon issuance,
----------------------
will be excluded or exempted under, or beyond the purview of, the Commodity
Exchange Act, as amended (the "Commodity Exchange Act"), and the rules and
regulations of the Commodity Futures Trading Commission under the Commodity
Exchange Act (the "Commodity Exchange Act Regulations").
xxii. Investment Company Act. The Company is not, and upon the
----------------------
issuance and sale of the Debt Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectus will
not be, an "investment company" within the meaning of the Investment Company Act
of 1940, as amended (the "1940 Act").
xxiii. Environmental Laws. Except as otherwise stated in the
------------------
Registration Statement and the Prospectus and except as would not, singly or in
the aggregate, result in a Material Adverse Effect, (A) neither the Company nor
any of its subsidiaries is in violation of any federal, state, local or, to the
best of its knowledge, foreign statute, law, rule, regulation, ordinance, code,
policy or rule of common law or any judicial or administrative interpretation
thereof including any judicial or administrative order, consent, decree or
judgment, relating to pollution or protection of human health, the environment
(including, without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata) or wildlife, including, without limitation, laws
and regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products (collectively, "Hazardous Materials") or to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials (collectively, "Environmental
Laws") that are applicable to actions or the omissions of the Company and its
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<PAGE>
subsidiaries, (B) the Company and its subsidiaries have all permits,
authorizations and approvals required under any Environmental Laws that are
applicable to the business of the Company and its subsidiaries and are each in
compliance with their requirements, (C) there are no pending or, to the best of
the Company's knowledge, threatened administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, notices of noncompliance
or violation, investigation or proceedings relating to any Environmental Law
against the Company or any of its subsidiaries and (D) to the best of the
Company's knowledge, there are no events or circumstances that might reasonably
be expected to form the basis of an order for clean-up or remediation, or an
action, suit or proceeding by any private party or governmental body or agency,
against or affecting the Company or any of its subsidiaries relating to
Hazardous Materials or any Environmental Laws.
xxiv. Registration Rights. Except as described in the Registration
-------------------
Statement and the Prospectus, no persons have rights to have any securities
registered pursuant to the Registration Statement or otherwise registered by the
Company under the 1933 Act.
xxv. Solvency. The Company is, and immediately after the Closing
--------
Time will be, Solvent. As used herein, the term "Solvent" means, with respect to
the Company on a particular date, that on such date (A) the fair market value of
the assets of the Company is greater than the total amount of liabilities
(including contingent liabilities) of the Company, (B) the present fair salable
value of the assets of the Company is greater than the amount that will be
required to pay the probable liabilities of the Company on its debts as they
become absolute and matured, (C) the Company is able to realize upon its assets
and pay its debts and other liabilities, including contingent obligations, as
they mature, and (D) the Company does not have unreasonably small capital.
xxvi. Stabilization. Neither the Company nor any of its officers,
-------------
directors or controlling persons has taken, directly or indirectly, any action
designed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Debt Securities.
xxvii. Distribution of Offering Material. The Company has not
---------------------------------
distributed and, prior to the later to occur of (i) the Closing Time and (ii)
completion of the distribution of the Debt Securities, will not distribute any
offering material in connection with the offering and sale of the Debt
Securities other than the Registra-
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<PAGE>
tion Statement, any preliminary prospectus, the Prospectus or other materials,
if any, permitted by the 1933 Act and approved by Merrill Lynch.
b. Officers' Certificates. Any certificate signed by any officer of the
Company or any of its subsidiaries and delivered to any Underwriter or to
counsel for the Underwriters in connection with the offering of the Debt
Securities shall be deemed a representation and warranty by the Company to each
Underwriter as to the matters covered thereby on the date of such certificate.
2. Sale and Delivery to Underwriters; Closing.
------------------------------------------
a. Debt Securities. The several commitments of the Underwriters to
purchase the Debt Securities pursuant to the Terms Agreement shall be deemed to
have been made on the basis of the representations and warranties herein
contained and shall be subject to the terms and conditions herein set forth.
b. Payment. Payment of the purchase price for, and delivery of, the Debt
Securities shall be made at the offices of Pillsbury Madison & Sutro LLP, New
York, New York, or at such other place as shall be agreed upon by Merrill Lynch
and the Company, at 7:00 A.M. (California time) on the third (fourth, if the
pricing occurs after 4:30 P.M. (Eastern time) on any given day) business day
after the date of the Terms Agreement (unless postponed in accordance with the
provisions of Section 10 hereof), or such other time not later than ten business
days after such date as shall be agreed upon by Merrill Lynch and the Company
(such time and date of payment and delivery being herein called "Closing Time").
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
Merrill Lynch for the respective accounts of the Underwriters of the Debt
Securities to be purchased by them. It is understood that each Underwriter has
authorized Merrill Lynch, for its account, to accept delivery of, receipt for,
and make payment of the purchase price for, the Debt Securities which it has
severally agreed to purchase. Merrill Lynch, individually and not as
representative of the Underwriters, may (but shall not be obligated to) make
payment of the purchase price for the Debt Securities to be purchased by any
Underwriter whose funds have not been received by the Closing Time, but such
payment shall not relieve such Underwriter from its obligations hereunder.
c. Denominations; Registration. The Debt Securities or certificates for
the Debt Securities shall be in such denominations and registered in such names
as
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<PAGE>
Merrill Lynch may request in writing at least one full business day prior to
the Closing Time. The Debt Securities or certificates for the Debt Securities
will be made available for examination and packaging by Merrill Lynch in The
City of New York not later than 10:00 A.M. (Eastern time) on the business day
prior to the Closing Time.
3. Covenants of the Company. The Company covenants with Merrill Lynch and
------------------------
with each Underwriter participating in the offering of the Debt Securities, as
follows:
a. Compliance with Securities Regulations and Commission Requests. The
Company, subject to Section 3(b), will comply with the requirements of Rule 430A
of the 1933 Act Regulations and/or Rule 434 of the 1933 Act Regulations, if and
as applicable, and will notify Merrill Lynch immediately, and confirm the notice
in writing, of (i) the effectiveness of any post effective amendment to the
Registration Statement or the filing of any supplement or amendment to the
Prospectus, (ii) the receipt of any comments from the Commission, (iii) any
request by the Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for additional information, and
(iv) the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus, or of the suspension of the
qualification of the Debt Securities for offering or sale in any jurisdiction,
or of the initiation or threatening of any proceedings for any of such purposes.
The Company will promptly effect the filings necessary pursuant to Rule 424 and
will take such steps as it deems necessary to ascertain promptly whether the
Prospectus transmitted for filing under Rule 424 was received for filing by the
Commission and, in the event that it was not, it will promptly file the
Prospectus. The Company will make every reasonable effort to prevent the
issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
b. Filing of Amendments. The Company will give Merrill Lynch notice of
its intention to file or prepare any amendment to the Registration Statement
(including any filing under Rule 462(b) of the 1933 Act Regulations), any Term
Sheet or any amendment, supplement or revision to either the prospectus included
in the Registration Statement at the time it became effective or to the
Prospectus, whether pursuant to the 1933 Act, the 1934 Act or otherwise, will
furnish Merrill Lynch with copies of any such documents a reasonable amount of
time prior to such proposed filing or use, as the case may be, and, in
connection with the issuance of
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<PAGE>
the Debt Securities, will not file or use any such document to which Merrill
Lynch or counsel for the Underwriters shall object.
c. Delivery of Registration Statements. The Company has furnished or
will deliver to Merrill Lynch and counsel for the Underwriters, without charge,
signed copies of the Registration Statement as originally filed and of each
amendment thereto (including exhibits filed therewith or incorporated by
reference therein and documents incorporated or deemed to be incorporated by
reference therein) and conformed copies of all consents and certificates of
experts, and will also deliver to Merrill Lynch, without charge, a conformed
copy of the Registration Statement as originally filed and of each amendment
thereto (without exhibits) for each of the Underwriters. Copies of the
Registration Statement and each amendment thereto furnished to the Underwriters
will be identical to any electronically transmitted copies thereof filed with
the Commission pursuant to EDGAR, except to the extent permitted by Regulation
S-T.
d. Delivery of Prospectuses. The Company will deliver to each
Underwriter, without charge, as many copies of each preliminary prospectus as
such Underwriter may reasonably request, and the Company hereby consents to the
use of such copies for purposes permitted by the 1933 Act. The Company will
furnish to each Underwriter, without charge, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, such
number of copies of the Prospectus as such Underwriter may reasonably request.
The Prospectus and any amendments or supplements thereto furnished to the
Underwriters will be identical to any electronically transmitted copies thereof
filed with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
e. Continued Compliance with Securities Laws. The Company will comply
with the 1933 Act and the 1933 Act Regulations and the 1934 Act and the 1934 Act
Regulations so as to permit the completion of the distribution of the Debt
Securities as contemplated in this Underwriting Agreement and the Terms
Agreement and in the Registration Statement and the Prospectus. If at any time
when the Prospectus is required by the 1933 Act or the 1934 Act to be delivered
in connection with sales of the Debt Securities, any event shall occur or
condition shall exist as a result of which it is necessary, in the opinion of
counsel for the Underwriters or for the Company, to amend the Registration
Statement in order that the Registration Statement will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or to
amend or supplement the Prospectus in order that the Prospectus will not include
an untrue statement of a material fact or omit to state a material fact
-15-
<PAGE>
necessary in order to make the statements therein not misleading in the light of
the circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the opinion of such counsel, at any such time to amend
the Registration Statement or amend or supplement the Prospectus in order to
comply with the requirements of the 1933 Act or the 1933 Act Regulations, the
Company will promptly prepare and file with the Commission, subject to Section
3(b), such amendment or supplement as may be necessary to correct such statement
or omission or to make the Registration Statement or the Prospectus comply with
such requirements, and the Company will furnish to the Underwriters, without
charge, such number of copies of such amendment or supplement as the
Underwriters may reasonably request.
f. Blue Sky Qualifications. The Company will use its best efforts, in
cooperation with the Underwriters, to qualify the Debt Securities for offering
and sale under the applicable securities laws of such states and other
jurisdictions (domestic or foreign) as Merrill Lynch may designate and to
maintain such qualifications in effect for a period of not less than one year
from the date of the Terms Agreement; provided, however, that the Company shall
not be obligated to file any general consent to service of process or to qualify
as a foreign corporation or as a dealer in securities in any jurisdiction in
which it is not so qualified or to subject itself to taxation in respect of
doing business in any jurisdiction in which it is not otherwise so subject. In
each jurisdiction in which the Debt Securities have been so qualified, the
Company will file such statements and reports as may be required by the laws of
such jurisdiction to continue such qualification in effect for a period of not
less than one year from the date of the Terms Agreement.
g. Earnings Statement. The Company will timely file such reports
pursuant to the 1934 Act as are necessary in order to make generally available
to its securityholders as soon as practicable an earnings statement for the
purposes of, and to provide the benefits contemplated by, the last paragraph of
Section 11(a) of the 1933 Act.
h. Use of Proceeds. The Company will use the net proceeds received by it
from the sale of the Debt Securities in the manner specified in the Prospectus
under "Use of Proceeds."
i. Restriction on Sale of Securities. Between the date of the Terms
Agreement and the Closing Time or such other date specified in such Terms
Agreement, the Company will not, without the prior written consent of Merrill
Lynch,
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<PAGE>
directly or indirectly, issue, sell, offer to sell, grant any option for the
sale of, or otherwise dispose of, the securities specified in the Terms
Agreement.
j. Reporting Requirements. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, will
file all documents required to be filed with the Commission pursuant to the 1934
Act within the time periods required by the 1934 Act and the 1934 Act
Regulations.
4. Payment of Expenses.
-------------------
a. Expenses. The Company will pay all expenses incident to the
performance of its obligations under this Underwriting Agreement and the Terms
Agreement, including (i) the preparation, printing and filing of the
Registration Statement (including financial statements and exhibits) as
originally filed and of each amendment thereto (excluding Underwriters'
counsel's fees), (ii) the preparation, printing and delivery to the Underwriters
of this Underwriting Agreement, the Terms Agreement, any Agreement among
Underwriters, the Indenture and such other documents as may be required in
connection with the offering, purchase, sale, issuance or delivery of the Debt
Securities (excluding Underwriters' counsel's fees), (iii) the preparation,
issuance and delivery of the Debt Securities, any certificates for the Debt
Securities to the Underwriters, including any transfer taxes and any stamp or
other duties payable upon the sale, issuance or delivery of the Debt Securities
to the Underwriters, (iv) the fees and disbursements of the Company's counsel,
accountants and other advisors or agents (including transfer agents and
registrars), as well as the fees and disbursements of the Trustee, and its
counsel, (v) the qualification of the Debt Securities under state securities
laws in accordance with the provisions of Section 3(f) hereof, including filing
fees and the reasonable fees and disbursements of counsel for the Underwriters
in connection therewith and in connection with the preparation, printing and
delivery of the Blue Sky Survey and any Legal Investment Survey, and any
amendment thereto, (vi) the printing and delivery to the Underwriters of copies
of each preliminary prospectus, any Term Sheet, and the Prospectus and any
amendments or supplements thereto, (vii) the fees charged by nationally
recognized statistical rating organizations for the rating of the Debt
Securities, (viii) the filing fees incident to, and the reasonable fees and
disbursements of counsel to the Underwriters in connection with, the review, if
any, by the National Association of Securities Dealers, Inc. (the "NASD") of the
terms of the sale of the Debt Securities, and (ix) the fees and expenses of any
Underwriter acting in the capacity of a "qualified independent underwriter" (as
defined in Section 2(l) of Schedule E of the bylaws of the NASD), if applicable.
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<PAGE>
b. Termination of Agreement. If the Terms Agreement is terminated by
Merrill Lynch in accordance with the provisions of Section 5 (except for Section
5(c)) or Section 9(b)(i) or 9(b)(iii) hereof, the Company shall reimburse the
Underwriters for all of their out-of-pocket expenses, including the reasonable
fees and disbursements of counsel for the Underwriters.
5. Conditions of Underwriters' Obligations. The obligations of the
---------------------------------------
Underwriters to purchase and pay for the Debt Securities pursuant to the Terms
Agreement are subject to the accuracy of the representations and warranties of
the Company contained in Section 1 hereof or in certificates of any officer of
the Company or any of its subsidiaries delivered pursuant to the provisions
hereof, to the performance by the Company of its covenants and other obligations
hereunder, and to the following further conditions:
a. Effectiveness of Registration Statement. The Registration Statement,
including any Rule 462(b) Registration Statement, has become effective under the
1933 Act and no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act and no proceedings for that
purpose shall have been initiated or be pending or threatened by the Commission,
and any request on the part of the Commission for additional information shall
have been complied with to the reasonable satisfaction of counsel to the
Underwriters. A prospectus containing information relating to the description
of the Debt Securities, the specific method of distribution and similar matters
shall have been filed with the Commission in accordance with Rule 424(b)(1),
(2), (3), (4) or (5), as applicable (or any required post-effective amendment
providing such information shall have been filed and declared effective in
accordance with the requirements of Rule 430A), or, if the Company has elected
to rely upon Rule 434 of the 1933 Act Regulations, a Term Sheet including the
Rule 434 Information shall have been filed with the Commission in accordance
with Rule 424(b)(7).
b. Opinions of Counsel for Company and General Counsel. At Closing Time,
Merrill Lynch shall have received the favorable opinion, dated as of Closing
Time, of each of Pillsbury Madison & Sutro LLP, counsel for the Company, and
Walter V. Stafford, General Counsel to the Company, in form and substance
satisfactory to counsel for the Underwriters, together with signed or reproduced
copies of such letters for each of the other Underwriters, to the effect set
forth in Exhibits B and C hereto, respectively, and to such further effect as
counsel to the Underwriters may reasonably request. In giving such opinion,
such counsel may rely, as to all matters governed by the laws of jurisdictions
other than the law of the State of New York, the federal law of the United
States and the General Corporation
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<PAGE>
Law of the State of Delaware, upon the opinions of counsel satisfactory to
Merrill Lynch. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and its subsidiaries and certificates of
public officials.
c. Opinion of Counsel for Underwriters. At Closing Time, Merrill Lynch
shall have received the favorable opinion, dated as of Closing Time, of Skadden,
Arps, Slate, Meagher & Flom, LLP, counsel for the Underwriters, together with
signed or reproduced copies of such letter for each of the other Underwriters,
with respect to the matters set forth in (i), (ii), (iv), (v), (vi), (vii),
(viii), (ix) and (xiv) (solely as to the information in the Prospectus under
"Description of the Notes"), and the penultimate paragraph of Exhibit B hereto.
In giving such opinion, such counsel may rely, as to all matters governed by the
laws of jurisdictions other than the law of the State of New York, the federal
law of the United States and the General Corporation Law of the State of
Delaware, upon the opinions of counsel satisfactory to Merrill Lynch. Such
counsel may also state that, insofar as such opinion involves factual matters,
they have relied, to the extent they deem proper, upon certificates of officers
of the Company and its subsidiaries and certificates of public officials.
d. Officers' Certificate. At Closing Time, there shall not have been,
since the date of the Terms Agreement or since the respective dates as of which
information is given in the Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, and
Merrill Lynch shall have received a certificate of the Chief Executive Officer
or a Senior Executive Vice President of each of the Company and CB Richard Ellis
and of the chief financial officer or chief accounting officer of each of the
Company and CB Richard Ellis, dated as of Closing Time, to the effect that (i)
there has been no such material adverse change, (ii) the representations and
warranties in Section 1 are true and correct with the same force and effect as
though expressly made at and as of the Closing Time, (iii) each of the Company
and CB Richard Ellis has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to the Closing
Time, and (iv) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
initiated or threatened by the Commission.
e. Accountant's Comfort Letter. At the time of the execution of the
Terms Agreement, Merrill Lynch shall have received from Arthur Andersen LLP a
letter dated such date, in form and substance satisfactory to Merrill Lynch,
together
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<PAGE>
with signed or reproduced copies of such letter for each of the other
Underwriters, containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus.
f. Bring-down Comfort Letter. At Closing Time, Merrill Lynch shall have
received from Arthur Andersen LLP a letter, dated as of Closing Time, to the
effect that they reaffirm the statements made in the letter furnished pursuant
to subsection (e) of this Section 5, except that the specified date referred to
shall be a date not more than three business days prior to the Closing Time.
g. Ratings. At Closing Time, the Debt Securities shall have the ratings
accorded by any "nationally recognized statistical rating organization," as
defined by the Commission for purposes of Rule 436(g) (2) of the 1933 Act
Regulations, if and as specified in the Terms Agreement, and the Company shall
have delivered to Merrill Lynch a letter, dated as of such date, from each such
rating organization, or other evidence satisfactory to Merrill Lynch, confirming
that the Debt Securities have such ratings. Since the time of execution of the
Terms Agreement, there shall not have occurred a downgrading in the rating
assigned to the Debt Securities or any of the Company's other securities by any
such rating organization, and no such rating organization shall have publicly
announced that it has under surveillance or review its rating of the Debt
Securities or any of the Company's other securities.
h. Lock-up Agreements. On the date of the Terms Agreement, Merrill Lynch
shall have received, in form and substance satisfactory to it, each lock-up
agreement, if any, specified in the Terms Agreement as being required to be
delivered by the persons listed therein.
i. Officer's Certificate. The Company shall have delivered a
certificate, signed by an officer of the Company, in form and substance
reasonably satisfactory to the Company, the Underwriters and Counsel for the
Underwriters, with respect to certain information set forth in the Registration
Statement.
j. Credit Agreements. The Company shall have entered into the Amended
and Restated Credit Agreement with the Bank of America National Trust and
Savings Association, as Agent and Letter of Credit Issuing Bank, the agents and
co-agents named therein, and the other financial institutions party thereto,
prior to or contemporaneously with the Closing Time, substantially in the form
described in the Prospectus.
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<PAGE>
k. Additional Documents. At Closing Time, counsel for the Underwriters
shall have been furnished with such documents and opinions as they may
reasonably require for the purpose of enabling them to pass upon the issuance
and sale of the Debt Securities as herein contemplated, or in order to evidence
the accuracy of any of the representations or warranties, or the fulfillment of
any of the conditions, herein contained; and all proceedings taken by the
Company in connection with the issuance and sale of the Debt Securities as
herein contemplated shall be satisfactory in form and substance to Merrill Lynch
and counsel for the Underwriters.
l. Termination of Terms Agreement. In addition to the termination
provisions provided in Section 9 hereof, if any condition specified in this
Section 5 shall not have been fulfilled when and as required to be fulfilled,
the Terms Agreement may be terminated by Merrill Lynch by notice to the Company
at any time at or prior to the Closing Time, and such termination shall be
without liability of any party to any other party except as provided in Section
4 and except that Sections 1, 6, 7 and 8 shall survive any such termination and
remain in full force and effect.
6. Indemnification.
---------------
a. Indemnification of Underwriters. Subject to Section 6(c) below, the
Company and CB Richard Ellis jointly and severally agree to indemnify and hold
harmless each Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 as
follows:
i. against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (or any
amendment thereto), including the Rule 430A Information and the Rule 434
Information deemed to be a part thereof, if applicable, or the omission or
alleged omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out of any
untrue statement or alleged untrue statement of a material fact included in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
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<PAGE>
ii. against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, or any such alleged untrue
statement or omission; provided that (subject to Section 6(d) below) any such
settlement is effected with the written consent of the Company; and
iii. against any and all expense whatsoever, as incurred (including
the reasonable fees and disbursements of counsel chosen by Merrill Lynch), in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the extent that
any such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
- -------- -------
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through Merrill Lynch expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information deemed to be a part thereof, if applicable, or any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto). In addition, neither the Company nor CB Richard Ellis will be liable
to any Underwriter with respect to any Preliminary Prospectus to the extent that
any such loss, liability, claim, damage or expense resulted from the fact that
such Underwriter, in contravention of a requirement of this Agreement or
applicable law, sold Debt Securities to a person to whom such Underwriter failed
to send or give, at or prior to the Closing Time, a copy of the Prospectus, as
then amended or supplemented, if the Company has previously furnished copies
thereof (sufficiently in advance of the Closing Time to allow for distribution
by the Closing Time) to the Underwriter and the loss, liability, claim, damage
or expense of such Underwriter resulted from an untrue statement or omission of
a material fact contained in or omitted from the Preliminary Prospectus which
was corrected in the Prospectus as, if applicable, amended or supplemented prior
to the Closing Time and such Prospectus was required by law to be delivered at
or prior to the written confirmation of sale to such person.
-22-
<PAGE>
b. Indemnification of Company, Directors and Officers. Each Underwriter
severally agrees to indemnify and hold harmless the Company, its directors, each
of its officers who signed the Registration Statement, and each person, if any,
who controls the Company within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act against any and all loss, liability, claim, damage
and expense described in the indemnity contained in subsection (a) of this
Section, as incurred, but only with respect to untrue statements or omissions,
or alleged untrue statements or omissions, made in the Registration Statement
(or any amendment thereto), including the Rule 430A Information and the Rule 434
Information deemed to be a part thereof, if applicable, or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Company by such Underwriter through Merrill Lynch expressly for use in the
Registration Statement (or any amendment thereto) or such preliminary prospectus
or the Prospectus (or any amendment or supplement thereto).
c. Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. Except as set forth below, in the case of parties indemnified
pursuant to Section 6(a) above, counsel to the indemnified parties shall be
selected by Merrill Lynch, and, in the case of parties indemnified pursuant to
Section 6(b) above, counsel to the indemnified parties shall be selected by the
Company. An indemnifying party may participate at its own expense in the
defense of any such action. If any indemnifying party so elects to participate
in the defense of such action within a reasonable time after receipt of notice
of an action commenced against an indemnified party, an indemnifying party,
jointly with any other indemnifying parties receiving such notice, may assume
the defense of such action with counsel chosen by it and approved by the
indemnified
-23-
<PAGE>
parties defendant in such action, unless such indemnified parties reasonably
object to such assumption on the ground that there may be legal defenses
available to them which are different from or in addition to those available to
such indemnifying party. If an indemnifying party assumes the defense of such
action, the indemnifying parties shall not be liable for any fees and expenses
of counsel for the indemnified parties incurred thereafter in connection with
such action. In no event shall the indemnifying parties be liable for fees and
expenses of more than one counsel (in addition to any local counsel) separate
from their own counsel for all indemnified parties in connection with any one
action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances. No indemnifying
party shall, without the prior written consent of the indemnified parties,
settle or compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
d. Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement. Notwithstanding the immediately preceding sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, an indemnifying party shall
not be liable for any settlement of the nature contemplated by Section 6(a)(ii)
effected without its consent if such indemnifying party (i) reimburses such
indemnified party in accordance with such request to the extent it considers
such request to be reasonable and (ii) provides written notice to the
indemnified party substantiating the unpaid balance as unreasonable, in each
case prior to the date of such settlement.
7. Contribution. If the indemnification provided for in Section 6 hereof is
------------
for any reason unavailable to or insufficient to hold harmless an indemnified
party in respect of any losses, liabilities, claims, damages or expenses
referred to therein, then each indemnifying party shall contribute to the
aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and CB
Richard Ellis, on the one hand, and the Underwriters, on the other hand, from
the offering of the Debt Securities pursuant to the Terms
-24-
<PAGE>
Agreement or (ii) if the allocation provided by clause (i) is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company and CB Richard Ellis, on the one hand, and of the Underwriters, on
the other hand, in connection with the statements or omissions which resulted in
such losses, liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations.
The relative benefits received by the Company and CB Richard Ellis, on the
one hand, and the Underwriters, on the other hand, in connection with the
offering of the Debt Securities pursuant to the Terms Agreement shall be deemed
to be in the same respective proportions as the total net proceeds from the
offering of such Debt Securities (before deducting expenses) received by the
Company and the total underwriting discount received by the Underwriters, in
each case as set forth on the cover of the Prospectus, or, if Rule 434 is used,
the corresponding location on the Term Sheet bear to the aggregate initial
public offering price of such Debt Securities as set forth on such cover.
The relative fault of the Company and CB Richard Ellis, on the one hand,
and the Underwriters, on the other hand, shall be determined by reference to,
among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company and CB Richard Ellis or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The Company and CB Richard Ellis and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
7. The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 7 shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified parry in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at
-25-
<PAGE>
which the Debt Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of any such untrue or alleged
untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Company. The Underwriters'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the aggregate principal amount, of Debt Securities set forth
opposite their respective names in the Terms Agreement, and not joint.
8. Representations, Warranties and Agreements to Survive Delivery. All
--------------------------------------------------------------
representations, warranties and agreements contained in this Underwriting
Agreement and the Terms Agreement or in certificates of officers of the Company
submitted pursuant hereto or thereto shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of any
Underwriter or controlling person, or by or on behalf of the Company, and shall
survive delivery of and payment for the Debt Securities.
9. Termination
-----------
a. Underwriting Agreement. This Underwriting Agreement (excluding the
Terms Agreement) may be terminated for any reason at any time by the Company or
by Merrill Lynch upon the giving of 30 days' prior written notice of such
termination to the other party hereto.
b. Terms Agreement. Merrill Lynch may terminate the Terms Agreement, by
notice to the Company, at any time at or prior to the Closing Time, if (i) there
has been, since the time of execution of the Terms Agreement or since the
respective dates as of which information is given in the Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business
-26-
<PAGE>
affairs or business prospects of the Company and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of business, or
(ii) there has occurred any material adverse change in the financial markets in
the United States, or any outbreak of hostilities or escalation thereof or other
calamity or crisis or any change or development involving a prospective change
in national or international political, financial or economic conditions, in
each case the effect of which is such as to make it, in the judgment of Merrill
Lynch, impracticable to market the Debt Securities or to enforce contracts for
the sale of the Debt Securities, or (iii) trading in any securities of the
Company has been suspended or materially limited by the Commission or the New
York Stock Exchange or if trading generally on the New York Stock Exchange or
the American Stock Exchange or in the Nasdaq National Market has been suspended
or limited, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices have been required, by either of said exchanges or by such
system or by order of the Commission, the NASD or any other governmental
authority, or (iv) a banking moratorium has been declared by either Federal or
New York authorities.
c. Liabilities. If this Underwriting Agreement or the Terms Agreement is
terminated pursuant to this Section 9, such termination shall be without
liability of any party to any other party except as provided in Section 4
hereof, and provided further that Sections 1, 6, 7 and 8 shall survive such
termination and remain in full force and effect.
10. Default by One or More of the Underwriters. If one or more of the
------------------------------------------
Underwriters shall fail at the Closing Time, to purchase the Debt Securities
which it or they are obligated to purchase under the Terms Agreement (the
"Defaulted Securities"), then Merrill Lynch shall have the right, within 24
hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, Merrill Lynch shall not have completed such
arrangements within such 24-hour period, then:
a. if the number or aggregate principal amount, as the case may be, of
Defaulted Securities does not exceed 10% of the aggregate principal amount, of
Debt Securities to be purchased on such date pursuant to the Terms Agreement,
the non-defaulting Underwriters shall be obligated, severally and not jointly,
to purchase the full amount thereof in the proportions that their respective
underwriting obligations under the Terms Agreement bear to the underwriting
obligations of all non-defaulting Underwriters, or
-27-
<PAGE>
b. if the aggregate principal amount of Defaulted Securities exceeds 10%
of the aggregate principal amount of Debt Securities to be purchased on such
date pursuant to the Terms Agreement, the Terms Agreement shall terminate
without liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section 10 shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
the Terms Agreement, either Merrill Lynch or the Company shall have the right to
postpone the Closing Time, for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or the Prospectus or
in any other documents or arrangements.
11. Notices. All notices and other communications hereunder shall be in
-------
writing and shall be deemed to have been duly given if mailed or transmitted by
any standard form of telecommunication. Notices to the Underwriters shall be
directed to Merrill Lynch at World Financial Center, North Tower, New York, New
York 10281-1201, attention of Edmond N. Moriarty, III; and notices to the
Company shall be directed to it at 533 Fremont Avenue, Los Angeles, CA 90071,
attention of Walter V. Stafford.
12. Parties. This Underwriting Agreement and the Terms Agreement shall each
-------
inure to the benefit of and be binding upon the Company, Merrill Lynch and, upon
execution of the Terms Agreement, any other Underwriters and their respective
successors. Nothing expressed or mentioned in this Underwriting Agreement or
the Terms Agreement is intended or shall be construed to give any person, firm
or corporation, other than the Underwriters and the Company and their respective
successors and the controlling persons and officers and directors referred to in
Sections 6 and 7 and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Underwriting
Agreement or the Terms Agreement or any provision herein or therein contained.
This Underwriting Agreement and the Terms Agreement and all conditions and
provisions hereof and thereof are intended to be for the sole and exclusive
benefit of the parties hereto and thereto and their respective successors, and
said controlling persons and officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation.
No purchaser of Debt Securities from any Underwriter shall be deemed to be a
successor by reason merely of such purchase.
-28-
<PAGE>
13. GOVERNING LAW AND TIME. THIS UNDERWRITING AGREEMENT AND THE TERMS
----------------------
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK. EXCEPT AS OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY
REFER TO NEW YORK CITY TIME.
14. Effect of Headings. The Article and Section headings herein and the
------------------
Table of Contents are for convenience only and shall not affect the construction
hereof.
-29-
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
Underwriting Agreement, along with all counterparts, will become a binding
agreement between Merrill Lynch and the Company in accordance with its terms.
Very truly yours,
RICHARD ELLIS
SERVICES, INC.
By: _____________________________
Name:
Title:
CB RICHARD ELLIS, INC.
By: _____________________________
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first
above written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: _________________________________
Authorized Signatory
-30-
<PAGE>
Exhibit A
TERMS AGREEMENT
---------------
May 20, 1998
To: CB Richard Ellis Services, Inc.
533 South Fremont Avenue
Los Angeles, CA 90071
Ladies and Gentlemen:
We understand that CB Richard Ellis Services, Inc., a Delaware corporation
(the "Company"), proposes to issue and sell $175,000,000 aggregate principal
amount of its senior subordinated debt securities (the "Debt Securities") (such
securities also being hereinafter referred to as the "Underwritten Securities").
Subject to the terms and conditions set forth or incorporated by reference
herein, the underwriters named below (the "Underwriters") offer to purchase,
severally and not jointly, the principal amount of Underwritten Securities set
forth opposite their names below at the purchase price set forth below.
<TABLE>
<CAPTION>
Principal Amount
Underwriters of Underwritten Securities
- ------------ --------------------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................ $103,425,000
BancAmerica Robertson Stephens.......... 47,775,000
NationsBanc Montgomery Securities LLC... 23,800,000
------------
TOTAL $175,000,000
------------
</TABLE>
A-1
<PAGE>
Independent Underwriter
-----------------------
The Company hereby confirms its engagement of Merrill Lynch, Pierce, Fenner
& Smith Incorporated ("Merrill Lynch") as, and Merrill Lynch hereby confirms its
agreement with the Company to render services as, a "qualified independent
underwriter" within the meaning of Rule 2720 of the Conduct Rules of the
National Association of Securities Dealers, Inc. (the "NASD Conduct Rules") with
respect to the offering and sale of the Debt Securities. Merrill Lynch, solely
in its capacity as qualified independent underwriter and not otherwise, is
referred to herein as the "Independent Underwriter."
In addition to and without limitation of the obligations of the Company and
CB Richard Ellis, Inc., a Delaware corporation and a wholly owned subsidiary of
the Company ("CB Richard Ellis"), to indemnify Merrill Lynch as an Underwriter,
the Company and CB Richard Ellis also agree to indemnify and hold harmless the
Independent Underwriter and each person, if any, who controls the Independent
Underwriter within the meaning of Section 15 of the Securities Act of 1933 (the
"1933 Act"), as amended or Section 20 of the Exchange Act of 1934 (the "1934
Act"), as amended, from and against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, incurred as a result of the Independent
Underwriter's participation as a "qualified independent underwriter" within the
meaning of Rule 2720 of the NASD Conduct Rules in connection with the offering
of the Underwritten Securities. If indemnity is sought pursuant to this
paragraph, the Company and CB Richard Ellis shall be liable for the reasonable
fees and expenses of not more than one counsel (in addition to any local
counsel) separate from their own counsel and that of other parties entitled to
indemnification under the Underwriting Agreement, dated the date hereof, among
the Company, CB Richard Ellis and Merrill Lynch, for the Independent Underwriter
in its capacity as a "qualified independent underwriter" and all persons, if
any, who control the Independent Underwriter within the meaning of Section 15 of
the 1933 Act or Section 20 of 1934 Act in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances if, in the reasonable judgment of
the Independent Underwriter, there may exist a conflict of interest between the
Independent Underwriter and the other indemnified parties. Any such separate
counsel for the Independent Underwriter and such control persons of the
Independent Underwriter shall be designated in writing by the Independent
Underwriter.
The Company, CB Richard Ellis and the Underwriters agree that Merrill Lynch
will not receive any additional benefits hereunder for serving as the
Independ-
A-2
<PAGE>
ent Underwriter in connection with the offering and sale of the Underwritten
Securities.
Restriction on Sale of Securities
---------------------------------
During a period of 180 days from the date hereof, the Company will not
cause or permit any of its Subsidiaries to, without the prior written consent of
Merrill Lynch, sell, offer to sell, grant any option for the sale of, or
otherwise dispose of, the Underwritten Securities or any other debt securities
of the Company or any of its Subsidiaries, or any securities convertible into or
exchangeable or exercisable for any of the Underwritten Securities or any such
other debt securities, except for Underwritten Securities sold to the
Underwriters pursuant to the terms hereof and except for certificates of deposit
and repurchase agreements and reverse repurchase agreements entered into in the
ordinary course of business.
Debt Securities
---------------
The Underwritten Securities shall have the following terms:
TITLE: 8 7/8% Senior Subordinated Notes due 2006
RANK: The Underwritten Securities are expressly subordinated in right of
payment to the prior payment in full of all Senior Indebtedness (as defined in
the Indenture) of the Company. The Underwritten Securities rank equal in right
of payment with all future senior subordinated indebtedness of the Company and
senior in right of payment to all future subordinated indebtedness of the
Company. The Underwritten Securities are also effectively subordinated to all
existing and future indebtedness and other liabilities of the Company's
subsidiaries.
RATINGS: At Closing Time, the Underwritten Securities shall be rated "Ba3" by
Moody's Investor's Service, Inc. and "B+" by Standard & Poor's Ratings Group.
AGGREGATE PRINCIPAL AMOUNT: $175,000,000
DENOMINATIONS: $1,000
CURRENCY OF PAYMENT: U.S. Dollars
INTEREST RATE OR FORMULA: 8.875%
A-3
<PAGE>
INTEREST PAYMENT DATES: June 1 and December 1
REGULAR RECORD DATES: May 15 and November 15
STATED MATURITY DATE: June 1, 2006
REDEMPTION PROVISIONS: The Underwritten Securities are redeemable at the option
of the Company, in whole or in part, at any time on or after June 1, 2002, at
the redemption prices (expressed as percentages of principal amount) set forth
below, plus accrued and unpaid interest thereon, if any, to the date of
redemption, if redeemed during the 12-month period beginning on June 1 of the
years indicated below:
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2002.................................. 104.438%
2003.................................. 102.958%
2004.................................. 101.479%
2005 and thereafter................... 100.000%
</TABLE>
On or prior to June 1, 2001, the Company may redeem, at any time or from
time to time, up to 35% of the aggregate principal amount of the Underwritten
Securities originally issued at a redemption price equal to 108 7/8% of the
principal amount thereof, plus accrued and unpaid interest thereon, if any, to
the date of redemption, with the net cash proceeds of one or more Public Equity
Offerings (as defined in the Indenture), provided, however, that at least
$113.75 million in aggregate principal amount of Underwritten Securities remains
outstanding immediately after giving effect to each such redemption.
SINKING FUND REQUIREMENTS: None.
CONVERSION PROVISIONS: None.
LISTING REQUIREMENTS: None.
FIXED OR VARIABLE PRICE OFFERING: Fixed Price Offering
If Fixed Price Offering, initial public offering price per Note: 98.736%
of the principal amount, plus accrued interest, if any, from May 26, 1998.
A-4
<PAGE>
PURCHASE PRICE PER NOTE: 98.736% of principal amount, plus accrued interest, if
any, from May 26, 1998.
FORM: Book Entry Only
OTHER TERMS AND CONDITIONS: As set forth in the Prospectus under the caption
"Description of the Notes."
CLOSING DATE AND LOCATION: May 26, 1998, New York, New York
All of the provisions contained in the document attached as Annex I hereto
entitled "Underwriting Agreement" are hereby incorporated by reference in their
entirety herein and shall be deemed to be a part of this Terms Agreement to the
same extent as if such provisions had been set forth in full herein. Terms
defined in such document are used herein as therein defined.
Please accept this offer no later than 4 o'clock P.M. (New York City time)
on May 20, 1998 by signing a copy of this Terms Agreement in the space set forth
below and returning the signed copy to us.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By _______________________________________________
Authorized Signatory
Acting on behalf of itself and the other named Underwriters.
A-5
<PAGE>
Accepted:
CB RICHARD ELLIS SERVICES, INC.
By _____________________
Name:
Title:
CB RICHARD ELLIS, INC.
By: _____________________________
Name:
Title:
A-6
<PAGE>
EXHIBIT B
FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
i. The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware.
ii. The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under the Underwriting
Agreement and the Terms Agreement.
iii. The Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a Material Adverse Effect.
iv. Each of the Underwriting Agreement and the Terms Agreement has
been duly authorized, executed and delivered by the Company and CB Richard
Ellis, as applicable.
v. The Debt Securities have been duly authorized by the Company for
issuance and sale pursuant to the Underwriting Agreement. The Debt Securities,
when issued and authenticated in the manner provided for in the Indenture and
delivered against payment of the consideration therefor specified in the
Underwriting Agreement and the Terms Agreement, will constitute valid and
legally binding obligations of the Company, enforceable against the Company in
accordance with their terms and the terms of the Indenture, except as the
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors' rights
generally or by general equitable principles. The Debt Securities are in the
form contemplated by, and each registered holder thereof is entitled to the
benefits of, the Indenture.
vi. The Indenture has been duly authorized, executed and delivered by
the Company.
B-1
<PAGE>
vii. The Debt Securities being sold pursuant to the Underwriting
Agreement, Terms Agreement and the Indenture conform in all material respects to
the statements relating thereto contained in the Prospectus and are in
substantially the form filed or incorporated by reference, as the case may be,
as an exhibit to the Registration Statement.
viii. The Registration Statement, including any Rule 462(b)
Registration Statement, has been declared effective under the 1933 Act; any
required filing of the Prospectus pursuant to Rule 424(b) has been made in the
manner and within the time period required by Rule 424(b); and, to the best of
our knowledge, no stop order suspending the effectiveness of the Registration
Statement or any Rule 462(b) Registration Statement has been issued under the
1933 Act and, to the best of our knowledge, no proceedings for that purpose have
been instituted or are pending or threatened by the Commission.
ix. The Registration Statement, including any Rule 462(b)
Registration Statement, the Rule 430A Information and the Rule 434 Information,
as applicable, the Prospectus and each amendment or supplement to the
Registration Statement and Prospectus, excluding the documents incorporated by
reference therein, as of their respective effective or issue dates (other than
the financial statements and notes thereto, other financial information and
supporting schedules included therein or omitted therefrom and the Trustee's
Statement of Eligibility on Form T-1 (the "Form T-1"), as to which we need
express no opinion) complied as to form in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations; provided, however
that in passing upon the compliance as to form of the Registration Statement and
the Prospectus, we have assumed that the statements therein are correct and
complete.
x. The documents incorporated by reference in the Prospectus (other
than the financial statements and notes thereto and supporting schedules therein
or omitted therefrom, as to which we express no opinion), when they became
effective or were filed with the Commission, as the case may be, complied as to
form in all material respects with the requirements of the 1933 Act or the 1934
Act, as applicable, and the rules and regulations of the Commission thereunder.
xi. The Debt Securities, upon issuance, will be excluded or exempted
under, or beyond the purview of, the Commodity Exchange Act, as amended (the
"Commodity Exchange Act"), and the rules and regulations of the
B-2
<PAGE>
Commodity Futures Trading Commission under the Commodity Exchange Act (the
"Commodity Exchange Act Regulations").
xii. If Rule 434 has been relied upon, the Prospectus was not
"materially different," as such term is used in Rule 434, from the prospectus
included in the Registration Statement at the time it became effective.
xiii. To the best of our knowledge, except as disclosed in the
Prospectus, there is not pending or threatened any action, suit, proceeding,
inquiry or investigation, to which the Company or any subsidiary is a party, or
to which the property of the Company or any subsidiary is subject, before or
brought by any court or governmental agency or body, domestic or foreign, which
might reasonably be expected to result in a Material Adverse Effect, or which
might reasonably be expected to materially and adversely affect the consummation
of the transactions contemplated by the Underwriting Agreement or the
performance by the Company of its obligations under the Underwriting Agreement.
xiv. The information in the Prospectus under "Description of the
Notes" and "Description of Certain Other Indebtedness" and in the Registration
Statement under Item 15, to the extent that it constitutes matters of law,
summaries of legal matters, summaries of the Company's charter and by-laws or
legal conclusions, has been reviewed by us and is correct in all material
respects.
xv. To the best of our knowledge, there are no California, New York
or federal statutes or regulations that are required to be described in the
Prospectus that are not described or incorporated therein as required.
xvi. All descriptions in the Registration Statement of material
contracts and other documents which are described individually to which the
Company or its Subsidiaries are a party are accurate in all material respects;
to the best of our knowledge, there are no franchises, contracts, indentures,
mortgages, loan agreements, notes, leases or other instruments required to be
described in the Registration Statement or to be filed as exhibits thereto other
than those described therein or filed or incorporated by reference as exhibits
thereto, and the descriptions thereof are correct in all material respects.
xvii. To the best of our knowledge, neither the Company nor any
Subsidiary is in violation of its charter or by-laws and no default by the
Company or any Subsidiary exists in the due performance or observance of any
material obligation, agreement, covenant or condition contained in any contract,
indenture, mort-
B-3
<PAGE>
gage, loan agreement, note, lease or other agreement or instrument that is
individually described in the Registration Statement or the Prospectus or filed
or incorporated by reference and currently in effect as an exhibit to the
Registration Statement, except for such violations or defaults that would not
reasonably be expected to have a Material Adverse Effect.
xvii. To the best of our knowledge, no filing with, or authorization,
approval, consent, license, order, registration, qualification or decree of, any
court or governmental authority or agency, (other than under the 1933 Act and
the 1933 Act Regulations and the 1939 Act, which have been obtained, or as may
be required under the securities or blue sky laws of the various states, as to
which we need express no opinion) is necessary or required in connection with
the due authorization, execution and delivery of the Underwriting Agreement and
the Terms Agreement or for the offering, issuance or sale of the Debt
Securities.
xix. The execution, delivery and performance of the Underwriting
Agreement, the Terms Agreement and the Indenture and the consummation of the
transactions contemplated in the Underwriting Agreement, the Terms Agreement,
the Indenture and in the Registration Statement (including the issuance and sale
of the Debt Securities and the use of the proceeds from the sale of the Debt
Securities as described in the Prospectus under the caption "Use Of Proceeds")
and compliance by the Company with its obligations under the Underwriting
Agreement and the Terms Agreement do not and will not, whether with or without
the giving of notice or lapse of time or both, conflict with or constitute a
breach of, or default or Repayment Event under or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any Subsidiary pursuant to any material contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or any other
agreement or instrument, known to us, to which the Company or any Subsidiary is
a party or by which it or any of them may be bound, or to which any of the
property or assets of the Company or any Subsidiary is subject (except for such
conflicts, breaches or defaults, Repayment Events or liens, charges or
encumbrances that would not have a Material Adverse Effect), except that (i)
borrowings under the Company's credit agreements are guaranteed by CB Richard
Ellis, (ii) all the capital stock of CB Richard Ellis is pledged to secure the
guarantee, and (iii) substantially all assets of the Company and its
subsidiaries are pledged to its lenders under the credit agreements as described
in the Prospectus; nor will any such action result in any violation of the
provisions of the charter or by-laws of the Company or any Subsidiary, or any
applicable law, statute, rule, regulation, judgment, order, writ or decree,
known to us, of any state or U.S. federal government, government instrumentality
or court (other than ordinances and regulations of
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<PAGE>
counties and political subdivisions thereof), having jurisdiction over the
Company or any Subsidiary or any of their respective properties, assets or
operations which, in our experience, is normally applicable to transactions of
the type contemplated by the Underwriting Agreement and the Terms Agreement
(except state securities laws as to which we need to express no opinion).
xx. To the best of our knowledge, except as described in the
Prospectus, there are no persons with rights to have any securities registered
pursuant to the Registration Statement or otherwise registered by the Company
under the 1933 Act.
xxi. The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the 1940
Act.
Nothing has come to our attention that would lead us to believe that the
Registration Statement or any amendment thereto, including the Rule 430A
Information and Rule 434 Information (if applicable), (except for financial
statements, including the notes thereto, and related schedules and other
financial and accounting data included therein or omitted therefrom, as to which
we need make no statement), at the time such Registration Statement or any such
amendment became effective, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectus or any
amendment or supplement thereto (except for financial statements, including the
notes thereto, and related schedules and other financial and accounting data
included therein or omitted therefrom, as to which we need make no statement),
at the time the Prospectus was issued, at the time any such amended or
supplemented prospectus was issued or at the Closing Time, included or includes
an untrue statement of a material fact or omitted or omits to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may rely as to matters of fact (but
not as to legal conclusions), to the extent they deem proper, on certificates of
responsible officers of the Company and public officials. Such opinion shall
not state that it is to be governed or qualified by, or that it is otherwise
subject to, any treatise, written policy or other document relating to legal
opinions, including, without limitation, the Legal Opinion Accord of the ABA
Section of Business Law (1991).
B-5
<PAGE>
EXHIBIT C
FORM OF OPINION OF COMPANY'S GENERAL COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
i. Each of CB Richard Ellis, Inc., formerly known as CB Commercial
Real Estate Group, Inc. ("Real Estate Group"), L.J. Melody & Company, and
Westmark Realty Advisors L.L.C. ("Westmark"), and Koll Real Estate Services
(collectively, the "Subsidiaries") has been duly incorporated, or, in the case
of Westmark, duly formed, and is validly existing as a corporation, or, in the
case of Westmark, is validly existing as a limited liability company, in good
standing under the laws of the jurisdiction of its incorporation or, in the case
of Westmark, its jurisdiction of formation, has corporate power and authority to
own, lease and operate its properties and to conduct its business as described
in the Prospectus and is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a Material Adverse Effect; except as
otherwise disclosed in the Registration Statement, all of the issued and
outstanding equity securities of any Subsidiary has been duly authorized and
validly issued, is fully paid and non-assessable and, to the best of my
knowledge, is owned by the Company, directly or through subsidiaries, free and
clear of any security interest, mortgage, pledge, lien, encumbrance, claim or
equity; none of the outstanding equity securities of each Subsidiary was issued
in violation of the preemptive rights of any securityholder of each Subsidiary
arising by operation of law or the subsidiary's charter or bylaws, provided,
however, that all of the outstanding equity securities of the Subsidiaries
(except for Westmark) are pledged to secure outstanding indebtedness of the
Company under the credit agreements as described in the Prospectus.
Nothing has come to my attention that would lead me to believe that the
Registration Statement or any amendment thereto, including the Rule 430A
Information and Rule 434 Information (if applicable), (except for financial
statements, including the notes thereto, and related schedules and other
financial and accounting data included therein or omitted therefrom, as to which
I need make no statement), at the time such Registration Statement or any such
amendment became effective, contained an untrue statement of a material fact or
omitted to state a material fact
C-1
<PAGE>
required to be stated therein or necessary to make the statements therein not
misleading or that the Prospectus or any amendment or supplement thereto (except
for financial statements, including the notes thereto, and related schedules and
other financial and accounting data included therein or omitted therefrom, as to
which I need make no statement), at the time the Prospectus was issued, at the
time any such amended or supplemented prospectus was issued or at the Closing
Time, included or includes an untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
In rendering such opinion, such counsel may rely as to matters of fact (but
not as to legal conclusions), to the extent they deem proper, on certificates of
responsible officers of the Company and public officials. Such opinion shall
not state that it is to be governed or qualified by, or that it is otherwise
subject to, any treatise, written policy or other document relating to legal
opinions, including, without limitation, the Legal Opinion Accord of the ABA
Section of Business Law (1991).
C-2
<PAGE>
EXHIBIT 3.1(i)
FIFTH RESTATED
CERTIFICATE OF INCORPORATION
OF
CB COMMERCIAL REAL ESTATE SERVICES GROUP, INC.
CB Commercial Real Estate Services Group, Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Corporation"), DOES HEREBY CERTIFY:
FIRST: The original name under which the Corporation was incorporated in
the State of Delaware is CB Acquisition Corp.
SECOND: The original Certificate of Incorporation of the Corporation was
filed with the Secretary of State of Delaware on March 9, 1989; the Restated
Certificate of Incorporation was filed with the Secretary of State of Delaware
on March 15, 1989; the Second Restated Certificate of Incorporation was filed
with the Secretary of State of Delaware on April 17, 1989; the Third Restated
Certificate of Incorporation was filed with the Secretary of State of Delaware
on September 18, 1989; and the Fourth Restated Certificate of Incorporation was
filed with the Secretary of State of Delaware on December 2, 1996.
THIRD: The Fifth Restated Certificate of Incorporation of the Corporation
in the form attached hereto as Exhibit A has been duly adopted in accordance
with the provisions of Sections 245 and 242 of the General Corporation Law of
the State of Delaware by the directors and stockholders of the Corporation.
FOURTH: The Fifth Restated Certificate of Incorporation so adopted reads
in full as set forth in Exhibit A attached hereto and is hereby incorporated
herein by this reference.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by the Chief Executive Officer and the Secretary this 19th day of May,
1998.
CB COMMERCIAL REAL ESTATE SERVICES GROUP, INC.
By /s/ James J. Didion
-------------------------------------------
JAMES J. DIDION
CHIEF EXECUTIVE OFFICER
ATTEST:
BY /s/ Trude A. Tsujimoto
-----------------------------------------
TRUDE A. TSUJIMOTO
SECRETARY
<PAGE>
EXHIBIT A
FIFTH RESTATED
CERTIFICATE OF INCORPORATION
OF
CB RICHARD ELLIS SERVICES, INC.
FIRST: The name of the corporation is:
-----
CB Richard Ellis Services, Inc.
SECOND: The registered office of the corporation in the State of
------
Delaware is located at 1013 Centre Road, City of Wilmington, County of New
Castle. The name of the registered agent of the corporation at such address is
Corporation Service Company.
THIRD: The purpose of the corporation is to engage in any lawful act or
-----
activity for which a corporation may be organized under the General Corporation
Law of the State of Delaware as the same exists or may hereafter be amended.
FOURTH:
------
A. The total number of shares of all classes of capital stock that the
corporation is authorized to issue is 108,000,000, of which 8,000,000 shall be
Preferred Stock ("Preferred Stock") and 100,000,000 shall be Common Stock
("Common Stock"). Both the Preferred Stock and Common Stock shall have a par
value of $.01 per share.
B. The Common Stock shall consist of a single class of 100,000,000 shares,
each of which shall be identical. There shall be no cumulative voting.
C. The Preferred Stock shall consist of a single class of 8,000,000 shares
and may be issued from time to time in one or more series. The Board of
Directors of the corporation (the "Board of Directors") is expressly authorized
to provide for the issue of all or any of the Preferred Stock in one or more
series, to fix the designation and number of shares thereof and to determine or
alter for each such series, such voting powers, full or limited, or no voting
powers, and such designations, preferences and relative, participating,
optional or other special rights, and the qualifications, limitations or
restrictions thereof, as shall be stated and expressed in the resolution or
resolutions adopted by the Board of Directors providing for the issuance of such
stock and as may be permitted by the General Corporation Law of the State of
Delaware. The Board of Directors is also expressly authorized to increase or
decrease (but not below the number of shares of such series then outstanding,
plus the number of shares of such series issuable upon exercise of outstanding
rights, options or warrants or upon conversion of outstanding securities issued
by the corporation) the number of shares of any series. If the number of shares
of any such series shall be so decreased, the shares constituting such decrease
shall resume the status that they had prior to the adoption of the resolution
originally fixing the number of shares of such series.
FIFTH: A director of the corporation shall not be liable to the
-----
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except to the extent such exemption from liability or
limitation thereof is not permitted under the General Corporation Law of the
State of
<PAGE>
Delaware as the same exists or may hereafter be amended. Any repeal or
modification of the foregoing sentence shall not adversely affect any right or
protection of a director of the corporation existing hereunder with respect to
any act or omission occurring prior to such repeal or modification.
SIXTH:
-----
A. The corporation shall indemnify and hold harmless, to the fullest
extent permitted by applicable law as it presently exists or may hereafter be
amended, any person who was or is made or is threatened to be made a party or is
otherwise involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative (a "Proceeding") by reason of the fact that he,
or a person for whom he is the legal representative, is or was a director or
officer of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation or
of a partnership, joint venture, trust, enterprise or nonprofit entity,
including service with respect to employee benefit plans (an "Indemnitee"),
against all liability and loss suffered and expenses (including attorneys' fees)
reasonably incurred by such person. The corporation shall not be required to
indemnify and hold harmless a person in connection with a Proceeding (or part
thereof) initiated by such person unless the Proceeding (or the part thereof
initiated by such person) was authorized by the Board of Directors.
B. The right to indemnification conferred by this Article SIXTH shall be
presumed to have been relied upon by the Indemnitee and shall be enforceable as
a contract right. The corporation may enter into contracts to provide
individual Indemnitees with specific rights of indemnification to the fullest
extent permitted by applicable law and may create trust funds, grant security
interests, obtain letters of credit or use other means to ensure the payment of
such amounts as may be necessary to effect the rights provided in this Article
SIXTH or in any such contract.
C. Except for any Proceeding described in the last sentence of Section A
of Article SIXTH, upon making a request for indemnification, the Indemnitee
shall be presumed to be entitled to indemnification under this Article SIXTH and
the corporation shall have the burden of proof to overcome that presumption in
reaching any contrary determination. Such indemnification shall include the
right to receive payment in advance of any reasonable expenses incurred by the
Indemnitee in connection with any Proceeding (other than a Proceeding described
in the last sentence of Section A of Article SIXTH) consistent with the
provisions of applicable law.
D. Any repeal or modification of the foregoing provisions of this Article
SIXTH shall not adversely affect any right or protection of any Indemnitee
existing at the time of such repeal or modification.
SEVENTH: The Board of Directors is authorized to adopt, amend or repeal
-------
the By-laws of the corporation, without any action on the part of the
stockholders, solely by the affirmative vote of at least a majority of the
directors of the corporation then in office.
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<PAGE>
EXHIBIT 4.1
FIRST SUPPLEMENTAL INDENTURE
Between
CB RICHARD ELLIS SERVICES, INC.
and
STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, NATIONAL ASSOCIATION,
as Trustee
Dated as of May 26, 1998
Supplemental to Indenture
Dated as of May 26, 1998
<PAGE>
FIRST SUPPLEMENTAL INDENTURE
THIS FIRST SUPPLEMENTAL INDENTURE, dated as of May 26, 1998, between CB
RICHARD ELLIS SERVICES, INC., a Delaware corporation (the "Corporation") and
STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, a National Association (the
"Trustee"),
WITNESSETH:
WHEREAS, the Corporation and the Trustee have entered into that certain
Indenture dated as of May 26, 1998 (the "Original Indenture," and such Original
Indenture provides that the Corporation and the Trustee may, at any time and
from time to time, under circumstances set forth in Article Ten thereof, enter
into one or more supplemental indentures without the consent of the Holders of
the outstanding Securities (as such terms are defined in the Original Indenture)
for the purpose of supplementing the provisions of the Original Indenture;
WHEREAS, the Corporation has duly authorized the execution and delivery of
this First Supplemental Indenture, and all things necessary have been done to
make this First Supplemental Indenture a valid agreement of the Corporation, in
accordance with its terms;
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:
That in order to declare additional terms and conditions applicable to
Securities which may hereafter be issued, authenticated and delivered, and in
consideration of the premises and of the purchase and acceptance of the
Securities by the Holders thereof, the Corporation covenants and agrees with the
Trustee, for the equal and proportionate benefit of the respective Holders from
time to time of the Securities or of any Series thereof, as follows:
ARTICLE ONE
DEFINITIONS
SECTION 1.01. CERTAIN TERMS DEFINED. The terms defined in this Section
1.01 shall, for all purposes of the Original Indenture and this First
Supplemental Indenture, have the meanings herein specified, unless the context
clearly otherwise requires:
ACQUIRED INDEBTEDNESS
The term "Acquired Indebtedness" means Indebtedness of a Person (i) assumed
in connection with an Asset Acquisition from such Person or (ii) existing at the
time such Person becomes a Restricted Subsidiary of any other Person (other than
any Indebtedness incurred in connection with, or in contemplation of, such Asset
Acquisition or such Person becoming such a Restricted Subsidiary). Acquired
Indebtedness shall be deemed to be incurred on the date of the related
acquisition of assets from any Person or the date the acquired Person becomes a
Restricted Subsidiary, as the case may be.
AFFILIATE
The term "Affiliate" means with respect to any specified Person; (i) any
other Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified Person; (ii) any other Person
that owns, directly or indirectly, 10% or more of such specified Person's
Capital Stock
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<PAGE>
or any officer, director or employee of any such specified Person or other
Person or, with respect to any natural Person, any person having a relationship
with such Person by blood, marriage or adoption no more remote than first
cousin; or (iii) any Person 10% or more of the Voting Stock of which is
beneficially owned or held directly or indirectly by such specified Person. For
the Purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through ownership of voting securities,
by contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
ASSET ACQUISITION
The term "Asset Acquisition" means (i) an Investment by the Corporation or
any Restricted Subsidiary in any other Person pursuant to which such Person will
become a Restricted Subsidiary or will be merged or consolidated with or into
the Corporation or any Restricted Subsidiary or (ii) the acquisition by the
Corporation or any Restricted Subsidiary of the assets of any Person which
constitute substantially all of the assets of such Person, or any division or
line of business of such Person, or which is otherwise outside of the ordinary
course of business.
ASSET SALE
The term "Asset Sale" means any sale, issuance, conveyance, transfer, lease
or other disposition (including, without limitation, by way of merger,
consolidation or sale and leaseback transaction) (collectively, a "transfer"),
directly or indirectly, in one or a series of related transactions, of: (i) any
Capital Stock of any Subsidiary; (ii) all or substantially all of the properties
and assets of any division or line of business of the Corporation or its
Subsidiaries; or (iii) any other properties or assets of the Corporation or any
Subsidiary other than in the ordinary course of business. For the purposes of
this definition, the term "Asset Sale" shall not include any transfer of
properties and assets (a) that is governed by the provisions relating to
consolidation, merger, sale of assets, etc. contained in Section 2.12; provided,
however, that any transaction consummated in compliance with the provisions of
Section 2.12 involving a transfer of less than all of the properties or assets
of the Corporation shall be deemed to be an Asset Sale with respect to the
properties or assets of the Corporation that are not transferred in such
transaction, (b) that is by the Corporation to any Restricted Subsidiary, or by
any Subsidiary to the Corporation or any Restricted Subsidiary in accordance
with the terms of this First Supplemental Indenture, (c) that is of obsolete
equipment in the ordinary course of business or (d) the Fair Market Value of any
such Asset Sale not otherwise described in clause (a) through (c) above which in
the aggregate does not exceed $10.0 million.
ASSET SALE OFFER
The term "Asset Sale Offer" shall have the meaning ascribed to such term in
Section 2.07 of this First Supplement Indenture.
AVERAGE LIFE TO STATED MATURITY
The term "Average Life to Stated Maturity" means, with respect to any
Indebtedness, as at any date of determination, the quotient obtained by dividing
(i) the sum of the products of (a) the number of years from such date to the
date or dates of each successive scheduled principal payment (including, without
limitation, any sinking fund requirements) of such Indebtedness multiplied by
(b) the amount of each such principal payment by (ii) the sum of all such
principal payments.
BANK CREDIT FACILITY
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<PAGE>
The term "Bank Credit Facility" means any senior bank credit facility
including the Revolving Credit Facility and any other facility provided by an
institution in the business of providing commercial credit, which facilities
collectively have an aggregate principal amount at any one time outstanding not
to exceed $500.0 million, less any permanent reductions made pursuant to the
provision described in the second paragraph of Section 2.07 of this First
Supplemental Indenture.
CAPITAL STOCK
The term "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, whether or not outstanding or issued
after the date of this First Supplemental Indenture.
CAPITALIZED LEASE OBLIGATION
The term "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, for the purpose of this First
Supplemental Indenture, the amount of such obligation at any date shall be the
capitalized amount thereof at such date, determined in accordance with GAAP.
CASH EQUIVALENTS
The term "Cash Equivalents" means, at any time, (i) any evidence of
Indebtedness with a maturity of not more than one year 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 acceptance with a maturity of not more than one year 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)
commercial paper with a maturity of not more than one year issued by a
corporation that is not an Affiliate of the Corporation organized under the laws
of any state of the United States or the District of Columbia and rated at least
A-1 by Standard & Poor's Corporation or at least P-1 by Moody's Investors
Service, Inc.; and (iv) repurchase obligations with a term of not more than
seven days for underlying securities of the types described in clauses (i) and
(ii) above entered into with any financial institution meeting the
qualifications specified in clause (ii) above.
CHANGE OF CONTROL
The term "Change of Control" means the occurrence of any of the following
events (whether or not approved by the Board of Directors of the Corporation ):
(i) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d)
of the Exchange Act) 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), directly or indirectly, of 50% or more of the total voting power of
the then outstanding Voting Stock of the Corporation; (ii) during any period of
two consecutive years, individuals who at the beginning of such period
constituted the board of directors of the Corporation (together with any new
directors whose election to such board or whose nomination for election by the
stockholders of the Corporation was approved by a vote of 50% of the directors
then still in office who were either directors at the beginning of such period
or whose election or nomination for election was previously so approved), cease
for any reason to constitute a majority of such board of directors then in
office; (iii) the Corporation consolidates with or merges with or into any
Person or sells, assigns, conveys, transfers, leases or otherwise
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<PAGE>
disposes of all or substantially all of its assets to any Person, or any
corporation consolidates with or merges into or with the Corporation, in any
such event pursuant to a transaction in which the outstanding Voting Stock of
the Corporation is changed into or exchanged for cash, securities or other
property, other than any such transaction where the outstanding Voting Stock of
the Corporation is not changed or exchanged at all (except to the extent
necessary solely to reflect a change in the jurisdiction of incorporation of the
Corporation) or where (A) the outstanding Voting Stock of the Corporation is
changed into or exchanged for (x) Voting Stock of the surviving corporation
which is not Redeemable Capital Stock or (y) cash, securities and other property
(other than Capital Stock of the surviving corporation) in an amount which could
be paid by the Corporation as a Restricted Payment as provided in Section 2.03
(and such amount shall be treated as a Restricted Payment subject to the
provisions in this First Supplemental Indenture contained in Section 2.03), (B)
no "person" or "group" owns immediately after such transaction, directly or
indirectly, 50% or more of the total outstanding Voting Stock of the surviving
corporation and (C) the holders of the Voting Stock of the Corporation
immediately prior to such transaction own, directly or indirectly, not less than
a majority of the total voting power of the then outstanding Voting Stock of the
surviving or transferee corporation immediately after such transaction; or (iv)
any order, judgment or decree shall be entered against the Corporation decreeing
the dissolution or split up of the Corporation and such order shall remain
undischarged or unstayed for a period in excess of sixty days.
CHANGE OF CONTROL OFFER
The term "Change of Control Offer" shall have the meaning ascribed to such
term in Section 3.03 of this First Supplemental Indenture.
CONSOLIDATED CASH FLOW AVAILABLE FOR FIXED CHARGES
The term "Consolidated Cash Flow Available for Fixed Charges" means, for
any period, (i) the sum of, without duplication, the amounts for such period,
taken as a single accounting period, of (a) Consolidated Net Income, (b) to the
extent reducing Consolidated Net Income, Consolidated Non-cash Charges, (c) to
the extent reducing Consolidated Net Income, Consolidated Interest Expense, and
(d) to the extent reducing Consolidated Net Income, Consolidated Income Tax
Expense less (ii) other non-cash items increasing Consolidated Net Income for
such period.
CONSOLIDATED FIXED CHARGE COVERAGE RATIO
The term "Consolidated Fixed Charge Coverage Ratio" means the ratio of the
aggregate amount of Consolidated Cash Flow Available for Fixed Charges of the
Corporation for the four full fiscal quarters immediately preceding the date of
the transaction (the "Transaction Date") giving rise to the need to calculate
the Consolidated Fixed Charge Coverage Ratio for which consolidated financial
information of the Corporation is available (such four full fiscal quarter
period being referred to herein as the "Four Quarter Period") to the aggregate
amount of Consolidated Fixed Charges of the Corporation for such Four Quarter
Period. For purposes of this definition, "Consolidated Cash Flow Available for
Fixed Charges" and "Consolidated Fixed Charges" will be calculated, without
duplication, after giving effect on a pro forma basis for the period of such
calculation to (i) the incurrence of any Indebtedness of the Corporation or any
of the Restricted Subsidiaries during the period commencing on the first day of
the Four Quarter Period 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, as if such incurrence occurred
on the first day of the Reference Period, except that with respect to the
calculation of Consolidated Interest Expense in the determination of
Consolidated Fixed Charges, the Consolidated Interest Expense of such Person
attributable to interest on any Indebtedness under a revolving credit facility
computed on a pro forma basis shall be computed based upon the average daily
balance of such Indebtedness based upon the number of days that such Facility
was in existence during the Reference Period, (ii) an adjustment to eliminate or
include, as applicable, the
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<PAGE>
Consolidated Cash Flow Available for Fixed Charges and Consolidated Fixed
Charges of the Corporation directly attributable to assets which are the subject
of any Asset Sale or Asset Acquisition (including, without limitation, any Asset
Acquisition giving rise to the need to make such calculation as a result of the
Corporation or one of the Restricted Subsidiaries (including any Person who
becomes a Restricted Subsidiary as a result of the Asset Acquisition) incurring
Acquired Indebtedness) occurring during the Reference Period and (iii) the
retirement of Indebtedness during the Reference Period which cannot thereafter
be reborrowed occurring as if retired on the first day of the Reference Period.
In calculating "Consolidated Fixed Charges" for purposes of determining the
denominator (but not the numerator) of this "Consolidated Fixed Charge Coverage
Ratio," (1) interest on Indebtedness determined on a fluctuating basis as of the
Transaction Date and which will continue to be so determined thereafter will be
deemed to accrue at a fixed rate per annum equal to the rate of interest on such
Indebtedness in effect on the Transaction Date; (2) 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 shall be deemed to have been in effect during the
Reference Period; and (3) notwithstanding clause (1) above, interest on
Indebtedness determined on a fluctuating basis, to the extent such interest is
covered by Interest Rate Agreements, will be deemed to accrue at the rate per
annum resulting after giving effect to the operation of such agreements. If the
Corporation or any Restricted Subsidiary directly or indirectly guarantees
Indebtedness of a third Person, the above definition will give effect to the
incurrence of such guaranteed Indebtedness as if the Corporation or any
Restricted Subsidiary had directly incurred or otherwise assumed such guaranteed
Indebtedness.
CONSOLIDATED FIXED CHARGES
The term "Consolidated Fixed Charges" means, for any period, the sum of,
without duplication, the amounts for such period of (i) Consolidated Interest
Expense; and (ii) the aggregate amount of cash dividends and other distributions
paid or accrued during such period in respect of Redeemable Capital Stock and
Preferred Stock of the Corporation.
CONSOLIDATED INCOME TAX EXPENSE
The term "Consolidated Income Tax Expense" means, for any period, the
provision for federal, state, local and foreign income taxes payable by the
Corporation and the Restricted Subsidiaries for such period as determined on a
consolidated basis in accordance with GAAP.
CONSOLIDATED INTEREST EXPENSE
The term "Consolidated Interest Expense" means, for any period, without
duplication, the sum of (a) the interest expense of the Corporation and the
Restricted Subsidiaries for such period as determined on a consolidated basis in
accordance with GAAP, including, without limitation, (i) any amortization of
debt discount attributable to such period, (ii) the net cost under or otherwise
associated with Interest Rate Agreements or Currency Agreements including any
amortization of discounts, (ii) the interest portion of any deferred payment
obligation, (iv) all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing and (v) all
capitalized interest and all accrued interest, and (b) all but the principal
component of Capitalized Lease Obligations, paid, accrued and/or scheduled to be
paid or accrued by the Corporation and the Restricted Subsidiaries during such
period and as determined on a consolidated basis in accordance with GAAP.
CONSOLIDATED NET INCOME
The term "Consolidated Net Income" means, for any period, the consolidated
net income (or loss) of the Corporation and the Restricted Subsidiaries for such
period on a consolidated basis as determined in
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accordance with GAAP, adjusted, to the extent included in calculating such net
income (or loss), by excluding, without duplication, (i) all extraordinary gains
or losses (net of all fees and expenses relating thereto), (ii) the portion of
net income (or loss) of the Corporation and its Restricted Subsidiaries on a
consolidated basis allocable to minority interests in unconsolidated Persons,
except to the extent that cash dividends or distributions are actually received
by the Corporation or a Restricted Subsidiary, (iii) income of the Corporation
and the Restricted Subsidiaries derived from or in respect of Investments in
Unrestricted Subsidiaries, except to the extent that cash dividends or
distributions are actually received by the Corporation or a Restricted
Subsidiary, (iv) net income (or loss) of any Person combined with the
Corporation or any of the Restricted Subsidiaries on a "pooling of interests"
basis attributable to any period prior to the date of combination, (v) any gain
or loss, net of taxes, realized upon the termination of any employee pension
benefit plan, (vi) net gains (or losses), net of taxes, less all fees and
expenses relating thereto, in respect of any Asset Sales by the Corporation or a
Restricted Subsidiary, (vii) the net income of any Restricted Subsidiary 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, (viii) any
restoration to income of any contingency reserve except to the extent provision
for such reserve was made out of income, accrued at any time following the Issue
Date, (ix) any gain, arising from the acquisition of any securities, or the
extinguishment, under GAAP, of any Indebtedness of the Corporation and (x) the
net non-cash compensation expense incurred in connection with the issuance or
exercise of any employee stock options the issuance of which was approved by the
Board of Directors.
CONSOLIDATED NON-CASH CHARGES
The term "Consolidated Non-cash Charges" means, for any period, the
aggregate depreciation, amortization and other non-cash expenses of the
Corporation and the Restricted Subsidiaries reducing Consolidated Net Income for
such period (other than any non-cash item requiring an accrual or reserve for
cash disbursements in any future period), determined on a consolidated basis in
accordance with GAAP.
CONSOLIDATED TANGIBLE ASSETS
The term "Consolidated Tangible Assets" means, at any date, the total
assets, less goodwill and other intangibles, of the Corporation and the
Restricted Subsidiaries determined on a consolidated basis in accordance with
GAAP as of the most recent date for which a consolidated balance sheet of the
Corporation is available.
CURRENCY AGREEMENT
The term "Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement designed to protect the
Corporation or its Restricted Subsidiaries against fluctuations in currency
values.
DEFAULT
The term "Default" means any event that is, or after notice or passage of
time or both would be, an Event of Default.
DESIGNATED SENIOR INDEBTEDNESS
The term "Designated Senior Indebtedness" means (a) all Senior Indebtedness
outstanding from time to time under the Revolving Credit Facility and (b) any
other Senior Indebtedness which, at the time of determination, is specifically
designated in the instrument governing such Senior Indebtedness as
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"Designated Senior Indebtedness" by the Corporation and which, at the time of
determination, has an outstanding principal amount at least equal to $10.0
million.
DESIGNATION
The term "Designation" shall have the meaning ascribed to such term in
Section 2.10 of this First Supplemental Indenture.
DESIGNATION AMOUNT
The term "Designation Amount" shall have the meaning ascribed to such term
in Section 2.10 of this First Supplemental Indenture.
ELIGIBLE SECURITIES
The term "Eligible Securities" means Capital Stock of any Person (or an
Affiliate of such Person) acquiring stock or assets from the Corporation or any
of its Restricted Subsidiaries which Capital Stock is listed on the New York
Stock Exchange, the American Stock Exchange or quoted on the National
Association of Securities Dealers, Inc.'s Automated Quotation System (National
Market) or any successor exchange or quotation system thereof.
EVENT OF DEFAULT
The term "Event of Default" shall have the meaning ascribed to such term in
Article One of the Original Indenture and with respect to the Notes shall
include the events set forth in Section 5.01 of this First Supplemental
Indenture."
EXCHANGE ACT
The term "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the Commission thereunder.
EXEMPTED AFFILIATE TRANSACTION
The term "Exempted Affiliate Transaction" means any transaction solely
between the Corporation and any of its Wholly-Owned Restricted Subsidiaries or
solely among Wholly-Owned Restricted Subsidiaries.
FAIR MARKET VALUE
The term "Fair Market Value" means, with respect to any asset or property,
the price which could be negotiated in an arm's-length transaction, for cash,
between an informed and willing seller under no compulsion to sell and an
informed and willing buyer under no compulsion to buy. Fair Market Value shall
be determined by the Board of Directors of the Corporation acting in good faith
evidenced by a board resolution thereof delivered to the Trustee.
FIRST SUPPLEMENTAL INDENTURE
The term "First Supplemental Indenture" shall mean this First Supplemental
Indenture dated as of May 26, 1998, between the Corporation and the Trustee, as
such supplemental indenture is originally executed, or as it may from time to
time be supplemented, modified or amended, as provided herein and in the
Original Indenture.
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FOUR QUARTER PERIOD
The term "Four Quarter Period" has the meaning set forth in the definition
of "Consolidated Fixed Charge Coverage Ratio."
GAAP
The term "GAAP" means, at any date of determination, generally accepted
accounting principles in effect in the United States which are applicable at the
date of determination and which are consistently applied for applicable periods.
GUARANTEE
The term "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. A guarantee shall include,
without limitation, any agreement to maintain or preserve any other Person's
financial condition or to cause any other Person to achieve certain levels of
operating results.
INCUR
The term "incur" has the meaning set forth in Section 2.02 of this First
Supplemental Indenture, and the terms "incurrence," "incurred," and "incurring"
shall have the meanings correlative to the foregoing.
INDEBTEDNESS
The term "Indebtedness" means, with respect to any Person, without
duplication, (i) all indebtedness 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 or arising in the ordinary course
of business, but including, without limitation, all obligations, contingent or
otherwise, of such Person in connection with any letters of credit, bankers
acceptance or other similar credit transaction and in connection with any
agreement to purchase, redeem, exchange, convert or otherwise acquire for value
any Capital Stock of such Person, or any warrants, rights or options to acquire
such Capital Stock, now or hereafter outstanding, (ii) all obligations of such
Person evidenced by bonds, notes, debentures or other similar instruments, (iii)
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 payables arising in the ordinary course of business, (iv) all
Capitalized Lease Obligations of such Person, (v) all Indebtedness referred to
in clauses (i) through (iv) above 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 or with respect to 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, (vi) all
guarantees of Indebtedness by such Person, (vii) except for purposes of the
covenant contained in Section 2.03, all Redeemable Capital Stock issued by such
Person valued at the greater of its voluntary or involuntary maximum fixed
repurchase price plus accrued and unpaid dividends and (viii) all obligations
under Interest Rate Agreements or Currency Agreements or Commodity Price
Protection Agreements of such Person (net of any payments owed to such Person
thereunder to the extent such Person's obligations thereunder are subject to
offset by the amount of payments owed to such
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Person thereunder), and (ix) any amendment, supplement, modification, deferral,
renewal, extension, refunding or refinancing of any liability of the types
referred to in clauses (i) through (viii) above. For purposes hereof, the
"maximum fixed repurchase price" of any Redeemable Capital Stock which does not
have a fixed repurchase price shall be calculated in accordance with the terms
of such Redeemable Capital Stock as if such Redeemable Capital Stock were
purchased on any date on which Indebtedness shall be required to be determined
pursuant to this First Supplemental Indenture, and if such price is based upon,
or measured by, the Fair Market Value of such Redeemable Capital Stock, such
Fair Market Value shall be determined in good faith by the board of directors of
the issuer of such Redeemable Capital Stock.
INDENTURE
The term "Indenture" shall mean the Original Indenture, as supplemented by
the First Supplemental Indenture, each being between the Corporation and the
Trustee, and as it may from time to time hereafter be further supplemented,
modified or amended, as provided in the Indenture, and shall include the form
and terms of particular Series of Securities established as contemplated by
Section 2.01 and 2.02 of the Original Indenture.
INDEPENDENT FINANCIAL ADVISOR
The term "Independent Financial Advisor" means a nationally recognized
accounting, appraisal or investment banking firm (i) which does not, and whose
directors, officers and employees or Affiliates do not have, a direct or
indirect financial interest in the Corporation and (ii) which, in the judgment
of the Board of Directors, is otherwise independent and qualified to perform the
task for which it is to be engaged.
INTEREST RATE AGREEMENTS
The term "Interest Rate Agreements" means one or more of the following
agreements which shall be entered into by one or more financial institutions:
obligations of any Person pursuant to 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 or any other arrangement involving payments by or to
such Person based upon fluctuations in interest rates (including, without
limitation, interest rate swaps, caps, floors, collars and similar agreements)
and/or other types of interest rate hedging agreements from time to time.
INVESTMENT
The term "Investment" means, with respect to any Person, any direct or
indirect advance, loan or other extension of credit (including by means of a
guarantee) or capital contribution to (by means of any transfer of cash or other
property to others or any payment for property or services for the account or
use of others or otherwise), 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 and all other items that would be
classified as investments on a balance sheet prepared in accordance with GAAP.
Investments shall exclude (i) extensions of trade credit on commercially
reasonable terms in accordance with normal trade practices and (ii) any property
or assets received solely in consideration for the issuance of Capital Stock of
the Corporation. In addition to the foregoing, any Currency Agreement, Interest
Rate Agreement or similar agreement shall constitute an Investment in the net
amount required to be set forth on such Person's balance sheet in accordance
with GAAP. Upon the sale of any portion of the Capital Stock of any Restricted
Subsidiary by the Corporation or any other Restricted Subsidiary, the
Corporation or such other Restricted Subsidiary shall be deemed to have made an
Investment in the amount of its remaining Investment, if any, in such Person.
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ISSUE DATE
The term "Issue Date" means the original issue date of the Notes under this
First Supplemental Indenture.
LIEN
The term "Lien" means any mortgage or deed of trust, charge, pledge, lien
(statutory or other), privilege, security interest, hypothecation, cessation and
transfer, lease of real property, assignment for security, claim, deposit
arrangement, or preference or priority or other encumbrance upon or with respect
to any property of any kind (including any conditional sale, capital lease or
other title retention agreement, any leases in the nature thereof, and any
agreement to give any security interest), whether real, personal or mixed,
movable or immovable, now owned or hereafter acquired. A Person shall be deemed
to own subject to a Lien any property which it 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.
L.J. MELODY
The term "L.J. Melody" means L.J. Melody & Company, a Texas corporation.
MATERIAL SUBSIDIARY
The term "Material Subsidiary" means each Restricted Subsidiary of the
Corporation that is a "significant subsidiary" as defined in Rule 1-02 of
Regulation S-X under the Securities Act and the Exchange Act (as such regulation
is in effect on the Issue Date).
MELODY LOAN ARBITRAGE FACILITY
The term "Melody Loan Arbitrage Facility" means a credit facility provided
to L.J. Melody by any depository bank in which L.J. Melody deposits payments
made on mortgage loans for which L.J. Melody is servicer prior to distribution
of such payments to or for the benefit of the holders of such loans, so long as
(i) L.J. Melody applies all proceeds of loans made under such credit facility to
purchase Cash Equivalents and (ii) all Cash Equivalents purchased by L.J. Melody
with the proceeds of loans thereunder (and proceeds thereof and distributions
thereon) are pledged to the depository bank providing such credit facility, and
such bank has a first priority perfected security interest therein, to secure
loans made under such credit facility.
MELODY MORTGAGE WAREHOUSING FACILITY
The term "Melody Mortgage Warehousing Facility" means the credit facility
provided by Residential Funding Corporation ("RFC") or any substantially similar
facility, pursuant to which RFC or another lender makes loans to L.J. Melody,
the proceeds of which loans are applied by L.J. Melody to fund commercial
mortgage loans originated and owned by L.J. Melody subject to an unconditional,
irrevocable commitment to purchase such mortgage loans by the Federal Home Loan
Mortgage Corporation, so long as loans made by RFC or such other lender to L.J.
Melody thereunder are secured by a pledge of commercial mortgage loans made by
L.J. Melody with the proceeds of such loans and RFC or such other lender has a
perfected first priority security interest therein, to secure loans made under
such credit facility.
NET CASH PROCEEDS
The term "Net Cash Proceeds" means (a) with respect to any Asset Sale by
any Person, the proceeds thereof (without duplication in respect of all Asset
Sales) in the form of cash or Cash Equivalents including
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payments in respect of deferred payment obligations when received in the form
of, or stock or other assets when disposed of for, cash or Cash Equivalents
(except to the extent that such obligations are financed or sold with recourse
to the Corporation or any Restricted Subsidiary) net of (i) brokerage
commissions and other reasonable fees and expenses (including fees and expenses
of legal counsel and investment bankers) related to such Asset Sale, (ii)
provision for all taxes payable as a result of such Asset Sale, (iii) payments
made to retire Indebtedness where payment of such Indebtedness is secured by the
assets or properties the subject of such Asset Sale, (iv) amounts required to be
paid to any Person (other than the Corporation or any Restricted Subsidiary)
owning a beneficial interest in or having a Lien on the assets subject to the
Asset Sale and (v) appropriate amounts to be provided by the Corporation or any
Restricted Subsidiary, as the case may be, as a reserve, in accordance with
GAAP, against any liabilities associated with such Asset Sale and retained by
the Corporation or any Restricted Subsidiary, 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 indemnification obligations associated with such Asset
Sale (provided that the amount of any such reserves shall be deemed to
constitute Net Cash Proceeds at the time such reserves shall have been released
or are not otherwise required to be retained as a reserve), all as reflected in
an officers' certificate delivered to the Trustee and (b) with respect to any
issuance or sale of shares of Capital Stock that have been converted into or
exchanged for shares of Capital Stock as referred to in Section 2.03 of this
First Supplemental Indenture, the proceeds of such issuance or sale in the form
of cash or Cash Equivalents including payments in respect of deferred payment
obligations when received in the form of, or stock or other assets when disposed
of for, cash or Cash Equivalents (except to the extent that such obligations are
financed or sold with recourse to the Corporation or any Restricted Subsidiary),
net of attorney's fees, accountant's fees and brokerage, consultation,
underwriting and other fees and expenses actually incurred in connection with
such issuance or sale and net of taxes paid or payable as a result thereof.
NOTES
The term "Notes" shall mean the Series of Securities authorized under and
being issued pursuant to this First Supplemental Indenture.
ORIGINAL INDENTURE
The term "Original Indenture" shall mean that certain Indenture dated as of
May 26, 1998, between the Corporation and the Trustee, as such indenture was
originally executed.
PARI PASSU INDEBTEDNESS
The term "Pari Passu Indebtedness" means any Indebtedness of the
Corporation which ranks pari passu in right of payment of the Notes.
PERMITTED INDEBTEDNESS
The term "Permitted Indebtedness" shall have the meaning ascribed to such
term in Section 2.02 of this First Supplemental Indenture.
PERMITTED INVESTMENTS
The term "Permitted Investments" means (a) Cash Equivalents; (b)
Investments in prepaid expenses, negotiable instruments held for collection and
base utility and workers' compensation performance and other similar deposits;
(c) loans and advances to vendors, employees and sales representatives, in each
case, made in the ordinary course of business not to exceed $12.5 million in the
aggregate at any one time outstanding; (d) Interest Rate Agreements, Currency
Agreements, and Commodity Price Protection
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Agreements permitted under subsections (f) and (g) of Section 2.02 of this First
Supplemental Indenture; (e) Investments represented by accounts receivable
created or acquired in the ordinary course of business; (f) Investments existing
on the Issue Date and any renewal or replacement thereof on terms and conditions
no less favorable in any respect than that existing on the Issue Date; (g) any
Investment to the extent that the consideration therefor is Qualified Capital
Stock of the Corporation; (h) bonds, notes, debentures or other securities or
other non-cash proceeds received in connection with an Asset Sale permitted
under Section 2.07 of this First Supplemental Indenture not to exceed 20% of the
total consideration in such Asset Sale; (i) Indebtedness permitted under
subsections (d) and (e) of the second paragraph of Section 2.02 of this First
Supplemental Indenture; (j) Investments in any of the Notes or any other debt
securities of the Corporation not otherwise prohibited by the Indenture; and (k)
the initial Investment in any non-U.S. Person that becomes a Restricted
Subsidiary, pursuant to which the Corporation or a Wholly-Owned Restricted
Subsidiary acquires 90% or more of the voting and economic interests therein.
PERMITTED MELODY INDEBTEDNESS
The term "Permitted Melody Indebtedness" means Indebtedness of L.J. Melody
under the Melody Loan Arbitrage Facility and the Melody Mortgage Warehousing
Facility.
PERSON
The term "Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency, authority or political
subdivision thereof.
PREFERRED STOCK
The term "Preferred Stock" means, with respect to any Person, Capital Stock
of any class or, classes (however designated) of such Person which is preferred
as to the payment of dividends or distributions or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
person, over Capital Stock of any other class of such Person.
PUBLIC EQUITY OFFERING
The term "Public Equity Offering" shall have the meaning ascribed to such
term in Section 3.02(b) of this First Supplemental Indenture.
QUALIFIED CAPITAL STOCK
The term "Qualified Capital Stock" of any person means any and all Capital
Stock of such Person other than Redeemable Capital Stock.
RATING AGENCIES
The term "Rating Agencies" means (i) Standard & Poor's Ratings Group and
(ii) Moody's Investors Service, Inc. or (iii) if Standard & Poor's Ratings Group
or Moody's Investors Service, Inc. or both shall not make a rating of the Notes
publicly available, a nationally recognized securities rating agency or
agencies, as the case may be, selected by the Corporation, which shall be
substituted for Standard & Poor's Ratings Group, Moody's Investors Service,
Inc. or both, as the case may be.
REDEEMABLE CAPITAL STOCK
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The term "Redeemable Capital Stock" means any class or series of Capital
Stock to the extent that, either by its terms, 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 any Stated Maturity of the principal of the Notes or is redeemable at
the option of the holder thereof at any time prior to such Stated Maturity, or
is convertible into or exchangeable for debt securities at any time prior to
such Stated Maturity.
REFERENCE PERIOD
The term "Reference Period" has the meaning set forth under the definition
of "Consolidated Fixed Charge Coverage Ratio."
RELATED BUSINESS
The term "Related Business" means real estate services related businesses
or a line of business reasonably related to the business conducted by the
Corporation or any of its Subsidiaries at such time.
RESTRICTED PAYMENT
The term "Restricted Payment" shall have the meaning ascribed to such term
in Section 2.03 of this First Supplemental Indenture.
RESTRICTED SUBSIDIARY
The term "Restricted Subsidiary" means any Subsidiary of the Corporation
that has not been designated by the Board of Directors, by a board resolution
delivered to the Trustee, as an Unrestricted Subsidiary pursuant to and in
compliance with the provisions of Section 2.10 of this First Supplement
Indenture. Any such Designation may be revoked by a board resolution of the
Board of Directors delivered to the Trustee, subject to the provisions of such
covenant.
REVOCATION
The term "Revocation" shall have the meaning ascribed to such term in
Section 2.10 of this First Supplemental Indenture.
REVOLVING CREDIT FACILITY
The term "Revolving Credit Facility" means that amended and restated credit
agreement dated as of May 20, 1998 among the Corporation and Bank of America
National Trust and Savings Association, as agent, and the other financial
institutions party thereto, together with the related documents thereto
(including, without limitation, any guarantee agreements, pledge agreements and
security documents), in each case as such agreements may be amended (including
any amendment and restatement thereof), supplemented or otherwise modified from
time to time, including any agreement extending the maturity of, refinancing,
replacing or otherwise restructuring (including increasing the amount of
available borrowings thereunder (provided that such increase in borrowings is
permitted under the provisions of Section 2.02 of this First Supplemental
Indenture) or adding Subsidiaries of the corporation as additional borrowers or
guarantors thereunder) all or any portion of the Indebtedness under such
agreement or any successor or replacement agreement and whether by the same or
any other agent, lender or group of lenders.
SECURITIES ACT
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The term "Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated by the Commission thereunder.
SENIOR INDEBTEDNESS
The term "Senior Indebtedness" means, with respect to the Corporation, the
principal of, premium, if any, and interest on any Indebtedness of the
Corporation whether outstanding on the Issue Date or thereafter created,
incurred or assumed, unless, in the case of any particular Indebtedness, the
instrument creating or evidencing the same or pursuant to which the same is
outstanding expressly provides that such Indebtedness shall not be senior in
right of payment to any Indebtedness of the Corporation. Without limiting the
generality of the foregoing, the term "Senior Indebtedness" will also include
the principal of, premium, if any, and interest (including interest that would
accrue but for the filing of a petition initiating any proceeding under any
state or federal bankruptcy laws, whether or not such claim is allowable in such
proceeding at the rate provided for in the documentation with respect thereto)
on, and all other amounts owing in respect of, all obligations of every nature
of the Corporation, from time to time owed to the lenders under the Revolving
Credit Facility including, without limitation, principal of and interest on, and
reimbursement obligations under letters of credit and all fees, expenses and
indemnities payable under the Revolving Credit Facility. Notwithstanding the
foregoing, "Senior Indebtedness" shall not include, to the extent constituting
Indebtedness, (i) Indebtedness evidenced by the Notes (ii) Indebtedness that is
subordinate or junior in right of payment to any Indebtedness of the
Corporation, (iii) Indebtedness which, when incurred and without respect to any
election under Section 1111(b) of Title 11 United States Code, is without
recourse to the Corporation, (iv) Indebtedness which is represented by
Redeemable Capital Stock, (v) Indebtedness for goods, materials or services
purchased in the ordinary course of business or Indebtedness consisting of trade
payables or other current liabilities (other than any current liabilities owing
under the Revolving Credit Facility or the current portion of any long-term
Indebtedness which would constitute Senior Indebtedness but for the operation of
this clause (v)), (vi) Indebtedness of or amounts owed by the Corporation for
compensation to employees or for services rendered to the Corporation, (vii) any
liability for federal, state, local or other taxes owed or owing by the
Corporation, (viii) Indebtedness of the Corporation to a Subsidiary of the
Corporation, and (ix) that portion of any Indebtedness which at the time of
issuance is issued in violation of the Indenture.
STATED MATURITY
The term "Stated Maturity" means, with respect to any Note or any
installment of interest thereon, the dates 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 is due
and payable.
SUBORDINATED INDEBTEDNESS
The term "Subordinated Indebtedness" means, with respect to the
Corporation, Indebtedness of the Corporation which is expressly subordinated in
right of payment to the Notes.
SUBORDINATED OBLIGATIONS
The term "Subordinated Obligations" means Indebtedness represented by, and
all obligations in respect of, the Notes and the payment of principal of,
premium, if any, interest on, and all other amounts owing in respect of, the
Notes.
SUBSIDIARY
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The term "Subsidiary" means, with respect to any Person, (a) any
corporation of which the outstanding shares of Voting Stock having at least a
majority of the votes entitled to be cast in the election of directors shall at
the time be owned, directly or indirectly, by such Person, or (b) any other
Person of which at least a majority of the shares of Voting Stock are at the
time, directly or indirectly, owned by such first named Person.
SURVIVING PERSON
The term "Surviving Person" means, with respect to any Person involved in
any consolidation or merger, or any sale, assignment, conveyance, transfer,
lease or other disposition of all or substantially all of its properties and
assets as an entirety, the Person formed by or surviving such merger or
consolidation or the Person to which such sale, assignment, conveyance, transfer
or lease is made.
TRANSACTION DATE
The term "Transaction Date" shall have the meaning ascribed to such term in
the definition of "Consolidated Fixed Charge Coverage Ratio."
UNRESTRICTED SUBSIDIARY
The term "Unrestricted Subsidiary" means each Subsidiary of the Corporation
designated as such pursuant to and in compliance with the provisions of Section
2.10 of this First Supplemental indenture and each Subsidiary of each such
Subsidiary of the Corporation. Any such designation may be revoked by a board
resolution of the Corporation delivered to the Trustee, subject to the
provisions of such Section 2.10.
UNUTILIZED NET CASH PROCEEDS
The term "Unutilized Net Cash Proceeds" shall have the meaning ascribed to
such term in Section 2.07 of this First Supplemental Indenture.
VOTING STOCK
The term "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,
stock of any other class or classes shall have, or might have, voting power by
reason of the happening of any contingency).
WHOLLY-OWNED RESTRICTED SUBSIDIARY
The term "Wholly-Owned Restricted Subsidiary" means any Restricted
Subsidiary of which 100% of the outstanding Capital Stock is owned by the
Corporation and/or another Wholly-Owned Restricted Subsidiary. For purposes of
this definition, any directors' qualifying shares shall be disregarded in
determining the ownership of a Restricted Subsidiary.
SECTION 1.02. OTHER DEFINITIONS. All of the terms appearing herein shall
be defined as the same are now defined under the provisions of the Original
Indenture, except as when expressly herein otherwise defined.
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ARTICLE TWO
ADDITIONAL COVENANTS OF THE CORPORATION
SECTION 2.01. APPLICABILITY. In addition to the covenants set forth in
the Original Indenture, the covenants set forth in this Article Two shall apply
to the Notes, provided, however, that if no Default or Event of Default has
occurred and is continuing, after the ratings assigned to the Notes by both
Rating Agencies are equal to or higher than BBB- and Baa3, or the equivalents
thereof, respectively (the "Investment Grade Ratings"), and notwithstanding that
the Notes may later cease to have an Investment Grade Rating, the Corporation
and the Restricted Subsidiaries will not be subject to the provisions of the
covenants contained in Sections 2.04, 2.07, 2.08, 2.09 and subsection (iii) of
the first paragraph of Section 2.12 of this First Supplemental Indenture.
SECTION 2.02. LIMITATION ON INDEBTEDNESS. The Corporation will not, and
will not permit any of the Restricted Subsidiaries to, directly or indirectly,
create, incur, assume, issue, guarantee or in any manner become liable for or
with respect to, contingently or otherwise (in each case, to "incur"), the
payment of any Indebtedness (including any Acquired Indebtedness but excluding
any Permitted Indebtedness (as defined in this Section 2.02), provided however,
that the Corporation and each Restricted Subsidiary may incur Indebtedness
(including Acquired Indebtedness) if immediately after giving pro forma effect
thereto, the Consolidated Fixed Charge Coverage Ratio of the Corporation is at
least equal to 2:1.
Notwithstanding the foregoing, the Corporation and the Restricted
Subsidiaries may incur each and all of the following (collectively, "Permitted
Indebtedness"):
(a) Indebtedness of the Corporation, or any Restricted Subsidiary which
guarantees the Corporation's obligations, (without duplication) under
any Bank Credit Facility;
(b) Indebtedness of the Corporation pursuant to the Notes and Indebtedness
of any Restricted Subsidiary pursuant to its guarantee of the Notes;
(c) Indebtedness (other than Indebtedness under any Bank Credit Facility
and the Notes) of the Corporation or any Restricted Subsidiary
outstanding on the date of this First Supplemental Indenture;
(d) Indebtedness of the Corporation owing to a Restricted Subsidiary;
provided that any Indebtedness for borrowed money of the Corporation
owing to a Restricted Subsidiary is made pursuant to an intercompany
note or loan or credit agreement and is subordinated in accordance with
provisions set forth in the Indenture; provided, further, that any
disposition, pledge or transfer of any such Indebtedness to a Person
(other than a disposition, pledge or transfer to a Restricted
Subsidiary) shall be deemed to be an incurrence of such Indebtedness by
the Corporation not permitted by this clause (d);
(e) Indebtedness of a Restricted Subsidiary owing to and held by the
Corporation or a Wholly-Owned Restricted Subsidiary; provided that any
such Indebtedness for borrowed money is made pursuant to an
intercompany note or loan or credit agreement; provided, further, that
(a) any disposition, pledge or transfer of any such Indebtedness to a
Person (other than the Corporation or a Wholly-Owned Restricted
Subsidiary) shall be deemed to be an incurrence of such Indebtedness by
the obligor not permitted by this clause (e);
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(f) Indebtedness of the Corporation or any Restricted Subsidiary under
Interest Rate Agreements covering Indebtedness of the Corporation or
such Restricted Subsidiary (which Indebtedness (i) bears interest at
fluctuating interest rates and (ii) is otherwise permitted to be
incurred under this covenant) to the extent the notional principal
amount of the obligations under such Interest Rate Agreements does not
exceed the principal amount of the Indebtedness to which such
obligations relate;
(g) Indebtedness of the Corporation or any Restricted Subsidiary under
Currency Agreements relating to (i) Indebtedness of the Corporation or
such Restricted Subsidiary and/or (ii) obligations to purchase or sell
assets or properties or to reduce foreign currency fluctuation risk, in
each case, incurred in the ordinary course of business of the
Corporation and not for purposes of speculation; provided, however,
that such Currency Agreements do not increase the Indebtedness or other
obligations of the Corporation outstanding other than as a result of
fluctuations in foreign currency exchange rates or by reason of fees,
indemnities and compensation payable thereunder;
(h) Reimbursement obligations under letters of credit and letters of
credit, in each case, to support (i) workers compensation obligations
and (ii) performance bonds, surety bonds, performance guarantees and
supplier obligations not to exceed $20 million in the aggregate at any
time outstanding, in the case of each of such clause (i) and (ii) of
the Corporation, in the ordinary course of business consistent with
past practice;
(i) Guarantees by the Corporation of Indebtedness of any Restricted
Subsidiary or by any Restricted Subsidiary of Indebtedness of the
Corporation; provided that such Indebtedness of such Restricted
Subsidiary of the Corporation, as the case may be, is permitted by the
terms of this First Supplemental Indenture;
(j) any renewals, extensions, substitutions, refundings, refinancings or
replacements (collectively, a "refinancing") of any Indebtedness
described in clauses (b) and (c) of this definition of "Permitted
Indebtedness," including any successive refinancings so long as the
aggregate principal amount of Indebtedness represented thereby is not
increased by such refinancing plus the lesser of (i) the stated amount
of any premium or other payment required to be paid in connection with
such a refinancing pursuant to the terms of the Indebtedness being
refinanced or (ii) the amount of premium or other payment actually paid
at such time to refinance the Indebtedness, plus, in either case, the
amount of expenses of the Corporation or a Restricted Subsidiary
incurred in connection with such refinancing and (x) in the case of any
refinancing of Indebtedness that is Subordinated Indebtedness, such new
Indebtedness is subordinated to the Notes at least to the same extent
as the Indebtedness being refinanced, (y) such refinancing does not
reduce the Average Life to Stated Maturity or the Stated Maturity of
such Indebtedness and (z) the primary obligor of such refinancing
Indebtedness is the same Person as the primary obligor on the
Indebtedness being refinanced unless the new primary obligor is the
Corporation;
(k) Permitted Melody Indebtedness; and
(l) Indebtedness of the Corporation or any Restricted Subsidiary in
addition to that described in clauses (a) through (k) of this Section
2.02, and any renewals, extensions, substitutions, refinancings or
replacements of such Indebtedness, so long as the aggregate principal
amount of all such Indebtedness shall not exceed $30 million
outstanding at any one time.
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SECTION 2.03. LIMITATION ON RESTRICTED PAYMENTS. (a) The Corporation will
not, and will not permit any Restricted Subsidiary to, directly or indirectly:
(i) declare or pay any dividend or make any other distribution or
payment on or in respect of its Capital Stock or any payment to the direct
or indirect holders (in their capacities as such) of its Capital Stock
(other than dividends or distributions payable solely in shares of
Qualified Capital Stock and dividends or distributions payable to the
Corporation or a Restricted Subsidiary (and, if such Restricted Subsidiary
seeking to declare or pay such dividend or distribution is not a Wholly-
Owned Restricted Subsidiary, to its other shareholders on a pro rata basis
or on a basis that results in the receipt by the Corporation or its Wholly-
Owned Restricted Subsidiaries of dividends or distributions of greater
value than they would receive on a pro rata basis)); or
(ii) purchase, redeem, defease or otherwise acquire or retire for
value, directly or indirectly, any Capital Stock of the Corporation (other
than any such Capital Stock owned by any Wholly-Owned Restricted
Subsidiary) or options, warrants or other rights to acquire such Capital
Stock; or
(iii) make any principal payment on, or purchase, repurchase, redeem,
defease, retire or otherwise acquire for value, prior to any scheduled
maturity, scheduled repayment, scheduled sinking fund payment or other
Stated Maturity, any Subordinated Indebtedness (other than any Subordinated
Indebtedness owed to and held by the Corporation); or
(iv) make any Investment (other than any Permitted Investment) in
any Person (other than in the Corporation, any Wholly-Owned Restricted
Subsidiary or a Person that becomes a Wholly-Owned Restricted Subsidiary,
or is merged with or into or consolidated with the Corporation or a Wholly-
Owned Restricted Subsidiary (provided the Corporation or a Wholly-Owned
Restricted Subsidiary is the survivor), as a result of or in connection
with such Investment)
(any of the foregoing actions described in clauses (i) through (iv), other than
any such action that is a Permitted Payment (as defined below), collectively,
"Restricted Payments") (the amount of any such Restricted Payment, if other than
cash, shall be the Fair Market Value of the asset(s) proposed to be transferred
by the Corporation or such Restricted Subsidiary, as the case may be, in each
case, as determined in good faith by the Board of Directors, whose determination
shall be conclusive and evidenced by a board resolution), unless (l) immediately
after giving effect to such Restricted Payment on a pro forma basis, no Default
or Event of Default shall have occurred and be continuing; (2) immediately after
giving effect to such Restricted Payment on a pro forma basis, the Corporation
could incur $1.00 of additional Indebtedness (other than Permitted Indebtedness)
under the provisions of Section 2.02 of this First Supplemental Indenture and
(3) after giving effect to the proposed Restricted Payment, the aggregate amount
of all such Restricted Payments declared or made after the Issue Date, does not
exceed $35 million plus the sum of:
(A) 50% of the aggregate cumulative Consolidated Net Income of
the Corporation during the period (treated as one accounting
period) beginning on the first day of the fiscal quarter
beginning after the Issue Date and ending on the last day of
the Corporation's last fiscal quarter ending prior to the
date of the Restricted Payment (or, if such aggregate
cumulative Consolidated Net Income shall be a deficit, minus
100% of such deficit);
(B) the aggregate Net Cash Proceeds received after the Issue
Date by the Corporation from the issuance or sale (other
than to any of the Restricted Subsidiaries) of Qualified
Capital Stock of the Corporation or from the
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exercise of any options, warrants or rights to purchase such
Qualified Capital Stock of the Corporation (except, in each
case, to the extent such proceeds are used to purchase,
redeem or otherwise retire Capital Stock or Subordinated
Indebtedness as set forth in clause (ii) or (iii) of
paragraph (b) below and excluding the net cash proceeds from
any issuance and sale of Qualified Capital Stock or from any
such exercises, in each case, financed, directly or
indirectly, using funds borrowed from the Corporation or any
Restricted Subsidiary until and to the extent such borrowing
is repaid);
(C) the aggregate Net Cash Proceeds received after the Issue
Date by the Corporation from the conversion or exchange, if
any, of debt securities or Redeemable Capital Stock of the
Corporation or its Subsidiaries into or for Qualified
Capital Stock of the Corporation plus, without duplication,
the aggregate of Net Cash Proceeds from their original
issuance, less any principal and sinking fund payments made
thereon;
(D) in the case of the disposition or repayment of any
Investment constituting a Restricted Payment made after the
Issue Date, an amount (to the extent not included in
Consolidated Net Income) equal to the lesser of the return
of capital with respect to such Investment and the initial
amount of such Investment which was treated as a Restricted
Payment, in either case, less the cost of disposition of
such Investment and net of taxes; and
(E) so long as the Designation thereof was treated as a
Restricted Payment made after the Issue Date, with respect
to any Unrestricted Subsidiary that has been redesignated as
a Restricted Subsidiary after the Issue Date in accordance
with the provisions of Section 2.10 of this First
Supplemental Indenture, the Fair Market Value of the
interest of the Corporation and the Restricted Subsidiaries
in such Subsidiary, provided that such amount shall not in
any case exceed the Designation Amount with respect to such
Restricted Subsidiary upon its Designation.
b. Notwithstanding the foregoing, and in the case of clauses (ii) through
(vi) below, so long as no Default or Event of Default shall have occurred and be
continuing or would arise therefrom, the foregoing provisions shall not prohibit
the following actions (each of clauses (i) through (iv) being referred to as a
"Permitted Payment"):
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if (A) at such date of declaration such payment
was permitted by the provisions of the Indenture and (B) such payment
shall have been deemed to have been paid on such date of declaration
and shall have been deemed a "Restricted Payment" for purposes of the
calculation required by paragraph (a) of this Section 2.03;
(ii) the repurchase, redemption, or other acquisition or retirement of any
shares of any class of Capital Stock of the Corporation in exchange
for (including any such exchange pursuant to the exercise of a
conversion right or privilege in connection with which cash is paid in
lieu of the issuance of fractional shares or scrip), or out of the Net
Cash Proceeds of a substantially concurrent issue and sale for cash to
any Person (other than to a Restricted Subsidiary) of, shares of
Qualified Capital Stock of the Corporation: provided that the Net Cash
Proceeds from the issuance of such shares of Qualified Capital Stock
are excluded from clause (B) of paragraph (a) of this Section 2.03;
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(iii) the repurchase, redemption, defeasance, retirement or acquisition
for value or payment of principal of any Subordinated Indebtedness
in exchange for, or out of the Net Cash Proceeds of a substantially
concurrent issuance and sale for cash to any Person (other than to
any Restricted Subsidiary of the Corporation) of, any Qualified
Capital Stock of the Corporation; provided that the Net Cash
Proceeds from the issuance of such shares of Qualified Capital Stock
are excluded from clause (B) of paragraph (a) of this Section 2.03;
(iv) the repurchase, redemption, defeasance, retirement, acquisition for
value or payment of principal of any Subordinated Indebtedness
(other than Redeemable Capital Stock) in exchange for, or out of the
Net Cash Proceeds of a substantially concurrent issuance and sale
for cash to any Person (other than to a Restricted Subsidiary) of,
new Subordinated Indebtedness; provided that any new Subordinated
Indebtedness (1) shall be in a principal amount that does not exceed
the principal amount so repurchased, redeemed, defeased, retired,
acquired or paid (or, if such Subordinated Indebtedness provides for
an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration thereof, then such lesser
amount as of the date of determination), plus the lesser of (I) the
stated amount of any premium or other payment required to be paid in
connection with such repurchase, redemption, defeasance, retirement,
acquisition or payment pursuant to the terms of the Indebtedness
being repurchased, redeemed, defeased, retired, acquired or paid or
(II) the amount of premium or other payment actually paid at such
time to repurchase, redeem, defease, retire, acquire or pay the
Indebtedness, plus, in either case, the amount of expenses of the
Corporation incurred in connection with such repurchase, redemption,
defeasance, retirement, acquisition or payment; (2) has an Average
Life to Stated Maturity equal to or greater than the Average Life to
Stated Maturity of the Subordinated Indebtedness being repurchased,
redeemed, defeased, retired, acquired or paid; (3) has a Stated
Maturity no earlier than the Stated Maturity of the Subordinated
Indebtedness being refinanced, redeemed, defeased, retired or
acquired for value and (4) is expressly subordinated in right of
payment to the Notes at least to the same extent as the Subordinated
Indebtedness to be repurchased, redeemed, defeased, retired,
acquired or paid;
(v) the purchase of stock or stock options from employees of the
Corporation and its Subsidiaries which stock was purchased by the
employee pursuant to an employee benefit plan approved by the Board
of Directors (or any committee thereof), in an aggregate amount not
to exceed $3.0 million in any fiscal year; and
(vi) co-investments by Westmark Realty Advisors L.L.C. with funds and
separate accounts that are subject to ERISA regulations, in an
aggregate amount not to exceed $10 million in any twelve-month
period.
c. In computing the amount of Restricted Payments previously made for
purposes of clause (3) of paragraph (a) of this Section 2.03, Restricted
Payments under clauses (i) (as described in subclause (B) of such clause), (v)
and (vi) of paragraph (b) of this Section 2.03 shall be included.
SECTION 2.04. LIMITATION ON TRANSACTIONS WITH AFFILIATES. The Corporation
will not, and will not cause or permit any Restricted Subsidiary to, directly or
indirectly, conduct any business or enter into or suffer to exist any contract,
agreement, arrangement or transaction with, or for the benefit of, any Affiliate
of the Corporation or of a Restricted Subsidiary (an "Affiliate Transaction") or
any series of related Affiliate Transactions (in either case, other than
Exempted Affiliate Transactions) (i) unless it is determined that the terms of
such Affiliate Transaction are fair and reasonable to the Corporation or such
Restricted Subsidiary, as applicable, and no less favorable to the Corporation
or such Restricted Subsidiary, as applicable, or to the Corporation and its
Restricted Subsidiaries as a whole, than could have been obtained in an arm's-
length
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transaction with a non-Affiliate and (ii) if involving consideration to either
party in excess of $5 million, unless such Affiliate Transaction has been
approved by a majority of the members of the Board of Directors that are
disinterested in such transaction and (iii) if involving consideration to either
party in excess of $25 million, unless in addition to the foregoing, the
Corporation, prior to the consummation thereof, obtains a written favorable
opinion as to the fairness of such transaction to the Corporation, or such
Restricted Subsidiary, as applicable, from a financial point of view from an
independent investment banking firm of national reputation (or, if nationally
recognized investment banking firms do not customarily render opinions with
respect to transactions of such type, by a nationally recognized expert with
experience in evaluating the terms and conditions of transactions of such type).
SECTION 2.05. LIMITATION ON LIENS. The Corporation will not, and will not
cause or permit any Restricted Subsidiary to, directly or indirectly, create,
incur, assume, suffer to exist or affirm any Lien of any kind securing any (a)
Pari Passu Indebtedness or Subordinated Indebtedness (including any assumption,
guarantee or other liability with respect thereto by any Restricted Subsidiary)
upon any of its property or assets (including any intercompany notes), whether
owned on the Issue Date or acquired after the Issue Date, or any proceeds,
income or profits therefrom, or assign or convey any right to receive proceeds,
income or profits therefrom, unless the Notes are directly secured equally and
ratably with (or, in the case of Subordinated Indebtedness, prior or senior
thereto, with the same relative priority as the Notes shall have with respect to
such Subordinated Indebtedness) the obligation or liability secured by such
Lien, except for Liens (A) securing any Indebtedness which became Indebtedness
pursuant to a transaction permitted under Section 2.12 of this First
Supplemental Indenture or securing Acquired Indebtedness which, in each case,
were created prior to (and not created in connection with, or in contemplation
of) the incurrence of such Pari Passu Indebtedness or Subordinated Indebtedness
(including any assumption, guarantee or other liability with respect thereto by
any Restricted Subsidiary) and which Indebtedness is permitted under the
provisions of Section 2.02 of this First Supplemental Indenture or (B) securing
any Indebtedness incurred in connection with any refinancing, renewal,
substitution or replacement of any such Indebtedness incurred in connection with
any Indebtedness described in clause (A) so long as the aggregate principal
amount of Indebtedness represented thereby is not increased by such refinancing
by an amount greater than the lesser of (i) the stated amount of any premium or
other payment required to be paid in connection with such a refinancing pursuant
to the terms of the Indebtedness being refinanced or (ii) the amount of premium
or other payment actually paid at such time to refinance the Indebtedness, plus,
in either case, the amount of expenses of the Corporation incurred in connection
with such refinancing; provided, however, that in the case of clauses (A) and
(B) any such Lien only extends (x) to the assets that were subject to such Lien
securing such Indebtedness prior to the related acquisition by the Corporation
or the Restricted Subsidiary or (y) in the case of assets constituting
receivables, extend to additional receivables of a similar nature and not
materially greater in value that the receivables securing such Indebtedness
prior to the related acquisition by the Corporation or the Restricted
Subsidiary, or (b) Senior Indebtedness which is incurred in violation of the
terms of the Indenture.
SECTION 2.06. LIMITATION ON INCURRENCE OF SENIOR SUBORDINATED
INDEBTEDNESS. The Corporation will not, directly or indirectly, create, incur,
issue, assume, guarantee or otherwise in any manner become directly or
indirectly liable for or with respect to or otherwise permit to exist any
Indebtedness that is subordinate or junior in right of payment to any
Indebtedness of the Corporation unless such Indebtedness is also (i) pari passu
with the Notes or subordinate or junior, in right of payment to the Notes and
(ii) does not have a Stated Maturity shorter than the final Stated Maturity of
the Notes.
SECTION 2.07. LIMITATION ON SALE OF ASSETS. The Corporation will not, and
will not cause or permit any Restricted Subsidiary to, directly or indirectly,
consummate an Asset Sale unless (i) at least 80% of the consideration from such
Asset Sale is received in cash or Cash Equivalents or Eligible Securities and
(ii) the Corporation or such Subsidiary receives consideration at the time of
such Asset Sale at least equal to the Fair Market Value of the shares or assets
subject to such Asset Sale.
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If all or a portion of the Net Cash Proceeds of any Asset Sale are not
required to be applied to repay permanently any Senior Indebtedness outstanding
as required by the terms thereof, or the Corporation determines not to apply
such Net Cash Proceeds to the permanent repayment of the Senior Indebtedness
which is required to be prepaid, or if no such Senior Indebtedness is then
outstanding, the Corporation or such Restricted Subsidiary may within 365 days
of such Asset Sale, invest the Net Cash Proceeds in capital expenditures,
properties and other assets that (as determined by the board of directors of the
Corporation) replace the properties and assets that were the subject of the
Asset Sale or in properties and assets that will be used in the businesses of
the Corporation or its Subsidiaries existing on the Issue Date or in businesses
reasonably related thereto.
To the extent (i) the Corporation or a Restricted Subsidiary, as the case
may be, received more than 20% of the consideration from an Asset Sale in the
form of Eligible Securities (the fair market value (on the date of such Asset
Sale) of such amount in excess of 20% of the consideration is referred to herein
as the "Eligible Securities Proceeds") or (ii) all or part of the Net Cash
Proceeds of any Asset Sale are not applied, or the Corporation determines not to
so apply such Net Cash Proceeds, within 365 days of such Asset Sale as described
in the immediately preceding paragraph (such Net Cash Proceeds, the "Unutilized
Net Cash Proceeds" and together with the Eligible Securities Proceeds, the
"Excess Proceeds"), the Corporation shall, within 20 days after such 365th day
or at any earlier time after such Asset Sale, make an offer to purchase (the
"Asset Sale Offer") all outstanding Notes and any Pari Passu Indebtedness the
terms of which require such an offer to be made up to a maximum principal amount
(expressed as a multiple of $1,000) of Notes and such Pari Passu Indebtedness
equal to such Excess Proceeds, at a purchase price in cash equal to 100% of the
principal amount thereof, plus accrued and unpaid interest thereon, if any, to
the Purchase Date; provided, however, that the Asset Sale Offer may be deferred
until there are aggregate Excess Proceeds, equal to or in excess of $20 million,
at which time the entire amount of such Excess Proceeds and not just the amount
in excess of $20 million, shall be applied as required pursuant to this
paragraph. An Asset Sale Offer will be required to be kept open for a period of
at least 20 business days.
With respect to any Asset Sale Offer effected pursuant to this Section
2.07, among the Notes and such Pari Passu Indebtedness, to the extent the
aggregate principal amount of Notes and such Pari Passu Indebtedness tendered
pursuant to such Asset Sale Offer exceeds the Excess Proceeds to be applied to
the repurchase thereof, such Notes and such Pari Passu Indebtedness shall be
purchased pro rata based on the aggregate principal amount of such Notes and
such Pari Passu Indebtedness tendered. To the extent the Excess Proceeds exceed
the aggregate amount of Notes and such Pari Passu Indebtedness tendered pursuant
to such Asset Sale Offer, the Corporation may retain and utilize any portion of
the Excess Proceeds not applied to repurchase the Notes and such Pari Passu
Indebtedness for any purpose consistent with the other terms of the Indenture
and such excess amount of Excess Proceeds shall not be included in any future
determination of Excess Proceeds.
In the event that the Corporation makes an Asset Sale Offer, the
Corporation shall comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act, and any other applicable securities laws or
regulations and any applicable requirements of any securities exchange on which
the Notes are listed, and any violation of the provisions of the Indenture
relating to such Asset Sale Offer occurring as a result of such compliance shall
not be deemed a Default.
SECTION 2.08. LIMITATION ON PREFERRED STOCK OF RESTRICTED SUBSIDIARIES.
The Corporation will not (a) sell and will not cause or permit any Restricted
Subsidiary of the Corporation to issue, sell or transfer any Preferred Stock of
any Restricted Subsidiary (other than to the Corporation or to a Wholly-Owned
Restricted Subsidiary) or otherwise (b) permit any Person (other than the
Corporation or a Wholly-Owned Restricted Subsidiary) to own any Preferred Stock
of any Restricted Subsidiary, in each case, except for (i) Preferred Stock
issued or sold to, held by or transferred to the Corporation or a Wholly-Owned
Restricted Subsidiary, and (ii) Preferred Stock issued by a Person prior to the
time (A) such Person becomes a Restricted Subsidiary
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or (B) such Person merges with or into a Restricted Subsidiary, provided that
such Preferred Stock was not issued or incurred by such Person in anticipation
of the type of transaction contemplated by subclause (A) or (B).
SECTION 2.09. LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS
AFFECTING RESTRICTED SUBSIDIARIES. The Corporation will not, and will not cause
or permit any Restricted Subsidiary to, directly or indirectly, create or
otherwise cause or suffer to exist or enter into any agreement with any Person
that would cause to become effective, any consensual encumbrance or restriction
of any kind, on the ability of any Restricted Subsidiary to (i) pay dividends,
in cash or otherwise, or make any other distribution on or in respect of its
Capital Stock or any other interest or participation in, or measured by, its
profits, to the Corporation or any other Restricted Subsidiary, (ii) pay any
Indebtedness owed to the Corporation or any other Restricted Subsidiary, (iii)
make any Investment in the Corporation or any other Restricted Subsidiary or
(iv) transfer any of its properties or assets to the Corporation or any other
Restricted Subsidiary, except for: (a) any encumbrance or restriction existing
under any agreement in effect on the Issue Date; (b) any encumbrance or
restriction, with respect to a Person that is not a Restricted Subsidiary of the
Corporation on the Issue Date, in existence at the time such Person becomes a
Restricted Subsidiary of the Corporation, and not incurred in connection with,
or in contemplation of, such Person becoming a Restricted Subsidiary; provided,
however, that such encumbrances and restrictions are not applicable to the
Corporation or any other Restricted Subsidiary, or the properties or assets of
the Corporation or any other Restricted Subsidiary; (c) customary provisions
restricting the subletting or assignment of any lease or the assignment of any
other contract to which the Corporation or any Restricted Subsidiary is a party,
which lease or contract is entered into in the ordinary course of business
consistent with past practice; (d) any encumbrance or restriction contained in
contracts for (x) sales of assets or stock permitted by Section 2.07 of this
First Supplemental Indenture or (y) the purchase of assets or stock which arises
out of an earn-out or similar arrangement; provided that, in each case, such
encumbrance or restriction relates only to assets being purchased or sold
pursuant to the contract containing such encumbrances or restriction; (e) any
encumbrance or restriction customarily contained in any security agreement or
mortgage which security agreement or mortgage creates a Lien permitted under
this Indenture; provided that such encumbrance or restriction relates only to
assets subject to such Lien; and (f) any encumbrance or restriction existing
under any agreement that extends, renews, refinances or replaces the agreements
containing the encumbrances or restrictions in the foregoing clauses (a), (b),
(c) and (e), or in this clause (f), provided that the terms and conditions of
any such encumbrances or restrictions are not more restrictive in any material
respect than those under or pursuant to the agreement so extended, renewed,
refinanced or replaced.
SECTION 2.10. LIMITATIONS ON UNRESTRICTED SUBSIDIARIES. The Corporation
may designate after the Issue Date any Subsidiary as an "Unrestricted
Subsidiary" under the Indenture (a "Designation") only if:
(i) no Default or Event of Default shall have occurred and be continuing
at the time of or after giving effect to such Designation;
(ii) the Corporation would be permitted to make an Investment (other than
a Permitted Investment) at the time of Designation (assuming the
effectiveness of such Designation) pursuant to paragraph (a)(iv) of
Section 2.03 in an amount (the "Designation Amount") equal to the
Fair Market Value of the Corporation's interest in such Subsidiary
on such date; and
(iii) the Corporation would be permitted under the Indenture to incur
$1.00 of additional Indebtedness (other than Permitted Indebtedness)
pursuant to Section 2.02 of this First Supplemental Indenture at the
time of such Designation (assuming the effectiveness of such
Designation).
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In the event of any such Designation, the Corporation shall be deemed to
have made an Investment constituting a Restricted Payment pursuant to the
provisions set forth in Section 2.03 of this First Supplemental Indenture for
all purposes of the Indenture in the Designation Amount.
The Corporation shall not, and shall not cause or permit any Restricted
Subsidiary to, at any time (x) provide credit support for or subject any of its
property or assets (other than the Capital Stock of any Unrestricted Subsidiary)
to the satisfaction of, any Indebtedness of any Unrestricted Subsidiary
(including any undertaking, agreement or instrument evidencing such
Indebtedness) or (y) be directly or indirectly liable for any Indebtedness of
any Unrestricted Subsidiary, except any non-recourse guarantee given solely to
support the pledge by the Corporation or any Restricted Subsidiary of the
Capital Stock of an Unrestricted Subsidiary. All Subsidiaries of Unrestricted
Subsidiaries shall automatically be deemed to be Unrestricted Subsidiaries.
The Corporation may revoke any Designation of a Subsidiary as an
Unrestricted Subsidiary (a "Revocation") if:
(A) no Default or Event of Default shall have occurred and be continuing at
the time of and after giving effect to such Revocation; and
(B) all Liens and Indebtedness of such Unrestricted Subsidiary outstanding
immediately following such Revocation would, if incurred at such time,
have been permitted to be incurred for all purposes of the Indenture;
and
(C) any transaction (or series of related transactions) between such
Subsidiary and any of its Affiliates that occurred while such
Subsidiary was an Unrestricted Subsidiary would be permitted by Section
2.04 of this First Supplemental Indenture as if such transaction (or
series of related transactions) had occurred at the time of such
Revocation.
All Designations and Revocations must be evidenced by resolutions of the
Board of Directors delivered to the Trustee certifying compliance with the
foregoing provisions.
SECTION 2.11. PROVISION OF FINANCIAL STATEMENTS. So long as the Notes are
outstanding, whether or not the Corporation is subject to Section 13(a) or 15(d)
of the Exchange Act, or any successor provision thereto, the Corporation will,
to the extent permitted by Commission practice and applicable law and
regulations, file with the Commission the annual reports, quarterly reports and
other documents which the Corporation would have been required to file with the
Commission pursuant to such Section 13(a) or 15(d), or any successor provision
thereto, if the Corporation were so subject, such documents to be filed with the
Commission on or prior to the date (the "Required Filing Dates") by which the
Corporation would have been required so to file such documents if the
Corporation were so subject. The Corporation will also in any event (x) within
15 days of each Required Filing Date, whether or not permitted or required to be
filed with the Commission, (i) transmit or cause to be transmitted by mail to
all Holders of the Notes and (ii) file with the Trustee, copies of the annual
reports, quarterly reports and other documents which the Corporation would have
been required to file with the Commission pursuant to Section 13(a) or 15(d) of
the Exchange Act, or any successor provision thereto, if the Corporation were
subject to either of such Sections and (y) if filing such documents by the
Corporation with the Commission is not permitted under the Exchange Act,
promptly upon written request and payment of the reasonable cost of duplication
and delivery, supply copies of such documents to any prospective Holder at the
Corporation's cost. In addition, for so long as any Notes remain outstanding,
the Corporation will furnish to the Holders of Notes and to securities analysts
and prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act, and, to any
beneficial Holder of Notes, if not obtainable from the Commission, information
of the type that would be filed with the Commission pursuant to the foregoing
provisions, upon the request of any such Holder. If any Subsidiaries' financial
statements would be required to be included in the financial
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statements filed or delivered pursuant hereto if the Corporation were subject to
Section 13(a) or 15(d) of the Exchange Act, the Corporation shall include such
Subsidiaries' financial statements in any filing or delivery pursuant hereto.
SECTION 2.12. CONSOLIDATION, MERGER, SALE OF ASSETS, ETC. The Corporation
shall not, in any transaction or series of related 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 the Corporation shall not permit any of the
Restricted Subsidiaries to enter into any such transaction or series of related
transactions if such transaction or series of related transactions, in the
aggregate, would result in a sale, assignment, conveyance, transfer, lease or
other disposition of all or substantially all of the properties and assets of
the Corporation and the Restricted Subsidiaries (determined on a consolidated
basis for the Corporation and the Restricted Subsidiaries), to any Person or
Persons, unless at the time and after giving effect thereto (i) either (A) (1)
if the transaction or transactions is a merger or consolidation involving the
Corporation, the Corporation shall be the Surviving Person of such merger or
consolidation or (2) if the transaction or transactions is a merger or
consolidation involving a Restricted Subsidiary, such Restricted Subsidiary
shall be the Surviving Person of such merger or consolidation, or (B) (1) the
Surviving Person shall be a corporation organized and existing under the laws of
the United States of America, any State thereof or the District of Columbia and
(2) in the case of a transaction involving the Corporation, the Surviving
Person, if other than the Corporation, shall expressly assume (unless such
obligations are otherwise assumed by operation of law) by a Supplemental
Indenture executed and delivered to the Trustee, all the obligations of the
Corporation under the Notes and the Indenture, and in each case, the Indenture
and the Notes shall remain in full force and effect; (ii) immediately after
giving effect to such transaction or series of related transactions on a pro
forma basis, no Default or Event of Default shall have occurred and be
continuing; and (iii) the Corporation, or the Surviving Person, as the case may
be, immediately after giving effect to such transaction or series of related
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 (other than Permitted Indebtedness) under the provisions
of Section 2.02 of this First Supplemental Indenture, and at the time of the
transaction if any of the property or assets of the Corporation or any of its
Restricted Subsidiaries would thereupon become subject to any Lien, the
provisions of Section 2.05 of this First Supplemental Indenture are complied
with.
Upon any consolidation or merger of the Corporation or any transfer of all
or substantially all of the assets of the Corporation in accordance with the
foregoing, in which the Corporation is not the Surviving Person, the Surviving
Person shall succeed to, and be substituted for, and may exercise every right
and power of, the Corporation under the Indenture and the Notes with the same
effect as if such successor corporation had been named as the Corporation
therein; and thereafter, except in the case of (a) a lease or (b) any sale,
assignment, conveyance, transfer, lease or other disposition to a Restricted
Subsidiary of the Corporation, the Corporation shall be discharged from all
obligations and covenants under the Indenture.
For all purposes of the Indenture and the Notes (including the provision of
this Section 2.12 and Sections 2.02, 2.03 and 2.05 of this First Supplemental
Indenture), Subsidiaries of any Surviving Person shall, upon such transaction or
series of related transactions, become Restricted Subsidiaries unless and until
designated as Unrestricted Subsidiaries pursuant to and in accordance with the
provisions of Section 2.10 of this First Supplemental Indenture and all
Indebtedness, and all Liens on property or assets, of the Corporation and the
Restricted Subsidiaries in existence immediately prior to such transactions or
series of related transactions will be deemed to have been incurred upon such
transaction or series of related transactions.
Notwithstanding anything to the contrary in this Section 2.12, a Restricted
Subsidiary may merge with or into another Restricted Subsidiary.
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SECTION 2.13. PAYMENT OF TAXES AND OTHER CLAIMS. Except with respect to
immaterial items, the Corporation shall, and shall cause each of its
Subsidiaries to, pay or discharge or cause to be paid or discharged, before the
same shall become delinquent, (i) all taxes, assessments and governmental
charges (including withholding taxes and any penalties, interest and additions
to taxes) levied or imposed upon the Corporation or any of its Subsidiaries or
any of their respective properties and assets and (ii) all lawful claims,
whether for labor, materials, supplies, services or anything else, which have
become due and payable and which by law have or may become a lien upon the
property and assets of the Corporation or any of its Subsidiaries; provided,
however, that neither the Corporation nor any Subsidiary shall be required to
pay or discharge or cause to be paid or discharged any such tax, assessment,
charge or claim whose amount, applicability or validity is being contested in
good faith by appropriate proceedings and for which such disputed amounts the
need for adequate reserves has been reviewed in accordance with GAAP.
SECTION 2.14. MAINTENANCE OF PROPERTIES AND INSURANCE. The Corporation
shall cause all material properties used or useful to the conduct of its
business and the business of each of its Subsidiaries 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, betterments and improvements thereof,
all as in their reasonable judgment may be necessary, so that the business
carried on in connection therewith may be properly conducted at all times;
provided, however, that nothing in this Section 2.14 shall prevent the
Corporation or any Subsidiary from discontinuing any operation or maintenance of
any of such properties, or disposing of any of them, if such discontinuance or
disposal is in the judgment of the Corporation, desirable in the conduct of the
business of such entity.
The Corporation shall provide, or cause to be provided, for itself and each
of its Subsidiaries, insurance (including appropriate self-insurance) against
loss or damage of the kinds that, in the reasonable, good faith opinion of the
Corporation is adequate and appropriate for the conduct of the business of the
Corporation and such Subsidiaries in a prudent manner, with (except for self-
insurance) reputable insurers or with the government of the United States of
America or an agency or instrumentality thereof, in such amounts, with such
deductibles, and by such methods as shall be customary, in the reasonable, good
faith opinion of the Corporation and adequate and appropriate for the conduct of
the business of the Corporation and such Subsidiaries in a prudent manner for
entities similarly situated in the industry, unless failure to provide such
insurance (together with all other such failures) would not have a material
adverse effect on the financial condition or results of operations of the
Corporation and such Subsidiaries considered as a whole.
SECTION 2.15. STAY, EXTENSION AND USURY LAWS. The Corporation covenants
(to the extent that it may lawfully do so) that it shall not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension or usury law or other law which would prohibit or
forgive the Corporation 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 the Corporation (to the
extent it may lawfully do so) hereby expressly waives all benefit or advantage
of any such law, and covenants that it will not, by resort to any such law,
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 has been enacted.
SECTION 2.16. LIMITATION ON STATUS AS INVESTMENT COMPANY. Neither the
Corporation nor any of its Restricted Subsidiaries shall become an "investment
company," as that term is defined in the Investment Company Act of 1940, as
amended, or otherwise become subject to regulation thereunder.
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ARTICLE THREE
TERMS OF THE NOTES
SECTION 3.01. TERMS OF THE NOTES. A Series of Securities in the aggregate
principal amount of One Hundred Seventy-Five Million Dollars ($175,000,000) to
be issued under the Original Indenture, as supplemented by this First
Supplemental Indenture, is hereby created, and such Series of Securities is
hereby designated the "8-7/8% Senior Subordinated Notes Due 2006". The Notes
shall mature on June 1, 2006 and shall bear interest at the rate of 8-7/8% per
annum from the most recent date to which interest has been paid or, if no
interest has been paid, from the Issue Date. Interest on the Notes shall be
payable semiannually on each June 1 and December 1, commencing December 1, 1998,
to the Holders of record on the Record Date.
The Notes shall be issued initially as a single Global Note, in registered
form, registered in the name of The Depositary Trust Corporation, as Depository,
or its nominee,, and otherwise substantially as in the form set forth in Exhibit
A to this First Supplemental Indenture with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
the Indenture. The Global Note shall be exchangeable for definitive Notes in
registered form substantially the same as the Global Note in denominations of
$1,000 or any integral multiple thereof upon the terms of and in accordance with
the provisions of the Indenture.
The Notes shall be payable (as to both principal and interest) when and as
the same become due at the office of the Trustee located in New York City, New
York, provided that, so long as the Notes are in the form of one or more Global
Notes, payments of interest may be made by wire transfer in accordance with the
Letter of Representations and provided further, that upon any exchange of the
Global Notes for Notes in definitive form, the Corporation elects to exercise
its option to have interest payable by check mailed to the registered owners at
such owners' addresses as they appear on the Register, as kept by the Trustee on
each relevant Record Date.
The Record Dates for the Notes shall be May 15 and November 15 of each
year.
SECTION 3.02. REDEMPTION OF THE NOTES. (a) Optional Redemption. The
Notes will be redeemable at the option of the Corporation, in whole or in part,
at any time on or after June 1, 2002, at the redemption prices (expressed as
percentages of principal amount) set forth below, plus accrued and unpaid
interest thereon, if any, to the date of redemption, if redeemed during the 12-
month period beginning on June 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
---- ----------------
<S> <C>
2002.............................. 104.438%
2003.............................. 102.958%
2004.............................. 101.479%
2005 and thereafter............... 100.000%
</TABLE>
(b) Optional Redemption upon Public Equity Offering. On or prior to June
1, 2001, the Corporation may, at its option, use the net proceeds of a Public
Equity Offering to redeem up to 35% of the originally issued aggregate principal
amount of the Notes, at a redemption price in cash equal to 108-7/8% of the
principal amount thereof, plus accrued and unpaid interest thereon, if any, to
the date of redemption; provided, however, that at least $113,750,000 in
aggregate principal amount of Notes is outstanding following such redemption.
Notice of any such redemption must be given not later than 30 days after the
consummation of the Public Equity Offering.
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As used in the preceding paragraph, a "Public Equity Offering" means any
underwritten public offering of Capital Stock (other than Redeemable Capital
Stock) of the Corporation made on a primary basis by the Corporation pursuant to
a registration statement filed with and declared effective by the Commission in
accordance with the Securities Act.
(c) Selection and Notice. In the event that less than all of the Notes
are to be redeemed at any time, selection of Notes for redemption shall be made
by the Trustee in compliance with the requirements of the principal national
securities exchange, if any, on which the Notes are listed or, if the Notes are
not listed on a national securities exchange, on a pro rata basis, by lot or by
such method as the Trustee will deem fair and appropriate; provided, however,
that no Notes of a principal amount of $1,000 or less shall be redeemed in part.
Notice of redemption will be mailed by first class mail at least 30 but no more
than 60 days before the redemption date to each Holder of Notes to be redeemed
at its registered address. If any Note is to be redeemed in part only, the
notice of redemption that relates to such Note will state the portion of the
principal amount thereof to be redeemed. A new Note in a principal amount equal
to the unredeemed portion thereof will be issued in the name of the Holder
thereof upon cancellation of the original Note. On and after the Redemption
Date, interest will cease to accrue on Notes or portions thereof called for
redemption so long as the Corporation has deposited with the Paying Agent for
the Notes funds in satisfaction of the applicable Redemption Price.
SECTION 3.03 CHANGE OF CONTROL. Following the occurrence of a Change of
Control (the date of such occurrence being the "Change of Control Date"), the
Corporation, within 20 Business Days following the Change of Control Date, shall
make an irrevocable and unconditional offer to purchase (a "Change of Control
Offer") all of the then outstanding Notes on a date (the "Change of Control
Purchase Date") that is no later than 50 Business Days after the occurrence of
such Change of Control at a purchase price (the "Change of Control Purchase
Price") in cash equal to 101% of the principal amount thereof, plus accrued and
unpaid interest thereon, if any, to the Change of Control Purchase Date. The
Corporation shall purchase all Notes properly tendered into the Change of
Control Offer and not withdrawn.
In order to effect such Change of Control Offer, the Corporation, not later
than the 20/th/ business day after the Change of Control Date, shall mail to
each Holder of Notes notice of the Change of Control Offer, which notice will
govern the terms of the Change of Control Offer and will state, among other
things, the procedures that Holders must follow to accept the Change of Control
Offer. The Change of Control Offer will be kept open for a period of at least
20 business days.
On or before the Change of Control Purchase Date, the Corporation will
deposit with the Trustee cash sufficient to pay the Change of Control Purchase
Price (together with any accrued and unpaid interest) for all Notes to be
tendered pursuant to the Change of Control Offer. On the Change of Control
Purchase Date, the Trustee shall pay the Change of Control Purchase Price to all
Holders tendering their Notes for purchase.
ARTICLE FOUR
SUBORDINATION PROVISIONS APPLICABLE TO
THE NOTES
SECTION 4.01. NOTES SUBORDINATE TO SENIOR INDEBTEDNESS. The Corporation
covenants and agrees, and each Holder of the Notes, by such Holder's
acceptance thereof, likewise covenants and agrees, that, to the extent and in
the manner hereinafter set forth in this Article Four (subject to the provisions
of Article Six of this First Supplemental Indenture), the Indebtedness
represented by the Notes and the payment of the principal of (and premium, if
any) and interest on each and all of the Notes is hereby expressly made
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subordinate and subject in right of payment to the prior payment in full in cash
or Cash Equivalents of all Senior Indebtedness whether outstanding on the Issue
Date or incurred thereafter.
SECTION 4.02. PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC. In the
event of (1) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or proceeding in
connection therewith, relating to the Corporation or to its creditors, as such,
or to a substantial part of its assets, or (2) any liquidation, dissolution or
other winding up of the Corporation, whether voluntary or involuntary and
whether or not involving insolvency or bankruptcy, or (3) any assignment for the
benefit of creditors or any other marshalling of assets or liabilities of the
Corporation, then and in any such event specified in (1), (2) or (3) above (each
such event, if any, herein sometimes referred to as a "Proceeding") the holders
of Senior Indebtedness shall be entitled to receive payment in full of all
amounts due or to become due on or in respect of all Senior Indebtedness, or
provision shall be made for such payment in cash or Cash Equivalents or
otherwise in a manner satisfactory to the holders of Senior Indebtedness, before
the Holders of the Notes are entitled to receive any payment or distribution of
any kind or character, whether in cash, property or securities, on account of
principal of (or premium, if any) or interest on the Notes or on account of any
purchase or other acquisition of Notes by the Corporation or any Subsidiary of
the Corporation (all such payments, distributions, purchases and acquisitions
herein referred to, individually and collectively, as a "Notes Payment"), and to
that end, the holders of all Senior Indebtedness shall be entitled to receive,
for application to the payment thereof, any Notes Payment which may be otherwise
payable or deliverable in respect of the Notes in any such Proceeding.
In the event that, notwithstanding the foregoing provisions of this Section
4.02, the Trustee or the Holder of any Note shall have received any Notes
Payment before all Senior Indebtedness is paid in full or payment thereof
provided for in cash or Cash Equivalents or otherwise in a manner satisfactory
to the holders of Senior Indebtedness, and if such fact shall, at or prior to
the time of such Notes Payment, have been made known to the Trustee or, as the
case may be, such Holder, then and in such event, such Notes Payment shall be
paid over or delivered forthwith to the trustee in bankruptcy, receiver,
liquidating trustee, custodian, assignee, agent or other Person making payment
or distribution of assets of the Corporation for application to the payment of
all Senior Indebtedness remaining unpaid, to the extent necessary to pay all
Senior Indebtedness in full, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness.
For purposes of this Article Four only, the words "any payment or
distribution of any kind or character, whether in cash, property or securities"
shall not be deemed to include a payment or distribution of stock or securities
of the Corporation provided for by a plan of reorganization or readjustment
authorized by an order or decree of a court of competent jurisdiction in a
reorganization proceeding under any applicable bankruptcy law or of any other
corporation provided for by such plan of reorganization or readjustment, which
stock or securities are subordinated in right of payment to all then outstanding
Senior Indebtedness to substantially the same extent as, or to a greater extent
than, the Notes are so subordinated as provided in this Article Four. The
consolidation of the Corporation with, or the merger of the Corporation into,
another Person or the liquidation or dissolution of the Corporation following
the conveyance or transfer of all or substantially all of its properties and
assets as an entirety to another Person upon the terms and conditions set forth
in Section 2.12 of this First Supplemental Indenture shall not be deemed a
Proceeding for the purposes of this Section 4.02 if the Person formed by such
consolidation or into which the Corporation is merged or the Person which
acquires by conveyance or transfer such properties and assets substantially as
an entirety, as the case may be, shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions set forth in such Section
2.12 of this First Supplemental Indenture.
SECTION 4.03. PRIOR PAYMENT TO SENIOR INDEBTEDNESS UPON ACCELERATION OF
NOTES. In the event that any Notes are declared due and payable before their
Stated Maturity, then and in such event, the holders of the Senior Indebtedness
outstanding at the time such Notes so become due and payable shall be entitled
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to receive payment in full of all amounts due or to become due on or in respect
of all Senior Indebtedness, or provision shall be made for such payment in cash
or Cash Equivalents or otherwise in a manner satisfactory to the holders of such
Senior Indebtedness, before the Holders of the Notes are entitled to receive
any Notes Payment (including any payment which may be payable by reason of the
payment of any other indebtedness of the Corporation being subordinated to the
payment of the Notes).
In the event that, notwithstanding the foregoing, the Corporation shall
make any Notes Payment to the Trustee or any Holder of Notes prohibited by the
foregoing provisions of this Article Four, and if such fact shall, at or prior
to the time of such Notes Payment, have been made known to the Trustee pursuant
to Section 4.10 or, as the case may be, such Holder, then and in such event,
such Notes Payment shall be paid over and delivered forthwith to the
Corporation.
The provisions of this Section 4.03 shall not apply to any Notes Payment
with respect to which Section 4.02 would be applicable.
SECTION 4.04. NO PAYMENT IN CERTAIN CIRCUMSTANCES. (a) During the
continuance of any default in the payment of any Senior Indebtedness beyond any
applicable grace period pursuant to which the maturity thereof may immediately
be accelerated, no payment or distribution of any assets of the Corporation of
any kind or character (other than capital stock of the Corporation or other
securities of the Corporation that are subordinated to Senior Indebtedness to at
least the same extent as the Notes) shall be made on account of the Subordinated
Obligations, or the purchase, redemption or other acquisition of, the Notes
unless and until such default has been cured or waived or has ceased to exist or
such Senior Indebtedness shall have been discharged or paid in full.
(b) During the continuance of any non-payment default with respect to any
Designated Senior Indebtedness pursuant to which the maturity thereof may
immediately be accelerated (a "Non-payment Default") and (x) after the receipt
by the Trustee from the representatives of such Designated Senior Indebtedness
of a written notice of such Non-payment Default or (y) if the Non-payment
Default results from the acceleration of the Notes, from the date of such
acceleration, no payment or distribution of any assets of the Corporation of
any kind or character (other than capital stock of the Corporation or other
securities of the Corporation that are subordinated to Senior Indebtedness to at
least the same extent as the Notes) shall be made by the Corporation on account
of the Subordinated Obligations, or the purchase, redemption or other
acquisition of, the Notes for the period specified below (the "Payment Blockage
Period").
The Payment Blockage Period will commence upon (x) the receipt of notice of
a Non-payment Default by the Trustee from the representatives of holders of
Designated Senior Indebtedness or (y) if the Non-payment Default results from
the acceleration of the Notes, upon such acceleration, and will end on the
earliest to occur of the following events: (i) 179 days shall have elapsed (A)
since the receipt of such notice of Non-payment Default or (B) if the Non-
payment Default results from the acceleration of the Notes, since such
acceleration (in each case, provided that such Designated Senior Indebtedness
shall not theretofore have been accelerated and the Corporation has not
defaulted with respect to the payment of such Designated Senior Indebtedness),
(ii) such default is cured or waived or ceases to exist or such Designated
Senior Indebtedness is discharged or (iii) such Payment Blockage Period shall
have been terminated by written notice to the Corporation or the Trustee from
the representatives of Designated Senior Indebtedness initiating such Payment
Blockage Period. After the end of any Payment Blockage Period, the Corporation
shall promptly resume making any and all required payments in respect of the
Notes, including any missed payments. Notwithstanding anything in the
subordination provisions of the Indenture or the Notes to the contrary, (x) in
no event shall a Payment Blockage Period extend beyond 179 days from the date
such Payment Blockage Period was commenced and (y) there shall be a period of at
least 186 consecutive days in each 365-day period when no Payment Blockage
Period is in effect. A Non-payment Default with respect to Designated Senior
Indebtedness that existed or was continuing on the date of the commencement of
any
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Payment Blockage Period with respect to the Designated Senior Indebtedness
initiating such Payment Blockage Period cannot be made the basis for the
commencement of a second Payment Blockage Period, whether or not within a period
of 365 consecutive days, unless such default has been cured or waived for a
period of not less than 90 consecutive days and subsequently recurs.
In the event that, notwithstanding the foregoing, the Corporation shall
make any Notes Payment to the Trustee or any Holder of Notes prohibited by the
foregoing provisions of this Section 4.04, and if such fact shall, at or prior
to the time of such Notes Payment, have been made known to the Trustee or, as
the case may be, such Holder, then and in such event, such Notes Payment shall
be paid over and delivered forthwith to the Corporation.
The Trustee shall give prompt written notice to the Corporation of any
notice from a holder of Senior Indebtedness received by the Trustee pursuant to
Section 4.10 which would prohibit the making of any payment to or by the Trustee
with respect to any Notes.
The provisions of this Section 4.04 shall not apply to any Notes Payment
with respect to which Section 4.02 would be applicable.
SECTION 4.05. PAYMENT PERMITTED IF NO DEFAULT. Nothing contained in this
Article Four or elsewhere in the Indenture or in any of the Notes shall prevent
(1) the Corporation, at any time except during the pendency of any Proceeding
referred to in Section 4.02 or under the conditions described in Sections 4.03
or 4.04, from making Notes Payments, or (2) the application by the Trustee of
any money deposited with it hereunder to Notes Payments or the retention of such
Notes Payment by Holders of Notes, if, at the time of such application by the
Trustee, it did not have knowledge that such Notes Payment would have been
prohibited by the provisions of this Article Four.
SECTION 4.06. SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS.
Subject to the payment in full of all amounts due or to become due on or in
respect of Senior Indebtedness, or the provision for such payment in cash or
Cash Equivalents or otherwise in a manner satisfactory to the holders of Senior
Indebtedness, the Holders of Notes shall be subrogated to the extent of the
payments or distributions made to the holders of such Senior Indebtedness
pursuant to the provisions of this Article Four (equally and ratably with the
holders of all Indebtedness of the Corporation which by its express terms is
subordinated to Indebtedness of the Corporation to substantially the same
extent as the Notes are subordinated and is entitled to like rights of
subrogation) to the rights of the holders of such Senior Indebtedness to receive
payments and distributions of cash, property and securities applicable to the
Senior Indebtedness until the principal of (and premium, if any) and interest on
the Notes shall be paid in full. For purposes of such subrogation, no payments
or distributions to the holders of the Senior Indebtedness of any cash, property
or securities to which the Holders of Notes or the Trustee would be entitled
except for the provisions of this Article Four, and no payments over pursuant
to the provisions of this Article Four to the holders of Senior Indebtedness by
Holders of Notes or the Trustee, shall, as among the Corporation, its creditors
other than holders of Senior Indebtedness and the Holders of the Notes, be
deemed to be a payment or distribution by the Corporation to or on account of
the Senior Indebtedness.
SECTION 4.07. PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS. The
provisions of this Article Four are and are intended solely for the purpose of
defining the relative rights of the Holders of the Notes on the one hand and
the holders of Senior Indebtedness on the other hand. Nothing contained in this
Article Four or elsewhere in this First Supplemental Indenture or in the Notes
is intended to or shall (1) impair, as among the Corporation, its creditors
other than holders of Senior Indebtedness and the Holders of Notes, the
obligation of the Corporation, which is absolute and unconditional, to pay to
the Holders of Notes the principal of (and premium, if any) and interest on the
Notes as and when the same shall become due and payable in accordance with the
terms hereof; or (2) affect the relative rights against the Corporation of the
Holders of
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Notes and creditors of the Corporation other than the holders of Senior
Indebtedness; or (3) prevent the Trustee or the Holder of any Note from
exercising all remedies otherwise permitted by applicable law upon default under
the Indenture, subject to the rights, if any, under this Article Four of the
holders of Senior Indebtedness to receive cash, property and securities
otherwise payable or deliverable to the Trustee or such Holder.
SECTION 4.08. TRUSTEE TO EFFECTUATE SUBORDINATION AND PAYMENT PROVISIONS.
Each Holder of a Note by acceptance thereof authorizes and directs the Trustee
to take such action as may be necessary or appropriate to effectuate the
subordination and payment provisions provided in this Article Four and appoints
the Trustee such Holder's attorney-in-fact for any and all such purposes.
SECTION 4.09. NO WAIVER OF SUBORDINATION PROVISIONS. No right of any
present or future holder of any Senior Indebtedness to enforce subordination as
herein provided shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Corporation or by any act or failure to
act, in good faith, by any such holder, or by any noncompliance by the
Corporation with the terms, provisions and covenants of the Indenture,
regardless of any knowledge thereof any such holder may have or be otherwise
charged with.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Indebtedness may, at any time and from time to time, without
the consent of or notice to the Trustee or the Holders of the Notes, without
incurring responsibility to the Holders of the Notes and without impairing or
releasing the subordination provided in this Article Four or the obligations
hereunder of the Holders of Notes to the holders of Senior Indebtedness, do any
one or more of the following: (i) change the manner, place or terms of payment
or extend the time of payment of, or renew or alter, Senior Indebtedness, or
otherwise amend or supplement in any manner Senior Indebtedness or any
instrument evidencing the same or any agreement under which Senior Indebtedness
is outstanding; (ii) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Indebtedness; (iii) release any
Person liable in any manner for the collection of Senior Indebtedness; and (iv)
exercise or refrain from exercising any rights against the Corporation and any
other Person.
SECTION 4.10. NOTICE TO TRUSTEE. The Corporation shall give prompt
written notice to the Trustee of any fact known to the Corporation which would
prohibit the making of any payment to or by the Trustee in respect of the Notes.
Notwithstanding the provisions of this Article Four or any other provision of
the Indenture, the Trustee shall not be charged with knowledge of the existence
of any facts which would prohibit the making of any payment to or by the Trustee
in respect of the Notes, unless and until the Trustee shall have received
written notice thereof from the Corporation or a holder of Senior Indebtedness
or from any trustee therefor; and, prior to the receipt of any such written
notice, the Trustee, subject to the provisions of Section 7.01 of the Original
Indenture, shall be entitled in all respects to assume that no such facts exist;
provided, however, that if the Trustee shall not have received the notice
provided for in this Section 4.10 at least three Business Days prior to the date
upon which by the terms hereof any money may become payable for any purpose
(including, without limitation, the payment of the principal of (and premium, if
any) or interest on, or amounts payable upon redemption or repurchase of, any
Note), then, anything herein contained to the contrary notwithstanding, the
Trustee shall have full power and authority to receive such money and to apply
the same to the purpose for which such money was received and shall not be
affected by any notice to the contrary which may be received by it within three
Business Days prior to such date.
Subject to the provisions of Section 7.01 of the Original Indenture, the
Trustee shall be entitled to rely on the delivery to it of a written notice by a
Person representing himself to be a holder of Senior Indebtedness (or a trustee
therefor) to establish that such notice has been given by a holder of Senior
Indebtedness (or a trustee therefor). In the event that the Trustee determines
in good faith that further evidence is required with respect to the right of any
Person as a holder of Senior Indebtedness to participate in any payment or
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distribution pursuant to this Article Four, the Trustee may request such Person
to furnish evidence to the reasonable satisfaction of the Trustee as to the
amount of Senior Indebtedness held by such Person, the extent to which such
person is entitled to participate in such payment or distribution and any other
facts pertinent to the rights of such Person under this Article Four, and if
such evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
SECTION 4.11. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING
AGENT. Upon any payment or distribution of assets of the Corporation referred
to in this Article Four, the Trustee, subject to the provisions of Section 7.01
of the Original Indenture, and the Holders of Notes shall be entitled to rely
upon any order or decree entered by any court of competent jurisdiction in which
such Proceeding is pending, or a certificate of the trustee in bankruptcy,
receiver, liquidating trustee, custodian, assignee for the benefit of creditors,
agent or other Person making such payment or distribution, delivered to the
Trustee or to the Holders of Notes, for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of the
Senior Indebtedness and other indebtedness of the Corporation, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article Four.
SECTION 4.12. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS.
The Trustee shall not be deemed to owe any fiduciary duty to the holders of
Senior Indebtedness and shall not be liable to any such holders if it shall in
good faith mistakenly pay over or distribute to Holders of Notes or to the
Corporation or to any other Person cash, property or securities to which any
holders of Senior Indebtedness shall be entitled by virtue of this Article Four
or otherwise.
SECTION 4.13. RIGHTS OF TRUSTEE AS HOLDER OF SENIOR INDEBTEDNESS;
PRESERVATION OF TRUSTEE'S RIGHTS. The Trustee in its individual capacity shall
be entitled to all the rights set forth in this Article Four with respect to
any Senior Indebtedness which may at any time be held by it, to the same extent
as any other holder of Senior Indebtedness, and nothing in the Indenture shall
deprive the Trustee of any of its rights as such holder.
SECTION 4.14. ARTICLE APPLICABLE TO PAYING AGENTS. In case at any time
any Paying Agent other than the Trustee shall have been appointed by the
Corporation and be then acting hereunder, the term "Trustee" as used in this
Article Four shall in such case (unless the context otherwise requires) be
construed as extending to and including such Paying Agent within its meaning as
fully for all intents and purposes as if such Paying Agent were named in this
Article Four in addition to or in place of the Trustee.
ARTICLE FIVE
ADDITIONAL EVENTS OF DEFAULT APPLICABLE
TO THE NOTES
SECTION 5.01. EVENTS OF DEFAULT APPLICABLE TO THE NOTES. The term "Event
of Default" whenever used herein with respect to the Notes shall mean any of the
events set forth in Section 6.01 of the Original Indenture (other than
subsection (d) of said Section 6.01) and any of the following events:
(a) the Corporation fails to comply with any of its obligations set forth
in Sections 2.07 , 2.12 and 3.03 of this First Supplemental Indenture;
or
(b) the Corporation fails to perform or observe any other term, covenant
or agreement contained in the Notes, or the Indenture (other than a
default specified in subsection (a), (b) or (c) of
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Section 6.01 of the Original Indenture or the foregoing subsection (a)
of this Section 5.01) for a period of 30 days after written notice to
comply shall have been given (a) to the Corporation by the Trustee or
(b) to the Corporation and the Trustee by the Holders of at least 25%
in aggregate principal amount of the Notes then outstanding; or
(c) a default or defaults under one or more agreements, indentures or
instruments under which the Corporation or any Restricted Subsidiary
then has Indebtedness outstanding in excess of $10 million,
individually or in the aggregate, and either (a) such Indebtedness is
already due and payable in full or (b) such default or defaults result
in the acceleration of the maturity of such Indebtedness; or
(d) one or more judgments, orders or decrees of any court or regulatory or
administrative agency for the payment of money in excess of $10
million (in excess of the coverage under applicable insurance policies
(after giving effect to any deductibles) under which a financially
sound and reputable insurer has not disputed coverage), individually
or in the aggregate, shall have been rendered against the Corporation
or any Restricted Subsidiary or any of their respective properties and
shall not have been discharged, and either (a) any creditor shall have
commenced an enforcement proceeding upon such judgment, order or
decree or (b) there shall have been a period of 60 consecutive days
during which a stay of enforcement of such judgment, order or decree,
by reason of a pending appeal or otherwise, shall not be in effect; or
(e) the entry by a court having jurisdiction in the premises of a decree
or order for relief in respect of a Material Subsidiary in an
involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of such Material Subsidiary or for any substantial part of
its property, or ordering the winding up or liquidation of its
affairs, if such decree or order shall remain unstayed and in effect
for a period of 60 consecutive days, or
(f) the commencement by a Material Subsidiary of a voluntary case under
any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or such Material Subsidiary's consent to the
entry of an order for relief in any involuntary case under any such
law, or its consent to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator (or
similar official) of such Material Subsidiary or for any substantial
part of its property, or the making by such Material Subsidiary of any
general assignment for the benefit of creditors, or its failure
generally to pay its debts as they become due or the taking by such
Material Subsidiary of any corporate action in furtherance of any of
the foregoing.
(g) any holder of at least $10 million in aggregate principal amount of
Indebtedness of the Corporation, or any Restricted Subsidiary shall
(a) commence judicial proceedings to foreclose upon assets of the
Corporation or any Restricted Subsidiary having a Fair Market Value,
individually or in the aggregate, in excess of $10 million or (b) have
exercised any right under applicable law or applicable security
documents to take ownership of any such assets in lieu of foreclosure.
If an Event of Default (other than as specified in clause (g) with
respect to the Corporation) shall occur and be continuing, the
Trustee, by notice to the Corporation, or the Holders of at least 25%
in aggregate principal amount of the Notes then outstanding, by notice
to the
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Trustee and the Corporation (an "Acceleration Notice"), may declare
the principal of, premium, if any, and accrued interest on all of the
outstanding Notes due and payable immediately, upon which declaration
all such amounts payable in respect of the Notes (x) will become and
be immediately due and payable or (y) if there are any amounts
outstanding under the Revolving Credit Facility, will become and be
immediately due and payable upon the first to occur of an acceleration
under the Revolving Credit Facility, or three (3) business days after
receipt by the Corporation and the agent under the Revolving Credit
Facility of such Acceleration Notice, unless such Event of Default has
been cured or waived prior to such date. If an Event of Default
specified in clause (g) above with respect to the Corporation occurs
and is continuing, then the principal of, premium, if any, and accrued
interest on all of the outstanding Notes will become and be
immediately due and payable without any declaration or further action
on the part of the Trustee or any Holder of Notes.
After a declaration of acceleration, but before 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 Notes then
outstanding, by written Notice to the Corporation and the Trustee, may
rescind such declaration if (a) the Corporation has paid or deposited
with the Trustee a sum sufficient to pay (i) all sums paid or advanced
by the Trustee under the Indenture 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 at the rate borne
by the Notes, and (b) 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 the Indenture.
ARTICLE SIX
DEFEASANCE PROVISIONS APPLICABLE
TO THE NOTES AND DISCHARGE
SECTION 6.01. DEFEASANCE PROVISIONS OF ORIGINAL INDENTURE NOT APPLICABLE
TO THE NOTES. The provisions of Sections 11.01, 11.02 and 11.03 of the Original
Indenture shall not apply to the Notes.
SECTION 6.02. LEGAL DEFEASANCE OF THE NOTES. Upon deposit with the
Trustee, in trust, at or before maturity, of money or securities of the kind and
in the necessary amount (as provided in Section 11.04 of the Original Indenture
and confirmed by a nationally recognized firm of independent public accountants)
to pay or redeem Outstanding Notes (whether upon or prior to their Stated
Maturity or any Redemption Date applicable thereto (provided that if the Notes
are to be redeemed prior to the maturity thereof, notice of such redemption
shall have been given as provided in Article Three of the Original Indenture or
provisions satisfactory to the Trustee shall have been made for the giving of
such notice), and compliance by the Corporation with the provisions of Section
6.04 of this First Supplemental Indenture, the obligation of the Corporation
duly and punctually to pay or cause to be paid the principal of and any interest
and premium in respect of the Notes and all liability of the Corporation in
respect of such payment shall cease, terminate and be completely discharged;
provided that such discharge shall not apply to (a) the rights of the Holders of
the Notes to receive payments in respect of the principal of, premium, if any,
and interest on the Notes when such payments are due, only out of the money or
securities deposited with the Trustee as aforesaid for their payment, (b) the
Corporation's obligation to issue temporary Notes, register the transfer or
exchange of any Notes, replace mutilated, destroyed, lost or stolen Notes and
maintain an office or agency for payments in
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respect of the Notes, (c) the rights, powers, trusts, duties and immunities of
the Trustee or (d) the requirement for the Corporation to comply with the
provisions of this Article Six.
SECTION 6.03. COVENANT DEFEASANCE OF THE NOTES. Upon (a) the deposit
with the Trustee, in trust, prior to maturity of money or securities of the kind
and in the necessary amount (as provided in Section 11.04 of the Original
Indenture and confirmed by a nationally recognized firm of independent public
accountants) to pay or redeem Outstanding Notes (whether upon or prior to their
Stated Maturity or any applicable Redemption Date therefor, provided that if
such Notes are to be redeemed prior to the maturity thereof, notice of such
redemption shall have been given as provided in Article Three of the Original
Indenture or provision satisfactory to the Trustee shall have been made for the
giving of such notice) and (b)compliance by the Corporation with the provisions
of Section 6.04 of this First Supplemental Indenture, all of the obligations
covenants and agreements of the Corporation with respect to the Notes set forth
in Section 4.02, 4.04 and 4.05 of the Original Indenture and in Article Two of
this First Supplemental Indenture shall cease, terminate and be completely
discharged.
SECTION 6.04. ADDITIONAL CONDITIONS TO LEGAL OR COVENANT DEFEASANCE OF THE
NOTES. In addition to the requirements for legal or covenant defeasance set
forth in Sections 6.02 and 6.03 of this First Supplemental Indenture, the
following conditions precedent shall also apply: (a) the Corporation shall have
delivered to the Trustee an opinion of independent counsel in the United States
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 legal
defeasance or 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 legal defeasance or covenant defeasance had not occurred (in
the case of legal defeasance under Section 6.02 of this First Supplemental
Indenture, such opinion must refer to and be based upon a ruling of the Internal
Revenue Service or a change in applicable federal income tax laws); (b) no
Default shall have occurred and be continuing on the date of such deposit with
respect to any of the events set forth in subsections (e) or (f) of Section 6.01
of the Original Indenture or subsections (e) or (f) of Section 5.01 of this
First Supplemental Indenture at any time during the period ending on the 91st
day after the date of deposit; (c) such legal defeasance or covenant defeasance
shall not cause the Trustee to have a conflicting interest with respect to any
securities of the Corporation; (d) such legal defeasance or covenant defeasance
shall not result in a breach or violation of, or constitute a default under, any
material agreement or instrument to which the Corporation is a party or by which
it is bound; (e) such legal defeasance or covenant defeasance shall not result
in the trust arising from such deposit constituting an investment company within
the meaning of the Investment Company Act of 1940, as amended, unless such trust
shall be registered under such Act or exempt from registration thereunder; (f)
the Corporation shall have delivered to the Trustee an opinion of independent
counsel in the United States to the effect that after the 91st day following the
deposit, the trust funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally; (g) the Corporation shall have delivered to the Trustee an
officers' certificate stating that the deposit was not made by the Corporation
with the intent of preferring the Holders of the Notes over the other creditors
of the Corporation with the intent of defeating, hindering, delaying or
defrauding creditors of the Corporation or others; (h) no event or condition
shall exist that would prevent the Corporation from making payments of the
principal of, premium, if any, and interest on the Notes on the date of such
deposit or at time ending on the 91st day after the date of such deposit; and
(x) the Corporation shall have delivered to the Trustee an officers' certificate
and an opinion of counsel, each stating that all conditions precedent under the
Indenture to either legal defeasance or covenant defeasance, as the case may be,
have been complied with.
SECTION 6.05. SATISFACTION AND DISCHARGE OF FIRST SUPPLEMENTAL INDENTURE.
The First Supplemental Indenture shall cease to be of further effect (except as
to any surviving rights of transfer or exchange of Notes expressly provided for
in the Indenture), and the Trustee, on demand of the Corporation,
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shall execute proper instruments acknowledging satisfaction and discharge of
this First Supplemental Indenture, when
(1) either:
(A) all Notes theretofore authenticated and delivered (other than (i)
Notes which have been destroyed, lost or stolen and which have
been replaced or paid as provided in the Indenture, and (ii)
Notes money for whose payment has theretofore been deposited in
trust or segregated and held in trust by the Corporation and
thereafter repaid to the Corporation or discharged from such
trust, as provided in the Indenture) have been delivered to the
Trustee canceled or for cancellation; or
(B) all such Notes not theretofore delivered to the Trustee canceled
or for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) are to be called for redemption within one year and
provision satisfactory to the Trustee for the giving of
notice of redemption shall have been made,
and the Corporation, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust funds in
trust for the purpose an amount sufficient to pay and discharge the
entire indebtedness on such Notes not theretofore delivered to the
Trustee canceled or for cancellation, for principal (and premium, if
any) and interest to the date of such deposit (in the case of Notes
which have become due and payable), or to the Stated Maturity or
Redemption Date, as the case may be;
(2) the Corporation has paid or caused to be paid all other sums payable
hereunder by the Corporation; and
(3) the Corporation has delivered to the Trustee such certificates and
opinions, if any, as the Trustee shall reasonably require to the
effect that all conditions precedent herein provided for relating to
the satisfaction and discharge of the Corporation's obligations under
this First Supplemental Indenture have been complied with.
SECTION 6.06. APPLICATION OF TRUST MONEY. All money deposited with the
Trustee pursuant to Section 6.05 of this First Supplemental Indenture shall be
held in trust and applied by it to the payment, either directly or through any
Paying Agent (including the Corporation acting as its own Paying Agent), as the
Trustee may determine, to the Holders of the Notes for whose payment or
redemption such money has been deposited with the Trustee, of all sums due and
to become due thereon for principal (and premium, if any) and interest.
ARTICLE SEVEN
MODIFICATION AND AMENDMENT
SECTION 7.01. ADDITIONAL PURPOSES FOR WHICH SUPPLEMENTAL INDENTURES MAY BE
ENTERED INTO WITHOUT CONSENT OF HOLDERS OF NOTES. Without the consent of the
Holders of any Notes, the Corporation and the Trustee may from time to time and
at any time enter into an indenture or indentures supplemental
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hereto (which shall comply with the provisions of the Trust Indenture Act of
1939 as then in effect) for the purposes set forth in Section 10.01 of the
Original Indenture and for the purpose of securing the Notes or adding a
guarantor under the Indenture, provided, however, that in the case of clause (g)
of the Original Indenture, such provisions shall not adversely affect the
Holders of the Notes.
SECTION 7.02. MODIFICATION OF INDENTURE WITH CONSENT OF HOLDERS OF EACH
OUTSTANDING NOTE AFFECTED THEREBY. In addition to clauses (a) through (d)
inclusive of Section 10.02 of the Original Indenture, no amendment or
modification of the Indenture or the Notes shall, without the consent of the
Holder of each outstanding Note affected thereby:
(a) alter the optional redemption or repurchase provisions of any such Note
or the Indenture in a manner adverse to the Holders of the Notes;
(b) change the place of payment of principal of (or premium on) or interest
on any such Note;
(c) modify any provisions of the Indenture relating to the waiver of past
defaults (other than to add sections of the Indenture or the Notes
subject thereto);
(d) waive a default in the payment of principal of, premium, if any, or
interest on, or redemption payment with respect to, the Notes (except a
rescission of acceleration of the Notes by the Holders thereof as
provided in the Indenture and a waiver of the payment default that
resulted from such acceleration);
(e) modify the ranking or priority of any Note; or
(f) following the occurrence of a Change of Control or Asset Sale, modify
the provisions of any covenant (or the related definitions) in the
Indenture requiring the Corporation to make and consummate a Change of
Control Offer in respect of such Change of Control or Asset Sale Offer
in respect of an Asset Sale or modify any of the provisions or
definitions with respect thereto in a manner materially adverse to the
Holders of each outstanding Note affected thereby.
ARTICLE EIGHT
MISCELLANEOUS PROVISIONS
SECTION 8.01. PROVISIONS OF THE ORIGINAL INDENTURE. Except insofar as
herein otherwise expressly provided, all the definitions, provisions, terms and
conditions of the Original Indenture shall be deemed to be incorporated in and
made a part of this First Supplemental Indenture; and the Original Indenture, as
amended and supplemented by this First Supplemental Indenture, is in all
respects ratified and confirmed, and the Original Indenture and this First
Supplemental Indenture shall be read, taken and considered as one and the same
instrument for all purposes and every Holder of the Notes authenticated and
delivered under the Indenture shall be bound hereby; provided, however, that to
the extent terms or provisions of this First Supplemental Indenture conflict
with or are inconsistent with terms or provisions in the Original Indenture, the
terms and provisions of this First Supplemental Indenture shall govern.
SECTION 8.02. LIMITATION OF SUITS BY HOLDERS OF NOTES. No Holder of any
Notes shall have any right by virtue of any provision of the Indenture to
institute any suit, action or proceeding in equity or at law upon or under or
with respect to the Indenture or for the appointment of a receiver or trustee,
or for any other remedy hereunder, unless such Holder previously shall have
given to the Trustee written notice of a
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continuing Event of Default as provided in the Indenture, and unless also the
Holders of not less that 25% in principal amount of the Notes then outstanding
shall have made written request upon the Trustee to institute such action, suit
or proceeding in its own name as Trustee and shall have offered to the Trustee
such reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby (including the reasonable fees of
counsel for the Trustee), and the Trustee, for 15 days after its receipt of such
notice, request and offer of indemnity, shall have neglected or refused to
institute any such action, suit or proceeding and no direction inconsistent with
such written request shall have been given to the Trustee pursuant to this
Section 8.02; it being understood and intended, and being expressly covenanted
by the taker and Holder of every Security with every other taker and Holder and
the Trustee, that no one or more Holders of Securities shall have any right in
any manner whatever by virtue or by availing of any provision of this Indenture
to affect, disturb or prejudice the rights of the Holders of any other of such
Securities, or to obtain or seek to obtain priority over or preference to any
other such Holder, or to enforce any right under this Indenture, except in the
manner herein provided and for the equal, ratable and common benefit of all
Holders of Securities. For the protection and enforcement of the provisions of
this Section 8.02, each and every Holder and the Trustee shall be entitled to
such relief as can be given either at law or in equity.
SECTION 8.03. SEPARABILITY OF INVALID PROVISIONS. In case any one or more
of the provisions contained in this First Supplemental Indenture should be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions contained in this First
Supplemental Indenture, and to the extent and only to the extent that any such
provision is invalid, illegal or unenforceable, this First Supplemental
Indenture shall be construed as if such provision had never been contained
herein.
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<PAGE>
SECTION 8.04. EXECUTION IN COUNTERPARTS. This First Supplemental
Indenture may be simultaneously executed and delivered in any number of
counterparts, each of which when so executed and delivered shall be deemed to be
an original; but such counterparts shall together constitute but one and the
same instrument.
IN WITNESS WHEREOF, CB RICHARD ELLIS SERVICES, INC. has caused this First
Supplemental Indenture to be signed by its Chairman of the Board or one of its
Vice Presidents and STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, NATIONAL
ASSOCIATION has caused this Indenture to be signed by one of its Vice Presidents
and one of its Assistant Secretaries.
CB RICHARD ELLIS SERVICES, INC.
By _____________________________________________
STATE STREET BANK AND TRUST COMPANY OF
CALIFORNIA, NATIONAL ASSOCIATION, as Trustee
By _____________________________________________
By _____________________________________________
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<PAGE>
EXHIBIT A
$______________ R-__________
CUSIP No. __________
CB RICHARD ELLIS SERVICES, INC.
8 7/8% SENIOR SUBORDINATED NOTE DUE 2006
[UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY ("DTC"), TO CB RICHARD ELLIS SERVICES, INC. OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT AND ANY NOTE 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 IS MADE TO CEDE & CO., OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL, INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.]*
[UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY DTC TO A NOMINEE OF
DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC OR BY DTC OR ANY
NOMINEE OF DTC TO A SUCCESSOR DEPOSITARY OR ANY NOMINEE OF SUCH SUCCESSOR
DEPOSITARY.]*
CB RICHARD ELLIS SERVICES, INC. (herein referred to as "CB Richard Ellis"),
a corporation duly organized and existing under the laws of the State of
Delaware, for value received, hereby promises to pay to __________________, or
registered assigns, the principal sum of $____________ on June 1, 2006, in
lawful money of the United States of America and to pay interest (computed on
the basis of a 360-day year of twelve 30-day months) thereon in like money from
_________**, 1998 OR FROM THE MOST RECENT INTEREST PAYMENT DATE (HEREINAFTER
DEFINED) TO WHICH INTEREST HAS BEEN PAID OR DULY PROVIDED FOR UNTIL PAYMENT OF
SUCH PRINCIPAL SUM, AT THE RATE OF 8 7/8% PER ANNUM, PAYABLE ON EACH JUNE 1 AND
DECEMBER 1, COMMENCING DECEMBER 1, 1998 (THE "INTEREST PAYMENT DATES").
THE PRINCIPAL HEREOF IS PAYABLE UPON PRESENTATION AND SURRENDER OF THIS
NOTE AT THE OFFICE OF STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA,
NATIONAL ASSOCIATION, AS TRUSTEE (HEREIN CALLED THE "TRUSTEE") IN NEW YORK CITY,
NEW YORK. INTEREST ON THIS NOTE MAY BE PAYABLE BY CHECK OR DRAFT MAILED TO THE
PERSON IN WHOSE NAME THIS NOTE IS REGISTERED AT THE CLOSE OF BUSINESS OF THE
RECORD DATE FOR SUCH INTEREST PAYMENT AT SUCH PERSON'S ADDRESS AS IT APPEARS ON
THE REGISTRATION BOOKS OF THE TRUSTEE. THE RECORD DATES FOR THE NOTES ARE MAY
15 AND NOVEMBER 15, RESPECTIVELY.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH ON THE
REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME
EFFECT AS IF FULLY SET FORTH AT THIS PLACE.
______________________
* To be included only if this Note is issued as a Global Note.
** Insert Date of Issuance
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<PAGE>
THIS NOTE SHALL NOT BE ENTITLED TO ANY BENEFIT UNDER THE INDENTURE
(HEREINAFTER DEFINED), OR BECOME VALID OR OBLIGATORY FOR ANY PURPOSE, UNTIL THE
CERTIFICATE OF AUTHENTICATION HEREON ENDORSED SHALL HAVE BEEN EXECUTED BY MANUAL
SIGNATURE BY THE TRUSTEE.
IN WITNESS WHEREOF, CB RICHARD ELLIS SERVICES, INC. HAS CAUSED THIS NOTE TO
BE SIGNED BY ONE OF ITS SENIOR EXECUTIVE VICE PRESIDENTS MANUALLY OR IN
FACSIMILE AND ITS CORPORATE SEAL TO BE IMPRINTED HEREON AND ATTESTED BY THE
MANUAL OR FACSIMILE SIGNATURE OF ITS SECRETARY OR AN ASSISTANT SECRETARY.
CB RICHARD ELLIS SERVICES, INC.
BY: ____________________________________
ATTEST: _______________________
ASSISTANT SECRETARY
DATED: MAY 26, 1998
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
THIS IS ONE OF THE SECURITIES, OF THE
SERIES DESIGNATED HEREIN, DESCRIBED IN
THE WITHIN-MENTIONED INDENTURE.
STATE STREET BANK AND TRUST COMPANY OF
CALIFORNIA, NATIONAL ASSOCIATION, AS TRUSTEE
BY: ___________________________
AUTHORIZED OFFICER
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<PAGE>
(REVERSE OF NOTE)
CB RICHARD ELLIS SERVICES, INC.
8 7/8% SENIOR SUBORDINATED NOTE DUE 2006
This Note is one of a duly authorized issue of securities of CB Richard Ellis,
not limited in aggregate principal amount, all issued or to be issued in one or
more series of varying dates, numbers, interest rates and other provisions,
under an Indenture dated as of May 26, 1998, as amended by the First
Supplemental Indenture dated as of May 26, 1998, (such Indenture as so amended
being herein referred to as the "Indenture"), each being between CB Richard
Ellis and the Trustee. Capitalized terms used and not otherwise defined herein
have the meaning set forth in the Indenture. This Note is one of a series of
Notes designated as its "8 7/8% Senior Subordinated Notes Due 2006" aggregating
$175,000,000 in principal amount (herein called the "Notes").
Reference is hereby made to the Indenture and all indentures supplemental
thereto for a description of the rights, obligations, duties and immunities
thereunder of CB Richard Ellis, the Trustee and the Holders of the Notes, to all
of the provisions of which Indenture the registered owner of this Note, by
acceptance hereof, assents and agrees. The Indenture contains provisions
permitting CB Richard Ellis and the Trustee, with the consent of the Holders of
not less than a majority in aggregate principal amount of the Securities (which
term is defined in the Indenture as any security or securities of CB Richard
Ellis, authenticated and delivered under the Indenture) at the time Outstanding
and affected by such supplemental indenture (voting as one class), to execute
one or more supplemental indentures for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of the Indenture
or of any supplemental indenture or of modifying in any manner the rights of the
Holders of such Securities; provided, however, that no such supplemental
indenture shall, without the consent of the Holder of each Outstanding Security
(including the Notes) affected thereby: (1) change the fixed maturity or
redemption date of any Note, or reduce the rate of interest on any Note or the
method of determining such rate of interest or extend the time of payment of
interest, or reduce the principal amount thereof, or reduce any premium payable
on the redemption thereof, or change the coin or currency in which the Notes or
the interest thereon is payable or impair the right to institute suit for the
enforcement of any such payment on or after the maturity thereof (or, in the
case of redemption, on or after the redemption date), (2) reduce the aforesaid
percentage of Holders of the Outstanding Securities whose consent is required
for the execution of such supplemental indenture, or the consent of the Holders
of which is required for any waiver provided for in the Indenture, (3) change
the time of payment or reduce the amount of any minimum sinking account or fund
payment or (4) modify any provisions of the Indenture relating to the amendment
thereof or the creation of a supplemental indenture (except to increase the
rights of the Holders). It is also provided in the Indenture that the Holders
of a majority in principal amount of the Notes may waive any past Event of
Default with respect to the Notes and its consequences, except a continuing
default in the payment of the principal of or interest on the Notes or in
respect of a covenant or provision of the Indenture which cannot be modified or
amended without the consent of the registered owner of each Note so affected.
In addition, the First Supplemental Indenture provides that no modification or
amendment of the Indenture or the Notes may be made without the consent of the
Holder of each Outstanding Note affected thereby to (a) alter the optional
redemption or repurchase provisions of any such Note or the Indenture in a
manner adverse to the Holders of the Notes, (b) change the place of payment of
principal of (or premium on) or interest on any such Note;, (c) modify any
provision of the Indenture relating to the waiver of past defaults (other than
to add sections of the Indenture or the Notes subject thereto), (d) waive a
default in the payment of the principal of, premium, if any, or interest on, or
redemption payment with respect to, the Notes (except a rescission or
acceleration of the Notes by the Holders thereof as provided in the Indenture
and a waiver of a payment default that resulted from such acceleration), (e)
modify the ranking or priority of any Note or (f) following the occurrence of a
Change of Control or Asset Sale, modify the provisions of any covenant (or the
related definitions) in the Indenture requiring the Corporation to make and
consummate a Change of Control Offer in respect of such Change of
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Control or Asset Sale Offer in respect of an Asset Sale or modify any of the
provisions or definitions with respect thereto in a manner materially adverse to
the Holders of each outstanding Note affected thereby.
The Notes will be redeemable, at the option of CB Richard Ellis, in whole or in
part, at any time on or after June 1, 2002, at the redemption prices (expressed
as a percentage of principal amount) set forth herein, together with accrued and
unpaid interest thereon, if any, to the date of redemption, if redeemed during
the 12-month period beginning on June 1 of the years below:
<TABLE>
<CAPTION>
Year Percentage Price
---- ----------------
<S> <C>
2002.................. 104.438%
2003.................. 102.958%
2004.................. 101.479%
2005 and thereafter... 100.000%
</TABLE>
On or prior to June 1, 2001, CB Richard Ellis may redeem, at any time or from
time to time, up to 35% of the aggregate principal amount of the Notes
originally issued at a redemption price equal to 108 7/8% of the principal
amount thereof, plus accrued and unpaid interest thereon, if any, to the date of
redemption, with the net cash proceeds of one or more Public Equity Offerings,
provided, however, that at least $113,750,000 in aggregate principal amount of
Notes remains outstanding immediately after giving effect to each such
redemption.
Notice of redemption will be mailed at least 30 days but not more than 60 days
prior to the redemption date to each registered owner of Notes to be redeemed at
its registered address. Notes which are called for redemption (unless CB
Richard Ellis shall default in the payment thereof) shall cease to be entitled
to the benefits of the Indenture and shall cease to bear interest from and after
the date fixed for redemption.
The indebtedness evidenced by the Notes is, to the extent and in the manner
provided in the Indenture, expressly subordinate in right of payment to the
prior payment in full of the Senior Indebtedness, whether outstanding on the
date of the Indenture or thereafter incurred, and this Note is issued subject to
the provisions of the Indenture with respect to such subordination. The
Corporation agrees, and each Holder of a Note by accepting a Note agrees, to the
subordination and authorizes the Trustee to give it effect.
If an Event of Default (as that term is defined in the Indenture) shall occur,
the principal of all Notes and the interest accrued thereon may be declared due
and payable upon the conditions, in the manner and with the effect provided in
the Indenture. The Indenture provides that in certain events such declaration
and its consequences may be waived by the Holders of a majority in aggregate
principal amount of the Notes then Outstanding.
The Notes are issuable in registered form in denominations of $1,000 and any
integral multiple thereof. Notes may be exchanged for a like aggregate amount
of Notes of other authorized denominations as provided in the Indenture. This
Note is transferable at the office of the Trustee in New York, New York by the
registered owner hereof in person, or by such registered owner's attorney duly
authorized in writing, on the books of the Trustee, but only in the manner,
subject to the limitations and upon payment of the charges provided in the
Indenture, and upon surrender and cancellation of this Note. Upon such transfer
a new fully registered Note or Notes of authorized denomination or
denominations, for the same aggregate principal amount will be issued to the
transferee in exchange herefor.
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CB Richard Ellis, the Trustee and any agent of CB Richard Ellis or the Trustee
may treat the registered owner hereof as the absolute owner of this Note for the
purpose of receiving payment as herein provided and for all other purposes, and
none of CB Richard Ellis, the Trustee or any such agent shall be affected by
notice to the contrary.
THIS NOTE, THE INDENTURE AND THE OBLIGATIONS OF CB RICHARD ELLIS IN RESPECT
HEREOF AND THEREOF ARE GOVERNED BY AND SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION, SECTION 5-1401 OF
THE NEW YORK GENERAL OBLIGATIONS LAW).
No recourse shall be had for the payment of the principal of or the interest on
this Note or for any claim based hereon, or otherwise in respect hereof, or
based on or in respect of the Indenture or any indenture supplemental thereto,
against any incorporator, stockholder, officer or director, as such, past,
present or future of CB Richard Ellis or of any successor thereof, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.
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ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM --as tenants in common
TEN ENT --as tenants by the entireties
JT TEN --as joint tenants with right of survivorship and not as
tenants in common
UNIF GIFT MIN ACT--_______ Custodian _______
(Cust) (Minor)
under Uniform Gifts to Minors
Act __________________
(State)
Additional abbreviations may also be used though not in the above list.
________________
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and transfer(s)
unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
____________________________________
_________________________________________________________________
Please print or typewrite name and address including postal zip code of assignee
_________________________________________________________________
_________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably
constituting and appointing _______________________________
attorney to transfer said Note on the books of CB Richard Ellis, with full power
of substitution in the premises.
Dated: _______________
__________________
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within instrument in every particular, without
alteration or enlargement or any change whatever.
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