<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission File Number: 0-22098
INSILCO CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 06-0635844
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
425 Metro Place North
Fifth Floor
Dublin, Ohio 43017
(Address of principal executive offices) (Zip Code)
614-792-0468
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. (X) Yes ( ) No
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. (X) Yes ( ) No
The registrant meets the conditions set forth in General Instruction H (1) (a)
and (b) of Form 10-Q and is therefore filing this Form with the reduced
disclosure format.
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. As of November 12, 1998, 100
shares of common stock, $.001 par value, were outstanding.
<PAGE> 2
INSILCO CORPORATION AND SUBSIDIARIES
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
Part I. FINANCIAL INFORMATION Page
----
<S> <C>
Item 1. Financial Statements
Condensed Consolidated Balance Sheets 3
- September 30, 1998 (unaudited)
- December 31, 1997
Condensed Consolidated Statements of Operations 4
- Nine months ended September 30, 1998 (unaudited)
- Nine months ended September 30, 1997 (unaudited)
- Three months ended September 30, 1998 (unaudited)
- Three months ended September 30, 1997 (unaudited)
Condensed Consolidated Statement of Stockholders' Equity
(Deficit) 5
- For the nine months ended September 30, 1998
(unaudited)
Condensed Consolidated Statements of Cash Flows 6
- Nine months ended September 30, 1998 (unaudited)
- Nine months ended September 30, 1997 (unaudited)
Notes to Unaudited Condensed Consolidated Financial Statements 7
Independent Auditors' Review Report 12
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 13
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 20
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INSILCO CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
(Unaudited)
September 30, December 31,
1998 1997
--------- ---------
Assets
------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 4,659 10,651
Trade receivables, net 84,167 67,209
Other receivables 3,651 3,477
Inventories, net 60,989 60,718
Deferred taxes 4,396 277
Prepaid expenses and other current assets 4,135 2,716
--------- ---------
Total current assets 161,997 145,048
Property, plant and equipment, net 114,131 113,971
Investment in Thermalex 10,556 9,736
Goodwill, net 13,219 13,408
Other assets and deferred charges 19,114 20,510
--------- ---------
Total assets $ 319,017 302,673
========= =========
Liabilities and Stockholders' Deficit
-------------------------------------
Current liabilities:
Current portion of long-term debt $ 15 1,684
Current portion of other long-term obligations 2,104 5,393
Accounts payable 36,624 39,757
Accrued expenses and other 44,645 58,706
--------- ---------
Total current liabilities 83,388 105,540
Long-term debt, excluding current portion 314,492 256,059
Deferred taxes 3,019 -
Other long-term obligations, excluding current portion 45,300 43,402
Amounts due to parent 2,981 -
Stockholders' deficit (130,163) (102,328)
--------- ---------
Contingencies (See Note 8)
Total liabilities and stockholders' deficit $ 319,017 302,673
========= =========
</TABLE>
Note: The condensed consolidated balance sheet at December 31, 1997 has been
derived from the audited balance sheet as of that date.
See accompanying notes to unaudited condensed consolidated financial statements.
3
<PAGE> 4
INSILCO CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Nine Months Nine Months Three Months Three Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Sales $ 422,388 407,609 135,065 131,394
Cost of products sold 298,743 283,203 98,072 93,250
Depreciation and amortization 15,787 14,353 5,144 4,749
Selling, general and administrative expenses 74,698 70,289 23,995 22,432
Merger expenses 20,890 - 19,549 -
--------- --------- --------- ---------
Operating income (loss) 12,270 39,764 (11,695) 10,963
--------- --------- --------- ---------
Other income (expense):
Interest expense (20,567) (13,460) (6,762) (5,698)
Interest income 94 2,808 22 770
Equity in net income of Thermalex 2,144 2,154 693 607
Other income, net 2,430 188 405 120
--------- --------- --------- ---------
Total other income (expense) (15,899) (8,310) (5,642) (4,201)
--------- --------- --------- ---------
Income (loss) from continuing operations
before income taxes and extraordinary item (3,629) 31,454 (17,337) 6,762
Income tax benefit (expense) (1,214) (11,571) 5,280 (2,447)
--------- --------- --------- ---------
Income (loss) from continuing operations
before extraordinary item (4,843) 19,883 (12,057) 4,315
Discontinued operations, net of tax:
Income from operations, net of tax of $1,037 - 1,170 - -
Gain on disposal, net of tax of $37,213 - 57,788 - -
--------- --------- --------- ---------
- 58,958 - -
--------- --------- --------- ---------
Income (loss) before extraordinary item (4,843) 78,841 (12,057) 4,315
Extraordinary item - (728) - (728)
--------- --------- --------- ---------
Net income (loss) $ (4,843) 78,113 (12,057) 3,587
========= ========= ========= =========
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
4
<PAGE> 5
INSILCO CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statement of Stockholders' Equity (Deficit)
For the Nine Months Ended September 30, 1998
(unaudited)
(In thousands)
<TABLE>
<CAPTION>
Accumulated
Common Stock Additional Retained Other Total
Par Value Paid-in Earnings Treasury Comprehensive Stockholders'
$0.001 Capital (Deficit) Stock Income Equity (Deficit)
-------- -------- -------- -------- -------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1997 $ 5 - (82,756) (16,268) (3,309) (102,328)
Net income (loss) - - (4,843) - - (4,843)
Merger Eliminations (5) (4,220) (12,043) 16,268 - -
Dividend to parent - - (30,856) - - (30,856)
Equity investment by parent 3,668 - - - 3,668
Issuance of Shares upon exercise
of stock options - 3,281 - - - 3,281
Tax benefit from exercise of stock options - 939 - - - 939
Other comprehensive income - - - - (24) (24)
-------- ------- -------- -------- -------- --------
Balance at September 30, 1998 $ - 3,668 (130,498) - (3,333) (130,163)
======== ======= ======== ======== ======== ========
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
5
<PAGE> 6
INSILCO CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
September 30, September 30,
1998 1997
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (4,843) 78,113
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization 15,787 14,353
Deferred tax expense 350 7,672
Other noncash charges and credits (2,569) (42)
Change in operating assets and liabilities:
Receivables (16,665) (17,432)
Inventories 27 3,050
Amounts due Insilco Holding Co. 2,981 -
Payables and other (17,972) (2,461)
Discontinued operations:
Gain on disposal of segment - (95,001)
Deferred tax expense - 25,687
Depreciation - 194
Change in operating assets and liabilities - (2,512)
-------- --------
Net cash provided by (used in) operating activities (22,904) 11,621
-------- --------
Cash flows from investing activities:
Capital expenditures (15,714) (15,022)
Other investing activities 711 3,437
Proceeds from divestiture, net - 112,610
-------- --------
Net cash provided by (used in) investing activities (15,003) 101,025
-------- --------
Cash flows from financing activities:
Proceeds from revolving credit facility 56,684 87,038
Equity investment from Insilco Holding Co. 3,668 -
Proceeds from loan from Insilco Holding Co. 3,500 -
Proceeds from stock option exercise 3,281 4,618
Dividend to Insilco Holding Co. (30,856) -
Payment of prepetition liabilities (2,735) (2,811)
Retirement of long-term debt (1,171) (117,071)
Debt issuance and tender costs (580) (11,126)
Purchase of treasury stock - (1,887)
Repurchase of shares - (220,000)
Proceeds from sale of 10 1/4% Notes - 150,000
-------- --------
Net cash provided by (used in) financing activities 31,791 (111,239)
-------- --------
Effect of exchange rate changes on cash 124 (259)
-------- --------
Net increase (decrease) in cash and cash equivalents (5,992) 1,148
Cash and cash equivalents at beginning of period 10,651 3,481
-------- --------
$ 4,659 4,629
======== ========
Interest paid $ 23,722 10,635
======== ========
Income taxes paid (refunded) $ (3,592) 6,683
======== ========
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
6
<PAGE> 7
INSILCO CORPORATION AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
September 30, 1998
(1) Basis of Presentation
---------------------
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information in accordance with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly,
they do not include all the information and footnotes required by
generally accepted accounting principles for complete financial
statements. In the opinion of management, all determinable adjustments
have been made which are considered necessary to present fairly the
financial position and the results of operations and cash flows at the
dates and for the periods presented.
(2) The Mergers
-----------
On August 17, 1998, the Company completed a series of transactions.
These transactions included, among other things, the formation by
Insilco Holding Co. ("Holdings") (then a wholly owned subsidiary of the
Company) of a wholly owned subsidiary ("ReorgSub"), followed by the
merger of ReorgSub with and into the Company (the "Reorganization
Merger"), pursuant to which each stockholder of the Company had his or
her shares of the Company converted into the same number of shares of
Holdings and the right to receive $0.01 per share in cash, and Holdings
became the parent of the Company.
Promptly following the Reorganization Merger, a second merger took place
pursuant to which Silkworm Acquisition Corporation ("Silkworm"), an
affiliate of DLJMB, merged with and into Holdings (the "Merger," and
together with the Reorganization Merger, the "Mergers") and each share
of Holdings Common Stock was converted into the right to receive $43.47
in cash and 0.03378 of a share of Holdings Common Stock. Thus, as a
result of the Mergers, each stockholder of the Company, in respect of
each of his or her shares, received $43.48 in cash and retained 0.03378
of a share of Holdings Common Stock.
Following the Mergers, (i) the Company's existing stockholders retained,
in the aggregate, approximately 10.1% (9.4% on a fully diluted basis) of
the outstanding shares of Holdings Common Stock; (ii) the DLJMB Funds
held approximately 69.0% (69.8% on a fully diluted basis) of the
outstanding shares of Holdings Common Stock; (iii) 399 Venture Partners
Inc., an affiliate of Citibank, N.A. ("CVC"), purchased shares of
Silkworm which in the Merger were converted into approximately 19.3%
(17.8% on a fully diluted basis) of the outstanding shares of Holdings
Common Stock; and (iv) management of the Company purchased approximately
1.7% (1.5% on a fully diluted basis) of the outstanding shares of
Holdings Common Stock.
Immediately prior to the effectiveness of the Reorganization Merger,
each outstanding option to acquire shares of the common stock of the
Company granted to employees and directors, whether or not vested (the
"Options") was canceled and in lieu thereof, each holder of an Option
received a cash payment in an amount equal to (x) the excess, if any, of
$45.00 over the exercise price of the Option multiplied by (y) the
number of shares subject to the Option, less applicable withholding
taxes (the "Option Cash Payments"). Certain holders of such Options
elected to utilize amounts otherwise receivable by them to purchase
$1,009,000 of equity and $2,659,000 of equity units of Holdings.
The total amount of cash required to consummate the foregoing
transactions was approximately $204.4 million. This amount was financed
with (i) gross proceeds of approximately $70.2 million from the
7
<PAGE> 8
INSILCO CORPORATION AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
September 30, 1998
issuance by Silkworm of units (which were converted into units of
Holdings (the "Holdings Units") in the Merger), each unit consisting of
$1,000 principal amount at maturity of 14% Senior Discount notes due
2008 (the "Holdings Senior Discount Notes") and one warrant to purchase
0.325 of a share of Holdings Common Stock at an exercise price of $0.01
per share, (ii) the issuance by Silkworm to the DLJMB Funds, CVC and
certain members of management of the Company, for an aggregate
consideration of approximately $56.1 million, of 1,245,138 shares of
Silkworm common stock (which was converted into Holdings Common Stock in
the Merger), (iii) the issuance by Holdings to the DLJMB Funds, for an
aggregate consideration of $35.0 million, of 1,400,000 shares of the
Holding's 15% Senior Exchangeable Preferred Stock due 2012 ("PIK
Preferred Stock") and the DLJMB Warrants to purchase 65,603 shares of
Holdings Common Stock at an exercise price of $0.01 per share, and (iv)
approximately $43.1 million of new borrowings under the Company's
existing credit facility (the "Existing Credit Facility").
In the third quarter and first nine months of 1998 the Company incurred
$19,549,000 and $20,890,000, respectively, of costs related to the
merger.
(3) 1997 Transactions
-----------------
In 1997, the Company completed several material transactions affecting
its ongoing operations and debt and capital structure (the "1997
Transactions") as described more fully below:
- On July 3, 1997, the Company refinanced its existing debt under a
new six year $200 million amended and restated Credit Agreement.
- In the third quarter of 1997, the Company purchased an aggregate of
5,714,284 shares of its common stock in two transactions using the
proceeds from the sale of its traditional office products business
within (the "Rolodex Business") the Office Products/Speciality
Group of $112,610,000, net of transaction costs, and the proceeds
received on the issuance of the $150 million aggregate principal
amount of 10 1/4% Senior Subordinated Notes due 2007 (the "10 1/4%
Notes").
The Company remains a separate reporting entity under the Securities
Exchange Act of 1934 because the 10 1/4% Notes are registered debt
securities under the Securities Act of 1933.
(4) Discontinued Operations
-----------------------
On March 5, 1997, the Company completed the sale of its Office Products
Business (consisting of the Rolodex Business, Rolodex Electronics and
Curtis, each as defined below) within the Office Products/Specialty
Publishing Group with the divestiture of Rolodex Business for
$112,610,000, net of transaction costs, resulting in a gain of
$57,788,000, net of taxes of $37,213,000. The divestiture of the Rolodex
Business was preceded in 1996 by the divestiture of the Rolodex
electronics product line ("Rolodex Electronics") and the Company's
computer accessories business, Curtis Manufacturing Co., Inc.
("Curtis"). The proceeds from these sales aggregated $21,818,000.
On July 7, 1998, the Company amended its Form 10-K for the year ended
December 31, 1997 and its Form 10-Q for the quarter ended March 31, 1998
to account for the sale of the Office Products Business as a
discontinued operation and, accordingly, the accompanying consolidated
statements of operations
8
<PAGE> 9
INSILCO CORPORATION AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
September 30, 1998
and cash flows for the periods prior to the sale have been reclassified.
Revenues associated with the discontinued Office Products Business for
the first quarter of 1997 were $10,797,000.
(5) Inventories
-----------
Inventories consisted of the following at September 30, 1998 (in
thousands):
<TABLE>
<S> <C>
Raw materials and supplies $27,848
Work-in-process 19,134
Finished goods 14,007
-------
Total inventories $60,989
=======
</TABLE>
(6) Related Party Transactions
--------------------------
As of September 30, 1998, the Company had an intercompany payable of
$2,981,000 to Holdings, the parent of the Company (see Note 2). The
intercompany payable consisted of a $3,500,000 advance to the Company
from Holdings, net of $519,000 of expenses paid by the Company on behalf
of Holdings.
In connection with the mergers, the Company paid Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJSC") an advisory fee of $3,500,000.
Donaldson, Lufkin & Jenrette Capital Funding received $1,750,000 of fees
from the Company to secure a backstop credit facility in the event that
the Company's Existing Revolving Credit Facility required refinancing.
In addition, the Company reimbursed DLJSC $110,000 for expenses related
to the merger.
(7) Comprehensive Income
--------------------
On January 1, 1998, the Company adopted the Financial Accounting
Standards Board ("FASB") Statement No. 130 ("SFAS 130"), "Reporting
Comprehensive Income". SFAS 130 establishes standards for reporting and
display of comprehensive income in the financial statements.
Comprehensive income is the total of net income and most other non-owner
changes in equity. This statement expands or modifies disclosures and
has no impact on the Company's financial position, results of operations
or cash flows. Comprehensive income (loss) for the third quarters of
1998 and 1997 totaled ($12,171,000) and $3,403,000, respectively,
including other comprehensive income consisting of foreign currency
translation adjustments (losses) totaling ($114,000) and ($184,000),
respectively. Comprehensive income (loss) for the first nine months of
1998 and 1997 totaled ($4,867,000) and $75,279,000, respectively,
including other comprehensive income consisting of foreign currency
translation adjustment (losses) totaling ($24,000) and ($2,834,000),
respectively.
(8) Contingencies
-------------
The Company is implicated in various claims and legal actions arising in
the ordinary course of business. Those claims or liabilities will be
addressed in the ordinary course of business and will be paid as
expenses are incurred. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on
the Company's consolidated financial position, results
9
<PAGE> 10
INSILCO CORPORATION AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
September 30, 1998
of operations or liquidity.
(9) Estimates
---------
In conformity with generally accepted accounting principles, the
preparation of our financial statements requires our management to make
estimates and assumptions that affect the amounts reported in our
financial statements and accompanying actual results may ultimately
differ from those estimates.
(10) Contingency Gain
----------------
On January 14, 1997, the Company's subsidiary, Taylor Publishing Company
("Taylor"), sued one of its principal competitors in the yearbook
business, Jostens, Inc. ("Jostens"), in the U.S. District Court for the
Eastern District of Texas, alleging violations of the federal antitrust
laws as well as various claims arising under state law. On May 13, 1998,
a verdict was rendered in favor of Taylor and on June 12, 1998, the
judge presiding over the litigation in the U.S. District Court rendered
a judgment in the amount of $25,225,000 plus interest at the rate of
5.434 percent. Jostens has announced that it will seek to overturn the
verdict in post trial motions or on appeal and accordingly the Company
has not recorded the gain. There can be no assurance as to the actual
amount, if any, that Taylor will recover from Jostens. In the third
quarter and first nine months of 1998, the Company incurred legal fees
in connection with the Jostens lawsuit of $132,000 and $900,000,
respectively.
(11) Subsequent Events -The Refinancing
----------------------------------
As a result of the Merger, the Company was required to make an Offer to
Purchase (as defined in the indenture relating to the 10 1/4% Notes (the
"10 1/4% Note Indenture") for all of the outstanding 10 1/4% Notes at
101% of their aggregate principal amount, plus accrued interest. The
Offer to Purchase expires on November 16, 1998 and the Company intends
to repurchase all 10 1/4% Notes validly tendered and not withdrawn as
promptly as practicable following acceptance of the 10 1/4% Notes. There
is an aggregate of $150 million principal amount of 10 1/4% Notes
outstanding.
On November 9, 1998, the Company completed the sale of $120 million of
12% Senior Subordinated Notes due 2007 (the "New Notes") with warrants
to purchase 62,400 shares at $45 per share of Holdings common stock. The
net proceeds from the offer and sale of the New Notes was approximately
$116.0 million after payment of $3.6 million in underwriting fees to
DLJSC and other expenses will be used to fund the repurchase of the 10
1/4% Notes validly tendered at a purchase price of 101% of principal
amount plus accrued and unpaid interest.
The indenture relating to the New Notes (the "Indenture") provides for a
mandatory special redemption at par plus accrued interest to the extent
that less than $120 million of the 10 1/4% Notes are tendered in the
Offer of Purchase. The Indenture also provides for an 1/8% increase in
the interest rate on the New Notes if the holders of the 10 1/4% Notes
do not consent to an amendment to the 10 1/4% Note Indenture to permit
the Company provide subsidiary guarantees to holders of the New Notes.
DLJ Capital Funding Inc. ("DLJ Capital Funding") has committed to lend
up to $300 million to the Company (the "New Credit Facility"). The New
Credit Facility will be used to refinance the Existing Credit Facility
and to fund a portion of the repurchase of the 10 1/4% Notes. The New
Credit Facility
10
<PAGE> 11
INSILCO CORPORATION AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
September 30, 1998
will include a term loan facility (the "Term Loan Facility") and a
revolving credit facility which will provide for revolving loans and up
to $50 million of letters of credit (the "Revolving Credit Facility").
The Term Loan Facility will have a maturity of seven years. The
Revolving Credit Facility will terminate on July 8, 2003. DLJ Capital
Funding's commitment, however, is subject to significant conditions. The
New Credit Facility together with the sale of the New Notes will be
referred to herein as "The Refinancing".
(12) Pro Forma Results of Operations
-------------------------------
The following financial information presents 1998 and 1997 pro forma
consolidated net sales and results of operations as if the mergers
including the interest expense associated with Company's $43.1 million
of additional borrowings under the Existing Credit Facility (see Note 2)
and the Refinancing (see Note 11) had occurred as of the beginning of
each respective period. The 1997 pro forma consolidated net sales and
results of operations are presented as if the 1997 Transactions had
occurred at the beginning of 1997, exclusive of nonrecurring items
directly attributable to the transaction. The pro forma results of
operations are as follows (in thousands,):
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
--------------------- ---------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $422,388 407,609 135,065 131,394
Income (loss) from continuing
operations 7,992 9,686 443 1,904
</TABLE>
11
<PAGE> 12
INDEPENDENT AUDITORS' REVIEW REPORT
THE BOARD OF DIRECTORS AND SHAREHOLDERS
INSILCO CORPORATION:
We have reviewed the condensed consolidated balance sheet of Insilco Corporation
and subsidiaries as of September 30, 1998, the related condensed consolidated
income statements for the three-month and nine-month periods ended September 30,
1998 and 1997, the condensed consolidated statement of stockholders' equity
(deficit) for the nine months ended September 30, 1998, and the condensed
consolidated statements of cash flows for the nine-month periods ended September
30, 1998 and 1997. These condensed consolidated financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the condensed consolidated financial statements referred to above for
them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Insilco Corporation and
subsidiaries as of December 31, 1997, and the related consolidated statements of
operations, stockholders' equity (deficit) and cash flows for the year then
ended (not presented herein); and in our report dated January 30, 1998, except
as to Note 21, which is as of June 8, 1998, and Note 2, which is as of July 7,
1998, we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet as of December 31, 1997, is fairly stated,
in all material respects, in relation to the consolidated balance sheet from
which it has been derived.
Columbus, Ohio
November 13, 1998 KPMG Peat Marwick LLP
12
<PAGE> 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The Company is a diversified manufacturer of automotive, telecommunications and
electronics components and is a publisher of school yearbooks and other
specialty publishing products. The Company's Automotive Components Group
manufactures transmission components and other stamped automotive components and
subassemblies at the Steel Parts unit, heat exchangers and heat exchanger tubing
at the Thermal Components unit, and stainless steel tubing used predominantly in
non-automotive applications at the Romac Metals unit. The Technologies Group
manufactures wire and cable assemblies for the telecommunications industry, high
performance data-grade connectors, precision metal stampings and power
transformers through its Escod Industries, Stewart Connector Systems, Stewart
Stamping, and Signal Transformer operating units, respectively. The Specialty
Publishing Group, which consists of Taylor Publishing, produces student
yearbooks and other specialty publishing products. The Company completed the
divestiture of its Office Products business with the sale of the Rolodex
Business in the first quarter of 1997. The Office Products Business is being
accounted for as a discontinued operation and, accordingly, the consolidated
statements of operations and cash flows for the periods prior to the sale have
been reclassified.
Summarized sales and operating income (loss) by business segment for the nine
months and three months ended September 30, 1998 compared to the corresponding
periods in 1997 are set forth in the following table (in thousands) and
discussed below:
<TABLE>
<CAPTION>
Nine Months Three Months
Ended September 30, Ended September 30,
------------------------ ------------------------
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
SALES
Automotive Components Group $ 185,710 171,912 61,945 55,646
Technologies Group 144,756 148,063 45,739 50,102
Specialty Publishing 91,922 87,634 27,381 25,646
--------- --------- --------- ---------
$ 422,388 407,609 135,065 131,394
========= ========= ========= =========
OPERATING INCOME (LOSS)
Automotive Components Group $ 15,809 17,211 4,338 4,611
Technologies Group 14,183 17,326 3,593 5,955
Specialty Publishing 3,222 5,535 (59) 421
Unallocated corporate costs (54) (308) (18) (24)
Unallocated corporate merger expenses (20,890) - (19,549) -
--------- --------- --------- ---------
$ 12,270 39,764 (11,695) 10,963
========= ========= ========= =========
</TABLE>
13
<PAGE> 14
SALES. Total net sales from continuing operations of $135,065,000 for the third
quarter of 1998 were up 3% or $3,671,000 over the corresponding period in 1997,
due to increased sales of automotive tubing at the Automotive Components Group
and increased sales at Taylor Publishing, due to the timing of yearbook
shipments. These sales increases were partially offset by a decline in the
Technologies Group caused by the continued weakness in the electronics market.
In the first nine months of 1998, net sales from continuing operations of
$422,388,000 increased 4% or $14,779,000 from 1997 primarily due to increased
sales at the Automotive Components Group of automotive tubing and industrial and
off-road radiators, and, to a lesser degree, increased sales at Specialty
Publishing related to the timing of yearbook shipments, partially offset by a
decline at the Technologies Group.
The Automotive Components Group's sales increased 11% or $6,299,000 and 8% or
$13,798,000 in the third quarter and first nine months of 1998, respectively,
compared to the corresponding periods of 1997, due to increased automotive
tubing sales in both the quarter and year-to-date periods. In addition, sales
for the first nine months of 1998 improved over the prior year due to increased
sales of radiators to OEMs serving the off-road and industrial equipment
markets. These increases were partially offset by a significant decline in sales
at the Company's heat exchanger capital equipment manufacturing division,
McKenica, which continues to experience a substantial decline in order backlog.
Sales of transmission and other stamped automotive parts at Steel Parts, and of
stainless steel tubing for non-automotive applications, were both up slightly in
the third quarter of 1998 and were relatively flat on a year-to-date basis.
The Technologies Group's sales decreased 9% or $4,363,000 in the third quarter
of 1998 compared to the corresponding period in 1997 due to declines at Escod
and Signal Transformer primarily due to the weakness in the electronics market
which has continued in the third quarter. These declines were partially offset
by increased sales of Stewart Connector's modular data interconnect products due
to increased demand from a major telecommunications customer. Sales in the
Technologies Group decreased 2% or $3,307,000 in the first nine months of 1998
compared to the corresponding period in 1997 due to the weak demand in the
electronics market in the second and third quarters of 1998. These sales
decreases were partially offset by increased sales from Stewart Stamping and
increased sales of Stewart Connector's modular data interconnect products.
Taylor Publishing's sales of $27,381,000 and $91,922,000 for the third quarter
and first nine months of 1998, respectively, increased 7% and 5% compared to the
corresponding periods in 1997 primarily due to timing of yearbook shipments.
OPERATING INCOME. In the third quarter of 1998, the Company had an operating
loss of $11,695,000 compared to operating income of $10,963,000 in the prior
year period primarily due to $19,549,000 of expenses related to the merger. In
addition, the Company incurred $1,258,000 of expenses related to management
severance, the consolidation of two facilities and a noncompete infringement
lawsuit filed by the Company. The Company experienced an operating loss at its
McKenica business unit due to a lack of available order backlog, lower operating
margins at Signal and Escod due to the weakness in the electronics market and
lower margins at Stewart Connector due to a less favorable mix of products and
price degradation on certain mature connector products.
For the first nine months of 1998, operating income decreased to $12,270,000
from $39,764,000 in 1997 primarily due to $20,890,000 of expenses related to the
merger, approximately $900,000 in legal expenses (compared to $200,000 in 1997)
associated with Taylor's antitrust lawsuit against Jostens for which Taylor
received a favorable judgement totaling $25,225,000 (see Note 10), and
$2,152,000 of expenses related to management severance, the consolidation of two
facilities and a noncompete infringement lawsuit filed by the Company. In
addition, the Company incurred increased costs, primarily higher shipping costs,
from production delays during its peak yearbook production season at Taylor
Publishing and lower margins at Steel Parts primarily due to increased costs
incurred to improve future operational efficiency and for the reasons cited
above, an operating loss at its McKenica business unit and lower operating
margins at Signal and Stewart Connector.
The Automotive Components Group's operating income in the third quarter of 1998
compared to the
14
<PAGE> 15
corresponding period of 1997 decreased to $4,338,000 from $4,611,000 primarily
due to an operating loss of $225,000 at its McKenica business unit, which
represented a $628,000 decline from the third quarter of 1997 operating income.
This decline was partially offset by improved operating income results at the
Company's heat exchanger and automotive tubing business. For the first nine
months of 1998, the Automotive Components Group's operating income compared to
the corresponding period of 1997 decreased to $15,809,000 from $17,211,000 due
to an operating loss of $535,000 at its McKenica business unit which represented
a $2,259,000 decline from 1997 and increased costs at Steel Parts incurred to
improve future operational efficiency. These declines were partially offset by
improved operating results at the other operating units of the Thermal
Components Group.
The Technologies Group's operating income decreased to $3,593,000 in the third
quarter of 1998 from $5,955,000 in the same period of 1997 as the continued
weakness in the electronics market caused significant declines in operating
income at Signal Transformer and Escod. Operating income at Stewart Connector
decreased from the prior year period due to a less favorable sales mix of
products and price degradation on certain mature connector products. For the
first nine months of 1998, the Technologies Group's operating income, compared
to the corresponding period of 1997, decreased to $14,183,000 from $17,326,000.
Operating income was impacted by the decreased sales of power transformers, wire
and cable assemblies and competitive pricing pressures in the connector market.
Partially offsetting these declines, operating income improved over the prior
year at Stewart Stamping.
Taylor Publishing had an operating loss of $59,000 in the third quarter of 1998
compared to operating income of $421,000 in 1997 primarily due to $300,000 of
severance expenses incurred in the third quarter of 1998 and $132,000 of legal
expenses associated with Taylor's antitrust lawsuit against Jostens. For the
first nine months of 1998, operating income decreased to $3,222,000 from
$5,535,000 in the prior year period primarily due to increased costs of labor
and air freight following production delays in the second quarter during its
peak yearbook production and delivery period. In addition, Taylor incurred
$900,000 of legal expenses associated with Taylor's antitrust lawsuit against
Jostens in the first nine months of 1998 compared to $200,000 in 1997.
OTHER INCOME (EXPENSE). Other income for the third quarters of 1998 and 1997
included $693,000 and $607,000, respectively, of equity income from the
Company's unconsolidated joint venture, Thermalex, which manufactures extruded
aluminum tubing primarily for automotive air conditioning condensers. For the
first nine months of 1998, other income included $2,144,000 of equity income
from Thermalex compared to $2,154,000 in 1997. Interest expense increased
$1,064,000 and $7,107,000 in the third quarter and first nine months of 1998,
respectively, from the corresponding 1997 periods due to the issuance of the
$150,000,000 of the 10 1/4% Notes completed in the third quarter of 1997.
Interest income decreased $748,000 and $2,714,000 in the third quarter and first
nine months of 1998, respectively, from the corresponding 1997 periods as a
result of interest income earned on the proceeds from the sale of the Rolodex
Business in 1997.
"Other income, net", included in Other income (expense), for the third quarter
and first nine months of 1998 increased $285,000 and $2,242,000, respectively,
from the corresponding periods of 1997, respectively. Other income for the first
nine months of 1998 included gains on the sale of idle assets.
INCOME TAX EXPENSE. The Company incurred a net loss of $4,843,000 primarily due
to $20,890,000 of merger expenses incurred. Consequently, the tax benefit
arising from these losses was mitigated by the fact that a significant amount of
these costs were not deductible for Federal income tax purposes, resulting in a
1998 third quarter tax benefit at a 30% effective tax rate and a tax expense at
a 33% effective tax rate for the nine month period ending September 30, 1998.
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES. Operations used $22,904,000 of
cash in the first nine months of 1998 as compared to providing $11,621,000 in
the first nine months of 1997. Cash flows from operations in the first nine
months of 1998 were impacted by $20,890,000 of merger expenses incurred and
interest payments related to the 10 1/4% Notes totaling $15,504,000 partially
offset by a Federal income tax refund of $5,110,000.
15
<PAGE> 16
The Company's cash flow for periods prior to the nine months ended September 30,
1997 was favorably impacted by tax loss carryforwards, which reduced the actual
cash payments for the years to well below the financial statement income tax
expense. The tax loss carryforwards were substantially reduced in 1997 due to
the gain from the sale of the Rolodex Business.
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES. In March 1997, the Company sold
its Rolodex Business for a net sales price of $112,610,000. In the first nine
months of 1998 and 1997, the Company received dividend distributions from
Thermalex of $1,324,000 and $1,460,000, respectively. The Company's other
investing activities consisted principally of capital expenditures which totaled
$15,714,000 and $15,022,000 for the first nine months of 1998 and 1997,
respectively.
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES. Financing activities provided
$28,123,000 in the first nine months of 1998 compared to using $111,239,000 in
the first nine months of 1997. On August 17, 1998 a series of transactions
involving the Company were completed. (See "The Merger Financing" below.) In
connection with the Mergers, the Company paid a dividend of $30,856,000 to
Holdings and borrowed approximately $43,100,000 of new borrowings under the
Company's existing credit facility. In addition, the Company received a
$3,500,000 loan from Holdings.
On July 3, 1997, the Company refinanced its bank debt (See Note 3 to the
condensed consolidated financial statements) and using the Rolodex Proceeds
purchased 2,857,142 shares of its common stock, at $38.50 per share in cash, for
an aggregate purchase price of $109,999,967. On August 12, 1997, the Company
completed the Tender Offer, in which it purchased an additional 2,857,142 shares
at a price of $38.50 per share in cash for an aggregate purchase price of
$109,999,967. On August 12, 1997, the Company issued $150 million of the 10 1/4%
Notes, for net proceeds of approximately $145.9 million (the "Offering"). The
Company used the net proceeds from the Offering to fund the repurchase of shares
tendered in the Tender Offer, repay loans under the Bank Credit Agreement, pay
fees and expenses of the aforementioned transactions and for general corporate
purposes. The Company incurred $11,126,000 in costs for the refinancing, Tender
Offer and issuance of the Notes.
In addition, the Company paid $2,735,000 and $2,811,000 of prepetition
liabilities in the first nine months of 1998 and 1997, respectively.
SEASONALITY. The Company's yearbook publishing business, Taylor Publishing, is
highly seasonal, with a majority of its sales occurring in the second and third
quarters of the year. Taylor receives significant customer advance deposits in
the second half of the year. The Company's other businesses are not highly
seasonal.
IMPACT OF INFLATION AND CHANGING PRICES. Inflation and changing prices have not
significantly affected the Company's operating results or markets.
LIQUIDITY. At September 30, 1998, the Company's cash and cash equivalents and
net working capital amounted to $4,659,000 and $78,609,000, respectively,
representing a decrease in cash and cash equivalents of $5,992,000 and an
increase in net working capital of $39,101,000 from year end 1997. The borrowing
ability under the Company's revolving credit facility as of the end of the
quarter was $27,840,000 which is also available for issuing letters of credit.
Trade receivables, net, at September 30, 1998 increased 25% or $16,958,000 over
the December 31, 1997 amount primarily due to increased receivables at Taylor
Publishing following its peak yearbook production period (see Seasonality).
THE MERGER. On August 17, 1998, a series of transactions involving the Company
was completed. These transactions included, among other things, the formation by
Holdings (then a wholly owned subsidiary of the Company) of a wholly owned
subsidiary ("ReorgSub"), followed by the merger of ReorgSub with and into the
16
<PAGE> 17
Company (the "Reorganization Merger"), pursuant to which each stockholder of the
Company had his or her shares of the Company converted into the same number of
shares of Holdings and the right to receive $0.01 per share in cash, and
Holdings became the parent of the Company.
Promptly following the Reorganization Merger, a second merger took place
pursuant to which Silkworm Acquisition Corporation ("Silkworm"), an affiliate
DLJMB, merged with and into Holdings (the "Merger," and together with the
Reorganization Merger, the "Mergers") and each share of Holdings Common Stock
was converted into the right to receive $43.47 in cash and 0.03378 of a share of
Holdings Common Stock. Thus, as a result of the Mergers, each stockholder of the
Company, in respect of each of his or her shares, received $43.48 in cash and
retained 0.03378 of a share of Holdings Common Stock. Concurrently with the
consummation of the Mergers, the DLJMB Funds purchased 1,400,000 shares of
Holdings 15% Senior Exchangeable Preferred Stock due 2012 (the "PIK Preferred
Stock"), and warrants to purchase 65,603 shares of Holdings Common Stock at an
exercise price of $0.01 per share.
Following the Mergers, (i) the Company's existing stockholders retained, in the
aggregate, approximately 10.1% (9.4% on a fully diluted basis) of the
outstanding shares of Holdings Common Stock; (ii) the DLJMB Funds held
approximately 69.0% (69.8% on a fully diluted basis) of the outstanding shares
of Holdings Common Stock; (iii) 399 Venture Partners Inc., an affiliate of
Citibank, N.A. ("CVC"), purchased shares of Silkworm which in the Merger were
converted into approximately 19.3% (17.8% on a fully diluted basis) of the
outstanding shares of Holdings Common Stock; and (iv) management of the Company
purchased approximately 1.7% (1.5% on a fully diluted basis) of the outstanding
shares of Holdings Common Stock.
Immediately prior to the effectiveness of the Reorganization Merger, each
outstanding option to acquire shares of the common stock of the Company granted
to employees and directors, whether or not vested (the "Options") was canceled
and in lieu thereof, each holder of an Option received a cash payment in an
amount equal to (x) the excess, if any, of $45.00 over the exercise price of the
Option multiplied by (y) the number of shares subject to the Option, less
applicable withholding taxes (the "Option Cash Payments"). Certain holders of
such Options elected to utilize amounts otherwise receivable by them to purchase
equity or equity units of Holdings.
THE MERGER FINANCING. The total amount of cash required to consummate the
foregoing transactions was approximately $204.4 million. This amount was
financed with (i) gross proceeds of approximately $70.2 million from the
issuance by Silkworm of units (which were converted into units of Holdings (the
"Holdings Units") in the Merger), each unit consisting of $1,000 principal
amount at maturity of 14% Senior Discount notes due 2008 (the "Holdings Senior
Discount Notes") and one warrant to purchase 0.325 of a share of Holdings Common
Stock at an exercise price of $0.01 per share, (ii) the issuance by Silkworm to
the DLJMB Funds, CVC and certain members of management of the Company, for an
aggregate consideration of approximately $56.1 million, of 1,245,138 shares of
Silkworm common stock (which was converted into Holdings Common Stock in the
Merger), (iii) the issuance by Holdings to the DLJMB Funds, for an aggregate
consideration of $35.0 million, of 1,400,000 shares of the PIK Preferred Stock
by Holdings and the DLJMB Warrants to purchase 65,603 shares of Holdings Common
Stock at an exercise price of $0.01 per share, and (iv) approximately $43.1
million of new borrowings under the Company's existing credit facility (the
"Existing Credit Facility").
THE YEAR 2000 ISSUES. Many existing computer programs utilized globally use only
two digits to identify a year in the date field. These programs, if not
corrected, could fail or create erroneous results after the century date changes
on January 1, 2000 or when otherwise dealing with dates later than December 31,
1999. This " Year 2000" issue is believed to affect virtually all companies and
organizations, including the Company.
The Company relies on computer-based technology and primarily utilizes a variety
of third-party hardware and software and to a minimal degree some proprietary
software. In addition to such information technology ('IT") systems, the
Company's operations rely on various non-IT equipment and systems that contain
embedded computer technology. Third parties with whom the Company has commercial
relationships, including raw materials
17
<PAGE> 18
suppliers and service providers (such as banking and financial services, data
processing services, telecommunications services and utilities), are also highly
reliant on computer-based technology.
In 1996, the Company commenced an assessment of the potential effects of the
Year 2000 issue on the Company's business, financial condition and results of
operations. In conjunction with such assessment, the Company developed and
implemented a "Year 2000" compliance program as described below.
THIRD-PARTY IT SYSTEMS. The majority of the Company's IT systems are third party
systems for which the Company has received Year 2000 compliant versions. The
Company does not expect any significant outlay of cash for these systems as all
of the third party systems are under current maintenance agreements which
provide for continuing operation including functions involving Year 2000. The
strategy instituted by the Company to identify and address Year 2000 issues
affecting third-party IT Systems includes contacting all third-party providers
of computer hardware and software to secure appropriate representations to the
effect that such hardware or software is or will timely be Year 2000 compliant.
PROPRIETARY IT SYSTEMS. The Company does not rely heavily on Company developed
proprietary IT systems. Pursuant to the Company's Year 2000 compliance program,
the Company has examined its proprietary IT systems for Year 2000 problems. All
such systems that were identified as relating to a critical function and that
were not Year 2000 compliant are being fixed. The Company believes that nearly
all of its proprietary IT systems fixed have been placed into production. The
Company is in the process of testing the remediated systems for Year 2000
compliance.
NON-IT SYSTEMS. The Company has undertaken a review of its non-IT systems and is
in the process of fixing of such systems that are within its control. The
Company expects to complete this remediation effort by April 30, 1999.
NON-IT VENDORS AND SUPPLIERS. The Company procures its raw materials and
operating supplies from a vast network of vendors located both within and
outside the United States. As a part of its contingency planning effort, the
Company is continually assessing the Year 2000 readiness of its important
vendors in order to identify any significant exposures that may exist and
establish alternate sources or strategies where necessary.
COSTS. The costs incurred to implement the Company's Year 2000 compliance
program have been immaterial to date and the Company presently expects to incur
less than $1.0 million of costs in the aggregate. All of the Company's Year 2000
compliance costs have been or are expected to be funded from the Company's
operating cash flow. The Company's Year 2000 compliance budget does not include
material amounts for hardware replacement because the Company has historically
employed a strategy to continually upgrade its business systems. Consequently,
the Company's Year 2000 budget has not required the diversion of funds from or
the postponement of the implementation of other planned IT projects.
RISKS ASSOCIATED WITH YEAR 2000 ISSUES. The Company's Year 2000 compliance
program is directed primarily towards ensuring that the Company will be able to
continue to perform three critical functions: (i) make and sell its products,
(ii) order and receive raw material and supplies, and (iii) pay its employees
and vendors. It is difficult, if not impossible, to assess with any degree of
accuracy the impact on any of these three areas of the failure of one or more
aspects of the Company's compliance program.
The novelty and complexity of the issues presented and the proposed solutions
therefore and the Company's dependence on the technical skills of employees and
independent contractors and on the representations and preparedness of third
parties are among the factors that could cause the Company's efforts to be less
than fully effective. Moreover, Year 2000 issues present a number of risks that
are beyond the Company's reasonable control, such as the failure of utility
companies to deliver electricity, the failure of telecommunications companies to
provide voice and data services, the failure of financial institutions to
process transactions and transfer funds,
18
<PAGE> 19
the failure of vendors to deliver materials or perform services required by the
Company and the collateral effects on the Company of the effects of Year 2000
issues on the economy in general or on the Company's customers in particular.
Although the Company believes that its Year 2000 compliance program is designed
to appropriately identify and address those Year 2000 issues that are subject to
the Company's reasonable control, there can be no assurance that the Company's
efforts in this regard will be fully effective or that Year 2000 issues will not
have a material adverse effect on the Company's business, financial condition or
results of operations.
SUBSEQUENT EVENTS. As a result of the Merger, the Company was required to make
an Offer to Purchase (as defined in the indenture (the "10 1/4% Note Indenture")
relating to the 10 1/4% Notes) for all of the outstanding 10 1/4% Notes at 101%
of their aggregate principal amount, plus accrued interest. The Offer to
Purchase expires on November 16, 1998 and the Company intends to repurchase all
10 1/4% Notes validly tendered and not withdrawn as promptly as practicable
following acceptance of the 10 1/4% Notes. There is an aggregate of $150 million
principal amount of 10 1/4% Notes outstanding.
On November 9, 1997 the Company completed the offering of $120 million of 12%
Senior Subordinated Notes (the "New Notes") due 2007 with warrants to purchase
62,400 shares of Holdings common stock. The net proceeds from the offer and sale
of the New Notes will be used to fund the repurchase of the 10 1/4% validly
tendered Notes at a purchase price of 101% of principal amount plus accrued and
unpaid interest.
DLJ Capital Funding Inc. ("DLJ Capital Funding") has committed to lend up to
$300 million to the Company (the "New Credit Facility"). The New Credit Facility
will be used to refinance the Existing Credit Facility and to fund a portion of
the repurchase of 10 1/4% Notes. The New Credit Facility will include a term
loan facility (the "Term Loan Facility") and a revolving credit facility
(subject to adjustment), which will provide for revolving loans and up to $50
million of letters of credit (the "Revolving Credit Facility"). The Term Loan
Facility will have a maturity of seven years. The Revolving Credit Facility will
terminate on July 8, 2003. DLJ Capital Funding's commitment, however, is subject
to significant conditions.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995. Except for the historical information contained herein, the matters
discussed in this Form 10-Q included in "Management's Discussion and Analysis of
Financial Condition and Results of Operations" include "Forward Looking
Statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Although the Company believes that the expectations reflected in the
Forward-Looking Statements contained herein are reasonable, no assurance can be
given that such expectations will prove to have been correct. Certain important
factors that could cause actual results to differ materially from expectations
("Cautionary Statements") include, but are not limited to the following: delays
in new product introductions, lack of market acceptance of new products, changes
in demand for the Company's products, changes in market trends, operating
hazards, general competitive pressures from existing and new competitors,
effects of governmental regulations, changes in interest rates, and adverse
economic conditions which could affect the amount of cash available for debt
servicing and capital investments. All subsequent written and oral
Forward-Looking Statements attributable to the Company or persons acting on its
behalf are expressly qualified in their entirety by the Cautionary Statements.
19
<PAGE> 20
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
4(a) - Indenture, dated as of November 9, 1998 between the
Company and the Trustee.
4(b) - Exchange and Registration Rights Agreement, dated as of
November 9, 1998, between the Company and the Initial
Purchasers.
10(a) - Purchase Agreement between Insilco Corporation and Insilco
Holding Co. and the Initial Purchaser dated as of November
2, 1998.
27 - Financial Data Schedule.
(b) Reports on Form 8-K
A report, dated July 23, 1998, on Form 8-K was filed during the
quarter ending September 30, 1998, pursuant to Items 5 and 7 of
that form.
A report, dated August 12, 1998, on Form 8-K was filed during the
quarter ending September 30, 1998, pursuant to Items 5 and 7 of
that form.
A report, dated August 17, 1998, on Form 8-K was filed during the
quarter ending September 30, 1998, pursuant to Items 5 and 7 of
that form.
A report, dated August 25, 1998, on Form 8-K was filed during the
quarter ending September 30, 1998, pursuant to Items 5 and 7 of
that form.
20
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INSILCO CORPORATION
-------------------------
Registrant
Date: November 13, 1998 By: /s/ David A. Kauer
-----------------------
David A. Kauer
Vice President and
Chief Financial Officer
21
<PAGE> 22
Exhibit Index
4(a) - Indenture, dated as of November 9, 1998 between the
Company and the Trustee.
4(b) - Exchange and Registration Rights Agreement, dated as of
November 9, 1998, between the Company and the Initial
Purchasers.
10(a) - Purchase Agreement between Insilco Corporation, Insilco
Holding Co. and the Initial Purchaser dated as of November
2, 1998.
27 - Financial Data Schedule.
<PAGE> 1
Exhibit 4(a)
EXECUTION COPY
""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""
INSILCO CORPORATION
AS ISSUER
to
STAR BANK, N.A.
AS TRUSTEE
----------------
Indenture
Dated as of November 9, 1998
----------------
$150,000,000
12% SENIOR SUBORDINATED NOTES DUE 2007
""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C>
RECITALS OF THE COMPANY...................................................................1
ARTICLE ONE
Definitions and Other Provisions
of General Application
SECTION 1.01 DEFINITIONS........................................................................2
Act.........................................................................................3
Affiliate...................................................................................3
Agent Member................................................................................3
Applicable Procedures.......................................................................3
Asset Disposition...........................................................................3
Authenticating Agent........................................................................3
Base Interest...............................................................................3
Board of Directors..........................................................................4
Board Resolution............................................................................4
Business Day................................................................................4
Capital Lease Obligation....................................................................4
Capital Stock...............................................................................4
Change of Control...........................................................................4
Claim.......................................................................................4
Commission..................................................................................4
Common Stock................................................................................4
Company.....................................................................................5
Company Order...............................................................................5
Company Request.............................................................................5
Consolidated EBITDA.........................................................................5
Consolidated EBITDA Coverage Ratio..........................................................5
Consolidated Income Tax Expense.............................................................6
Consolidated Interest Expense...............................................................6
Consolidated Net Income.....................................................................6
Consolidated Net Worth......................................................................6
Consolidated Subsidiaries...................................................................6
Corporate Trust Office......................................................................7
Corporation.................................................................................7
Debt........................................................................................7
Defaulted Interest..........................................................................8
Defeasance..................................................................................8
Depositary..................................................................................8
Designated Senior Debt......................................................................8
</TABLE>
- - ---------------------
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
i
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
<S> <C>
DTC.........................................................................................8
Event of Default............................................................................8
Excepted Disposition........................................................................8
Exchange Act................................................................................8
Exchange Notes..............................................................................9
Exchange Offer..............................................................................9
Exchange Registration Statement.............................................................9
Expiration Date.............................................................................9
Global Note.................................................................................9
Guarantee...................................................................................9
Holders.....................................................................................9
Incur.......................................................................................9
Indenture..................................................................................10
Initial Purchaser..........................................................................10
Insolvency Proceeding......................................................................10
Interest Payment Date......................................................................10
Interest Rate, Currency or Commodity Price Agreement.......................................10
Investment.................................................................................10
Lien ......................................................................................10
Liquidated Damages.........................................................................11
Maturity...................................................................................11
Net Available Proceeds.....................................................................11
Notice of Default..........................................................................11
Obligations................................................................................12
Offer Document.............................................................................12
Offer Expiration Date......................................................................12
Offer to Purchase..........................................................................12
Officers" Certificate......................................................................14
Old Credit Facility........................................................................14
Opinion of Counsel.........................................................................14
Original Notes.............................................................................14
Outstanding................................................................................14
Paying Agent...............................................................................15
payment in full............................................................................15
Permitted Interest Rate, Currency or Commodity Price Agreement.............................15
Permitted Investment.......................................................................15
Person.....................................................................................16
Plan or Reorganization.....................................................................16
Post-Petition Interest.....................................................................16
Predecessor Note...........................................................................16
Preferred Stock............................................................................16
Public Offering............................................................................17
</TABLE>
- - ---------------------
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
ii
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
<S> <C>
Purchase Agreement.........................................................................17
Purchase Amount............................................................................17
Purchase Date..............................................................................17
Purchase Price.............................................................................17
Receivables................................................................................17
Receivables Sale...........................................................................17
Redeemable Interest........................................................................17
Redemption Date............................................................................17
Redemption Price...........................................................................17
Registered Notes...........................................................................17
Registration Rights Agreement..............................................................17
Regular Record Date........................................................................18
Reinvested Amounts.........................................................................18
Related Person.............................................................................18
Required Filing Dates......................................................................18
Restricted Global Note.....................................................................18
Restricted Payment.........................................................................18
Restricted Securities......................................................................18
Restricted Securities Certificate..........................................................18
Restricted Securities Legend...............................................................18
Restricted Subsidiary......................................................................18
Rule 144A..................................................................................19
Rule 144A Notes............................................................................19
Notes......................................................................................19
Securities Act.............................................................................19
Securities Act Legend......................................................................19
Note Register..............................................................................19
Note Registrar.............................................................................19
Senior Debt................................................................................19
Shares.....................................................................................19
Shelf Registration Statement...............................................................20
Special Record Date........................................................................20
Stated Maturity............................................................................20
Subordinated Debt..........................................................................20
Subordinated Obligations...................................................................20
Subordinated Securities....................................................................21
Subsidiary.................................................................................21
Successor Company..........................................................................21
Successor Note.............................................................................21
Tender Offer...............................................................................21
Trust Indenture Act........................................................................21
Trustee....................................................................................22
</TABLE>
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part of the Indenture.
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<PAGE> 5
<TABLE>
<CAPTION>
PAGE
<S> <C>
Unpermitted Debt...........................................................................22
Unrestricted Notes Certificate.............................................................22
Unrestricted Subsidiary....................................................................22
U.S. Person................................................................................22
Vice President.............................................................................23
Voting Stock...............................................................................23
Water Street...............................................................................23
Wholly Owned Restricted Subsidiary.........................................................23
SECTION 1.02 Compliance Certificates and Opinions..............................................23
SECTION 1.03 Form of Documents Delivered to Trustee............................................24
SECTION 1.04 Acts of Holders; Record Dates.....................................................24
SECTION 1.05 Notices, Etc., to Trustee and the Company.........................................26
SECTION 1.06 Notice to Holders; Waiver.........................................................27
SECTION 1.07 Conflict with Trust Indenture Act.................................................27
SECTION 1.08 Effect of Headings and Table of Contents..........................................27
SECTION 1.09 Successors and Assigns............................................................27
SECTION 1.10 Separability Clause...............................................................28
SECTION 1.11 Benefits of Indenture.............................................................28
SECTION 1.12 Governing Law.....................................................................28
SECTION 1.13 Legal Holidays....................................................................28
ARTICLE TWO
Note Forms
SECTION 2.01 Forms Generally; Initial Forms of Rule 144A Notes.................................28
SECTION 2.02 Form of Face of Note..............................................................29
SECTION 2.03 Form of Reverse of Note...........................................................34
SECTION 2.04 Form of Trustee"s Certificate of Authentication...................................37
ARTICLE THREE
The Notes
SECTION 3.01 Title and Terms...................................................................38
SECTION 3.02 Denominations.....................................................................39
SECTION 3.03 Execution, "Authentication" Delivery and Dating...................................39
SECTION 3.04 Temporary Notes...................................................................40
SECTION 3.05 Global Notes......................................................................41
</TABLE>
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<TABLE>
<CAPTION>
PAGE
<S> <C>
SECTION 3.06 Registration, Registration of Transfer and Exchange
Generally; Restrictions on Transfer and Exchange; Securities
Act Legends.......................................................................42
SECTION 3.07 Mutilated, Destroyed, Lost and Stolen Notes.......................................44
SECTION 3.08 Payment of Interest; Interest Rights Preserved....................................45
SECTION 3.09 Persons Deemed Owners.............................................................46
SECTION 3.10 Cancellation......................................................................46
SECTION 3.11 Computation of Interest...........................................................46
SECTION 3.12 CUSIP Numbers.....................................................................46
ARTICLE FOUR
Satisfaction and Discharge
SECTION 4.01 Satisfaction and Discharge of Indenture...........................................47
SECTION 4.02 Application of Trust Money........................................................48
ARTICLE FIVE
Remedies
SECTION 5.01 Events of Default.................................................................48
SECTION 5.02 Acceleration of Maturity; Rescission and Annulment................................50
SECTION 5.03 Collection of Indebtedness and Suits for Enforcement by
Trustee...........................................................................51
SECTION 5.04 Trustee May File Proofs of Claim..................................................51
SECTION 5.05 Trustee May Enforce Claims Without Possession of Notes............................52
SECTION 5.06 Application of Money Collected....................................................52
SECTION 5.07 Limitation on Suits...............................................................52
SECTION 5.08 Unconditional Right of Holders to Receive Principal, Premium
and Interest......................................................................53
SECTION 5.09 Restoration of Rights and Remedies................................................53
SECTION 5.10 Rights and Remedies Cumulative....................................................54
SECTION 5.11 Delay or Omission Not Waiver......................................................54
SECTION 5.12 Control by Holders................................................................54
SECTION 5.13 Waiver of Past Defaults...........................................................54
SECTION 5.14 Undertaking for Costs.............................................................55
SECTION 5.15 Waiver of Stay, Usury or Extension Laws...........................................55
</TABLE>
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<PAGE> 7
ARTICLE SIX
The Trustee
<TABLE>
<CAPTION>
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<S> <C> <C>
SECTION 6.01 Certain Duties and Responsibilities...............................................55
SECTION 6.02 Notice of Defaults................................................................56
SECTION 6.03 Certain Rights of Trustee.........................................................56
SECTION 6.04 Not Responsible for Recitals or Issuance of Notes.................................57
SECTION 6.05 May Hold Notes....................................................................57
SECTION 6.06 Money Held in Trust...............................................................57
SECTION 6.07 Compensation and Reimbursement....................................................57
SECTION 6.08 Disqualification; Conflicting Interests...........................................58
SECTION 6.09 Corporate Trustee Required; Eligibility...........................................58
SECTION 6.10 Resignation and Removal; Appointment of Successor.................................58
SECTION 6.11 Acceptance of Appointment by Successor............................................60
SECTION 6.12 Merger Conversion, Consolidation or Succession to Business........................60
SECTION 6.13 Preferential Collection of Claims Against Company.................................60
SECTION 6.14 Appointment of Authenticating Agent...............................................60
SECTION 6.15 Trustee"s Application for Instructions from the Company...........................62
ARTICLE SEVEN
Holders Lists and Reports by Trustee, Company and Guarantors
SECTION 7.01 Company to Furnish Trustee Names and Addresses of Holders.........................62
SECTION 7.02 Preservation of Information; Communications to Holders............................63
SECTION 7.03 Reports by Trustee................................................................63
SECTION 7.04 Reports by the Company and Guarantors.............................................63
ARTICLE EIGHT
Merger, Consolidation, Etc.
SECTION 8.01 Mergers, Consolidations and Certain Transfers, Leases and
Acquisitions of Assets............................................................64
SECTION 8.02 Successor Substituted.............................................................65
</TABLE>
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<TABLE>
<CAPTION>
ARTICLE NINE
Supplemental Indentures
PAGE
<S> <C> <C>
SECTION 9.01 Supplemental Indentures Without Consent of Holders................................65
SECTION 9.02 Supplemental Indentures with Consent of Holders...................................66
SECTION 9.03 Execution of Supplemental Indentures..............................................67
SECTION 9.04 Effect of Supplemental Indentures.................................................68
SECTION 9.05 Conformity with Trust Indenture Act...............................................68
SECTION 9.06 Reference in Notes to Supplemental Indentures.....................................68
SECTION 9.07 Changes Adverse to Holders of Senior Debt.........................................68
ARTICLE TEN
Covenants
SECTION 10.01 Payment of Principals Premium and Interest........................................68
SECTION 10.02 Maintenance of Office or Agency...................................................68
SECTION 10.03 Money for Note Payments to Be Held in Trust.......................................69
SECTION 10.04 Existence.........................................................................70
SECTION 10.05 Maintenance of Properties.........................................................70
SECTION 10.06 Payment of Taxes and Other Claims.................................................70
SECTION 10.07 Maintenance of Insurance..........................................................71
SECTION 10.08 Limitation on Consolidated Debt...................................................71
SECTION 10.09 Limitation on Debt and Preferred Stock of Subsidiaries............................73
SECTION 10.10 Limitation on Layered Debt........................................................74
SECTION 10.11 Limitation on Issuance of Guarantees of Subordinated Debt.........................74
SECTION 10.12 Limitation on Restricted Payments.................................................74
SECTION 10.13 Limitation on Dividend and Other Payment Restrictions
Affecting Subsidiaries............................................................76
SECTION 10.14 Limitation on Liens...............................................................77
SECTION 10.15 Limitation on Ownership of Capital Stock of Subsidiaries..........................78
SECTION 10.16 Limitation on Transactions with Affiliates and Related
Persons...........................................................................78
SECTION 10.17 Limitation on Certain Asset Dispositions..........................................79
SECTION 10.18 Change of Control.................................................................81
SECTION 10.19 Provision of Financial Information................................................82
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<S> <C> <C>
SECTION 10.20 Unrestricted Subsidiaries.........................................................83
SECTION 10.21 Note Guarantees...................................................................85
SECTION 10.22 Statement by Officers as to Default; Compliance Certificates......................85
SECTION 10.23 Waiver of Certain Covenants.......................................................86
ARTICLE ELEVEN
Redemption of Notes
SECTION 11.01 Redemption at the Election of the Company.........................................86
SECTION 11.02 Applicability of Article..........................................................86
SECTION 11.03 Election to Redeem; Notice to Trustee.............................................86
SECTION 11.04 Selection by Trustee of Notes to Be Redeemed......................................87
SECTION 11.05 Notice of Redemption..............................................................87
SECTION 11.06 Deposit of Redemption Price.......................................................88
SECTION 11.07 Notes Payable on Redemption Date..................................................88
SECTION 11.08 Notes Redeemed in Part............................................................88
SECTION 11.09 Special Redemption................................................................88
ARTICLE TWELVE
Defeasance and Covenant Defeasance
SECTION 12.01 Company"s Option to Effect Defeasance or Covenant Defeasance......................89
SECTION 12.02 Defeasance and Discharge..........................................................89
SECTION 12.03 Covenant Defeasance...............................................................90
SECTION 12.04 Conditions to Defeasance or Covenant Defeasance...................................90
SECTION 12.05 Deposited Money and U.S. Government Obligations to Be Held
in Trust: Other Miscellaneous Provisions..........................................92
SECTION 12.06 Reinstatement.....................................................................92
ARTICLE THIRTEEN
Subordination of Notes
SECTION 13.01 Notes Subordinate to Senior Debt..................................................93
SECTION 13.02 Payment Over of Proceeds Upon Dissolution, Etc. ..................................93
SECTION 13.03 No Payment When Senior Debt in Default............................................94
SECTION 13.04 Certain Payments Permitted........................................................95
</TABLE>
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part of the Indenture.
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<TABLE>
PAGE
<S> <C> <C>
SECTION 13.05 Subrogation to Rights of Holders of Senior Debt...................................95
SECTION 13.06 Provisions Solely to Define Relative Rights.......................................96
SECTION 13.07 Trustee to Effectuate Subordination...............................................96
SECTION 13.08 No Waiver of Subordination Provisions.............................................96
SECTION 13.09 Notice to Trustee.................................................................97
SECTION 13.10 Reliance on Judicial Order or Certificate of Liquidation
Agent.............................................................................98
SECTION 13.11 Trustee Not Fiduciary for Holders of Senior Debt..................................98
SECTION 13.12 Rights of Trustee as Holder of Senior Debt; Preservation of
Trustee"s Rights..................................................................99
SECTION 13.13 Article Applicable to Paying Agents...............................................99
SECTION 13.14 Defeasance of this Article Thirteen...............................................99
ARTICLE FOURTEEN
Note Guarantees
SECTION 14.01 Guarantee.........................................................................99
SECTION 14.02 Subordination of Note Guarantee..................................................100
SECTION 14.03 Limitation on Guarantor Liability................................................101
SECTION 14.04 Execution and Delivery of Note Guarantee.........................................101
SECTION 14.05 Guarantors May Consolidate, etc., on Certain Terms...............................101
SECTION 14.06 Releases Following Sale of Assets................................................102
ARTICLE FIFTEEN
Jurisdiction and Consent to Service of Process
SECTION 15.01 Jurisdiction and Consent to Service of Process...................................103
ANNEX A -- Form of Unrestricted Notes Certificate
</TABLE>
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<PAGE> 11
INSILCO CORPORATION
Certain Sections of this Indenture relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
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<S> <C>
Trust Indenture Indenture
Act Section Section
Section 310(a)(1) ...................................................... 6.09
(a)(2) ...................................................... 6.09
(a)(3) ...................................................... Not Applicable
(a)(4) ...................................................... Not Applicable
(b) ...................................................... 6.08
6.10
Section 311(a) ...................................................... 6.13
(b) ...................................................... 6.13
Section 312(a) ...................................................... 7.01
7.02(a)
(b) ...................................................... 7.02(b)
(c) ...................................................... 7.03(a)
Section 313(a) ...................................................... 7.03(a)
(a)(4) ...................................................... 1.01
10.04
(b) ...................................................... 7.03(a)
(c) ...................................................... 7.03(a)
(d) ...................................................... 7.03(b)
Section 314(a) ...................................................... 7.04
(b) ...................................................... Not Applicable
(c)(1) ...................................................... 1.02
(c)(2) ...................................................... 1.02
(c)(3) ...................................................... Not Applicable
(d) ...................................................... Not Applicable
(e) ...................................................... 1.02
Section 315(a) ...................................................... 6.01
(b) ...................................................... 6.02
(c) ...................................................... 6.01
(d) ...................................................... 6.01
(e) ...................................................... 5.14
Section 316(a) ...................................................... 1.01
(a)(1)(A) ...................................................... 5.02
5.12
(a)(1)(B) ...................................................... 5.13
(a)(2) ...................................................... Not Applicable
(b) ...................................................... 5.08
(c) ...................................................... 1.04
Section 317(a)(1) ...................................................... 5.03
</TABLE>
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<TABLE>
<S> <C> <C>
(a)(2) ...................................................... 5.04
(b) ...................................................... 10.03
Section 318(a) ...................................................... 1.07
</TABLE>
------------
Note: This table of contents shall not, for any purpose, be
deemed to be a part of the Indenture.
xi
<PAGE> 13
INDENTURE, dated as of November 9, 1998, among INSILCO
CORPORATION, a corporation duly organized and existing under the laws of the
State of Delaware (herein called the "Company " ), having its principal office
at 425 Metro Place N., Fifth Floor, Box 7196, Dublin, Ohio 43017, and STAR BANK,
N.A, an Ohio corporation, as Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of
this Indenture to provide for the issuance of (i) initially, $120,000,000
aggregate principal amount of its senior subordinated notes designated as its
12% Senior Subordinated Notes due 2007 (including any Exchange Notes issued in
respect thereof, the "Initial Notes") and (ii), if and when issued, up to an
aggregate principal amount of $30,000,000 additional 12% Subordinated Notes due
2007, of substantially the tenor hereinafter set forth, which may be offered
hereafter (including any Exchange Notes issued in respect thereof, the
"Additional Notes"), and to provide therefor the Company has duly authorized the
execution and delivery of this Indenture. The Initial Notes and the Additional
Notes are referred to herein as the "Notes". All Notes shall be identical in all
respects other than issue dates, the date from which interest accrues and any
changes relating thereto. The Notes may consist of either or both of Original
Notes or Exchange Notes, each as defined herein. The Original Notes and the
Exchange Notes shall rank pari passu with one another.
All things necessary (i) to make the Notes, when executed by
the Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company and (ii) to make this Indenture a
valid agreement of the Company, all in accordance with their respective terms,
have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of
the Notes by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Notes, as follows:
<PAGE> 14
ARTICLE ONE
Definitions and Other Provisions
of General Application
SECTION 1.1 DEFINITIONS.
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles, and, except as otherwise herein expressly
provided, the term "generally accepted accounting principles" with
respect to any computation required or permitted hereunder shall mean
such accounting principles as are generally accepted at the date of
such computation;
(4) all references in this Indenture and the Notes to interest
in respect of any Note shall be deemed to include all interest payable
with respect to any Non-Guarantee Period, if any, and all Liquidated
Damages, if any, in respect of such Note, unless the context otherwise
requires, and express mention of the payment of Liquidated Damages in
any provision hereof or thereof shall not be construed as excluding
reference to Liquidated Damages in those provisions hereof or thereof
where such express mention is not made; all references in this
Indenture and the Notes to principal in respect of any Note shall be
deemed to include any Redemption Price or Purchase Price payable in
respect of such Note pursuant to any redemption or Offer to Purchase
hereunder (and all such references to the Stated Maturity of the
principal in respect of any Note shall be deemed to include the
Redemption Date with respect to any such Redemption Price and the
Purchase Date with respect to any such Purchase Price), and express
mention of the payment of any Redemption Price or Purchase Price in any
provision hereof or thereof shall not be construed as excluding
reference to any Redemption Price or Purchase Price in those provisions
hereof or thereof where such express reference is not made;
(5) unless the context otherwise requires, any reference to
"Article", "Section" or "Annex" refers to an Article or Section of or
Annex to this Indenture;
(6) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision; and
2
<PAGE> 15
(7) all references to $, US$, dollars or United States dollars
shall refer to the lawful currency of the United States.
"Act", when used with respect to any Holder, has the meaning
specified in Section 104.
"Additional Notes" means additional Notes (other than the
Initial Notes) issued under this Indenture in accordance with Sections 3.01 and
9.01 hereof.
"Affiliate" of any Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person. For the purposes of this definition, "control" when
used with respect to any Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agent Member" means any member of, or participant in, the
Depositary.
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Note or beneficial interest therein, the rules
and procedures of the Depositary for such Note, to the extent applicable to such
transaction and as in effect at the time of such transfer or transaction.
"Asset Disposition" means, with respect to the Company or any
Restricted Subsidiary, any transfer, conveyance, sale, lease or other
disposition by the Company or such Restricted Subsidiary (including a
consolidation or merger or other sale of such Restricted Subsidiary with, into
or to another Person in a transaction in which such Restricted Subsidiary ceases
to be a Restricted Subsidiary) of (i) shares of Capital Stock (other than
directors" qualifying shares) or other ownership interests of any Restricted
Subsidiary, (ii) substantially all of the assets of the Company or such
Restricted Subsidiary representing a division or line of business or (iii) other
assets or rights of the Company or any Restricted Subsidiary outside of the
ordinary course of business, but excluding, in each case of Clauses (i), (ii)
and (iii), (a) any disposition in the ordinary course of business of obsolete
equipment or other property used in the business of the Company or any
Restricted Subsidiary that is no longer used or useful in such business, (b) any
disposition by the Company or any Restricted Subsidiary to the Company or any
Wholly Owned Restricted Subsidiary, (c) required payments with respect to any
Debt permitted to be Incurred pursuant to Section 10.08, (d) any disposition
that is permitted pursuant to Section 10.12, and (e) the disposition of all or
substantially all of the assets of the Company and its Subsidiaries on a
consolidated basis permitted pursuant to Section 8.01.
"Authenticating Agent" means any Person authorized by the
Trustee pursuant to Section 6.14 to act on behalf of the Trustee to authenticate
Notes.
"Base Interest" means the interest that would otherwise accrue
on the Notes under the terms thereof and the Indenture, without giving effect to
any Liquidated Damages.
3
<PAGE> 16
"Board of Directors" means, with respect to the Company, the
board of directors of the Company or any duly authorized committee of that
board. Except as otherwise provided or unless the context otherwise requires,
each reference herein to the "Board of Directors" shall mean the Board of
Directors of the Company.
"Board Resolution" of the Company means a copy of a resolution
certified by the Secretary or an Assistant Secretary of the Company to have been
duly adopted by its Board of Directors and to be in full force and effect on the
date of such certification, and delivered to the Trustee. Except as otherwise
expressly provided or unless the context otherwise requires, each reference
herein to a "Board Resolution" shall mean a Board Resolution of the Company.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in The City of New
York are authorized or obligated by law or executive order to close.
"Capital Lease Obligation" of any Person means the obligation
to pay rent or other payment amounts under a lease of (or other Debt
arrangements conveying the right to use) real or personal property of such
Person that is required to be classified and accounted for as a capital lease or
a liability on the face of a balance sheet of such Person in accordance with
generally accepted accounting principles. The stated maturity of such obligation
shall be the date of the last payment of rent or any other amount due under such
lease prior to the first date upon which such lease may be terminated by the
lessee without payment of a penalty. The principal amount of such obligation
shall be the capitalized amount thereof that would appear on the face of a
balance sheet of such Person in accordance with generally accepted accounting
principles.
"Capital Stock" of any Person means any and all shares,
interests, participations or other equivalents (however designated) of corporate
stock or other equity participations, including partnership interests, whether
general or limited, of such Person.
"Change of Control" has the meaning specified in Section
1018(c).
"Claim" means any and all rights to payment under or in
respect of any of the Notes or this Indenture, all rights, remedies, demands,
causes of action and claims of every type and description at any time held or
asserted by, or arising in favor of, any holder of a Note against the Company or
any of its Subsidiaries or Affiliates or any of their assets, in each case on
account of any breach of any promise, obligation, agreement, indemnity,
representation, warranty or covenant in a Note or the Indenture or the
performance or nonperformance or payment or nonpayment thereof.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Exchange Act, or, if at any
time after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Common Stock" of any Person means Capital Stock of such
Person that does not rank prior, as to the payment of dividends or as to the
distribution of assets upon any voluntary or
4
<PAGE> 17
involuntary liquidation, dissolution or winding up of such Person, to shares of
Capital Stock of any other class of such Person.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Order" or "Company Request" means a written request
or order signed in the name of the Company by its Chairman of the Board, its
Vice Chairman of the Board, its President or a Vice President, and by its
Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and
delivered to the Trustee.
"Consolidated EBITDA" of any Person means for any period, on a
consolidated basis for such Person and its Consolidated Subsidiaries, the sum of
the amounts for such period of (i) Consolidated Net Income, (ii) Consolidated
Interest Expense (but excluding any interest capitalized in accordance with
generally accepted accounting principles), (iii) Consolidated Income Tax
Expense, (iv) depreciation and amortization expense, (v) other non-cash charges
and (vi) other non-operating expenses that have been deducted in the
determination of Consolidated Net Income; PROVIDED, HOWEVER, that for each such
Consolidated Subsidiary the items (i) through (vi) shall be included in such sum
only (x) to the extent and in the same proportion that the Consolidated Net
Income of such Consolidated Subsidiary was included in calculating the
Consolidated Net Income of such Person and (y) only to the extent that the
amount specified in Clause (x) is not restricted from the payment of dividends
or the making of distributions to such Person during such period.
"Consolidated EBITDA Coverage Ratio" of any Person means for
any period the ratio of (i) Consolidated EBITDA of such Person for such period
to (ii) the sum of (A) Consolidated Interest Expense of such Person for such
period, plus (B) the annual interest expense (including the amortization of debt
discount but excluding the fees and expenses incurred in connection with the
amortization of the Old Credit Facility) with respect to any Debt Incurred or
proposed to be Incurred by such Person or its Consolidated Subsidiaries since
the beginning of such period to the extent not included within Clause (ii)(A),
minus (C) Consolidated Interest Expense of such Person with respect to any Debt
that is no longer outstanding or that will no longer be outstanding as a result
of the transaction with respect to which the Consolidated EBITDA Coverage Ratio
is being calculated, to the extent included within Clause (ii)(A); provided,
however, that in making such computation, the Consolidated Interest Expense of
such Person attributable to interest on any Debt bearing a floating interest
rate shall be computed on a pro forma basis as if the rate in effect on the date
of computation had been the applicable rate for the entire period; and provided,
further, that, in the event such Person or any of its Consolidated Subsidiaries
has made acquisitions or dispositions of assets not in the ordinary course of
business (including by merger, consolidation or purchase of Capital Stock)
during or after such period, the computation of the Consolidated EBITDA Coverage
Ratio (and for the purpose of such computation, the calculation of Consolidated
Net Income, Consolidated Interest Expense, Consolidated Income Tax Expense and
Consolidated EBITDA) shall be made on a pro forma basis as if the acquisitions
or dispositions had taken place on the first day of such period.
5
<PAGE> 18
"Consolidated Income Tax Expense" of any Person means for any
period the consolidated provision for income taxes of such Person and its
Consolidated Subsidiaries for such period determined in accordance with
generally accepted accounting principles.
"Consolidated Interest Expense" of any Person means for any
period, on a consolidated basis for such Person and its Consolidated
Subsidiaries, all of the following determined in accordance with generally
accepted accounting principles: (i) the consolidated interest expense included
in a consolidated income statement (net of interest income), (ii) the portion of
any rental obligation in respect of any Capital Lease Obligation allocable to
interest expense in accordance with generally accepted accounting principles;
(iii) the amortization of Debt discounts (but excluding the amortization of fees
and expenses Incurred in connection with the amortization of the Old Credit
Facility and the amount of financing costs and expenses that are capitalized and
amortized); (iv) to the extent not included in total interest expense, any net
payments made or received during such period under interest rate or currency
swaps, hedges or exchanges or similar derivative agreements, including any
amortized portion of such payments and (v) any interest capitalized in
accordance with generally accepted accounting principles.
"Consolidated Net Income" of any Person means for any period
the consolidated net income (or loss) of such Person and its Consolidated
Subsidiaries for such period determined in accordance with generally accepted
accounting principles; provided that there shall be excluded therefrom (i) the
net income (or loss) of any Person acquired by such Person or a Subsidiary of
such Person in a pooling-of-interests transaction for any period prior to the
date of such transaction (subject to the final proviso of the definition of
Consolidated EBITDA Coverage Ratio when Consolidated Net Income is being
computed for purposes of calculating the Consolidated EBITDA Coverage Ratio),
(ii) the net income (but not net loss) of any Consolidated Subsidiary of such
Person to the extent restricted from the payment of dividends or the making of
distributions to such Person during such period, (iii) the net income (or loss)
of any Person that is not a Consolidated Subsidiary of such Person except to the
extent of the amount of dividends or other distributions actually paid to such
Person by such other Person during such period, (iv) extraordinary gains and
losses (and any unusual gains and losses arising outside the ordinary course of
business not included in extraordinary gains and losses), (v) net gains and
losses in respect of dispositions of assets other than in the ordinary course of
business and (vi) the tax effect of any of the items described in Clauses (i)
through (v) above.
"Consolidated Net Worth" of any Person at any date means the
consolidated stockholders" equity of such Person and its Consolidated
Subsidiaries at such date, as determined on a consolidated basis in accordance
with generally accepted accounting principles, less amounts attributable to
Redeemable Interests of such Person; provided, however, that, with respect to
the Company and its Restricted Subsidiaries, adjustments following the date of
the Indenture to the accounting books and records of the Company and its
Restricted Subsidiaries in accordance with Accounting Principles Board Opinions
Nos. 16 and 17 (or successor opinions thereto) or otherwise resulting from the
acquisition of control of the Company by another Person shall not be given
effect to.
"Consolidated Subsidiaries" of any Person means all other
Persons that would be accounted for as consolidated Persons in such Person's
financial statements in accordance with
6
<PAGE> 19
generally accepted accounting principles; provided, however, that, for any
particular period during which any Subsidiary of the Company was an Unrestricted
Subsidiary, "Consolidated Subsidiaries" will exclude such Subsidiary for such
period (or portion thereof) during which it was an Unrestricted Subsidiary.
"Continuing Directors" means, as of any date of determination,
any member of the Board of Directors of the Company who (a) was a member of such
Board of Directors on the date of the Indenture or (b) was nominated for
election or elected to such Board of Directors with the approval of, or whose
election to the Board of Directors was ratified by, at least a majority of the
Continuing Directors who were members of such Board of Directors at the time of
such nomination or election.
"Corporate Trust Office" means the office of the Trustee
maintained in Cincinnati, Ohio, at which at any particular time its principal
corporate trust business shall be administered, which as of the date hereof, is
located at 425 Walnut Street, Cincinnati, Ohio 45201-1118.
"Corporation" means a corporation, association, company,
joint-stock company or business trust.
"Credit Facility" means, collectively, the Credit Agreement
dated as of July 3, 1997 among the Company, certain of its Subsidiaries, the
financial institutions from time to time party thereto as Lenders and Issuing
Banks, The First National Bank of Chicago and Goldman Sachs Credit Partners
L.P., as syndication agents, and Citicorp USA, Inc., in its separate capacity as
collateral and administrative agent for the Lenders and Issuing Banks, and the
Loan Documents (as defined therein) (or other analogous documents entered into
in connection with any refinancing thereof), in each case as the same may from
time to time be amended, renewed, restated, supplemented or otherwise modified
at the option of the parties thereto; and any other agreement pursuant to which
any of the Debt, commitments, Obligations, costs, expenses, fees, reimbursements
and other indemnities payable or owing under the Credit Facility may be
refinanced, restructured, renewed, extended, refunded or increased, as any such
other agreement may from time to time at the option of the parties thereto be
amended, renewed, restated, supplemented, or otherwise modified.
"CVC" means 399 Venture Partners, Inc. and its Affiliates.
"Debt" means (without duplication), with respect to any
Person, whether recourse is to all or a portion of the assets of such Person,
(i) every obligation of such Person for money borrowed, (ii) every obligation of
such Person evidenced by bonds, debentures, notes or other similar instruments,
including payment obligations Incurred in connection with the acquisition of
property, assets or businesses, (iii) every reimbursement obligation of such
Person with respect to letters of credit, bankers' acceptances or similar
facilities issued for the account of such Person, (iv) every obligation of such
Person issued or assumed as the deferred purchase price of property or services
(but excluding trade accounts payable or accrued liabilities arising in the
ordinary course of business), (v) every Capital Lease Obligation of such Person,
(vi) the maximum fixed redemption or repurchase price of Redeemable Interests of
such Person at the time of determination, (vii) the market value of any
indebtedness, obligation or other liability of
7
<PAGE> 20
such Person in respect of any interest rate or currency swap, hedge or exchange
or similar derivative agreement with any counterparty thereto, net of
indebtedness, obligations or other liabilities owed to such Person by such
counterparty and (viii) every obligation of the type referred to in Clauses (i)
through (vii) of another Person and all dividends of another Person the payment
of which, in either case, such Person has Guaranteed or for which such Person is
responsible or liable, directly or indirectly, jointly or severally, as obligor,
Guarantor or otherwise, but excluding from Debt (a) any indebtedness,
obligations or other liabilities subject to the Plan of Reorganization and (b)
any indebtedness or other liabilities Incurred in connection with obligations
Incurred to pay premiums for corporate owned life insurance policies purchased
by the Company in an aggregate amount not to exceed the aggregate cash value of
such policies.
"Defaulted Interest" has the meaning specified in Section
3.08.
"Defeasance" has the meaning specified in Section 12.02.
"Depositary" means, with respect to any Securities, a clearing
agency that is registered as such under the Exchange Act and is designated by
the Company to act as Depositary for such Securities (or any successor
securities clearing agency so registered).
"Designated Senior Debt" means (i) all Obligations in respect
of the Credit Facility and (ii) all Obligations in respect of any other Senior
Debt of the Company in each case in an outstanding principal amount not less
than $10 million.
"DLJMB" means DLJ Merchant Banking Partners II, L.P. and its
Affiliates.
"Domestic Subsidiary" means a Subsidiary that is organized
under the laws of the United States or any state, district or territory thereof.
"DTC" means The Depository Trust Company, a New York
corporation.
"Event of Default" has the meaning specified in Section 5.01.
"Excepted Disposition" means a transfer, conveyance, sale,
lease or other disposition by the Company or any Restricted Subsidiary of (i)
the Capital Stock or any or all of the assets of Taylor Publishing Company, (ii)
certain assets of a Restricted Subsidiary that may be required to be divested,
in an amount not to exceed $8 million, in connection with an action by the
Federal Trade Commission relating to the acquisition by the Company of certain
assets of Helima-Helvetion International, Inc. or (iii) any other asset of the
Company or any Restricted Subsidiary for which the Company or any Restricted
Subsidiary receives a mortgage or a purchase money security interest the
principal amount of which at any time outstanding does not exceed $8 million or,
taken together with all other mortgages and purchase money security interests in
respect of any other such assets, the aggregate principal amount of which at any
time outstanding does not exceed $15 million.
"Exchange Act" means the Securities Exchange Act of 1934 (or
any successor statute), as it may be amended from time to time.
8
<PAGE> 21
"Exchange Notes" means the Notes issued pursuant to the
Exchange Offer and their Successor Notes.
"Exchange Offer" means an offer made by the Company pursuant
to the Registration Rights Agreement under an effective registration statement
under the Securities Act to exchange securities substantially identical to
Outstanding Notes (except for the differences provided for herein) for
Outstanding Notes.
"Exchange Registration Statement" means a registration
statement of the Company under the Securities Act registering Exchange Notes for
distribution pursuant to the Exchange Offer.
"Expiration Date" has the meaning specified in Section 104.
"Global Note" means a Note that is registered in the Note
Register in the name of a Depositary or a nominee thereof.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person guaranteeing any Debt, or dividends or distributions
on any equity security, of any other Person (the "primary obligor") in any
manner, whether directly or indirectly, and including, without limitation, any
obligation of such Person, (i) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Debt or to purchase (or to advance or
supply funds for the purchase of) any security for the payment of such Debt,
(ii) to purchase property, securities or services for the purpose of assuring
the holder of such Debt of the payment of such Debt, or (iii) to maintain
working capital, equity capital or other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Debt (and "Guaranteed," "Guaranteeing" and "Guarantor" shall have meanings
correlative to the foregoing); provided, however, that the Guarantee by any
Person shall not include endorsements by such Person for collection or deposit,
in either case, in the ordinary course of business.
"Guarantors" means (i) each of the Domestic Subsidiaries of
the Company that is a Wholly Owned Restricted Subsidiary on the date of the
Indenture and that executes a supplemental indenture to provide a Note Guarantee
in accordance with the provisions of this Indenture and (ii) any other
Subsidiary of the Company that executes a supplemental indenture to provide a
Note Guarantee in accordance with the provisions of this Indenture, and in each
case, which has not been released as a Guarantor pursuant to the provisions of
Section 14.06.
"Holders" means a Person in whose name a Note is registered in
the Note Register.
"Holdings" means Insilco Holding Co., a Delaware corporation.
"Incur" means, with respect to any Debt or other obligation of
any Person, to create, issue, incur (by conversion, exchange or otherwise),
assume, Guarantee or otherwise become liable in respect of such Debt or other
obligation or the recording, as required pursuant to generally accepted
accounting principles or otherwise, of any such Debt or other obligation on
9
<PAGE> 22
the balance sheet of such Person (and "Incurrence", "Incurred", "Incurrable" and
"Incurring" shall have meanings correlative to the foregoing); provided,
however, that a change in generally accepted accounting principles that results
in an obligation of such Person that exists at such time becoming Debt shall not
be deemed an Incurrence of such Debt.
"Indenture" means this instrument as originally executed or as
it may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively.
"Initial Notes" has the meaning specified in the recitals to
this Indenture.
"Initial Purchaser" means Donaldson, Lufkin & Jenrette
Securities Corporation, as initial purchaser of the Initial Notes from the
Company pursuant to the Purchase Agreement, or any initial purchaser of
Additional Notes under a Purchase Agreement.
"Insolvency Proceeding" has the meaning specified in Section
1302.
"Interest Payment Date" means the Stated Maturity of an
installment of interest on the Notes.
"Interest Rate, Currency or Commodity Price Agreement" of any
Person means any forward contract, futures contract, swap, option or other
financial agreement or arrangement (including, without limitation, caps, floors,
collars and similar agreements) relating to, or the value of which is dependent
upon, interest rates, currency exchange rates or commodity prices or indices
(excluding contracts for the purchase or sale of goods in the ordinary course of
business).
"Investment" by any Person in any other Person means (i) any
direct or indirect loan, advance or other extension of credit or capital
contribution to or for the account of such other Person (by means of any
transfer of cash or other property to any Person or any payment for property or
services for the account or use of any Person, or otherwise), (ii) any direct or
indirect purchase or other acquisition of any Capital Stock, bond, note,
debenture or other debt or equity security or evidence of Debt, or any other
ownership interest, issued by such other Person, whether or not such acquisition
is from such or any other Person, (iii) any direct or indirect payment by such
Person on a Guarantee of any obligation of or for the account of such other
Person or (iv) any other investment of cash or other property by such Person in
or for the account of such other Person.
"Lien" means, with respect to any property or assets, any
mortgage or deed of trust, pledge, hypothecation, assignment, Receivables Sale,
deposit arrangement, security interest, lien, charge, easement (other than any
easement not materially impairing usefulness or marketability), encumbrance,
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever on or with respect to such property or assets
(including, without limitation, any conditional sale or other title retention
agreement having substantially the same economic effect as any of the
foregoing).
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<PAGE> 23
"Liquidated Damages" means all liquidated damages then owing
pursuant to the Registration Rights Agreement.
"Maturity", when used with respect to any security, means the
date on which the principal of such security becomes due and payable as therein
or herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"Net Available Proceeds" means cash, readily marketable cash
equivalents, readily marketable fixed-income securities and equity securities
traded on a national securities exchange or NASDAQ (valued, in the case of
securities, at the market value thereof when received by the Company or such
Restricted Subsidiary) received (including by way of sale or discounting of a
note, installment receivable or other receivable, but excluding any other
consideration received in the form of an assumption by any transferee of Debt or
other obligations relating to the properties or assets transferred, or otherwise
received in any non-cash form) from an Asset Disposition by the Company or any
Restricted Subsidiary, net of (i) all legal, title and recording tax expenses,
commissions and other fees and expenses Incurred and all federal, state,
provincial, foreign and local taxes required to be accrued as a liability as a
consequence of such Asset Disposition, (ii) all payments made by the Company or
any Restricted Subsidiary on any Debt which is secured by assets disposed of in
such Asset Disposition in accordance with the terms of any Lien upon or with
respect to such assets or which must by the terms of such Lien, or in order to
obtain a necessary consent to such Asset Disposition or by applicable law, be
repaid out of the proceeds from such Asset Disposition, (iii) amounts provided
as a reserve by the Company or any Restricted Subsidiary, in accordance with
generally accepted accounting principles, against liabilities under any
indemnification obligations to the buyer in such Asset Disposition (except to
the extent and at the time any such amounts are released from any such reserve,
such amounts shall constitute Net Available Proceeds) and (iv) all distributions
and other payments made to minority interest holders in Restricted Subsidiaries
or joint ventures as a result of such Asset Disposition.
"Non-Guarantee Period" means, if prior to the 90th day after
the date of this Indenture, all Wholly-Owned Restricted Subsidiaries on the date
of the Indenture which are Domestic Subsidiaries (other than Subsidiaries
entitled to be released from the Note Guarantee pursuant to Section 14.06) have
not executed and delivered a Supplemental Indenture providing a Note Guarantee,
the period commencing on such 90th day and ending on the date, if any, that all
such Domestic Subsidiaries (other than Subsidiaries entitled to be released from
the Note Guarantee pursuant to Section 14.06) have executed and delivered a
Supplemental Indenture providing a Note Guarantee.
"Notes" has the meaning specified in the first paragraph of
the recitals to this instrument and includes the Exchange Notes.
"Note Guarantee" means the Guarantee by each Guarantor,
pursuant to Section 9.01 and Article Fourteen.
"Note Register" and "Note Registrar" have the respective
meanings specified in Section 306.
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<PAGE> 24
"Notice of Default" means a written notice of the kind
specified in Section 5.01(4).
"Obligations" mean any principal, interest, penalties,
expenses, fees, indemnities, reimbursements, damages and other liabilities
payable under the documentation governing any Debt.
"Offer Document" has the meaning specified in the definition
of "Offer to Purchase".
"Offer Expiration Date" has the meaning specified in the
definition of "Offer to Purchase".
"Offer to Purchase" means an offer, set forth in a writing
(the "Offer Document") sent by the Company by first class mail, postage prepaid,
to each Holder at its address appearing in the Note Register on the date of the
Offer Document, to purchase up to the principal amount of Notes specified in
such Offer Document at the purchase price specified in such Offer Document (as
determined pursuant to this Indenture). Unless otherwise required by applicable
law, the Offer Document shall specify an expiration date (the "Offer Expiration
Date") of the Offer to Purchase which shall be, subject to any contrary
requirements of applicable law, not less than 30 days or more than 60 days after
the date of such Offer Document and a settlement date (the "Purchase Date") for
the purchase of Notes within five Business Days after the Offer Expiration Date.
The Company shall notify the Trustee in writing at least 15 Business Days (or
such shorter period as is acceptable to the Trustee) prior to the mailing of the
Offer Document of the Company's obligation to make an Offer to Purchase, and the
Offer Document shall be mailed by the Company or, at the Company's request, by
the Trustee in the name and at the expense of the Company. The Offer Document
shall contain information concerning the business of the Company and its
Subsidiaries which the Company in good faith believes will enable such Holders
to make an informed decision with respect to the Offer to Purchase (which at a
minimum will include (i) the most recent annual and quarterly financial
statements and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" required to be filed with the Trustee pursuant to Section
10.19 (which requirements may be satisfied by delivery of such documents
together with the Offer Document), (ii) a description of material developments
in the Company's business subsequent to the date of the latest of such financial
statements referred to in Clause (i) (including a description of the events
requiring the Company to make the Offer to Purchase), (iii) if applicable,
appropriate pro forma financial information concerning the Offer to Purchase and
the events requiring the Company to make the Offer to Purchase and (iv) any
other information required by applicable law to be included therein. The Offer
Document shall contain all instructions and materials necessary to enable such
Holder to tender Notes pursuant to the Offer to Purchase. The Offer Document
shall also state:
(1) the Section of this Indenture pursuant to which the Offer
to Purchase is being made;
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<PAGE> 25
(2) the Offer Expiration Date and the Purchase Date;
(3) the aggregate principal amount of the Outstanding Notes
offered to be purchased by the Company pursuant to the Offer to
Purchase (including, if less than 100%, the manner by which such amount
has been determined as required by this Indenture) (the "Purchase
Amount");
(4) the purchase price to be paid by the Company for each
$1,000 aggregate principal amount of Notes accepted for payment (as
specified pursuant to this Indenture);
(5) that the Holder may tender all or any portion of the Notes
registered in the name of such Holder and that any portion of a Note
tendered must be tendered in an integral multiple of $1,000 principal
amount;
(6) the place or places where Notes are to be surrendered for
tender pursuant to the Offer to Purchase and a description of the
procedure which a Holder must follow to tender all or a portion of the
Notes;
(7) that interest on any Note not tendered or tendered but not
purchased by the Company pursuant to the Offer to Purchase will
continue to accrue;
(8) that on the Purchase Date the purchase price will become
due and payable upon each Note accepted for payment pursuant to the
Offer to Purchase and that interest thereon shall cease to accrue on
and after the Purchase Date;
(9) that each Holder electing to tender a Note pursuant to the
Offer to Purchase will be required to surrender such Note at the place
or places specified in the Offer Document prior to the close of
business on the Offer Expiration Date (such Note being duly endorsed
by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the
Holder thereof or his attorney duly authorized in writing and bearing
appropriate signature guarantees);
(10) that Holders will be entitled to withdraw all or any
portion of Notes tendered if the Company (or its Paying Agent)
receives, not later than the close of business on the Offer Expiration
Date, a telegram, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Note the Holder
tendered, the certificate number of the Note the Holder tendered and a
statement that such Holder is withdrawing all or a portion of its
tender;
(11) that (a) if Notes in an aggregate principal amount less
than or equal to the Purchase Amount are duly tendered and not
withdrawn pursuant to the Offer to Purchase, the Company shall purchase
all such Notes and (b) if Notes in an aggregate principal amount in
excess of the Purchase Amount are tendered and not withdrawn pursuant
to the Offer to Purchase, the Company shall purchase Notes having an
aggregate principal amount equal to the Purchase Amount on a pro rata
basis (with such adjustments as may
13
<PAGE> 26
be deemed appropriate so that only Notes in denominations of $1,000 or
integral multiples thereof shall be purchased);
(12) that in the case of any Holder whose Note is purchased
only in part, the Company shall execute, and the Trustee shall
authenticate and deliver to the Holder of such Note without service
charge, a new Note or Notes, of any authorized denomination as
requested by such Holder, in an aggregate principal amount equal to and
in exchange for the unpurchased portion of the Note so tendered; and
(13) that each Holder electing to tender a Note pursuant to
the Offer to Purchase will be required to complete the Option of Holder
to Elect Purchase.
Any Offer to Purchase shall be governed by and effected in accordance with the
Offer Document for such Offer to Purchase.
"Officers' Certificate" of the Company means a certificate
signed by the Chairman of the Board, a Vice Chairman of the Board, the President
or a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary
or an Assistant Secretary, of the Company, and delivered to the Trustee. One of
the officers signing an Officers' Certificate given pursuant to Section 10.21
shall be the principal executive, financial or accounting officer of the
Company. Unless the context otherwise requires, each reference herein to an
"Officers' Certificate" shall mean an Officers' Certificate of the Company.
References herein, or in any Note, to any officer of a Person that is a
partnership shall mean such officer of the partnership or, if none, of a general
partner of the partnership authorized thereby to act on its behalf.
"Old Credit Facility" means the revolving credit and term loan
facility to which the Company and certain of its Subsidiaries were parties that
was replaced by, and repaid in full by advances under, the Credit Facility.
"Opinion of Counsel" means a written opinion of counsel, who
may be counsel for the Company, and who shall be reasonably acceptable to the
Trustee. An Opinion of Counsel may have qualifications customary for opinions of
the type required and counsel delivering such Opinion of Counsel may rely on
certificates of the Company or government or other officials customary for
opinions of the type required, including certificates testifying as to matters
of fact.
"Original Notes" means all Notes other than Exchange Notes.
"Outstanding", when used with respect to Notes, means, as of
the date of determination, all Notes theretofore authenticated and delivered
under this Indenture or any indenture supplemental hereto, except:
(i) Notes theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Notes for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the
14
<PAGE> 27
Company) in trust or set aside and segregated in trust by the Company
(if the Company shall act as a Paying Agent) for the Holders of such
Notes; provided that, if such Notes are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made;
(iii) Notes which have been defeased pursuant to Section
12.02; and
(iv) Notes which have been paid pursuant to Section 3.07
or in exchange for or in lieu of which other Notes have been
authenticated and delivered pursuant to this Indenture, other than any
such Notes in respect of which there shall have been presented to the
Trustee proof satisfactory to it that such Notes are held by a bona
fide purchaser in whose hands such Notes are valid obligations of the
Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Notes owned by
the Company or any other obligor upon the Notes or the Note Guarantees or any
Affiliate of the Company or of such other obligor shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Notes which the Trustee actually
knows to be so owned shall be so disregarded. Notes so owned which have been
pledged in good faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Trustee the pledgee's right so to act with respect to
such Notes and that the pledgee is not the Company or any other obligor upon the
Notes or any Affiliate of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to
pay the principal of (and premium, if any) or interest on any Notes on behalf of
the Company.
"Payment in full," together with any correlative term such as
"paid in full" and "pay in full," means with respect to any Obligation payment
in full thereof in cash.
"Permitted Interest Rate, Currency or Commodity Price
Agreement" of any Person means any Interest Rate, Currency or Commodity Price
Agreement entered into with one or more financial institutions that is designed
to protect such Person against fluctuations in interest rates or currency
exchange rates with respect to Debt Incurred or, in the case of currency or
commodity protection agreements, against currency exchange rate or commodity
price fluctuations relating to then existing financial obligations or then
existing or sold production and, in any case, not for purposes of speculation.
"Permitted Investment" means (i) Investments in the Company or
any Person that is, or as a consequence of such Investment becomes, a Restricted
Subsidiary, (ii) securities either issued directly or fully guaranteed or
insured by the government of the United States of America or any agency or
instrumentality thereof having maturities of not more than one year, (iii) time
deposits and certificates of deposit, demand deposits and banker's acceptances
having maturities of not more than one year from the date of deposit, of any
domestic commercial bank having capital and surplus in excess of $500 million
and having a peer group rating of B or better (or the
15
<PAGE> 28
equivalent thereof) by Thompson BankWatch, Inc. or outstanding long-term debt
rated BBB or better (or the equivalent thereof) by Standard & Poor's Ratings
Group or Baa2 or better (or the equivalent thereof) by Moody's Investors
Service, Inc., (iv) demand deposits made in the ordinary course of business and
consistent with the Company's customary cash management policy in any domestic
office of any commercial bank organized under the laws of the United States of
America or any state thereof, (v) insured deposits issued by commercial banks of
the type described in Clause (iv) above, (vi) mutual funds whose investment
guidelines restrict such funds' investments primarily to those satisfying the
provisions of any of Clauses (ii), (iii), (vii) and (viii) of this definition,
(vii) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in Clauses (ii) and (iii) above
entered into with any bank meeting the qualifications specified in Clause (iii)
above, (viii) commercial paper (other than commercial paper issued by an
Affiliate or Related Person) rated A-1 or the equivalent thereof by Standard &
Poor's Ratings Group or P-1 or the equivalent thereof by Moody's Investors
Service, Inc., and in each case maturing within 360 days, (ix) receivables owing
to the Company or a Restricted Subsidiary if created or acquired in the ordinary
course of business and payable or dischargeable in accordance with customary
trade terms, (x) any Investment consisting of loans and advances to employees of
the Company or any Restricted Subsidiary for travel, entertainment, relocation,
employee incentive plans or other expenses in the ordinary course of business,
(xi) any Investment consisting of a Permitted Interest Rate, Currency or
Commodity Price Agreement, (xii) any Investment acquired by the Company or any
of its Restricted Subsidiaries (A) in exchange for any other Investment or
accounts receivable held by the Company or any such Restricted Subsidiary in
connection with or as a result of a bankruptcy, workout, reorganization or
recapitalization of the issuer of such other Investment or the obligor with
respect to such accounts receivable or (B) as a result of a foreclosure by the
Company or any of its Restricted Subsidiaries with respect to any secured
Investment or other transfer of title with respect to any secured Investment in
default, (xiii) any Investment that constitutes part of the consideration from
an Asset Disposition made pursuant to, and in compliance with, Section 10.17,
(xiv) Investments the payment for which consists exclusively of Capital Stock
(exclusive of Redeemable Interests) of the Company and (xv) Investments existing
as of the date of the Indenture of the Company or any Subsidiary of the Company.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Plan or Reorganization" means the Company's Amended and
Restated Plan of Reorganization dated November 23, 1992.
"Post-Petition Interest" means all interest accrued or
accruing after the commencement of any Insolvency Proceeding (and interest that
would accrue but for the commencement of any Insolvency Proceeding) in
accordance with and at the contract rate (including, without limitation, any
rate applicable upon default) specified in the agreement or instrument creating,
evidencing or governing any Senior Debt, whether or not, pursuant to applicable
law or otherwise, the claim for such interest is allowed as a claim in such
Insolvency Proceeding.
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"Predecessor Note" of any particular Note means every Note
issued before, and evidencing all or a portion of the same debt as that
evidenced by, such particular Note; and, for the purposes of this definition,
any Note authenticated and delivered under Section 3.07 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Note shall be deemed to evidence
the same debt as the mutilated, destroyed, lost or stolen Note.
"Preferred Stock" of any Person means Capital Stock of such
Person of any class or classes (however designated) that ranks prior, as to the
payment of dividends or as to the distribution of assets upon any voluntary or
involuntary liquidation, dissolution or winding up of such Person, to shares of
Capital Stock of any other class of such Person.
"Principals" means DLJMB and/or CVC.
"Public Offering" means any underwritten public offering of
Capital Stock pursuant to a registration statement filed under the Securities
Act.
"Purchase Agreement" means the Purchase Agreement, dated as of
November 2, 1998, among the Company, Holdings and Donaldson, Lufkin & Jenrette
Securities Corporation, as such agreement may be amended from time to time, and
any purchase agreement with the Company relating to Additional Notes, as such
agreement may be amended from time to time.
"Purchase Amount" has the meaning specified in the definition
of "Offer to Purchase".
"Purchase Date" has the meaning specified in the definition of
"Offer to Purchase".
"Purchase Price" has the meaning specified in the definition
of "Offer to Purchase".
"Receivables" means receivables, chattel paper, instruments,
documents or intangibles evidencing or relating to the right to payment of
money.
"Receivables Sale" of any Person means any sale of Receivables
of such Person (pursuant to a purchase facility or otherwise), other than in
connection with a disposition of the business operations of such Person relating
thereto or a disposition of defaulted Receivables for purpose of collection and
not as a financing arrangement.
"Redeemable Interest" of any Person means any equity security
of or other ownership interest in such Person that by its terms (or by the terms
of any security into which it is convertible or for which it is exchangeable) or
otherwise (including upon the occurrence of an event) matures or is required to
be redeemed (pursuant to any sinking fund obligation or otherwise) or is
convertible into or exchangeable for Debt or is redeemable at the option of the
holder thereof, in whole or in part, at any time prior to the final Stated
Maturity of the Notes.
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"Redemption Date", when used with respect to any Note to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Note to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Registered Notes" means the Exchange Notes and all other
Notes sold or otherwise disposed of pursuant to an effective registration
statement under the Securities Act, together with their respective Successor
Notes.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of November 9, 1998, by and between the Company and
Donaldson, Lufkin & Jenrette Securities Corporation, as Initial Purchaser, as
such agreement may be amended from time to time, and, with respect to any
Additional Notes, one or more registration rights agreements between the Company
and the other parties thereto, as such agreement(s) may be amended, from time to
time, relating to rights given by the Company to the purchasers of Additional
Notes to register or exchange such Additional Notes under the Securities Act.
"Regular Record Date" for the interest payable on any Interest
Payment Date means February 1 and August 1 (whether or not a Business Day), as
the case may be, next preceding such Interest Payment Date.
"Reinvested Amounts", with respect to any Asset Disposition,
means amounts invested, within one year from the later of the date of the
related Asset Disposition or the receipt of the Net Available Proceeds from such
Asset Disposition, in assets that will be used in the same or a substantially
similar or related business of the Company or any of its Wholly Owned Restricted
Subsidiaries as conducted prior to such Asset Disposition (determined by the
Board of Directors in good faith, as evidenced by a resolution of such Board of
Directors).
"Related Party" means, with respect to any Principal, (a) any
controlling stockholder or partner of such Principal on the date of the
Indenture, or (b) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons beneficially holding
(directly or through one or more Subsidiaries) a 51% or more controlling
interest of which consist of the Principals and/or such other Persons referred
to in the immediately preceding clauses (a) or (b).
"Related Person" of any Person means any other Person directly
or indirectly owning (a) 5% or more of the outstanding Common Stock of such
Person (or, in the case of a Person that is not a corporation, 5% or more of the
equity interest in such Person) or (b) 5% or more of the combined voting power
of the Voting Stock of such Person.
"Required Filing Dates" has the meaning specified in Section
10.19.
"Restricted Global Note" has the meaning specified in Section
2.01.
"Restricted Payment" has the meaning specified in Section
10.12.
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"Restricted Securities" means all Notes required pursuant to
Section 3.06(c) to bear a Restricted Securities Legend. Such term includes the
Restricted Global Note.
"Restricted Securities Certificate" means a certificate
substantially in the form set forth in Annex B.
"Restricted Securities Legend" means a legend substantially in
the form of the legend required in the form of Note set forth in Section 2.02 to
be placed upon a Restricted Note.
"Restricted Subsidiary" means (i) at any date, a Subsidiary of
the Company that is not an Unrestricted Subsidiary as of such date and (ii) for
any period, a Subsidiary of the Company that for any portion of such period is
not an Unrestricted Subsidiary, provided that such term shall mean such
Subsidiary only for such portion of such period.
"Rule 144A" means Rule 144A under the Securities Act (or any
successor provision), as it may be amended from time to time.
"Rule 144A Notes" means the Notes purchased by the Initial
Purchaser from the Company pursuant to the Purchase Agreement.
"Securities Act" means the Securities Act of 1933 (or any
successor statute), as it may be amended from time to time.
"Securities Act Legend" means a Restricted Securities Legend.
"Senior Debt" means with respect to any Person (i) all Debt
and other Obligations owing in respect of the Credit Facility (including,
without limitation, all loans, letters of credit and other extensions of credit
thereunder and all expenses, fees, reimbursements, indemnities and other amounts
owing pursuant thereto), (ii) all Debt referred to in Clauses (i), (ii), (iii),
(v), (vii) or (viii) of the definition of Debt, whether Incurred on or prior to
the date of the Indenture or thereafter Incurred, and (iii) amendments,
modifications, renewals, extensions, refinancings and refundings of any such
Debt; provided, however, the following shall not constitute Senior Debt: (a) any
Debt owed to a Person when such Person is a Subsidiary of the Company, (b) any
Debt which by the terms of the instrument creating or evidencing the same is
pari passu with or subordinate in right of payment to the Notes, (c) any Debt
Incurred in violation of the Indenture or (d) any Debt which is subordinate in
right of payment in any respect to any other Debt of such Person. For purposes
of this definition, "Debt" includes any obligation to pay principal, premium (if
any), interest, penalties, reimbursement or indemnity amounts, fees and expenses
(including Post-Petition Interest). To the extent any payment of Senior Debt
(whether by or on behalf of the Company, as proceeds of security or enforcement
or any right of setoff or otherwise) is declared to be fraudulent or
preferential, set aside or required to be paid to a trustee, receiver or other
similar party under any bankruptcy, insolvency, receivership or similar law,
then if such payment is recovered by, or paid over to, such trustee, receiver or
other similar party, the Senior Debt or part thereof originally intended to be
satisfied shall be deemed to be reinstated and outstanding as if such payment
had not occurred. All Senior Debt shall be and remain Senior Debt for all
purposes of the Indenture, whether or not subordinated in any Insolvency
Proceeding.
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"Shares" means shares of the Company"s Common Stock, $.001 par
value per share.
"Shelf Registration Statement" means a shelf registration
statement under the Securities Act filed by the Company, if required by, and
meeting the requirements of, the Registration Rights Agreement (including
pursuant to Section 2(b) but excluding Section 2(c) of the initial Registration
Right Agreement and the Shelf Registration Statement containing a market making
prospectus) registering Notes for resale.
"Special Record Date" for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to Section 3.08.
"Special Redemption" has the meaning set forth in Section
11.09.
"Special Redemption Account" has the meaning set forth in
Section 11.09.
"Special Redemption Date" has the meaning set forth in Section
11.09.
"Stated Maturity", when used with respect to any Note or any
instalment of interest thereon, means the date specified in such Note as the
fixed date on which the principal of such Note or such instalment of interest,
as the case may be, is due and payable.
"Subordinated Debt" means Debt of the Company as to which the
payment of principal of (and premium, if any) and interest and other payment
obligations in respect of such Debt shall be subordinate to the prior payment in
full of the Notes to at least the following extent: (i) no payments of principal
of (or premium, if any) or interest on or otherwise due in respect of such Debt
may be permitted for so long as any default in the payment of principal (or
premium, if any) or interest on the Notes exists; (ii) in the event that any
other default exists with respect to the Notes that with the passing of time or
the giving of notice, or both, would constitute an event of default, upon notice
by Holders of 25% or more in principal amount of the Notes to the Trustee, the
Trustee shall have the right to give notice to the Company and the holders of
such Debt (or trustees or agents therefor) of a payment blockage, and thereafter
no payments of principal of (or premium, if any) or interest on or otherwise due
in respect of such Debt may be made for a period of 179 days from the date of
such notice; and (iii) such Debt may not (x) provide for payments of principal
of such Debt at the stated maturity thereof or by way of a sinking fund
applicable thereto or by way of any mandatory redemption, defeasance, retirement
or repurchase thereof by the Company (including any redemption, retirement or
repurchase which is contingent upon events or circumstances, but excluding any
retirement required by virtue of acceleration of such Debt upon an event of
default thereunder), in each case prior to the final Stated Maturity of the
Notes or (y) permit redemption or other retirement (including pursuant to an
offer to purchase made by the Company) of such other Debt at the option of the
holder thereof prior to the final Stated Maturity of the Notes, other than a
redemption or other retirement at the option of the holder of such Debt
(including pursuant to an offer to purchase made by the Company) which is
conditioned upon a change of control of the Company pursuant to provisions
substantially similar to those described under "Change of Control" (and which
shall provide that such Debt will not be repurchased pursuant to such provisions
prior to the
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Company's repurchase of the Notes required to be repurchased by the Company
pursuant to the provisions described under "Change of Control").
"Subordinated Obligations" has the meaning specified in
Section 13.01.
"Subordinated Securities" mean securities distributed to the
holders of the Notes (i) in an Insolvency Proceeding, pursuant to a plan of
reorganization consented to by each class of Senior Debt or (ii) outside an
Insolvency Proceeding, but only if, in each case, all of the terms and
conditions of such securities (including, without limitation, term, tenor,
interest, amortization, subordination, covenants and defaults) are in all
material respects at least as favorable (and provide the same relative benefits)
to the holders of Senior Debt and, in the case of an Insolvency Proceeding, to
the holders of any Note distributed in such Insolvency Proceeding on account of
Senior Debt as the terms and conditions of the Notes and the Indenture are and
provide to the holders of Senior Debt.
"Subsidiary" of any Person means (i) a corporation more than
50% of the combined voting power of the outstanding Voting Stock of which is
owned, directly or indirectly, by such Person or by one or more other
Subsidiaries of such Person or by such Person and one or more Subsidiaries
thereof or (ii) any other Person (other than a corporation) in which such Person
or one or more other Subsidiaries of such Person or such Person and one or more
other Subsidiaries thereof, directly or indirectly, has at least a majority
ownership and power to direct the policies, management and affairs thereof.
"Successor Company" has the meaning specified in Section 8.01.
"Successor Note" of any particular Note means every Note
issued after, and evidencing all or a portion of the same debt as that evidenced
by, such particular Note; and, for the purposes of this definition, any Note
authenticated and delivered under Section 307 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Note shall be deemed to evidence the same
debt as the mutilated, destroyed, lost or stolen Note.
"10 1/4% Notes' means the Company's existing 10-1/4% Senior
Subordinated Notes due 2007 in the aggregate principal amount of $150,000,000.
"10 1/4% Offer to Purchase" means the offer to repurchase the
10-1/4% Notes at a purchase price equal to, 101% of the principal amount
thereof, plus accrued interest that the Company was required to make pursuant
to the 10-1/4% Note Indenture in connection with the Mergers (as defined in
the initial Purchase Agreement).
"Tender Offer" means the Company's offer to purchase,
commenced July 11, 1997, up to 2,857,142 Shares at a price of $38.50 per Share.
"Transactions" means (i) the Tender Offer, (ii) the repurchase
by the Company of Shares from Robert L. Smialek at $38.50 per Share pursuant to
a negotiated share purchase agreement entered into in July 1997, (iii) the
repurchase by the Company of Shares from Water Street at $38.50 per Share
pursuant to a negotiated share purchase agreement entered into in July
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1997, (iv) the entering into by the Company of the Credit Facility and (v) the
offering of the 10 1/4 % Notes.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as
in force at the date as of which this instrument was executed; provided,
however, that in the event the Trust Indenture Act of 1939 is amended after such
date, "Trust Indenture Act" means, to the extent required by any such amendment,
the Trust Indenture Act of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Units" means the 120,000 units each consisting of $1,000
principal amount of Notes and one Warrant.
"Unpermitted Debt" has the meaning specified in Section 1020.
"Unrestricted Notes Certificate" means a certificate
substantially in the form set forth in Annex A.
"Unrestricted Subsidiary" means (i) at any date, a Subsidiary
of the Company that is an Unrestricted Subsidiary in accordance with the
provisions of Section 1020 and (ii) for any period, a Subsidiary of the Company
that for any portion of such period is an Unrestricted Subsidiary in accordance
with the provisions of Section 1020, PROVIDED that such term shall mean such
Subsidiary only for such portion of such period.
"U.S. Person" means (i) any individual resident in the United
States, (ii) any partnership or corporation organized or incorporated under the
laws of the United States, (iii) any estate of which an executor or
administrator is a U.S. Person (other than an estate governed by foreign law and
of which at least one executor or administrator is a non-U.S. Person who has
sole or shared investment discretion with respect to its assets), (iv) any trust
of which any trustee is a U.S. Person (other than a trust of which at least one
trustee is a non-U.S. Person who has sole or shared investment discretion with
respect to its assets and no beneficiary of the trust (and no settlor if the
trust is revocable) is a U.S. Person), (v) any agency or branch of a foreign
entity located in the United States, (vi) any non-discretionary or similar
account (other than an estate or trust) held by a dealer or other fiduciary for
the benefit or account of a U.S. Person, (vii) any discretionary or similar
account (other than an estate or trust) held by a dealer or other fiduciary
organized, incorporated or (if an individual) resident in the United States
(other than such an account held for the benefit or account of a non-U.S.
Person), (viii) any partnership or corporation organized or incorporated under
the laws of a foreign jurisdiction and formed by a U.S. Person principally for
the purpose of investing in securities not registered under the Securities Act
(unless it is organized or incorporated, and owned, by accredited investors
within the meaning of Rule 5.01(a) under the Securities Act who are not natural
persons, estates or trusts); provided, however, that the term "U.S. Person" does
not include (A) a branch or agency of a U.S. Person that is located and
operating outside the United States for valid business purposes as a locally
regulated branch or agency engaged in the banking or insurance business,
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(B) any employee benefit plan established and administered in accordance with
the law, customary practices and documentation of a foreign country and (C) the
international organizations set forth in Section 902(o)(7) of Regulation S under
the Securities Act and any other similar international organizations, and their
agencies, affiliates and pension plans.
"Vice President", when used with respect to the Company or the
Trustee, means any vice president of such Person, whether or not designated by a
number or a word or words added before or after the title "vice president".
"Voting Stock" of any Person means Capital Stock of such
Person which ordinarily has voting power for the election of directors (or
persons performing similar functions) of such Person, whether at all times or
only so long as no senior class of securities has such voting power by reason of
any contingency.
"Warrants" means the 120,000 warrants issued as Units with the
Initial Notes to purchase an aggregate of 62,400 shares of Holdings Common Stock
(subject to adjustment). Each Warrant will be exercisable for 0.52 of a share of
Holdings Common Stock (subject to adjustment) initially at an exercise price of
$45 per share.
"Water Street" means Water Street Corporate Recovery Fund I,
L.P.
"Wholly Owned Restricted Subsidiary" means a Restricted
Subsidiary all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
the Company, Holdings or by one or more Wholly Owned Restricted Subsidiaries or
by the Company, Holdings and one or more Wholly Owned Restricted Subsidiaries.
SECTION 1.02 COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company or a Guarantor
to the Trustee to take any action under any provision of this Indenture, the
Company or such Guarantor shall furnish to the Trustee such certificates and
opinions as may be required under the Trust Indenture Act or this Indenture.
Each such certificate or opinion shall be given in the form of an Officers"
Certificate, if to be given by an officer of the Company or of such Guarantor,
or an Opinion of Counsel, if to be given by counsel, and shall comply with the
requirements of the Trust Indenture Act and any other requirement set forth in
this Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include
(1) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
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(3) a statement that, in the opinion of each such individual,
he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of each
such individual, such condition or covenant has been complied with.
SECTION 1.03 FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
SECTION 1.04 ACTS OF HOLDERS; RECORD DATES.
Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 6.01) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.
The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a
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notary public or other officer authorized by law to take acknowledgments of
deeds, certifying that the individual signing such instrument or writing
acknowledged to him the execution thereof. Where such execution is by a signer
acting in a capacity other than his individual capacity, such certificate or
affidavit shall also constitute sufficient proof of his authority. The fact and
date of the execution of any such instrument or writing, or the authority of the
Person executing the same, may also be proved in any other manner which the
Trustee deems sufficient.
The ownership of Notes shall be proved by the Note Register.
Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Note shall bind every future
Holder of the same Note and the Holder of every Note issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Note.
The Company may set any day as a record date for the purpose
of determining the Holders of Outstanding Notes entitled to give, make or take
any request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Indenture to be given, made or taken by
Holders of Notes, provided that the Company may not set a record date for, and
the provisions of this paragraph shall not apply with respect to, the giving or
making of any notice, declaration, request or direction referred to in the next
paragraph. If any record date is set pursuant to this paragraph, the Holders of
Outstanding Notes on such record date, and no other Holders, shall be entitled
to take the relevant action, whether or not such Holders remain Holders after
such record date; provided that no such action shall be effective hereunder
unless taken on or prior to the applicable Expiration Date by Holders of the
requisite principal amount of Outstanding Notes on such record date. Nothing in
this paragraph shall be construed to prevent the Company from setting a new
record date for any action for which a record date has previously been set
pursuant to this paragraph (whereupon the record date previously set shall
automatically and with no action by any Person be cancelled and of no effect),
and nothing in this paragraph shall be construed to render ineffective any
action taken by Holders of the requisite principal amount of Outstanding Notes
on the date such action is taken. Promptly after any record date is set pursuant
to this paragraph, the Company, at its own expense, shall cause notice of such
record date, the proposed action by Holders and the applicable Expiration Date
to be given to the Trustee in writing and to each Holder of Notes in the manner
set forth in Section 1.06.
The Trustee may set any day as a record date for the purpose
of determining the Holders of Outstanding Notes entitled to join in the giving
or making of (i) any Notice of Default, (ii) any declaration of acceleration
referred to in Section 5.02, (iii) any request to institute proceedings referred
to in Section 5.07(2) or (iv) any direction referred to in Section 5.12. If any
record date is set pursuant to this paragraph, the Holders of Outstanding Notes
on such record date, and no other Holders, shall be entitled to join in such
notice, declaration, request or direction, whether or not such Holders remain
Holders after such record date; provided that no such action shall be effective
hereunder unless taken on or prior to the applicable Expiration Date by Holders
of the requisite principal amount of Outstanding Notes on such record date.
Nothing in this paragraph shall be construed to prevent the Trustee from setting
a
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new record date for any action for which a record date has previously been set
pursuant to this paragraph (whereupon the record date previously set shall
automatically and with no action by any Person be cancelled and of no effect),
and nothing in this paragraph shall be construed to render ineffective any
action taken by Holders of the requisite principal amount of Outstanding Notes
on the date such action is taken. Promptly after any record date is set pursuant
to this paragraph, the Trustee, at the Company's expense, shall cause notice of
such record date, the proposed action by Holders and the applicable Expiration
Date to be given to the Company in writing and to each Holder of Notes in the
manner set forth in Section 1.06.
With respect to any record date set pursuant to this Section,
the party hereto which sets such record date may designate any day as the
"Expiration Date" and from time to time may change the Expiration Date to any
earlier or later day; provided that no such change shall be effective unless
notice of the proposed new Expiration Date is given to the other party hereto in
writing, and to each Holder of Notes in the manner set forth in Section 1.06, on
or prior to the existing Expiration Date. If an Expiration Date is not
designated with respect to any record date set pursuant to this Section, the
party hereto which set such record date shall be deemed to have initially
designated the 180th day after such record date as the Expiration Date with
respect thereto, subject to its right to change the Expiration Date as provided
in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be
later than the 180th day after the applicable record date.
Without limiting the foregoing, a Holder entitled hereunder to
take any action hereunder with regard to any particular Note may do so with
regard to all or any part of the principal amount of such Note or by one or more
duly appointed agents each of which may do so pursuant to such appointment with
regard to all or any part of such principal amount.
SECTION 1.05 NOTICES, ETC., TO TRUSTEE AND THE COMPANY.
Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document provided or permitted by
this Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee at its Corporate Trust Office,
Attention: Corporate Trust Trustee Administration, or at any other
address previously furnished in writing to the Holders or the Company
by the Trustee, or, with respect to notices by the Company, transmitted
by facsimile transmission (confirmed by guaranteed overnight courier)
to the following facsimile number: (513) 632-5511 or to any other
facsimile number previously furnished in writing to the Company by the
Trustee, or
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage
prepaid, to it addressed to it at the address of the Company's
principal office specified in the first paragraph of this instrument or
at any other address previously furnished in writing to the Trustee by
the Company or, with respect to notices by the
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Trustee, transmitted by facsimile transmission (confirmed by guaranteed
overnight courier) to the following facsimile number: (614) 791-3197 or
to any other facsimile number previously furnished in writing to the
Trustee by the Company.
SECTION 1.06 NOTICE TO HOLDERS; WAIVER.
Where this Indenture provides for notice to Holders of any
event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid, to
each Holder affected by such event, at its address as it appears in the Note
Register, not later than the latest date (if any), and not earlier than the
earliest date (if any), prescribed for the giving of such notice. In any case
where notice to Holders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Holder shall
affect the sufficiency of such notice with respect to other Holders. Where this
Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Trustee, but such filing shall not be
a condition precedent to the validity of any action taken in reliance upon such
waiver.
In case by reason of the suspension of regular mail service or
by reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the Trustee
shall constitute a sufficient notification for every purpose hereunder.
SECTION 1.07 CONFLICT WITH TRUST INDENTURE ACT.
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required under such Act to be a
part of and govern this Indenture, the latter provision shall control. If any
provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall be
deemed to apply to this Indenture as so modified or to be excluded, as the case
may be. Until such time as this Indenture shall be qualified under the Trust
Indenture Act, this Indenture, the Company and the Trustee shall be deemed for
all purposes hereof to be subject to and governed by the Trust Indenture Act to
the same extent as would be the case if this Indenture were so qualified on the
date hereof.
SECTION 1.08 EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction hereof.
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SECTION 1.09 SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company
shall bind its successors and assigns, whether so expressed or not.
SECTION 1.10 SEPARABILITY CLAUSE.
In case any provision in this Indenture or in the Notes shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
SECTION 1.11 BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Notes, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder and the Holders of Notes, any benefit or any legal or equitable right,
remedy or claim under this Indenture.
SECTION 1.12 GOVERNING LAW.
THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
SECTION 1.13 LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption Date,
Purchase Date or Stated Maturity of any Note shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the Notes) payment
of interest or principal (and premium, if any) need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the Interest Payment Date, Redemption Date or Purchase Date
or at the Stated Maturity, provided that no interest shall accrue for the period
from and after such Interest Payment Date, Redemption Date, Purchase Date or
Stated Maturity, as the case may be.
ARTICLE TWO
Note Forms
SECTION 2.01 FORMS GENERALLY; INITIAL FORMS OF RULE 144A NOTES.
The Notes and the Trustee's certificates of authentication
shall be in substantially the forms set forth in this Article, with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture, and may have such letters, numbers or
other marks of identification and such legends or endorsements placed thereon as
may be required to comply with the rules of any securities exchange or as may,
consistently
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<PAGE> 41
herewith, be determined by the officers executing such Notes, as evidenced by
their execution thereof.
The definitive Notes shall be printed, lithographed, engraved,
typewritten or produced by any combination of these methods on steel engraved
borders or may be produced in any other manner permitted by the rules of any
securities exchange on which the Notes may be listed, all as determined by the
officers executing such Notes, as evidenced by their execution thereof.
Upon their original issuance, Rule 144A Notes shall be issued
in the form of one or more Global Notes registered in the name of DTC, as
Depositary, or its nominee and deposited with the Trustee, as custodian for DTC,
for credit by DTC to the respective accounts of beneficial owners of the Notes
represented thereby (or such other accounts as they may direct). Such Global
Notes, together with their Successor Notes which are Global Notes are
collectively herein called the "Restricted Global Note".
SECTION 2.02 FORM OF FACE OF NOTE.
[IF THE NOTE IS A RESTRICTED NOTE, THEN INSERT -- THIS NOTE
(OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR
THE ACCOUNT OR BENEFIT OR, U.S. PERSONS, EXCEPT AS SET FORTH IN THE NEXT
SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE
HOLDER:
(1) REPRESENTS THAT (A)IT IS A "QUALIFIED INSTITUTIONAL BUYER"
(AS DEFINED RULE 144A UNDER THE SECURITIES ACT), OR (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(A)(1),(2),(3) OR (7) OR REGULATION D UNDER THE SECURITIES ACT (AN
"IAI"))
(2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS
NOTE EXCEPT (A) TO THE ISSUER OR ANY OF ITS SUBSIDIARIES, (B) TO A
PERSON WHOM THE SELLER REASONABLY BELIEVED IS A QIB PURCHASING FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (C) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (D) TO AN IAI THAT,
PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM THE
TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL
AMOUNT OF NOTES LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO
THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES
ACT, (E) IN ACCORDANCE WITH ANOTHER
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EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND
BASED UPON AN OPINION COUNSEL ACCEPTABLE TO THE COMPANY) OR (F)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND.
THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING.
[IF THE NOTE IS A GLOBAL NOTE, THEN INSERT -- THIS NOTE IS A
GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS NOTE MAY NOT
BE EXCHANGED IN WHOLE OR IN PART FOR A NOTE REGISTERED, AND NO TRANSFER OF THIS
NOTE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN
SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE INDENTURE.]
[IF THE NOTE IS A GLOBAL NOTE AND THE DEPOSITORY TRUST COMPANY
IS TO BE THE DEPOSITARY THEREFOR, THEN INSERT -- UNLESS THIS CERTIFICATE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW
YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT 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.]
[IF THE NOTE IS ISSUED AS PART OF A UNIT PRIOR TO THE
SEPARATION DATE, THEN INSERT -- THE NOTES EVIDENCED BY THIS CERTIFICATE ARE
INITIALLY ISSUED AS PART OF AN ISSUANCE OF UNITS (THE "UNITS"), EACH OF WHICH
CONSIST OF $1,000 PRINCIPAL AMOUNT AT MATURITY OF THE 12% SENIOR SUBORDINATED
NOTES DUE 2007 OF INSILCO CORPORATION. (THE "NOTES") AND ONE WARRANT (THE
"WARRANTS") INITIALLY ENTITLING THE HOLDER THEREOF TO PURCHASE 0.52 OF A SHARE,
PAR VALUE $0.001 PER SHARE, OF INSILCO HOLDING CO.
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PRIOR TO THE EARLIEST TO OCCUR OF (I) 180 DAYS AFTER THE
CLOSING OF THE OFFERING OF THE UNITS, (II) THE DATE ON WHICH A REGISTRATION
STATEMENT WITH RESPECT TO A REGISTERED EXCHANGE OFFER FOR THE NOTES IS DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (III) THE DATE A SHELF REGISTRATION
STATEMENT WITH RESPECT TO THE NOTES IS DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (IV) SUCH DATE AS DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION IN
ITS SOLE DISCRETION SHALL DETERMINE AND (V) THE OCCURRENCE OF A CHANGE OF
CONTROL (AS DEFINED IN THE INDENTURE GOVERNING THE NOTES), THE NOTES EVIDENCED
BY THIS CERTIFICATE MAY NOT BE TRANSFERRED OR EXCHANGED SEPARATELY FROM, BUT MAY
BE TRANSFERRED OR EXCHANGED ONLY TOGETHER WITH, THE WARRANTS.]
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<PAGE> 44
INSILCO CORPORATION
12% SENIOR SUBORDINATED NOTES DUE 2007
[If Restricted Global Note - CUSIP No. ________]
No. ________ $___________
INSILCO CORPORATION, a corporation duly organized and existing
under the laws of Delaware (herein called the "Company", which term includes any
successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to _________________, or registered assigns,
the principal sum of __________________ Dollars (such amount the "principal
amount" of this Note) [IF THE NOTE IS A GLOBAL NOTE, THEN INSERT --, or such
other principal amount (which, when taken together with the principal amounts of
all other Outstanding Notes, shall not exceed $150,000,000 in the aggregate at
any time) as may be set forth in the records of the Trustee hereinafter referred
to in accordance with the Indenture, on August 15, 2007 and to pay interest
thereon from [INSERT DATE OF ISSUANCE] or from the most recent Interest Payment
Date to which interest has been paid or duly provided for, semi-annually on
February 15 and August 15 in each year, commencing [INSERT FIRST INTEREST
PAYMENT DATE], at the rate of 12.00% per annum (or during any Non-Guarantee
Period (as defined in the Indenture), 12.125% per annum) (the "Base Interest"),
until the principal hereof is paid or made available for payment [IF THE NOTE IS
AN ORIGINAL NOTE, THEN INSERT - - and pay Liquidated Damages, if any, payable
pursuant to the Registration Rights Agreement (as defined in the Indenture);
provided that any amount of principal of (and premium, if any) and interest on
this Note which is overdue shall bear interest (to the extent that payment
thereof shall be legally enforceable) at the rate of 14.00% per annum (or during
any Non-Guarantee Period, 14.125% per annum), from the date such amount is due
to the day it is paid or made available for payment, and such overdue interest
shall be payable on demand. [IF THE NOTE IS AN ORIGINAL NOTE, THEN INSERT -- All
references to interest in this Note shall include any Liquidated Damages payable
with respect to this Note pursuant to the Registration Rights Agreement.
The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in such Indenture, be paid
to the Person in whose name this Note (or one or more Predecessor Notes) is
registered at the close of business on the Regular Record Date for such
interest, which shall be February 1 or August 1 (whether or not a Business Day),
as the case may be, next preceding such Interest Payment Date [IF THE NOTE IS AN
ORIGINAL NOTE, THEN INSERT --, provided that any accrued and unpaid interest on
this Note upon the issuance of an Exchange Note in exchange for this Note shall
cease to be payable to the Holder hereof and shall be payable on the next
Interest Payment Date for such Exchange Note to the Holder thereof on the
related Regular Record Date]. Any such interest not so punctually paid or duly
provided for will forthwith cease to be payable to the Holder on the relevant
Regular Record Date and may either be paid to the Person in whose name this Note
(or one or more Predecessor Notes) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Notes not less than 10
days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Notes
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<PAGE> 45
may be listed, and upon such notice as may be required by such exchange, all as
more fully provided in the Indenture. Interest on this Note shall be computed on
the basis set forth in the Indenture.
Payment of the principal of (and premium, if any) and interest
on this Note will be made at the office or agency of the Company maintained for
that purpose in the Borough of Manhattan, The City of New York, New York and at
any other office or agency maintained by the Company for such purpose, in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts; provided, however, that at
the option of the Company payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the Note
Register; provided further that all payments of the principal (and premium, if
any) and interest on Notes, the Holders of which have given wire transfer
instructions to the Company or its agent at least 10 Business Days prior to the
applicable payment date will be required to be made by wire transfer of
immediately available funds to the accounts specified by such Holders in such
instructions.
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 set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual signature,
this Note shall not be entitled to any benefit under the Indenture or be valid
or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed under its corporate seal.
INSILCO CORPORATION
By________________________________
Attest:
- - -------------------------
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SECTION 2.03 FORM OF REVERSE OF NOTE.
This Note is one of a duly authorized issue of Notes of the
Company designated as its 12% Senior Subordinated Notes Due 2007 (herein called
the "Notes"), limited in aggregate principal amount to $150,000,000, issued and
to be issued under an Indenture, dated as of November 9, 1998 (herein called the
"Indenture", which term shall have the meaning assigned to it in such
instrument), among the Company and Star Bank, N.A., as Trustee (herein called
the "Trustee", which term includes any successor trustee under the Indenture),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee and the Holders of the Notes
and of the terms upon which the Notes, are, and are to be, authenticated and
delivered.
The Notes are subject to redemption upon not less than 30 nor
more than 60 days' notice by mail, to each Holder of Notes to be redeemed at
such Holder's address appearing in the Note Register, in amounts of $1,000 or an
integral multiple of $1,000 principal amount, at the following Redemption Prices
(expressed as percentages of principal amount) plus any accrued but unpaid
interest to but excluding the Redemption Date if redeemed during the 12-month
period beginning on August 15 of each of the years indicated below:
YEAR REDEMPTION PRICE
---- ----------------
2002 106.000%
2003 104.000%
2004 102.000%
2005 and thereafter 100.000%
provided that interest installments whose Stated Maturity is on or prior to such
Redemption Date will be payable to the Holders of such Notes, or one or more
Predecessor Notes, of record at the close of business on the relevant Regular
Record Dates referred to on the face hereof.
Except as described in the next paragraph, the Notes do not
have the benefit of any mandatory redemption or sinking fund obligations.
The Indenture provides that in certain circumstances a portion
of the Notes will be subject to a mandatory Special Redemption. In addition, the
Indenture provides that, subject to certain conditions, if (i) certain Net
Available Proceeds are available to the Company as a result of Asset
Dispositions or (ii) a Change of Control occurs, the Company shall be required
to make an Offer to Purchase for all or a specified portion of the Notes.
In the event of redemption or purchase pursuant to an Offer to
Purchase of this Note in part only, a new Note or Notes of like tenor for the
unredeemed or unpurchased portion hereof will be issued in the name of the
Holder hereof upon the cancellation hereof.
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<PAGE> 47
If an Event of Default shall occur and be continuing, the
principal of all the Notes may be declared due and payable in the manner and
with the effect provided in the Indenture.
The Indenture contains provisions for defeasance at any time
of (i) the entire indebtedness of this Note or (ii) certain restrictive
covenants and Events of Default with respect to this Note, in each case upon
compliance with certain conditions set forth therein.
The Notes shall be subordinated in right of payment to Senior
Debt of the Company as provided in the Indenture.
If the Note Guarantee is provided by any Guarantor, the holder
of the Note shall have the benefit of the Note Guarantee as provided in, and
subject to the terms of, the Indenture.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Notes under the
Indenture at any time by the Company and the Trustee with the consent of the
Holders of at least two-thirds in aggregate principal amount of the Notes at the
time Outstanding. The Indenture also contains provisions permitting the Holders
of specified percentages in aggregate principal amount of the Notes at the time
Outstanding, on behalf of the Holders of all the Notes, to waive compliance by
the Company with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Note shall be conclusive and binding upon such Holder and upon
all future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Note.
As provided in and subject to the provisions of the Indenture,
the Holder of this Note shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Notes, the Holders of not less than 25% in principal amount of the Notes at the
time Outstanding shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default as Trustee and offered the
Trustee reasonable indemnity and the Trustee shall not have received from the
Holders of a majority in principal amount of Notes at the time Outstanding a
direction inconsistent with such request and shall have failed to institute any
such proceeding for 60 days after receipt of such notice, request and offer of
indemnity. The foregoing shall not apply to certain suits described in the
Indenture, including any suit instituted by the Holder of this Note for the
enforcement of any payment of principal hereof or any premium or interest hereon
on or after the respective due dates expressed herein (or, in the case of
redemption, on or after the Redemption Date or, in the case of any purchase of
this Note required to be made pursuant to an Offer to Purchase, on the Purchase
Date).
No reference herein to the Indenture and no provision of this
Note or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of (and premium, if
any) and interest on this Note at the times, place and rate, and in the coin or
currency, herein prescribed.
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<PAGE> 48
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Note is registrable in the
Note Register, upon surrender of this Note for registration of transfer at the
office or agency of the Company in the Borough of Manhattan, The City of New
York, duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Note Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Notes, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.
The Notes are issuable only in registered form without coupons
in denominations of $1,000 principal amount and any integral multiple thereof.
As provided in the Indenture and subject to certain limitations therein set
forth, Notes are exchangeable for a like aggregate principal amount of Notes of
a different authorized denomination, as requested by the Holder surrendering the
same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Note is registered as the owner hereof
for all purposes, whether or not this Note be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Note which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
The Indenture and this Note shall be governed by and construed
in accordance with the laws of the State of New York.
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<PAGE> 49
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased in its
entirety by the Company pursuant to Section 10.17 or 10.18 of the Indenture,
check the box:
[ ]
If you want to elect to have only a part of this Note
purchased by the Company pursuant to Section 10.17 or 10.18 of the Indenture,
state the principal amount of this Note you want to elect to have so purchased
by the Company: $__________
Dated: Your Signature:_____________________________
(Sign exactly as name
appears on the other
side of this Note)
Signature Guarantee:_____________________________________________
Notice: Signature(s) must be guaranteed by
an "eligible guarantor institution" meeting
the requirements of the Trustee, which
requirements will include membership or
participation in STAMP or such other
"signature guarantee program" as may be
determined by the Trustee in addition to, or
in substitution for STAMP, all in accordance
with the Securities Exchange Act of 1934, as
amended.
SECTION 2.4 FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
This is one of the Notes referred to in the within-mentioned
Indenture.
------------------------------------,
as Trustee
Dated: By ___________________________________
Authorized Signatory
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<PAGE> 50
ARTICLE THREE
The Notes
SECTION 3.01 TITLE AND TERMS.
The aggregate principal amount of Notes which may be
authenticated and delivered under this Indenture is limited to $150,000,000,
except for Notes authenticated and delivered upon registration of transfer of,
or in exchange for, or in lieu of, other Notes pursuant to Sections 3.03, 3.04,
3.05, 3.06, 3.07, 9.06, 11.08 or in connection with an Offer to Purchase
pursuant to Sections 10.17 or 10.18. The Company may issue Exchange Notes from
time to time pursuant to an Exchange Offer, in each case pursuant to a Board
Resolution and subject to Section 3.03, in authorized denominations in exchange
for a like principal amount of Original Notes. Upon any such exchange the
Original Notes shall be cancelled in accordance with Section 3.10 and shall no
longer be deemed Outstanding for any purpose. In no event shall the aggregate
principal amount of Original Notes and Exchange Notes Outstanding exceed
$150,000,000.
The Notes shall be designated as the 12% Senior Subordinated
Notes of the Company and the Original Notes shall be known as the "12.00% Senior
Subordinated Notes due 2007, Series A" and the Exchange Notes shall be known as
the "12.00% Senior Subordinated Notes due 2007, Series B" in each case, of the
Company. The Stated Maturity of the Notes shall be August 15, 2007 and they
shall bear interest at the rate of 12.00% per annum (or during any Non-Guarantee
Period, at the rate of 12.125% per annum) (the "Base Interest"), from their date
of issuance or from the most recent Interest Payment Date to which interest has
been paid or duly provided for, as the case may be, payable semiannually on
February 15 and August 15, commencing February 15, 1998, until the principal
thereof is paid or made available for payment and, with respect to any Original
Notes, Liquidated Damages, if any, will be payable pursuant to the Registration
Rights Agreement; provided that any amount of principal of (and premium, if any)
and interest on the Notes which is overdue shall bear interest (to the extent
that payment thereof shall be legally enforceable) at the rate of 14.00% per
annum, or during any Non-Guarantee Period at the rate of 14.125% per annum, from
the date such amount is due to the day it is paid or made available for payment,
and such overdue interest shall be payable on demand. All references to interest
in this Indenture shall include any Liquidated Damages payable with respect to
the Notes pursuant to the Registration Rights Agreement. The Company shall
provide written notice to the Trustee of any period during which Liquidated
Damages are payable or of any Non-Guarantee Period at the end of any such
period.
The principal of (and premium, if any) and interest on the
Notes shall be payable at the office or agency of the Company in the Borough of
Manhattan, The City of New York, New York, maintained for such purpose and at
any other office or agency maintained by the Company for such purpose; provided,
however, that at the option of the Company payment of interest may be made by
check mailed to the address of the Person entitled thereto as such address shall
appear in the Note Register; provided further that all payments of the principal
(and premium, if any) and interest on Notes, the Holders of which have given
wire transfer
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<PAGE> 51
instructions to the Company or its agent at least 10 Business Days prior to the
applicable payment date will be required to be made by wire transfer of
immediately available funds to the accounts specified by such Holders in such
instructions.
The Notes shall be subject to redemption as provided in
Article Eleven.
The Notes shall be subject to repurchase by the Company
pursuant to an Offer to Purchase as provided in Sections 10.17 and 10.18.
The Notes shall not have the benefit of any sinking fund
obligations.
The Notes shall be subject to defeasance at the option of the
Company as provided in Article Twelve.
Unless the context otherwise requires, the Original Notes
(including any Additional Notes) and the Exchange Notes (including any
Additional Notes) shall constitute one series for all purposes under the
Indenture, including with respect to any amendment, waiver, acceleration or
other Act of Holders, redemption or Offer to Purchase.
SECTION 3.02 DENOMINATIONS.
The Notes shall be issuable only in registered form without
coupons, and only in denominations of $1,000 principal amount and, any integral
multiple thereof.
SECTION 3.03 EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Notes shall be executed on behalf of the Company by its
Chairman of the Board, its Vice Chairman of the Board, Chief Executive Officer,
its President or one of its Vice Presidents, attested by its Secretary or one of
its Assistant Secretaries. The signature of any of these officers on the Notes
may be manual or facsimile.
Notes bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Notes or did
not hold such offices at the date of such Notes.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Notes executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Notes; and the Trustee in accordance with
such Company Order shall authenticate and deliver such Notes as in this
Indenture provided and not otherwise.
At any time and from time to time after the execution and
delivery of this Indenture and after the effectiveness of a registration
statement under the Securities Act with respect thereto, the Company may deliver
Exchange Notes executed by the Company to the Trustee for authentication,
together with a Company Order for the authentication and delivery of
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<PAGE> 52
such Exchange Notes and a like principal amount of Original Notes for
cancellation in accordance with Section 3.10 of this Indenture, and the Trustee
in accordance with the Company Order shall authenticate and deliver such Notes.
Prior to authenticating such Exchange Notes, and accepting any additional
responsibilities under this Indenture in relation to such Notes, the Trustee
shall be entitled to receive, if requested, and (subject to Section 6.01) shall
be fully protected in relying upon, an Opinion of Counsel stating in substance
(a) that all conditions hereunder precedent to the
authentication and delivery of such Exchange Notes have been complied
with and that such Exchange Notes, when such Notes have been duly
authenticated and delivered by the Trustee (and subject to any other
conditions specified in such Opinion of Counsel), have been duly issued
and delivered and will constitute valid and legally binding obligations
of the Company, enforceable in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
and similar laws of general applicability relating to or affecting
creditors" rights and to general equity principles; and
(b) that the issuance of the Exchange Notes in exchange for
Original Notes has been effected in compliance with the Securities Act.
Each Note shall be dated the date of its authentication.
No Note shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any Note
shall be conclusive evidence, and the only evidence, that such Note has been
duly authenticated and delivered hereunder.
SECTION 3.04 TEMPORARY NOTES.
Pending the preparation of definitive Notes, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Notes, which Notes are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Notes, in lieu of which they are
issued and with such appropriate insertions, omissions, substitutions and other
variations as the officers executing such Notes may determine, as evidenced by
their execution thereof.
If temporary Notes are issued, the Company will cause
definitive Notes to be prepared without unreasonable delay. After the
preparation of definitive Notes, the temporary Notes shall be exchangeable for
definitive Notes, upon surrender of the temporary Notes at any office or agency
of the Company designated pursuant to Section 10.02, without charge to the
Holder. Upon surrender for cancellation of any one or more temporary Notes the
Company shall execute and the Trustee shall authenticate and deliver in exchange
therefor a like principal amount of definitive Notes of authorized
denominations. Until so exchanged the temporary Notes shall in all respects be
entitled to the same benefits under this Indenture as definitive Notes.
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SECTION 3.05 GLOBAL NOTES.
(a) Each Global Note authenticated under this Indenture shall
be registered in the name of the Depositary designated by the Company for such
Global Note or a nominee thereof and delivered to such Depositary or a nominee
thereof or custodian therefor, and each such Global Note shall constitute a
single Note for all purposes of this Indenture.
(b) Notwithstanding any other provision in this Indenture, no
Global Note may be exchanged in whole or in part for Notes registered, and no
transfer of a Global Note in whole or in part may be registered, in the name of
any Person other than the Depositary for such Global Note or a nominee thereof
unless (i) such Depositary (A) has notified the Company that it is unwilling or
unable to continue as Depositary for such Global Note or (B) has ceased to be a
clearing agency registered as such under the Exchange Act, and in either case
the Company fails to appoint a successor Depositary within 90 days, (ii) the
Company, at its option, executes and delivers to the Trustee a Company Order
stating that it elects to cause the issuance of the Notes in certificated form
and that all Global Notes shall be exchanged in whole for Notes that are not
Global Notes (in which case such exchange shall be effected by the Trustee) or
(iii) there shall have occurred and be continuing an Event of Default or any
event which after notice or lapse of time or both would be an Event of Default
with respect to such Global Note.
(c) If any Global Note is to be exchanged for other Notes or
cancelled in whole, it shall be surrendered by or on behalf of the Depositary or
its nominee to the Trustee, as Note Registrar, for exchange or cancellation as
provided in this Article Three. If any Global Note is to be exchanged for other
Notes or cancelled in part, or if another Note is to be exchanged in whole or in
part for a beneficial interest in any Global Note, then either (i) such Global
Note shall be so surrendered for exchange or cancellation as provided in this
Article Three or (ii) the principal amount thereof shall be reduced or increased
by an amount equal to the portion thereof to be so exchanged or cancelled, or
equal to the principal amount of such other Note to be so exchanged for a
beneficial interest therein, as the case may be, by means of an appropriate
adjustment made on the records of the Trustee, as Note Registrar, whereupon the
Trustee, in accordance with the Applicable Procedures, shall instruct the
Depositary or its authorized representative to make a corresponding adjustment
to its records. Upon any such surrender or adjustment of a Global Note, the
Trustee shall, subject to Section 3.06(c) and as otherwise provided in this
Article Three, authenticate and deliver any Notes issuable in exchange for such
Global Note (or any portion thereof) to or upon the order of, and registered in
such names as may be directed by, the Depositary or its authorized
representative. Upon the request of the Trustee in connection with the
occurrence of any of the events specified in the preceding paragraph, the
Company shall promptly make available to the Trustee a reasonable supply of
Notes that are not in the form of Global Notes. The Trustee shall be entitled to
rely upon any order, direction or request of the Depositary or its authorized
representative which is given or made pursuant to this Article Three if such
order, direction or request is given or made in accordance with the Applicable
Procedures.
(d) Every Note authenticated and delivered upon registration
of transfer of, or in exchange for or in lieu of, a Global Note or any portion
thereof, whether pursuant to this Article Three or otherwise, shall be
authenticated and delivered in the form of, and shall be, a Global
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Note, unless such Note is registered in the name of a Person other than the
Depositary for such Global Note or a nominee thereof.
(e) The Depositary or its nominee, as registered owner of a
Global Note, shall be the Holder of such Global Note for all purposes under the
Indenture and the Notes, and owners of beneficial interests in a Global Note
shall hold such interests pursuant to the Applicable Procedures. Accordingly,
any such owner"s beneficial interest in a Global Note will be shown only on, and
the transfer of such interest shall be effected only through, records maintained
by the Depositary or its nominee or its Agent Members.
SECTION 3.06 REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE
GENERALLY; RESTRICTIONS ON TRANSFER AND EXCHANGE;
SECURITIES ACT LEGENDS.
(a) REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE
GENERALLY. The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office and in any other
office or agency of the Company designated pursuant to Section 10.02 being
herein sometimes collectively referred to as the "Note Register") in which,
subject to such reasonable regulations as it may prescribe, the Company shall
provide for the registration of Notes and of transfers and exchanges of Notes.
The Trustee is hereby appointed "Note Registrar" for the purpose of registering
Notes and transfers and exchanges of Notes as herein provided. Such Note
Register shall distinguish between Original Notes and Exchange Notes.
Upon surrender for registration of transfer of any Note at an
office or agency of the Company designated pursuant to Section 10.02 for such
purpose, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Notes of any authorized denominations, of a like aggregate principal amount
and bearing such restrictive legends as may be required by this Indenture.
At the option of the Holder, and subject to the other
provisions of this Section 3.06, Notes may be exchanged for other Notes of any
authorized denominations, of a like aggregate principal amount, upon surrender
of the Notes to be exchanged at any such office or agency. Whenever any Notes
are so surrendered for exchange, the Company shall execute, and the Trustee
shall authenticate and deliver, the Notes which the Holder making the exchange
is entitled to receive.
All Notes issued upon any registration of transfer or exchange
of Notes shall be the valid obligations of the Company, evidencing the same
debt, and (except for the differences between Original Notes and Exchange Notes
provided for herein) entitled to the same benefits under this Indenture, as the
Notes surrendered upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of
transfer or for exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company and the Note
Registrar duly executed, by the Holder thereof or his attorney duly authorized
in writing.
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No service charge shall be made for any registration of
transfer or exchange of Notes, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 3.03, 3.04, 3.05, 3.06, 9.06, 10.17, 10.18 or
11.08 not involving any transfer.
The Company shall not be required (i) to issue, register the
transfer of or exchange any Note during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of
Notes selected for redemption under Section 11.04 and ending at the close of
business on the day of such mailing, or (ii) to register the transfer of or
exchange any Note so selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part.
(b) CERTAIN TRANSFERS AND EXCHANGES. Notwithstanding any other
provision of this Indenture or the Notes a beneficial interest in a Global Note
may be exchanged for a Note that is not a Global Note as provided in Section
3.05, PROVIDED that, if such interest is a beneficial interest in the Restricted
Global Note, then such interest shall be exchanged for a Restricted Note
(subject in to Section 3.06(c)).
(c) SECURITIES ACT LEGENDS. Rule 144A Notes and their
Successor Notes shall bear a Restricted Securities Legend, subject to the
following:
(i) subject to the following Clauses of this Section
3.06(c), a Note or any portion thereof which is exchanged, upon
transfer or otherwise, for a Global Note or any portion thereof shall
bear the Securities Act Legend borne by such Global Note while
represented thereby;
(ii) subject to the following Clauses of this Section
3.06(c), a new Note which is not a Global Note and is issued in
exchange for another Note (including a Global Note) or any portion
thereof, upon transfer or otherwise, shall bear the Securities Act
Legend borne by such other Note, provided that, if such new Note is
required pursuant to Section 3.06(b) to be issued in the form of a
Restricted Note, it shall bear a Restricted Securities Legend;
(iii) Registered Notes shall not bear a Securities Act
Legend;
(iv) at any time after the Notes may be freely transferred
without registration under the Securities Act or without being subject
to transfer restrictions pursuant to the Securities Act, a new Note
which does not bear a Securities Act Legend may be issued in exchange
for or in lieu of a Note (other than a Global Note) or any portion
thereof which bears such a legend if the Trustee has received an
Unrestricted Notes Certificate, satisfactory to the Trustee and duly
executed by the Holder of such legended Note or his attorney duly
authorized in writing, and after such date and receipt of such
certificate, the Trustee shall authenticate and deliver such a new Note
in exchange for or in lieu of such other Note as provided in this
Article Three;
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(v) a new Note which does not bear a Securities Act Legend
may be issued in exchange for or in lieu of a Note (other than a Global
Note) or any portion thereof which bears such a legend if, in the
Company"s judgment, placing such a legend upon such new Note is not
necessary to ensure compliance with the registration requirements of
the Securities Act, and the Trustee, at the direction of the Company,
shall authenticate and deliver such a new Note as provided in this
Article Three; and
(vi) notwithstanding the foregoing provisions of this
Section 3.06(c), a Successor Note of a Note that does not bear a
particular form of Securities Act Legend shall not bear such form of
legend unless the Company has reasonable cause to believe that such
Successor Note is a "restricted Note" within the meaning of Rule 144,
in which case the Trustee, at the direction of the Company, shall
authenticate and deliver a new Note bearing a Restricted Securities
Legend in exchange for such Successor Note as provided in this Article
Three.
The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer imposed
under this Indenture or under applicable law with respect to any transfer of any
interest in any Note (including any transfers between or among Agent Members or
beneficial owners of interests in any Global Note) other than to require
delivery of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly required by the terms
of, this Indenture, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.
SECTION 3.7 MUTILATED, DESTROYED, LOST AND STOLEN NOTES.
If any mutilated Note is surrendered to the Trustee, the
Company shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Note of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any Note and
(ii) such Note or indemnity as may be required by either of them to save each of
them and any agent of any of them harmless, then, in the absence of notice to
the Company or the Trustee that such Note has been acquired by a bona fide
purchaser, the Company shall execute and upon its request the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen Note, a
new Note of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Note has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
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Every new Note issued pursuant to this Section in lieu of any
mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Company, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies of any Holder with
respect to the replacement or payment of mutilated, destroyed, lost or stolen
Notes.
SECTION 3.8 PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Interest on any Note which is payable, and is punctually paid
or duly provided for, on any Interest Payment Date shall be paid to the Person
in whose name that Note (or one or more Predecessor Notes) is registered at the
close of business on the Regular Record Date for such interest.
Any interest on any Note which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Notes (or their respective
Predecessor Notes) are registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest, which shall be
fixed in the following manner. The Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each
Note and the date of the proposed payment, and at the same time the
Company shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for
such deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled
to such Defaulted Interest as in this Clause provided. Thereupon the
Trustee shall fix a Special Record Date for the payment of such
Defaulted Interest which shall be not more than 15 days and not less
than 10 days prior to the date of the proposed payment and not less
than 10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of such
Special Record Date and, in the name and at the expense of the Company,
shall cause notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor to be mailed, first-class postage
prepaid, to each Holder of Notes at such Holder"s address as it appears
in the Note Register, not less than 10 days prior to such Special
Record Date. Notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor having been so mailed, such
Defaulted Interest shall be paid to the Persons in whose names the
Notes (or their respective Predecessor Notes) are registered at the
close of business on such Special Record Date and shall no longer be
payable pursuant to the following Clause (2).
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(2) The Company may make payment of any Defaulted Interest in
any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Notes may be listed, and upon such
notice as may be required by such exchange, if, after notice given by
the Company to the Trustee of the proposed payment pursuant to this
Clause, such manner of payment shall be deemed practicable by the
Trustee.
Subject to the foregoing provisions of this Section, each Note
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Note shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Note.
SECTION 3.09 PERSONS DEEMED OWNERS.
Prior to due presentment of a Note for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such Note is registered as the owner of such
Note for the purpose of receiving payment of principal of (and premium, if any)
and (subject to Section 3.08) interest on such Note and for all other purposes
whatsoever, whether or not such Note be overdue, and neither the Company, the
Trustee nor any agent of the Company or the Trustee shall be affected by notice
to the contrary.
SECTION 3.10 CANCELLATION.
All Notes surrendered for payment, redemption, repurchase
pursuant to any Offer to Purchase, registration of transfer or exchange shall,
if surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly cancelled by it. The Company may at any time deliver to
the Trustee for cancellation any Notes previously authenticated and delivered
hereunder which the Company may have acquired in any manner whatsoever, and all
Notes so delivered shall be promptly cancelled by the Trustee. No Notes shall be
authenticated in lieu of or in exchange for any Notes cancelled as provided in
this Section, except as expressly permitted by this Indenture. All cancelled
Notes held by the Trustee shall be disposed of by the Trustee and the Trustee
will certify as to such disposal to the reasonable satisfaction of the Company;
PROVIDED, HOWEVER, that the Trustee shall in no event be required to destroy any
Notes. The Trustee shall provide the Company a list of all Notes that have been
cancelled from time to time as requested by the Company.
SECTION 3.11 COMPUTATION OF INTEREST.
Interest on the Notes shall be computed on the basis of a
360-day year of twelve 30-day months; PROVIDED, HOWEVER, that any interest on
overdue principal of (and premium, if any) and interest on any Notes, shall be
computed on the basis of a 365-day or 366-day year, as the case may be, and the
number of days actually elapsed during the relevant period of default in the
payment of such overdue principal (and premium, if any) or interest.
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SECTION 3.12 CUSIP NUMBERS.
The Company in issuing the Notes may use "CUSIP" numbers (if
then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in
notices of redemption as a convenience to Holders; PROVIDED that any such notice
may state that no representation is made as to the correctness of such numbers
either as printed on the Notes or as contained in any notice of a redemption and
that reliance may be placed only on the other identification numbers printed on
the Notes, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Company will promptly notify the Trustee of any
change in the "CUSIP" numbers.
ARTICLE FOUR
Satisfaction and Discharge
SECTION 4.01 SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall cease to be of further effect (except as
to any surviving rights of registration of transfer or exchange of Notes herein
expressly provided for), and the Trustee, on demand of and at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of this 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
Section 3.07 and (ii) Notes for whose payment money has
theretofore been deposited in trust or segregated and held in
trust by the Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section 10.03) have
been delivered to the Trustee for cancellation; or
(B) all such Notes not theretofore delivered to the
Trustee 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
under arrangements satisfactory to the Trustee for the giving
of notice of redemption by the Trustee in the name, and at the
expense, of the Company,
and the Company, 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
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theretofore delivered to the Trustee 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 Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers"
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.07, the obligations of
the Trustee to any Authenticating Agent under Section 6.14 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of
this Section, the obligations of the Trustee under Section 4.02 and the last
paragraph of Section 10.03 shall survive.
SECTION 4.02 APPLICATION OF TRUST MONEY.
Subject to the provisions of the last paragraph of Section
10.03, all money deposited with the Trustee pursuant to Section 4.01 shall be
held in trust and applied by it, in accordance with the provisions of the Notes
and this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with the
Trustee.
ARTICLE FIVE
Remedies
SECTION 5.01 EVENTS OF DEFAULT.
"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(1) default in the payment of any interest upon any Note when
it becomes due and payable, and continuance of such default for a
period of 30 days; or
(2) default in the payment of the principal of (or premium, if
any, on) any Note at its Maturity; or
(3) failure to perform or comply with the provisions of
Sections 8.01, 10.17 and 10.18; or
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(4) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than Section 10.21 or
a covenant or warranty a default in whose performance or whose breach
is elsewhere in this Section specifically dealt with) or the Notes, and
continuance of such default or breach for a period of 60 days after
there has been given, in the manner provided in Section 1.06, to the
Company and the Trustee by the Holders of at least 25% in principal
amount of the Outstanding Notes a written notice specifying such
default or breach and requiring it to be remedied and stating that such
notice is a "Notice of Default" hereunder; or
(5) a default or defaults under the terms of any bond(s),
debenture(s), note(s) or other evidence(s) of, or obligations
constituting, Debt by the Company or any Restricted Subsidiary, or
under any mortgage(s), indenture(s), agreement(s) or instrument(s)
under which there may be issued or existing or by which there may be
secured or evidenced, any Debt of the Company or any Restricted
Subsidiary, in each case with a principal or similar amount then
outstanding, individually or in the aggregate, in excess of $15
million, whether such Debt now exists or is hereafter Incurred, which
default or defaults constitute a failure to pay any portion of the
principal or similar amount of such Debt when due and payable after the
expiration of any applicable grace period with respect thereto or will
have resulted in such Debt becoming or being declared due and payable
prior to the date on which it would otherwise have become due and
payable; or
(6) a final judgment or final judgments (not subject to
appeal) for the payment of money are entered against the Company or any
Restricted Subsidiary in an aggregate amount in excess of $15 million
(in excess of applicable insurance coverage) by a court or courts of
competent jurisdiction, which judgments remain unstayed, undischarged
or unbonded for a period of 60 days after the entry of such judgment or
judgments; or
(7) the entry by a court having jurisdiction in the premises
of (A) a decree or order for relief in respect of the Company or any
Restricted Subsidiary in an involuntary case or proceeding under any
applicable Federal or State bankruptcy, insolvency, reorganization or
other similar law or (B) a decree or order adjudging the Company or any
Restricted Subsidiary a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company or any Restricted
Subsidiary under any applicable Federal or State law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official of the Company or any Restricted Subsidiary or
of any substantial part of the property of the Company or any
Restricted Subsidiary, or ordering the winding up or liquidation of the
affairs of the Company or any Restricted Subsidiary, and the
continuance of any such decree or order for relief or any such other
decree or order unstayed and in effect for a period of 60 consecutive
days;
(8) the commencement by the Company or any Restricted
Subsidiary of a voluntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other
similar law or of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the consent by the Company or any
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Restricted Subsidiary to the entry of a decree or order for relief in
respect of the Company or any Restricted Subsidiary in an involuntary
case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or to the commencement
of any bankruptcy or insolvency case or proceeding against the Company
or any Restricted Subsidiary or the filing by the Company or any
Restricted Subsidiary of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or State law, or
the consent by the Company or any Restricted Subsidiary to the filing
of such a petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator or
similar official of the Company or any Restricted Subsidiary or of any
substantial part of the property of the Company or any Restricted
Subsidiary, or the making by the Company or any Restricted Subsidiary
of an assignment for the benefit of creditors, or the admission by the
Company or any Restricted Subsidiary in writing of its inability to pay
its debts generally as they become due, or the taking of corporate
action by the Company or any Restricted Subsidiary in furtherance of
any such action;
(9) except as permitted by this Indenture, any Note Guarantee
after it is provided shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full
force and effect or any Guarantor, or any Person acting on behalf of
any Guarantor, shall deny or disaffirm its obligations under its Note
Guarantee.
SECTION 5.02 ACCELERATION OF MATURITY; RESCISSION AND
ANNULMENT.
If an Event of Default (other than an Event of Default
specified in Section 5.01(7) or (8)) occurs and is continuing, then and in every
such case the Trustee or the Holders of not less than 25% in principal amount of
the Outstanding Notes may declare the principal of all the Notes to be due and
payable immediately, by a notice in writing to the Company (and to the Trustee
if given by the Holders), and upon any such declaration such principal and any
accrued interest shall become immediately due and payable. If an Event of
Default specified in Section 5.01(7) or (8) occurs and is continuing, the
principal of and any accrued interest on the Notes then Outstanding shall
automatically, and without any declaration or other action on the part of the
Trustee or any Holder, become immediately due and payable.
In addition, if an Event of Default occurs by reason of any
willful action (or inaction) taken (or not taken) by or on behalf of the Company
with the intention of avoiding payment of the premium that the Company would
have had to pay if the Company had then elected to redeem the Notes pursuant to
the provisions of Section 11.01 hereof at the next earliest possible date, a
premium equal to the premium that otherwise would have been applicable pursuant
to Section 11.01 at such time (or if such Event of Default occurs prior to
August 15, 2002, a premium equal to the premium that would be payable had the
Company elected to redeem the Notes during the 12-month period beginning on
August 15, 2002) shall become and be immediately due and payable upon the Notes
becoming immediately due and payable.
At any time after such a declaration of acceleration has been
made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter in this Article provided, the Holders of
a majority in principal amount of the
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Outstanding Notes, by written notice to the Company and the Trustee, may rescind
and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest on all Notes,
(B) the principal of (and premium, if any, on) any
Notes which have become due otherwise than by such declaration
of acceleration (including any Notes required to have been
purchased on the Purchase Date pursuant to an Offer to
Purchase made by the Company) and any interest thereon at the
rate borne by the Notes,
(C) to the extent that payment of such interest is
lawful, interest upon overdue interest at the rate provided
therefor in the Notes, and
(D) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel;
and
(2) all Events of Default, other than the nonpayment of the
principal of Notes which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 5.13.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 5.03 COLLECTION OF INDEBTEDNESS AND SUITS FOR
ENFORCEMENT BY TRUSTEE.
The Company covenants that if
(1) default is made in the payment of any interest on any Note
when such interest becomes due and payable and such default continues
for a period of 30 days, or
(2) default is made in the payment of the principal of (or
premium, if any, on) any Note at the Maturity thereof or, with respect
to any Note required to have been purchased pursuant to an Offer to
Purchase made by the Company, at the Purchase Date thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Notes, the whole amount then due and payable on such Notes for
principal (and premium, if any) and interest, and, to the extent that payment of
such interest shall be legally enforceable, interest on any principal (and
premium, if any) and interest that is overdue, at the rate provided therefor in
the Notes, and, in addition thereto, such further amount as shall be sufficient
to cover the costs
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and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
If an Event of Default occurs and is continuing, the Trustee
may in its discretion proceed to protect and enforce its rights and the rights
of the Holders by such appropriate judicial proceedings as the Trustee shall
deem most effectual to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid of
the exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 5.04 TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of any judicial proceeding relative to the Company or
any other obligor upon the Notes or the property of the Company or its
creditors, the Trustee shall be entitled and empowered, by intervention in such
proceeding or otherwise, to take any and all actions, including participation as
a member, voting or otherwise, of any committee of creditors, authorized under
the Trust Indenture Act in order to have claims of the Holders and the Trustee
allowed in any such proceeding. In particular, the Trustee shall be authorized
to collect and receive any moneys or other property payable or deliverable on
any such claims and to distribute the same; and any custodian, receiver,
assignee, trustee, liquidator, sequestrator or other similar official in any
such judicial proceeding is hereby authorized by each Holder to make such
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 6.07.
Notwithstanding the foregoing, no provision of this Indenture
shall be deemed to authorize the Trustee to authorize or consent to or accept or
adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of any Holder
thereof or to authorize the Trustee to vote in respect of the claim of any
Holder in any such proceeding; PROVIDED, HOWEVER, that the Trustee may, on
behalf of such Holders, vote for the election of a trustee in bankruptcy or
similar official and be a member of a creditors" or other such committee.
SECTION 5.05 TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
NOTES.
All rights of action and claims under this Indenture or the
Notes may be prosecuted and enforced by the Trustee without the possession of
any of the Notes or the production thereof in any proceeding relating thereto,
and any such proceeding instituted by the Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Notes in respect of which such judgment
has been recovered.
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SECTION 5.06 APPLICATION OF MONEY COLLECTED.
Subject to Article 13 and applicable law, any money collected
by the Trustee pursuant to this Article shall be applied in the following order,
at the date or dates fixed by the Trustee upon prior written notice to the
Company and, in case of the distribution of such money on account of principal
(or premium, if any) or interest, upon presentation of the Notes and the
notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 6.07;
SECOND: To the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Notes in respect
of which or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to the
amounts due and payable on such Notes for principal (and premium, if
any) and interest, respectively; and
THIRD: The balance, if any, to the Company.
SECTION 5.07 LIMITATION ON SUITS.
No Holder of any Note shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(2) the Holders of not less than 25% in principal amount of
the Outstanding Notes shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own
name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the Outstanding Notes;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
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SECTION 5.08 UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE
PRINCIPAL, PREMIUM AND INTEREST.
Notwithstanding any other provision in this Indenture, but
subject to Article Thirteen hereof, the Holder of any Note shall have the right,
which is absolute and unconditional, to receive payment of the principal of (and
premium, if any) and (subject to Section 3.08) any interest on such Note on the
respective Stated Maturities expressed in such Note (or, in the case of
redemption or repurchase, on the Redemption Date or the Purchase Date, as the
case may be) and to institute suit for the enforcement of any such payment, and
such rights shall not be impaired without the consent of such Holder.
SECTION 5.09 RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 5.10 RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes in the last paragraph
of Section 3.07, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
SECTION 5.11 DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any
Note to exercise any right or remedy accruing upon any Event of Default shall
impair any such right or remedy or constitute a waiver of any such Event of
Default or an acquiescence therein. Every right and remedy given by this Article
or by law to the Trustee or to the Holders may be exercised from time to time,
and as often as may be deemed expedient, by the Trustee or by the Holders, as
the case may be.
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SECTION 5.12 CONTROL BY HOLDERS.
The Holders of a majority in principal amount of the
Outstanding Notes shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee, PROVIDED that
(1) such direction shall not be in conflict with any rule of
law or with this Indenture, and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 5.13 WAIVER OF PAST DEFAULTS.
The Holders of not less than two-thirds in aggregate principal
amount of the Outstanding Notes may on behalf of the Holders of all the Notes
waive any past default hereunder and its consequences, except a default
(1) in the payment of the principal of (or premium, if any) or
interest on any Note (including any Note which is required to have been
purchased pursuant to an Offer to Purchase made by the Company), or
(2) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the
Holder of each Outstanding Note affected.
Upon any such waiver, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
SECTION 5.14 UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, a court may require any party litigant in
such suit to file an undertaking to pay the costs of such suit, and may assess
costs against any such party litigant, in the manner and to the extent provided
in the Trust Indenture Act; PROVIDED, that neither this Section nor the Trust
Indenture Act shall be deemed to authorize any court to require such an
undertaking or to make such an assessment in any suit instituted by the Company,
the Trustee or any Holder, or group of Holders, holding in the aggregate at
least 10% in principal amount of the Outstanding Notes or in any suit instituted
by any Holder for the enforcement of principal of (and premium, if any) or
interest on any Note on or after the respective Stated Maturities expressed in
such Note (or, in the case of redemption, on or after the Redemption Date or, in
the case of any purchase required to be made pursuant to an Offer to Purchase,
on or after the Purchase Date).
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SECTION 5.15 WAIVER OF STAY, USURY OR EXTENSION LAWS.
The Company and each of the Guarantors covenants (to the
extent that they may lawfully do so) that it will not at any time insist upon,
or plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, usury or extension law wherever enacted, now or at any time hereafter
in force, which may affect the covenants or the performance of this Indenture;
and the Company and each of the Guarantors (to the extent that they may lawfully
do so) hereby expressly waives all benefit or advantage of any such law and
covenants that it will not hinder, delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.
ARTICLE SIX
The Trustee
SECTION 6.01 CERTAIN DUTIES AND RESPONSIBILITIES.
The duties and responsibilities of the Trustee shall be as
provided by the Trust Indenture Act. Notwithstanding the foregoing, no provision
of this Indenture shall require the Trustee to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder or thereunder, or in the exercise of any of its rights or powers, if
it shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it. Whether or not herein or therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
SECTION 6.02 NOTICE OF DEFAULTS.
The Trustee shall give the Holders notice of any default
hereunder as and to the extent provided by the Trust Indenture Act; PROVIDED,
HOWEVER, that in the case of any default of the character specified in Section
5.01(4), no such notice to Holders shall be given until at least 30 days after
the occurrence thereof. For the purpose of this Section, the term "default"
means any event which is, or after notice or lapse of time or both would become,
an Event of Default.
SECTION 6.03 CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of Section 6.01:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have been signed
or presented by the proper party or parties;
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(b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order
and any resolution of the Board of Directors may be sufficiently
evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officers"
Certificate;
(d) the Trustee may consult with counsel and the advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request
or direction of any of the Holders pursuant to this Indenture, unless
such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters
as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or
attorney;
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder; and
(h) the Trustee shall not be deemed to have notice or
knowledge of any matter unless an officer of the Trustee regularly
employed in its Corporate Trust Office has actual knowledge thereof or
unless written notice thereof is received by, or provided pursuant to
the provisions of Section 1.05 to, the Trustee at its Corporate Trust
Office and such notice refers to the Notes generally, the Company or
this Indenture.
SECTION 6.04 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF NOTES.
The recitals contained herein and in the Notes, except the
Trustee"s certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or the Notes except that the Trustee represents that it is duly
authorized to execute and deliver this Indenture, authenticate the Notes and
perform its
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obligations hereunder. The Trustee shall not be accountable for the use or
application by the Company of Notes or the proceeds thereof.
SECTION 6.05 MAY HOLD NOTES.
The Trustee, any Authenticating Agent, any Paying Agent, any
Note Registrar or any other agent of the Company or the Trustee, in its
individual or any other capacity, may become the owner or pledgee of Notes and,
subject to Sections 6.08 and 6.13, may otherwise deal with the Company and any
other obligor upon the Notes with the same rights it would have if it were not
Trustee, Authenticating Agent, Paying Agent, Note Registrar or such other agent.
SECTION 6.06 MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The Trustee
shall be under no liability for interest on any money received by it hereunder
except as otherwise agreed with the Company.
SECTION 6.07 COMPENSATION AND REIMBURSEMENT.
The Company agrees
(1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or advance
as may be attributable to its negligence or bad faith; and
(3) to indemnify the Trustee or any predecessor Trustees and
their agents for, and to hold it harmless against, any loss, liability
or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration
of this trust, including the costs and expenses, of defending itself
against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
The Trustee shall have a lien prior to the Notes as to all
property and funds held by it hereunder for any amount owing it or any
predecessor Trustee pursuant to this Section 6.07, except with respect to funds
held in trust for the benefit of the Holders of particular Notes.
When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 5.01, the expenses
(including the reasonable charges and expenses
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of its counsel) and the compensation for the services are intended to
constitute expenses of administration under any applicable Federal or state
bankruptcy, insolvency or other similar law.
The provisions of this Section shall survive the termination
of this Indenture.
SECTION 6.08 DISQUALIFICATION; CONFLICTING INTERESTS.
If the Trustee has or shall acquire a conflicting interest
within the meaning of the Trust Indenture Act, the Trustee shall either
eliminate such interest or resign, to the extent and in the manner provided by,
and subject to the provisions of, the Trust Indenture Act and this Indenture.
SECTION 6.09 CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall be
a Person that is eligible pursuant to the Trust Indenture Act to act as such,
has a combined capital and surplus of at least $50 million and has its Corporate
Trust Office located in the Borough of Manhattan, The City of New York. If such
Person publishes reports of condition at least annually, pursuant to law or to
the requirements of its supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such Person shall
be deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
SECTION 6.10 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee under
Section 6.11.
(b) The Trustee may resign at any time by giving written
notice thereof to the Company. If an instrument of acceptance by a successor
Trustee shall not have been delivered to the Trustee within 30 days after the
giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the
Holders of a majority in principal amount of the Outstanding Notes, delivered to
the Trustee and the Company.
(d) If at any time:
(l) the Trustee shall fail to comply with Section 6.08 after
written request therefor by the Company or by any Holder who has been a
bona fide Holder of a Note for at least six months, or
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(2) the Trustee shall cease to be eligible under Section 6.09
and shall fail to resign after written request therefor by the Company
or by any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to Section 5.14, any Holder who has been a bona fide
Holder of a Note for at least six months may, on behalf of itself and all others
similarly situated, petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any cause, the Company, by a Board Resolution, shall promptly appoint a
successor Trustee. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee shall be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Notes delivered to the Company and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its acceptance of such
appointment, become the successor Trustee and supersede the successor Trustee
appointed by the Company. If no successor Trustee shall have been so appointed
by the Company or the Holders and accepted appointment in the manner hereinafter
provided, any Holder who has been a bona fide Holder of a Note for at least six
months may, on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to all
Holders in the manner provided in Section 1.06. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office.
SECTION 6.11 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but, on request of the
Company or the successor Trustee, such retiring Trustee shall, upon payment of
its charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee and shall duly
assign, transfer and deliver to such successor Trustee all property and money
held by such retiring Trustee hereunder. Upon request of any such successor
Trustee, the Company shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Trustee all such rights,
powers and trusts.
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No successor Trustee shall accept its appointment unless at
the time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
SECTION 6.12 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all the corporate
trust business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Notes shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Notes so authenticated with the same effect
as if such successor Trustee had itself authenticated such Notes.
SECTION 6.13 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
If and when the Trustee shall be or become a creditor of the
Company or any other obligor upon the Notes, the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company or any such other obligor.
SECTION 6.14 APPOINTMENT OF AUTHENTICATING AGENT.
The Trustee may appoint an Authenticating Agent or Agents
which shall be authorized to act on behalf of the Trustee to authenticate Notes
issued upon original issue and upon exchange, registration of transfer, partial
redemption or partial purchase or pursuant to Section 3.07, and Notes so
authenticated shall be entitled to the benefits of this Indenture and shall be
valid and obligatory for all purposes as if such Notes had been authenticated by
the Trustee hereunder. Wherever reference is made in this Indenture to-the
authentication and delivery of Notes by the Trustee or the Trustee"s certificate
of authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a certificate
of authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Company and shall at all
times be a corporation organized and doing business under the laws of the United
States of America, any State thereof or the District of Columbia, authorized
under such laws to act as Authenticating Agent, having a combined capital and
surplus of not less than $50 million and subject to supervision or examination
by Federal or State authority. If such Authenticating Agent publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such Authenticating Agent shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section, such Authenticating
Agent shall resign immediately in the manner and with the effect specified in
this Section.
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Any corporation into which an Authenticating Agent may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which such
Authenticating Agent shall be a party, or any corporation succeeding to the
corporate agency or corporate trust business of an Authenticating Agent, shall
continue to be an Authenticating Agent, provided such corporation shall be
otherwise eligible under this Section, without the execution or filing of any
paper or any further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving
written notice thereof to the Trustee and the Company. The Trustee may at any
time terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and the Company. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail written notice of
such appointment first-class postage prepaid, to each Holder of Notes at such
Holder"s address as it appears in the Note Register. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder, with
like effect as if originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible under the provisions of
this Section.
The Trustee agrees to pay to each Authenticating Agent from
time to time reasonable compensation for its services under this Section, and
the Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 6.07.
If an appointment is made pursuant to this Section, the Notes
may have endorsed thereon, in addition to the Trustee"s certificate of
authentication, an alternative certificate of authentication in the following
form:
This is one of the Notes described in the within-mentioned
Indenture.
----------------------------------,
As Trustee
Dated: By________________________________,
As Authenticating Agent
By________________________________,
Authorized Officer
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SECTION 6.15 TRUSTEE'S APPLICATION FOR INSTRUCTIONS FROM THE COMPANY.
Any application by the Trustee for written instructions from
the Company may, at the option of the Trustee, set forth in writing any action
proposed to be taken or omitted by the Trustee under this Indenture and the date
on and/or after which such action shall be taken or such omission shall be
effective. The Trustee shall not be liable for any action taken by, or omission
of, the Trustee in accordance with a proposal included in such application on or
after the date specified in such application (which date shall not be less than
three Business Days after the date any officer of the Company actually receives
such application, unless any such officer shall have consented in writing to any
earlier date) unless prior to taking any such action (or the effective date in
the case of an omission), the Trustee shall have received written instructions
in response to such application specifying the action to be taken or omitted.
ARTICLE SEVEN
Holders" Lists and Reports by Trustee, Company and Guarantors
SECTION 7.01 COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.
The Company will furnish or cause to be furnished to the
Trustee
(a) semi-annually, not more than 15 days after each Regular
Record Date, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Holders as of such Regular
Record Date; and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15 days
prior to the time such list is furnished;
EXCLUDING from any such list names and addresses received by the Trustee in its
capacity as Note Registrar.
SECTION 7.02 PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in the most
recent list furnished to the Trustee as provided in Section 7.01 and the names
and addresses of Holders received by the Trustee in its capacity as Note
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 7.01 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders
with respect to their rights under this Indenture or under the Notes, and the
corresponding rights and duties of the Trustee, shall be as provided by the
Trust Indenture Act.
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(c) Every Holder of Notes, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of any of them shall be held accountable by reason of any
disclosure of information as to names and addresses of Holders made pursuant to
the Trust Indenture Act.
SECTION 7.03 REPORTS BY TRUSTEE.
(a) The Trustee shall transmit to Holders such reports
concerning the Trustee and its actions under this Indenture as may be required
pursuant to the Trust Indenture Act at the times and in the manner provided
pursuant thereto. The Trustee shall promptly deliver to the Company a copy of
any reports it delivers to Holders pursuant to Section 7.03.
(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which the Notes are listed, with the Commission and with the Company. The
Company will notify the Trustee when the Notes are listed on any stock exchange.
SECTION 7.04 REPORTS BY THE COMPANY AND GUARANTORS.
The Company and the Guarantors shall file with the Trustee and
the Commission, and transmit to Holders, such information, documents and other
reports, and such summaries thereof, as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided pursuant to such Act;
provided that any such information, documents or reports required to be filed
with the Commission pursuant to Section 13 or 15(d) of the Exchange Act shall be
filed with the Trustee within 15 days after the same is so required to be filed
with the Commission.
Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's and the
Guarantors' compliance with any of its covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officers' Certificates).
ARTICLE EIGHT
Merger, Consolidation, Etc.
SECTION 8.1 MERGERS, CONSOLIDATIONS AND CERTAIN TRANSFERS, LEASES AND
ACQUISITIONS OF ASSETS.
The Company (a) shall not, and shall not permit any Restricted
Subsidiary to, consolidate with or merge into any Person, provided that this
Clause (a) shall not prohibit any such consolidation or merger by a Restricted
Subsidiary if (i) such Restricted Subsidiary ceases to be a Restricted
Subsidiary in such consolidation or merger or (ii) such consolidation or merger
is with or into the Company or another Restricted Subsidiary; (b) shall not
permit any Person
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other than a Restricted Subsidiary to consolidate with or merge into (i) the
Company or (ii) any Restricted Subsidiary, provided that this Clause (b) shall
not prohibit any such consolidation or merger with or into a Restricted
Subsidiary if such Restricted Subsidiary ceases to be a Restricted Subsidiary in
such consolidation or merger; and (c) shall not, directly or indirectly, in one
transaction or a series of related transactions, transfer, convey, sell, lease
or otherwise dispose of all or substantially all of the properties and assets of
the Company and its Subsidiaries on a consolidated basis, unless, in any such
transaction (or series) contemplated by Clause (a), (b) or (c) above:
(1) immediately before and after giving effect to such
transaction (or series of related transactions) and treating any Debt
Incurred by the Company or a Subsidiary of the Company as a result of
such transaction (or series of related transactions) as having been
Incurred by the Company or such Subsidiary at the time of such
transaction (or series of related transactions), no Event of Default,
and no event which, after notice or lapse of time, or both, would
become an Event of Default, shall have occurred and be continuing;
(2) in case the Company shall consolidate with or merge into
another Person or shall directly or indirectly, in one or a series of
related transactions, transfer, convey, sell, lease or otherwise
dispose of all or substantially all of its properties and assets as an
entirety, the Person formed by such consolidation or into which the
Company is merged or the Person which acquires by transfer, conveyance,
sale, lease or other disposition all or substantially all of the
properties and assets of the Company and its Subsidiaries on a
consolidated basis (for purposes of this Article Eight, a "Successor
Company") shall be a corporation, partnership, limited liability
company or trust, shall be organized and validly existing under the
laws of the United States of America, any State thereof or the District
of Columbia and shall expressly assume by an indenture supplemental
hereto executed and delivered to the Trustee, in form satisfactory to
the Trustee, the due and punctual payment of the principal of (and
premium, if any) and interest on all the Notes and the performance of
every covenant of this Indenture on the part of the Company to be
performed or observed;
(3) either the Company or, if applicable, the Successor
Company, as the case may be, would, at the time of such transaction (or
series of related transactions) and after giving pro forma effect
thereto as if such transaction (or series of related transactions) had
occurred at the beginning of the most recently ended four full fiscal
quarter period for which annual or quarterly financial statements are
publicly available immediately preceding the date of such transaction
(or series of related transactions), have been permitted to Incur at
least $1.00 of additional Debt pursuant to the Consolidated EBITDA
Coverage Ratio test set forth in the first paragraph of Section 10.08;
(4) if, as a result of any such transaction (or series of
related transactions), property and assets of the Company would become
subject to a Lien which would not be permitted by Section 10.14, the
Company or, if applicable, the Successor Company, as the case may be,
will have taken such steps as necessary effectively to secure the Notes
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equally and ratably with (or prior to, as provided in Section 10.14)
Debt secured by such Lien; and
(5) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
transaction (or series of related transactions) and, if a supplemental
indenture is required in connection with such transaction (or series of
related transactions), such supplemental indenture complies with this
Article and that all conditions precedent herein provided for relating
to such transaction (or series of related transactions) have been
complied with, and, with respect to such Officers" Certificate, setting
forth in reasonable detail the calculations referred to in Clause (3),
if applicable, above.
SECTION 8.02 SUCCESSOR SUBSTITUTED.
Upon any consolidation of the Company with, or merger of the
Company into, any other Person or any transfer, conveyance, sale, lease or other
disposition of all or substantially all of the properties and assets of the
Company and its Subsidiaries on a consolidated basis, in each case in accordance
with Section 8.01, the Successor Company shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under this Indenture
with the same effect as if such Successor Company had been named as the Company
herein, and thereafter, the predecessor Person shall be relieved of all
obligations and covenants under this Indenture and the Notes.
ARTICLE NINE
Supplemental Indentures
SECTION 9.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders, the Company, when
authorized by a Board Resolution of the Company, the Guarantors and the Trustee,
at any time and from time to time, may enter into one or more indentures
supplemental hereto, in form satisfactory to the Trustee, for any of the
following purposes:
(1) to evidence the succession of another Person to the
Company and the assumption by any such successor of the covenants of
the Company herein and in the Notes; or
(2) to add to the covenants of the Company for the benefit of
the Holders, or to surrender any right or power herein conferred upon
the Company; or
(3) to secure the Notes pursuant to the requirements of
Section 10.14 or otherwise; or
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(4) to comply with any requirements of the Commission in order
to effect qualification of this Indenture under the Trust Indenture Act
in connection with the issuance of the Exchange Notes and thereafter
maintain the qualification of this Indenture under the Trust Indenture
Act; or
(5) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture which shall not be inconsistent
with the provisions of this Indenture, PROVIDED that such action
pursuant to this Clause (5) shall not adversely affect the interests of
the Holders in any material respect;
(6) to provide for the issuance of Additional Notes in
accordance with the limitations set forth in this Indenture as of the
date hereof; or
(7) to allow any Subsidiary to execute a supplemental
indenture to provide a Note Guarantee; or
(8) to add to, change or eliminate any of the provisions of
this Indenture to permit or facilitate the issuance of Global Notes and
matters related thereto, PROVIDED that such action pursuant to this
Clause (8) shall not adversely affect the interests of the Holders in
any material respect.
SECTION 9.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of the Holders of at least two-thirds in
aggregate principal amount of the Outstanding Notes, by Act of said Holders
delivered to the Company and the Trustee, the Company, when authorized by a
Board Resolution of the Company, and the Trustee may enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
of modifying in any manner the rights of the Holders under this Indenture;
PROVIDED, however, that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Note affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of interest on, any Note, or reduce the principal thereof
or the rate of interest thereon or any premium payable upon the
redemption thereof, or change the place of payment where, or the coin
or currency in which, the principal of (or premium, if any) or interest
on any Note is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the Stated Maturity thereof
(or, in the case of redemption, on or after the Redemption Date or, in
the case of an Offer to Purchase which has been made, on or after the
applicable Purchase Date), or
(2) reduce the percentage in principal amount of the
Outstanding Notes, the consent of whose Holders is required for any
such supplemental indenture, or the consent of whose Holders is
required for any waiver (of compliance with certain provisions of
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this Indenture or certain defaults hereunder and their consequences)
provided for in this Indenture, or
(3) modify any of the provisions of this Section, Section 5.13
or Section 10.22 except to increase any such percentage or to provide
that certain other provisions of this Indenture cannot be modified or
waived without the consent of the Holder of each Outstanding Note
affected thereby, or
(4) modify any of the provisions of Article Thirteen of this
Indenture in a manner adverse to the Holders, or
(5) modify Sections 10.17 and 10.18 of this Indenture in a
manner adverse to the Holders in any material respect,
(6) release any Guarantor from its obligations under its Note
Guarantee or this Indenture, except in accordance with the terms of
this Indenture, or
(7) following the mailing to a Holder of an Offer Document
with respect to an Offer to Purchase, modify the provisions of this
Indenture with respect to such Offer to Purchase in a manner adverse to
such Holder in any material respect.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
SECTION 9.03 EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts created by,
any supplemental indenture permitted by this Article or the modifications
thereby of the trusts created by this Indenture, the Trustee shall be entitled
to receive, and (subject to Section 6.01) shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture. The Trustee may, but
shall not be obligated to, enter into any such supplemental indenture which
affects the Trustee"s own rights, duties or immunities under this Indenture or
otherwise.
SECTION 9.04 EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this
Article, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes; and
every Holder of Notes theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
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SECTION 9.05 CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article
shall conform to the requirements of the Trust Indenture Act.
SECTION 9.06 REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES.
Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Notes so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Notes.
SECTION 9.07 CHANGES ADVERSE TO HOLDERS OF SENIOR DEBT.
No amendment, waiver or modification of any subordination
provision adverse to the holders of Senior Debt will be effective against any
holder of Senior Debt unless expressly consented to in writing by or on behalf
of such holder (or by any specified percentage of holders of a class of Senior
Debt required to consent thereto) pursuant to the terms of the agreement or
instrument creating, evidencing or governing such Senior Debt.
ARTICLE TEN
Covenants
SECTION 10.01 PAYMENT OF PRINCIPALS, PREMIUM AND INTEREST.
The Company will duly and punctually pay the principal of (and
premium, if any) and interest on the Notes in accordance with the terms of the
Notes and this Indenture.
SECTION 10.02 MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain in the Borough of Manhattan, The
City of New York, an office or agency where Notes may be presented or
surrendered for payment, where Notes may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served. The Company will give
prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust Office of the Trustee, and the
Company hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more
other offices or agencies (in or outside the Borough of Manhattan, The City of
New York) where the Notes may
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be presented or surrendered for any or all such purposes and may from time to
time rescind such designations; PROVIDED, HOWEVER, that no such designation or
rescission shall in any manner relieve the Company of its obligation to maintain
an office or agency in the Borough of Manhattan, The City of New York, for such
purposes. The Company will give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency.
SECTION 10.03 MONEY FOR NOTE PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent,
it will, on or before each due date of the principal of (and premium, if any) or
interest on any of the Notes, segregate and hold in trust for the benefit of the
Persons entitled thereto a sum sufficient to pay the principal (and premium, if
any) or interest so becoming due until such sums shall be paid to such Persons
or otherwise disposed of as herein provided and will promptly notify the Trustee
of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents, it
will, prior to each due date of the principal of (and premium, if any) or
interest on any Notes, deposit with a Paying Agent a sum sufficient to pay such
amount, such sum to be held as provided by the Trust Indenture Act, and (unless
such Paying Agent is the Trustee) the Company will promptly notify the Trustee
of its action or failure so to act.
The Company will cause each Paying Agent other than the
Trustee to execute and deliver to the Trustee an instrument in which such Paying
Agent shall agree with the Trustee, subject to the provisions of this Section,
that such Paying Agent will (i) comply with the provisions of the Trust
Indenture Act applicable to it as a Paying Agent (or, until such time as this
Indenture shall be qualified under the Trust Indenture Act, which would be
applicable to it as Paying Agent if the Indenture were so qualified) and (ii)
during the continuance of any default by the Company (or any other obligor upon
the Notes) in the making of any payment in respect of the Notes, upon the
written request of the Trustee, forthwith pay to the Trustee all sums held in
trust by such Paying Agent as such.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Subject to any applicable abandoned property laws, any money
deposited with the Trustee or any Paying Agent, or then held by the Company, in
trust for the payment of the principal of (and premium, if any) or interest on
any Note and remaining unclaimed for two years after such principal (and
premium, if any) or interest has become due and payable shall be paid to the
Company on Company Request, or (if then held by the Company) shall be discharged
from such trust; and the Holder of such Note shall thereafter, as an unsecured
general creditor, look
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only to the Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; PROVIDED, HOWEVER, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in a newspaper
published in the English language, customarily published on each Business Day
and of general circulation in The City of New York, notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such publication, any unclaimed balance of
such money then remaining will be repaid to the Company.
SECTION 10.04 EXISTENCE.
Subject to Article Eight, the Company will do or cause to be
done all things necessary to preserve and keep in full force and effect its
existence, rights (charter and statutory) and franchises; provided, HOWEVER,
that the Company shall not be required to preserve any such right or franchise
if the Board of Directors of the Company shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company and
that the loss thereof is not disadvantageous in any material respect to the
Holders.
SECTION 10.05 MAINTENANCE OF PROPERTIES.
The Company will cause all properties used or useful in the
conduct of its business or the business of any Restricted Subsidiary to be
maintained and kept in good condition, repair and working order and supplied
with all necessary equipment and will cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
PROVIDED, HOWEVER, that nothing in this Section shall prevent the Company or any
Restricted Subsidiary from discontinuing the operation or maintenance of any of
such properties if such discontinuance is, in the judgment of the Company,
desirable in the conduct of its business or the business of any Restricted
Subsidiary and not disadvantageous in any material respect to the Holders.
SECTION 10.06 PAYMENT OF TAXES AND OTHER CLAIMS.
The Company will pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (1) all taxes, assessments
and governmental charges levied or imposed upon the Company or any of its
Subsidiaries or upon the income, profits or property of the Company or any of
its Subsidiaries, and (2) all lawful claims for labor, materials and supplies
which, if unpaid, might by law become a lien upon the property of the Company or
any of its Restricted Subsidiaries; PROVIDED, HOWEVER, that the Company shall
not 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 or would not result in
a material adverse effect on the Company.
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SECTION 10.07 MAINTENANCE OF INSURANCE.
The Company shall, and the Company shall cause its Restricted
Subsidiaries to, keep at all times all of their properties which are of an
insurable nature insured against loss or damage, and to maintain liability
insurance, with insurers believed by the Company to be responsible or in the
case of any insurance coverage, to self-insure, in each case to the extent, in
the judgment of the Company, to do so comports with good business practice.
SECTION 10.08 LIMITATION ON CONSOLIDATED DEBT.
The Company shall not, and shall not permit any Restricted
Subsidiary to, Incur any Debt unless, immediately after giving effect to the
Incurrence of such Debt and the receipt and application of the proceeds thereof,
the Consolidated EBITDA Coverage Ratio of the Company and its Restricted
Subsidiaries for the four full fiscal quarters next preceding the Incurrence of
such Debt for which financial information is available, calculated on a pro
forma basis as if such Debt had been Incurred and the proceeds thereof had been
received and so applied at the beginning of the four full fiscal quarters, would
be greater than (x) 1.9 to 1 for Debt Incurred on or prior to November 9, 1999
and (y) 2.0 to 1.0 for Debt Incurred thereafter.
Without regard to the foregoing limitations, the following
Debt may be Incurred:
(i) Debt Incurred by the Company or any Restricted
Subsidiary under the Credit Facility in an aggregate principal amount
at any time outstanding not to exceed $200 million, less (A) $20
million at each of the third, fourth and fifth anniversaries of the
Credit Facility's effective date, plus (B) increased revolving credit
commitments thereunder in an aggregate amount not exceeding in the
aggregate the amount of Debt that is permitted to be Incurred, but has
not been Incurred, under Clauses (iv) and (viii) below, and plus (C)
the amount of Debt Incurred under the Credit Facility on a term loan
basis that is Incurred pursuant to the immediately preceding paragraph,
and, with respect to all of the foregoing, any renewal, extension,
refinancing or refunding (a "refinancing") of such Debt in an amount
that does not exceed the sum of the amount of the revolving credit
commitments and the amount of the outstanding term Debt under the
Credit Facility immediately prior to such renewal, extension,
refinancing or refunding; provided that no Debt Incurred on a term loan
basis may be refinanced on a revolving credit basis;
(ii) the original issuance by the Company of the Debt
evidenced by the Notes (including any Exchange Notes) and the issuance
by the Company's Subsidiaries of the Note Guarantee;
(iii) Debt (other than Debt described in another clause
of this paragraph) of the Company outstanding on the date of the
Indenture after giving effect to the application of the proceeds of the
Notes;
(iv) Debt in respect of Capital Lease Obligations,
mortgage financings or other purchase money obligations, in an
aggregate principal amount at any time outstanding not to exceed $15
million (including Debt refinanced pursuant to Clause (vii) of this
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paragraph and without duplication at such time of any portion of any
revolving credit commitment then in effect that represents an increase
made under the immediately preceding Clause (i)(B) in reliance on this
Clause (iv)), Incurred by the Company or any Restricted Subsidiary for
the purpose of financing all or any part of the acquisition or
improvement of any property used in the business of the Company or such
Restricted Subsidiary;
(v) Debt owed by the Company to any Wholly Owned
Restricted Subsidiary or Debt owed by any Restricted Subsidiary to the
Company or a Wholly Owned Restricted Subsidiary; PROVIDED, HOWEVER,
that (a) any such Debt (not pledged as security for any Senior Debt)
owing by the Company to a Wholly Owned Restricted Subsidiary shall be
Subordinated Debt evidenced by an intercompany promissory note and (b)
upon either (1) the transfer or other disposition (excluding any pledge
thereof as security for any Senior Debt) by such Wholly Owned
Restricted Subsidiary or the Company of any Debt so permitted to a
Person other than the Company or another Wholly Owned Restricted
Subsidiary or (2) the issuance (other than director' qualifying
shares), sale, lease, transfer or other disposition (including by
consolidation or merger) of shares of Capital Stock (other than any
pledge thereof as security for any Senior Debt) of such Wholly Owned
Restricted Subsidiary to a Person other than the Company or another
such Wholly Owned Restricted Subsidiary, the provisions of this Clause
(v) shall no longer be applicable to such Debt and such Debt shall be
deemed to have been Incurred at the time of such issuance, sale, lease,
transfer or other disposition, as the case may be;
(vi) Debt Incurred by the Company or any Restricted
Subsidiary consisting of Permitted Interest Rate, Currency or Commodity
Price Agreements;
(vii) Debt which is exchanged for or the proceeds of
which are used to refinance or refund, or any extension or renewal of,
outstanding Debt Incurred pursuant to the preceding paragraph of this
Section 10.08 or Clauses (ii), (iii) or (iv) above (each of the
foregoing, a "refinancing") in an aggregate principal amount not to
exceed the principal amount of the Debt so refinanced, plus the amount
of any premium required to be paid in connection with such refinancing
pursuant to the terms of the Debt so refinanced or the amount of any
premium reasonably determined by the Company as necessary to accomplish
such refinancing by means of a tender offer or privately negotiated
repurchase and plus the expenses of the Company or the Restricted
Subsidiary, as the case may be, Incurred in connection with such
refinancing; PROVIDED, HOWEVER, that (a) Debt the proceeds of which are
used to refinance the Notes or Debt that is pari passu with or
subordinate in right of payment to the Notes shall only be permitted if
(1) in the case of any refinancing of the Notes or Debt that is PARI
PASSU with the Notes, the refinancing Debt is Incurred by the Company
and made PARI PASSU with the Notes or subordinated in right of payment
to the Notes, and (2) in the case of any refinancing of Debt that is
subordinate in right of payment to the Notes, the refinancing Debt is
Incurred by the Company and constitutes Subordinated Debt; (b) the
refinancing Debt by its terms, or by the terms of any agreement or
instrument pursuant to which such Debt is issued, (1) does not provide
for payments of principal of such Debt at the Stated Maturity thereof
or by way of a sinking fund applicable thereto or by way of any
mandatory redemption,
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defeasance, retirement or repurchase thereof (including any redemption,
defeasance, retirement or repurchase which is contingent upon events or
circumstances, but excluding any retirement required by virtue of
acceleration of such Debt upon any event of default thereunder), in
each case prior to the final Stated Maturity of the Debt being
refinanced and (2) except as provided for by the terms of the Debt
being refinanced, does not permit redemption or other retirement
(including pursuant to an offer to purchase) of such Debt at the option
of the holder thereof prior to the final Stated Maturity of the Debt
being refinanced other than a redemption or other retirement at the
option of the holder of such Debt (including pursuant to an offer to
purchase) which is conditioned upon provisions substantially similar to
those described in Sections 10.17 and 10.18; and (c) in the case of any
refinancing of Debt Incurred by the Company, the refinancing Debt may
be Incurred only by the Company and, in the case of refinancing of Debt
Incurred by a Restricted Subsidiary, the refinancing Debt may be
Incurred only by the Company or such Restricted Subsidiary; PROVIDED,
FURTHER, that Debt Incurred pursuant to this Clause (vii) may not be
Incurred more than 90 days prior to the application of the proceeds to
repay the Debt to be refinanced; and
(viii) Debt not otherwise permitted to be Incurred by the
Company or any Restricted Subsidiary pursuant to Clauses (i) through
(vii) above, which, together with any other outstanding Debt Incurred
pursuant to this Clause (viii), has an aggregate principal amount at
any time outstanding not in excess of $15,000,000 (without duplication
at such time of any portion of any revolving credit commitment then in
effect that represents an increase made under the immediately preceding
Clause (i)(B) in reliance on this Clause (viii)).
SECTION 10.09 LIMITATION ON DEBT AND PREFERRED STOCK OF SUBSIDIARIES.
The Company shall not cause, and shall not permit, any
Restricted Subsidiary to Incur any Debt or issue any Preferred Stock except: (i)
Debt Incurred by any Restricted Subsidiary that is expressly permitted in the
second paragraph of Section 10.08; (ii) Debt or Preferred Stock outstanding on
the date of the Indenture after giving effect to the application of the proceeds
of the Notes; (iii) Debt or Preferred Stock issued to and held by the Company or
a Wholly Owned Restricted Subsidiary (provided that such Debt or Preferred Stock
is at all times held by the Company or a Wholly Owned Restricted Subsidiary); or
(iv) Debt or Preferred Stock Incurred or issued by a Person prior to the time
(A) such Person became a Restricted Subsidiary, (B) such Person merges into or
consolidates with a Restricted Subsidiary or (C) another Restricted Subsidiary
merges into or consolidates with such Person (in a transaction in which such
Person becomes a Restricted Subsidiary), which Debt or Preferred Stock was not
Incurred or issued in anticipation of such transaction and was outstanding prior
to such transaction or (v) any Guarantee incurred by any Guarantor; PROVIDED, in
the case of this clause (v), that if the obligation Guaranteed is (x)
subordinated to the Notes, then such Guarantee shall be subordinated to the Note
Guarantee to substantially the same extent or (y) PARI PASSU with the Notes,
then such Guarantee shall be PARI PASSU with the Note Guarantee to substantially
the same extent.
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SECTION 10.10 LIMITATION ON LAYERED DEBT.
The Company shall not Incur any Debt which by its terms is
both (i) subordinated in right of payment to any Senior Debt and (ii) senior in
right of payment to the Notes. The Guarantors shall not Incur any Debt which by
its terms is both (i) subordinated in right of payment to any Senior Debt and
(ii) senior in right of payment to the Note Guarantee.
SECTION 10.11 LIMITATION ON ISSUANCE OF GUARANTEES OF SUBORDINATED DEBT.
The Company shall not permit any Restricted Subsidiary,
directly or indirectly, to assume, guarantee or in any other manner become
liable with respect to any Debt of the Company that by its terms is PARI PASSU
with or junior in right of payment to the Notes except that if such Restricted
Subsidiary has issued a Note Guarantee it may Guarantee any such Debt provided
that if the obligation Guaranteed is (x) subordinated to the Notes, then such
Guarantee shall be subordinated to the Note Guarantee to substantially the same
extent or (y) PARI PASSU with the Notes, then such Guarantee shall be PARI PASSU
with the Note Guarantee to substantially the same extent.
SECTION 10.12 LIMITATION ON RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, (i) declare or pay any dividend, or make
any distribution, of any kind or character (whether in cash, property or
securities) in respect of the Capital Stock of the Company or any Restricted
Subsidiary or to the holders thereof in their capacity as such (excluding (u)
any dividends or distributions to the extent payable in shares of the Capital
Stock of the Company (other than Redeemable Interests) or in options, warrants
or other rights to acquire the Capital Stock of the Company (other than
Redeemable Interests), (v) dividends or distributions by a Restricted Subsidiary
to the Company or another Restricted Subsidiary and (w) the payment of pro rata
dividends by a Restricted Subsidiary to holders of both minority and majority
interests in such Restricted Subsidiary); (ii) other than pursuant to the
Special Redemption, purchase, redeem or otherwise acquire or retire for value
(a) any Capital Stock of the Company or any Capital Stock of or other ownership
interests in any Subsidiary or any Affiliate or Related Person of the Company or
(b) any options, warrants or other rights to purchase or acquire shares of
Capital Stock of the Company or any Capital Stock of or other ownership
interests in any Subsidiary or any Affiliate or Related Person of the Company
(excluding, in each case of (a) and (b), the purchase, redemption or other
acquisition or retirement by any Restricted Subsidiary of any of its Capital
Stock, other ownership interests or options, warrants or rights to purchase such
Capital Stock or other ownership interests (x) owned by the Company or any
Restricted Subsidiary, (y) owned by any other Person if effected on a pro rata
basis with respect to holders of both minority and majority interests in such
Restricted Subsidiary or (z) owned by any officer, director or employee of the
Company, but solely for the purpose of enabling such Person (or the Company on
his or her behalf) to satisfy tax obligations in respect of his or her exercise
of options, warrants or rights to purchase Capital Stock of the Company); (iii)
make, directly or indirectly, any Investment that is not a Permitted Investment;
(iv) redeem, defease (whether legal, covenant or other defeasance), repurchase,
retire or otherwise acquire or retire for value, prior to any
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scheduled maturity, repayment or sinking fund payment, Debt of the Company that
is subordinate in right of payment to the Notes; or (v) make any Excess Deposit
(as defined in Section 10.14) (each of the transactions described in Clauses (i)
through (v) being referred to herein as a "Restricted Payment"), if at the time
thereof:
(1) an Event of Default, or an event that with the lapse of
time or the giving of notice, or both, would constitute an Event of
Default, shall have occurred and be continuing,
(2) the Company would, at the time of such Restricted Payment
and after giving pro forma effect thereto as if such Restricted Payment
had been made at the beginning of the Company"s most recently ended
four full fiscal quarter period for which annual or quarterly financial
statements are publicly available immediately preceding the date of
such Restricted Payment, not have been permitted to Incur at least
$1.00 of additional Debt pursuant to the Consolidated EBITDA Coverage
Ratio test set forth in the first paragraph of Section 10.08, or
(3) upon giving effect to such Restricted Payment, the
aggregate of all Restricted Payments (excluding Restricted Payments
permitted by Clauses (ii), (iii) and (iv) of the next succeeding
paragraph) from the date of this Indenture (the amount so expended, if
other than in cash, determined in good faith by the Board of Directors)
exceeds the sum, without duplication, of:
(a) 50% of the Consolidated Net Income (or, in case
Consolidated Net Income shall be negative, less 100% of such
deficit) of the Company for the period (taken as one
accounting period) from June 30, 1997 through the end of the
Company"s most recently ended fiscal quarter for which annual
or quarterly financial statements are publicly available at
the time of such Restricted Payment;
(b) 100% of the aggregate net cash proceeds from the
issuance and sale (other than to a Restricted Subsidiary) of
Capital Stock (other than Redeemable Interests) of the Company
and options, warrants or other rights to acquire Capital Stock
(other than Redeemable Interests and Debt convertible into
Capital Stock) of the Company and the principal amount of Debt
and Redeemable Interests of the Company that has been
converted into or exchanged for Capital Stock (other than
Redeemable Interests) of the Company after June 30, 1997;
PROVIDED that any such net proceeds received by the Company
from an employee stock ownership plan financed by loans from
the Company or a Subsidiary of the Company shall be included
only to the extent such loans have been repaid with cash on or
prior to the date of determination;
(c) the amount by which the total consideration paid
by the Company in the Tender Offer is less than $110 million;
and
(d) $5 million.
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The foregoing provisions of this Section 10.12 shall not be violated by reason
of:
(i) the payment of any dividend within 60 days after
declaration thereof if at the declaration date such payment would have
complied with the foregoing provisions;
(ii) any payment made by the Company in connection
with the consummation of the Transactions;
(iii) any refinancing or refunding of Debt permitted
pursuant to Clause (i) or Clause (vii) of the second paragraph of
Section 10.08; and
(iv) the purchase, redemption or other acquisition or
retirement for value of any Capital Stock of the Company or any
options, warrants or rights to purchase or acquire shares of Capital
Stock of the Company in exchange for, or out of the net cash proceeds
of, the substantially concurrent issuance or sale (other than to a
Restricted Subsidiary) of Capital Stock (other than Redeemable
Interests) of the Company; PROVIDED that the amount of any such net
cash proceeds that are utilized for any such purchase, redemption or
other acquisition or retirement for value shall be excluded from Clause
(3)(b) in the foregoing paragraph.
Upon the designation of any Restricted Subsidiary as an
Unrestricted Subsidiary, an amount equal to the greater of the book value and
the fair market value of all assets of such Restricted Subsidiary at the end of
the Company"s most recently ended fiscal quarter for which annual or quarterly
financial statements are publicly available prior to such designation will be
deemed to be a Restricted Payment at the time of such designation for purposes
of calculating the aggregate amount of Restricted Payments (including the
Restricted Payment resulting from such designation) permitted under the second
preceding paragraph.
SECTION 10.13 LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS
AFFECTING SUBSIDIARIES.
The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary: (i) to pay dividends (in cash or otherwise) or make any
other distributions in respect of its Capital Stock or other ownership interests
or pay any Debt or other obligation owed to the Company or any other Restricted
Subsidiary; (ii) to make loans or advances to the Company or any other
Restricted Subsidiary; or (iii) to sell, lease or transfer any of its property
or assets to the Company or any Restricted Subsidiary.
Notwithstanding the foregoing, the Company may, and may permit
any Restricted Subsidiary to, suffer to exist any such encumbrance or
restriction:
(a) pursuant to any agreement in effect on the date
of the Indenture (including the Credit Facility, the Indenture
and the Notes);
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(b) pursuant to an agreement relating to any Debt
Incurred by such Restricted Subsidiary prior to the date on
which such Restricted Subsidiary was acquired by the Company
and outstanding on such date and not Incurred in anticipation
of becoming a Restricted Subsidiary;
(c) pursuant to mortgages and other purchase money
obligations in connection with property acquired or improved
in the ordinary course of business or liens in connection
therewith permitted to be Incurred under Section 10.14 that
impose restrictions of the nature described in Clause (iii)
above on the property so acquired or improved;
(d) pursuant to an agreement effecting a renewal,
refunding, refinancing or extension of Debt Incurred pursuant
to an agreement referred to in Clause (a), (b) or (c) above,
PROVIDED, HOWEVER, that the provisions contained in such
renewal, refunding, refinancing or extension agreement
relating to such encumbrance or restriction are no more
restrictive in any material respect than the provisions
contained in the agreement the subject thereof (as determined
in good faith by the Board of Directors);
(e) pursuant to customary non-assignment provisions
entered into in the ordinary course of business consistent
with past practices in leases, licenses or contracts to the
extent such provisions restrict the transfer, subletting or
other disposition of any such lease, license or contract;
(f) pursuant to an agreement which has been entered
into for the sale or other disposition of all or substantially
all of the Capital Stock or assets of such Restricted
Subsidiary, PROVIDED that consummation of such transaction
would not result in an Event of Default or an event that, with
the passing of time or the giving of notice or both, would
constitute an Event of Default, that such restriction
terminates if such transaction is closed or abandoned and that
they closing or abandonment of such transaction occurs within
one year of the date such agreement was entered into; or
(g) arising under any applicable law, rule,
regulation or order.
SECTION 10.14 LIMITATION ON LIENS.
The Company shall not, and shall not permit any Restricted
Subsidiary to, Incur or suffer to exist any Lien on or with respect to any
property or assets now owned or hereafter acquired to secure any Debt of the
Company that is expressly by its terms subordinate or junior in right of payment
to any other Debt of the Company (other than related to any secured deposit of
funds for the repayment of the 10 3% Notes; provided that the excess of such
secured deposit over the principal amount of the 10 3% Notes to be repaid (an
"Excess Deposit") shall be subject to the provisions of Section 10.12) without
making, or causing such Restricted Subsidiary to make, effective provision for
securing the Notes (a) equally and ratably with such Debt as to such property or
assets for so long as such Debt will be so secured or (b) in the event such Debt
is
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subordinate in right of payment to the Notes, prior to such Debt as to such
property or assets for so long as such Debt will be secured.
SECTION 10.15 LIMITATION ON OWNERSHIP OF CAPITAL STOCK OF SUBSIDIARIES.
The Company shall not, and shall not permit any Restricted
Subsidiary to, issue, transfer, convey, lease or otherwise dispose of any shares
of Capital Stock (other than directors' qualifying shares and shares pledged as
security for any Senior Debt) of a Restricted Subsidiary or securities
convertible or exchangeable into, or options, warrants, rights or any other
interest with respect to, Capital Stock of a Restricted Subsidiary to any Person
other than the Company or a Wholly Owned Restricted Subsidiary except in a
transaction consisting of a sale (including a public offering) of all or part of
the Capital Stock of such Restricted Subsidiary owned by the Company and any
Restricted Subsidiary and that complies with the provisions of Section 10.17 to
the extent such provisions apply; PROVIDED THAT after any sale of less than all
of the Capital Stock of any Restricted Subsidiary, the Company directly or
indirectly maintains voting power to elect a majority of the board of directors
of such Restricted Subsidiary.
SECTION 10.16 LIMITATION ON TRANSACTIONS WITH AFFILIATES AND RELATED
PERSONS.
The Company shall not, and shall not permit any Restricted
Subsidiary of the Company to, after the date of this Indenture, enter into any
transaction (or series of related transactions) (including the purchase, sale,
lease or exchange of property, the rendering of any service or the making of any
loan or advance) with any Affiliate or Related Person of the Company (other than
the Company or any Restricted Subsidiary), including any Investment, either
directly or indirectly, that involves total consideration or asset transfers in
excess of $1,000,000 (i) unless such transaction is on terms no less favorable
to the Company or such Restricted Subsidiary than those that could be obtained
in a comparable arm"s-length transaction with an entity that is not an Affiliate
or Related Person and is in the best interests of the Company or such Restricted
Subsidiary and (ii) except for the Transactions. For any transaction that
involves in excess of $1,000,000 but less than or equal to $5,000,000, the Chief
Executive Officer of the Company shall determine that the transaction satisfies
the above criteria and shall evidence such a determination by a certificate
filed with the Trustee. For any transaction that involves in excess of
$5,000,000, a majority of the disinterested members of the Board of Directors
shall determine that the transaction satisfies the above criteria and shall
evidence such a determination by a Board Resolution filed with the Trustee. For
any transaction that involves in excess of $10,000,000, the Company shall also
obtain an opinion from a nationally recognized expert with experience in
appraising the terms and conditions of the type of transaction (or series of
related transactions) for which the opinion is required stating that such
transaction (or series of related transactions) is on terms no less favorable to
the Company or such Restricted Subsidiary than those that could be obtained in a
comparable arm"s-length transaction with an entity that is not an Affiliate or
Related Person of the Company, which opinion shall be filed with the Trustee;
provided, HOWEVER, that the foregoing restrictions will not apply to: (a)
reasonable employment, compensation, bonus or benefit arrangements entered into
in the ordinary course of business (including the granting of stock acquisition
rights and other incentives other than Redeemable
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Interests); the payment of reasonable fees, expense reimbursements and customary
indemnification, advances and other similar arrangements with respect to
officers and directors; and reasonable loans and advances to employees in the
ordinary course of business; (b) required payments with respect to any Debt
permitted by Section 10.08; (c) transactions permitted by Section 10.12; (d) any
payments or other transactions pursuant to any tax sharing agreement with any
Person with which the Company or such Restricted Subsidiary is required or
permitted to file a consolidated tax return or with which the Company or such
Restricted Subsidiary is or could be part of a consolidated group for tax
purposes; and (e) any transaction with the Principals, their Related Parties or
any of their Affiliates to the extent that such transaction is or was approved
by a majority of the disinterested members of the Board of Directors in good
faith.
SECTION 10.17 LIMITATION ON CERTAIN ASSET DISPOSITIONS.
(a) The Company shall not make, and shall not permit any
Restricted Subsidiary to make, any Asset Disposition in one transaction (or
series of related transactions) unless:
(i) the Company (or such Restricted Subsidiary, as the
case may be) receives consideration at the time of such disposition at
least equal to the fair market value of the shares or other assets
disposed of (as determined in good faith by the Board of Directors of
the Company and evidenced by a Board Resolution) for any transaction
(or series of related transactions) involving in excess of $2 million;
(ii) at least 80% of the consideration received by the
Company (or such Restricted Subsidiary) for such disposition consists
of (u) cash, readily marketable cash equivalents, readily marketable
fixed-income securities or equity securities traded on a national
securities exchange or NASDAQ (valued, in the case of securities, at
the market value thereof when received by the Company or such
Restricted Subsidiary), (v) the assumption of Debt or other liabilities
reflected on the consolidated balance sheet of the Company and its
Restricted Subsidiaries in accordance with generally accepted
accounting principles (excluding Debt or any other liabilities
subordinate in right of payment to the Notes) and release of the
Company and its Restricted Subsidiaries from all liability in respect
of the Debt or other liabilities assumed, (w) assets used by, or stock
or other ownership interests in, a Person that upon the consummation of
such Asset Disposition becomes a Restricted Subsidiary and will be
principally engaged in the business of the Company or any of its Wholly
Owned Restricted Subsidiaries substantially as such business was
conducted immediately prior to such Asset Disposition (as determined by
the Board of Directors in good faith) or (x) any combination thereof;
and
(iii) 100% of the Net Available Proceeds from such Asset
Disposition (including from the sale of any marketable cash
equivalents, fixed-income or equity securities received therein), less
any Reinvested Amounts, are applied by the Company (or a Restricted
Subsidiary) within one year from the later of the date of such Asset
Disposition or the receipt of such Net Available Proceeds, (A) FIRST,
to repayment of Senior Debt of the Company or Debt of its Restricted
Subsidiaries then outstanding under any agreements or instruments which
would require such application or which would
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prohibit payments pursuant to Clause (B) following; (B) SECOND, to the
extent Net Available Proceeds are not required to be applied to Senior
Debt of the Company or Debt of Restricted Subsidiaries as specified in
Clause (A), to purchases of Outstanding Notes pursuant to an Offer to
Purchase at a purchase price equal to 100% of their principal amount,
plus accrued interest to the date of purchase (subject to the rights of
Holders of record on the relevant Regular Record Date to receive
interest due on an Interest Payment Date that is on or prior to the
Purchase Date), and, to the extent required by the terms thereof, to
purchases (on a pro rata basis with the Notes) of any other Debt of the
Company or its Restricted Subsidiaries that is PARI PASSU with the
Notes at a price no greater than 100% of the principal amount thereof,
plus accrued interest to the date of purchase, in each case to the
extent such purchases are not prohibited by the terms of any Senior
Debt of the Company or of any Debt of Restricted Subsidiaries then
outstanding; (C) THIRD, to the extent of any remaining Net Available
Proceeds following purchases pursuant to the foregoing Clause (b), to
the repayment of other Debt of the Company or Debt of a Restricted
Subsidiary, to the extent permitted under the terms thereof, and (D)
FOURTH, to the extent of any remaining Net Available Proceeds, to any
other use as determined by the Company which is not otherwise
prohibited by the Indenture.
Notwithstanding the foregoing, the Company shall not be
required to comply with the requirements of Clause (ii) or Clause (iii) of the
preceding paragraph for any Asset Disposition that is an Excepted Disposition,
and the Company shall not be required to comply with the requirements of Clause
(iii) of the preceding paragraph except at any time and from time to time that
the aggregate amount of Net Available Proceeds, less Reinvested Amounts,
required to be applied pursuant to Clause (iii) (and not theretofore so applied)
exceeds $10 million; PROVIDED, HOWEVER, with respect to such Clause (iii), that
if any Restricted Subsidiary in which a Reinvested Amount is invested becomes an
Unrestricted Subsidiary thereafter, such change in status, except as otherwise
provided in clause (b) of the proviso to the penultimate paragraph of Section
10.20, will be deemed an Asset Disposition with Net Available Proceeds of cash
in an amount equal to such Reinvested Amount (less any portion of such
Reinvested Amount theretofore distributed to the Company or any Restricted
Subsidiary), and such amount of cash will be applied pursuant to Clause (iii)
above (subject to this proviso).
(b) The Company shall mail by first class mail the Offer
Document for an Offer to Purchase required pursuant to Section 10.17(a) within
30 days after the date which is one year after the later of the date of
consummation of the Asset Disposition referred to in Section 10.17(a) or the
receipt of the Net Available Proceeds from such Asset Disposition. The aggregate
principal amount of the Notes to be offered to be purchased pursuant to the
Offer to Purchase shall equal the Net Available Proceeds required to be made
available therefor pursuant to Clause (iii)(B) of Section 10.17(a) (rounded down
to the next lowest integral multiple of $1,000). Each Holder shall be entitled
to tender all or any portion of the Notes owned by such Holder pursuant to the
Offer to Purchase, subject to the requirement that any portion of a Note
tendered must be tendered in an integral multiple of $1,000 principal amount.
The Company shall not be entitled to any credit against its
obligations under this Section 10.17 for the principal amount of any Notes
acquired or redeemed by the Company otherwise than pursuant to the Offer to
Purchase pursuant to this Section 10.17.
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In the event the Company is required to make an Offer to
Purchase pursuant to this Section 10.17, and the amount available for such Offer
to Purchase is not evenly divisible by $1,000, the Trustee shall promptly refund
to the Company, any remaining funds, which in no event will exceed $1,000.
(c) Not later than the date of the Offer Document with respect
to an Offer to Purchase pursuant to this Section 10.17, the Company shall
deliver to the Trustee an Officers' Certificate as to (i) the Purchase Amount,
(ii) the allocation of the Net Available Proceeds from the Asset Disposition
pursuant to which such Offer to Purchase is being made, including, with respect
to Reinvested Amounts, the assets acquired and a statement that such assets will
be used in the same or substantially similar or related business of the Company
and any of its Wholly Owned Restricted Subsidiaries as conducted prior to such
Asset Disposition, and (iii) the compliance of such allocation with the
provisions of Section 10.17(a).
The Company and the Trustee shall perform their respective
obligations specified in the Offer Document for the Offer to Purchase. On or
prior to the Purchase Date, the Company shall (i) accept for payment (on a pro
rata basis, if necessary) Notes or portions thereof tendered pursuant to the
Offer to Purchase, (ii) deposit with the Paying Agent (or, if the Company is
acting as its own Paying Agent, segregate and hold in trust as provided in
Section 10.03) money sufficient to pay the purchase price of all Notes or
portions thereof so accepted and (iii) deliver or cause to be delivered to the
Trustee all Notes so accepted together with an Officers' Certificate stating the
Notes or portions thereof accepted for payment by the Company. The Paying Agent
(or the Company, if so acting) shall promptly mail or deliver to Holders of
Notes so accepted payment in an amount equal to the Purchase Price for each
$1,000 principal amount of Notes so accepted, and the Company shall promptly
execute a new Note or Notes equal in principal amount to any unpurchased portion
of the Note surrendered, and thereafter the Trustee shall promptly authenticate
and mail or deliver to such Holders such new Note or Notes. Any Note not
accepted for payment shall be promptly mailed or delivered by the Company to the
Holder thereof. The Company shall publicly announce the results of the Offer to
Purchase on or as soon as practicable after the Purchase Date.
(d) Notwithstanding the foregoing, this Section 10.17 shall
not apply to any Asset Disposition which constitutes a transfer, conveyance,
sale, lease or other disposition of all or substantially all of the properties
and assets of the Company and its Restricted Subsidiaries subject to Section
8.01.
SECTION 10.18 CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, each Holder of
a Note shall have the right to have such Note repurchased by the Company on the
terms and conditions set forth in this Section 10.18 and this Indenture. The
Company shall, within 30 days following consummation of a transaction that
results in a Change of Control, mail an Offer Document with respect to an Offer
to Purchase all Outstanding Notes at a Purchase Price equal to 101% of their
aggregate principal amount as of the Purchase Date plus any accrued interest to
the Purchase Date (PROVIDED, HOWEVER, that installments of interest whose Stated
Maturity is on or prior to the Purchase Date shall be payable to the Holders of
such Notes, or one or more Predecessor Notes,
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registered as such at the close of business on the relevant Regular Record Dates
according to their terms and as set forth in Section 3.08). Each Holder shall be
entitled to tender all or any portion of the Notes owned by such Holder pursuant
to the Offer to Purchase, subject to the requirement that any portion of a Note
tendered must be tendered in an integral multiple of $1,000 principal amount.
(b) The Company and the Trustee shall perform their respective
obligations specified in the Offer Document for the Offer to Purchase. Prior to
the Purchase Date, the Company shall (i) accept for payment Notes or portions
thereof tendered pursuant to the Offer to Purchase, (ii) deposit with the Paying
Agent (or, if the Company is acting as its own Paying Agent, segregate and hold
in trust as provided in Section 10.03) money sufficient to pay the Purchase
Price of all Notes or portions thereof so accepted and (iii) deliver or cause to
be delivered to the Trustee all Notes so accepted together with an Officers"
Certificate stating the Notes or portions thereof accepted for payment by the
Company. The Paying Agent (or the Company if so acting) shall promptly mail or
deliver to Holders of Notes so accepted payment in an amount equal to the
Purchase Price for each $1,000 of Notes so accepted, and the Company shall
promptly execute a new Note or Notes equal in principal amount to any
unpurchased portion of the Note surrendered as requested by the Holder, and
thereafter the Trustee shall promptly authenticate and mail or deliver to such
Holders such new Note or Notes. Any Note not accepted for payment shall be
promptly mailed or delivered by the Company to the Holder thereof. The Company
shall publicly announce the results of the Offer to Purchase on or as soon as
practicable after the Purchase Date.
(c) A "Change of Control" shall be deemed to have occurred in
the event that, after the date of this Indenture, the following occurs: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Subsidiaries, taken as a
whole, to any "person" or "group" (as such terms are used in Section 13(d) of
the Exchange Act), other than the Principals and their Related Parties; (ii) the
adoption of a plan for the liquidation or dissolution of the Company; (iii) the
consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is than any "person" or "group" (as such
terms are used in Section 13(d) of the Exchange Act), other than the Principals
and their Related Parties, becomes the "beneficial owner" (as such term is
defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or
indirectly through one or more intermediaries, of 50% or more of the voting
power of the outstanding voting stock of the Company; or (iv) the first day on
which a majority of the members of the Board of Directors are not Continuing
Directors.
SECTION 10.19 PROVISION OF FINANCIAL INFORMATION.
(a) So long as any of the Notes are Outstanding, and in
addition to and without limitation of the Company's obligations pursuant to
Section 7.04, whether or not the Company is required to be subject to Section
13(a) or 15(d) of the Exchange Act, or any successor provisions, the Company
(unless not permitted by the Commission to do so) shall file with the Commission
the annual reports, quarterly reports and other documents which the Company
would have been required to file with the Commission pursuant to such Section
13(a) or 15(d) or any successor
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provisions thereto if the Company were so required such documents to be filed
with the Commission on or prior to the respective dates (the "Required Filing
Dates") by which the Company would have been required so to file such documents
if the Company were so required. The Company shall also in any event (a) within
15 days of each Required Filing Date (i) transmit by mail to all Holders, as
their names and addresses appear in the Note Register, without cost to such
Holders, and (ii) file with the Trustee, copies of the annual reports, quarterly
reports and other documents which the Company files with the Commission pursuant
to such Section 13(a) or 15(d) or any successor provisions thereto or would have
been required to file with the Commission pursuant to such Section 13(a) or
15(d) or any successor provisions thereto if the Company were required to comply
with such Sections or successor provisions and (b) if filing such documents by
the Company with the Commission is not permitted under the Exchange Act,
promptly upon written request supply copies of such documents to any prospective
holder of securities. Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Truste's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
(b) If the Company at any time is not subject to the reporting
requirements of Section 13 or Section 15(d) of the Exchange Act (or any
successor provisions) while any Notes constitute Restricted Notes, it will
furnish to any holder of such a Note (or a beneficial interest therein), or to
any prospective purchaser designated by such holder, upon the request of such
holder, such financial and other information as may be required to satisfy the
requirements of Paragraph (d)(4) of Rule 144A to permit such resales and that
information that would be required if the Company were subject to the
informational requirements of Section 13 or 15(d) of the Exchange Act.
SECTION 10.20 UNRESTRICTED SUBSIDIARIES.
The Company at any time may designate any Person that is a
Subsidiary (other than a Guarantor), or after the date of this Indenture becomes
a Subsidiary, of the Company as an "Unrestricted Subsidiary", whereupon (and
until such Person ceases to be an Unrestricted Subsidiary) such Person and each
other Person that is then or thereafter becomes a Subsidiary of such Person
shall be deemed to be an Unrestricted Subsidiary for all purposes of this
Indenture. In addition, the Company may at any time terminate the status of any
Subsidiary as an Unrestricted Subsidiary, whereupon such Subsidiary and each
other Subsidiary of the Company (if any) of which such Subsidiary is a
Subsidiary shall be a Restricted Subsidiary for all purposes of this Indenture.
Each such designation or termination shall be evidenced by a Board Resolution
and shall be effective upon the later of (i) the date specified therein and (ii)
the delivery by the Company to the Trustee of such Board Resolution and an
Officer"s Certificate stating that the requirements of this Section 10.20 will
have been satisfied upon effectiveness of such designation or termination.
Notwithstanding the foregoing, no change in the status of a
Subsidiary of the Company from a Restricted Subsidiary to an Unrestricted
Subsidiary or from an Unrestricted
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Subsidiary to a Restricted Subsidiary shall be effective, and no Person may
otherwise become a Restricted Subsidiary, if:
(a) the Consolidated EBITDA Coverage Ratio of the Company and
its Restricted Subsidiaries for the four full fiscal quarters of the
Company next preceding the effective date of such purported change or
other event, calculated on a pro forma basis as if such change or other
event had been effective at the beginning of such period, would not
exceed (a) on or prior to November 9, 1999, 1.9 to 1.0 and (b)
thereafter, 2.0 to 1.0;
(b) in the case of any change in status of such a Subsidiary
from a Restricted Subsidiary to an Unrestricted Subsidiary, the
Restricted Payment resulting from such change would violate Clause (3)
of the first paragraph of Section 10.12, or
(c) such change or other event would otherwise result (after
the giving of notice or the lapse of time, or both) in an Event of
Default.
In addition and notwithstanding the foregoing, no Restricted
Subsidiary may become an Unrestricted Subsidiary, and the status of any
Unrestricted Subsidiary as an Unrestricted Subsidiary shall be deemed to have
been immediately terminated (whereupon such Subsidiary and each other Subsidiary
of the Company (if any) of which such Subsidiary is a Subsidiary will be a
Restricted Subsidiary) at any time when:
(i) such Subsidiary (A) has outstanding Debt that is
Unpermitted Debt or (B) owns or holds any Capital Stock of or other
ownership interests in, or a Lien on any property or other assets of,
the Company or any of its Restricted Subsidiaries; or
(ii) the Company or any other Restricted Subsidiary (A)
provides credit support for, or a Guarantee of, any Debt of such
Subsidiary (including any undertaking, agreement or instrument
evidencing such Debt) or (B) is directly or indirectly liable for any
Debt of such Subsidiary.
Any termination of the status of an Unrestricted Subsidiary as an Unrestricted
Subsidiary pursuant to the preceding sentence shall be deemed to result in a
breach of this Section 10.20 in any circumstance in which the Company would not
have been permitted to change the status of such Unrestricted Subsidiary to the
status of a Restricted Subsidiary pursuant to the provisions of the preceding
paragraph, PROVIDED, HOWEVER, that (a) so long as the aggregate principal amount
outstanding of Unpermitted Debt does not exceed $5 million, no such breach will
be deemed to have occurred with respect to any Unpermitted Debt until 15 days
after the Company has become aware of such Unpermitted Debt and such Unpermitted
Debt remains outstanding or Unpermitted Debt, and (b) notwithstanding Sections
10.12 and 10.17 of this Indenture, any change of status of an Unrestricted
Subsidiary to a Restricted Subsidiary as aforesaid followed within one year by a
change of status of such Restricted Subsidiary to an Unrestricted Subsidiary
will not be deemed an Asset Disposition or cause any Reinvested Amount invested
therein to be deemed Net Available Proceeds or the book value or fair market
value of the assets thereof to be deemed a Restricted Payment. "Unpermitted
Debt" means any Debt of a Subsidiary of the Company if (x) a default thereunder
(or under any instrument or agreement pursuant to or by which such Debt is
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issued, secured or evidenced), or any right that the holders thereof may have to
take enforcement action against such Subsidiary or its property or other assets,
would permit (whether or not after the giving of notice or the lapse of time or
both) the holders of any Debt of the Company or any other Restricted Subsidiary
to declare the same due and payable prior to the date on which it otherwise
would have become due and payable or otherwise to take any enforcement action
against the Company or such other Restricted Subsidiary or (y) such Debt is
secured by a Lien on any property or other assets of the Company and any of its
other Restricted Subsidiaries.
Each Person that is or becomes a Subsidiary of the Company
shall be deemed to be a Restricted Subsidiary for all purposes of this Indenture
at all times when it is a Subsidiary of the Company that is not an Unrestricted
Subsidiary. Each Person that is or becomes a Wholly Owned Subsidiary of the
Company shall be deemed to be a Wholly Owned Restricted Subsidiary at all times
when it is a Wholly Owned Subsidiary of the Company that is not an Unrestricted
Subsidiary.
SECTION 10.21 NOTE GUARANTEES.
(a) The Company shall use its reasonable best efforts to
obtain within 90 days after the date of this Indenture any necessary consent
from parties to the Credit Facility, holders of the 103% Notes and from any
party to any other agreement or instrument to which the Company or any
Subsidiary is a party to permit each Wholly-Owned Restricted Subsidiary of the
Company on the date of this Indenture that is a Domestic Subsidiary (other than
any Subsidiary which would be entitled to be released from its obligations under
the Note Guarantee pursuant to Section 14.06 of this Indenture) to become a
Guarantor and execute a supplemental indenture to this Indenture to provide the
Note Guarantee. If such consents are obtained or at any time that such
Subsidiaries are not prohibited by any agreement or instrument to which the
Company or any Subsidiary is a party from providing the Note Guarantee (whether
or not within such 90-day period), the Company promptly shall cause each such
Subsidiary to execute a supplemental indenture in accordance with Article 9 and
Article 14 of this Indenture providing the Note Guarantee and deliver an Opinion
of Counsel to the Trustee pursuant to paragraph (c) below
(b) If the Note Guarantee is issued as provided in paragraph
(a) above, the Company shall cause any Person that becomes a Wholly-Owned
Restricted Subsidiary of the Company after the date of this Indenture that is a
Domestic Subsidiary and that Guarantees any Debt under the Credit Facility, to
become a Guarantor by executing a supplemental indenture in accordance with
Article 9 and Article 14 of this Indenture providing for the Note Guarantee and
deliver an Opinion of Counsel to the Trustee pursuant to paragraph (c) below
(c) The Opinion of Counsel described above shall be to the
effect that such supplemental indenture has been duly authorized, executed and
delivered by such Subsidiary and constitutes a valid and binding obligation of
such Subsidiary, enforceable against such Subsidiary in accordance with its
terms (subject to customary exceptions).
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SECTION 10.22 STATEMENT BY OFFICERS AS TO DEFAULT; COMPLIANCE CERTIFICATES.
(a) The Company will deliver to the Trustee, within 90 days
after the end of each fiscal year of the Company ending after the date of this
Indenture, an Officers' Certificate, stating whether or not to the knowledge of
the signers thereof the Company is in default in the performance and observance
of any of the terms, provisions and conditions of this Indenture (without regard
to any period of grace or requirement of notice provided hereunder) and, if the
Company shall be in default, specifying all such defaults and the nature and
status thereof of which they may have knowledge.
(b) The Company shall deliver to the Trustee, as soon as
possible and in any event within 30 days after the Company becomes aware of the
occurrence of an Event of Default or an event which, with notice or the lapse of
time or both, would constitute an Event of Default, an Officers" Certificate
setting forth the details of such Event of Default or default, and the action
which the Company proposes to take with respect thereto.
SECTION 10.23 WAIVER OF CERTAIN COVENANTS.
The Company may omit in any particular instance to comply with
any covenant or condition set forth in Section 8.01 and Sections 10.04 through
10.22, inclusive, if before the time for such compliance the Holders of at least
two-thirds in principal amount of the Outstanding Notes shall, by Act of such
Holders, either waive such compliance in such instance or generally waive
compliance with such covenant or condition, but no such waiver shall extend to
or affect such covenant or condition except to the extent so expressly waived,
and, until such waiver shall become effective, the obligations of the Company
and the duties of the Trustee in respect of any such covenant or condition shall
remain in full force and effect; PROVIDED, HOWEVER, with respect to an Offer to
Purchase as to which an Offer Document has been mailed, no such waiver may be
made or shall be effective against any Holder tendering Notes pursuant to such
Offer to Purchase, and the Company may not omit to comply with the terms of such
Offer Document as to such Holder, unless such Holder shall have waived such
requirement.
ARTICLE ELEVEN
Redemption of Notes
SECTION 11.01 REDEMPTION AT THE ELECTION OF THE COMPANY.
The Notes may be redeemed at the election of the Company, at
the times and the Redemption Prices and subject to the conditions and other
requirements specified in the form of Note hereinbefore set forth.
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SECTION 11.02 APPLICABILITY OF ARTICLE.
Redemption of Notes at the election of the Company, as
permitted or required by any provision of the Notes and this Indenture, or as
required pursuant to Section 11.09, shall be made in accordance with such
provision and the applicable provisions of this Article.
SECTION 11.03 ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Notes pursuant to
Section 11.01 shall be evidenced by a Board Resolution. In case of any
redemption at the election of the Company or as required pursuant to Section
11.09, of less than all the Notes, the Company shall, at least 60 days (or ten
days in the case of a redemption pursuant to Section 11.09) prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date and of
the principal amount of Notes to be redeemed.
SECTION 11.04 SELECTION BY TRUSTEE OF NOTES TO BE REDEEMED.
If less than all the Notes are to be redeemed, the particular
Notes to be redeemed shall be selected not more than 60 days (or five days in
the case of a redemption pursuant to Section 11.09) prior to the Redemption Date
by the Trustee, from the Outstanding Notes not previously called for redemption,
by such method as the Trustee shall deem fair and appropriate and which may
provide for the selection for redemption of portions (equal to $1,000 or any
integral multiple thereof) of the principal amount of Notes of a denomination
larger than $1,000.
The Trustee shall promptly notify the Company and each Note
Registrar in writing of the Notes selected for redemption and, in the case of
any Notes selected for partial redemption, the principal amount thereof to be
redeemed.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of Notes shall
relate, in the case of any Notes redeemed or to be redeemed only in part, to the
portion of such Notes which has been or is to be redeemed.
SECTION 11.05 NOTICE OF REDEMPTION.
Notice of redemption shall be given by first-class mail,
postage prepaid, mailed not less than 30 nor more than 60 days (or not less than
5 nor more than 10 days in the case of a redemption pursuant to Section 11.09)
prior to the Redemption Date, to each Holder of Notes to be redeemed, at his
address appearing in the Note Register.
All notices of redemption provide the CUSIP numbers of the
Notes to be redeemed and shall state:
(1) the Redemption Date,
(2) the Redemption Price,
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(3) if less than all the Outstanding Notes are to be redeemed,
the identification (and, in the case of partial redemption of any
Notes, the principal amounts) of the particular Notes to be redeemed,
(4) that on the Redemption Date the Redemption Price will
become due and payable upon each such Note to be redeemed and that
interest thereon will cease to accrue on and after said date,
(5) the place or places where such Notes are to be surrendered
for payment of the Redemption Price, and
(6) that in the case that a Note is only redeemed in part, the
Company shall execute and the Trustee shall authenticate and deliver to
the Holder of such Note without service charge, a new Note or Notes in
an aggregate amount equal to the unredeemed portion of the Note.
Notice of redemption of Notes to be redeemed pursuant to this
Article Eleven shall be given by the Company or, at the Company's request, by
the Trustee in the name and at the expense of the Company.
SECTION 11.06 DEPOSIT OF REDEMPTION PRICE.
Prior to any Redemption Date, the Company shall deposit with
the Trustee or with a Paying Agent (or, if the Company is acting as its own
Paying Agent, segregate and hold in trust as provided in Section 10.03) an
amount of money sufficient to pay the Redemption Price of, and (except if the
Redemption Date shall be an Interest Payment Date) any accrued interest on, all
the Notes which are to be redeemed on that date.
SECTION 11.07 NOTES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the Notes
so to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Notes shall cease to bear interest. Upon surrender of any such
Note for redemption in accordance with said notice, such Note shall be paid by
the Company or Paying Agent at the Redemption Price, together with any accrued
interest to the Redemption Date; PROVIDED, HOWEVER, that installments of
interest whose Stated Maturity is on or prior to the Redemption Date shall be
payable to the Holders of such Notes, or one or more Predecessor Notes,
registered as such at the close of business on the relevant Regular Record Dates
according to their terms and the provisions of Section 3.08.
If any Note called for redemption shall not be so paid upon
surrender thereof for redemption, the principal of (and premium, if any) and
interest on such Note shall be deemed overdue and shall, until paid, bear
interest from the Redemption Date at the rate provided by the Note.
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SECTION 11.08 NOTES REDEEMED IN PART.
Any Note which is to be redeemed only in part shall be
surrendered at an office or agency of the Company designated for that purpose
pursuant to Section 10.02 (with due endorsement by, or a written instrument of
transfer in form satisfactory to the Company and the Trustee duly executed by,
the Holder thereof or his attorney duly authorized in writing), and the Company
shall execute, and the Trustee shall authenticate and deliver to the Holder of
such Note without service charge, a new Note or Notes, of any authorized
denomination as requested by such Holder, in aggregate principal amount equal to
and in exchange for the unredeemed portion of the principal amount of the Note
so surrendered.
SECTION 11.09 SPECIAL REDEMPTION.
(a) In the event that the sum of the aggregate purchase price
(including premium) (the "Aggregate Purchase Price") for 103% Notes that the
Company purchases from holders thereof in transactions on or after the date of
this Indenture and on or prior to November 30, 1998 (including purchases in
connection with the 103% Offer to Purchase) (the "Aggregate Purchase Price") is
less than the net proceeds from the offering of the Units, then the Company
shall effect a redemption (the "Special Redemption"), on a date not more than
ten days after November 30, 1998 (the "Special Redemption Date"), in accordance
with the provisions of the Indenture, of Notes in an aggregate principal amount
equal to the amount by which (x) the net proceeds from the offering of the Units
on November 9, 1998 exceed (y) the Aggregate Purchase Price, at a cash
redemption price of 100% of the principal amount of the Notes being redeemed
plus accrued interest on the Notes to the date of redemption.
(b) Each Holder of a Note by its acceptance of the Note agrees
that in connection with any Special Redemption it shall deliver to the Company
for cancellation one Warrant for each $1,000 principal amount of Notes being
redeemed from such Holder.
(c) The Company agrees to deposit the net proceeds from the
offering of the Units into a separate account (the "Special Redemption
Account"). The Company agrees that it shall use funds in the Special Redemption
Account only to pay the Aggregate Purchase Price and as provided below. Any
funds remaining in the Special Redemption Account shall be used to fund the
Special Redemption (to the extent so required), and any excess funds shall be
released to the Company. Funds held in the Special Redemption Account, pending
release for the uses set forth above, shall be invested at the direction of the
Company in investments of the types referred to in clauses (ii) through (viii)
of the definition of Permitted Investments.
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ARTICLE TWELVE
Defeasance and Covenant Defeasance
SECTION 12.01 COMPANY'S OPTION TO EFFECT DEFEASANCE OR
COVENANT DEFEASANCE.
The Company may at its option by Board Resolution, at any time
after the Exchange Offer has been consummated (or, if applicable, the Shelf
Registration Statement has been declared or otherwise become effective) in
accordance with the Registration Rights Agreement, elect to have either Section
12.02 or Section 12.03 applied to the Outstanding Notes upon compliance with the
conditions set forth below in this Article Twelve.
SECTION 12.02 DEFEASANCE AND DISCHARGE.
Upon the Company's exercise of the option provided in Section
12.01 applicable to this Section, the Company and the Guarantors shall be deemed
to have been discharged from its obligations with respect to the Outstanding
Notes and Note Guarantees, on and after the date the conditions set forth below
are satisfied (hereinafter, "Defeasance"). For this purpose, such Defeasance
means that the Company shall be deemed to have paid and discharged the entire
indebtedness represented by the Outstanding Notes and to have satisfied all its
other obligations under such Notes and this Indenture insofar as such Notes are
concerned (and the Trustee, at the expense of the Company, shall execute proper
instruments acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder: (A) the rights of
Holders of such Notes to receive, solely from the trust fund described in
Section 12.04 and as more fully set forth in such Section, payments in respect
of the principal of (and premium, if any) and interest on such Notes when such
payments are due, (B) the Company's obligations with respect to such Notes under
Sections 3.04, 3.05, 3.06, 3.07, 10.02, 10.03 and 10.19, (C) the rights, powers,
trusts, duties and immunities of the Trustee hereunder and (D) this Article
Twelve. Subject to compliance with this Article Twelve the Company may exercise
its option under this Section 12.02 notwithstanding the prior exercise of its
option under Section 12.03.
SECTION 12.03 COVENANT DEFEASANCE.
Upon the Company's exercise of the option provided in Section
12.01 applicable to this Section, (i) the Company and each Guarantor shall be
released from its obligations under Sections 10.05 through 1018, inclusive, and
Sections 10.20 and 10.21 and Clauses (3) and (4) of Section 8.01, and (ii) the
occurrence of an event specified in Section 5.01(3) (with respect to Section
8.01, only Clauses (1), (3) and (4) thereof), 5.01(4) (with respect to any of
Sections 10.05 through 10.18, inclusive, and Sections 10.20 and 10.21), 5.01(5)
and 5.01(6) shall not be deemed to be an Event of Default on and after the date
the conditions set forth below are satisfied (hereinafter, "covenant
defeasance"). For this purpose, such covenant defeasance means that the Company
may omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such Section, Clause or Article,
whether directly or indirectly by reason of any reference elsewhere herein to
any such Section, Clause or Article or by reason of
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any reference in any such Section, Clause or Article to any other provision
herein or in any other document; but the remainder of this Indenture and such
Notes shall be unaffected thereby.
SECTION 12.04 CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE.
The following shall be the conditions to application of either
Section 12.02 or Section 12.03 to the then Outstanding Notes:
(1) The Company shall irrevocably have deposited or caused to
be deposited with the Trustee (or another trustee satisfying the
requirements of Section 6.09 who shall agree to comply with the
provisions of this Article Twelve applicable to it) as trust funds in
trust for the purpose of making the following payments, specifically
pledged as Note for, and dedicated solely to, the benefit of the
Holders of such Notes, (A) money in an amount, or (B) U.S. Government
Obligations which through the scheduled payment of principal and
interest in respect thereof in accordance with their terms will
provide, not later than one day before the due date of any payment,
money in an amount, or (C) a combination thereof, in an amount
sufficient in the opinion of a nationally recognized firm of
independent certified public accountants expressed in a written opinion
with respect thereto delivered to the Trustee, to pay and discharge,
and which shall be applied by the Trustee (or other qualifying trustee)
to pay and discharge, the principal of (premium, if any) and each
installment of interest, if any, on the Outstanding Notes on the Stated
Maturity of such principal or installment of interest in accordance
with the terms of this Indenture and of such Notes.
(2) In the case of an election under Section 12.02, the
Company shall have delivered to the Trustee an Opinion of Counsel
stating that (x) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling, or (y) since the
date of this Indenture there has been a change in the applicable
Federal income tax law, in either case to the effect that, and based
thereon such opinion shall confirm that, the Holders of the Outstanding
Notes will not recognize gain or loss for Federal income tax purposes
as a result of such deposit, defeasance and discharge and will be
subject to Federal income tax on the same amount, in the same manner
and at the same times as would have been the case if such deposit,
defeasance and discharge had not occurred.
(3) In the case of an election under Section 12.03, the
Company shall have delivered to the Trustee an Opinion of Counsel to
the effect that the Holders of the Outstanding Notes will not recognize
gain or loss for Federal income tax purposes as a result of such
deposit and covenant defeasance and will be subject to Federal income
tax on the same amount, in the same manner and at the same times as
would have been the case if such deposit and covenant defeasance had
not occurred.
(4) The Company shall have delivered to the Trustee an
Officer's Certificate to the effect that the Notes, if then listed on
any Notes exchange or approved for trading in any automated quotation
system, will not be delisted or disapproved for such trading as a
result of such deposit.
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(5) No Event of Default or event which with notice or lapse of
time or both would become an Event of Default shall have occurred and
be continuing on the date of such deposit or, insofar as subsections
5.01(7) and (8) are concerned, at any time during the period ending on
the 91st day after the date of such deposit (it being understood that
this condition shall not be deemed satisfied until the expiration of
such period).
(6) Such defeasance or covenant defeasance shall not cause the
Trustee to have a conflicting interest within the meaning of the Trust
Indenture Act (assuming all Notes are in default within the meaning of
such Act).
(7) Such defeasance or covenant defeasance shall not result in
a breach or violation of, or constitute a default under, any other
agreement or instrument to which the Company is a party or by which it
is bound.
(8) The Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to either the defeasance
under Section 12.02 or the covenant defeasance under Section 12.03 (as
the case may be) have been complied with.
(9) Such defeasance or covenant defeasance shall not result in
the trust arising from such deposit constituting an investment company
as defined in the Investment Company Act of 1940, as amended from time
to time, or such trust shall be qualified under such act or exempt from
regulation thereunder.
SECTION 12.05 DEPOSITED MONEY AND U.S. GOVERNMENT
OBLIGATIONS TO BE HELD IN TRUST: OTHER
MISCELLANEOUS PROVISIONS.
Subject to the provisions of the last paragraph of Section
10.03, all money and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee (or other qualifying trustee --
collectively, for purposes of this Section 12.05, the "Trustee") pursuant to
Section 12.04 in respect of the Notes shall be held in trust and applied by the
Trustee, in accordance with the provisions of such Notes and this Indenture, to
the payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent) as the Trustee may determine, to the Holders of
such Notes, of all sums due and to become due thereon in respect of principal
(and premium, if any) and interest, but such money need not be segregated from
other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 12.04 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the Holders of the Outstanding Notes.
Anything in this Article Twelve to the contrary
notwithstanding, the Trustee shall deliver or pay to the Company from time to
time upon Company Request and be relieved of all liability with respect to any
money or U.S. Government Obligations held by it as provided in
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Section 12.04 which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written opinion with respect
thereto delivered to the Trustee, are in excess of the amount thereof which
would then be required to be deposited to effect an equivalent defeasance or
covenant defeasance.
SECTION 12.06 REINSTATEMENT.
If the Trustee or the Paying Agent is unable to apply any
money in accordance with Section 12.02 or 12.03 by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, then the Company's obligations under
this Indenture and the Notes shall be revived and reinstated as though no
deposit had occurred pursuant to this Article Twelve until such time as the
Trustee or Paying Agent is permitted to apply all such money in accordance with
Section 12.02 or 12.03; PROVIDED, HOWEVER, that if the Company makes any payment
of principal of (and premium, if any) or interest on any Note following the
reinstatement of its obligations, the Trustee or Paying Agent shall promptly pay
any such amount to the Holder of the Notes and the Company shall be subrogated
to the rights of the Holders of such Notes to receive such payment from the
money held by the Trustee or the Paying Agent.
ARTICLE THIRTEEN
Subordination of Notes
SECTION 13.01 NOTES SUBORDINATE TO SENIOR DEBT.
The Company covenants and agrees, and each Holder of a Note,
by his acceptance thereof, likewise covenants and agrees, that, to the extent
and in the manner hereinafter set forth in this Article (subject to the
provisions of Article Four and Article Twelve), the payment of the principal of
(and premium, if any) and interest on the Notes and all other Obligations in
respect of the Notes or on account of any Claim (collectively, the "Subordinated
Obligations") are hereby expressly made subordinate and subject in right of
payment to the prior payment in full of all Senior Debt of the Company.
SECTION 13.02 PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC.
In the event of (a) any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or other similar
case or proceeding in connection therewith, relative to the Company or to its
creditors, as such, or to its assets, or (b) any liquidation, dissolution or
other winding up of the Company, whether voluntary or involuntary and whether or
not involving insolvency or bankruptcy, or (c) any assignment for the benefit of
creditors or any other marshalling of assets and liabilities of the Company,
then and in any such event specified in (a), (b) or (c) above (each such event,
if any, herein sometimes referred to as an "Insolvency Proceeding") the holders
of all Senior Debt of the Company shall first be entitled to receive payment in
full of the principal of (and premium, if any), interest on and all other
Obligations in respect of such Senior Debt, including all amounts due or to
become due on all such Senior Debt, or provision shall be made for such payment
in cash or cash equivalents or
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otherwise in a manner satisfactory to the holders of such Senior Debt, before
the Holders of the Notes are entitled to receive any payment or distribution of
any kind or character from the Company, whether in cash, property or securities
(including any payment or distribution which may be payable or deliverable by
reason of the payment of any other Debt of the Company subordinated to the
payment of the Notes) on account of the Subordinated Obligations or on account
of any purchase, redemption or other acquisition of Notes by the Company or any
Subsidiary of the Company (all such payments, distributions, purchases and
acquisitions herein referred to, individually and collectively, as a "Securities
Payment"), and to that end the holders of Senior Debt of the Company shall be
entitled to receive, for application to the payment thereof, any Securities
Payment which may be payable or deliverable in respect of the Notes in any such
Insolvency Proceeding.
If notwithstanding the foregoing provisions of this Section,
the Trustee or the Holder of any Note shall have received during the pendency of
any Insolvency Proceeding any Securities Payment before all Senior Debt of the
Company is paid in full or payment thereof provided for in cash or cash
equivalents or otherwise in a manner satisfactory to the holders of such Senior
Debt, then in such event such Securities Payment shall be paid over or delivered
forthwith to the holders of Senior Debt for application to the payment of such
Senior Debt remaining unpaid, to the extent necessary to pay such Senior Debt in
full, after giving effect to any concurrent payment or distribution to or for
the holders of such Senior Debt. Notwithstanding the foregoing, Holders of the
Notes may receive Subordinated Securities.
The consolidation of the Company with, or the merger of the
Company into, another Person or the liquidation or dissolution of the Company
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 Article Eight shall not be deemed an Insolvency
Proceeding for the purposes of this Section if the Person formed by such
consolidation or into which the Company is merged or the Person which acquires
by conveyance or transfer such properties and assets 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 Article Eight.
SECTION 13.03 NO PAYMENT WHEN SENIOR DEBT IN DEFAULT.
In the event that any Senior Payment Default (as defined
below) shall have occurred and be continuing, then no Securities Payment (other
than pursuant to the Special Redemption and except for Subordinated Securities)
shall be made unless and until such Senior Payment Default shall have been cured
or waived in writing in accordance with the instruments governing such
Designated Senior Debt or shall have ceased to exist or all amounts then due and
payable in respect of Senior Debt of the Company shall have been paid in full,
or provision shall have been made for such payment in cash or otherwise in a
manner satisfactory to the holders of such Senior Debt. "Senior Payment Default"
means (i) any default in the payment of principal of (or premium, if any) or
interest on or any other payment Obligation owing in respect of any Designated
Senior Debt of the Company and (ii) any event of default with respect to
Designated Senior Debt of the Company which has resulted in such Designated
Senior Debt becoming or being declared due and payable prior to the date on
which it would otherwise have become due and payable.
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In the event that any Senior Nonmonetary Default (as defined
below) shall have occurred and be continuing, then, upon the receipt by the
Company and the Trustee of written notice of such Senior Nonmonetary Default
from the administrative agent under the Credit Facility or the trustee or other
authorized representative of the holders of any Designated Senior Debt (in any
case, a "Senior Representative"), no Securities Payment (other than pursuant to
the Special Redemption and except for Subordinated Securities) shall be made
during the period (the "Blockage Period") commencing on the date of such receipt
of such written notice and ending on the earliest of (i) 179 days after such
date, (ii) the date, if any, on which the Designated Senior Debt to which such
default relates is paid in full or such default is waived in writing in
accordance with the instruments governing such Designated Senior Debt or
otherwise cured and (iii) the date on which the Company and the Trustee receive
written notice from such Senior Representative terminating the Blockage Period.
If notwithstanding the foregoing the Trustee or the Holder of any Note receives
during the pendency of any Blockage Period any Securities Payment before such
Designated Senior Debt is paid in full or payment thereof is provided for in
cash or cash equivalents or otherwise in a manner satisfactory to the holders of
such Designated Senior Debt, then in such event such Securities Payment will be
required to be paid over or delivered forthwith to the holders of such
Designated Senior Debt for application to the payment thereof, to the extent
necessary to pay such Designated Senior Debt in full. Notwithstanding the
foregoing, Holders of the Notes may receive payments pursuant to the Special
Redemption and Subordinated Securities. "Senior Nonmonetary Default" means the
occurrence or existence and continuance of any event of default, or of any event
which, after notice or lapse of time (or both), would become an event of
default, under the terms of any instrument pursuant to which any Designated
Senior Debt of the Company is outstanding, permitting (after notice or lapse of
time or both) one or more holders of such Designated Senior Debt (or a trustee
or agent on behalf of the holders thereof) to declare such Designated Senior
Debt due and payable prior to the date on which it would otherwise become due
and payable, other than a Senior Payment Default.
During any 360-day period, the aggregate of all Blockage
Periods shall not exceed 179 days and there shall be a period of at least 181
consecutive days in each consecutive 360-day period when no Blockage Period is
in effect. When no Blockage Period is in effect, the Company may make all
required payments (including any such payments not made during any Blockage
Period) in respect of the Notes not prohibited by the terms of these
subordination provisions. No Senior Payment Default or Senior Nonmonetary
Default that existed or was continuing on the date of commencement of any
Blockage Period will be, or can be, made the basis for the commencement of a
subsequent Blockage Period, unless such default has been cured or waived for a
period of not less than 90 consecutive days.
The provisions of this Section shall not apply to any
Securities Payment with respect to which Section 13.02 would be applicable.
If a payment of the Notes is accelerated because of an Event
of Default, the Company shall promptly notify holders of Senior Debt of the
acceleration.
In the event that the Trustee or any Holder receives any
payment of any Obligations with respect to the Notes at the time when such
payment is prohibited by this Article Thirteen, such payment shall be held by
the Trustee or such Holder, in trust for the benefit of,
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and shall be paid forthwith over and delivered to, the holders of Senior Debt as
their interest may appear or their Senior Representative, for application to the
payment of all Obligations with respect to Senior Debt remaining unpaid to the
extent necessary to pay such obligations in full in accordance with their terms,
after giving effect to any concurrent payment or distribution to or for the
holders of Senior Debt.
SECTION 13.04 CERTAIN PAYMENTS PERMITTED.
Nothing contained in this Article or elsewhere in this
Indenture or in any of the Notes shall prevent the Company, at any time except
during the pendency of any Insolvency Proceeding referred to in Section 13.02 or
under the conditions described in Section 13.03, from making Securities
Payments.
SECTION 13.05 SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR DEBT.
Subject to the payment in full in cash of all amounts due or
to become due on or in respect of Senior Debt of the Company, or the provision
for such payment in cash or cash equivalents or otherwise in a manner
satisfactory to the holders of such Senior Debt, the Holders of the Notes shall
be subrogated to the rights of the holders of such Senior Debt to receive
payments and distributions of cash, property and securities applicable to such
Senior Debt 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 Debt of the Company of any cash,
property or securities to which the Holders of the Notes or the Trustee would be
entitled except for the provisions of this Article, and no payments over
pursuant to the provisions of this Article to the holders of Senior Debt of the
Company, as the case may be, by Holders of the Notes or the Trustee, shall, as
among the Company, its creditors other than holders of Senior Debt and the
Holders of the Notes, be deemed to be a payment or distribution by the Company
to or on account of the Senior Debt of the Company.
SECTION 13.06 PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS.
The provisions of this Article are and are intended solely for
the purpose of defining the relative rights of the Holders on the one hand and
the holders of Senior Debt on the other hand. Nothing contained in this Article
or elsewhere in this Indenture or in the Notes is intended to or shall (a)
impair, as among the Company, its creditors other than holders of Senior Debt
and the Holders of the Notes, the obligation of the Company, which is absolute
and unconditional (and which, subject to the rights under this Article of the
holders of Senior Debt, is intended to rank equally with all other general
obligations of the Company), to pay to the Holders of the 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 their terms; or (b) affect the
relative rights against the Company of the Holders of the Notes and creditors of
the Company other than the holders of Senior Debt; or (c) prevent the Trustee or
the Holder of any Note from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if any,
under this Article of the holders of Senior Debt to receive cash, property and
securities otherwise payable or deliverable to the Trustee or such Holder.
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SECTION 13.07 TRUSTEE TO EFFECTUATE SUBORDINATION.
Each Holder of a Note by his acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for any and all such purposes
including, without limitation, the timely filing of a claim for the unpaid
balance of the Note held by such Holder in the form required in any Insolvency
Proceeding and causing such claim to be approved. If a proper claim or proof of
debt in the form required in such proceeding is not filed prior to 30 days
before the expiration of the time to file such claims or proofs, then, so long
as any Senior Debt is committed or outstanding under the Credit Facility, the
Senior Representative for the Credit Facility is hereby authorized, and shall
have the right (without any duty), to file an appropriate claim for and on
behalf of such Holders of the Notes.
SECTION 13.08 NO WAIVER OF SUBORDINATION PROVISIONS.
No right of any present or future holder of any Senior Debt 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 Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
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 Debt 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 or the
obligations hereunder of the Holders of the Notes to the holders of Senior Debt,
even if any right of reimbursement or subrogation or other right or remedy of
any Holder is affected, impaired or extinguished thereby, do any one or more of
the following:
(1) change the manner, place or terms of payment or change or
extend the time of payment of, or renew, exchange, amend, increase or
alter, the terms of any Senior Debt, any Note or therefor or guaranty
thereof or any liability of any obligor thereon (including any
guarantor) to such holder, or any liability incurred directly or
indirectly in respect thereof or otherwise amend, renew, exchange,
extend, modify, increase or supplement in any manner any Senior Debt or
any instrument evidencing or guaranteeing or securing the same or any
agreement under which Senior Debt is outstanding;
(2) sell, exchange, release, surrender, realize upon, enforce
or otherwise deal with in any manner and in any order any property
pledged, mortgaged or otherwise securing Senior Debt or any liability
of any obligor thereon, to such holder, or any liability incurred
directly or indirectly in respect thereof;
(3) settle or compromise any Senior Debt or any other
liability of any obligor of the Senior Debt to such holder or any Note
therefor or any liability incurred directly or indirectly in respect
thereof and apply any sums by whomsoever paid and however
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realized to any liability (including without limitation, Senior Debt)
in any manner or order; and
(4) fail to take or to record or otherwise perfect, for any
reason or for no reason, any lien or Note interest securing Senior Debt
by whomsoever granted, exercise or delay in or refrain from exercising
any right or remedy against any obligor or any guarantor or any other
person, elect any remedy and otherwise deal freely with any obligor and
any Note for the Senior Debt or any liability of any obligor to such
holder of any liability incurred directly or indirectly in respect
thereof.
SECTION 13.09 NOTICE TO TRUSTEE.
The Company shall give prompt written notice to the Trustee of
any fact known to the Company which would prohibit the making of any payment to
or by the Trustee in respect of the Notes. Notwithstanding the provisions of
this Article or any other provision of this 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 Company or
a holder of Senior Debt or from any trustee therefor; and, prior to the receipt
of any such written notice, the Trustee, subject to the provisions of Section
6.01, shall be entitled in all respects to assume that no such facts exist,
provided that nothing in this Section 13.09 shall impair the subordination
provisions of this Article Thirteen.
Subject to the provisions of Section 6.01, 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 Debt (or a trustee, representative
or agent therefor) to establish that such notice has been given by a holder of
Senior Debt (or a trustee, representative or agent 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 Debt to participate in
any payment or distribution pursuant to this Article, the Trustee may request
such Person to furnish evidence to the reasonable satisfaction of the Trustee as
to the amount of Senior Debt 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, 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 13.10 RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATION
AGENT.
Upon any payment or distribution of assets or securities of
the Company referred to in this Article, the Trustee, subject to the provisions
of Section 6.01, and the Holders of the Notes shall be entitled to rely upon any
order or decree entered by any court of competent jurisdiction in which any
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
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holders of the Senior Debt and other indebtedness of the Company, as the case
may be, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article.
SECTION 13.11 TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR DEBT.
The Trustee shall not be deemed to owe any fiduciary duty to
the holders of Senior Debt and shall not be liable (except for its gross
negligence or willful misconduct) to any such holders if it shall in good faith
mistakenly pay over or distribute to Holders of Notes or to the Company or to
any other Person cash, property or securities to which any holders of Senior
Debt shall be entitled by virtue of this Article or otherwise. The Trustee shall
not be charged with knowledge of the existence of Senior Debt or of any facts
that would prohibit any payment hereunder unless the Trustee shall have received
notice to that effect at the address of the Trustee set forth in Section 1.05.
With respect to the holders of Senior Debt, the Trustee undertakes to perform or
to observe only such of its covenants or obligations as are specifically set
forth in this Article and no implied covenants or obligations with respect to
holders of Senior Debt shall be read into this Indenture against the Trustee.
SECTION 13.12 RIGHTS OF TRUSTEE AS HOLDER OF SENIOR DEBT; PRESERVATION OF
TRUSTEE'S RIGHTS.
The Trustee in its individual capacity shall be entitled to
all the rights set forth in this Article with respect to any Senior Debt which
may at any time be held by it, to the same extent as any other holder of Senior
Debt, and nothing in this Indenture shall deprive the Trustee of any of its
rights as such holder.
Nothing in this Article shall apply to claims of, or payments
to, the Trustee under or pursuant to Section 6.07.
SECTION 13.13 ARTICLE APPLICABLE TO PAYING AGENTS.
In case at any time any Paying Agent other than the Trustee
shall have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article 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 in addition to or in place of the Trustee; PROVIDED,
HOWEVER, that this Section 13.13 shall not apply to the Company or any Affiliate
of the Company if it or such Affiliate acts as Paying Agent.
SECTION 13.14 DEFEASANCE OF THIS ARTICLE THIRTEEN.
The subordination of the Notes provided by this Article
Thirteen is expressly made subject to the provisions for defeasance or covenant
defeasance in Articles Four and Twelve and, anything herein to the contrary
notwithstanding, upon the effectiveness of any such
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defeasance or covenant defeasance, the Notes then Outstanding shall thereupon
cease to be subordinated pursuant to this Article Thirteen.
ARTICLE FOURTEEN
NOTE GUARANTEES
.
SECTION 14.01 GUARANTEE
Subject to this Article 14, each of the Guarantors by
execution of a supplemental indenture substantially in the form of Exhibit A
hereto hereby, jointly and severally, unconditionally guarantees to each Holder
of a Note authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, irrespective of the validity and enforceability of this
Indenture, the Notes and the obligations of the Company hereunder or thereunder,
that: (a) the principal of and interest on the Notes will be promptly paid in
full when due, whether at maturity, by acceleration, redemption or otherwise,
and interest on the overdue principal of and interest on the Notes, if any, if
lawful, and all other obligations of the Company to the Holders or the Trustee
hereunder or thereunder will be promptly paid in full or performed, all in
accordance with the terms hereof and thereof; and (b) in case of any extension
of time of payment or renewal of any Notes or any of such other obligations,
that same will be promptly paid in full when due or performed in accordance with
the terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise. Failing payment when due of any amount so guaranteed
or any performance so guaranteed for whatever reason, the Guarantors shall be
jointly and severally obligated to pay the same immediately. Each Guarantor
agrees that this is a guarantee of payment and not a guarantee of collection.
The Guarantors hereby agree that their obligations hereunder
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Notes with respect
to any provisions hereof or thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a guarantor.
Each Guarantor hereby waives diligence, presentment, demand of payment, filing
of claims with a court in the event of insolvency or bankruptcy of the Company,
any right to require a proceeding first against the Company, protest, notice and
all demands whatsoever and covenant that this Note Guarantee shall not be
discharged except by complete performance of the obligations contained in the
Notes and this Indenture.
If any Holder or the Trustee is required by any court or
otherwise to return to the Company, the Guarantors or any custodian, trustee,
liquidator or other similar official acting in relation to either the Company or
the Guarantors, any amount paid by either to the Trustee or such Holder, this
Note Guarantee, to the extent theretofore discharged, shall be reinstated in
full force and effect.
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Each Guarantor agrees that it shall not be entitled to any
right of subrogation in relation to the Holders in respect of any obligations
guaranteed hereby until payment in full of all obligations guaranteed hereby.
Each Guarantor further agrees that, as between the Guarantors, on the one hand,
and the Holders and the Trustee, on the other hand, (x) notwithstanding any
stay, injunction or other prohibition preventing such acceleration in respect of
the obligations guaranteed hereby, all amounts otherwise subject to acceleration
as provided for in Article 5 hereof shall be due and payable upon demand by the
Trustee or the Holders in accordance with the provisions of Article 5 and (y) in
the event of any declaration of acceleration of such obligations as provided in
Article 5 hereof, such obligations (whether or not due and payable) shall
forthwith become due and payable by the Guarantors for the purpose of this Note
Guarantee. The Guarantors shall have the right to seek contribution from any
non-paying Guarantor so long as the exercise of such right does not impair the
rights of the Holders under the Guarantee.
SECTION 14.02 SUBORDINATION OF NOTE GUARANTEE.
The Guarantors agree, and each Holder by accepting a Note
agrees, that the Obligations of each Guarantor under its Note Guarantee pursuant
to this Article 14 shall be junior and subordinated to the Senior Debt of such
Guarantor on the same basis as the Notes are junior and subordinated to Senior
Debt of the Company as provided in Article 10 hereof. For the purposes of the
foregoing sentence, the Trustee and the Holders shall have the right to receive
and/or retain payments by any of the Guarantors only at such times as they may
receive and/or retain payments in respect of the Notes pursuant to this
Indenture.
SECTION 14.03 LIMITATION ON GUARANTOR LIABILITY.
Each Guarantor, and by its acceptance of Notes, each Holder,
hereby confirms that it is the intention of all such parties that the Note
Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance
for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar federal or state law to the
extent applicable to any Note Guarantee. To effectuate the foregoing intention,
the Trustee, the Holders and the Guarantors hereby irrevocably agree that the
obligations of such Guarantor under its Note Guarantee and this Article 14 shall
be limited to the maximum amount as will, after giving effect to such maximum
amount and all other contingent and fixed liabilities of such Guarantor that are
relevant under such laws, and after giving effect to any collections from,
rights to receive contribution from or payments made by or on behalf of any
other Guarantor in respect of the obligations of such other Guarantor under this
Article 14, result in the obligations of such Guarantor under its Note Guarantee
not constituting a fraudulent transfer or conveyance.
SECTION 14.04 EXECUTION AND DELIVERY OF NOTE GUARANTEE.
To evidence the Note Guarantee of a Guarantor set forth in
Section 14.01, a supplemental indenture to this Indenture shall be executed on
behalf of such Guarantor by one of its officers.
If an Officer whose signature is on such supplemental
indenture no longer holds that office at the time the Trustee authenticates the
Note, the Note Guarantee shall be valid nevertheless.
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The delivery of any Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the Note
Guarantee set forth in this Indenture provided pursuant to a supplemental
indenture to this Indenture on behalf of the Guarantors (whether or not the
supplemental indenture of such Guarantor is executed before or after delivery of
such Note).
SECTION 14.05 GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN
TERMS.
Except as provided by Section 14.06, no Guarantor may
consolidate with or merge with or into (whether or not such Guarantor is the
surviving Person) another Person whether or not affiliated with such Guarantor
unless:
(a) the Person formed by or surviving any such consolidation
or merger (if other than a Guarantor or the Company) unconditionally assumes all
the obligations of such Guarantor, pursuant to a supplemental indenture in form
and substance reasonably satisfactory to the Trustee, under the Notes, this
Indenture and the Note Guarantee on the terms set forth herein or therein;
(b) immediately after giving effect to such transaction, no
Default or Event of Default exists; and
(c) the Company would, at the time of such transaction and
after giving pro forma effect thereto as if such transaction had occurred at the
beginning of the applicable four-quarter period, be permitted to incur at least
$1.00 of additional Indebtedness pursuant to the Consolidated EBITDA Coverage
Ratio test set forth in the first paragraph of Section 10.08 hereof.
In case of any such consolidation, merger, sale or conveyance
and upon the assumption by the successor Person, by supplemental indenture,
executed and delivered to the Trustee and satisfactory in form to the Trustee,
of the Note Guarantee and the due and punctual performance of all of the
covenants and conditions of this Indenture to be performed by the Guarantor,
such successor Person shall succeed to and be substituted for the Guarantor with
the same effect as if it had been named herein as a Guarantor. All the Note
Guarantees so issued shall in all respects have the same legal rank and benefit
under this Indenture as the Note Guarantee theretofore and thereafter issued in
accordance with the terms of this Indenture as though all of such Note Guarantee
had been issued at the date of the execution hereof.
Except as set forth in Articles 8 and 10 hereof, and
notwithstanding clauses (a) and (b) above, nothing contained in this Indenture
or in any of the Notes shall prevent any consolidation or merger of a Guarantor
with or into the Company or another Guarantor, or shall prevent any sale or
conveyance of the property of a Guarantor as an entirety or substantially as an
entirety to the Company or another Guarantor.
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SECTION 14.06 RELEASES FOLLOWING SALE OF ASSETS.
In the event of a sale or other disposition to any Person
other than Company or any Subsidiary of the Company of all or substantially all
of the assets of any Guarantor, by way of merger, consolidation or otherwise, or
a sale or other disposition of all or substantially all of the capital stock of
any Guarantor, then such Guarantor (in the event of a sale or other disposition,
by way of merger, consolidation or otherwise, of all or substantially all of the
capital stock of such Guarantor) or the Person acquiring the property (in the
event of a sale or other disposition of all or substantially all of the assets
of such Guarantor) will be released and relieved of any obligations under its
Note Guarantee; provided that such sale or other disposition complies with the
provisions of paragraph (a) of Section 10.17 (other than clause (iii) thereof)
and the other provisions of this Indenture. Upon delivery by the Company to the
Trustee of an Officers" Certificate and an Opinion of Counsel to the effect that
such sale or other disposition was made by the Company in accordance with the
applicable provisions of this Indenture, the Trustee shall execute any documents
reasonably required in order to evidence the release of any Guarantor from its
obligations under its Note Guarantee.
Any Guarantor not released from its obligations under its Note
Guarantee shall remain liable for the full amount of principal of and interest,
if any, on the Notes and for the other obligations of any Guarantor under this
Indenture as provided in this Article 14.
ARTICLE FIFTEEN
Jurisdiction and Consent to Service of Process.
SECTION 15.01 JURISDICTION AND CONSENT TO SERVICE OF PROCESS.
(a) The Company hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of any
New York State court or Federal court of the United States of America sitting in
New York City, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to the Notes or this Indenture, or for
recognition or enforcement of any judgment, and the Company hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. The Company agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Article Fourteen shall affect any right that
any Holder or the Trustee may otherwise have to bring any action or proceeding
relating to the Notes or this Indenture against the Company or its properties in
the courts of any jurisdiction.
(b) The Company hereby irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection which
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to the Notes or this Indenture in any New
York State or Federal court. The Company hereby
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irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.
(c) The Company irrevocably consents to service of process in
the manner provided for notices in Section 1.05. Nothing in this Agreement will
affect the right of any Holder or the Trustee to serve process in any other
manner permitted by law.
-----------------
This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, all as of the day and year first above written.
Insilco Corporation,
By:____________________________
Name:
Title:
By:____________________________
Name
Title:
STAR BANK, N.A.,
As Trustee
By:____________________________
Name:
Title:
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STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the __th day of November, 1998, before me personally came
David A. Kauer, to me known, who, being by me duly sworn, did depose and say
that he is the Vice President and Treasurer of Insilco Corporation, the
corporation described in and which executed the foregoing instrument, and that
he signed his name thereto by authority of the Board of Directors of said
corporation.
--------------------------------
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STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the __th day of November, 1998, before me personally came
Kenneth H. Koch, to me known, who, being by me duly sworn, did depose and say
that he is the Vice President, General Counsel and Secretary of Insilco
Corporation, the corporation described in and which executed the foregoing
instrument, and that he signed his name thereto by authority of the Board of
Directors of said corporation.
--------------------------------
108
<PAGE> 122
ANNEX A -- Form of Unrestricted Notes Certificate
UNRESTRICTED NOTES CERTIFICATE
(For removal of Securities Act Legends pursuant to Section 306(c))
Star Bank, N.A.
425 Walnut Street
Cincinnati, Ohio 45201-1118
Re: 12% Senior Subordinated Notes due 2007 of Insilco
Corporation (the "NOTES")
Reference is made to the Indenture, dated as of November 9,
1998 (the "Indenture"), from Insilco Corporation (the "Company") to Star Bank,
N.A., as Trustee. Terms used herein and defined in the Indenture or in Rule 144
under the U.S. Securities Act of 1933 (the "Securities Act") are used herein as
so defined.
This certificate relates to U.S. $________ principal amount of
Notes, which are evidenced by the following certificate(s) (the "Specified
Notes"):
CUSIP No(s). ___________________
CERTIFICATE No(s). _____________
The person in whose name this certificate is executed below
(the "Undersigned") hereby certifies that either (i) it is the sole beneficial
owner of the Specified Notes or (ii) it is acting on behalf of all the
beneficial owners of the Specified Notes and is duly authorized by them to do
so. Such beneficial owner or owners are referred to herein collectively as the
"Owner". If the Specified Notes are represented by a Global Note, they are held
through the Depositary or an Agent Member in the name of the Undersigned, as or
on behalf of the Owner. If the Specified Notes are not represented by a Global
Note, they are registered in the name of the Undersigned, as or on behalf of the
Owner.
The Owner has requested that the Specified Notes be exchanged
for Notes bearing no Securities Act Legend pursuant to Section 3.06(c) of the
Indenture. In connection with such exchange, the Owner hereby certifies that the
exchange is occurring after a holding period of at least two years (computed in
accordance with paragraph (d) of Rule 144) has elapsed since the Specified Notes
were last acquired from the Company or from an affiliate of the Company,
whichever is later, and the Owner is not, and during the preceding three months
has
109
<PAGE> 123
not been, an affiliate of the Company. The Owner also acknowledges that any
future transfers of the Specified Notes must comply with all applicable
securities laws of the states of the United States and other jurisdictions.
This certificate and the statements contained herein are made
for your benefit and the benefit of the Company and the Initial Purchaser.
Dated: ___________________________________________
(Print the name of the Undersigned, as such
term is defined in the second paragraph of
this certificate).
By:________________________________________
Name:
Title:
(If the Undersigned is a corporation,
partnership or fiduciary, the title of the
person signing on behalf of the Undersigned
must be stated.)
110
<PAGE> 124
EXHIBIT A
THIS FIRST SUPPLEMENTAL INDENTURE (this "SUPPLEMENTAL INDENTURE"),
entered into as of __________, 199__, among Insilco Corporation, a Delaware
corporation (the "COMPANY"), [INSERT EACH GUARANTOR EXECUTING THIS SUPPLEMENTAL
INDENTURE AND ITS JURISDICTION OF INCORPORATION] (each an "UNDERSIGNED") and
Star Bank, N.A., as trustee (the "Trustee").
RECITALS
WHEREAS, the Company and the Trustee entered into the Indenture, dated
as of November 9, 1998 (the "INDENTURE"), relating to the Company's 12% Senior
Subordinated Notes due 2007 (the "NOTES");
WHEREAS, as a condition to the Trustee entering into the Indenture and
the Holders purchase of the Notes, the Company agreed pursuant to Section 10.21
of the Indenture to cause its Domestic Subsidiaries which are Wholly Owned
Restricted Subsidiaries to provide the Note Guarantee in certain circumstances.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and intending to be legally bound, the parties hereto hereby
agree as follows:
Section 1. Capitalized terms used herein and not otherwise defined
herein are used as defined in the Indenture.
Section 2. Pursuant to Section 9.01 of the Indenture, each Undersigned,
by its execution of this Supplemental Indenture, agrees to be a Guarantor under
the Indenture and to be bound by the terms of the Indenture applicable to
Guarantors, including, but not limited to, Article 14 thereof, and to comply
with the provisions of the Registration Rights Agreement (as such term is
defined in the Indenture) applicable to such Guarantor.
Section 3. This Supplemental Indenture shall be governed by and
construed in accordance with the internal laws of the State of New York.
Section 4. This Supplemental Indenture may be signed in various
counterparts which together shall constitute one and the same instrument.
Section 5. This Supplemental Indenture is an amendment supplemental to
the Indenture and said Indenture and this Supplemental Indenture shall
henceforth be read together.
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Supplemental Indenture or have caused this Supplemental Indenture to be duly
executed on their
<PAGE> 125
respective behalf by their respective officers thereunto duly authorized, as of
the day and year first above written.
INSILCO CORPORATION
By: __________________________
Name:
Title:
[GUARANTOR]
By: __________________________
Name:
Title:
STAR BANK, N.A.,
as Trustee
By: __________________________
Name:
Title:
<PAGE> 126
FIRST SUPPLEMENTAL INDENTURE
dated as of __________, 199__
among
INSILCO CORPORATION,
[GUARANTOR]
and
STAR BANK, N.A.,
as Trustee
with respect to
Insilco Corporation's 12% Senior Subordinated
Notes due 2007
<PAGE> 1
EXECUTION COPY
Exhibit 4(b)
===============================================================================
A/B EXCHANGE
REGISTRATION RIGHTS AGREEMENT
INSILCO CORPORATION
----------------------------------------
$120,000,000 Aggregate Principal Amount of
12% SENIOR SUBORDINATED NOTES DUE 2007
----------------------------------------
Dated as of November 9, 1998
-------------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
================================================================================
<PAGE> 2
TABLE OF CONTENTS
SECTION 1. DEFINITIONS......................................................1
SECTION 2. HOLDERS..........................................................3
SECTION 3. REGISTERED EXCHANGE OFFER........................................3
SECTION 4. SHELF REGISTRATION...............................................4
(a) Shelf Registration.............................................4
(b) Provision by Holders of Certain Information in
Connection with the Shelf Registration Statement...............5
SECTION 5. LIQUIDATED DAMAGES...............................................6
SECTION 6. REGISTRATION PROCEDURES..........................................7
(a) Exchange Offer Registration Statement..........................7
(b) Shelf Registration Statement...................................8
(c) General Provisions.............................................8
(d) Restrictions on Holders.......................................14
SECTION 7. REGISTRATION EXPENSES...........................................14
SECTION 8. INDEMNIFICATION.................................................15
SECTION 9. RULE 144A AND RULE 144..........................................18
SECTION 10. MISCELLANEOUS..................................................18
(a) Remedies......................................................18
(b) No Inconsistent Agreements....................................18
(c) Amendments and Waivers........................................18
(d) Third Party Beneficiary.......................................19
(e) Registration Statements on Form S-3...........................19
(f) Registration of the Note Guarantees..........................19
(g) Notices.......................................................19
(h) Successors and Assigns........................................20
(i) Counterparts..................................................20
(j) Headings......................................................20
(k) Governing Law.................................................20
(l) Severability..................................................20
(m) Entire Agreement..............................................20
i
<PAGE> 3
This Registration Rights Agreement (this "Agreement") is made and
entered into as of November 9, 1998, by and among Insilco Corporation, a
Delaware corporation (the "Issuer"), and Donaldson, Lufkin & Jenrette Securities
Corporation (the "Initial Purchaser"), which has agreed to purchase the Issuer's
12% Senior Subordinated Notes due 2007 (the "Series A Notes") pursuant to the
Purchase Agreement (as defined).
This Agreement is made pursuant to the Purchase Agreement, dated
November 2, 1998 (the "Purchase Agreement"), by and between the Issuer and the
Initial Purchaser. In order to induce the Initial Purchaser to purchase the
Series A Notes, the Issuer has agreed to provide the registration rights set
forth in this Agreement. The execution and delivery of this Agreement is a
condition to the obligations of the Initial Purchaser set forth in Section 9 of
the Purchase Agreement. Capitalized terms used herein and not otherwise defined
shall have the meaning assigned to them in the Indenture, dated November 9, 1998
(the "Indenture"), between the Issuer and Star Bank, N.A., as Trustee, relating
to the Series A Notes and the Series B Notes (as defined).
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
Act: The Securities Act of 1933, as amended.
Affiliate: As defined in Rule 144.
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
Certificated Securities: Definitive Notes, as defined in the Indenture.
Closing Date: The date hereof.
Commission: The Securities and Exchange Commission.
Consummate: An Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon the occurrence of (a) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the Series B Notes to be issued in the Exchange Offer, (b) the
keeping of the Exchange Offer open for a period not less than the period
required pursuant to Section 3(b) hereof and (c) the delivery by the Issuer to
the Registrar under the Indenture of Series B Notes in the same aggregate
principal amount as the aggregate principal amount of Series A Notes validly
tendered and not withdrawn by Holders thereof pursuant to the Exchange Offer.
Consummation Date: The date on which the Exchange Offer is
consummated.
Consummation Deadline: As defined in Section 3(b) hereof.
<PAGE> 4
Effectiveness Deadline: As defined in Sections 3(a) and 4(a) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Offer: The exchange and issuance by the Issuer of a principal
amount of Series B Notes (which shall be registered pursuant to the Exchange
Offer Registration Statement) equal to the outstanding principal amount of
Series A Notes that are validly tendered and not withdrawn in connection with
such exchange and issuance.
Exchange Offer Registration Statement: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Initial Purchaser
proposes to sell the Series A Notes to certain "qualified institutional buyers,"
as such term is defined in Rule 144A under the Act.
Filing Deadline: As defined in Sections 3(a) and 4(a) hereof.
Holders: As defined in Section 2 hereof.
Prospectus: The prospectus included in a Registration Statement at the
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
Recommencement Date: As defined in Section 6(d) hereof.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the Issuer
relating to (a) an offering of Series B Notes pursuant to an Exchange Offer or
(b) the registration for resale of Transfer Restricted Securities pursuant to
the Shelf Registration Statement, in each case, (i) that is filed pursuant to
the provisions of this Agreement and (ii) including the Prospectus included
therein, all amendments and supplements thereto (including post-effective
amendments) and all exhibits and material incorporated by reference therein.
Rule 144: Rule 144 promulgated under the Act.
Series B Notes: The Issuer's 12% Senior Subordinated Notes due 2007 to
be issued pursuant to the Indenture (i) in the Exchange Offer or (ii) as
contemplated by Section 6(b) hereof.
Shelf Registration Statement: As defined in Section 4 hereof.
Suspension Notice: As defined in Section 6(d) hereof.
2
<PAGE> 5
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb),
as in effect on the date of the Indenture.
Transfer Restricted Securities: Each (a) Series A Note, until the
earliest to occur of (i) the date on which such Series A Note is exchanged in
the Exchange Offer for a Series B Note, (ii) the date on which such Series A
Note has been disposed of in accordance with a Shelf Registration Statement (and
the purchasers thereof have been issued Series B Notes), and (iii) the date on
which such Series A Note is distributed to the public pursuant to Rule 144 under
the Act and (b) Series B Note issued to a Broker-Dealer in the Exchange Offer
until the date on which such Series B Note is disposed of by such Broker-Dealer
pursuant to the "Plan of Distribution" contemplated by the Exchange Offer
Registration Statement (including the delivery of the Prospectus contained
therein).
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities
(each, a "Holder") whenever such Person is (i) the holder of record of any
definitive certificated security which are Transfer Restricted Securities or
(ii) the beneficial holder of any global security which are Transfer Restricted
Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable
federal law (after the procedures set forth in Section 6(a)(i) hereof have been
complied with), the Issuer shall use its reasonable best efforts to (i) cause
the Exchange Offer Registration Statement to be filed with the Commission as
soon as practicable after the Closing Date, but in no event later than 120 days
after the Closing Date (such 120th day, the "Filing Deadline"), (ii) cause such
Exchange Offer Registration Statement to become effective at the earliest
possible time, but in no event later than 150 days after the Closing Date (such
150th day, the "Effectiveness Deadline"), (iii) in connection with the
foregoing, (A) file all pre-effective amendments to such Exchange Offer
Registration Statement as may be necessary in order to cause it to become
effective, and (B) subject to the proviso in Section 6(c)(xii) hereof, cause all
necessary filings, if any, in connection with the registration and qualification
of the Series B Notes to be made under the Blue Sky laws of such jurisdictions
as are necessary to permit Consummation of the Exchange Offer, and (iv) upon the
effectiveness of such Exchange Offer Registration Statement, commence and,
within the time periods contemplated by Section 3(b) hereof, Consummate the
Exchange Offer. The Exchange Offer shall be on the appropriate form permitting
(i) registration of the Series B Notes to be offered in exchange for the Series
A Notes that are Transfer Restricted Securities and (ii) resales of Series B
Notes by Broker-Dealers that tendered into the Exchange Offer Series A Notes
that such Broker-Dealer acquired for its own account as a result of
market-making activities or other trading activities (other than Series A Notes
acquired directly from the Issuer or any of its Affiliates) as contemplated by
Section 3(c) hereof.
(b) The Issuer shall use its reasonable best efforts to cause the
Exchange Offer Registration Statement to be effective continuously, and shall
keep the Exchange Offer open for a period of not less than the minimum period
required under applicable federal and state
3
<PAGE> 6
securities laws to Consummate the Exchange Offer; provided that in no event
shall such period be less than 20 Business Days. The Issuer shall cause the
Exchange Offer to comply with all applicable federal and state securities laws.
No securities other than the Series B Notes shall be included in the Exchange
Offer Registration Statement. The Issuer shall use its reasonable best efforts
to cause the Exchange Offer to be Consummated on the earliest practicable date
after the Exchange Offer Registration Statement has become effective, but in no
event later than 30 Business Days thereafter (such 30th day, the "Consummation
Deadline").
(c) The Issuer shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that any Broker-Dealer who holds Transfer Restricted Securities that
were acquired for the account of such Broker-Dealer as a result of market-making
activities or other trading activities (other than Series A Notes acquired
directly from the Issuer or any Affiliate of the Issuer), may exchange such
Transfer Restricted Securities pursuant to the Exchange Offer. Such "Plan of
Distribution" section shall also contain all other information with respect to
such sales by such Broker-Dealers that the Commission may require in order to
permit such sales pursuant thereto, but such "Plan of Distribution" shall not
name any such Broker-Dealer or disclose the amount of Transfer Restricted
Securities held by any such Broker-Dealer, except to the extent required by the
Commission.
Because such Broker-Dealer may be deemed to be an "underwriter" within
the meaning of the Act and must, therefore, deliver a prospectus meeting the
requirements of the Act in connection with its initial sale of any Series B
Notes received by such Broker-Dealer in the Exchange Offer, the Issuer shall
permit the use of the Prospectus contained in the Exchange Offer Registration
Statement by such Broker-Dealer to satisfy such prospectus delivery requirement
for a period of 90 days following the Consummation Date. To the extent necessary
to ensure that the prospectus contained in the Exchange Offer Registration
Statement is available for sales of Series B Notes by Broker-Dealers, the Issuer
agrees to use its reasonable best efforts to keep the Exchange Offer
Registration Statement continuously effective, supplemented, amended and current
as required by and subject to the provisions of Sections 6(a) and (c) hereof and
in conformity with the requirements of this Agreement, the Act and the policies,
rules and regulations of the Commission as announced from time to time, for a
period of 90 days from the Consummation Date or such shorter period as will
terminate when no Transfer Restricted Securities are outstanding. The Issuer
shall provide sufficient copies of the latest version of such Prospectus to such
Broker-Dealers, promptly upon request, at any time during such period.
SECTION 4. SHELF REGISTRATION
(a) SHELF REGISTRATION. If (i) the Exchange Offer is not permitted by
applicable law (after the Issuer has complied with the procedures set forth in
Section 6(a)(i) hereof) or, (ii) if any Holder of Transfer Restricted Securities
shall notify the Issuer in writing that (A) based on an opinion of counsel, such
Holder was prohibited by law or Commission policy from participating in the
Exchange Offer (which, for the avoidance of doubt, for the purposes of this
Clause (A) includes any Affiliate participating in the Exchange Offer but not
receiving freely tradeable Series B Notes) or (B) such Holder is a Broker-Dealer
and holds Series A Notes acquired directly from the Issuer, then the Issuer
shall:
4
<PAGE> 7
(x) cause to be filed, on or prior to 30 days after the
earlier of (i) the date on which the Issuer determines that the
Exchange Offer Registration Statement cannot be filed as a result of
Section 4(a)(i) hereof and (ii) the date on which the Issuer receives
the notice specified in Section 4(a)(ii) hereof (such earlier date, the
"Filing Deadline"), a shelf registration statement (the "Shelf
Registration Statement") pursuant to Rule 415 under the Act (which may
be an amendment to the Exchange Offer Registration Statement) relating
to (1) all Transfer Restricted Securities in the case of clause (a)(i)
above or (2) the Transfer Restricted Securities specified in any notice
in the case of clause (a)(ii) above; and
(y) shall use its reasonable best efforts to cause such Shelf
Registration Statement to become effective on or prior to 60 days after
the Filing Deadline for the Shelf Registration Statement (such 60th
day, the "Effectiveness Deadline").
By its execution and delivery of this Agreement, the Initial Purchaser shall be
deemed to have given the notice required by clause (a)(ii) above and shall be
entitled to the benefit of this Section 4(a).
If, after the Issuer has filed an Exchange Offer Registration Statement
that satisfies the requirements of Section 3(a) hereof, the Issuer is required
to file and make effective a Shelf Registration Statement solely because the
Exchange Offer is not permitted under applicable federal law (i.e., Section
4(a)(i) hereof), then the filing of the Exchange Offer Registration Statement
shall be deemed to satisfy the requirements of clause (x) above; provided that,
in such event, the Issuer shall remain obligated to meet the Effectiveness
Deadline set forth in clause (y).
To the extent necessary to ensure that the Shelf Registration Statement
is available for sales of Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 4(a) and the other securities required
to be registered therein pursuant to Section 6(b)(ii) hereof, the Issuer shall
use its reasonable best efforts to keep any Shelf Registration Statement
required by this Section 4(a) continuously effective, supplemented, amended and
current as required by and subject to the provisions of Sections 6(b) and (c)
hereof and in conformity with the requirements of this Agreement, the Act and
the policies, rules and regulations of the Commission as announced from time to
time, until the later of (a) the date on which the Initial Purchaser is no
longer deemed to be an Affiliate of the Issuer, and (b) the earlier of the
second anniversary of the Closing Date (as such date may be extended pursuant to
Section 6(d) hereof) and such earlier date when no Transfer Restricted
Securities covered by such Shelf Registration Statement remain outstanding.
(b) PROVISION BY HOLDERS OF CERTAIN INFORMATION IN CONNECTION WITH THE
SHELF REGISTRATION Statement. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Issuer in writing, within 20 days after receipt of a request therefor, the
information specified in Item 507 or 508 of Regulation S-K, as applicable, of
the Act for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein. No Holder of Transfer
Restricted Securities shall be entitled to liquidated damages pursuant to
Section 5 hereof unless and until such Holder shall
5
<PAGE> 8
have provided all such information. Each selling Holder agrees to promptly
furnish additional information required to be disclosed in order to make the
information previously furnished to the Issuer by such Holder not materially
misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not
filed with the Commission on or prior to the applicable Filing Deadline, (ii)
any such Registration Statement has not been declared effective by the
Commission on or prior to the applicable Effectiveness Deadline, (iii) the
Exchange Offer has not been Consummated on or prior to the Consummation Deadline
or (iv) any Registration Statement required by this Agreement is filed and
declared effective but shall thereafter cease to be effective or fail to be
usable for its intended purpose without being succeeded within ten Business Days
by a post-effective amendment to such Registration Statement that cures such
failure and that is itself declared effective within ten Business Days of filing
such post-effective amendment to such Registration Statement (each such event
referred to in clauses (i) through (iv), a "Registration Default"), then the
Issuer hereby agrees to pay to each Holder of Transfer Restricted Securities
affected thereby liquidated damages in an amount equal to $.05 per week per
$1,000 in principal amount of Transfer Restricted Securities held by such Holder
for each week or portion thereof that the Registration Default continues for the
first 90-day period immediately following the occurrence of such Registration
Default. The amount of the liquidated damages shall increase by an additional
$.05 per week per $1,000 in principal amount of Transfer Restricted Securities
with respect to each subsequent 90-day period until all Registration Defaults
have been cured, up to a maximum amount of liquidated damages of $.25 per week
per $1,000 in principal amount of Transfer Restricted Securities; provided that
the Issuer shall in no event be required to pay liquidated damages for more than
one Registration Default at any given time. Notwithstanding anything to the
contrary set forth herein, (1) upon filing of the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement), in the case
of (i) above, (2) upon the effectiveness of the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement), in the case
of (ii) above, (3) upon Consummation of the Exchange Offer, in the case of (iii)
above, (4) upon the filing of a post-effective amendment to the Registration
Statement or an additional Registration Statement that causes the Exchange Offer
Registration Statement (and/or, if applicable, the Shelf Registration Statement)
to again be declared effective or made usable in the case of (iv) above, or (5)
if sooner, upon the first date on which no Transfer Restricted Securities remain
outstanding, in the case of clauses (i) through (iv) above, the liquidated
damages payable with respect to the Transfer Restricted Securities as a result
of such clause (i), (ii), (iii) or (iv), as applicable, shall cease.
All accrued liquidated damages shall be paid to the Holders entitled
thereto, in the manner provided for the payment of interest in the Indenture, on
each Interest Payment Date, as more fully set forth in the Indenture and the
Notes. Notwithstanding the fact that any securities for which liquidated damages
are due cease to be Transfer Restricted Securities, all obligations of the
Issuer to pay liquidated damages with respect to securities that accrued prior
to the time such securities ceased to be Transfer Restricted Securities shall
survive until such time as such obligations with respect to such securities
shall have been satisfied in full.
6
<PAGE> 9
SECTION 6. REGISTRATION PROCEDURES
(a) EXCHANGE OFFER REGISTRATION STATEMENT. In connection with the
Exchange Offer, the Issuer shall (x) comply with all applicable provisions of
Section 6(c) hereof, (y) use its reasonable best efforts to effect such exchange
and to permit the resale of Series B Notes by Broker-Dealers that tendered in
the Exchange Offer Series A Notes that such Broker-Dealer acquired for its own
account as a result of its market-making activities or other trading activities
(other than Series A Notes acquired directly from the Issuer or any of its
Affiliates) being sold in accordance with the intended method or methods of
distribution thereof, and (z) comply with all of the following provisions:
(i) If, following the date hereof there has been announced
a change in Commission policy with respect to exchange offers, such as
the Exchange Offer, that, in the opinion of counsel to the Issuer,
raises a substantial question as to whether the Exchange Offer is
permitted by applicable federal law, the Issuer hereby agrees to seek a
no-action letter or other favorable decision from the Commission
allowing the Issuer to Consummate an Exchange Offer for such Transfer
Restricted Securities. The Issuer hereby agrees to use its reasonable
best efforts in pursuing the issuance of such a decision to the
Commission staff level.
(ii) As a condition to its participation in the Exchange
Offer, each Holder of Transfer Restricted Securities (including,
without limitation, any Holder who is a Broker-Dealer) shall furnish,
upon the request of the Issuer, prior to the Consummation of the
Exchange Offer, a written representation to the Issuer (which may be
contained in the letter of transmittal contemplated by the Exchange
Offer Registration Statement) to the effect that, at the time of
Consummation of the Exchange Offer, (A) any Series B Notes received by
such Holder will be acquired in the ordinary course of its business,
(B) such Holder will have no arrangement or understanding with any
person to participate in the distribution of the Series A Notes or the
Series B Notes within the meaning of the Act, (C) if the Holder is not
a Broker-Dealer or is a Broker-Dealer but will not receive Series B
Notes for its own account in exchange for Series A Notes, neither the
Holder nor any such other Person is engaged in or intends to
participate in a distribution of the Series B Notes, and (D) that such
Holder is not an Affiliate of the Issuer. If the Holder is a
Broker-Dealer that will receive Series B Notes for its own account in
exchange for Series A Notes, it will represent that the Notes to be
exchanged for the Series B Notes were acquired by it as a result of
market-making activities or other trading activities, and will
acknowledge that it will deliver a prospectus meeting the requirements
of the Act in connection with any resale of such Series B Notes. It is
understood that, by acknowledging that it will deliver, and by
delivering, a prospectus meeting the requirements of the Act in
connection with any resale of such Series B Notes, the Holder is not
admitting that it is an "underwriter" within the meaning of the Act.
(iii) Prior to effectiveness of the Exchange Offer
Registration Statement, the Issuer shall provide a supplemental letter
to the Commission (A) stating that the Issuer is registering the
Exchange Offer in reliance on the position of the Commission enunciated
in EXXON CAPITAL HOLDINGS CORPORATION (available May 13,
7
<PAGE> 10
1988) and MORGAN STANLEY AND CO., INC. (available June 5, 1991), as
interpreted in the Commission's letter to SHEARMAN & STERLING dated
July 2, 1993, and, if applicable, any no-action letter obtained
pursuant to clause (i) above, (B) including a representation that the
Issuer has not entered into any arrangement or understanding with any
Person to distribute the Series B Notes to be received in the Exchange
Offer and that, to the best of the Issuer's information and belief,
each Holder participating in the Exchange Offer is acquiring the Series
B Notes in its ordinary course of business and has no arrangement or
understanding with any Person to participate in the distribution of the
Series B Notes received in the Exchange Offer and (C) any other
undertaking or representation required by the Commission as set forth
in any no-action letter obtained pursuant to clause (i) above, if
applicable.
(b) SHELF REGISTRATION STATEMENT. In connection with the Shelf
Registration Statement, the Issuer shall:
(i) comply with all the provisions of Section 6(c) hereof
and use its reasonable best efforts to effect such registration to
permit the sale of the Transfer Restricted Securities being sold in
accordance with the intended method or methods of distribution thereof
(as indicated in the information furnished to the Issuer pursuant to
Section 4(b) hereof), and pursuant thereto the Issuer will prepare and
file with the Commission a Registration Statement relating to the
registration on any appropriate form under the Act, which form shall be
available for the sale of the Transfer Restricted Securities in
accordance with the intended method or methods of distribution thereof
within the time periods and otherwise in accordance with the provisions
hereof, and
(ii) issue, upon the request of any Holder or purchaser of
Series A Notes covered by any Shelf Registration Statement contemplated
by this Agreement, Series B Notes having an aggregate principal amount
equal to the aggregate principal amount of Series A Notes sold pursuant
to the Shelf Registration Statement and surrendered to the Issuer for
cancellation; the Issuer shall register Series B Notes on the Shelf
Registration Statement for this purpose and issue the Series B Notes to
the purchaser(s) of securities subject to the Shelf Registration
Statement in the names as such purchaser(s) shall designate.
(c) GENERAL PROVISIONS. In connection with any Registration Statement
and any related Prospectus required by this Agreement, the Issuer shall, during
the periods specified in Sections 3 and 4 hereof, as applicable:
(i) use its reasonable best efforts to keep such
Registration Statement continuously effective and provide all requisite
financial statements for the period specified in Section 3 or 4 of this
Agreement, as applicable. Upon the occurrence of any event that would
cause any such Registration Statement or the Prospectus contained
therein (A) to contain an untrue statement of material fact or omit to
state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading or (B) not to be effective and usable for resale of Transfer
Restricted Securities during the period required by this Agreement, the
Issuer
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shall file promptly an appropriate amendment to such Registration
Statement or a supplement to the Prospectus, as applicable, curing such
defect, and, in the case of an amendment, use its reasonable best
efforts to cause such amendment to be declared effective as soon as
practicable.
(ii) prepare and file with the Commission such amendments
and post-effective amendments to the applicable Registration Statement
as may be necessary to keep such Registration Statement effective for
the applicable period set forth in Section 3 or 4 hereof, as the case
may be; cause the Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 under the Act, and to comply fully with Rules 424, 430A and
462, as applicable, under the Act in a timely manner; and comply with
the provisions of the Act with respect to the disposition of all
securities covered by such Registration Statement during the applicable
period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such Registration
Statement or supplement to the Prospectus;
(iii) advise each Holder whose Transfer Restricted
Securities have been included in a Shelf Registration Statement (in the
case of the Shelf Registration Statement) and the Initial Purchaser
promptly and, if requested by such Person, confirm such advice in
writing, (A) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to any
applicable Registration Statement or any post-effective amendment
thereto, when the same has become effective, (B) of any request by the
Commission for amendments to the Registration Statement or amendments
or supplements to the Prospectus or for additional information relating
thereto, (C) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement under the
Act or of the suspension by any state securities commission of the
qualification of the Transfer Restricted Securities for offering or
sale in any jurisdiction, or the initiation of any proceeding for any
of the preceding purposes, and (D) of the existence of any fact or the
happening of any event that makes any statement of a material fact made
in the Registration Statement, the Prospectus, any amendment or
supplement thereto or any document incorporated by reference therein
untrue, or that requires the making of any additions to or changes in
the Registration Statement in order to make the statements therein not
misleading, or that requires the making of any additions to or changes
in the Prospectus in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading. If at
any time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, or any state securities
commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of the
Transfer Restricted Securities under state securities or Blue Sky laws,
the Issuer shall use its reasonable best efforts to obtain the
withdrawal or lifting of such order at the earliest possible time;
(iv) subject to Section 6(c)(i), if any fact or event
contemplated by Section 6(c)(iii)(D) hereof shall exist or have
occurred, prepare a supplement or post-effective amendment to the
Registration Statement or related Prospectus or any document
incorporated therein by reference or file any other required document
so that, as thereafter
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delivered to the purchasers of Transfer Restricted Securities, the
Prospectus will not contain an untrue statement of a material fact or
omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading;
(v) furnish to each Holder whose Transfer Restricted
Securities have been included in a Shelf Registration Statement (in the
case of the Shelf Registration Statement) and the Initial Purchaser,
before filing with the Commission, copies of any Registration Statement
or any Prospectus included therein or any amendments or supplements to
any such Registration Statement or Prospectus (including all documents
incorporated by reference after the initial filing of such Registration
Statement), which documents will be subject to the review and comment
of such Persons, if any, for a period of at least five Business Days,
and the Issuer will not file any such Registration Statement or
Prospectus or any amendment or supplement to any such Registration
Statement or Prospectus (including all such documents incorporated by
reference) to which such Persons shall reasonably object within five
Business Days after the receipt thereof. Such Persons shall be deemed
to have reasonably objected to such filing if such Registration
Statement, amendment, Prospectus or supplement, as applicable, as
proposed to be filed, contains an untrue statement of a material fact
or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading or fails to comply with the applicable requirements of
the Act;
(vi) promptly prior to the filing of any document that is
to be incorporated by reference into a Registration Statement or
Prospectus, provide copies of such document to each Holder whose
Transfer Restricted Securities have been included in a Shelf
Registration Statement (in the case of the Shelf Registration
Statement) and the Initial Purchaser, make the Issuer's representatives
available for discussion of such document and other customary due
diligence matters, and include such information in such document prior
to the filing thereof as such Persons may reasonably request;
(vii) make available, at reasonable times, for inspection by
each Holder whose Transfer Restricted Securities have been included in
a Shelf Registration Statement (in the case of the Shelf Registration
Statement) and the Initial Purchaser and any attorney or accountant
retained by such Persons, all financial and other records, pertinent
corporate documents of the Issuer and cause the Issuer's officers,
directors and employees to supply all information reasonably requested
by any such Persons, attorney or accountant in connection with such
Registration Statement or any post-effective amendment thereto
subsequent to the filing thereof and prior to its effectiveness;
(viii) if requested by any Holders whose Transfer Restricted
Securities have been included in a Shelf Registration Statement (in the
case of the Shelf Registration Statement) or the Initial Purchaser,
promptly include in any Registration Statement or Prospectus, pursuant
to a supplement or post-effective amendment if necessary, such
information as such Persons may reasonably request to have included
therein, including, without limitation, information relating to the
"Plan of Distribution" of the Transfer Restricted Securities and the
use of the Registration Statement or Prospectus
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<PAGE> 13
for market-making activities; and make all required filings of such
Prospectus supplement or post-effective amendment as soon as
practicable after the Issuer is notified of the matters to be included
in such Prospectus supplement or post-effective amendment;
(ix) furnish to each Holder whose Transfer Restricted
Securities have been included in a Shelf Registration Statement (in the
case of the Shelf Registration Statement) and the Initial Purchaser,
without charge, at least one copy of the Registration Statement, as
first filed with the Commission, and of each amendment thereto,
including all documents incorporated by reference therein and all
exhibits (including exhibits incorporated therein by reference);
(x) deliver to each Holder whose Transfer Restricted
Securities have been included in a Shelf Registration Statement and the
Initial Purchaser without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement
thereto as such Persons reasonably may request; the Issuer hereby
consents to the use (in accordance with law and subject to Section 6(d)
hereof) of the Prospectus and any amendment or supplement thereto by
each selling Person in connection with the offering and the sale of the
Transfer Restricted Securities covered by the Prospectus or any
amendment or supplement thereto and all market-making activities of the
Initial Purchaser, as the case may be;
(xi) upon the request of any Holder whose Transfer
Restricted Securities have been included in a Shelf Registration
Statement (in the case of the Shelf Registration Statement) or the
Initial Purchaser, enter into such agreements (including underwriting
agreements) and make such representations and warranties and take all
such other actions in connection therewith in order to expedite or
facilitate the disposition of the Transfer Restricted Securities
pursuant to any applicable Registration Statement contemplated by this
Agreement as may be reasonably requested by such Person in connection
with any sale or resale pursuant to any applicable Registration
Statement. In such connection, the Issuer shall:
(A) upon request of any such Person, furnish (or in
the case of paragraphs (2) and (3), use its reasonable best
efforts to cause to be furnished) to each Holder whose
Transfer Restricted Securities have been included in a Shelf
Registration Statement (in the case of the Shelf Registration
Statement) and the Initial Purchaser, upon Consummation of the
Exchange Offer or upon the effectiveness of the Shelf
Registration Statement, as the case may be:
(1) a certificate, dated such date, signed
on behalf of the Issuer by (x) the President or any
Vice President and (y) a principal financial or
accounting officer of the Issuer, confirming, as of
the date thereof, the matters set forth in Sections
6(cc), 9(a) and 9(b) of the Purchase Agreement and
such other similar matters as such Person may
reasonably request;
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(2) an opinion, dated the date of
Consummation of the Exchange Offer or the date of
effectiveness of the Shelf Registration Statement, as
the case may be, of counsel for the Issuer covering
matters similar to those set forth in Sections 9(e)
and (f) of the Purchase Agreement and such other
matters as such Person may reasonably request, and in
any event including a statement to the effect that
such counsel has participated in conferences with
officers and other representatives of the Issuer,
representatives of the independent public accountants
for the Issuer and have considered the matters
required to be stated therein and the statements
contained therein, although such counsel has not
independently verified the accuracy, completeness or
fairness of such statements; and that such counsel
advises that, on the basis of the foregoing (relying
as to materiality to the extent such counsel deems
appropriate upon the statements of officers and other
representatives of the Issuer) and without
independent check or verification), no facts came to
such counsel's attention that caused such counsel to
believe that the applicable Registration Statement,
at the time such Registration Statement or any
post-effective amendment thereto became effective
and, in the case of the Exchange Offer Registration
Statement, as of the date of Consummation of the
Exchange Offer, 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 contained in such Registration Statement
as of its date and, in the case of the opinion dated
the date of Consummation of the Exchange Offer, as of
the date of Consummation, contained an untrue
statement of a material fact or omitted 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. Without
limiting the foregoing, such counsel may state
further that such counsel assumes no responsibility
for, and has not independently verified, the
accuracy, completeness or fairness of the financial
statements, notes and schedules and other financial
data included in any Registration Statement
contemplated by this Agreement or the related
Prospectus; and
(3) a customary comfort letter, dated the
date of Consummation of the Exchange Offer, or as of
the date of effectiveness of the Shelf Registration
Statement, as the case may be, from the Issuer's
independent accountants, in the customary form and
covering matters of the type customarily covered in
comfort letters to underwriters in connection with
underwritten offerings, and affirming the matters set
forth in the comfort letters delivered pursuant to
Section 9(h) of the Purchase Agreement; and
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(B) deliver such other documents and certificates as
may be reasonably requested by such Persons to evidence
compliance with the matters covered in clause (A) above and
with any customary conditions contained in any agreement
entered into by the Issuer pursuant to this clause;
(xii) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders and their counsel in
connection with the registration and qualification of the Transfer
Restricted Securities under the securities or Blue Sky laws of such
jurisdictions as the selling Holders may request and do any and all
other acts or things necessary or advisable to enable the disposition
in such jurisdictions of the Transfer Restricted Securities covered by
the applicable Registration Statement; provided that the Issuer shall
not be required to register or qualify as a foreign corporation where
it is not now so qualified or to take any action that would subject it
to the service of process in suits or to taxation, other than as to
matters and transactions relating to the Registration Statement, in any
jurisdiction where it is not now so subject;
(xiii) in connection with any sale of Transfer Restricted
Securities that will result in such securities no longer being Transfer
Restricted Securities, cooperate with the Holders to facilitate the
timely preparation and delivery of certificates representing Transfer
Restricted Securities to be sold and not bearing any restrictive
legends; and to register such Transfer Restricted Securities in such
denominations and such names as the selling Holders may request at
least two Business Days prior to such sale of Transfer Restricted
Securities;
(xiv) use its reasonable best efforts to cause the
disposition of the Transfer Restricted Securities covered by the
Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the
seller or sellers thereof to consummate the disposition of such
Transfer Restricted Securities, subject to the proviso contained in
clause (xii) above;
(xv) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of a Registration
Statement covering such Transfer Restricted Securities and provide the
Trustee under the Indenture with printed certificates for the Transfer
Restricted Securities which are in a form eligible for deposit with The
Depository Trust Company;
(xvi) otherwise use its reasonable best efforts to comply
with all applicable rules and regulations of the Commission, and make
generally available to its security holders with regard to any
applicable Registration Statement, as soon as practicable, a
consolidated earnings statement meeting the requirements of Rule 158
(which need not be audited) covering a twelve-month period beginning
after the effective date of the Registration Statement (as such term is
defined in Rule 158(c) under the Act);
(xvii) cause the Indenture to be qualified under the TIA not
later than the effective date of the first Registration Statement
required by this Agreement and, in connection therewith, cooperate with
the Trustee and the Holders to effect such changes
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to the Indenture as may be required for such Indenture to be so
qualified in accordance with the terms of the TIA; and execute and use
its reasonable best efforts to cause the Trustee to execute, all
documents that may be required to effect such changes and all other
forms and documents required to be filed with the Commission to enable
such Indenture to be so qualified in a timely manner; and
(xviii) provide promptly to each Holder and the Initial
Purchaser, upon request, each document filed with the Commission
pursuant to the requirements of Section 13 or Section 15(d) of the
Exchange Act.
(d) RESTRICTIONS ON HOLDERS. Each Holder agrees by acquisition of a
Transfer Restricted Security and the Initial Purchaser agrees that, upon receipt
of the notice referred to in Section 6(c)(iii)(C) or any notice from the Issuer
of the existence of any fact of the kind described in Section 6(c)(iii)(D)
hereof (in each case, a "Suspension Notice"), such Person will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the
applicable Registration Statement until (i) such Person has received copies of
the supplemented or amended Prospectus contemplated by Section 6(c)(iv) hereof,
or (ii) such Person is advised in writing by the Issuer that the use of the
Prospectus may be resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference in the Prospectus (in
each case, the "Recommencement Date"). Each Person receiving a Suspension Notice
hereby agrees that it will either (i) destroy any Prospectuses, other than
permanent file copies, then in such Person's possession which have been replaced
by the Issuer with more recently dated Prospectuses or (ii) deliver to the
Issuer (at the Issuer's expense) all copies, other than permanent file copies,
then in such Person's possession of the Prospectus covering such Transfer
Restricted Securities that was current at the time of receipt of the Suspension
Notice. The time period regarding the effectiveness of such Registration
Statement set forth in Section 3 or 4 hereof, as applicable, shall be extended
by a number of days equal to the number of days in the period from and including
the date of delivery of the Suspension Notice to the date of delivery of the
Recommencement Date.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Issuer's performance of or compliance
with this Agreement will be borne by the Issuer, regardless of whether a
Registration Statement becomes effective, including, without limitation: (i) all
registration and filing fees and expenses; (ii) all fees and expenses of
compliance with federal securities and state Blue Sky or securities laws; (iii)
all expenses of printing (including printing certificates for the Series B Notes
to be issued in the Exchange Offer and printing of Prospectuses (whether for
exchanges, sales, market-making or otherwise), messenger and delivery services
and telephone; (iv) all fees and disbursements of counsel for the Issuer; (v)
all application and filing fees in connection with listing the Series B Notes on
a national securities exchange or automated quotation system pursuant to the
requirements hereof; and (vi) all fees and disbursements of independent
certified public accountants of the Issuer (including the expenses of any
special audit and comfort letters required by or incident to such performance).
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The Issuer will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit and the
fees and expenses of any Person, including special experts, retained by the
Issuer.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Issuer will reimburse the
Initial Purchaser and the Holders of Transfer Restricted Securities who are
tendering Series A Notes in the Exchange Offer and/or selling or reselling
Series A Notes or Series B Notes pursuant to the "Plan of Distribution"
contained in the Exchange Offer Registration Statement or the Shelf Registration
Statement, as applicable, for the reasonable fees and disbursements of not more
than one counsel, who shall be chosen by the Holders of a majority in principal
amount of the Transfer Restricted Securities for whose benefit such Registration
Statement is being prepared.
SECTION 8. INDEMNIFICATION
(a) The Issuer agrees to indemnify and hold harmless each Holder, its
directors, officers and each Person, if any, who controls such Holder (within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act), from
and against any and all losses, claims, damages, liabilities, judgments,
(including, without limitation, any legal or other expenses incurred in
connection with investigating or defending any matter, including any action that
could give rise to any such losses, claims, damages, liabilities or judgments)
caused by any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement, preliminary prospectus or Prospectus
(or any amendment or supplement thereto) provided by the Issuer to any Holder or
any prospective purchaser of Series B Notes or registered Series A Notes, or
caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities or
judgments are caused by an untrue statement or omission or alleged untrue
statement or omission that is based upon information relating to any of the
Holders furnished in writing to the Issuer by any of the Holders.
(b) Each Holder of Transfer Restricted Securities agrees, severally and
not jointly, to indemnify and hold harmless the Issuer, its directors and
officers, and each person, if any, who controls (within the meaning of Section
15 of the Act or Section 20 of the Exchange Act) the Issuer, to the same extent
as the foregoing indemnity from the Issuer set forth in Section 8(a) hereof, but
only with reference to information relating to such Holder furnished in writing
to the Issuer by such Holder expressly for use in any Registration Statement. In
no event shall any Holder, its directors, officers or any Person who controls
such Holder be liable or responsible for any amount in excess of the amount by
which the total amount received by such Holder with respect to its sale of
Transfer Restricted Securities pursuant to a Registration Statement exceeds (i)
the amount paid by such Holder for such Transfer Restricted Securities and (ii)
the amount of any damages that such Holder, its directors, officers or any
Person who controls such Holder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission.
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(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"indemnified party"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying party") in writing,
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all fees and expenses of such counsel, as incurred (except that,
in the case of any action in respect of which indemnity may be sought pursuant
to both Sections 8(a) and 8(b), a Holder shall not be required to assume the
defense of such action pursuant to this Section 8(c), but may employ separate
counsel and participate in the defense thereof, but the fees and expenses of
such counsel, except as provided below, shall be at the expense of the Holder).
Any indemnified party shall have the right to employ separate counsel in any
such action and participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of the indemnified party, unless (i) the
employment of such counsel shall have been specifically authorized in writing by
the indemnifying party, (ii) the indemnifying party shall have failed to assume
the defense of such action or employ counsel reasonably satisfactory to the
indemnified party or (iii) the named parties to any such action (including any
impleaded parties) include both the indemnified party and the indemnifying
party, and the indemnified party shall have been advised by such counsel that
there may be one or more legal defenses available to it which are different from
or additional to those available to the indemnifying party (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the indemnified party). In any such case, the indemnifying party
shall not, in connection with any one action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) for
all indemnified parties and all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by a majority of the
Holders, in the case of the parties indemnified pursuant to Section 8(a), and by
the Issuer, in the case of parties indemnified pursuant to Section 8(b). The
indemnifying party shall indemnify and hold harmless the indemnified party from
and against any and all losses, claims, damages, liabilities and judgments by
reason of any settlement of any action (i) effected with its written consent or
(ii) effected without its written consent if the settlement is entered into more
than twenty Business Days after the indemnifying party shall have received a
request from the indemnified party for reimbursement for the fees and expenses
of counsel (in any case where such fees and expenses are at the expense of the
indemnifying party) and, prior to the date of such settlement, the indemnifying
party shall have failed to comply with such reimbursement request. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement or compromise of, or consent to the entry of
judgment with respect to, any pending or threatened action in respect of which
the indemnified party is or could have been a party and indemnity or
contribution may be or could have been sought hereunder by the indemnified
party, unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability on claims that
are or could have been the subject matter of such action 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 the indemnified party.
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(d) To the extent that the indemnification provided for in this Section
8 is unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities or judgments referred to therein, then each indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or judgments (i) in such proportion as is
appropriate to reflect the relative benefits received by the Issuer, on the one
hand, and the Holders, on the other hand, from their sale of Transfer Restricted
Securities or (ii) if the allocation provided by clause 8(d)(i) is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause 8(d)(i) hereof but also the relative
fault of the Issuer, on the one hand, and of the Holder, on the other hand, in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative fault of the Issuer, on the one hand, and
of the Holder, on the other hand, shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Issuer, on the one hand, or by the Holder, on the
other hand, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, liabilities or judgments referred to above shall be deemed to include,
subject to the limitations set forth in the second paragraph of Section 8(a),
any legal or other fees or expenses reasonably incurred by such indemnified
party in connection with investigating or defending any matter, including any
action that could have given rise to such losses, claims, damages, liabilities
or judgments.
The Issuer and each Holder agree that it would not be just and
equitable if contribution pursuant to this Section 8(d) were determined by pro
rata allocation (even if the Holders 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 in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 8, no Holder, its directors, its
officers or any Person, if any, who controls such Holder shall be required to
contribute, in the aggregate, any amount in excess of the amount by which the
total received by such Holder with respect to the sale of Transfer Restricted
Securities pursuant to a Registration Statement exceeds (i) the amount paid by
such Holder for such Transfer Restricted Securities and (ii) the amount of any
damages which such Holder has otherwise been required to pay by reason of 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 Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Holders' obligations to contribute
pursuant to this Section 8(d) are several in proportion to the respective
principal amount of Transfer Restricted Securities held by each Holder hereunder
and not joint.
(e) The Issuer agrees that the indemnity and contribution provisions of
this Section 8 shall apply to the Initial Purchaser to the same extent, on the
same conditions, as it applies to Holders.
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SECTION 9. RULE 144A AND RULE 144
The Issuer agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding and during any period in which the
Issuer (i) is not subject to Section 13 or 15(d) of the Exchange Act, to make
available, upon request of any Holder, to such Holder or beneficial owner of
Transfer Restricted Securities in connection with any sale thereof and any
prospective purchaser of such Transfer Restricted Securities designated by such
Holder or beneficial owner, the information required by Rule 144A(d)(4) under
the Act in order to permit resales of such Transfer Restricted Securities
pursuant to Rule 144A, and (ii) is subject to Section 13 or 15(d) of the
Exchange Act, to make all filings required thereby in a timely manner in order
to permit resales of such Transfer Restricted Securities pursuant to Rule 144.
SECTION 10. MISCELLANEOUS
(a) REMEDIES. The Issuer acknowledges and agrees that any failure by
the Issuer to comply with its obligations under Sections 3 and 4 hereof may
result in material irreparable injury to the Initial Purchaser or the Holders
for which there is no adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the event of any such
failure, the Initial Purchaser or any Holder may obtain such relief as may be
required to specifically enforce the Issuer's obligations under Sections 3 and 4
hereof. The Issuer further agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
(b) NO INCONSISTENT AGREEMENTS. The Issuer will not, on or after the
date of this Agreement, enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. The Issuer has not previously
entered into any agreement granting any registration rights with respect to its
securities to any Person. The rights granted to the Holders hereunder do not in
any way conflict with and are not inconsistent with the rights granted to the
holders of the Issuer's securities under any agreement in effect on the date
hereof.
(c) AMENDMENTS AND WAIVERS. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 10(c)(i), the Issuer has obtained the written consent of
Holders of all outstanding Transfer Restricted Securities, and (ii) in the case
of all other provisions hereof, the Issuer has obtained the written consent of
Holders of a majority of the outstanding principal amount of Transfer Restricted
Securities (excluding Transfer Restricted Securities held by the Issuer or its
Affiliates). Notwithstanding the foregoing, a waiver or consent to departure
from the provisions hereof that (i) relates exclusively to the rights of Holders
whose Transfer Restricted Securities are being tendered pursuant to the Exchange
Offer, and that does not affect directly or indirectly the rights of other
Holders whose Transfer Restricted Securities are not being tendered pursuant to
such Exchange Offer, may be given by the Holders of a majority of the
outstanding principal amount of Transfer Restricted Securities subject to such
Exchange Offer or (ii) relates exclusively to the rights of an Affiliate or the
Initial Purchaser, and that does not adversely affect
18
<PAGE> 21
any other Holder of Transfer Restricted Securities, may be given by such
Affiliate or the Initial Purchaser, as the case may be.
(d) THIRD PARTY BENEFICIARY. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Issuer, on the one
hand, and the Initial Purchaser, on the other hand, and shall have the right to
enforce such agreements directly to the extent they may deem such enforcement
necessary or advisable to protect its rights or the rights of Holders hereunder.
(e) REGISTRATION STATEMENTS ON FORM S-3. The Issuers and the Guarantors
(as such term is defined in the Indenture) agree for the benefit of the Holders
and the Initial Purchaser that for so long as any of the Transfer Restricted
Securities remain outstanding, if at any time sales by the Initial Purchaser of
the Transfer Restricted Securities will satisfy clauses 1 or 3 of the
"Transaction Requirements" specified in Form S-3 (or any comparable provision of
any successor form to Form S-3), the Issuers and the Guarantors will use their
reasonable best efforts to comply with, and maintain their compliance with, the
"Registrant Requirements" of Form S-3 (or any comparable provision of any
successor form to Form S-3).
(f) REGISTRATION OF THE NOTE GUARANTEES. The Issuer shall cause each
Guarantor, by execution of a supplemental indenture to the Indenture providing
for a Note Guarantee, to agree to take such actions as are necessary to register
the Note Guarantee (as each such term is defined in the Indenture), if issued,
under the Act in connection with any registration of the Notes pursuant to this
Agreement.
(g) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of
the Registrar under the Indenture, with a copy to the Registrar under
the Indenture; and
(ii) if to the Issuer:
c/o Insilco Corporation
425 Metro Place N.
Fifth Floor
Box 7196
Dublin, Ohio 43017
Telecopier No.: (614) 792-0468
Attention: Kenneth H. Koch
19
<PAGE> 22
With a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Telecopier No.: (212) 450-4000
Attention: Richard D. Truesdell, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next Business Day, if timely delivered
to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
Upon the date of filing of the Exchange Offer or a Shelf Registration
Statement, as the case may be, notice shall be delivered to Donaldson, Lufkin &
Jenrette Securities Corporation (in the form attached hereto as Exhibit A) and
shall be addressed to: Attention: Louise Guarneri (Compliance Department), 277
Park Avenue, New York, New York 10172.
(h) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including, without limitation, and without the need for an express assignment,
subsequent Holders; provided that nothing herein shall be deemed to permit any
assignment, transfer or other disposition of Transfer Restricted Securities in
violation of the terms hereof or of the Purchase Agreement or the Indenture. If
any transferee of any Holder shall acquire Transfer Restricted Securities in any
manner, whether by operation of law or otherwise, such Transfer Restricted
Securities shall be held subject to all of the terms of this Agreement, and by
taking and holding such Transfer Restricted Securities such Person shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement, including the restrictions on resale set
forth in this Agreement and, if applicable, the Purchase Agreement, and such
Person shall be entitled to receive the benefits hereof.
(i) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(j) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(k) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
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<PAGE> 23
(l) SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(m) ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
21
<PAGE> 24
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
INSILCO CORPORATION
By:
-------------------------------
Name:
Title:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By:
---------------------------------
Name:
Title:
<PAGE> 25
EXHIBIT A
NOTICE OF FILING OF
A/B EXCHANGE OFFER REGISTRATION STATEMENT
To: Donaldson, Lufkin & Jenrette Securities Corporation
277 Park Avenue
New York, New York 10172
Attention: Louise Guarneri (Compliance Department)
Fax: (212) 892-7272
From: Insilco Corporation
12% Senior Subordinated Notes due 2007
Date: ___________, 199[ ]
For your information only (NO ACTION REQUIRED):
Today, ___________, 199[ ], we filed [an A/B Exchange Registration
Statement/a Shelf Registration Statement] with the Securities and Exchange
Commission.
23
<PAGE> 1
Exhibit 10(a)
EXECUTION COPY
================================================================================
INSILCO CORPORATION
AND
INSILCO HOLDING CO.
as Issuers
-------------------------------------
120,000 UNITS CONSISTING OF
$120,000,000 12% SENIOR SUBORDINATED NOTES DUE 2007 AND
WARRANTS TO PURCHASE 62,400 SHARES OF COMMON STOCK
--------------------------------------
------------------
PURCHASE AGREEMENT
Dated as of November 2, 1998
------------------
DONALDSON, LUFKIN & JENRETTE
Securities Corporation
---------------------------------
================================================================================
<PAGE> 2
120,000 Units Consisting of
$120,000,000 12% Senior Subordinated Notes due 2007
of Insilco Corporation and
Warrants to Purchase 62,400 Shares of Common Stock
of Insilco Holding Co.
PURCHASE AGREEMENT
November 2, 1998
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
277 Park Avenue New York,
New York 10172
Dear Sirs:
Insilco Corporation, a Delaware corporation ("Insilco") and Insilco
Holding Co., a Delaware corporation ("Holdings" and together with Insilco, the
"Issuers"), propose to issue and sell to Donaldson, Lufkin & Jenrette
Securities Corporation (the "Initial Purchaser") 120,000 units (the
"Units"), each consisting of $1,000 principal amount of 12% Senior
Subordinated Notes due 2007 (the "Series A Notes") of Insilco and one warrant
(collectively, the "Warrants") to purchase 0.520 of a share of common stock of
Holdings, par value $0.001 per share (the "Common Stock"), subject to the
terms and conditions set forth herein. The Series A Notes are to be issued
pursuant to the provisions of an indenture (the "Indenture"), to be dated as
of the Closing Date (as defined below), between Insilco and Star Bank, N.A., as
trustee (the "Trustee"). The Series A Notes and the Series B Notes (as defined
below) issuable in exchange therefor are collectively referred to herein as the
"Notes." The Warrants will be issued pursuant to a warrant agreement to be
dated as of the Closing Date (the "Warrant Agreement") between Holdings and
National City Bank, as warrant agent (the "Warrant Agent"). Shares of Common
Stock of Holdings issuable upon exercise of the Warrants are collectively
referred to herein as the "Warrant Shares." The Units, the Notes, the Warrants
and the Warrant Shares are collectively referred to herein as the
"Securities." The Series A Notes and the Warrants will not be detachable or
separable until the first to occur of certain events specified in the Offering
Memorandum. Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Indenture or the Warrant Agreement, as
applicable.
All agreements, representations and warranties of the Issuers set forth
in this Agreement are made as of the date of this Agreement. This Agreement, the
Indenture, the Series A Notes, the Warrants, the Warrant Agreement, the A/B
Registration Rights Agreement (as defined), and the Warrant Registration Rights
Agreement (as defined) are collectively referred herein as the "Operative
Documents."
<PAGE> 3
1. OFFERING MEMORANDUM.
The Units will be offered and sold to the Initial Purchaser pursuant to
one or more exemptions from the registration requirements under the Securities
Act of 1933, as amended (the "Securities Act"). The Issuer has prepared a
preliminary offering memorandum, dated October 30, 1998 (the "Preliminary
Offering Memorandum"), and a final offering memorandum, dated November 2, 1998
(the "Offering Memorandum"), relating to the Units.
Upon original issuance thereof, and until such time as the same is no
longer required pursuant to the Indenture, the Series A Notes (and all
securities issued in exchange therefor, in substitution thereof or upon
conversion thereof) shall bear the following legend:
"THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND,
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS, EXCEPT AS SET FORTH IN THE NEXT SENTENCE. BY ITS ACQUISITION
HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER:
(1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB") OR (B) IT IS
AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)
(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN
"IAI"),
(2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS SECURITY
EXCEPT (A) TO THE ISSUER OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON
WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (C) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (D) TO AN IAI THAT,
PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
TRANSFER OF THIS SECURITY (THE FORM OF WHICH CAN BE OBTAINED FROM THE
TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL
AMOUNT OF SECURITIES LESS THAN $250,000, AN OPINION OF COUNSEL
ACCEPTABLE TO THE ISSUER THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, (E) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN
OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER) OR (F) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH
THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION, AND
2
<PAGE> 4
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY OR
AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT
OF THIS LEGEND.
THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER ANY TRANSFER OF THIS SECURITY IN VIOLATION OF THE FOREGOING."
Upon original issuance thereof, and until such time as the same is no
longer required pursuant to the Warrant Agreement, the Warrants (and all
securities issued in exchange therefor, in substitution thereof or upon
conversion thereof) shall bear the following legend:
"THIS WARRANT (OR ITS PREDECESSOR) AND THE SHARES OF COMMON STOCK
ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND,
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS, EXCEPT AS SET FORTH IN THE NEXT SENTENCE. BY ITS ACQUISITION
HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER:
(1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB") OR (B) IT IS
AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)
(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN
"IAI"),
(2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS WARRANT
OR THE WARRANT SHARES EXCEPT (A) TO THE ISSUER OR ANY OF ITS
SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (D) TO
AN IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE WARRANT AGENT A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE TRANSFER OF THIS WARRANT OR THE WARRANT SHARES (THE
FORM OF WHICH CAN BE OBTAINED FROM THE WARRANT AGENT) AND AN OPINION OF
COUNSEL ACCEPTABLE TO THE ISSUER THAT SUCH TRANSFER IS IN COMPLIANCE
WITH THE SECURITIES ACT, (E) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN
OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER) OR (F) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH
THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION, AND
3
<PAGE> 5
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS WARRANT OR
THE WARRANT SHARES OR AN INTEREST HEREIN OR THEREIN IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
THE WARRANT AGREEMENT CONTAINS A PROVISION REQUIRING THE WARRANT AGENT
TO REFUSE TO REGISTER ANY TRANSFER OF THIS SECURITY IN VIOLATION OF THE
FOREGOING."
2. AGREEMENTS TO SELL AND PURCHASE. On the basis of the
representations, warranties and covenants contained in this Agreement, and
subject to the terms and conditions contained herein, the Issuers agree to issue
and Insilco agrees to sell to the Initial Purchaser, and the Initial Purchaser
agrees to purchase from Insilco, all of the Units at a price equal to $970 per
Unit (the "Purchase Price").
3. TERMS OF OFFERING. The Initial Purchaser has advised the Issuers
that the Initial Purchaser will make offers (the "Exempt Resales") of the
Units purchased hereunder on the terms set forth in the Offering Memorandum, as
amended or supplemented, solely to persons whom the Initial Purchaser reasonably
believes to be "qualified institutional buyers" ("QIBs") as defined in Rule
144A under the Securities Act (the "Eligible Purchasers"). The Initial
Purchaser will offer the Units to Eligible Purchasers initially at a price equal
to $1,000 per Unit. Such price may be changed at any time without notice.
Holders (including subsequent transferees) of the Series A Notes will
have the registration rights set forth in the registration rights agreement with
respect to the Series A Notes (the "A/B Registration Rights Agreement"), to be
dated the Closing Date, in substantially the form of Exhibit A hereto, for so
long as such Series A Notes constitute "Transfer Restricted Securities" (as
defined in the A/B Registration Rights Agreement). Pursuant to the A/B
Registration Rights Agreement, Insilco will agree to file with the Securities
and Exchange Commission (the "Commission") under the circumstances set forth
therein, (i) a registration statement under the Securities Act (the "Exchange
Offer Registration Statement") relating to Insilco's 12% Senior Subordinated
Notes due 2007 (the "Series B Notes"), to be offered in exchange for the
Series A Notes (such offer to exchange being referred to as the "Exchange
Offer") and (ii) a shelf registration statement pursuant to Rule 415 under the
Securities Act (the "Note Shelf Registration Statement" and, together with the
Exchange Offer Registration Statement, the "Note Registration Statements")
relating to the resale by certain holders of the Series A Notes and to use its
reasonable best efforts to cause such Note Registration Statements to be
declared and remain effective and usable for the periods specified in the A/B
Registration Rights Agreement and to consummate the Exchange Offer.
Holders (including subsequent transferees) of the Warrants will have
the registration rights with respect to the Warrants set forth in the warrant
registration rights agreement (the "Warrant Registration Rights Agreement,"
and together with the A/B Registration Rights Agreement, the "Registration
Rights Agreements"), to be dated the Closing Date, in substantially the form of
Exhibit B hereto, for so long as the Warrants or Warrant Shares constitute
"Transfer Restricted Securities" (as defined in the Warrant Registration
Rights Agreement). Pursuant to the Warrant Registration Rights Agreement,
Holdings will agree to file with the Commission under the circumstances set
forth therein, a shelf registration
4
<PAGE> 6
statement pursuant to Rule 415 under the Securities Act (the "Warrant
Registration Statement") relating to the resale by certain holders of Warrants
and Warrant Shares and to use its reasonable best efforts to cause such Warrant
Registration Statement to be declared and remain effective and usable for the
periods specified in the Warrant Registration Rights Agreement.
4. DELIVERY AND PAYMENT.
(a) Delivery of, and payment of the Purchase Price for, the Units shall
be made at the offices of Davis Polk & Wardwell or such other location as may be
mutually acceptable. Such delivery and payment shall be made at 9:00 a.m. New
York City time, on November 9, 1998, or at such other time on the same date or
such other date as shall be agreed upon by the Initial Purchaser and the Issuers
in writing. The time and date of such delivery and the payment for the Units are
herein called the "Closing Date."
(b) One or more of the Units containing Series A Notes and Warrants in
definitive global form (collectively, the "Global Securities"), registered in
the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"),
shall be delivered by the Issuers to the Initial Purchaser (or as the Initial
Purchaser directs), in each case, with any transfer taxes thereon duly paid by
the Issuers against payment by the Initial Purchaser of the portion of the
Purchase Price relating to the Units by wire transfer in immediately available
funds to the order of Insilco. The Global Securities shall be made available to
the Initial Purchaser for inspection not later than 9:30 a.m., New York City
time, on the business day immediately preceding the Closing Date.
5. AGREEMENTS OF THE ISSUERS. Each Issuer hereby agrees with the
Initial Purchaser as follows:
(a) To advise the Initial Purchaser promptly and, if requested by the
Initial Purchaser, confirm such advice in writing, (i) of the issuance by any
state securities commission of any stop order suspending the qualification or
exemption from qualification of any Units for offering or sale in any
jurisdiction designated by the Initial Purchaser pursuant to Section 5(e)
hereof, or the initiation of any proceeding by any state securities commission
or any other federal or state regulatory authority for such purpose, and (ii) of
the happening of any event during the period referred to in Section 5(c) below
that makes any statement of a material fact made in the Preliminary Offering
Memorandum or the Offering Memorandum untrue or that requires any additions to
or changes in the Preliminary Offering Memorandum or the Offering Memorandum in
order to make the statements therein not misleading. Each Issuer shall use its
reasonable best efforts to prevent the issuance of any stop order or order
suspending the qualification or exemption of any Securities under any state
securities or Blue Sky laws, and, if at any time any state securities commission
or other federal or state regulatory authority shall issue an order suspending
the qualification or exemption of any Securities under any state securities or
Blue Sky laws, each Issuer shall use its reasonable best efforts to obtain the
withdrawal or lifting of such order at the earliest possible time; provided,
however, that neither Issuer shall be required in connection therewith to
qualify as a foreign corporation in any jurisdiction in which it is not now so
qualified or to take any action that would subject it to general consent to
service of process or taxation, other than as to matters and transactions
relating to the Preliminary Offering Memorandum, the Offering Memorandum or
Exempt Resales, in any jurisdiction in which it is not now so subject.
5
<PAGE> 7
(b) To furnish the Initial Purchaser and those persons identified by
the Initial Purchaser to the Issuers as many copies of the Preliminary Offering
Memorandum and the Offering Memorandum, and any amendments or supplements
thereto, as the Initial Purchaser may reasonably request for the time period
specified in Section 5(c). Subject to the Initial Purchaser's compliance with
its representations and warranties and agreements set forth in Section 7 hereof,
each Issuer consents to the use of the Preliminary Offering Memorandum and the
Offering Memorandum, and any amendments and supplements thereto required
pursuant hereto, by the Initial Purchaser in connection with Exempt Resales and
market-making activities.
(c) During such period as, in the opinion of counsel for the Initial
Purchaser, an Offering Memorandum is required by law to be delivered in
connection with Exempt Resales by the Initial Purchaser and in connection with
market-making activities of the Initial Purchaser for so long as any Securities
are outstanding, (i) not to make any amendment or supplement to the Offering
Memorandum of which the Initial Purchaser shall not previously have been advised
or to which the Initial Purchaser shall reasonably object after being so advised
and (ii) to prepare promptly, upon the Initial Purchaser's reasonable request,
any amendment or supplement to the Offering Memorandum which may be necessary or
advisable in connection with such Exempt Resales or such market-making
activities.
(d) If, during the period referred to in Section 5(c) above, any event
shall occur or condition shall exist as a result of which, in the opinion of
counsel to the Initial Purchaser, it becomes necessary to amend or supplement
the Offering Memorandum in order to make the statements therein, in the light of
the circumstances when such Offering Memorandum is delivered by the Initial
Purchaser, not misleading, or if, in the opinion of counsel to the Initial
Purchaser, it is necessary to amend or supplement the Offering Memorandum to
comply with any applicable law, forthwith to prepare an appropriate amendment or
supplement to such Offering Memorandum so that the statements therein, as so
amended or supplemented, will not, in the light of the circumstances when it is
so delivered, be misleading, or so that such Offering Memorandum will comply
with applicable law, and to furnish to the Initial Purchaser and such other
persons as the Initial Purchaser may designate such number of copies thereof as
the Initial Purchaser may reasonably request.
(e) Prior to the sale of all Units pursuant to Exempt Resales as
contemplated hereby, to cooperate with the Initial Purchaser and counsel to the
Initial Purchaser in connection with the registration or qualification of the
Units for offer and sale to the Initial Purchaser and pursuant to Exempt Resales
under the securities or Blue Sky laws of such jurisdictions as the Initial
Purchaser may request and to continue such registration or qualification in
effect so long as required for Exempt Resales and to file such consents to
service of process or other documents as may be necessary in order to effect
such registration or qualification; provided, however, that neither Issuer shall
be required in connection therewith to qualify as a foreign entity in any
jurisdiction in which it is now so qualified or to take any action that would
subject it to general consent to service of process or taxation, other than as
to matters and transactions relating to the Preliminary Offering Memorandum, the
Offering Memorandum or Exempt Resales, in any jurisdiction in which it is now so
subject.
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<PAGE> 8
(f) So long as any of the Securities are outstanding and the Indenture
or Warrant Agreement so requires, (i) to mail and make generally available as
soon as practicable after the end of each fiscal year to the record holders of
the Securities a financial report of the Issuers and their subsidiaries on a
consolidated basis, all such financial reports to include a consolidated balance
sheet, a consolidated statement of operations, a consolidated statement of cash
flows and a consolidated statement of shareholders' equity as of the end of and
for such fiscal year, together with comparable information as of the end of and
for the preceding year, certified by the Issuer's independent public accountants
and (ii) to mail and make generally available as soon as practicable after the
end of each quarterly period (except for the last quarterly period of each
fiscal year) to such holders, a consolidated balance sheet, a consolidated
statement of operations and a consolidated statement of cash flows as of the end
of and for such period, and for the period from the beginning of such year to
the close of such quarterly period, together with comparable information for the
corresponding periods of the preceding year.
(g) So long as any of the Securities are outstanding, to furnish to the
Initial Purchaser as soon as available copies of all reports or other
communications furnished by either Issuer to its security holders or furnished
to or filed with the Commission or any national securities exchange on which any
class of securities of either Issuer is listed and such other publicly available
information concerning either Issuer and/or their subsidiaries as the Initial
Purchaser may reasonably request.
(h) So long as any of the Series A Notes or Warrants remain outstanding
and during any period in which either Issuer is not subject to Section 13 or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
to make available to any holder of Series A Notes or Warrants in connection with
any sale thereof and any prospective purchaser of such Series A Notes or
Warrants from such holder, the information ("Rule 144A Information") required
by Rule 144A(d)(4) under the Securities Act.
(i) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of the obligations of each Issuer under
this Agreement, including: (i) the fees, disbursements and expenses of counsel
to the Issuers and accountants of the Issuers in connection with the sale and
delivery of the Units to the Initial Purchaser and pursuant to Exempt Resales,
and all other fees and expenses in connection with the preparation, printing,
filing and distribution of the Preliminary Offering Memorandum, the Offering
Memorandum and all amendments and supplements to any of the foregoing (including
financial statements), including the mailing and delivering of copies thereof to
the Initial Purchaser and persons designated by it in the quantities specified
herein, (ii) all costs and expenses related to the transfer and delivery of the
Units to the Initial Purchaser and pursuant to Exempt Resales, including any
transfer or other taxes payable thereon, (iii) all costs of printing or
producing this Agreement, the other Operative Documents and any other agreements
or documents in connection with the offering, purchase, sale or delivery of the
Units, (iv) all expenses in connection with the registration or qualification of
the Units for offer and sale under the securities or Blue Sky laws of the
several states and all costs of printing or producing any preliminary and
supplemental Blue Sky memoranda in connection therewith (including the filing
fees and fees and disbursements of counsel for the Initial Purchaser in
connection with such registration or qualification and memoranda relating
thereto), (v) the cost of printing
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<PAGE> 9
certificates representing the Securities, (vi) all expenses and listing fees in
connection with the application for quotation of the Units in the National
Association of Securities Dealers, Inc. ("NASD") Automated Quotation System -
PORTAL ("PORTAL"), (vii) the fees and expenses of the Trustee and the Warrant
Agent and their respective counsel in connection with the Indenture, the Notes,
the Warrant Agreement and the Warrants, (viii) the costs and charges of any
transfer agent, registrar and/or depositary (including the DTC), (ix) any fees
charged by rating agencies for the rating of the Notes, (x) all costs and
expenses of the Exchange Offer and any Registration Statement, as set forth in
the Registration Rights Agreements, and (xi) and all other costs and expenses
incident to the performance of the obligations of the Issuers hereunder and
under the Registration Rights Agreements for which provision is not otherwise
made in this Section.
(j) To use its best efforts to effect the inclusion of the Units,
Series A Notes and Warrants in PORTAL and to maintain the listing of the Units,
Series A Notes and Warrants on PORTAL for so long as any Units, Series A Notes
or Warrants are outstanding.
(k) To obtain the approval of DTC for "book-entry" transfer of the
Securities, and to comply with all agreements set forth in the representation
letters of the Issuers to DTC relating to the approval of the Securities by DTC
for "book-entry" transfer.
(l) During the period beginning on the date hereof and continuing to
and including the Closing Date, not to offer, sell, contract to sell or
otherwise transfer or dispose of any securities of either Issuer or any
warrants, rights or options to purchase or otherwise acquire securities of
either Issuer substantially similar to the Units, Notes, Warrants or Common
Stock (other than (i) the Units, Notes, Warrants or Warrant Shares and (ii)
commercial paper issued in the ordinary course of business), without the prior
written consent of the Initial Purchaser.
(m) Not to sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in the Securities Act) that
would be integrated with the sale of the Units, the Series A Notes or the
Warrants to the Initial Purchaser or pursuant to Exempt Resales in a manner that
would require the registration of any such sale of the Units, the Series A Notes
or the Warrants under the Securities Act.
(n) Not to voluntarily claim, and to actively resist any attempts to
claim, the benefit of any usury laws against the holders of any Notes.
(o) To cause the Exchange Offer to be made in the appropriate form to
permit Series B Notes registered pursuant to the Securities Act to be offered in
exchange for the Series A Notes, subject to the limitations contemplated by the
A/B Registration Rights Agreement, and to comply with all applicable federal and
state securities laws in connection with the Exchange Offer.
(p) To comply with all of its agreements set forth in the Registration
Rights Agreements.
(q) To cause the Offer to Purchase (as defined in Offering Memorandum)
to be consummated no later than November 20, 1998.
(r) To enter into the New Credit Facility (as defined in Offering
Memorandum) no later than November 20, 1998.
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<PAGE> 10
(s) To use its best efforts to do and perform all things required or
necessary to be done and performed under this Agreement by it prior to the
Closing Date and to satisfy all conditions precedent to the delivery of the
Units.
(t) For so long as any of the Securities are outstanding and during
such period after the Closing Date as, in the opinion of counsel for the Initial
Purchaser, an Offering Memorandum is required by law to be delivered in
connection with market-making activities of the Initial Purchaser, to (i)
periodically amend the Offering Memorandum so that the Offering Memorandum would
comply with the requirements of Section 10(a) of the Securities Act if the
Series A Notes or the Warrants were being offered and sold pursuant to a
registration statement under the Securities Act, (ii) amend or supplement the
Offering Memorandum when necessary to reflect any material changes in the
information provided therein, and (iii) provide the Initial Purchaser with
copies of each such amendment or supplement and such other documents, including
opinions of counsel and "comfort" letters, as the Initial Purchaser may
reasonably request.
6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE ISSUERS. As of the
date hereof, each Issuer represents and warrants to, and agrees with, the
Initial Purchaser that:
(a) The Preliminary Offering Memorandum as of its date did not, and the
Offering Memorandum does not, and any supplement or amendment to them will not,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
except that the representations and warranties contained in this paragraph (a)
shall not apply to statements in or omissions from the Preliminary Offering
Memorandum or the Offering Memorandum (or any supplement or amendment thereto)
based upon information relating to the Initial Purchaser furnished to either
Issuer in writing by the Initial Purchaser expressly for use therein. No stop
order preventing the use of the Preliminary Offering Memorandum or the Offering
Memorandum, or any amendment or supplement thereto, or any order asserting that
any of the transactions contemplated by this Agreement are subject to the
registration requirements of the Securities Act, has been issued.
(b) Each of the Issuers and their subsidiaries listed on Schedule B
hereto (each, a "Significant Subsidiary") has been duly organized, is validly
existing and in good standing under the laws of its jurisdiction of organization
and has the requisite power and authority to carry on its business as described
in the Preliminary Offering Memorandum and the Offering Memorandum and to own,
lease and operate its properties, and is duly qualified and is in good standing
as a foreign entity authorized to do business in each jurisdiction in which the
nature of its business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified would not (i) have a
material adverse effect on the business, prospects, financial condition or
results of operations of Holdings and its subsidiaries, taken as a whole or (ii)
in any manner draw into question the validity of any of the Operative Documents
(the events referred to in clauses (i) and (ii), a "Material Adverse Effect").
(c) All equity interests of each Issuer have been duly authorized and
validly issued and are fully paid, non-assessable and not subject to any
preemptive or similar rights.
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<PAGE> 11
(d) The entities listed on Schedule A hereto are the only subsidiaries,
direct or indirect, of Holdings. Except as otherwise set forth in the Offering
Memorandum, all of the outstanding equity interests of each of Holdings'
subsidiaries have been duly authorized and validly issued and are fully paid and
non-assessable and are owned by Holdings, directly or indirectly through one or
more subsidiaries, free and clear of any security interest, claim, lien,
encumbrance or adverse interest of any nature (each, a "Lien") except for
Liens under the Credit Facility.
(e) This Agreement has been duly authorized, executed and delivered by
each Issuer.
(f) The Issuers have duly and validly authorized the issuance of the
Series A Notes and the Warrants as a Unit.
(g) The Indenture has been duly authorized by Insilco, and on the
Closing Date, will have been validly executed and delivered by Insilco. When the
Indenture has been duly executed and delivered by Insilco, the Indenture will be
a valid and binding agreement of Insilco, enforceable against Insilco in
accordance with its terms, except as (i) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability. On the
Closing Date, the Indenture will conform in all material respects to the
requirements of the Trust Indenture Act of 1939, as amended (the "TIA" or
"Trust Indenture Act"), and the rules and regulations of the Commission
applicable to an indenture which is qualified thereunder.
(h) The Series A Notes have been duly authorized and, on the Closing
Date, will have been validly executed and delivered by Insilco. When the Series
A Notes have been issued, executed and authenticated in accordance with the
provisions of the Indenture and delivered to and paid for by the Initial
Purchaser in accordance with the terms of this Agreement, the Series A Notes
will be entitled to the benefits of the Indenture and will be valid and binding
obligations of Insilco, enforceable in accordance with their terms, except as
(i) the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and (ii) rights of
acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability. On the Closing Date, the Series A
Notes will conform as to legal matters to the description thereof contained in
the Offering Memorandum.
(i) The Series B Notes have been duly authorized by Insilco. When the
Series B Notes are issued, executed and authenticated in accordance with the
terms of the Exchange Offer and the Indenture, the Series B Notes will be
entitled to the benefits of the Indenture and will be the valid and binding
obligations of Insilco, enforceable against Insilco in accordance with their
terms, except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and (ii) rights
of acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability.
(j) The Warrant Agreement has been duly authorized by Holdings and, on
the Closing Date, will have been validly executed and delivered by Holdings.
When the Warrant Agreement has been validly executed and delivered, the Warrant
Agreement will constitute the
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<PAGE> 12
valid and binding agreement of Holdings, enforceable against Holdings in
accordance with its terms, except as (i) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability.
(k) The Warrants have been duly authorized by Holdings and, on the
Closing Date, will have been validly delivered by Holdings. When the Warrants
have been validly issued and countersigned and upon delivery to the Initial
Purchaser against payment therefor in accordance with the terms hereof, the
Warrants will be entitled to the benefits of the Warrant Agreement and will be
valid and binding obligations of Holdings, enforceable against Holdings in
accordance with their terms except as (i) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability.
(l) Holdings has duly authorized and reserved for issuance the Warrant
Shares to be issued upon the exercise of the Warrants and, when issued and
delivered upon the exercise of the Warrants against payment of the exercise
price as provided in the Warrant Agreement, the Warrant Shares will have been
validly issued and will be fully paid and non assessable, and the issuance of
the Warrant Shares will not be subject to any preemptive or similar rights.
(m) The Registration Rights Agreements have been duly authorized by the
Issuer party thereto and, on the Closing Date, will have been duly executed and
delivered by such Issuer. When each Registration Rights Agreement has been duly
executed and delivered, such Registration Rights Agreement will be a valid and
binding agreement of such Issuer, enforceable against such Issuer in accordance
with its terms, except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights generally,
(ii) rights of acceleration and the availability of equitable remedies may be
limited by equitable principles of general applicability and (iii) rights to
indemnity and contribution thereunder may be limited by applicable law. On the
Closing Date, the Registration Rights Agreements will conform as to legal
matters to the descriptions thereof in the Offering Memorandum.
(n) (1) All of the indebtedness represented by the Series A Notes is
being incurred for proper purposes and in good faith. (2) As of the date hereof
(a) the fair value and present fair saleable value of the assets of Holdings and
its subsidiaries exceeds and would exceed their stated liabilities and
identified contingent liabilities, (b) Holdings and its subsidiaries should be
able to pay their debts as they become absolute and matured and (c) the capital
of Holdings and its subsidiaries is not and would not be unreasonably small for
the business in which it each of them is engaged.
(o) Neither of the Issuers nor any of their subsidiaries is in
violation of their respective organizational documents or, except as otherwise
set forth in the Offering Memorandum, in default in the performance of any
obligation, agreement, covenant or condition contained in any indenture, loan
agreement, mortgage, lease or other agreement or instrument to which either
Issuer or any of their subsidiaries is a party or by which either Issuer
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<PAGE> 13
or any of their subsidiaries or their respective property is bound, except for
such defaults which, singly or in the aggregate, would not have a Material
Adverse Effect.
(p) The execution, delivery and performance by each Issuer of each of
the Operative Documents to which it is a party, the compliance by each Issuer
with all provisions thereof and the consummation of the transactions
contemplated thereby, and the consummation of the Offer to Purchase (as defined
in the Offering Memorandum) will not (i) require any consent, approval,
authorization or other order of, or qualification with, any court or
governmental body or agency (except such as may be required under the federal
securities or Blue Sky laws of the various states or have been or will be
obtained prior to the Closing Date), (ii) conflict with or constitute a breach
of any of the terms or provisions of, or a default under, (A) the organizational
documents of the Issuers or any of their subsidiaries or (B), except as
otherwise set forth in the Offering Memorandum, any indenture, loan agreement,
mortgage, lease or other agreement or instrument that is material to Holdings
and its subsidiaries, taken as a whole, to which either Issuer or any of their
subsidiaries is a party or by which either Issuer or any of their subsidiaries
or their respective property is bound, (iii) violate or conflict with any
applicable law or any rule, regulation, judgment, order or decree of any court
or any governmental body or agency having jurisdiction over either Issuer or any
of their subsidiaries or their respective property, (iv) except as otherwise set
forth in the Offering Memorandum, result in the imposition or creation of (or
the obligation to create or impose) a Lien under any agreement or instrument to
which either Issuer or any of their subsidiaries is a party or by which either
Issuer or any of their subsidiaries or their respective property is bound, or
(v) result in the termination, suspension or revocation of any Authorization (as
defined below) of either Issuer or any of their subsidiaries or result in any
other impairment of the rights of the holder of any such Authorization, except,
in the case of clauses (i), (ii)(B), (iv) and (v), as would not, singly or in
the aggregate, have a Material Adverse Effect.
(q) To the best knowledge of each Issuer, no action has been taken and
no law, statute, rule or regulation or order has been enacted, adopted or issued
by any governmental agency or body which prevents the execution, delivery and
performance of any of this Agreement, the Indenture, the Notes, the Warrants,
the Warrant Agreement or any of the other Operative Documents or the issuance of
the Securities, or suspends the sale of the Securities in any jurisdiction
referred to in Section 5(e) and no injunction, restraining order or other order
or relief of any nature by a federal or state court or other tribunal of
competent jurisdiction has been issued with respect to either Issuer which would
prevent or suspend the issuance or sale of the Units in any jurisdiction
referred to in Section 5(e).
(r) There are no legal or governmental proceedings pending or
threatened to which either Issuer or any of their subsidiaries is or could be a
party or to which any of their respective property is or could be subject, which
might result, singly or in the aggregate, in a Material Adverse Effect.
(s) To the best knowledge of each Issuer, neither Issuer nor any of
their subsidiaries has violated any foreign, federal, state or local law or
regulation relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), any provisions of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or any provisions of the
Foreign Corrupt Practices
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Act or the rules and regulations promulgated thereunder, except for such
violations which, singly or in the aggregate, would not have a Material Adverse
Effect.
(t) There are no known costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance with
Environmental Laws or any Authorization, any related constraints on operating
activities and any potential liabilities to third parties) which would, singly
or in the aggregate, have a material adverse effect on the business, financial
condition or results of operations of Holdings and its subsidiaries, taken as a
whole.
(u) Each of the Issuers and their subsidiaries has such permits,
licenses, consents, exemptions, franchises, authorizations and other approvals
(each, an "Authorization") of, and has made all filings with and notices to,
all governmental or regulatory authorities and self-regulatory organizations and
all courts and other tribunals, including without limitation, under any
applicable Environmental Laws, as are necessary to own, lease, license and
operate its respective properties and to conduct its business, except where the
failure to have any such Authorization or to make any such filing or notice
would not, singly or in the aggregate, have a Material Adverse Effect. Each such
Authorization is valid and in full force and effect and each of the Issuers and
their subsidiaries is in compliance with all the terms and conditions thereof
and with the rules and regulations of the authorities and governing bodies
having jurisdiction with respect thereto; and no event has occurred (including,
without limitation, the receipt of any notice from any authority or governing
body) which allows or, after notice or lapse of time or both, would allow,
revocation, suspension or termination of any such Authorization or results or,
after notice or lapse of time or both, would result in any other impairment of
the rights of the holder of any such Authorization; and such Authorizations
contain no restrictions that are burdensome to either Issuer or any of their
subsidiaries; except, in each case, where such failure to be valid and in full
force and effect or to be in compliance, the occurrence of any such event or the
presence of any such restriction, would not, singly or in the aggregate, have a
Material Adverse Effect.
(v) The accountants, KPMG Peat Marwick LLP, that have certified the
financial statements included in the Preliminary Offering Memorandum and the
Offering Memorandum are independent public accountants with respect to each
Issuer, as required by the Securities Act and the Exchange Act.
(w) The historical financial statements, together with related notes,
forming part of the Preliminary Offering Memorandum and the Offering Memorandum
(and any amendment or supplement thereto), present fairly the consolidated
financial position, results of operations and changes in financial position of
Insilco and its subsidiaries (and for the third quarter of 1998 Holdings and its
subsidiaries as set forth in Annex A to the Offering Memorandum) on the basis
stated in the Preliminary Offering Memorandum and the Offering Memorandum at the
respective dates or for the respective periods to which they apply; such
statements and related schedules and notes have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved, except as disclosed therein; and the other financial and
statistical information and data set forth in the Preliminary Offering
Memorandum and the Offering Memorandum (and any amendment or supplement thereto)
are, in all material respects, accurately presented and prepared on a basis
consistent with such
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financial statements and the books and records of Insilco and its subsidiaries
or Holdings and its subsidiaries, as the case may be.
(x) To the best knowledge of each Issuer, each Issuer has complied with
all provisions of Section 517.075, Florida Statues (Chapter 92-198, Laws of
Florida).
(y) The pro forma financial statements included in the Preliminary
Offering Memorandum and the Offering Memorandum have been prepared on a basis
consistent with the historical financial statements of Insilco and its
subsidiaries and give effect to assumptions used in the preparation thereof on a
reasonable basis and in good faith and present fairly the historical and
proposed transactions contemplated by the Preliminary Offering Memorandum and
the Offering Memorandum; and such pro forma financial statements comply as to
form in all material respects with the requirements applicable to pro forma
financial statements included in registration statements on Form S-1 under the
Securities Act. The other pro forma financial and statistical information and
data included in the Preliminary Offering Memorandum and the Offering Memorandum
are, in all material respects, accurately presented and prepared on a basis
consistent with the pro forma financial statements.
(z) Neither Issuer is, and after giving effect to the offering and sale
of the Units and the application of the net proceeds thereof as described in the
Offering Memorandum, neither Issuer will be, an "investment company," as such
term is defined in the Investment Company Act of 1940, as amended.
(aa) Except as otherwise set forth in the Offering Memorandum, there
are no contracts, agreements or understandings between either Issuer and any
person granting such person the right to require such Issuer to file a
registration statement under the Securities Act with respect to any securities
of the Issuer or to require such Issuer to include such securities with the
Securities registered pursuant to any Registration Statements.
(bb) Neither Issuer nor any agent thereof acting on its behalf has
taken, and none of them will take, any action that might cause this Agreement or
the issuance or sale of the Series A Notes to violate Regulation G (12 C.F.R.
Part 207), Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R. Part 221)
or Regulation X (12 C.F.R. Part 224) of the Board of Governors of the Federal
Reserve System.
(cc) No "nationally recognized statistical rating organization" (as
such term is defined for purposes of Rule 436(g)(2) under the Securities Act)
(i) has imposed (or has informed either Issuer that it is considering imposing)
any condition (financial or otherwise) on such Issuer's retaining any rating
assigned to such Issuer or any securities of such Issuer or (ii) has indicated
to such Issuer that it is considering (A) the downgrading, suspension, or
withdrawal of, or any review for a possible change that does not indicate the
direction of the possible change in, any rating so assigned or (B) any change in
the outlook for any rating of such Issuer, or any securities of such Issuer.
(dd) Since the respective dates as of which information is given in the
Offering Memorandum other than as set forth in the Offering Memorandum
(exclusive of any amendments or supplements thereto subsequent to the date of
this Agreement), (i) there has not occurred any material adverse change or any
development involving a prospective material adverse change in the condition,
financial or otherwise, or the earnings, business, management
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or operations of Holdings and its subsidiaries, taken as a whole, (ii) there has
not been any material adverse change or any development involving a prospective
material adverse change in the capital stock or in the long-term debt of
Holdings or any of its subsidiaries and (iii) neither Holdings nor any of its
subsidiaries has incurred any material liability or obligation, direct or
contingent.
(ee) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its date, contains all the information specified in, and
meeting the requirements of, Rule 144A(d)(4) under the Securities Act.
(ff) When the Series A Notes and Warrants are issued and delivered
pursuant to this Agreement, neither the Series A Notes nor the Warrants will be
of the same class (within the meaning of Rule 144A under the Securities Act) as
any security of Holdings or Insilco that is listed on a national securities
exchange registered under Section 6 of the Exchange Act or that is quoted in a
United States automated inter-dealer quotation system.
(gg) No form of general solicitation or general advertising (as defined
in Regulation D under the Securities Act) was used by either Issuer or any of
its representatives (other than the Initial Purchaser, as to whom the Issuers
make no representation) in connection with the offer and sale of the Units
contemplated hereby, including, but not limited to, articles, notices or other
communications published in any newspaper, magazine, or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising. No
securities of the same class as the Series A Notes or the Warrants have been
issued and sold by Insilco or Holdings within the six-month period immediately
prior to the date hereof.
(hh) Prior to the effectiveness of any Registration Statement, the
Indenture is not required to be qualified under the TIA.
(ii) No registration under the Securities Act of the Units, the
Warrants or the Series A Notes is required for the sale of such securities to
the Initial Purchaser as contemplated hereby or for the Exempt Resales assuming
the accuracy of the Initial Purchaser's representations and warranties and
agreements set forth in Section 7 hereof.
(jj) There is no (i) material unfair labor practice complaint,
grievance or arbitration proceeding pending or, to the best knowledge of each
Issuer, threatened against either Issuer or any of their subsidiaries before the
National Labor Relations Board or any state or local labor relations board or
(ii) strike, labor dispute, slowdown or stoppage pending or, to the best
knowledge of each Issuer, threatened against either Issuer or any of their
subsidiaries, except for such actions specified in clause (i) or (ii) above,
which, singly or in the aggregate, would not have a Material Adverse Effect. To
the best of each Issuer's knowledge, no collective bargaining organizing
activities are taking place with respect to either Issuer or any of their
subsidiaries, which, singly or in the aggregate, would have a Material Adverse
Effect.
(kk) Each of the Issuers and their subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability, and (ii) the recorded accountability
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<PAGE> 17
for assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(ll) Except as otherwise set forth in the Offering Memorandum, the
Issuers and their subsidiaries own or possess, or can acquire on reasonable
terms, all patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks and
trade names ("intellectual property") currently employed by them in connection
with the business now operated by them except where the failure to own or
possess or otherwise be able to acquire such intellectual property would not,
singly or in the aggregate, have a Material Adverse Effect; and, to the best of
each Issuer's knowledge, neither of the Issuers nor any of their subsidiaries
has received any notice of infringement of or conflict with asserted rights of
others with respect to any of such intellectual property which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
have a Material Adverse Effect.
(mm) Each certificate signed by any officer of either Issuer and
delivered to the Initial Purchaser or counsel for the Initial Purchaser shall be
deemed to be a representation and warranty by such Issuer to the Initial
Purchaser as to the matters covered thereby.
Each Issuer acknowledges that the Initial Purchaser and, for purposes
of the opinions to be delivered to the Initial Purchaser pursuant to Section 9
hereof, counsel to the Issuer and counsel to the Initial Purchaser will rely
upon the accuracy and truth of the foregoing representations and hereby consents
to such reliance.
7. INITIAL PURCHASER'S REPRESENTATIONS AND WARRANTIES. The Initial
Purchaser represents and warrants to, and agrees with, the Issuers:
(a) The Initial Purchaser is either a QIB or an institutional
"accredited investor" (as such term is defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act, an "Accredited Institution"), in either case,
with such knowledge and experience in financial and business matters as is
necessary in order to evaluate the merits and risks of an investment in the
Units.
(b) The Initial Purchaser is not acquiring the Units with a view to any
distribution thereof or with any present intention of offering or selling any of
the Units in a transaction that would violate the Securities Act or the
securities laws of any state of the United States or any other applicable
jurisdiction. The Initial Purchaser will be reoffering and reselling the Units
only to QIBs in reliance on the exemption from the registration requirements of
the Securities Act provided by Rule 144A.
(c) The Initial Purchaser agrees that no form of general solicitation
or general advertising (within the meaning of Regulation D under the Securities
Act) has been or will be used by the Initial Purchaser or any of its
representatives in connection with the offer and sale of the Units pursuant
hereto, including, but not limited to, articles, notices or other communications
published in any newspaper, magazine or similar medium or broadcast over
television or radio, or any seminar or meeting whose attendees have been invited
by any general solicitation or general advertising.
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(d) The Initial Purchaser agrees that, in connection with Exempt
Resales, the Initial Purchaser will solicit offers to buy the Units only from,
and will offer to sell the Units only to, Eligible Purchasers. The Initial
Purchaser further agrees that it will offer to sell the Units only to, and will
solicit offers to buy the Units only from Eligible Purchasers that the Initial
Purchaser reasonably believes are QIBs that agree that (x) the Units purchased
by them may be resold, pledged or otherwise transferred within the time period
referred to under Rule 144(k) (taking into account the provisions of Rule 144(d)
under the Securities Act, if applicable) under the Securities Act, as in effect
on the date of the transfer of such Units, only (I) to the Issuers or any of
their subsidiaries, (II) to a person whom the seller reasonably believes is a
QIB purchasing for its own account or for the account of a QIB in a transaction
meeting the requirements of Rule 144A under the Securities Act, (III) in a
transaction meeting the requirements of Rule 144 under the Securities Act, (IV)
to an Accredited Institution that, prior to such transfer (A) in the case of the
Series A Notes, furnishes the Trustee a signed letter containing certain
representations and agreements relating to the registration of transfer of such
Series A Notes (the form of which may be obtained from the Trustee) or (B) in
the case of the Warrants, furnishes the Warrant Agent a signed letter containing
certain representations and agreements relating to the registration of transfer
of such Warrants (the form of which may be obtained from the Warrant Agent),
and, with respect to the Series A Notes, if such transfer is in respect of an
aggregate principal amount of Series A Notes less than $250,000, and, with
respect to the Warrants, an opinion of counsel acceptable to the Issuers that
such transfer is in compliance with the Securities Act, (V) in accordance with
another exemption from the registration requirements of the Securities Act (and
based upon an opinion of counsel acceptable to the Issuer thereof) or (VI)
pursuant to an effective registration statement and, in each case, in accordance
with the applicable securities laws of any State of the United States or any
other applicable jurisdiction and (y) they will deliver to each person to whom
such Units or an interest therein is transferred a notice substantially to the
effect of the foregoing.
The Initial Purchaser acknowledges that the Issuers and, for purposes
of the opinions to be delivered to the Initial Purchaser pursuant to Section 9
hereof, counsel to the Issuers and counsel to the Initial Purchaser will rely
upon the accuracy and truth of the foregoing representations, and the Initial
Purchaser hereby consents to such reliance.
8. INDEMNIFICATION.
(a) The Issuers, jointly and severally, agree to indemnify and hold
harmless the Initial Purchaser, its directors, its officers and each person, if
any, who controls the Initial Purchaser within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages, liabilities and judgments (including, without
limitation, any legal or other expenses incurred in connection with
investigating or defending any matter, including any action, that could give
rise to any such losses, claims, damages, liabilities or judgments) caused by
any untrue statement or alleged untrue statement of a material fact contained in
the Offering Memorandum (or any amendment or supplement thereto), the
Preliminary Offering Memorandum or any Rule 144A Information provided by the
Issuers to any holder or prospective purchaser of Units pursuant to Section 5(h)
or caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities or
judgments are caused by any such untrue statement or omission or
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alleged untrue statement or omission based upon information relating to the
Initial Purchaser furnished in writing to the Issuers by the Initial Purchaser;
provided, however, that the foregoing indemnity agreement with respect to any
Preliminary Offering Memorandum shall not inure to the benefit of the Initial
Purchaser if the Initial Purchaser fails to deliver a final Offering Memorandum
(as then amended or supplemented, provided by the Issuers to the Initial
Purchaser in the requisite quantity and on a timely basis to permit proper
delivery on or prior to the Closing Date) to the person asserting any losses,
claims, damages and liabilities and judgments caused by any untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Offering Memorandum, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, if such material misstatement or omission or
alleged material misstatement or omission was cured in the final Offering
Memorandum.
(b) The Initial Purchaser agrees to indemnify and hold harmless each
Issuer and its directors and officers and each person, if any, who controls
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) such Issuer to the same extent as the foregoing indemnity from the
Issuers to the Initial Purchaser but only with reference to information relating
to the Initial Purchaser furnished in writing to the Issuers by the Initial
Purchaser expressly for use in the Preliminary Offering Memorandum or the
Offering Memorandum.
(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"Indemnified Party"), the Indemnified Party shall promptly notify the person
against whom such indemnity may be sought (the "Indemnifying Party") in
writing and the Indemnifying Party shall assume the defense of such action,
including the employment of counsel reasonably satisfactory to the Indemnified
Party and the payment of all fees and expenses of such counsel, as incurred
(except that, in the case of any action in respect of which indemnity may be
sought pursuant to both Sections 8(a) and 8(b), the Initial Purchaser shall not
be required to assume the defense of such action pursuant to this Section 8(c),
but may employ separate counsel and participate in the defense thereof, but the
fees and expenses of such counsel, except as provided below, shall be at the
expense of the Initial Purchaser). Any Indemnified Party shall have the right to
employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
the Indemnified Party unless (i) the employment of such counsel shall have been
specifically authorized in writing by the Indemnifying Party, (ii) the
Indemnifying Party shall have failed to assume the defense of such action or
employ counsel reasonably satisfactory to the Indemnified Party or (iii) the
named parties to any such action (including any impleaded parties) include both
the Indemnified Party and the Indemnifying Party, and the Indemnified Party
shall have been advised by such counsel that there may be one or more legal
defenses available to it which are different from or additional to those
available to the Indemnifying Party (in which case the Indemnifying Party shall
not have the right to assume the defense of such action on behalf of the
Indemnified Party). In any such case, the Indemnifying Party shall not, in
connection with any one action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (in addition to any local counsel) for all Indemnified Parties
and all such fees and expenses shall be reimbursed as they are incurred. Such
firm shall be designated
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in writing by Donaldson, Lufkin & Jenrette Securities Corporation, in the case
of the parties indemnified pursuant to Section 8(a), and by the Issuers, in the
case of parties indemnified pursuant to Section 8(b). The Indemnifying Party
shall indemnify and hold harmless the Indemnified Party from and against any and
all losses, claims, damages, liabilities and judgments by reason of any
settlement of any action (i) effected with its written consent or (ii) effected
without its written consent if the settlement is entered into more than twenty
business days after the Indemnifying Party shall have received a request from
the Indemnified Party for reimbursement for the fees and expenses of counsel (in
any case where such fees and expenses are at the expense of the Indemnifying
Party) and, prior to the date of such settlement, the Indemnifying Party shall
have failed to comply with such reimbursement request. No Indemnifying Party
shall, without the prior written consent of the Indemnified Party, effect any
settlement or compromise of, or consent to the entry of judgment with respect
to, any pending or threatened action in respect of which the Indemnified Party
is or could have been a party and indemnity or contribution may be or could have
been sought hereunder by the Indemnified Party, unless such settlement,
compromise or judgment (i) includes an unconditional release of the Indemnified
Party from all liability on claims that are or could have been the subject
matter of such action 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 the
Indemnified Party.
(d) To the extent the indemnification provided for in this Section 8 is
unavailable to an Indemnified Party or insufficient in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Issuers, on the one hand, and the Initial Purchaser, on the other hand, from the
offering of the Units or (ii) if the allocation provided by clause 8(d)(i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause 8(d)(i) above but
also the relative fault of the Issuers, on the one hand, and the Initial
Purchaser, on the other hand, in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or judgments, as
well as any other relevant equitable considerations. The relative benefits
received by the Issuers, on the one hand, and the Initial Purchaser, on the
other hand, shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Units (after underwriting discounts and
commissions, but before deducting expenses) received by the Issuers, and the
total discounts and commissions received by the Initial Purchaser bear to the
total price to investors of the Units, in each case, as set forth in the table
on the cover page of the Offering Memorandum. The relative fault of the Issuers,
on the one hand, and the Initial Purchaser, on the other hand, shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Issuers, on the one hand,
or the Initial Purchaser, on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Issuers and the Initial Purchaser agree that it would not be just
and equitable if contribution pursuant to this Section 8(d) were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified
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Party as a result of the losses, claims, damages, liabilities or judgments
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses incurred
by such Indemnified Party in connection with investigating or defending any
matter, including any action, that could have given rise to such losses, claims,
damages, liabilities or judgments. Notwithstanding the provisions of this
Section 8, the Initial Purchaser shall not be required to contribute any amount
in excess of the amount by which the total discounts and commissions received by
the Initial Purchaser exceeds the amount of any damages which the Initial
Purchaser has otherwise been required to pay by reason of 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 Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) The remedies provided for in this Section 8 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
Indemnified Party at law or in equity.
9. CONDITIONS OF INITIAL PURCHASER'S OBLIGATIONS. The obligations of
the Initial Purchaser to purchase the Units under this Agreement are subject to
the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Issuers contained in
this Agreement shall be true and correct on the Closing Date with the same force
and effect as if made on and as of the Closing Date.
(b) On or after the date hereof, (i) there shall not have occurred any
downgrading, suspension or withdrawal of, nor shall any notice have been given
of any potential or intended downgrading, suspension or withdrawal of, or of any
review (or of any potential or intended review) for a possible change that does
not indicate the direction of the possible change in, any rating of either
Issuer or any securities of either Issuer (including, without limitation, the
placing of any of the foregoing ratings on credit watch with negative or
developing implications or under review with an uncertain direction) by any
"nationally recognized statistical rating organization" (as such term is
defined for purposes of Rule 436(g)(2) under the Securities Act), (ii) there
shall not have occurred any change, nor shall any notice have been given of any
potential or intended change, in the outlook for any rating of either Issuer or
any securities of either Issuer by any such rating organization and (iii) no
such rating organization shall have given notice that it has assigned (or is
considering assigning) a lower rating to the Notes than that on which the Notes
were marketed.
(c) Since the respective dates as of which information is given in the
Offering Memorandum other than as set forth in the Offering Memorandum
(exclusive of any amendments or supplements thereto subsequent to the date of
this Agreement), (i) there shall not have occurred any change or any development
involving a prospective change in the condition, financial or otherwise, or the
earnings, business, management or operations of Holdings and its subsidiaries,
taken as a whole, (ii) there shall not have been any change or any development
involving a prospective change in the capital stock or in the long-term debt of
either Issuer or any of their subsidiaries and (iii) neither of the Issuers nor
any of their subsidiaries shall have incurred any liability or obligation,
direct or contingent, the effect of
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which, in any such case described in clause 9(c)(i), 9(c)(ii) or 9(c)(iii), in
the judgment of the Initial Purchaser, is material and adverse and, in the
judgment of the Initial Purchaser, makes it impracticable to market the Units on
the terms and in the manner contemplated in the Offering Memorandum.
(d) You shall have received on the Closing Date a certificate dated the
Closing Date, signed by the President and the Chief Financial Officer of each
Issuer, confirming the matters set forth in Sections 6(cc), 9(a), 9(b) and 9(c)
and stating that such Issuer has complied with all the agreements and satisfied
all of the conditions herein contained and required to be complied with or
satisfied on or prior to the Closing Date.
(e) The Initial Purchaser shall have received on the Closing Date an
opinion (satisfactory to the Initial Purchaser and counsel for the Initial
Purchaser), dated the Closing Date, of Kenneth H. Koch, General Counsel for the
Issuers, to the effect that:
(i) each Issuer has been duly incorporated and is validly
existing in good standing under the laws of its jurisdiction of
organization and has the requisite power to enter into the Operative
Documents to which it is a party;
(ii) all the outstanding shares of capital stock of Insilco
are duly authorized and validly issued and are fully paid and
non-assessable and have not been issued in violation of any preemptive
rights pursuant to law or Insilco's certificate of incorporation;
(iii) all the shares of capital stock of Holdings
outstanding prior to the Mergers and the Merger Financing (as such
terms are defined in the Offering Memorandum), and any shares of
capital stock of Holdings issued subsequent to the Mergers and prior to
the date hereof, are duly authorized and validly issued and, to such
counsel's knowledge, fully paid and non-assessable and have not been
issued in violation of any preemptive rights pursuant to law or
Holding's certificate of incorporation;
(iv) each Significant Subsidiary is a corporation duly
incorporated, validly existing and in good standing under the laws of
its jurisdiction of incorporation and has all requisite corporate power
and authority to own its properties and to carry on its business as now
being conducted. Each Issuer and each Significant Subsidiary is a
corporation duly qualified to transact business and is in good standing
as a foreign corporation in each jurisdiction where the character of
its activities requires such qualification, except where the failure to
be so qualified would not have a Material Adverse Effect;
(v) all of the outstanding shares of the capital stock of
each Significant Subsidiary are duly authorized, validly issued, and,
to such counsel's knowledge, fully paid and nonassessable, and have not
been issued in violation of any preemptive rights pursuant to law or in
such certificate of incorporation of such Significant Subsidiary, and
all of the outstanding shares of the capital stock of each Significant
Subsidiary are owned by Insilco, however, as set forth in the Offering
Memorandum, all of such shares have been pledged to Insilco's lenders
under the Existing Credit Facility (as such term is defined in the
Offering Memorandum) and are expected to be pledged to Insilco's
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lenders under the New Credit Facility (as such term is defined in the
Offering Memorandum);
(vi) to such counsel's knowledge, there is no material
document, agreement or other instrument to which either Issuer is a
party (other than the Registration Rights Agreements, the Pledge
Agreement between Holdings and the lenders pursuant to the Existing
Credit Facility, with respect to the pledge of Insilco stock, and such
other registration rights agreements as are described in the Offering
Memorandum) granting any person the right to require either Issuer to
file a registration statement under the Securities Act with respect to
any securities of the Issuers or to require either Issuer to include
such securities with the Securities registered pursuant to any
Registration Statement; and
(vii) the execution, delivery and performance by the Issuers
of the Operative Documents to which each is a party, the consummation
of the transactions contemplated thereby and compliance by the Issuers
with the provisions thereof, and the consummation of the Offer to
Purchase, will not (i) except to the extent such has been obtained,
require any consent, approval, authorization or other order of, or
qualification with, any court or governmental body or agency (except
such as may be required under the Securities Act or the securities or
Blue Sky laws of the various states or by NASD or the Secretary of
State of Delaware), (ii) conflict with or constitute a breach of any of
the terms or provisions of, or a default under, (A) the certificate of
incorporation or bylaws of Insilco or Holdings, as the case may be, or
(B), assuming receipt of the consents from the lenders under the
Existing Credit Facility as described in the Offering Memorandum,
require any consent or approval (which has not been obtained or waived)
of parties to, or conflict with or constitute a breach of any of the
terms or provisions of, or a default under, any document, agreement or
other instrument to which Holdings or any of its subsidiaries is a
party or by which any of them is bound, (iii) to such counsel's
knowledge, violate or conflict with any statute or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over Holdings or any of its subsidiaries or any of their
respective properties, or (iv) result in the termination, suspension or
revocation of any Authorization of Holdings or any of its subsidiaries,
except in the case of clauses (i), (ii)(B), (iii) and (iv), as would
not, singly or in the aggregate, have a Material Adverse Effect.
The opinion of Kenneth H. Koch described in this Section 9(e) shall be
rendered to the Initial Purchaser at the request of the Issuers and shall so
state therein.
(f) The Initial Purchaser shall have received on the Closing Date an
opinion (satisfactory to the Initial Purchaser and counsel for the Initial
Purchaser), dated the Closing Date, of Davis Polk & Wardwell, to the effect
that:
(i) each Issuer is validly existing in good standing
under the laws of its jurisdiction of organization and has the
requisite power to enter into the Operative Documents to which it
is a party;
(ii) assuming all the outstanding shares of capital stock
of Insilco have been duly authorized and validly issued and are fully
paid and non-assessable, all shares of
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capital stock of Holdings issued in connection with the Mergers and the
Merger Financing were duly authorized and validly issued and are fully
paid and non-assessable and not subject to any preemptive or similar
rights, as applicable;
(iii) the execution, delivery and performance by each Issuer
of this Agreement and the other Operative Documents to which each
Issuer is a party, the compliance by each Issuer with the provisions
hereof and thereof, and the consummation of the Offer to Purchase, will
not (i) require any consent, approval, authorization or other order of,
or qualification with, any court or governmental body or agency (except
such as may be required under the Securities Act or the securities or
Blue Sky laws of the various states or by NASD or the Secretary of
State of Delaware), (ii) conflict with or constitute a breach of any of
the terms or provisions of, or a default under, (A) the certificate of
incorporation or bylaws of Insilco or Holdings, as the case may be, or
(B) require any consent or approval (which has not been obtained or
waived) of parties to, or conflict with or constitute a breach of any
of the terms or provisions of, or a default under, the Indenture dated
as of August 12, 1997 relating to the 10.25% Senior Subordinated Notes
due 2007 of Insilco, the Indenture dated as of August 17, 1998 relating
to the 14% Senior Discount Notes due 2008 of Holdings, any of the
Operative Documents or the Warrant Agreement or the Registration Rights
Agreements as defined in the Purchase Agreement, dated as of August 12,
1998, relating to the Holdings Units, (iii) violate or conflict with
any laws, rules, regulations or rulings normally applicable to general
business corporations in relation to transactions of the type
contemplated by the aforementioned agreements or court decrees
applicable to either Issuer or their properties, or (iv) result in the
imposition or creation of a Lien under any agreement referred to in
clause (ii)(B), except in the case of clauses (i), (ii)(B) and (iv), as
would not, singly or in the aggregate, have a Material Adverse Effect;
(iv) the Series A Notes have been duly authorized by
Insilco and, when executed and authenticated in accordance with the
provisions of the Indenture and delivered to and paid for by the
Initial Purchaser in accordance with the terms of this Agreement, will
be entitled to the benefits of the Indenture and will be valid and
binding obligations of Insilco, enforceable against Insilco in
accordance with their terms, except as (x) the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights and remedies generally, (y) as
such enforcement may be limited by equitable principles of general
applicability, regardless of whether enforcement is sought in a
proceeding at law or in equity and (z) to the extent that a waiver of
rights under any usury or stay law may be unenforceable;
(v) the Indenture has been has been duly authorized,
executed and delivered by Insilco and is a valid and binding agreement
of Insilco, enforceable against Insilco in accordance with its terms,
except as (x) the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
creditors' rights and remedies generally, (y) as such enforcement may
be limited by equitable principles of general applicability, regardless
of whether enforcement is sought in a proceeding at law or in equity
and (z) to the extent that a waiver of rights under any usury or stay
law may be unenforceable;
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(vi) the Series B Notes have been duly authorized;
(vii) this Agreement has been duly authorized, executed and
delivered by each Issuer;
(viii) the Warrants have been duly authorized by Holdings
and, when executed and countersigned in accordance with the provisions
of the Warrant Agreement and delivered to and paid for by the Initial
Purchaser in accordance with the terms of this Agreement, will be
entitled to the benefits of the Warrant Agreement and will be valid and
binding obligations of Holdings, enforceable against Holdings in
accordance with their terms, except as (x) the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization or moratorium
or similar laws affecting creditors' rights and remedies generally and
(y) as such enforcement may be limited by equitable principles of
general applicability, regardless of whether enforcement is sought in a
proceeding at law or in equity;
(ix) the Warrant Agreement has been has been duly
authorized, executed and delivered by Holdings and is a valid and
binding agreement of Holdings, enforceable against Holdings in
accordance with its terms, except as (x) the enforceability thereof may
be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights and remedies generally and (y)
as such enforcement may be limited by equitable principles of general
applicability, regardless of whether enforcement is sought in a
proceeding at law or in equity;
(x) each of the Registration Rights Agreements has been
duly authorized, executed and delivered by the Issuer party thereto and
is a valid and binding agreement of such Issuer, enforceable against
such Issuer in accordance with its terms, except as (x) the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
and remedies generally, (y) as such enforcement may be limited by
equitable principles of general applicability, regardless of whether
enforcement is sought in a proceeding at law or in equity, and (z) as
rights to indemnity and contribution thereunder may be limited by
applicable law;
(xi) Holdings has duly authorized and reserved for issuance
the Warrant Shares to be issued upon the exercise of the Warrants and,
when issued and delivered upon the exercise of the Warrants against
payment of the exercise price as provided in the Warrant Agreement,
will have been validly issued and will be fully paid and non
assessable, and the issuance of the Warrant Shares will not be subject
to any preemptive or similar statutory rights;
(xii) the statements under the captions "Certain
Relationships and Related Party Transactions," "Description of
Certain Indebtedness," "Description of Holdings Capital Stock"
(other than the second sentence thereof), "Description of Units,"
"Description of the Notes," "Description of Warrants" and "Plan of
Distribution" and the description of the existing employment
agreements under "Executive Compensation - Employment and Severance
Benefit Agreements" in the Offering Memorandum, insofar as such
statements constitute a summary of the legal matters or documents
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<PAGE> 26
referred to therein, fairly present in all material respects such legal
matters or documents;
(xiii) the statements made in the Offering Memorandum under
the caption "Certain Federal Income Tax Consequences," insofar as
they purport to constitute summaries of matters of United States
federal tax law and regulations or legal conclusions with respect
thereto, constitute accurate summaries of the matters described therein
in all material respects;
(xiv) the Indenture complies as to form in all material
respects with the requirements of the TIA, and the rules and
regulations of the Commission applicable to an indenture which is
qualified thereunder;
(xv) it is not necessary in connection with the offer, sale
and delivery of the Units to the Initial Purchaser in the manner
contemplated by this Agreement or in connection with the initial
placement of the Units by the Initial Purchaser in the manner
contemplated by the Offering Memorandum pursuant to Exempt Resales to
qualify the Indenture under the TIA, and no registration under the
Securities Act of the Units, the Series A Notes or the Warrants is
required for the sale of the Units, the Series A Notes and the Warrants
to the Initial Purchaser as contemplated by this Agreement or for the
initial placement of the Units by the Initial Purchaser in the manner
contemplated by the Offering Memorandum pursuant to Exempt Resales
assuming that (i) each Eligible Purchaser is a QIB, (ii) the accuracy
of, and compliance with, the Initial Purchaser's representations and
agreements contained in Section 7 of this Agreement, and (iii) the
accuracy of the agreements and representations of the Issuers set forth
in Sections 5(h) and (m) and 6(ee), (ff) and (gg) of this Agreement;
and
(xvi) Neither Issuer is, after giving effect to the offering
and sale of the Units in accordance with the terms of this Agreement
and the application of the net proceeds thereof as described in the
Offering Memorandum under the caption "Use of Proceeds," an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended.
In addition, such counsel shall state that it has participated in the
preparation of the Offering Memorandum and any amendments or supplements
thereto, if applicable, and that although such counsel has not independently
verified the accuracy, completeness or fairness of the statements contained
therein, no facts have come to such counsel's attention to cause it to believe
that, as of the date of the Offering Memorandum or as of the Closing Date, the
Offering Memorandum, as amended or supplemented, if applicable (except for the
financial statements and other financial or statistical data included therein or
omitted therefrom, as to which such counsel need not express any belief)
contains any untrue statement of a material fact 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.
The opinions of Davis Polk & Wardwell described in this Section 9(p)
shall be rendered to the Initial Purchaser at the request of the Issuers and
shall so state therein.
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(g) The Initial Purchaser shall have received, at the Closing Date, an
opinion, dated the Closing Date, of Simpson Thacher & Bartlett, counsel for the
Initial Purchaser, in form and substance satisfactory to the Initial Purchaser.
(h) The Initial Purchaser shall have received, at the time this
Agreement is executed and at the Closing Date, letters dated the date hereof or
the Closing Date, as the case may be, in form and substance satisfactory to the
Initial Purchaser from KPMG Peat Marwick, independent public accountants,
containing the information and statements of the type ordinarily included in
accountants' "comfort letters" with respect to the financial statements and
certain financial information contained in the Offering Memorandum.
(i) The Units shall have been approved by the NASD for trading and duly
listed in PORTAL.
(j) The Initial Purchaser shall have received a counterpart, conformed
as executed, of (i) the Indenture which shall have been entered into by Insilco
and the Trustee and (ii) the Warrant Agreement which shall have been entered
into by Holdings and the Warrant Agent.
(k) Each Issuer shall have executed the Operative Documents to which it
is a party, and the Initial Purchaser shall have received an original copy
thereof, duly executed by such Issuer.
(l) Neither Issuer shall have failed at or prior to the Closing Date to
perform or comply with any of the agreements herein contained and required to be
performed or complied with by such Issuer at or prior to the Closing Date.
10. EFFECTIVENESS OF AGREEMENT AND TERMINATION. This Agreement shall
become effective upon the execution and delivery of this Agreement by the
parties hereto.
This Agreement may be terminated at any time on or prior to the Closing
Date by the Initial Purchaser by written notice to the Issuers if any of the
following has occurred: (i) any outbreak or escalation of hostilities or other
national or international calamity or crisis or change in economic conditions or
in the financial markets of the United States or elsewhere that, in the Initial
Purchaser's judgment, is material and adverse and, in the Initial Purchaser's
judgment, makes it impracticable to market the Units on the terms and in the
manner contemplated in the Offering Memorandum, (ii) the suspension or material
limitation of trading in securities or other instruments on the New York Stock
Exchange, the American Stock Exchange, the Chicago Board of Options Exchange,
the Chicago Mercantile Exchange, the Chicago Board of Trade or the Nasdaq
National Market or limitation on prices for securities or other instruments on
any such exchange or the Nasdaq National Market, (iii) the suspension of trading
of any securities of either Issuer on any exchange or in the over-the-counter
market, (iv) the enactment, publication, decree or other promulgation of any
federal or state statute, regulation, rule or order of any court or other
governmental authority which, in the Initial Purchaser's opinion, materially and
adversely affects, or will materially and adversely affect, the business,
prospects, financial condition or results of operations of Holdings and its
subsidiaries, taken as a whole, (v) the declaration of a banking moratorium by
either federal or New York State authorities or (vi) the taking of any action by
any federal, state or local government or agency in respect of its monetary or
fiscal affairs which, in the Initial Purchaser's opinion, has a material adverse
effect on the financial markets in the United States.
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11. MISCELLANEOUS. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (i) if to either Issuer, at 425 Metro
Place North, 5th Floor, Dublin, OH 43017, Attn: Chief Financial Officer, and
(ii) if to the Initial Purchaser, to Donaldson, Lufkin & Jenrette Securities
Corporation, 277 Park Avenue, New York, New York 10172, Attention: Syndicate
Department, or in any case to such other address as the person to be notified
may have requested in writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Issuers and the Initial Purchaser set
forth in or made pursuant to this Agreement shall remain operative and in full
force and effect, and will survive delivery of and payment for the Units,
regardless of (i) any investigation, or statement as to the results thereof,
made by or on behalf of the Initial Purchaser, the officers or directors of the
Initial Purchaser, any person controlling the Initial Purchaser, the Issuers,
the officers or directors of the Issuers, or any person controlling the Issuer,
(ii) acceptance of the Units and payment for them hereunder and (iii)
termination of this Agreement.
If for any reason the Units are not delivered by or on behalf of the
Issuers as provided herein (other than as a result of any termination of this
Agreement pursuant to Section 10), Insilco agrees to reimburse the Initial
Purchaser for all out-of-pocket expenses (including the fees and disbursements
of counsel) incurred by them. Notwithstanding any termination of this Agreement,
Insilco shall be liable for all expenses which the Issuers have agreed to pay
pursuant to Section 5(i) hereof. Insilco also agrees to reimburse the Initial
Purchaser and its officers, directors and each person, if any, who controls the
Initial Purchaser within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act for any and all fees and expenses (including
without limitation the fees and expenses of counsel) incurred by them in
connection with enforcing their rights under this Agreement (including without
limitation their rights under Section 8).
27
<PAGE> 29
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Issuers, the Initial
Purchaser, the Initial Purchaser's directors and officers, any controlling
persons of the Initial Purchaser referred to herein, each Issuer's directors and
officers, any controlling persons of the Issuers referred to herein and their
respective successors and assigns, all as and to the extent provided in this
Agreement, and no other person shall acquire or have any right under or by
virtue of this Agreement. The term "successors and assigns" shall not include
a purchaser of any of the Units from the Initial Purchaser merely because of
such purchase.
This Agreement shall be governed and construed in accordance with the
internal laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth the agreement
between the Issuers and the Initial Purchaser.
Very truly yours,
INSILCO CORPORATION
By:
------------------------------------------
Name:
Title:
INSILCO HOLDING CO.
By:
------------------------------------------
Name:
Title:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By:
-------------------------------
Name:
Title:
28
<PAGE> 30
SCHEDULE A
SUBSIDIARIES
ARUP Alu-Rohr und-Profil GmbH
Great Lake, Inc.
Insilco Corporation
Insilco Asia Corporation
Dalian General ThermoDynamics Incorporated Ltd.
InNet Technologies, Inc.
Insilco Deutschland GmbH
Insilco Teoranta
Signal Caribe, Inc.
Signal Dominicana, S.A.
Signal Transformer Co., Inc.
Steel Parts Corporation
Stewart Connector Systems, Inc.
Stewart Connector Systems GmbH
Stewart Connector Systems (Japan), Inc.
Stewart Connector Systems de Mexico, S.A. de C.V.
Stewart Stamping Corporation
Taylor Publishing Company
Thermal Components Division, Inc.
Thermal Components, Inc.
Thermalex, Inc.
S-1
<PAGE> 31
SCHEDULE B
SIGNIFICANT SUBSIDIARIES
Signal Transformer Co., Inc.
Steel Parts Corporation
Stewart Connector Systems, Inc.
Stewart Stamping Corporation
Taylor Publishing Company
S-1
<PAGE> 32
EXHIBIT A
FORM OF A/B REGISTRATION RIGHTS AGREEMENT
A-1
<PAGE> 33
EXHIBIT B
FORM OF WARRANT REGISTRATION RIGHTS AGREEMENT
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