<PAGE> 1
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 June 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 0-19598
---------
INFOUSA INC.
- --------------------------------------------------------------------------------
(exact name of registrant specified in its charter)
DELAWARE 47-0751545
- -------------------------------- --------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
5711 SOUTH 86TH CIRCLE, OMAHA, NEBRASKA 68127
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (402) 593-4500
----------------------------
(Former name, former address and former fiscal year, if changed since last
report)
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 at least the past 90 days.
Yes X No
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
24,666,161 shares of Class A Common Stock and
24,666,161 shares of Class B Common Stock at August 3, 1998
<PAGE> 2
INFOUSA INC.
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
PART I - FINANCIAL INFORMATION 2
Consolidated Balance Sheets as of June 30, 1998 and
December 31, 1997 3
Consolidated Statements of Operations for the three months and six
months ended June 30, 1998 and 1997 4
Consolidated Statements of Cash Flows for the six months ended
June 30, 1998 and 1997 5
Notes to Consolidated Financial Statements 6 - 10
Management's Discussion and Analysis of Results of Operations 11 - 21
PART II - OTHER INFORMATION 22
Item 1. Legal Proceedings 23
Item 2. Changes in Securities 23
Item 4. Submission of Matters to a Vote of Security Holders 24
Item 5. Other Information 24
Item 6. Exhibits and Reports on Form 8-K 25
Signature 26
Index to Exhibits
</TABLE>
<PAGE> 3
INFOUSA INC.
FORM 10-Q
FOR THE QUARTER ENDED
JUNE 30, 1998
PART I
FINANCIAL INFORMATION AND
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
2
<PAGE> 4
INFOUSA INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
ASSETS
JUNE 30, DECEMBER 31,
1998 1997
------------- -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents....................................... $ 23,199 $ 10,653
Marketable securities........................................... 10,279 24,045
Trade accounts receivable, net of allowances of $6,967 and
$6,013, respectively.......................................... 60,470 49,409
Income taxes receivable......................................... 2,197 345
Prepaid expenses................................................ 5,847 3,475
Deferred marketing costs........................................ 6,594 3,417
--------- ---------
Total current assets.................................... 108,586 91,344
--------- ---------
Property and equipment, net....................................... 35,449 25,117
Intangible assets, net of accumulated amortization................ 110,862 73,741
Deferred income taxes............................................. -- 1,410
Other assets...................................................... 1,231 3,299
--------- ---------
$ 256,128 $ 194,911
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt............................... $ 798 $ 716
Payable to shareholders......................................... -- 1,871
Accounts payable................................................ 16,401 9,426
Accrued payroll expenses........................................ 3,807 4,910
Accrued expenses................................................ 9,120 5,406
Deferred revenue................................................ 3,816 4,238
Deferred income taxes........................................... 3,081 4,770
--------- ---------
Total current liabilities............................... 37,023 31,337
--------- ---------
Long-term debt, net of current portion............................ 117,242 81,284
Deferred income taxes............................................. 9,120 --
Other liabilities................................................. 844 2,054
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.0025 par value. Authorized 5,000,000 shares;
None issued or outstanding.................................... -- --
Class A common stock, $.0025 par value. Authorized 220,000,000
shares; 24,666,161 shares issued and outstanding at
June 30, 1998 and 24,460,332 shares issued and
outstanding at December 31, 1997.............................. 62 61
Class B common stock, $.0025 par value. Authorized 75,000,000
shares; 24,831,161 shares issued and 24,666,161 shares
outstanding at June 30, 1998 and 24,625,332 shares issued
and 24,460,332 shares outstanding at December 31, 1997........ 62 62
Paid-in capital................................................. 72,096 69,055
Retained earnings............................................... 22,184 13,126
Treasury stock, at cost, 165,000 shares of Class B common stock
held at June 30, 1998 and December 31, 1997.................. (2,281) (2,281)
Unrealized holding gain (loss), net of tax...................... (224) 213
---------- ---------
Total stockholders' equity.............................. 91,899 80,236
--------- ---------
$ 256,128 $ 194,911
========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
3
<PAGE> 5
INFOUSA INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------------- ---------------------------
1998 1997 1998 1997
------------- ------------- ------------- ---------
<S> <C> <C> <C> <C>
Net sales............................................ $ 62,076 $ 47,008 $117,456 $ 88,956
Costs and expenses:
Database and production costs...................... 16,086 13,111 31,491 24,526
Selling, general and administrative................ 27,103 20,079 50,497 38,065
Depreciation and amortization...................... 6,258 9,056 13,086 15,412
Acquisition-related and restructuring charges...... 400 -- 14,252 51,798
-------- -------- -------- --------
49,847 42,246 109,326 129,801
-------- -------- -------- --------
Operating income (loss).............................. 12,229 4,762 8,130 (40,845)
Other income (expense):
Investment income.................................. 15,098 1,008 16,094 1,558
Interest expense................................... (1,865) (967) (3,144) (1,475)
--------- -------- -------- --------
Income (loss) before income taxes.................... 25,462 4,803 21,080 (40,762)
Income taxes......................................... 9,964 1,893 12,022 3,524
-------- -------- -------- --------
Net income (loss).................................... $ 15,498 $ 2,910 $ 9,058 $(44,286)
======== ======== ======== ========
BASIC EARNINGS PER SHARE:
Net income (loss).................................. $ 0.31 $ 0.06 $ 0.18 $ (0.93)
======== ======== ======== ========
Weighted average shares outstanding................ 49,607 48,678 49,298 47,551
======== ======== ======== ========
DILUTED EARNINGS PER SHARE:
Net income (loss).................................. $ 0.30 $ 0.06 $ 0.18 $ (0.93)
======== ======== ======== ========
Weighted average shares outstanding................ 51,226 49,461 50,754 47,551
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
4
<PAGE> 6
INFOUSA INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------------
1998 1997
----------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) .............................................. $ 9,058 $(44,286)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization .............................. 13,086 15,412
Deferred income taxes ...................................... 4,985 (1,879)
Net realized gains on sale of marketable
securities and other investments.......................... (17,604) (866)
Impairment of other assets.................................. 2,000 --
Acquisition-related and restructuring charges............... 14,252 49,200
Changes in assets and liabilities, net of
effect of acquisitions:
Trade accounts receivable............................... (4,130) (1,492)
Prepaid expenses........................................ (1,296) 631
Deferred marketing costs................................ (3,177) (1,066)
Accounts payable........................................ (3,903) (2,022)
Income taxes receivable and payable..................... (1,852) 2,442
Accrued expenses........................................ (13,242) (6,658)
--------- --------
Net cash (used in) provided by operating activities... (1,823) 9,416
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of marketable
securities ................................................... 36,392 16,728
Purchases of marketable securities ............................. (5,727) (10,303)
Purchases of other investments ................................. -- (2,000)
Purchases of property and equipment ............................ (10,402) (5,356)
Acquisitions of businesses ..................................... (31,595) (59,806)
Consumer database costs ........................................ (1,133) (1,340)
Software development costs ..................................... (2,717) (972)
Other .......................................................... -- 13
--------- --------
Net cash used in investing activities................... (15,182) (63,036)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt .................................... (110,367) (1,857)
Proceeds from long-term debt.................................... 144,000 63,000
Deferred financing costs........................................ (5,253) (250)
Payment of note payable to shareholders......................... -- (7,925)
Proceeds from exercise of stock options......................... 770 686
Tax benefit related to employee stock options................... 401 332
--------- --------
Net cash provided by financing activities............... 29,551 53,986
Net increase in cash and cash equivalents......................... 12,546 366
Cash and cash equivalents, beginning.............................. 10,653 7,497
--------- --------
Cash and cash equivalents, ending................................. $ 23,199 $ 7,863
========= ========
Supplemental cash flow information:
Interest paid................................................... $ 3,110 $ 1,550
========= ========
Income taxes paid............................................... $ 8,518 $ 4,517
========= ========
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
5
<PAGE> 7
INFOUSA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
The accompanying unaudited financial statements have been prepared on the same
basis as the audited consolidated financial statements and, in the opinion of
management, contain all adjustments, consisting of normal recurring adjustments
and other adjustments as described in Note 2, necessary to fairly present the
financial information included therein.
The Company suggests that this financial data be read in conjunction with the
audited consolidated financial statements and notes thereto for the year ended
December 31, 1997 included in the Company's 1997 Annual Report on Form 10-K, as
amended, filed with the Securities and Exchange Commission. Results for the
interim period presented are not necessarily indicative of results to be
expected for the entire year.
2. ACQUISITIONS AND ACQUISITION-RELATED AND RESTRUCTURING CHARGES
Effective March 1998, the Company acquired certain assets and assumed certain
liabilities of Walter Karl, Inc.. ("Walter Karl"), a national direct marketing
service firm that provides list management, list brokerage, database marketing
and direct marketing services to a wide array of customers. Total consideration
for the acquisition was approximately $19.4 million in cash, funded using a
revolving credit facility (See Note 4). The acquisition has been accounted for
under the purchase method of accounting. As part of the acquisition, the Company
performed a valuation analysis and recorded acquisition-related charges of $9.2
million for the write-off of purchased in-process research and development costs
which related to projects that had not met technological feasibility.
Intangibles and goodwill recorded as part of the purchase included goodwill of
$23.9 million (to be amortized over 15 years), core technology of $3.7 million
(to be amortized over 3 years), tradenames of $4.2 million (to be amortized over
15 years), customer base of $2.2 million (to be amortized over 3 years), and
$0.8 million of other intangibles (to be amortized over 15 years).
Effective June 1998, the Company acquired certain assets and assumed certain
liabilities of JAMI Marketing Services, Inc. ("JAMI"), a list brokerage, list
management, data processing, and marketing consulting firm. Total consideration
for the acquisition was approximately $12.6 million in cash, subject to
adjustment, funded with the proceeds from the disposition of the Company's
holdings of Metromail Corporation common stock (See "Management's Discussion and
Analysis of Financial Condition - Other Income (Expense), Net"). The acquisition
has been accounted for under the purchase method of accounting. Goodwill
recorded as part of the purchase was $12.6 million, representing the total cash
paid. The Company estimates that the assets acquired approximates the
liabilities assumed. The Company is in the process of performing a valuation
analysis of the acquisition, and the preliminary estimates of net liabilities
assumed and goodwill and other intangibles to be recorded as part of the
purchase will likely change upon completion of the valuation analysis during the
third quarter of 1998 and the assessment of purchased in-process research and
development costs. No results of operations were recorded by the Company for the
period ended June 30, 1998 related to JAMI, and will be recorded during the
third quarter of 1998 upon completion of the valuation analysis.
6
<PAGE> 8
In addition to the write-off of purchased in-process research and development
costs of $9.2 million for Walter Karl previously described, included in
acquisition-related and restructuring charges in the accompanying consolidated
statement of operations for the six month period ended June 30, 1998 are: $3.0
million of costs associated with the Company's bid to acquire Metromail
Corporation, $0.7 million associated with the Company's offering to sell Class A
Common Stock which was not completed, and $1.4 million for restructuring costs
related to the Company's compilation and sales activities for new businesses.
The $1.4 million of restructuring costs is comprised of: $0.6 million for
severance pay, $0.3 million for lease termination costs, and $0.5 million for
the abandonment of certain assets. The restructuring, including recording the
payments and writedowns described, is anticipated to be completed by December
31, 1998.
The accompanying consolidated statement of operations for the three month period
ended June 30, 1998 reflects acquisition-related and restructuring charges of
$0.4 million for costs associated with the Company's bid to acquire Metromail
Corporation.
3. SENIOR SUBORDINATED NOTES
On June 18, 1998, the Company completed a private placement of 9 1/2% Senior
Subordinated Notes due June 15, 2008 (the "Notes") in the aggregate principal
amount of $115.0 million. The Notes have not been registered under the
Securities Act of 1933, as amended (the "Act") and may not be offered or sold in
the United States absent registration or an applicable exemption from the
registration requirements of the Act. A portion of the proceeds were used to
pay-off the revolving credit facility described in Note 4 below. The Notes are
subject to various covenants, including among other things, limiting additional
indebtedness, dividends and requiring that the Company maintain a Consolidated
Fixed Charge Coverage Ratio greater than 2.25 to 1.0 prior to June 15, 2000 and
2.50 to 1.0 thereafter.
Interest on the Notes will accrue from the original issuance date and will be
payable semi-annually in arrears on June 15 and December 15 of each year,
commencing on December 15, 1998, at the rate of 9 1/2% per annum. The Notes are
redeemable, in whole or in part, at the option of the Company, on or after June
15, 2003, at designated redemption prices outlined in the Indenture governing
the Notes, plus any accrued interest to the date of redemption. In addition, at
any time on or prior to June 15, 2001, the Company, at its option, may redeem up
to 35% of the aggregate principal amount of the Notes originally issued with the
net cash proceeds of one or more equity offerings, at the redemption price equal
to 109.5% of the principal amount thereof, plus any accrued interest to the date
of redemption. In the event of a change in control, each holder of Notes will
have the right to require the Company to repurchase such holder's Notes at a
price equal to 101% of the principal amount thereof, plus any accrued interest
to the repurchase date.
During May 1998, the Company entered into a Treasury yield collar agreement (the
"Treasury Collar") with a bank, to hedge against the movement in interest rates
on the ten-year Treasury Note. The Treasury Collar was in the notional amount of
$100.0 million. During June 1998, the Company terminated the Treasury Collar
and, in connection therewith, made a payment of approximately $1.6 million to
the bank which was recorded as deferred financing costs included in intangible
assets in the accompanying consolidated balance sheets. The termination fee will
be amortized over the 10 year life of the Notes.
7
<PAGE> 9
4. REVOLVING CREDIT AGREEMENT
At June 30, 1998, the Company maintained an uncollateralized $100 million Credit
Facility with First Union National Bank of North Carolina ("FUNB"). At June 30,
1998, there were no borrowings under this facility. Interest expense on the
facility, which was based on LIBOR plus 0.50% based on the Company's funded debt
ratio, was approximately $2.5 million for the six months ended June 30, 1998.
The Company terminated the FUNB Credit Facility on July 1, 1998.
During June 1998, the Company executed a commitment letter with a bank proposing
to extend credit up to $13.5 million related to the financing of the Company's
new facility in Montebello, New York. The commitment is subject to the
negotiation and execution of a definitive credit and security agreement. The
note would be collateralized by certain real property.
The Company is currently in negotiations for a new revolving credit facility.
There can be no assurance that the negotiation of the new credit facility will
be successfully completed or that credit will be made available thereunder.
5. EARNINGS PER SHARE INFORMATION
The following data show the amounts used in computing earnings per share and the
effect on the weighted average number of shares of dilutive potential common
stock. Options on 0.9 million shares of common stock were not included in
computing diluted earnings per share for the six month period ended June 30,
1997, because their effects were antidilutive.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- -------------------
1998 1997 1998 1997
------ ------ ------ ------
<S> <C> <C> <C> <C>
Weighted average number of shares outstanding
used in basic EPS..................................... 49,607 48,678 49,298 47,551
Net additional common stock equivalent shares
outstanding after assumed exercise of stock options... 1,619 783 1,456 --
------ ------ ------ ------
Weighted average number of shares outstanding
used in diluted EPS................................... 51,226 49,461 50,754 47,551
====== ====== ====== ======
</TABLE>
8
<PAGE> 10
6. NEW ACCOUNTING STANDARDS
In 1997, the Financial Accounting Standards Board ("FASB") issued Statement of
Financial Accounting Standard ("SFAS") No. 130, "Reporting Comprehensive
Income," which establishes standards for reporting and display of comprehensive
income and its components in the financial statements. Reclassification of
financial statements for earlier periods provided for comparative purposes is
required. The following is a reconciliation of net income (loss) per the
accompanying consolidated statements of operations to comprehensive income
(loss) for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------- ----------------------
1998 1997 1998 1997
-------- ------- -------- --------
<S> <C> <C> <C> <C>
Net income (loss).................................... $ 15,498 $ 2,910 $ 9,058 $(44,286)
Other comprehensive income (loss):...................
Unrealized gain (loss) from investments:.............
Unrealized holding gains (losses) arising during
the period, net of income taxes of $(6,046),
$(40), $6,020, and $2,097, respectively......... (10,452) (65) 9,822 3,422
Reclassification adjustment for net (gains)
Losses included in net income, net of
income taxes of $50, $(150), $(6,288),
and $(146), respectively........................ 81 (244) (10,259) (239)
-------- ------- -------- --------
Net unrealized gain from investments.............. (10,371) (309) (437) 3,183
-------- ------- -------- --------
Comprehensive income (loss).......................... $ 5,127 $ 2,601 $ 8,621 $ 41,103
======== ======= ======== ========
</TABLE>
In 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." This statement is effective for fiscal
years beginning after December 15, 1997, which will expand disclosures made by
the Company and will have no impact on consolidated financial position, results
of operations or cash flows.
In 1998, the Accounting Standards Committee issued Statement of Accounting
Position ("SOP") No. 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use," which is effective for fiscal years
beginning after December 15, 1998. The SOP provides guidance on when costs
incurred for internal-use computer software are and are not capitalized, and on
the accounting for such software that is marketed. The Company believes its
existing policy is in compliance with the provisions of the SOP.
7. CONTINGENCIES
The Company and its subsidiaries are involved in legal proceedings, claims and
litigation arising in the ordinary course of business. Management believes that
any resulting liability should not materially affect the Company's financial
position, results of operations, or cash flows. See also Part II, Item 1.
9
<PAGE> 11
8. SUBSEQUENT EVENTS
Subsequent to June 30, 1998, the Company acquired certain assets and assumed
certain liabilities of Contacts Target Marketing ("CTM"), a regional business
marketing database company, based in Vancouver, Canada, for approximately $0.4
million in cash. CTM will be operated as a branch of the Company's Canadian
operation.
During July 1998, the Company executed a mortgage note in the amount of $10.8
million. The note bears a fixed rate of 7.40% through July 2003, and then will
be adjusted to the rate which is 175 basis points over the five year Treasury
Constant Maturities (as defined by the Federal Reserve System), yet in any
event, shall not bear an interest rate below 7.25%. The mortgage note is
collateralized by the deed of trust covering certain real property located at
the Company's new Papillion, Nebraska facility.
Effective July 31, 1998, the Company changed its name to infoUSA Inc., and the
listing symbols for the Company's Class A Common Stock and Class B Common Stock
on the Nasdaq National Market were changed to "IUSAA" and "IUSAB", respectively.
10
<PAGE> 12
INFOUSA INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
The Company is a leading provider of business and consumer marketing information
and data processing services. The Company's products and services help its
clients generate new customers more effectively at lower cost. The Company's key
assets include a proprietary database of over 11 million businesses and a
consumer database of over 113 million households and 180 million individuals in
the United States and Canada, which the Company believes are among the most
comprehensive and accurate available. The Company leverages these key assets by
selling a broad range of marketing information products and data processing
services through targeted distribution channels primarily to small and medium
size businesses and also to consumers and large corporations.
This discussion and analysis contains forward-looking statements, including
without limitation statements in the discussion of database and production costs
and liquidity, and capital resources, within the meaning of Section 21E of the
Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933,
which are subject to the "safe harbor" created by those sections. The Company's
actual future results could differ materially from those projected in the
forward-looking statements. Some factors which could cause future actual results
to differ materially from the company's recent results or those projected in the
forward-looking statements are described in "Factors Affecting Operating
Results" below. The Company assumes no obligation to update the forward-looking
statement or such factors.
11
<PAGE> 13
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, certain items
from the Company's consolidated statement of operations data expressed as a
percentage of net sales, and selected other financial data expressed as
designated within the table:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------- ---------------------
1998 1997 1998 1997
--------- --------- --------- -------
<S> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Net sales......................................................... 100% 100% 100% 100%
Costs and expenses:
Database and production costs................................... 26 28 27 28
Selling, general and administrative............................. 44 43 43 43
Depreciation and amortization................................... 10 19 11 17
Acquisition-related and restructuring charges................... -- -- 12 58
------- ------- ------- -------
Total costs and expenses..................................... 80 90 93 146
------- ------- ------- -------
Operating income (loss)........................................... 20 10 7 (46)
Other income (expense), net....................................... 21 -- 11 --
------- ------- ------- -------
Income (loss) before income taxes................................. 41 10 18 (46)
Income taxes...................................................... 16 4 10 4
------- ------- ------- -------
Net income (loss)................................................. 25% 6% 8% (50)%
======= ======= ======= =======
OTHER DATA:
SALES BY PRODUCT GROUP:
(AMOUNTS IN MILLIONS)
Sales Lead Generation Products............................. $ 39.5 $ 32.9 $ 75.2 $ 65.0
Data Processing Services................................... 16.2 11.3 28.8 16.3
Consumer CD-ROM Products................................... 6.4 2.8 13.5 7.7
------- ------- ------- -------
Total...................................................... $ 62.1 $ 47.0 $ 117.5 $ 89.0
======= ======= ======= =======
SALES BY PRODUCT GROUP AS A PERCENTAGE OF NET SALES:
Sales Lead Generation Products............................. 64% 70% 64% 73%
Data Processing Services................................... 26 24 25 18
Consumer CD-ROM Products................................... 10 6 11 9
------- ------- ------- -------
Total...................................................... 100% 100% 100% 100%
======= ======= ======= =======
Earnings before, interest, taxes, depreciation and amortization,
as adjusted("EBITDA, as adjusted") (1).......................... $18,887 $13,818 $35,468 $26,365
======= ======= ======= =======
EBITDA, as adjusted, as a percentage of net sales................. 30% 29% 30% 30%
======= ======= ======= =======
Ratio of EBITDA, as adjusted, to interest expense................. 10.1 14.3 11.3 17.9
======= ======= ======= =======
Ratio of earnings to fixed charges (2)............................ 14.7 6.0 7.7 --
======= ======= ======= =======
</TABLE>
(1) "EBITDA, as adjusted" is defined as operating income (loss) adjusted to
exclude depreciation, amortization of intangible assets, and
acquisition-related and restructuring charges. EBITDA, as adjusted, is
presented because it is a widely accepted indicator of a company's ability
to incur and service debt. However, EBITDA, as adjusted, does not purport
to represent cash provided by operating activities as reflected in the
Company's consolidated statements of cash flows, is not a measure of
financial performance under generally accepted accounting principles
("GAAP") and should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with GAAP. Also, the measure
of EBITDA, as adjusted, may not be comparable to similar measures reported
by other companies.
(2) "Earnings to fixed charges ratio" is determined by dividing the sum of
income before income taxes and interest expense by interest expense.
12
<PAGE> 14
NET SALES
- ---------
Net sales for the quarter ended June 30, 1998 were $62.1 million, a 32%
increase from $47.0 million for the same period in 1997. Net sales of sales lead
generation products for the second quarter of 1998 were $39.5 million, a 20%
increase from $32.9 million in the second quarter of 1997. Net sales of data
processing services for the second quarter of 1998 were $16.2 million, a 43%
increase from $11.3 million for the same period in 1997. Net sales of consumer
CD-ROM products for the second quarter of 1998 were $6.4 million, a 128%
increase from $2.8 million for the same period in 1997. The significant increase
in net sales of consumer CD-ROM products is principally the result of the
acquisition of Pro CD, Inc. in August 1997, in which the results of its
operations are recorded in the second quarter of 1998, yet not in the results of
operations for the second quarter of 1997.
For the six months ended June 30, 1998 net sales were $117.5 million, a 32%
increase from $89.0 million for the same period in 1997. Net sales of sales lead
generation products for the six months ended June 30, 1998 were $75.2 million, a
16% increase from $65.0 million for the same period in 1997. Net sales of data
processing services for the six months ended June 30, 1998 were $28.8 million, a
77% increase from $16.3 million for the same period in 1997. Net sales of
consumer CD-ROM products for the six months ended June 30, 1998 were $13.5
million, a 75% increase from $7.7 million for the same period in 1997.
Factors contributing to the increase in net sales include: the increase in the
number of sales representatives from 740 as of June 30, 1997 to 1,144 as of June
30, 1998; the enhancement of existing and development of new sales lead
generation and consumer CD-ROM products; the increase in the number of mailing
pieces mailed from 13.5 million during the first six months of 1997 to 19.9
million during the same period of 1998; the acquisitions of Pro CD, Inc. in
August 1997 and Walter Karl, Inc. in March 1998; and the acquisition of the
Database America Companies ("DBA") in February 1997, in which the Company
recorded the results of operations for DBA (which includes the majority of the
Company's data processing services) for only two months during the first quarter
of 1997.
DATABASE AND PRODUCTION COSTS
- -----------------------------
Database and production costs for the second quarter of 1998 were $16.1
million, or 26% of net sales, compared to $13.1 million, or 28% of net sales,
for the second quarter of 1997. For the six month period, these costs were $31.5
million, or 27% of net sales, compared to $24.5 million, or 28% of net sales for
the same period in 1997. The decrease in database and production costs as a
percentage of net sales reflects the Company's continued development of its own
proprietary databases and the leveraging of compilation and verification costs
as the Company's net sales have increased.
13
<PAGE> 15
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
- --------------------------------------------
Selling, general and administrative expenses for the second quarter of 1998 were
$27.1 million, or 44% of net sales, compared to $20.1 million, or 43% of net
sales, for the second quarter of 1997. For the six month period, these costs
were $50.5 million, or 43% of net sales, compared to $38.1 million, or 43% of
net sales for the same period in 1997. The increase in selling, general and
administrative expenses as a percentage of net sales is primarily the result of
higher costs associated with sales personnel, in which the Company during the
first six months of 1998 added a significant number of new sales representatives
and the benefit of these additions had not been fully realized as of June 30,
1998. Excluding the effects of the build-up in sales force, selling, general and
administrative expenses as a percentage of net sales for the three and six month
periods ended June 30, 1998 would have been slightly lower than the comparable
periods during 1997.
DEPRECIATION AND AMORTIZATION EXPENSES
- --------------------------------------
Depreciation and amortization expenses for the second quarter of 1998 were $6.3
million, or 10% of net sales, compared to $9.1 million, or 19% of net sales, for
the second quarter of 1997. For the six month period, these costs were $13.1
million, or 11% of net sales, compared to $15.4 million, or 17% of net sales for
the same period in 1997. Amortization of acquired database costs and purchased
data processing software associated with the acquisition of the Database America
Companies (DBA) in February 1997 totaled $1.2 million and $5.8 million for the
quarters ended June 30, 1998, and 1997, respectively, and $3.9 million and $9.9
million for the six months ended June 30, 1998, and 1997, respectively.
Excluding amortization on acquired database costs and purchased data processing
software associated with the acquisition of DBA in February 1997, depreciation
and amortization expenses were $5.1 million and $3.3 million for the second
quarter of 1998 and 1997, respectively, and $9.2 million and $5.5 million for
the six month periods ended June 30, 1998 and 1997, respectively. The increase
relates primarily to amortization of intangibles for acquisitions recorded since
June 1997, including Pro CD in August 1997 and Walter Karl in March 1998.
ACQUISITION-RELATED AND RESTRUCTURING CHARGES
- ---------------------------------------------
As part of the acquisition of Walter Karl, Inc. in March 1998, the Company
recorded a charge of $9.2 million during the first quarter of 1998 for the
write-off of acquired in-process research and development costs. Also included
in acquisition-related and restructuring charges for the six months ended June
30, 1998 are $3.0 million of costs associated with the Company's bid to acquire
Metromail Corporation, $0.7 million associated with the Company's offering to
sell Class A Common Stock which was not completed, and $1.4 million for
restructuring costs related to the Company's compilation and sales activities
for new businesses. These acquisition-related and restructuring charges totaled
$14.3 million, and represented 12% of net sales during the six months ended June
30, 1998. As part of the acquisition of the Database America Companies in
February 1997, the Company recorded charges totaling $51.8 million, or 58% of
net sales, during the six months ended June 30, 1997 for the write-off of
acquired in-process research and development costs as well as other related
integration and organizational restructuring costs.
14
<PAGE> 16
During the quarter ended June 30, 1998, the Company recorded additional
acquisition-related charges of $0.4 million for costs associated with the
Company's bid to acquire Metromail Corporation.
OPERATING INCOME (LOSS)
- -----------------------
Including the factors previously described, the Company had operating income of
$12.2 million, or 20% of net sales for the quarter ended June 30, 1998, as
compared to operating income of $4.8 million, or 10% of net sales for the same
period in 1997. For the six month period, the Company had operating income $8.1
million, or 7% of net sales, as compared to an operating loss of $(40.8)
million, or (46)% of net sales for the same period in 1997.
Excluding the effect of the amortization on acquired database costs and
purchased data processing software and acquisition-related and restructuring
charges previously described, the Company would have had operating income of
$13.8 million, or 22% of net sales, and $10.6 million, or 23% of net sales, for
the quarterly periods ended June 30, 1998, and 1997, respectively. Excluding
these same charges, the Company would have had operating income of $26.3
million, or 22% of net sales, and $20.8 million, or 23% of net sales, for the
six months ended June 30, 1998, and 1997, respectively.
OTHER INCOME (EXPENSE), NET
- ---------------------------
Other income (expense), net for the second quarter of 1998 was $13.2 million, as
compared to $0.0 million in the same period for 1997. For the six months ended
June 30, 1998 and 1997, other income (expense), net was $13.0 million and $0.1
million, respectively. During the second quarter of 1998, the Company recorded a
realized gain of $16.5 million on the disposition of its holdings in Metromail
Corporation common stock. This realized gain was offset during the second
quarter of 1998 when the Company recorded a loss of $2.0 million on the
write-off of an investment classified in other assets in the accompanying
consolidated balance sheets.
INCOME TAXES
- ------------
A provision for income taxes of $10.0 million and $1.9 million was recorded for
the second quarter of 1998 and 1997, respectively, and $12.0 milllion and $3.5
million for the six months ended June 30, 1998, and 1997, respectively.
Acquisition-related charges of $9.2 million and $49.2 million were included in
income before income taxes during the six months ended June 30, 1998 and 1997,
respectively, but are not deductible for tax purposes. The provision for these
periods also reflect the inclusion of amortization on certain intangibles in
taxable income not deductible for tax purposes.
EBITDA, AS ADJUSTED
- -------------------
Excluding acquisition-related and restructuring charges previously described,
the Company's EBITDA, as adjusted, was $18.9 million, or 30% of net sales,
during the second quarter of 1998, compared to $13.8 million, or 29% of net
sales, during the same period of 1997. Excluding acquisition-related and
restructuring charges previously described, the Company's EBITDA, as adjusted,
was $35.5 million, or 30% of net sales, during the six months ended June 30,
1998, compared to $26.4 million, or 30% of net sales, during the same period of
1997.
15
<PAGE> 17
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
As of June 30, 1998, the Company's principal sources of liquidity included cash
and cash equivalents of $23.2 million and marketable securities with a fair
market value of $10.3 million. As of June 30, 1998, none of the Company's $100.0
million revolving credit facility had been drawn upon, and the Company had
working capital of $71.6 million.
The Company terminated its revolving credit facility with First Union National
Bank on July 1, 1998. The Company is currently in negotiations for a new
revolving credit facility. There can be no assurance that the negotiation of the
new credit facility will be successfully completed or that credit will be made
available thereunder.
Net cash used by operating activities during the six month period ended June 30,
1998 totaled $1.8 million. The Company spent approximately $10.4 million related
to property additions during the same period. The Company completed construction
in August 1998 of a new facility for the consumer and business database
compilation division located in Papillion, Nebraska, at an estimated cost of
approximately $10.0 million. The Company is also building a new sales center and
data processing services facility in Montebello, New York, with an estimated
cost of $18.0 million, which is presently anticipated to be completed during
late-1999.
During March 1998, the Company paid approximately $19.4 million in cash in
connection with the acquisition of Walter Karl, Inc and $12.6 million with the
acquisition of JAMI Marketing Services, Inc.
During May 1998, the Company recorded a realized gain on the disposition of its
holdings in the common stock of Metromail Corporation for $16.5 million. The
Company recorded gross proceeds on the disposition of the Metromail Corporation
common stock of $34.2 million.
The Company believes that its existing sources of liquidity and cash generated
from operations, assuming no major acquisitions, will satisfy the Company's
projected working capital and other cash requirements for at least the next 12
months. To the extent the Company experiences growth in the future, the Company
anticipates that its operating and investing activities may use cash. Any such
future growth and any acquisitions of other technologies, products or companies
may require the Company to obtain additional equity or debt financing, which may
not be available or may be dilutive.
16
<PAGE> 18
YEAR 2000 COMPLIANCE BY THE COMPANY AND OTHERS
- ----------------------------------------------
The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Company's
computer programs that have date-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices, or
engage in similar normal business activities.
Based on a recent assessment, the Company determined that it will be required to
modify or replace significant portions of its software so that its computer
systems will properly utilize dates beyond December 31, 1999. The Company
presently believes that with modifications to existing software and planned
conversions to new software, the Year 2000 issue can be mitigated. However, if
such modifications and conversions are not made, or are not completed in time,
the Year 2000 issue could have a material adverse impact on the operations of
the Company.
The Company has not completed an estimate of the total cost to reprogram or
replace and test all software for Year 2000 modifications. Although a formal
estimate has not been made, it believes that the costs to be charged to
operations to achieve Year 2000 compliance will be minimized as: 1) the Company
is already in the process of acquiring and implementing a new accounting and
financial reporting system and certain other internal business information
systems which would have been required even without the Year 2000 issue (the
cost of these new systems are capitalizable), and 2) the Company leverages its
skilled information systems development and programming staff to complete
critical portions of reprogramming and replacement efforts with internal
resources, thereby minimizing the extent of external costs incurred to ensure
Year 2000 compliance.
The Company has initiated formal communications with all of its significant
suppliers and large customers to determine the extent to which the Company is
vulnerable to those third parties failure to address their own Year 2000 issue.
It is the Company's goal to complete the critical risk elements of the Year 2000
remediation not later than September, 1999. However, the systems of other
companies on which the Company's systems rely may not be prepared for the Year
2000, or such companies may implement Year 2000 preparations with systems that
are incompatible with the Company's systems. In that event, the Company's
operations and financial condition may be materially and adversely affected. The
Company believes that the current versions of its products are currently, or
will be, by the end of 1998, Year 2000 compliant, and such products are subject
to ongoing analysis and review.
17
<PAGE> 19
FACTORS THAT MAY AFFECT OPERATING RESULTS
INTEGRATION OF RECENT AND FUTURE ACQUISITIONS
Since mid-1996, the Company has completed eight significant
acquisitions, including the August 1996 acquisition of Digital Directory
Assistance, the November 1996 merger with County Data Corporation and
acquisition of Marketing Data Systems, the December 1996 acquisition of BJ
Hunter, the February 1997 merger with Database America ("DBA"), the August 1997
acquisition of Pro CD, the March 1998 acquisition of Walter Karl and the May
1998 acquisition of JAMI Marketing. The Company also made a number of other
smaller acquisitions and other acquisitions in prior periods. The Company
recently attempted to acquire Metromail Corporation ("Metromail") for
approximately $850.0 million, including the assumption of debt, and may in the
future evaluate other acquisitions of that magnitude. The Company's strategy
includes continued growth through acquisitions of complementary products,
technologies or businesses, which, if implemented, may result in the diversion
of management's attention from the day-to-day operations of the Company's
business and may include numerous other risks, including difficulties in the
integration of operations, databases, products and personnel, difficulty in
applying the Company's internal controls to acquired businesses and particular
problems, liabilities or contingencies related to the businesses being acquired.
To the extent that efforts to integrate recent or future acquisitions fail,
there could be a material adverse effect on the Company's business, financial
condition and results of operations. While the Company has not made any binding
commitments with respect to any particular future acquisitions, the Company
frequently evaluates the strategic opportunities available to it and intends to
pursue opportunities that it believes fit its business strategy. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Overview."
RECENT CHANGES IN SENIOR MANAGEMENT
The Company has recently undergone significant changes in its senior
management team, even as it has experienced rapid growth both internally and
through acquisitions. Vinod Gupta, the Company's Chairman, was re-appointed
Chief Executive Officer in August 1998, having resigned that position in October
1997. Scott Dahnke, Chief Executive Officer from October 1997, Jon Wellman,
President and Chief Operating Officer since January 1997 and Chief Financial
Officer from January 1995 to January 1997, and Steve Purcell, Chief Financial
Officer since April 1997, resigned from their respective positions in July and
August 1998. Rick Puckett, who joined the Company as Controller in October 1997,
was named Chief Financial Officer upon the announcement of Mr. Purcell's
departure. Gregory Back, Executive Vice President of Corporate Planning and
Business Development, and Kevin Hall, Senior Vice President of Special Projects,
both joined the Company in October 1987, and Sanford Goodman, Vice President of
Corporate Development, joined the Company in June 1998. Messrs. Dahnke, Wellman
and Purcell did not resign because of any disagreements with the Company's Board
or other senior management, and much of the Company's remaining senior
management team has been with the Company for many years. However, the departure
of these three key individuals is likely to place significant additional burdens
on the Company's management team. In the past, limitations on senior management
resources resulted in a few key individuals taking on multiple roles and
responsibilities in the Company, which in turn placed a significant strain on
the Company's senior management. Moreover, some of the Company's current senior
management have very limited prior experience with the Company, its other senior
management and their current positions. Failure of the Company's senior
management to adjust to new responsibilities, manage growth or work together
effectively could result in disruptions of operations or the departure of
additional key personnel, which in turn could have a material adverse effect on
the Company's business, financial condition, results of operations and stock
price.
FLUCTUATIONS IN OPERATING RESULTS
The Company believes that future operating results will be subject to
quarterly and annual fluctuations, and that long term growth will depend upon
the Company's ability to expand its present business and complete strategic
acquisitions. The Company's net sales on a quarterly basis can be affected by
seasonal characteristics and certain other factors. For example, the Company
typically experiences higher revenue from its sales leads products in the fall
of each year due to increases in direct marketing by the Company's clients in
the fourth quarter of each year. In addition, the Company typically experiences
increases in revenue in the two months following introduction of new editions of
its consumer CD-ROM products. Revenue from sales lead generation products is
generally lower in the summer due to decreased direct marketing activity of the
Company's customers during that time. The Company's operating expenses are
determined in part based on the Company's expectations of future revenue growth
and are substantially fixed. As a result, unexpected changes in revenue levels
will have a disproportionate effect on operating performance in any given
period. Long term growth will be materially adversely affected if the Company
fails to broaden its existing product and service offerings, increase sales of
products and services, or expand into new markets, or complete acquisitions or
successfully integrate acquired operations into its existing operations. To the
extent there are fluctuations in operating results or the Company fails to
achieve long-term internal growth or growth through acquisitions, there could be
a material adverse effect on the Company's business, financial condition or
results of operations.
18
<PAGE> 20
RISK OF PRODUCT RETURNS
The Company has agreements that allow retailers certain rights to
return its consumer CD-ROM products. Accordingly, the Company is exposed to the
risk of product returns from retailers and distributors, particularly in the
case of products sold shortly before introduction of the next year's edition of
the same product. Consumers may also seek to return consumer CD-ROM products,
although historically returns from consumers have been low. At the time of
product sales, the Company establishes reserves based on estimated future
returns of products, taking into account promotional activities, the timing of
new product introductions, seasonal variations in product returns, distributor
and retailer inventories of the Company's products and other factors. Actual
product returns could differ from estimates, and product returns that exceed the
Company's reserves could materially adversely affect the Company's business,
financial condition and results of operations.
EFFECTS OF LEVERAGE
As of June 30, 1998, the Company had total indebtedness of
approximately $118.0 million. In addition, the Company expects to enter into a
new revolving credit facility (the "New Credit Facility") under which it will be
able to incur up to $75.0 million of additional borrowings. The Company's
ability to pay principal and interest on its debt obligations will depend upon
its future operating performance, which performance will be affected by
prevailing economic conditions and financial, business and other factors,
certain of which are beyond the control of the Company. The Company's ability to
pay principal and interest on its debt obligations may also depend upon the
future availability of revolving credit borrowings under the New Credit
Facility. Such availability will depend on, among other things, the Company's
ability to enter into the New Credit Facility on acceptable terms and its
ability to meet certain specified financial ratios and maintenance tests. The
Company expects that, based on current and expected levels of operations, its
operating cash flow, together with anticipated borrowings under the New Credit
Facility, should be sufficient to meet its operating expenses, to make necessary
capital expenditures and to service its debt requirements as they become due. If
the Company is unable to service its indebtedness, it will be forced to take
actions, such as reducing or delaying acquisitions and/or capital expenditures,
selling assets, restructuring or refinancing its indebtedness or seeking
additional equity capital. There is no assurance that any of these remedies
could be effected on satisfactory terms, if at all.
RESTRICTIONS IMPOSED BY TERMS OF INDEBTEDNESS
The terms of the Company's debt arrangements contain certain covenants
limiting the incurrence of indebtedness, payment of dividends or other
restricted payments, issuance of guarantees, entering into certain transactions
with affiliates, consummation of certain asset sales, certain mergers and
consolidations, sales or other dispositions of all or substantially all of the
assets of the Company and imposing restrictions on the ability of a subsidiary
to pay dividends or make certain payments to the Company and its subsidiaries. A
breach of any of these covenants could result in events of default under the
terms of the Company's debt arrangements. The Company's ability to comply with
such covenants may be affected by events beyond its control. Upon the occurrence
of an event of default under the terms of the Company's debt arrangements,
certain lenders could elect to declare all amounts outstanding, together with
accrued interest, to be immediately due and payable. If such lenders accelerate
the payment of such indebtedness, there can be no assurance that the assets of
the Company would be sufficient to repay in full such indebtedness and the other
indebtedness of the Company. If the Company were unable to repay those amounts,
such lenders could proceed against the collateral granted to them to secure that
indebtedness.
RISKS ASSOCIATED WITH CHANGES IN TECHNOLOGY
Advances in information technology may result in changing customer
preferences for products and product delivery formats in the business and
consumer marketing information industry. The Company believes it is presently
the leading provider of marketing information on CD-ROM. However, the Company
believes that if customers increasingly look to the Internet, digital video disc
("DVD") or other new technology for information resources, the market for
business and consumer information on CD-ROM may contract and prices for CD-ROM
products may have to decrease or CD-ROM products may become obsolete. The
Company plans to offer and sell its products and services increasingly over the
Internet and to introduce products on DVD. Failure of the Company to
successfully sell its products over the Internet or on DVD or to successfully
introduce products that take advantage of other technological changes may thus
have a material adverse effect on the Company's business, results of operations
and financial condition.
19
<PAGE> 21
COMPETITION
The business and consumer marketing information industry is highly
competitive. Many of the Company's principal or potential future competitors are
much larger than the Company and have much larger capital bases from which to
develop and compete with the Company. The Company faces increasing competition
in consumer sales lead generation products and data processing services from
Great Universal Stores, P.L.C. ("GUS") as a result of GUS' recent acquisitions
of Experian, Direct Marketing Technologies and Metromail. In business sales lead
generation products, the Company faces competition from Dun's Marketing Services
("DMS"), a division of Dun & Bradstreet. DMS, which relies upon information
compiled from Dun & Bradstreet's credit database, tends to focus on marketing to
large companies. In business directory publishing, the Company competes
primarily with Regional Bell Operating Companies, Donnelley Marketing and many
smaller, regional directory publishers. In consumer sales lead generation
products, the Company competes with Metromail, Donnelley Marketing, R.L. Polk,
Trans Union, Experian and Equifax, both directly and through reseller networks.
In data processing services, the Company competes with Acxiom, May & Speh,
Direct Marketing Technologies and Harte-Hanks Data Technologies. In consumer
products, the Company competes with certain smaller producers of CD-ROM
products. In addition, the rapid expansion of the Internet creates a substantial
new channel for distributing business information to the market, and a new
avenue for future entrants to the business and consumer marketing information
industry. There is no guarantee that the Company will be successful in this new
market.
LOSS OF DATA CENTERS
The Company's business depends on computer systems contained in the
Company's data centers located in Omaha, Nebraska, Carter Lake, Iowa and
Montvale, New Jersey. A fire or other disaster affecting any of the Company's
data centers could disable the Company's computer systems. Any significant
damage to any of the data centers could have a material adverse effect on the
Company's business, financial condition and results of operations. See
"Business--Computer Operations and Database Protection."
LIMITED PROTECTION OF INTELLECTUAL PROPERTY RIGHTS
The Company regards its databases and software as proprietary. The
Company's databases are copyrighted, and the Company depends on trade secret and
non-disclosure safeguards for protection of its software. The Company
distributes its products under agreements that grant customers a license to use
the Company's products for specified purposes and contain terms and conditions
prohibiting the unauthorized reproduction and use of the Company's products. In
addition, the Company generally enters into confidentiality agreements with its
management and programming staff and limits access to and distribution of its
proprietary information. There can be no assurance that the foregoing measures
will be adequate to protect the Company's intellectual property.
DIRECT MARKETING REGULATION AND DEPENDENCE UPON MAIL CARRIERS
The Company and many of its customers engage in direct marketing.
Certain data and services provided by the Company are subject to regulation by
federal, state and local authorities. In addition, growing concerns about
individual privacy and the collection, distribution and use of information about
individuals have led to self-regulation of such practices by the direct
marketing industry through guidelines suggested by the Direct Marketing
Association and to increased federal and state regulation. Compliance with
existing federal, state and local laws and regulations and industry
self-regulation has not to date had a material adverse effect on the Company's
business, financial condition or results of operations. Nonetheless, federal,
state and local laws and regulations designed to protect the public from the
misuse of personal information in the marketplace and adverse publicity or
potential litigation concerning the commercial use of such information may
increasingly affect the operations of the Company, which could result in
substantial regulatory compliance or litigation expense or a loss of revenue.
Certain proposed federal legislation could also create proprietary rights in
certain "white pages" information that is presently in the public domain, which
could in turn increase the cost to the Company of acquiring data or disrupt its
ability to do so. The direct mail industry depends and will continue to depend
upon the services of the United States Postal Service and other private mail
carriers. Any modification by the United States Postal Service of its rate
structure, any increase in public or private postal rates generally or any
disruption in the availability of public or private postal services could have a
negative impact on the demand for business information, direct mail activities
and the cost of the Company's direct mail activities.
20
<PAGE> 22
FINANCIAL AND ACCOUNTING ISSUES RELATED TO ACQUISITIONS
In connection with the acquisitions completed since mid-1996, the
Company issued approximately 3.7 million shares of Class A Common Stock and 3.7
million shares of Class B Common Stock, and paid approximately $158.4 million in
cash. The issuance of stock in these or future transactions may be dilutive to
existing stockholders to the extent that earnings of the acquired companies do
not offset the additional number of shares outstanding. In connection with the
acquisitions of DBA, Pro CD and Walter Karl, the Company incurred approximately
$97.0 million in debt. In connection with future acquisitions, the Company may
incur substantial amounts of debt. Servicing such debt may result in decreases
in earnings per share, and the inability on the part of the Company to service
such debt would result in a material adverse effect on the Company's business,
financial condition and results of operations. Finally, the Company expects that
future acquisitions will generally be required to be accounted for using the
purchase method. As a result of such accounting treatment, the Company may be
required to take charges to operations or to amortize goodwill in connection
with future acquisitions. As a result of acquisitions completed since mid-1996,
the Company was required to take significant acquisition-related charges to
operations and will be required to amortize goodwill and other intangibles over
periods of 1 to 15 years. The acquisition-related charges and amortization of
goodwill and other intangibles have had and will continue to have an adverse
effect on net income. To the extent that future acquisitions result in
substantial charges to operations, incurrence of debt and amortization of
goodwill and other intangibles, such acquisitions could have an adverse effect
on the Company's net income, earnings per share and overall financial condition.
VOLATILITY AND UNCERTAINTIES WITH RESPECT TO STOCK PRICE
As with other companies that have experienced rapid growth, the Company
has experienced and is likely to continue to experience substantial volatility
in its stock price. Factors such as announcements by either the Company or its
competitors of new products or services or of changes in product or service
pricing policies, quarterly fluctuations in the Company's operating results,
announcements of technical innovations, announcements relating to strategic
relationships or acquisitions by the Company or its competitors, changes in
earnings estimates, opinions or ratings by analysts, and general market
conditions or market conditions within the business and consumer marketing
information industry, among other factors, may have significant impact on the
Company's stock price. Should the Company fail to introduce, enhance or
integrate products or services on the schedules expected, its stock price could
be adversely affected. It is likely that in some future quarter the Company will
fail to achieve anticipated operating results, and this failure could have a
material adverse effect on the Company's stock price. In addition, the Company's
Class A Common Stock and Class B Common Stock have been trading for a very short
time. While the Company expects the Class A Common Stock and Class B Common
Stock prices to remain roughly equal in most market conditions, the difference
in rights of the two classes, coupled with the general volatility of the
Company's stock price described above, could cause the Class A Common Stock and
Class B Common Stock to trade at different prices. In the event of a tender
offer or other unsolicited attempt to acquire the Company, shares of Class B
Common Stock would likely trade at a substantial premium to shares of Class A
Common Stock as a result of the disparity of voting rights. Future issuances of
both Class A Common Stock and Class B Common Stock could affect the price for
either or both classes of Common Stock. For the foregoing reasons, the price for
the Company's Class A Common Stock and Class B Common Stock may be subject to
substantial fluctuation.
PURCHASE OF NOTES UPON A CHANGE OF CONTROL
Upon the occurrence of a change of control of the Company in certain
circumstances, the Company is required to make an offer to purchase all
outstanding Notes at a purchase price equal to 101% of the principal amount
thereof, together with accrued and unpaid interest, if any, to the date of
purchase. There can be no assurance that the Company will have available funds
sufficient to purchase the Notes upon such change of control. In addition, any
change of control, and any repurchase of the Notes upon a change of control, is
expected to constitute an event of default under the New Credit Facility with
the result that the obligations of the Company thereunder could be declared due
and payable by the lenders. Upon the occurrence of an event of default, the
lenders under the New Credit Facility would have the ability to block
repurchases of the Notes for a period of time and upon any acceleration of the
obligations under the New Credit Facility, the lenders thereunder would be
entitled to receive payment of all outstanding obligations thereunder before the
Company may repurchase any of the Notes tendered pursuant to an offer to
repurchase the Notes upon such change of control.
21
<PAGE> 23
INFOUSA INC.
FORM 10-Q
FOR THE QUARTER ENDED
JUNE 30, 1998
PART II
OTHER INFORMATION
22
<PAGE> 24
INFOUSA INC.
FORM 10-Q
FOR THE QUARTER ENDED
JUNE 30, 1998
PART II
ITEM 1. LEGAL PROCEEDINGS
-----------------
On March 17, 1998, the Company filed suit in Delaware court to enjoin a merger
agreement whereby Great Universal Stores, PLC ("GUS") would acquire Metromail
Corporation ("Metromail") for $31.50 per share. On March 20, 1998, GUS filed a
counterclaim against the Company alleging, among other things, that ABI
tortiously interfered with the Merger Agreement and Parent's prospective
business relations with Metromail. The Counterclaim also alleges that the
Company breached a confidentiality agreement entered into by the Company with
Metromail's financial advisor and of which GUS is a third party beneficiary. As
relief, the GUS claim seeks, among other things, injunctive relief and actual,
punitive and other damages in an amount to be determined at trial, estimated by
GUS to exceed $500 million, plus fees and expenses. On March 27, 1998, the
Delaware Chancery Court denied the Company's motion for a preliminary injunction
to block the GUS Merger Agreement. The Company does not believe that the GUS
counterclaim has merit and will vigorously defend the suit, however there can be
no assurance that this matter will be resolved without a material adverse affect
on the Company's financial condition. On March 30, 1998, the Metromail Board of
Directors accepted a proposal to be acquired by GUS for $34.50 per share.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
-----------------------------------------
On June 18, 1998, the Company completed a private placement of 9 1/2% Senior
Subordinated Notes (the "Notes") in the aggregate principal amount of
$115,000,000, which Notes impose certain restrictions on the Company's ability
to pay dividends on, or make other distributions with respect to, its Class A
Common Stock and Class B Common Stock. Such restrictions are defined in the
Indenture dated as of June 18, 1998 attached hereto as Exhibit 4.2, and
incorporated herein by reference. The Notes have not been registered under the
Securities Act of 1933, as amended (the "Act"), and may not be offered or sold
in the United States absent registration or an applicable exemption from the
registration requirements of the Act.
23
<PAGE> 25
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
At the 1998 Annual Meeting of Stockholders of the Company held on May 22, 1998,
the stockholders voted and approved the following items:
1. Re-elected the following to the Board of Directors for a term of three
years.
Harold W. Andersen:
FOR: 197,867,718 WITHHOLD AUTHORITY: 25,166,574
Elliot S. Kaplan:
FOR: 200,069,061 WITHHOLD AUTHORITY: 22,965,231
Jon H. Wellman:
FOR: 197,872,995 WITHHOLD AUTHORITY: 25,161,297
2. The stockholders voted to amend the Company's Certificate of Incorporation
to change the name of the Company to infoUSA Inc.
<TABLE>
<S> <C> <C> <C>
FOR: 208,660,943 AGAINST: 1,906,287 ABSTAIN: 12,467,062 NON-VOTES: 0
</TABLE>
3. The stockholders also ratified the re-appointment of PricewaterhouseCoopers
LLP as the Company's independent auditors to examine the financial
statements of the Compoany for the fiscal year 1998.
<TABLE>
<S> <C> <C> <C>
FOR: 212,211,984 AGAINST: 9,905,929 ABSTAIN: 916,379 NON-VOTES: 0
</TABLE>
In addition to the directors elected at the 1998 Annual Meeting, the terms of
Directors Vinod Gupta, Jon Hoffmaster, Scott Dahnke, Paul Goldner, Gautam Gupta,
George Haddix and George Kubat continued after the meeting.
ITEM 5. OTHER INFORMATION
-----------------
In July and August 1998, Jon Wellman resigned as the Company's President
and Chief Operating Officer, Scott Dahnke resigned as the Company's Chief
Executive Officer and Steven Purcell resigned as the Company's Chief Financial
Officer.
Effective upon Mr. Dahnke's resignation, Vinod Gupta, the Company's
Chairman of the Board, was re-appointed as the Company's Chief Executive
Officer. Effective upon Mr. Purcell's resignation, Rick Puckett, the Company's
controller, was appointed Chief Financial Officer.
24
<PAGE> 26
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits
3.1 Certificate of Incorporation, as amended through July 31, 1998
4.1 Purchase Agreement dated June 12, 1998 between the Registrant, BT
Alex. Brown Incorporated, Goldman, Sachs & Co. and Hambrecht & Quist
LLC.
4.2 Indenture dated as of June 18, 1998 (the "Indenture") by and between
the Registrant and State Street Bank and Trust Company of California,
N.A., as Trustee
4.3 Exchange and Registration Rights Agreement dated as of June 18, 1998
by and among the Registrant and BT Alex. Brown Incorporated, Goldman,
Sachs & Co. and Hambrecht & Quist LLC as the Initial Purchasers.
4.4 $115,000,000 Existing Global 9 1/2% Senior Subordinated Note due 2008.
27 Financial Data Schedule
(b) Report on Form 8-K
On May 21, 1998, the Company filed a Current Report on Form 8-K announcing
that the Company was contemplating a private placement of senior
subordinated notes
On June 18, 1998, the Company filed a Current Report on Form 8-K announcing
that the Company had completed a private placement of 9 1/2% Senior
Subordinated Notes
On July 31, 1998, the Company filed a Current Report on Form 8-K amending
the Company's Certificate of Incorporation to change the Company's name to
infoUSA Inc.
25
<PAGE> 27
S I G N A T U R E S
-------------------
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.
AMERICAN BUSINESS INFORMATION, INC.
Date: August 14, 1998 /S/ RICK PUCKETT
---------------------- -----------------------------------------------
Rick Puckett, Chief Financial Officer (principal
financial officer)
26
<PAGE> 28
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
3.1 Certificate of Incorporation, as amended through July 31, 1998
4.1 Purchase Agreement dated June 12, 1998 between the Registrant, BT Alex. Brown Incorporated,
Goldman, Sachs & Co. and Hambrecht & Quist LLC.
4.2 Indenture dated as of June 18, 1998 (the "Indenture") by and between the Registrant and State Street
Bank and Trust Company of California, N.A., as Trustee
4.3 Exchange and Registration Rights Agreement dated as of June 18, 1998 by and among the Registrant and BT Alex.
Brown Incorporated, Goldman, Sachs & Co. and Hambrecht & Quist LLC as the Initial Purchasers.
4.4 $115,000,000 Existing Global 9 1/2% Senior Subordinated Note due 2008.
27 Financial Data Schedule
</TABLE>
<PAGE> 1
CERTIFICATE OF INCORPORATION
OF
INFOUSA INC.
ARTICLE I.
Name
The name of the Corporation shall be infoUSA Inc.
ARTICLE II.
Registered Office and Agent
The address of the Corporation's registered office in the State of
Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle,
19801, and the name of the Registered Agent at such address is The Corporation
Trust Company.
ARTICLE III.
Purpose
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
ARTICLE IV.
Authorized Stock
A. The total number of shares of all classes of capital stock which the
corporation shall have authority to issue is three hundred million
(300,000,000) shares which shall be divided into three classes as
follows:
(i) Two Hundred Twenty Million (220,000,000) shares of Class A
Common Stock of the par value of one fourth of one cent
($0.0025) per share;
(ii) Seventy-Five million (75,000,000) shares of Class B Common
Stock of the par value of one fourth of one cent ($0.0025) per
share; and
(iii) Five Million (5,000,000) shares of Preferred Stock with a par
value of one fourth of one cent ($0.0025) per share.
<PAGE> 2
Upon this Certificate of Amendment of Certificate of Incorporation
becoming effective pursuant to the General Corporation Law of the State of
Delaware (the "Effective Time"), and without any further action on the part of
the Corporation or its stockholders, each share of the Corporation's Common
Stock, one fourth of one cent ($0.0025) par value, then issued (including shares
held in the treasury of the Corporation), shall be automatically reclassified,
changed and converted into one (1) fully paid and non-assessable share of Class
B Common Stock, one fourth of one cent ($0.0025) par value. Any stock
certificate which, immediately prior to the Effective Time, represents shares of
Common Stock, one fourth of one cent ($0.0025) par value, will, from and after
the Effective Time, automatically and without the necessity of presenting the
same for exchange, represent that number of shares of Class B Common Stock equal
to the number of shares of Common Stock represented by such certificate prior to
the Effective Time. As soon as practicable after the Effective Time, the
corporation's transfer agent shall mail a transmittal letter to each record
holder who then holds shares of Class B Common Stock, informing such persons of
this reclassification with appropriate instructions on exchanging certificates
representing such shares and other relevant matters. The Class A Common Stock
and Class B Common Stock are hereinafter collectively referred to as the "Common
Stock."
The rights, preferences, privileges, restrictions and limitations
pertaining to the Common Stock, subject to applicable law, are set forth in
Section B of this Article IV. The rights, preferences, privileges, restrictions
and limitations pertaining to the Preferred Stock, subject to applicable law,
are set forth in Article V.
B. COMMON STOCK: Except as set forth expressly in this Section B and to
the fullest extent not otherwise required by applicable law, the Class
A Common Stock and Class B Common Stock shall be identical in every
respect.
(i) DIVIDENDS: Subject to all of the rights of any Preferred Stock
as to dividends, holders of shares of Class A Common Stock
shall be entitled to receive, when and as declared by the Board
of Directors, out of funds legally available therefor,
dividends at the rate per share of $0.02, per annum, as
adjusted for stock splits, stock dividends, recapitalizations,
and similar events, payable in preference and priority to any
payment of any dividend on the Class B Common Stock of the
Corporation (such preferential dividends, the "Class A
Preferential Dividends"). The Class A Preferential Dividends
shall not be cumulative, and no right to such dividends shall
accrue to holders of Class A Common Stock unless declared by
the Board of Directors. No dividends or other distributions
shall be made with respect to the Class B Common Stock in any
fiscal year, other than dividends payable solely in capital
stock, until (a) the Class A Preferential Dividends have been
paid to or declared and set apart upon all shares of Class A
Common Stock during that fiscal year, and (b) such dividend is
declared by the Board of Directors. All dividends other than
the Class A Preferential Dividends shall be paid, when, as and
if declared by the Board of Directors, at an equal per-share
rate on all then-outstanding shares of Class A Common Stock and
Class B Common Stock.
<PAGE> 3
(ii) VOTING: To the fullest extent not otherwise required by law,
the holder of each share of Class A Common Stock issued and
outstanding shall have one vote with respect to such share and
the holder of each share of Class B Common Stock shall have ten
(10) votes with respect to such share, such votes to be counted
together with all other shares of stock of the Corporation
having general voting power and not separately as a class.
Holders of Common Stock shall be entitled to notice of any
shareholders' meeting in accordance with the Bylaws of the
Corporation. Pursuant to Section 242(c) of the General
Corporation Law of Delaware, the number of authorized shares of
Class A Common Stock or Class B Common Stock may be increased
or decreased (but not below the number of shares thereof then
outstanding) by the affirmative vote of the holders of a
majority of the stock of the corporation entitled to vote,
voting together as a single class.
(iii) ALLOCATIONS OF PROCEEDS UPON LIQUIDATION: In the event of any
liquidation, dissolution or winding up of the Corporation (a
"Liquidation Event") the assets or funds of the Corporation
legally available for distribution to its stockholders by
reason of their ownership of the stock of the Corporation
shall, subject to all of the rights of any Preferred Stock to
receive assets of the Corporation upon a Liquidation Event, be
distributed as follows: first, the holders of Common Stock
shall be entitled to receive for each outstanding share of
Common Stock then held by them an amount equal to all declared
but unpaid dividends on such share; second, all remaining
assets and funds of the Corporation legally available for
distribution to stockholders by reason of their ownership of
stock of the Corporation shall be distributed ratably among the
holders of Common Stock in proportion to the number of shares
of Common Stock held by them. For purposes of this paragraph, a
merger or consolidation of the Corporation with or into any
other corporation or corporations, or a sale of all or
substantially all of the assets of the Corporation, shall be
treated as a liquidation, dissolution or winding up, unless the
stockholders of the Corporation immediately prior to such
transaction hold at least 50% of the outstanding voting equity
securities of the surviving corporation in such merger,
consolidation or sale of assets reorganization.
C. ISSUANCES AND REPURCHASES OF COMMON STOCK: The Board of Directors
shall have the power to issue and sell all or any part of any class of
stock herein or hereafter authorized to such persons, firms,
associations or corporations, and for such consideration as the Board
of Directors shall from time to time, in its discretion, determine,
whether or not greater consideration could be received upon the issue
or sale of the same number of shares of another class, and as otherwise
permitted by law. In addition, the Board of Directors shall have the
power to purchase any class of stock herein or hereafter authorized
from such persons, firms, associations or corporations, and for such
consideration as the Board of Directors shall from time to time, in its
discretion, determine, whether or not less consideration could be paid
upon the purchase of the same number of shares of another class, and as
otherwise permitted by law."
<PAGE> 4
ARTICLE V.
Rights and Preferences of Holders
of Preferred Stock
The Board of Directors is authorized, subject to limitations prescribed
by law and the provisions of Article IV, to provide for the issuance of the
shares of Preferred Stock in series, and by filing a Certificate pursuant to the
applicable law of the State of Delaware, to establish from time to time the
number of shares to be included in each such series, and to fix the designation,
powers, preferences and rights of the shares of each such series and the
qualifications, limitations or restrictions thereof.
The authority of the Board of Directors with respect to each series of
Preferred Stock shall include, but not be limited to, determination of the
following:
A. The number of shares constituting that series and the distinctive
designation of that series;
B. The dividend rate on the shares of that series, whether dividends shall
be cumulative, and if so, from which data or dates, and the relative
rights of priority, if any, of payment of dividends on shares of that
series;
C. Whether that series shall have voting rights, in addition to the voting
rights provided by law, and if so, the terms of such voting rights;
D. Whether that series shall have conversion privileges, and if so, the
terms and conditions of such conversion privileges, including provision
for adjustment of the conversion rate in such events as the Board of
Directors shall determine;
E. Whether or not the shares of that series shall be redeemable, and, if
so, the terms and conditions of such redemption, including the date or
date upon or after which they shall be redeemable, and the amount per
share payable in case of redemption, which amount may vary under
different conditions and at different redemption dates;
F. Whether that series shall have a sinking fund for the redemption or
purchase of shares of that series, and, if so, the terms and amount of
such sinking funds;
G. The rights of the shares of that series in the event of voluntary or
involuntary liquidation, dissolution or winding up of the Corporation,
and the relative rights of priority, if any, of payment of shares of
that series;
H. Any other relative rights, preferences and limitations of that series.
Dividends on outstanding shares of Preferred Stock shall be paid or
declared and set apart for payment before any dividend shall be paid or declared
and set apart for payment on the Common Stock with respect to the same dividend
period.
<PAGE> 5
If upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the assets available for distribution to holders
of shares of Preferred Stock of all series shall be insufficient to pay such
holders the full preferential amount to which they are entitled, then such
assets shall be distributed ratably among the shares of each series of Preferred
Stock in accordance with each such series respective preferential amounts
(including unpaid cumulative dividends, if any).
ARTICLE VI.
Incorporator
The name and mailing address of the Incorporator is Vinod Gupta, 5711
South 86th Circle, Omaha, Nebraska 68127. Until the directors are elected, the
Incorporator shall manage the affairs of the Corporation, including the adoption
of the original bylaws of the Corporation and may do whatever is necessary and
proper to effect the organization of the Corporation and the election of
directors.
ARTICLE VII.
Premptive Rights
The holders of Common Stock or Preferred Stock of the Corporation shall
have no preemptive rights to subscribe for any shares of any class of stock of
the Corporation whether now or hereafter authorized.
ARTICLE VIII.
Board of Directors
A. The number of Directors constitution the entire Board shall be not less
than three (3) nor more than fifteen (15), as fixed from time to time
by vote of the majority of the entire Board; provided, however, that
the number of Directors shall not be reduced so as to shorten the term
of any Director at the time in office.
B. The Board of Directors shall be divided into three classes, as
nearly equal in numbers as the then total number of Directors
constituting the entire Board permits with the term of office of one
class expiring each year. At the first annual meeting of shareholders
in 1992, the term of office of the first class of Directors will expire
and at which them their successors shall be elected for a term expiring
at the third succeeding annual meeting after their election. At the
annual meeting of the shareholders in 1993, the term of office of the
second class of Directors will expire and at which time their
successors shall be elected for a term expiring at the third succeeding
annual meeting after their election. At the annual meeting of the
shareholders in 1994, the term of office of the third class of
Directors will expire and at which time their successors shall be
elected for a term expiring at the third succeeding annual meeting
<PAGE> 6
after their election. Any vacancies in the Board of Directors for any
reason, and any directorships resulting from any increase in the number
of Directors, may be filled by the Board of Directors, acting by a
majority of the Directors then in office, although less than a quorum,
and any Director so chosen shall hold office until the next election of
the class for which such Director shall have been chosen. Subject to
the foregoing, at each annual meeting of shareholders, the successors
to the class of Directors whose term shall then expire shall be elected
to hold office for a term expiring at the third succeeding annual
meeting after their election.
C. Notwithstanding any other provisions of this Certificate of
Incorporation or the Bylaws of the Corporation (and notwithstanding the
fact that some lesser percentage may be specified by law, this
Certificate of Incorporation or the Bylaws of the Corporation), any
director or the entire Board of Directors of the Corporation may be
removed at any time, but only for cause and only by affirmative vote of
the holders of fifty percent (50%) or more of the outstanding shares of
capital stock of the Corporation entitled to vote generally in the
election of Directors (considered for this purpose as one class) cast
at a meeting of the shareholders called for that purpose.
ARTICLE IX.
Bylaws
All of the powers of the Corporation, insofar as the same may be
lawfully vested by this Certificate of Incorporation in the Board of Directors,
are hereby conferred upon the Board of Directors of the Corporation. Except as
otherwise provided in this Article IX, and in furtherance, and not in limitation
of that power, the Board of Directors shall have the power to make, adopt,
alter, amend and repeal from time to time the Bylaws of the corporation, subject
to the right of the shareholders entitled to vote with respect thereto to adopt,
alter, amend and repeal Bylaws made by the Board of Directors. The shareholders
may expressly provide in any bylaw that such bylaw may not be altered, amended
or repealed by the Board of Directors; and a bylaw so providing may not be
altered, amended or repealed by the Board of Directors.
ARTICLE X.
Amendment of Articles
Notwithstanding any other provision of this Certificate of
Incorporation or the Bylaws of the Corporation (in addition to any other vote
that may be required by law, this Certificate of Incorporation or the Bylaws),
the affirmative vote of the holders of at least sixty percent (60%) of the
outstanding shares of the Common Stock of the Corporation, and any series of
Preferred Stock entitled to vote generally in the election of Directors
(considered for this purpose as one class) shall be required to amend, alter or
repeal any provision of this Certificate of Incorporation.
<PAGE> 7
ARTICLE XI.
Liability of Directors
No Director of the Corporation shall be personally liable to the
Corporation or its shareholders for monetary damages for breach of fiduciary
duty as a Director; provided, however, that the foregoing clause shall not apply
to any liability of a Director: (i) for any breach of the Director's duty of
loyalty to the Corporation or its shareholders; (ii) for acts or omissions not
in good faith or which involved intentional misconduct or a knowing violation of
law; (iii) under Section 174 of the General Corporation Law of the State of
Delaware; or (iv) for any transaction from which the Director derived an
improper personal benefit. If the General Corporation Law of the State of
Delaware is amended to authorize corporate action further eliminating or
limiting the personal liability of the Directors, then the liability of the
Director of the Corporation shall be eliminated or limited to the fullest extent
permitted by the General Corporation Law of the State of Delaware, as so
amended. Any repeal or modification of this Article XI shall not adversely
effect any right or protection of a Director of the Corporation existing
hereunder with respect to any act or omission occurring prior to such repeal or
modification.
ARTICLE XII.
Director Voting
Unless otherwise provided by resolution by the Board of Directors, it
shall not be required that elections of Directors be conducted by written
ballot.
ARTICLE XIII.
Indemnification
The Corporation shall to the extent required, and may, to the extent
permitted, by Section 145 of the Delaware General Corporation Law, as amended
from time to time, indemnify and reimburse all persons whom it may indemnify and
reimburse pursuant thereto. Notwithstanding the foregoing, the indemnification
provided for in this Article XIII shall not be deemed exclusive of any other
rights to which those entitled to receive indemnification or reimbursement
hereunder may be entitled under any bylaw of this Corporation, agreement, vote
or consent of shareholders or disinterested directors or otherwise.
<PAGE> 1
AMERICAN BUSINESS INFORMATION, INC.
$115,000,000
9-1/2% SENIOR SUBORDINATED NOTES DUE 2008
PURCHASE AGREEMENT
June 12, 1998
BT Alex. Brown Incorporated
Goldman, Sachs & Co.
Hambrecht & Quist LLC
c/o BT Alex. Brown Incorporated
One Bankers Trust Plaza
130 Liberty Street
New York, New York 10006
Ladies and Gentlemen:
American Business Information, Inc. (the "Company"), a Delaware
corporation, hereby confirms its agreement with you (the "Initial Purchasers"),
as set forth below.
1. The Securities. Subject to the terms and conditions herein contained,
the Company proposes to issue and sell to the Initial Purchasers $115,000,000
aggregate principal amount of its 9-1/2% Senior Subordinated Notes due 2008 (the
"Securities"). The Securities are to be issued under an indenture dated as of
June 18, 1998, between the Company and State Street Bank and Trust Company of
California, N.A., as trustee (the "Trustee") (the "Indenture").
The Securities will be offered and sold to you without being registered
under the Securities Act of 1933, as amended, and the rules and regulations
thereunder (the "Act"), in reliance on exemptions therefrom.
In connection with the sale of the Securities, the Company has prepared
a preliminary offering memorandum dated May 28, 1998 (the "Preliminary
Memorandum") and a final offering memorandum dated June 12, 1998 (the "Final
Memorandum," the Preliminary
<PAGE> 2
-2-
Memorandum and the Final Memorandum each herein being referred to as a
"Memorandum") setting forth or including a description of the terms of the
Securities, the terms of the offering of the Securities, a description of the
Company and any material developments relating to the Company occurring after
the date of the most recent historical financial statements included therein.
Unless otherwise indicated, all references herein to the Preliminary Memorandum
or the Final Memorandum shall be deemed to include any documents filed under the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder (the "Exchange Act") which are incorporated by reference therein. As
used herein, the term "Incorporated Documents" means the documents which at the
time are incorporated by reference in the Preliminary Memorandum or the Final
Memorandum or any amendment or supplement thereto.
The Initial Purchasers and their direct and indirect transferees of the
Securities will be entitled to the benefits of the Registration Rights
Agreement, substantially in the form attached hereto as Exhibit A (the
"Registration Rights Agreement"), pursuant to which the Company will agree,
among other things, to file a registration statement (the "Registration
Statement") with the Securities and Exchange Commission (the "Commission")
registering the Exchange Notes (as defined in the Registration Rights Agreement)
under the Act.
2. Representations and Warranties of the Company. The Company represents
and warrants to and agrees with each of the Initial Purchasers that:
(a) The Preliminary Memorandum as of the date thereof did not and the
Final Memorandum and any amendment or supplement thereto as of the date thereof
does not and at all times subsequent thereto up to the Closing Date (as defined
in Section 3 below) will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading, except
that the representations and warranties set forth in this Section 2(a) do not
apply to statements or omissions made in reliance upon and in conformity with
information relating to any of the Initial Purchasers furnished to the Company
in writing by the Initial Purchasers expressly for use in the Preliminary
Memorandum, the Final Memorandum or any amendment or supplement thereto.
(b) The Incorporated Documents heretofore filed were filed in a timely
manner under the Exchange Act and, when they were filed (or, if any amendment
with respect to any such document was filed, when such amendment was filed),
conformed in all material respects to the requirements of the Exchange Act and
did not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and any further Incorporated Documents will, when so
filed, be filed in a timely manner under the
<PAGE> 3
-3-
Exchange Act and conform in all material respects to the requirements of the
Exchange Act and will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading.
(c) As of the Closing Date, the Company will have the authorized, issued
and outstanding capitalization set forth in the Final Memorandum; all of the
outstanding shares of capital stock of the Company and each of American Business
Information Marketing, Inc., CD Rom Technologies, Inc., Contacts Influential,
Inc., Database Companies of America, Inc. and County Data Corporation (each, a
"Subsidiary" and collectively, the "Subsidiaries") have been, and as of the
Closing Date will be, duly authorized and validly issued, are fully paid and
nonassessable and were not issued in violation of any preemptive or similar
rights; except as set forth in the Final Memorandum, all of the outstanding
shares of capital stock of the Company and the Subsidiaries will be free and
clear of all liens, encumbrances, equities and claims (other than those under
the Company's existing credit agreement dated as of February 14, 1997 among the
Company and the lenders party thereto and First Union National Bank, as agent
(the "Existing Credit Agreement")) or restrictions on transferability (other
than those imposed by the Act and the securities or "Blue Sky" laws of certain
jurisdictions) or voting; except as set forth in the Final Memorandum, there are
no (i) options, warrants or other rights to purchase, (ii) agreements or other
obligations to issue or (iii) other rights to convert any obligation into, or
exchange any securities for, shares of capital stock of or ownership interests
in the Company or any of the Subsidiaries outstanding. Except for the Company's
direct and indirect interests in the Subsidiaries, the Company does not own,
directly or indirectly, more than 10% of the total outstanding shares of capital
stock or any other equity or long-term debt securities or have more than a 10%
equity interest in any firm, partnership, joint venture or other entity.
(d) Each of the Company and the Subsidiaries is duly organized, validly
existing and in good standing under the laws of its jurisdiction of organization
and has all requisite corporate or other power and authority to own its
properties and conduct its business as now conducted and as described in the
Final Memorandum; each of the Company and the Subsidiaries is duly qualified to
do business and is in good standing in all other jurisdictions where the
ownership or leasing of its properties or the conduct of its business requires
such qualification, except where the failure to be so qualified would not,
individually or in the aggregate, have a material adverse effect on the general
affairs, management, business, condition (financial or otherwise), prospects or
results of operations of the Company and the Subsidiaries, taken as a whole (any
such event, a "Material Adverse Effect").
<PAGE> 4
-4-
(e) The Company has all requisite corporate power and authority to
execute, deliver and perform each of its obligations under the Securities, the
Exchange Notes and the Private Exchange Notes (as defined in the Registration
Rights Agreement). The Securities, when issued, will be in the form contemplated
by the Indenture. The Securities and the Exchange Notes have each been duly and
validly authorized by the Company and, when executed by the Company and
authenticated by the Trustee in accordance with the provisions of the Indenture
and, in the case of the Securities, when delivered to and paid for by the
Initial Purchasers in accordance with the terms of this Agreement, will have
been duly executed, issued and delivered and will constitute valid and legally
binding obligations of the Company, entitled to the benefits of the Indenture,
and enforceable against the Company in accordance with their terms, except that
the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, and (ii) general
principles of equity and the discretion of the court before which any proceeding
therefor may be brought (regardless of whether such enforcement is considered in
a proceeding in equity or at law).
(f) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under the Indenture. The Indenture
meets the requirements for qualification under the Trust Indenture Act of 1939,
as amended (the "TIA"). The Indenture has been duly and validly authorized by
the Company and, when executed and delivered in accordance with its terms
(assuming the due authorization, execution and delivery by the Trustee), will
have been duly executed and delivered and will constitute a valid and legally
binding agreement of the Company, enforceable against the Company in accordance
with its terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii) general
principles of equity and the discretion of the court before which any proceeding
therefor may be brought (regardless of whether such enforcement is considered in
a proceeding in equity or at law).
(g) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under the Registration Rights
Agreement. The Registration Rights Agreement has been duly and validly
authorized by the Company and, when executed and delivered by the Company
(assuming due authorization, execution and delivery by the other parties
thereto), will have been duly executed and delivered and will constitute a valid
and legally binding agreement of the Company, enforceable against the Company in
accordance with its terms, except that (A) the enforcement thereof may be
subject to (i) bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect
<PAGE> 5
-5-
relating to creditors' rights generally and (ii) general principles of equity
and the discretion of the court before which any proceeding therefor may be
brought (regardless of whether such enforcement is considered in a proceeding in
equity or at law) and (B) any rights to indemnity or contribution thereunder may
be limited by federal and state securities laws and public policy
considerations.
(h) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. This Agreement and the
consummation by the Company of the transactions contemplated hereby have been
duly and validly authorized by the Company. This Agreement has been duly
executed and delivered by the Company.
(i) No consent, approval, authorization or order of any court or
governmental agency or body, or third party is required for the performance of
this Agreement by the Company or the consummation of the other transactions
contemplated hereby, except such as have been obtained (including the Waiver
Agreement dated as of May 27, 1998 by and among the Company and the required
lenders (the "Waiver") under the Existing Credit Agreement) and such as may be
required under state securities or "Blue Sky" laws in connection with the
purchase and resale of the Securities by the Initial Purchasers. Neither the
Company nor any of the Subsidiaries is (i) in violation of its certificate of
incorporation or bylaws, (ii) in breach or violation of any statute, judgment,
decree, order, rule or regulation applicable to any of them or any of their
respective properties or assets, except for any such breach or violation which
would not, individually or in the aggregate, have a Material Adverse Effect, or
(iii) in breach of or default under (nor has any event occurred which, with
notice or passage of time or both, would constitute a default under) or in
violation of any of the terms or provisions of any indenture, mortgage, deed of
trust, loan agreement, note, lease, license, franchise agreement, permit,
certificate, contract or other agreement or instrument to which any of them is a
party or to which their respective properties or assets are subject, except for
(x) any such breach, default, violation or event which would not, individually
or in the aggregate, have a Material Adverse Effect or (y) any such breach,
default or violation waived by the Waiver.
(j) The execution, delivery and performance by the Company of this
Agreement, the Indenture, the Securities, the Exchange Notes, and the
Registration Rights Agreement and the consummation of the transactions
contemplated hereby and thereby, and the fulfillment of the terms hereof and
thereof, will not conflict with or constitute or result in a breach of or a
default under (or an event which, with notice or passage of time or both, would
constitute a default under) or violation of or cause an acceleration of any
obligation under, or result in the imposition or creation of (or the
<PAGE> 6
-6-
obligation to create or impose) a lien on any property or assets of the Company
or any Subsidiary with respect to (i) the terms or provisions of any Contract,
except for (x) any such conflict, breach, violation, default or event which
would not, individually or in the aggregate, have a Material Adverse Effect or
(y) any such breach, default or violation waived by the Waiver, (ii) the
certificate of incorporation or bylaws of the Company or any of the
Subsidiaries, or (iii) (assuming compliance with all applicable state securities
or "Blue Sky" laws and assuming the accuracy of the representations and
warranties of the Initial Purchasers in Section 8 hereof) any statute, judgment,
decree, order, rule or regulation of any court or governmental agency or body
applicable to the Company, the Subsidiaries or any of their respective
properties or assets, except for any such conflict, breach or violation which
would not, individually or in the aggregate, have a Material Adverse Effect.
(k) Each of the Indenture, the Securities, the Exchange Notes, the
Registration Rights Agreement and this Agreement conforms in all material
respects to the description thereof in the Final Memorandum.
(l) The consolidated financial statements of the Company and the related
notes thereto included in the Final Memorandum present fairly in all material
respects the financial position, results of operations and cash flows of the
Company at the dates and for the periods to which they relate and have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis, except as otherwise stated therein, and comply as to form in
all material respects with the applicable accounting requirements of the Act and
the rules and regulations thereunder, except as otherwise stated therein. The
summary and selected financial and statistical data included in the Final
Memorandum present fairly in all material respects the information shown therein
and have been prepared and compiled on a basis consistent with the audited
financial statements included therein and comply as to form in all material
respects with the applicable accounting requirements of the Act and the rules
and regulations thereunder, except as otherwise stated therein. Coopers &
Lybrand L.L.P. is an independent public accounting firm within the meaning of
the Act.
(m) (i) The pro forma financial information included in the Final
Memorandum (A) complies as to form in all material respects with the applicable
requirements of Regulation S-X promulgated under the Exchange Act, (B) has been
prepared in accordance with the Commission's rules and guidelines with respect
to pro forma financial statements and (C) has been properly computed on the
bases described therein, and (ii) the assumptions used in the preparation of the
pro forma financial information included in the Final Memorandum are reasonable
and the adjustments used therein are appropriate to give effect to the
transactions or circumstances referred
<PAGE> 7
-7-
to therein.
(n) The statistical and market-related data included in the Final
Memorandum are based on or derived from sources which the Company believes to be
reliable and accurate.
(o) Except as described in the Final Memorandum, there is not pending
or, to the best knowledge of the Company, threatened any action, suit,
proceeding, inquiry or investigation to which the Company is a party, or to
which any of its properties or assets are subject, before or brought by any
court, arbitrator or governmental agency or body, which could reasonably be
expected to have a Material Adverse Effect, or which seeks to restrain, enjoin,
prevent the consummation of or otherwise challenge the issuance or sale of the
Securities to be sold hereunder or the consummation of the other transactions
described in the Final Memorandum.
(p) Each of the Company and the Subsidiaries owns or possesses adequate
licenses or other rights to use all patents, trademarks, service marks, trade
names, copyrights and know-how necessary to conduct the businesses now or
proposed to be operated by it as described in the Final Memorandum, and neither
the Company nor any of the Subsidiaries has received any notice of infringement
of or conflict with (or knows of any such infringement of or conflict with)
asserted rights of others with respect to any patents, trademarks, service
marks, trade names, copyrights or know-how which, if such assertion of
infringement or conflict were sustained, would, individually or in the
aggregate, have a Material Adverse Effect.
(q) Each of the Company and the Subsidiaries possesses all licenses,
permits, certificates, consents, orders, approvals and other authorizations
from, and has made or will have made all declarations and filings with, all
federal, state, local and other governmental authorities, all self-regulatory
organizations and all courts and other tribunals presently required or necessary
to own or lease, as the case may be, and to operate its properties and to carry
on its business as now or proposed to be conducted as set forth in the Final
Memorandum ("Permits"), except where the failure to obtain such Permits would
not, individually or in the aggregate, have a Material Adverse Effect; each of
the Company and the Subsidiaries has fulfilled and performed all of its
obligations with respect to such Permits and no event has occurred which allows,
or after notice or lapse of time would allow, revocation or termination thereof
or results in any other material impairment of the rights of the holder of any
such Permit, except such as would not have a Material Adverse Effect; and
neither the Company nor any Subsidiary has received any notice of any proceeding
relating to revocation or modification of any such Permit, except as described
in the Final Memorandum or except where such revocation or modification would
not, individually or in the
<PAGE> 8
-8-
aggregate, have a Material Adverse Effect.
(r) Since the respective dates as of which information is given in the
Final Memorandum and except as described therein, there has been no material
adverse change, or any fact known to the Company which could reasonably be
expected to result in a material adverse change, in the general affairs,
management, business, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries taken as a whole, whether or not
arising from transactions in the ordinary course of business, or any loss of, or
damage to, properties (whether or not insured) which could reasonably be
expected to affect materially and adversely the general affairs, management,
business, condition (financial or otherwise) or results of operations of the
Company and its Subsidiaries taken as a whole. Since the date of the latest
balance sheet presented in the Final Memorandum, neither the Company nor any of
its Subsidiaries has (i) incurred or undertaken any liabilities or obligations,
direct or contingent, that are material to the Company and its Subsidiaries
taken as a whole, (ii) entered into any material transaction not in the ordinary
course of business and consistent with past practice, except as disclosed in the
Final Memorandum, or (iii) declared or paid any dividend or made any
distribution on any shares of its capital stock or redeemed, purchased or
otherwise acquired or agreed to redeem, purchase or otherwise acquire any shares
of its capital stock (other than any dividends or distributions to the Company).
(s) Each of the Company and Subsidiaries has filed all necessary
federal, state and foreign income and franchise tax returns, and has paid all
taxes shown as due thereon, except where the failure to so file such returns or
pay such taxes would not, individually or in the aggregate, have a Material
Adverse Effect. Other than tax deficiencies which the Company or any of the
Subsidiaries is contesting in good faith and for which the Company or such
Subsidiary has provided adequate reserves, there are no tax deficiencies that
have been asserted against the Company or any Subsidiary that would have,
individually or in the aggregate, a Material Adverse Effect.
(t) None of the Company or any of the Subsidiaries or any agent acting
on their behalf has taken or will take any action that might cause this
Agreement or the sale of the Securities to violate Regulation G, T, U or X of
the Board of Governors of the Federal Reserve System, in each case as in effect,
or as the same may hereafter be in effect, on the Closing Date.
(u) Each of the Company and the Subsidiaries has good title to all
personal property described in the Final Memorandum as being owned by it, good
and defensible title to all real property described in the Final Memorandum as
being owned by it and good and defensible title to each leasehold estate in the
real and
<PAGE> 9
-9-
personal property described in the Final Memorandum as being leased by it free
and clear of all liens, charges, encumbrances or restrictions, except as
described in the Final Memorandum or to the extent the failure to have such
title or the existence of such liens, charges, encumbrances or restrictions
would not have, individually or in the aggregate, a Material Adverse Effect. All
leases, contracts and agreements to which the Company or any Subsidiary is a
party or by which the Company or such Subsidiary is bound are valid and
enforceable against the Company or such Subsidiary and, to the knowledge of the
Company, are valid and enforceable against the other party or parties thereto
and are in full force and effect with only such exceptions as would not have,
individually or in the aggregate, a Material Adverse Effect.
(v) There are no legal or governmental proceedings involving or
affecting the Company, any of the Subsidiaries or any of their respective
properties or assets that would be required to be described in a prospectus
pursuant to the Act that are not described in the Final Memorandum, nor are
there any material contracts or other documents that would be required to be
described in a prospectus pursuant to the Act that are not described in the
Final Memorandum.
(w) Except as would not, individually or in the aggregate, have a
Material Adverse Effect, (A) each of the Company and the Subsidiaries is in
compliance with and not subject to liability under applicable Environmental Laws
(as defined below), (B) each of the Company and the Subsidiaries has made all
filings and provided all notices required under any applicable Environmental
Law, and has in full force and effect and is in compliance with all Permits
required under any applicable Environmental Law, (C) there is no civil, criminal
or administrative action, suit, demand, claim, hearing, notice of violation,
investigation, proceeding, notice or demand letter or request for information
pending or, to the knowledge of the Company, threatened against the Company or
any Subsidiary under any Environmental Law, (D) no lien, charge, encumbrance or
restriction has been recorded under any Environmental Law with respect to any
assets, facility or property owned, operated, leased or controlled by the
Company or any Subsidiary, (E) neither the Company nor any Subsidiary has
received notice that it has been identified as a potentially responsible party
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended ("CERCLA"), or any comparable state law, and (F) no property
or facility of the Company or any Subsidiary is (i) listed or proposed for
listing on the National Priorities List under CERCLA or (ii) listed in the
Comprehensive Environmental Response, Compensation, Liability Information System
List promulgated pursuant to CERCLA, or on any comparable list maintained by any
state or local governmental authority.
For purposes of this Agreement, "Environmental Laws" means the common law and
<PAGE> 10
-10-
all applicable federal, state and local laws or regulations, codes, orders,
decrees, judgments or injunctions issued, promulgated, approved or entered
thereunder, relating to pollution or protection of public or employee health and
safety or the environment, including, without limitation, laws relating to (i)
emissions, discharges, releases or threatened releases of hazardous materials,
into the environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), (ii) the manufacture,
processing, distribution, use, generation, treatment, storage, disposal,
transport or handling of hazardous materials, and (iii) underground and
aboveground storage tanks, and related piping, and emissions, discharges,
releases or threatened releases therefrom.
(x) There is no strike, labor dispute, slowdown or work stoppage
with the employees of the Company or the Subsidiaries which is pending
or, to the knowledge of the Company, threatened.
(y) Each of the Company and the Subsidiaries carries insurance
in such amounts and covering such risks as is adequate for the conduct
of its business and the value of its properties.
(z) Neither the Company nor any Subsidiary has any liability for
any prohibited transaction or funding deficiency or any complete or
partial withdrawal liability with respect to any pension, profit sharing
or other plan which is subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), to which the Company or any
Subsidiary makes or ever has made a contribution and in which any
employee of the Company or any Subsidiary is or has ever been a
participant except any such liability which would not have a Material
Adverse Effect. With respect to such plans, each of the Company and the
Subsidiaries is in compliance in all material respects with all
applicable provisions of ERISA.
(aa) Each of the Company and the Subsidiaries (i) makes and
keeps accurate books and records and (ii) maintains internal accounting
controls which provide reasonable assurance that (A) transactions are
executed in accordance with management's authorization, (B) transactions
are recorded as necessary to permit preparation of its financial
statements and to maintain accountability for its assets, (C) access to
its assets is permitted only in accordance with management's
authorization and (D) the reported accountability for its assets is
compared with existing assets at reasonable intervals.
(ab) Neither the Company nor any Subsidiary will be an
"investment company" or "promoter" or "principal underwriter" for an
"investment company," as such terms are defined in the Investment
Company Act of 1940, as amended, and the rules and regulations
thereunder.
<PAGE> 11
-11-
(ac) No holder of securities of the Company (other than the
Registrable Notes (as defined in the Registration Rights Agreement))
will be entitled to have such securities registered under the
registration statements required to be filed by the Company pursuant to
the Registration Rights Agreement.
(ad) Immediately after the consummation of the transactions
contemplated by this Agreement, the fair value and present fair saleable
value of the assets of each of the Company and the Subsidiaries will
exceed the sum of its stated liabilities and identified contingent
liabilities; the Company and its Subsidiaries on a consolidated basis
are not, and will not be after giving effect to the execution, delivery
and performance of this Agreement and the consummation of the
transactions contemplated hereby, (a) left with unreasonably small
capital with which to carry on their business as it is proposed to be
conducted, (b) unable to pay their debts (contingent or otherwise) as
they mature, or (c) otherwise insolvent.
(ae) Neither the Company nor any of the Subsidiaries nor any of
their respective Affiliates (as defined in Rule 501(b) of Regulation D
under the Act) has directly, or through any agent, (i) sold, offered for
sale, solicited offers to buy or otherwise negotiated in respect of any
"security" (as defined in the Act) which is or could be integrated with
the sale of the Securities in a manner that would require the
registration under the Act of the Securities or (ii) engaged in any form
of general solicitation or general advertising (as those terms are used
in Regulation D under the Act) in connection with the offering of the
Securities or in any manner involving a public offering within the
meaning of Section 4(2) of the Act.
(af) Assuming the accuracy of the representations and warranties
of the Initial Purchasers in Section 8 hereof, it is not necessary in
connection with the offer, sale and delivery of the Securities to the
Initial Purchasers in the manner contemplated by this Agreement to
register any of the Securities under the Act or to qualify the Indenture
under the TIA.
(ag) No securities of the Company are of the same class (within
the meaning of Rule 144A under the Act) as the Securities and listed on
a national securities exchange registered under Section 6 of the
Exchange Act, or quoted in a U.S. automated inter-dealer quotation
system.
(ah) Neither the Company nor any Subsidiary has taken, or will
take, directly or indirectly, any action designed to, or that might be
reasonably expected to, cause or result in stabilization or manipulation
of the price of the Securities.
Any certificate signed by any officer of the Company or any
Subsidiary and
<PAGE> 12
-12-
delivered to any Initial Purchaser or to counsel for the Initial Purchasers
shall be deemed a joint and several representation and warranty by the Company
and each of the Subsidiaries to each Initial Purchaser as to the matters covered
thereby.
3. Purchase, Sale and Delivery of the Securities. On the basis of the
representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to the Initial Purchasers, and each of the Initial Purchasers
agrees, acting severally and not jointly, to purchase the Securities, at 100% of
their principal amount, in the respective principal amounts set forth opposite
their names on Schedule I hereto.
One or more certificates in definitive form for the Securities that the
Initial Purchasers have agreed to purchase hereunder, and in such denomination
or denominations and registered in such name or names as the Initial Purchasers
request upon notice to the Company at least 48 hours prior to the Closing Date,
shall be delivered by or on behalf of the Company to the Initial Purchasers,
against payment by or on behalf of the Initial Purchasers of the purchase price
therefor by wire transfer of immediately available funds payable to such account
or accounts as the Company shall specify prior to the Closing Date, or by such
means as the parties hereto shall agree prior to the Closing Date. Such delivery
of and payment for the Securities shall be made at the offices of Cahill Gordon
& Reindel, 80 Pine Street, New York, New York, at 9:00 A.M., New York time, on
9:00 A.M., 1998, or at such other place, time or date as the Initial Purchasers
and the Company may agree upon, such time and date of delivery against payment
being herein referred to as the "Closing Date." The Company will make such
certificate or certificates for the Securities available for checking and
packaging by the Initial Purchasers at the offices of BT Alex. Brown
Incorporated in New York, New York or such other place as BT Alex. Brown
Incorporated may designate, at least 24 hours prior to the Closing Date.
4. Offering by the Initial Purchasers. The Initial Purchasers propose to
make an offering of the Securities at the price and upon the terms set forth in
the Final Memorandum as soon as practicable after this Agreement is entered into
and as in the sole judgment of the Initial Purchasers is advisable.
5. Covenants of the Company. The Company covenants and agrees with each
of the Initial Purchasers that:
(a) The Company will not amend or supplement the Final
Memorandum or any amendment or supplement thereto of which the Initial
Purchasers and counsel to the Initial Purchasers shall not previously
have been advised and furnished a copy a reasonable period of time prior
to the proposed amendment or supplement and unless the Company is
required by the Act or the Exchange Act to make such amendment or
<PAGE> 13
-13-
supplement, as to which the Initial Purchasers shall not have given
their consent, which consent shall not be unreasonably withheld. The
Company will promptly, upon the reasonable request of the Initial
Purchasers or counsel for the Initial Purchasers, make any amendments or
supplements to the Final Memorandum that may be necessary or advisable
in connection with the resale of the Securities by the Initial
Purchasers.
(b) The Company will cooperate with the Initial Purchasers in
arranging for the qualification of the Securities for offering and sale
under the securities or "Blue Sky" laws of such jurisdictions as the
Initial Purchasers may designate and will continue such qualification in
effect for as long as may be necessary to complete the resale of the
Securities by the Initial Purchasers; provided, however, that in
connection therewith the Company shall not be required to qualify as a
foreign corporation or to execute a general consent to service of
process in any jurisdiction or subject the Company to any tax in any
such jurisdiction where it is not then so subject.
(c) If, at any time prior to the completion of the distribution
by the Initial Purchasers of the Securities or the Private Exchange
Notes (if any), any event occurs or information becomes known as a
result of which the Final Memorandum as then amended or supplemented
would include an untrue statement of a material fact, or omit to state a
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, or if for
any other reason it is necessary at any time to amend or supplement the
Final Memorandum in order to comply with applicable law, the Company
will promptly notify the Initial Purchasers thereof and will prepare, at
the Company's expense, an amendment to the Final Memorandum that
corrects such statement or omission or effects such compliance.
(d) The Company will, without charge, provide to the Initial
Purchasers and to counsel for the Initial Purchasers as many copies of
the Preliminary Memorandum and the Final Memorandum or any amendment or
supplement thereto as the Initial Purchasers may reasonably request.
(e) The Company will apply the net proceeds from the sale of the
Securities substantially as set forth under "Use of Proceeds" in the
Final Memorandum.
(f) For so long as any Securities remain outstanding, the
Company will furnish to the Initial Purchasers copies of all reports and
other communications (financial or otherwise) furnished by the Company
to the Trustee or the holders of the Securities and, as soon as
available, copies of any reports or financial statements furnished to or
filed by the Company with the Commission or any national securities
exchange
<PAGE> 14
-14-
or quotation system on which any class of securities of the Company may
be listed.
(g) Prior to the Closing Date, the Company will furnish to the
Initial Purchasers, as soon as they have been prepared by or are
available to the Company, a copy of any unaudited interim consolidated
financial statements of the Company for any period subsequent to the
period covered by its most recent financial statements appearing in the
Final Memorandum.
(h) Neither the Company nor any of its Affiliates will sell,
offer for sale or solicit offers to buy or otherwise negotiate in
respect of any "security" (as defined in the Act) that could be
integrated with the sale of the Securities in a manner that would
require the registration under the Act of the Securities.
(i) The Company will not, nor will the Company allow any of the
Subsidiaries to, engage in any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Act) in
connection with the offering of the Securities or in any manner
involving a public offering within the meaning of Section 4(2) of the
Act.
(j) For so long as any of the Securities remain outstanding, the
Company will make available, upon request, to any holder of such
Securities and any prospective purchasers thereof the information
specified in Rule 144A(d)(4) under the Act, unless the Company is then
subject to Section 13 or 15(d) of the Exchange Act.
(k) The Company will use its best efforts to (i) permit the
Securities to be designated PORTAL securities in accordance with the
rules and regulations adopted by the NASD relating to trading in the
Private Offerings, Resales and Trading through Automated Linkages market
(the "PORTAL Market") and (ii) permit the Securities to be eligible for
clearance and settlement through The Depository Trust Company.
(l) The Company will authorize, execute and deliver the Private
Exchange Notes if such notes are required to be issued pursuant to the
terms and conditions of the Registration Rights Agreement.
6. Expenses. The Company agrees to pay all costs and expenses incident
to the performance of its obligations under this Agreement, whether or not the
transactions contemplated herein are consummated or this Agreement is terminated
pursuant to Section 11 hereof, including all costs and expenses incident to: (i)
the printing, word processing or other production of documents with respect to
such transactions, including any costs of printing the Preliminary Memorandum
and the Final Memorandum and any amendments or supplements thereto, and any
"Blue Sky" memoranda, (ii) all arrangements relating to the delivery to the
<PAGE> 15
-15-
Initial Purchasers of copies of the foregoing documents, (iii) the fees and
disbursements of the counsel, the accountants and any other experts or advisors
retained by the Company, (iv) the preparation (including printing), issuance and
delivery to the Initial Purchasers of any certificates evidencing the
Securities, (v) the qualification of the Securities under state securities and
"Blue Sky" laws, including filing fees and reasonable fees and disbursements of
counsel for the Initial Purchasers relating thereto, (vi) the expenses of the
Company in connection with any meetings with prospective investors in the
Securities, (vii) the fees and expenses of the Trustee, including fees and
expenses of its counsel, and (viii) all expenses and listing fees incurred in
connection with the application for quotation of the Securities on the PORTAL
Market, and (ix) any fees charged by investment rating agencies for the rating
of the Securities. If the sale of the Securities provided for herein is not
consummated because any condition to the obligations of the Initial Purchasers
set forth in Section 7 hereof is not satisfied, because this Agreement is
terminated or because of any failure, refusal or inability on the part of the
Company to perform all obligations and satisfy all conditions on their part to
be performed or satisfied hereunder (other than solely by reason of a default by
the Initial Purchasers of their obligations hereunder after all conditions
hereunder have been satisfied in accordance herewith), the Company agrees to
promptly reimburse the Initial Purchasers upon demand for all out-of-pocket
expenses of the Initial Purchasers (including reasonable fees and expenses of
Cahill Gordon & Reindel, counsel for the Initial Purchasers) incurred in
connection with the transactions contemplated hereby.
7. Conditions of the Initial Purchasers' Obligations. The obligation of
the Initial Purchasers to purchase and pay for the Securities shall, in their
sole discretion, be subject to the satisfaction or waiver of the following
conditions on or prior to the Closing Date:
(a) On the Closing Date, the Initial Purchasers shall have
received the opinion, dated as of the Closing Date and addressed to the
Initial Purchasers, of Wilson, Sonsini, Goodrich & Rosati, a
Professional Corporation, special counsel for the Company, in form and
substance satisfactory to counsel for the Initial Purchasers, to the
effect that:
(i) The Company and each of the Subsidiaries is duly
incorporated and validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation and
has the corporate authority to own or lease its properties and
to conduct its business as described in the Final Memorandum.
Each of the Company and the Subsidiaries is duly qualified to do
business and is in good standing as a foreign corporation in
each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification,
except where the failure to be so qualified or be in good
standing could not reasonably be expected to have a Material
Adverse Effect.
<PAGE> 16
-16-
(ii) The Company has the capitalization set forth in the
Final Memorandum; all of the outstanding shares of capital stock
of the Subsidiaries are owned, directly or indirectly, by the
Company, free and clear of any adverse claim or restriction upon
voting or transfer (other than those imposed by federal, state
or foreign securities laws and any lien securing the Existing
Credit Facility) and, to such counsel's knowledge, were not
issued in violation of any preemptive or similar rights
contained in the respective articles or certificate of
incorporation or bylaws of each Subsidiary.
(iii) To the knowledge of such counsel and except as
otherwise set forth in the Final Memorandum, (A) no options,
warrants or other rights to purchase from the Company or any
Subsidiary shares of capital stock or ownership interests in the
Company or any Subsidiary are outstanding, (B) no agreements or
other obligations of the Company or any Subsidiary to issue, or
other rights to cause the Company or any Subsidiary to convert,
any obligation into, or exchange any securities for, shares of
capital stock or ownership interests in the Company or any
Subsidiary are outstanding and (C) no holder of securities of
the Company or any Subsidiary (other than the Registrable Notes)
is entitled to have such securities registered under a
registration statement filed by the Company pursuant to the
Registration Rights Agreement.
(iv) The Company has the requisite corporate power and
authority to enter into and perform its obligations under this
Agreement, the Registration Rights Agreement and the Indenture
(including, without limitation, the corporate power to issue,
sell and deliver the Securities as contemplated by this
Agreement).
(v) This Agreement has been duly authorized, executed
and delivered by the Company. The statements in the Final
Memorandum under the caption "Private Placement," insofar as
such statements purport to summarize certain of the terms of
this Agreement, fairly summarize, in all material respects, such
terms of this Agreement.
(vi) The Indenture has been duly authorized, executed
and delivered by the Company. The statements in the Final
Memorandum under the caption "Description of Notes," insofar as
such statements purport to summarize the terms of the Indenture,
fairly summarize, in all material respects, the terms of the
Indenture.
(vii) The Securities have been duly authorized for
issuance and sale to the Initial Purchasers by the Company. The
statements in the Final Memorandum
<PAGE> 17
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under the caption "Description of Notes," insofar as such
statements purport to summarize the terms of the Securities,
fairly summarize, in all material respects, the terms of the
Securities. The Securities are in the form contemplated by the
Indenture.
(viii) The Exchange Notes have been duly authorized for
issuance and sale to the Initial Purchasers by the Company.
(ix) The Registration Rights Agreement has been duly
authorized, executed and delivered by the Company. The
statements in the Final Memorandum under the caption "Exchange
Offer; Registration Rights," insofar as such statements purport
to summarize the terms of the Registration Rights Agreement,
fairly summarize, in all material respects, the terms of the
Registration Rights Agreement.
(x) To such counsel's knowledge, there are no legal or
governmental proceedings pending to which the Company or any
Subsidiary is a party or to which the property or assets of the
Company or any Subsidiary are subject which (i) would be
required under the Act to be described in a registration
statement or in a prospectus delivered at the time of the
confirmation of the sale of an offering of securities registered
under the Act that are not described in the Final Memorandum, or
(ii) question the validity or enforceability of any of the
Agreements or any action taken or to be taken pursuant thereto;
and to such counsel's knowledge, no such proceedings are overtly
threatened in writing.
(xi) To the knowledge of such counsel, there is no
contract, agreement or other document to which the Company or
any Subsidiary is a party that would be required under the Act
to be described in a registration statement or prospectus that
is not described in the Final Memorandum.
(xii) The execution and delivery by the Company of, and
the performance by the Company of its obligations under, the
Agreements and the Securities, the issuance and sale of the
Securities by the Company and the consummation by the Company of
the transactions contemplated by the Agreements and the
Securities will not (i) conflict with the Certificate of
Incorporation or Bylaws of the Company, (ii) except as set forth
in the Final Memorandum, result in a material breach or
violation of any of the terms or provisions of, or constitute a
material default under any material agreements reviewed by such
counsel, or (iii) result in any material violation of any
provision of applicable United States federal or California
state law, or any judgment, order or decree known
<PAGE> 18
-18-
to such counsel of any United States federal or California state
court or governmental agency or body having jurisdiction over
the Company or by which the Company or its properties or assets
is bound. Except for such consents, approvals, authorizations,
other orders, filings, or qualifications or registrations as may
be required under applicable state securities laws in connection
with the purchase and distribution of the Securities by the
Initial Purchasers or as set forth in the Registration Rights
Agreement or the Indenture, as to which such counsel need
express no opinion, no consent, approval, authorization, order,
filing, qualification or registration with any United States
federal or California state court or governmental body or agency
is required for the performance by the Company of its
obligations under the Agreements and the issuance and sale of
the Securities by the Company.
(xiii) The Company is not, or immediately after the sale
of the Securities to be sold hereunder and the application of
the proceeds from such sale (as described in the Final
Memorandum under the caption "Use of Proceeds") will not be,
subject to registration and regulation as an "investment
company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as
amended.
(xiv) Assuming, without independent investigation, (a)
that the Securities are sold to the Initial Purchasers, and
initially resold by the Initial Purchasers, in accordance with
the terms of, and in the manner contemplated by, this Agreement
and the Final Memorandum, (b) the accuracy of the
representations and warranties of the Company set forth in this
Agreement and in certain certificates, (c) the accuracy of the
Initial Purchasers' representations and warranties set forth in
this Agreement, (d) the due performance by the Company and the
Initial Purchasers of their respective covenants and agreements
set forth in this Agreement, (e) the Initial Purchasers'
compliance with the terms of the offering of the Securities and
the transfer procedures and restrictions described in the Final
Memorandum, (f) the accuracy of any representations and
warranties made in accordance with this Agreement and the Final
Memorandum by each purchaser (each, a "Subsequent Purchaser") to
whom the Initial Purchasers initially resell Securities and (g)
that each Subsequent Purchaser to whom the Initial Purchasers
initially resell Securities receives a copy of the Final
Memorandum if requested by such Subsequent Purchaser prior to
such sale, then the offer, issuance, sale and delivery of the
Securities to the Initial Purchasers, and the initial reoffer,
resale and delivery of the Securities by the Initial Purchasers
to the Subsequent Purchasers, in accordance with the terms of,
and in the manner contemplated by, this Agreement and the Final
Memorandum, do not require registration under the
<PAGE> 19
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Act, or qualification of the Indenture under the TIA, it being
understood that no opinion is expressed as to any subsequent
resale of Securities or any resale of Securities by any person
other than the Initial Purchasers.
(xv) Neither the issuance and sale of the Securities nor
the application of the net proceeds thereof as set forth in the
Final Memorandum will violate Regulations G, T, U or X of the
Board of Governors of the Federal Reserve System.
At the time the foregoing opinion is delivered, such counsel
shall additionally state that it has participated in conferences with
officers and other representatives of the Company, representatives of
the independent public accountants for the Company, and representatives
of the Initial Purchasers and their counsel, at which the contents of
the Final Memorandum were discussed, and, although it has not
independently verified and is not passing upon and assumes no
responsibility for the accuracy, completeness or fairness of the
statements contained in the Final Memorandum (except to the extent
specified in subsection 7(a)(v), (vi) (vii), and (ix), no facts have
come to its attention which lead it to believe that the Final
Memorandum, on the date thereof or at the Closing Date, contained or
contains an untrue statement of a material fact or omitted or omits to
state a material fact necessary to make the statements contained
therein, in the light of the circumstances under which they were made,
not misleading (it being understood that such counsel has not been
requested to and does not make any comment with respect to the financial
statements, the notes thereto and schedules or other financial or
statistical data included in the Final Memorandum). The opinion of such
counsel described in this Section shall be rendered to the Initial
Purchasers at the request of the Company and shall so state therein.
References to the Final Memorandum in this subsection (a) shall
include any amendment or supplement thereto prepared in accordance with
the provisions of this Agreement at the Closing Date.
In rendering such opinion, such counsel may state that they
express no opinion as to the laws of any jurisdiction other than the
federal laws of the United States, the laws of the State of California
and the General Corporation Law of the State of Delaware. Such counsel
may also state that, insofar as such opinion involves factual matters,
such counsel have relied, to the extent they deem proper, upon
certificates of officers of the Company and certificates of public
officials; provided that such certificates have been provided to the
Initial Purchasers.
(b) On the Closing Date, the Initial Purchasers shall have
received the opinion, dated as of the Closing Date and addressed to the
Initial Purchasers, of Winthrop,
<PAGE> 20
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Stimson & Roberts, special New York counsel for the Company, in form and
substance satisfactory to counsel for the Initial Purchasers, to the
effect that:
(i) The Securities, when duly executed and authenticated
in accordance with the provisions of the Indenture and delivered
to and paid for by the Initial Purchasers in accordance with the
terms of this Agreement, will be valid and binding obligations
of the Company, entitled to the benefits of the Indenture, and
enforceable against the Company in accordance with their terms,
except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar
laws affecting creditors' rights generally, general principles
of equity (regardless of whether enforcement is sought in a
proceeding in equity or law) and an implied covenant of good
faith and fair dealing.
(ii) Each of the Indenture and the Registration Rights
Agreement is a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms,
except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar
laws affecting creditors' rights generally, general principles
of equity (regardless of whether enforcement is sought in a
proceeding in equity or law) and an implied covenant of good
faith and fair dealing, and except that, in the case of the
Registration Rights Agreement, such counsel expresses no opinion
regarding the indemnification and contribution provisions
contained in Section 7 thereof.
(iii) The Exchange Notes and the Private Exchange Notes,
when duly executed and delivered by the Company in accordance
with the terms of the Registration Rights Agreement and the
Indenture (assuming the due authorization, execution and
delivery of the Indenture by the Trustee and due authentication
and delivery of the Exchange Notes and the Private Exchange
Notes by the Trustee in accordance with the Indenture), will
constitute the valid and legally binding obligations of the
Company, entitled to the benefits of the Indenture and
enforceable against the Company in accordance with their terms,
except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar
laws affecting creditors' rights generally, general principles
of equity (regardless of whether enforcement is sought in a
proceeding in equity or law) and an implied covenant of good
faith and fair dealing.
(c) The Initial Purchasers shall have received an opinion, dated
the Closing Date, of Cahill Gordon & Reindel, counsel for the Initial
Purchasers, with respect to certain legal matters relating to this
Agreement, and such other related matters as the Initial
<PAGE> 21
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Purchasers may reasonably require. In rendering such opinion, Cahill
Gordon & Reindel shall have received and may rely upon such certificates
and other documents and information as they may reasonably request to
pass upon such matters.
(d) The Initial Purchasers shall have received from Coopers &
Lybrand L.L.P., independent public accountants for the Company, comfort
letters, dated the date hereof and the Closing Date, in form and
substance reasonably satisfactory to the Initial Purchasers and counsel
for the Initial Purchasers.
(e) The representations and warranties of the Company contained
in this Agreement shall be true and correct in all material respects on
and as of the Closing Date as if made on and as of the Closing Date; the
Company shall have performed all covenants and agreements and satisfied
all conditions on its part to be performed or satisfied hereunder at or
prior to the Closing Date; and, except as set forth in the Final
Memorandum (exclusive of any amendment or supplement thereto after the
date hereof) subsequent to the date of the most recent financial
statements in such Final Memorandum, there shall have been no event or
development that, individually or in the aggregate, has or would be
reasonably likely to have a Material Adverse Effect.
(f) The issuance and sale of the Securities pursuant to this
Agreement shall not be enjoined (temporarily or permanently) and no
restraining order or other injunctive order shall have been issued or
any action, suit or proceeding shall have been commenced with respect to
this Agreement before any court or governmental authority.
(g) The Initial Purchasers shall have received certificates,
dated the Closing Date, signed on behalf of the Company by its Chief
Executive Officer and Chief Financial Officer to the effect that:
(i) The representations and warranties of the Company in
this Agreement are true and correct in all material respects as
if made on and as of the Closing Date, and the Company has
performed in all material respects all covenants and agreements
and satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Date;
(ii) At the Closing Date, since the date hereof or since
the date of the most recent financial statements in the Final
Memorandum (exclusive of any amendment or supplement thereto
after the date hereof), no event or events have occurred, no
information has become known nor does any condition exist that,
individually or in the aggregate, would have a Material Adverse
Effect; and
<PAGE> 22
-22-
(iii) The sale of the Securities hereunder has not been
enjoined (temporarily or permanently).
(h) On the Closing Date, the Initial Purchasers shall have
received the Registration Rights Agreement executed by the Company and
such agreement shall be in full force and effect at all times from and
after the Closing Date.
(i) The Indenture shall have been duly executed and delivered by
the Company and the Trustee, and the Securities shall have been duly
executed by the Company, and the Securities shall have been duly
authenticated by the Trustee.
(j) On or before the Closing Date, the Initial Purchasers and
counsel for the Initial Purchasers shall have received such further
documents, certificates and schedules or instruments relating to the
business, corporate, legal and financial affairs of the Company as they
shall have heretofore reasonably requested from the Company.
All such documents, opinions, certificates and schedules or instruments
delivered pursuant to this Agreement will comply with the provisions hereof only
if they are reasonably satisfactory in all material respects to the Initial
Purchasers and counsel for the Initial Purchasers. The Company shall furnish to
the Initial Purchasers such conformed copies of such documents, opinions,
certificates and schedules or instruments in such quantities as the Initial
Purchasers shall reasonably request. For purposes of this Section 7, this
Agreement, the Registration Rights Agreement, the Indenture, the Securities and
the Exchange Notes may be referred to collectively as the "Agreements".
8. Offering of Securities; Restrictions on Transfer. Each of the Initial
Purchasers represents and warrants (as to itself only) that it is a QIB. Each of
the Initial Purchasers agrees with the Company (as to itself only) that (i) it
has not and will not solicit offers for, or offer or sell, the Securities by any
form of general solicitation or general advertising (as those terms are used in
Regulation D under the Act) or in any manner involving a public offering within
the meaning of Section 4(2) of the Act; and (ii) it has and will solicit offers
for the Securities only from, and will offer the Securities only to persons whom
the Initial Purchasers reasonably believe to be QIBs or, if any such person is
buying for one or more institutional accounts for which such person is acting as
fiduciary or agent, only when such person has represented to the Initial
Purchasers that each such account is a QIB, to whom notice has been given that
such sale or delivery is being made in reliance on Rule 144A, and, in each case,
in transactions under Rule 144A.
9. Indemnification and Contribution. (a) The Company agrees to indemnify
and hold harmless the Initial Purchasers and the affiliates, directors,
officers, agents, representatives and employees of the Initial Purchasers, and
each other person, if any, who
<PAGE> 23
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controls any Initial Purchaser within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, against any losses, claims, damages or
liabilities, joint or several, to which any Initial Purchaser or any such
affiliate, director, officer, agent, representative, employee or controlling
person may become subject under the Act, the Exchange Act or otherwise, insofar
as any such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of any
material fact contained in (A) any Memorandum or any amendment or
supplement thereto or (B) any application or other document, or any
amendment or supplement thereto, executed by the Company based upon
written information furnished by or on behalf of the Company filed in
any jurisdiction in order to qualify the Securities under the securities
or "Blue Sky" laws thereof or filed with any securities association or
securities exchange (each, an "Application"); or
(ii) the omission or alleged omission to state, in any
Memorandum or any amendment or supplement thereto, or any Application, a
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,
and will reimburse, as incurred, the Initial Purchasers and each such affiliate,
director, officer, agent, representative and employee and each such controlling
person for any legal or other expenses reasonably incurred by the Initial
Purchasers, such affiliate, director, officer, agent, representative or employee
or such controlling person in connection with investigating, defending against
or appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action; provided, however, that the Company will not be
liable (i) in any such case to the extent that any such loss, claim, damage, or
liability arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in any Memorandum or any
amendment or supplement thereto, or any Application, in reliance upon and in
conformity with written information furnished to the Company by the Initial
Purchasers specifically for use therein or (ii) with respect to the Preliminary
Memorandum, to the extent that any such loss, claim, damage or liability arises
solely from the fact that the Initial Purchasers sold Securities to a person to
whom there was not sent or given a copy of the Final Memorandum (as amended or
supplemented) at or prior to the written confirmation of such sale if the
Company shall have previously furnished copies thereof to the Initial Purchasers
in accordance with Section 5(d) hereof and the Final Memorandum (as amended or
supplemented) would have corrected any such untrue statement or omission. This
indemnity agreement will be in addition to any liability that the Company may
otherwise have to the indemnified parties. The Company shall not be liable under
this paragraph (a) for any settlement of any claim or action effected without
their consent, which consent shall not be unreasonably withheld or delayed.
<PAGE> 24
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The Initial Purchasers shall not, without the prior written consent of
the Company, effect any settlement or compromise of any pending or threatened
proceeding in respect of which the Company is or could have been a party, or
indemnity could have been sought hereunder by the Company, unless such
settlement (A) includes an unconditional written release of the Company, in form
and substance reasonably satisfactory to the Company, from all liability on
claims that are the subject matter of such proceeding and (B) does not include
any statement as to an admission of fault, culpability or failure to act by or
on behalf of the Company.
(k) The Initial Purchasers agree, severally and not jointly, to
indemnify and hold harmless the Company, its affiliates, directors, officers,
agents, representatives and employees and each other person, if any, who
controls the Company within the meaning of Section 15 of the Act or Section 20
of the Exchange Act against any losses, claims, damages or liabilities to which
the Company or any such affiliate, director, officer, agent, representative,
employees or controlling person may become subject under the Act, the Exchange
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in any
Memorandum or any amendment or supplement thereto, or any Application or (ii)
the omission or the alleged omission to state therein a material fact required
to be stated in any Memorandum or any amendment or supplement thereto, or any
Application, or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information concerning such Initial
Purchaser furnished to the Company by such Initial Purchaser specifically for
use therein; and, subject to the limitation set forth immediately preceding this
clause, will reimburse, as incurred, any legal or other expenses reasonably
incurred by the Company or any such affiliate, director, officer, agent,
representative, employee or controlling person in connection with investigating
or defending against or appearing as a third party witness in connection with
any such loss, claim, damage, liability or action in respect thereof. This
indemnity agreement will be in addition to any liability that the Initial
Purchasers may otherwise have to the indemnified parties. The Initial Purchasers
shall not be liable under this Section 9 for any settlement of any claim or
action effected without their consent, which consent shall not be unreasonably
withheld or delayed.
The Company shall not, without the prior written consent of the Initial
Purchasers, effect any settlement or compromise of any pending or threatened
proceeding in respect of which any Initial Purchaser is or could have been a
party, or indemnity could have been sought hereunder by any Initial Purchaser,
unless such settlement (A) includes an unconditional written release of the
Initial Purchasers, in form and substance reasonably satisfactory to the Initial
Purchasers, from all liability on claims that are the subject matter of such
proceeding and (B) does not include any statement as to an admission of fault,
<PAGE> 25
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culpability or failure to act by or on behalf of any Initial Purchaser.
(l) Promptly after receipt by an indemnified party under this Section 9
of notice of the commencement of any action for which such indemnified party is
entitled to indemnification under this Section 9, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party under
this Section 9, notify the indemnifying party of the commencement thereof in
writing; but the omission to so notify the indemnifying party (i) will not
relieve it from any liability under paragraph (a) or (b) above unless and to the
extent such failure results in the forfeiture by the indemnifying party of
substantial rights and defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraphs (a) and (b) above. In case any
such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party;
provided, however, that if (i) the use of counsel chosen by the indemnifying
party to represent the indemnified party would present such counsel with a
conflict of interest, (ii) the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have been advised by counsel that there may be one or more legal defenses
available to it and/or other indemnified parties that are different from or
additional to those available to the indemnifying party, or (iii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after receipt by the indemnifying party of notice of the institution of
such action, then, in each such case, the indemnifying party shall not have the
right to direct the defense of such action on behalf of such indemnified party
or parties and such indemnified party or parties shall have the right to select
separate counsel to defend such action on behalf of such indemnified party or
parties. After notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof and approval by such indemnified
party of counsel appointed to defend such action, the indemnifying party will
not be liable to such indemnified party under this Section 9 for any legal or
other expenses, other than reasonable costs of investigation, subsequently
incurred by such indemnified party in connection with the defense thereof,
unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the immediately preceding sentence (it being
understood, however, that in connection with such action the indemnifying party
shall not be liable for the expenses of more than one separate counsel (in
addition to local counsel) in any one action or separate but substantially
similar actions in the same jurisdiction arising out of the same general
allegations or circumstances, designated by BT Alex. Brown Incorporated in the
case of paragraph (a) of this Section 9 or the Company in the case of paragraph
(b) of this Section 9, representing the indemnified parties under such paragraph
(a) or paragraph (b), as the case
<PAGE> 26
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may be, who are parties to such action or actions) or (ii) the indemnifying
party has authorized in writing the employment of counsel for the indemnified
party at the expense of the indemnifying party. After such notice from the
indemnifying party to such indemnified party, the indemnifying party will not be
liable for the costs and expenses of any settlement of such action effected by
such indemnified party without the prior written consent of the indemnifying
party (which consent shall not be unreasonably withheld), unless such
indemnified party waived in writing its rights under this Section 9, in which
case the indemnified party may effect such a settlement without such consent.
(m) In circumstances in which the indemnity agreement provided for in
the preceding paragraphs of this Section 9 is unavailable to, or insufficient to
hold harmless, an indemnified party in respect of any losses, claims, damages or
liabilities (or actions in respect thereof), each indemnifying party, in order
to provide for just and equitable contribution, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect (i) the relative benefits received by the indemnifying
party or parties on the one hand and the indemnified party on the other from the
offering of the Securities or (ii) if the allocation provided by the foregoing
clause (i) is not permitted by applicable law, not only such relative benefits
but also the relative fault of the indemnifying party or parties on the one hand
and the indemnified party on the other in connection with the statements or
omissions or alleged statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof). The relative
benefits received by the Company on the one hand and any Initial Purchaser on
the other shall be deemed to be in the same proportion as the total proceeds
from the offering (before deducting expenses) received by the Company bear to
the total discounts and commissions received by such Initial Purchaser. The
relative fault of the parties 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 Company on the one hand, or such Initial Purchaser on the other,
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission or alleged statement or
omission, and any other equitable considerations appropriate in the
circumstances. The Company and the Initial Purchasers agree that it would not be
just and equitable if the amount of such contribution were determined by pro
rata or per capita allocation or by any other method of allocation that does not
take into account the equitable considerations referred to in the first sentence
of this paragraph (d). Notwithstanding any other provision of this paragraph
(d), no Initial Purchaser shall be obligated to make contributions hereunder
that in the aggregate exceed the total discounts, commissions and other
compensation received by such Initial Purchaser under this Agreement, less the
aggregate amount of any damages that such Initial Purchaser has otherwise been
required to pay by reason of the untrue or alleged untrue statements or the
omissions or alleged omissions to state a material fact, and no person guilty
<PAGE> 27
-27-
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. For purposes of this paragraph (d), each
affiliate, director, officer, agent, representative and employee of an Initial
Purchaser and each person, if any, who controls an Initial Purchaser within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act shall have
the same rights to contribution as the Initial Purchasers, and each director and
officer of the Company and each person, if any, who controls the Company within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act, shall
have the same rights to contribution as the Company.
10. Survival Clause. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Company, its
officers and the Initial Purchasers set forth in this Agreement or made by or on
behalf of them, respectively, pursuant to this Agreement shall remain in full
force and effect, regardless of (i) any investigation made by or on behalf of
the Company, any of its officers or directors, the Initial Purchasers or any
controlling person referred to in Section 9 hereof and (ii) delivery of and
payment for the Securities. The respective agreements, covenants, indemnities
and other statements set forth in Sections 6, 9 and 15 hereof shall remain in
full force and effect, regardless of any termination or cancellation of this
Agreement.
11. Termination. (a) This Agreement may be terminated in the sole
discretion of the Initial Purchasers by notice to the Company given prior to the
Closing Date in the event that the Company shall have failed, refused or been
unable to perform, in all material respects, all obligations and satisfy all
conditions on its part to be performed or satisfied hereunder at or prior
thereto or, if at or prior to the Closing Date:
(i) either (x) the Company shall have sustained any loss or
interference with respect to its businesses or properties from fire,
flood, hurricane, accident or other calamity, whether or not covered by
insurance, or from any strike, labor dispute, slow down or work stoppage
or any legal or governmental proceeding, which loss or interference, in
the sole judgment of the Initial Purchasers, has had or has a Material
Adverse Effect, or (y) there shall have been, in the sole judgment of
the Initial Purchasers, any event or development that, individually or
in the aggregate, has or could be reasonably likely to have a Material
Adverse Effect (including, without limitation, a change in control of
the Company), except in each case as described in the Final Memorandum
(exclusive of any amendment or supplement thereto);
(ii) trading in securities generally on the New York Stock
Exchange, the American Stock Exchange or the NASDAQ National Market
shall have been suspended or maximum or minimum prices shall have been
established on any such exchange or market;
<PAGE> 28
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(iii) a banking moratorium shall have been declared by New York
or United States authorities;
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, or (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or any other national or international
calamity or emergency or (C) any material change in the financial
markets of the United States that, in the case of (A), (B) or (C) above
and in the sole judgment of the Initial Purchasers, makes it
impracticable or inadvisable to proceed with the offering or the
delivery of the Securities as contemplated by the Final Memorandum; or
(v) any securities of the Company shall have been downgraded or
placed on any "watch list" for possible downgrading by any nationally
recognized statistical rating organization.
(n) Termination of this Agreement pursuant to this Section 11 shall be
without liability of any party to any other party except as provided in Section
10 hereof.
12. Information Supplied by the Initial Purchasers. The statements set
forth in the last paragraph of the cover page of the Final Memorandum, the first
paragraph on page (i) and the third, fifth, sixth and seventh paragraphs of the
section entitled "Private Placement" constitute the only information furnished
by the Initial Purchasers to the Company for the purposes of Sections 2(a) and 9
hereof.
13. Notices. All communications hereunder shall be in writing and, if
sent to the Initial Purchasers, shall be mailed or delivered or telecopied and
confirmed in writing to BT Alex. Brown Incorporated, One Bankers Trust Plaza,
130 Liberty Street, New York, New York 10006, Attention: Corporate Finance
Department, and if sent to the Company, shall be mailed, delivered or telecopied
and confirmed in writing to the Company at American Business Information, Inc.,
5711 South 86th Circle, P.O. Box 27347, Omaha, Nebraska 68127-0347Attention:
Chief Executive Officer.
14. Successors. This Agreement shall inure to the benefit of and be
binding upon the Initial Purchasers, the Company and their respective
successors, assigns and legal representatives, and nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person any legal or equitable right, remedy or claim under or in respect of this
Agreement, or any provisions herein contained; this Agreement and all conditions
and provisions hereof being intended to be and being for the sole and exclusive
benefit of the Initial Purchasers, the Company and their respective successors,
assigns and legal representatives and for the benefit of no other person except
that (i) the indemnities of
<PAGE> 29
-29-
the Company contained in Section 9 of this Agreement shall also be for the
benefit of the affiliates, directors, officers, agents, representatives and
employees of the Initial Purchasers and any person or persons who control any of
the Initial Purchasers within the meaning of Section 15 of the Act or Section 20
of the Exchange Act and (ii) the indemnities of the Initial Purchasers contained
in Section 9 of this Agreement shall also be for the benefit of the affiliates,
directors, officers, agents, representatives and employees of the Company and
any person or persons who control the Company within the meaning of Section 15
of the Act or Section 20 of the Exchange Act. No purchaser of any of the
Securities from the Initial Purchasers will be deemed a successor because of
such purchase.
15. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT,
AND THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
ANY PROVISIONS RELATING TO CONFLICTS OF LAW.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
<PAGE> 30
S-1
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement among the Company and
the Initial Purchasers.
Very truly yours,
AMERICAN BUSINESS INFORMATION, INC.
By:
------------------------------
Name:
Title:
<PAGE> 31
S-2
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
BT ALEX. BROWN INCORPORATED
By:
Name:
Title:
GOLDMAN, SACHS & CO.
By:
Name:
Title:
HAMBRECHT & QUIST LLC
By:
Name:
Title:
<PAGE> 32
SCHEDULE I
<TABLE>
<CAPTION>
Principal Amount of
Initial Purchaser Securities To Be Purchased
- ----------------- --------------------------
<S> <C>
BT Alex. Brown Incorporated .............. $ 69,000,000
Goldman, Sachs & Co. ..................... $ 34,500,000
Hambrecht & Quist LLC .................... $ 11,500,000
Total ............................ $115,000,000
============
</TABLE>
<PAGE> 1
AMERICAN BUSINESS INFORMATION, INC.,
as Issuer,
and
STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
----------------------
INDENTURE
Dated as of June 18, 1998
----------------------
$115,000,000
9 1/2% Senior Subordinated Notes due 2008
<PAGE> 2
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ----------- -----------------
<S> <C>
310(a)(1) 7.10
(a)(2) 7.10
(a)(3) N.A.
(a)(4) N.A.
(a)(5) 7.08; 7.10
(b) 7.08; 7.10;12.02
(c) N.A.
311(a) 7.11
(b) 7.11
(c) N.A.
312(a) 2.05
(b) 12.03
(c) 12.03
313(a) 7.06
(b)(1) N.A.
(b)(2) 7.06
(c) 7.06; 12.02
(d) 7.06
314(a) 4.06; 4.08; 12.02
(b) N.A.
(c)(1) 12.04
(c)(2) 12.04
(c)(3) N.A.
(d) N.A.
(e) 12.05
(f) N.A.
315(a) 7.01(b)
(b) 7.05; 12.02
(c) 7.01(a)
(d) 7.01(c)
(e) 6.11
316(a)(last sentence) 2.09
(a)(1)(A) 6.05
(a)(1)(B) 6.04
(a)(2) N.A.
(b) 6.07
(c) 9.05
317(a)(1) 6.08
(a)(2) 6.09
(b) 2.04
318(a) 12.01
(c) 12.01
</TABLE>
- ----------
N.A. means Not Applicable
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
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ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions. 1
SECTION 1.02. Incorporation by Reference of TIA. 27
SECTION 1.03. Rules of Construction. 28
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating. 29
SECTION 2.02. Execution and Authentication; Aggregate Principal
Amount. 30
SECTION 2.03. Registrar and Paying Agent. 31
SECTION 2.04. Paying Agent To Hold Assets in Trust. 32
SECTION 2.05. Noteholder Lists. 32
SECTION 2.06. Transfer and Exchange. 33
SECTION 2.07. Replacement Notes. 34
SECTION 2.08. Outstanding Notes. 34
SECTION 2.09. Treasury Notes. 35
SECTION 2.10. Temporary Notes. 35
SECTION 2.11. Cancellation. 35
SECTION 2.12. Defaulted Interest. 36
SECTION 2.13. CUSIP Number. 36
SECTION 2.14. Deposit of Moneys. 36
SECTION 2.15. Book-Entry Provisions for Global Note. 37
SECTION 2.16. Special Transfer Provisions. 38
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee. 40
SECTION 3.02. Selection of Notes To Be Redeemed. 41
SECTION 3.03. Notice of Redemption. 41
SECTION 3.04. Effect of Notice of Redemption. 42
SECTION 3.05. Deposit of Redemption Price. 42
SECTION 3.06. Notes Redeemed in Part. 43
ARTICLE FOUR
COVENANTS
</TABLE>
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<PAGE> 4
<TABLE>
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<S> <C> <C>
SECTION 4.01. Payment of Notes. 43
SECTION 4.02. Maintenance of Office or Agency. 44
SECTION 4.03. Corporate Existence. 44
SECTION 4.04. Payment of Taxes and Other Claims. 44
SECTION 4.05. Maintenance of Properties and Insurance. 45
SECTION 4.06. Compliance Certificate; Notice of Default. 45
SECTION 4.07. Compliance with Laws. 46
SECTION 4.08. SEC Reports. 47
SECTION 4.09. Waiver of Stay, Extension or Usury Laws. 47
SECTION 4.10. Limitation on Restricted Payments. 48
SECTION 4.11. Limitation on Transactions with Affiliates. 50
SECTION 4.12. Limitation on Incurrence of Additional Indebtedness. 51
SECTION 4.13. Limitation on Dividend and Other Payment Restrictions
Affecting Subsidiaries. 52
SECTION 4.14. Prohibition on Incurrence of Senior Subordinated Debt. 53
SECTION 4.15. Limitation on Change of Control. 53
SECTION 4.16. Limitation on Asset Sales. 55
SECTION 4.17. Limitation on Preferred Stock of Restricted
Subsidiaries. 60
SECTION 4.18. Limitation on Liens. 60
SECTION 4.19. Conduct of Business. 60
SECTION 4.20. Limitation of Guarantees by Subsidiaries. 61
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. When Company May Merge, Etc. 62
SECTION 5.02. Successor Corporation Substituted. 63
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default. 64
SECTION 6.02. Acceleration. 65
SECTION 6.03. Other Remedies. 66
SECTION 6.04. Waiver of Past Defaults. 67
SECTION 6.05. Control by Majority. 67
SECTION 6.06. Limitation on Suits. 67
</TABLE>
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<TABLE>
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<S> <C> <C>
SECTION 6.07. Rights of Holders To Receive Payment. 68
SECTION 6.08. Collection Suit by Trustee. 68
SECTION 6.09. Trustee May File Proofs of Claim. 69
SECTION 6.10. Priorities. 69
SECTION 6.11. Undertaking for Costs. 70
SECTION 6.12. Restoration of Rights and Remedies. 70
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee. 70
SECTION 7.02. Rights of Trustee. 72
SECTION 7.03. Individual Rights of Trustee. 73
SECTION 7.04. Trustee's Disclaimer. 73
SECTION 7.05. Notice of Default. 73
SECTION 7.06. Reports by Trustee to Holders. 74
SECTION 7.07. Compensation and Indemnity. 74
SECTION 7.08. Replacement of Trustee. 75
SECTION 7.09. Successor Trustee by Merger, Etc. 76
SECTION 7.10. Eligibility; Disqualification. 77
SECTION 7.11. Preferential Collection of Claims Against Company. 77
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. Termination of the Company's Obligations. 77
SECTION 8.02. Legal Defeasance and Covenant Defeasance. 79
SECTION 8.03. Conditions to Legal Defeasance or Covenant Defeasance. 81
SECTION 8.04. Application of Trust Money. 83
SECTION 8.05. Repayment to the Company 84
SECTION 8.06. Satisfaction and Discharge. 84
SECTION 8.07. Reinstatement. 85
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders. 85
SECTION 9.02. With Consent of Holders. 86
SECTION 9.03. Effect on Senior Debt. 87
SECTION 9.04. Compliance with TIA. 88
SECTION 9.05. Revocation and Effect of Consents. 88
</TABLE>
-5-
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<TABLE>
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<S> <C> <C>
SECTION 9.06. Notation on or Exchange of Notes. 89
SECTION 9.07. Trustee To Sign Amendments, Etc. 89
ARTICLE TEN
SUBORDINATION
SECTION 10.01. Notes Subordinated to Senior Debt of the Company. 89
SECTION 10.02. No Payment on Notes in Certain Circumstances. 90
SECTION 10.03. Payment Over of Proceeds Upon Dissolution, Etc. 91
SECTION 10.04. Payments May Be Paid Prior to Dissolution. 93
SECTION 10.05. Subrogation. 93
SECTION 10.06. Obligations of the Company Unconditional. 94
SECTION 10.07. Notice to Trustee. 94
SECTION 10.08. Reliance on Judicial Order or Certificate of
Liquidating Agent. 95
SECTION 10.09. Trustee's Relation to Senior Debt. 96
SECTION 10.10. Subordination Rights Not Impaired by Acts or
Omissions of the Company or Holders of Senior Debt. 96
SECTION 10.11. Noteholders Authorize Trustee To Effectuate
Subordination of Notes. 97
SECTION 10.12. This Article Ten Not To Prevent Events of Default. 98
SECTION 10.13. Trustee's Compensation Not Prejudiced. 98
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. TIA Controls. 98
SECTION 11.02. Notices. 98
SECTION 11.03. Communications by Holders with Other Holders. 100
SECTION 11.04. Certificate and Opinion as to Conditions Precedent. 100
SECTION 11.05. Statements Required in Certificate or Opinion. 100
SECTION 11.06. Rules by Trustee, Paying Agent, Registrar. 101
SECTION 11.07. Legal Holidays. 101
SECTION 11.08. Governing Law. 101
</TABLE>
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<TABLE>
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<S> <C> <C>
SECTION 11.09. No Adverse Interpretation of Other Agreements. 102
SECTION 11.10. No Recourse Against Others. 102
SECTION 11.11. Successors. 102
SECTION 11.12. Duplicate Originals. 102
SECTION 11.13. Severability. 102
Signatures 120
Exhibit A(1) - Form of Initial Note A.1-1
Exhibit A(2) - Form of Exchange Note A.2-1
Exhibit B - Form of Legend for Global Notes B-1
Exhibit C - Form of Certificate To Be Delivered in
Connection with Transfers to Non-QIB
Accredited Investors C-1
Exhibit D - Form of Certificate To Be Delivered in
Connection with Transfers Pursuant to
Regulation S D-1
</TABLE>
Note: This Table of Contents shall not, for any purpose, be deemed to be part of
the Indenture.
-7-
<PAGE> 8
-8-
INDENTURE, dated as of June 18, 1998, between American Business
Information, Inc., a Delaware corporation (the "Company"), and State Street Bank
and Trust Company of California, N.A., as trustee (the "Trustee").
The Company has duly authorized the creation of an issue of
9 1/2% Senior Subordinated Notes due 2008 and, to provide therefor, the Company
has duly authorized the execution and delivery of this Indenture. All things
necessary to make the Notes, when duly issued and executed by the Company and
authenticated and delivered hereunder, the valid Obligations of the Company, and
to make this Indenture a valid and binding agreement of the Company, have been
done.
Each party hereto agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders of the Notes.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Acceleration Notice" has the meaning provided in Section 6.02.
"Acquired Indebtedness" means Indebtedness of a Person or any of
its Subsidiaries existing at the time such Person becomes a Restricted
Subsidiary of the Company or at the time it merges or consolidates with the
Company or any of its Subsidiaries or assumed in connection with the acquisition
of assets from such Person and in each case not incurred by such Person in
connection with, or in anticipation or contemplation of, such Person becoming a
Restricted Subsidiary of the Company or such acquisition, merger or
consolidation.
"Act" means the Securities Act of 1933, as amended.
"Affiliate" means, with respect to any specified Person, any
other Person who directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, such specified
Person. The term "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting
<PAGE> 9
-9-
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative of the foregoing.
"Affiliate Transaction" has the meaning provided in Section 4.11.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Agent Members" has the meaning provided in Section 2.15.
"Asset Acquisition" means (a) an Investment by the Company or any
Restricted Subsidiary of the Company in any other Person pursuant to which such
Person shall become a Restricted Subsidiary of the Company or any Restricted
Subsidiary of the Company, or shall be merged with or into the Company or any
Restricted Subsidiary of the Company, or (b) the acquisition by the Company or
any Restricted Subsidiary of the Company of the assets of any Person (other than
a Restricted Subsidiary of the Company) which constitute all or substantially
all of the assets of such Person or comprises any division or line of business
of such Person or any other properties or assets of such Person other than in
the ordinary course of business.
"Asset Sale" means any direct or indirect sale, issuance,
conveyance, transfer, lease (other than operating leases entered into in the
ordinary course of business), assignment or other transfer for value by the
Company or any of its Restricted Subsidiaries (including any Sale and Leaseback
Transaction) to any Person other than the Company or a Wholly Owned Restricted
Subsidiary of the Company of (a) any Capital Stock of any Restricted Subsidiary
of the Company; or (b) any other property or assets of the Company or any
Restricted Subsidiary of the Company other than in the ordinary course of
business; provided, however, that asset sales or other dispositions shall not
include (i) a transaction or series of related transactions for which the
Company or its Restricted Subsidiaries receive aggregate consideration of less
than $2,000,000, (ii) the sale, lease, conveyance, disposition or other transfer
of all or substantially all of the assets of the Company as permitted under
Section 5.01, (iii) the sale or other transfer for value by the Company of any
Capital Stock of any Person (other than a Subsidiary) so long as the Investment
in such Capital Stock was permitted under Section 4.10,(iv) the sale of Cash
Equivalents, (v) disposals or replacements of
<PAGE> 10
-10-
obsolete or outdated equipment in the ordinary course of business and (vi) the
sale or discount, in each case without recourse (other than recourse for a
breach of a representation or warranty), of accounts receivable arising in the
ordinary course of business, but only in connection with the compromise or
collection thereof in the ordinary course of business and not as part of a
financing transaction.
"Authenticating Agent" has the meaning provided in Section 2.02.
"Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal, state or foreign law for the relief of debtors.
"Blockage Period" has the meaning provided in Section 10.02(a).
"Board of Directors" means, as to any Person, the board of
directors of such Person or any duly authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"Business Day" means a day that is not a Legal Holiday.
"Capitalized Lease Obligation" means, as to any Person, the
Obligations of such Person under a lease that are required to be classified and
accounted for as capital lease Obligations under GAAP and, for purposes of this
definition, the amount of such Obligations at any date shall be the capitalized
amount of such Obligations at such date, determined in accordance with GAAP.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including
each class of Common Stock and Preferred Stock of such Person and (ii) with
respect to any Person that is not a corporation, any and all partnership or
other equity interests of such Person.
<PAGE> 11
-11-
"Cash Equivalents" means (i) marketable direct Obligations issued
by, or unconditionally guaranteed by, the United States Government or issued by
any agency thereof and backed by the full faith and credit of the United States,
in each case maturing within one year from the date of acquisition thereof; (ii)
marketable direct Obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having a rating of at least A from
either Standard & Poor's Corporation ("S&P") or Moody's Investors Service, Inc.
("Moody's"); (iii) commercial paper maturing no more than one year from the date
of creation thereof and, at the time of acquisition, having a rating of at least
A-2 from S&P or at least P-2 from Moody's; (iv) certificates of deposit, time
deposits or bankers' acceptances maturing within one year from the date of
acquisition thereof issued by any bank organized under the laws of the United
States of America or any state thereof or the District of Columbia or any U.S.
branch of a foreign bank having at the date of acquisition thereof combined
capital and surplus of not less than $250,000,000; (v) repurchase Obligations
with a term of not more than 30 days for underlying securities of the types
described in clause (i) above entered into with any bank meeting the
qualifications specified in clause (iv) above; (vi) investments in money market
funds which invest substantially all their assets in securities of the types
described in clauses (i) through (v) above and (vii) in the case of any foreign
subsidiary, (A) direct Obligations of the sovereign nation (or any agency
thereof) in which such foreign subsidiary is organized or is conducting business
or in Obligations fully and unconditionally guaranteed by such sovereign nation
(or any agency thereof) or (B) of the type and maturity described in clauses
(iii), (iv) or (v) above of foreign obligors, which Obligations or obligors (or
the parents of such obligors) have ratings described in such clauses or
equivalent ratings from comparable foreign rating agencies.
"Change of Control" means the occurrence of one or more of the
following events: (i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all of
the assets of the Company to any Person or group of related Persons for purposes
of Section 13(d) of the Exchange Act (a "Group"), together with any Affiliates
thereof (whether or not otherwise in compliance with the provisions of this
Indenture) other than to the Permitted Holders; (ii) the approval by the holders
of Capital Stock of the Company of any plan or proposal for the
<PAGE> 12
-12-
liquidation or dissolution of the Company (whether or not otherwise in
compliance with the provisions of this Indenture); (iii) any Person or Group
(other than the Permitted Holders) shall become the owner, directly or
indirectly, beneficially or of record (other than any Person described in clause
(d)(2) of Rule 13d-3 of the Exchange Act), of shares representing more than 50%
of the aggregate ordinary voting power represented by the issued and outstanding
Capital Stock of the Company; or (iv) the replacement of a majority of the Board
of Directors of the Company over a two-year period from the directors who
constituted the Board of Directors of the Company at the beginning of such
period, and such replacement shall not have been approved by a vote of at least
a majority of the Board of Directors of the Company then still in office who
either were members of such Board of Directors at the beginning of such period
or whose election as a member of such Board of Directors was previously so
approved.
"Change of Control Offer" has the meaning provided in Section
4.15.
"Change of Control Payment Date" has the meaning provided in
Section 4.15.
"Common Stock" of any Person means any and all shares, interests
or other participations in, and other equivalents (however designated and
whether voting or non-voting) of such Person's common stock, whether outstanding
on the Issue Date or issued after the Issue Date, and includes, without
limitation, all series and classes of such common stock.
"Company" means American Business Information, Inc., a Delaware
corporation, and its successors that become a party to this Indenture in
accordance with its terms.
"Consolidated EBITDA" means, with respect to any Person, for any
period, the sum (without duplication) of (i) Consolidated Net Income and (ii) to
the extent Consolidated Net Income has been reduced thereby, (A) all income
taxes of such Person and its Restricted Subsidiaries paid or accrued in
accordance with GAAP for such period (other than income taxes attributable to
extraordinary, unusual or nonrecurring gains or losses or taxes attributable to
sales or dispositions outside the ordinary course of business), (B) Consolidated
Interest Expense and (C) Consolidated Non-cash Charges less any non-cash items
increasing Consolidated Net Income for such period, all as determined on a
consolidated basis for such Person and its
<PAGE> 13
-13-
Restricted Subsidiaries in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to
any Person, the ratio of Consolidated EBITDA of such Person during the four full
fiscal quarters (the "Four Quarter Period") ending on or prior to the date of
the transaction giving rise to the need to calculate the Consolidated Fixed
Charge Coverage Ratio (the "Transaction Date") to Consolidated Fixed Charges of
such Person for the Four Quarter Period. In addition to and without limitation
of the foregoing, for purposes of this definition, "Consolidated EBITDA" and
"Consolidated Fixed Charges" shall be calculated after giving effect on a pro
forma basis for the period of such calculation to (i) the incurrence or
repayment of any Indebtedness of such Person or any of its Restricted
Subsidiaries (and the application of the proceeds thereof) giving rise to the
need to make such calculation and any incurrence or repayment of other
Indebtedness (and the application of the proceeds thereof), other than the
incurrence or repayment of Indebtedness in the ordinary course of business for
working capital purposes pursuant to working capital facilities, occurring
during the Four Quarter Period or at any time subsequent to the last day of the
Four Quarter Period and on or prior to the Transaction Date, as if such
incurrence or repayment, as the case may be (and the application of the proceeds
thereof), occurred on the first day of the Four Quarter Period and (ii) any
asset sales or other dispositions or Asset Acquisitions (including, without
limitation, any Asset Acquisition giving rise to the need to make such
calculation as a result of such Person or one of its Restricted Subsidiaries
(including any Person who becomes a Restricted Subsidiary as a result of the
Asset Acquisition) incurring, assuming or otherwise being liable for Acquired
Indebtedness and also including any Consolidated EBITDA (including any pro forma
expense and cost reductions calculated on a basis consistent with Regulation S-X
under the Exchange Act) attributable to the assets which are the subject of the
Asset Acquisition or asset sale or other disposition during the Four Quarter
Period) occurring during the Four Quarter Period or at any time subsequent to
the last day of the Four Quarter Period and on or prior to the Transaction Date,
as if such asset sale or other disposition or Asset Acquisition (including the
incurrence, assumption or liability for any such Acquired Indebtedness) occurred
on the first day of the Four Quarter Period. If such Person or any of its
Restricted Subsidiaries directly or indirectly guarantees Indebtedness of a
third Person, the preceding sentence shall give effect to the incurrence of such
guaranteed Indebtedness as if such Person or any Restricted
<PAGE> 14
-14-
Subsidiary of such Person had directly incurred or otherwise assumed such
guaranteed Indebtedness. Furthermore, in calculating "Consolidated Fixed
Charges" for purposes of determining the denominator (but not the numerator) of
this "Consolidated Fixed Charge Coverage Ratio," (1) interest on outstanding
Indebtedness determined on a fluctuating basis as of the Transaction Date and
which will continue to be so determined thereafter shall be deemed to have
accrued at a fixed rate per annum equal to the rate of interest on such
Indebtedness in effect on the Transaction Date; and (2) notwithstanding clause
(1) above, interest on Indebtedness determined on a fluctuating basis, to the
extent such interest is covered by agreements relating to Interest Swap
Obligations, shall be deemed to accrue at the rate per annum resulting after
giving effect to the operation of such agreements.
"Consolidated Fixed Charges" means, with respect to any Person
for any period, the sum, without duplication, of (i) Consolidated Interest
Expense, plus (ii) the product of (x) the amount of all dividend payments on any
series of Preferred Stock of such Person (other than dividends paid in Qualified
Capital Stock) paid, accrued or scheduled to be paid or accrued during such
period times (y) a fraction, the numerator of which is one and the denominator
of which is one minus the then current effective consolidated federal, state and
local tax rate of such Person, expressed as a decimal.
"Consolidated Interest Expense" means, with respect to any Person
for any period, the sum of, without duplication: (i) the aggregate of the
interest expense of such Person and its Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP, including without
limitation, (a) any amortization of debt discount and amortization or write-off
of deferred financing costs, (b) the net costs under Interest Swap Obligations,
(c) all capitalized interest and (d) the interest portion of any deferred
payment obligation; and (ii) the interest component of Capitalized Lease
Obligations paid, accrued and/or scheduled to be paid or accrued by such Person
and its Restricted Subsidiaries during such period as determined on a
consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, with respect to any Person, for
any period, the aggregate net income (or loss) of such Person and its Restricted
Subsidiaries for such period on a consolidated basis, determined in accordance
with GAAP, plus, to the extent net income has been reduced thereby, any non-cash
charges relating to any Asset Acquisition by such Person
<PAGE> 15
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permitted by the terms of this Indenture; provided that there shall be excluded
therefrom (a) after-tax gains from Asset Sales or abandonments or reserves
relating thereto, (b) after-tax items classified as extraordinary or
nonrecurring gains, (c) the net income of any Person acquired in a "pooling of
interests" transaction accrued prior to the date it becomes a Restricted
Subsidiary of the referent Person or is merged or consolidated with the referent
Person or any Restricted Subsidiary of the referent Person, (d) the net income
(but not loss) of any Restricted Subsidiary of the referent Person to the extent
that the declaration of dividends or similar distributions by that Restricted
Subsidiary of that income is restricted by a contract, operation of law or
otherwise, (e) the net income of any Person, other than a Restricted Subsidiary
of the referent Person, except to the extent of cash dividends or distributions
paid to the referent Person or to a Wholly Owned Restricted Subsidiary of the
referent Person by such Person, (f) any restoration to income of any contingency
reserve, except to the extent that provision for such reserve was made out of
Consolidated Net Income accrued at any time following the Issue Date, (g) income
or loss attributable to discontinued operations (including, without limitation,
operations disposed of during such period whether or not such operations were
classified as discontinued), and (h) in the case of a successor to the referent
Person by consolidation or merger or as a transferee of the referent Person's
assets, any earnings of the successor corporation prior to such consolidation,
merger or transfer of assets.
"Consolidated Net Worth" of any Person means the consolidated
stockholders' equity of such Person, determined on a consolidated basis in
accordance with GAAP, less (without duplication) amounts attributable to
Disqualified Capital Stock of such Person.
"Consolidated Non-cash Charges" means, with respect to any
Person, for any period, the aggregate depreciation, amortization and other
non-cash expenses of such Person and its Restricted Subsidiaries reducing
Consolidated Net Income of such Person and its Restricted Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP (excluding
any such charges constituting an extraordinary item or loss or any such charge
which requires an accrual of or a reserve for cash charges for any future
period).
"Covenant Defeasance" has the meaning provided in Section
8.02(c).
<PAGE> 16
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"Credit Facility" means one or more credit facilities governed by
one or more credit agreements among the Company, the lenders party thereto in
their capacities as lenders thereunder, together with the related documents
thereto (including, without limitation, any guarantee agreements and security
documents), in each case as such agreements may be amended (including any
amendment and restatement thereof), supplemented or otherwise modified from time
to time, including any agreement extending the maturity of, refinancing,
replacing or otherwise restructuring (including increasing the amount of
available borrowings thereunder or adding Restricted Subsidiaries of the Company
as additional borrowers or guarantors thereunder) all or any portion of the
Indebtedness under any such agreements or any successor or replacement
agreements and whether by the same or any other agent, lender or group of
lenders.
"Currency Agreement" means any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement designed to
protect the Company or any Restricted Subsidiary of the Company against
fluctuations in currency values.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means an event or condition the occurrence of which is,
or with the lapse of time or the giving of notice or both would be, an Event of
Default.
"Default Notice" has the meaning provided in Section 10.02(a).
"Depositary" means The Depository Trust Company, its nominees and
successors.
"Designated Senior Debt" means (i) Indebtedness under or in
respect of the Credit Facility and (ii) any other Indebtedness constituting
Senior Debt which, at the time of determination, has an aggregate principal
amount of at least $25,000,000 and is specifically designated in the instrument
evidencing such Senior Debt as "Designated Senior Debt" by the Company.
"Disqualified Capital Stock" means that portion of any Capital
Stock which, by its terms (or by the terms of any security into which it is
convertible or for which it is
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exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the sole option of the holder thereof on or prior to the final maturity date
of the Notes.
"Equity Offering" means a public or private offering of Qualified
Capital Stock of the Company for aggregate net cash proceeds to the Company of
at least $20,000,000.
"Event of Default" has the meaning provided in Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute or statutes thereto.
"Exchange Notes" means the 9 1/2% Senior Subordinated Notes due
2008 to be issued in exchange for the Initial Notes pursuant to the Registration
Rights Agreement.
"Exchange Offer" has the meaning assigned to such term in the
Registration Rights Agreement.
"fair market value" means, with respect to any asset or property,
the price which could be negotiated in an arm's-length, free market transaction,
for cash, between a willing seller and a willing and able buyer, neither of whom
is under undue pressure or compulsion to complete the transaction. Fair market
value shall be determined by the Board of Directors of the Company acting
reasonably and in good faith and shall be evidenced by a Board Resolution of the
Board of Directors of the Company delivered to the Trustee.
"GAAP" means generally accepted accounting principles set forth
in the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession of the United States, which are in effect as of the
Issue Date.
"Global Note" has the meaning provided in Section 2.01.
"Guarantee" has the meaning provided in Section 4.20.
"Holder" or "Noteholder" means the Person in whose
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name a Note is registered on the Registrar's books.
"incur" has the meaning provided in Section 4.12.
"Indebtedness" means with respect to any Person, without
duplication, (i) all Obligations of such Person for borrowed money, (ii) all
Obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments, (iii) all Capitalized Lease Obligations of such Person,
(iv) all Obligations of such Person issued or assumed as the deferred purchase
price of property, all conditional sale Obligations and all Obligations under
any title retention agreement (but excluding trade accounts payable and other
accrued liabilities arising in the ordinary course of business), (v) all
Obligations for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction, (vi) guarantees and other
contingent Obligations in respect of Indebtedness referred to in clauses (i)
through (v) above and clause (viii) below, (vii) all Obligations of any other
Person of the type referred to in clauses (i) through (vi) which are secured by
any lien on any property or asset of such Person, the amount of such Obligation
being deemed to be the lesser of the fair market value of such property or asset
or the amount of the Obligation so secured, (viii) all Obligations under
currency agreements and interest swap agreements of such Person and (ix) all
Disqualified Capital Stock issued by such Person with the amount of Indebtedness
represented by such Disqualified Capital Stock being equal to the greater of its
voluntary or involuntary liquidation preference and its maximum fixed repurchase
price, but excluding accrued dividends, if any. For purposes hereof, the
"maximum fixed repurchase price" of any Disqualified Capital Stock which does
not have a fixed repurchase price shall be calculated in accordance with the
terms of such Disqualified Capital Stock as if such Disqualified Capital Stock
were purchased on any date on which Indebtedness shall be required to be
determined pursuant to this Indenture, and if such price is based upon, or
measured by, the fair market value of such Disqualified Capital Stock, such fair
market value shall be determined reasonably and in good faith by the Board of
Directors of the issuer of such Disqualified Capital Stock.
"Indenture" means this Indenture, as amended or supplemented from
time to time in accordance with the terms hereof.
"Independent Financial Advisor" means a firm (i) which does not,
and whose directors, officers and employees or
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Affiliates do not, have a direct or indirect financial interest in the Company
and (ii) which, in the judgment of the Board of Directors of the Company, is
otherwise independent and qualified to perform the task for which it is to be
engaged.
"Initial Notes" means, collectively, (i) the 9 1/2% Senior
Subordinated Notes due 2008 of the Company issued on the Issue Date.
"Initial Purchasers" means BT Alex. Brown Incorporated, Goldman,
Sachs & Co. and Hambrecht & Quist LLC.
"Institutional Accredited Investor" means an institution that is
an "accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or
(7) under the Act.
"Interest Payment Date" means the stated maturity of an
installment of interest on the Notes.
"Interest Swap Obligations" means the Obligations of any Person
pursuant to any arrangement with any other Person, whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such other
Person calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements.
"Investment" means, with respect to any Person, any direct or
indirect loan or other extension of credit (including, without limitation, a
guarantee) or capital contribution to (by means of any transfer of cash or other
property to others or any payment for property or services for the account or
use of others), or any purchase or acquisition by such Person of any Capital
Stock, bonds, notes, debentures or other securities or evidences of Indebtedness
issued by, any Person. "Investment" shall exclude extensions of trade credit by
the Company and its Restricted Subsidiaries on commercially reasonable terms in
accordance with normal trade practices of the Company or such Restricted
Subsidiary, as the case may be. For the purposes of Section 4.10, (i)
"Investment" shall include and be valued at the fair market value of the net
assets of any Restricted Subsidiary at the time that such Restricted Subsidiary
is designated an Unrestricted Subsidiary and shall exclude the fair market value
of the net assets of any Unrestricted Subsidiary at the time that such
Unrestricted
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Subsidiary is designated a Restricted Subsidiary and (ii) the amount of any
Investment shall be the original cost of such Investment plus the cost of all
additional Investments by the Company or any of its Restricted Subsidiaries,
without any adjustments for increases or decreases in value, or write-ups,
write-downs or write-offs with respect to such Investment, reduced by the
payment of dividends or distributions in connection with such Investment or any
other amounts received in respect of such Investment; provided that no such
payment of dividends or distributions or receipt of any such other amounts shall
reduce the amount of any Investment if such payment of dividends or
distributions or receipt of any such amounts would be included in Consolidated
Net Income. If the Company or any Restricted Subsidiary of the Company sells or
otherwise disposes of any Common Stock of any direct or indirect Restricted
Subsidiary of the Company such that, after giving effect to any such sale or
disposition, the Company no longer owns, directly or indirectly, greater than
50% of the outstanding Common Stock of such Restricted Subsidiary, the Company
shall be deemed to have made an Investment on the date of any such sale or
disposition equal to the fair market value of the Common Stock of such
Restricted Subsidiary not sold or disposed of.
"Issue Date" means the date of original issuance of the Initial
Notes.
"Legal Defeasance" has the meaning provided in Section 8.02(b).
"Legal Holiday" has the meaning provided in Section 11.07.
"Lien" means any lien, mortgage, deed of trust, pledge, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof and any
agreement to give any security interest).
"Maturity Date" means June 15, 2008.
"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds in the form of cash or Cash Equivalents including payments in respect
of deferred payment Obligations when received in the form of cash or Cash
Equivalents (other than the portion of any such deferred payment constituting
interest) received by the Company or any of its Restricted Subsidiaries from
such Asset Sale net of (a) reasonable out-of-
<PAGE> 21
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pocket expenses and fees relating to such Asset Sale (including, without
limitation, legal, accounting and investment banking fees and sales
commissions), (b) taxes paid or payable after taking into account any reduction
in consolidated tax liability due to available tax credits or deductions and any
tax sharing arrangements, (c) repayment of Indebtedness that is required to be
repaid in connection with such Asset Sale and (d) appropriate amounts to be
provided by the Company or any Restricted Subsidiary, as the case may be, as a
reserve, in accordance with GAAP, against any liabilities associated with such
Asset Sale and retained by the Company or any Restricted Subsidiary, as the case
may be, after such Asset Sale, including, without limitation, pension and other
post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification Obligations associated with
such Asset Sale.
"Net Proceeds Offer" has the meaning provided in Section 4.16.
"Net Proceeds Offer Payment Date" has the meaning provided in
Section 4.16.
"Net Proceeds Offer Trigger Date" has the meaning provided in
Section 4.16.
"Non-payment Default" has the meaning provided in Section
10.02(a).
"Notes" means, collectively, the Initial Notes, the Private
Exchange Notes, if any, the Unrestricted Notes and any other notes issued after
the Issue Date in accordance with clause (iv) of the fourth paragraph of Section
2.02, treated as a single class of securities, as amended or supplemented from
time to time in accordance with the terms hereof, that are issued pursuant to
this Indenture.
"Obligations" means all obligations for principal, premium,
interest, penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.
"Officer" means, with respect to any person, the Chairman of the
Board, the Chief Executive Officer, the President, any Vice President, the Chief
Financial Officer, the Treasurer, the Controller, or the Secretary of such
person, or any other officer designated by the Board of Directors serving in a
similar capacity.
<PAGE> 22
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"Officers' Certificate" means, with respect to any person, a
certificate signed by two Officers or by an Officer and either an Assistant
Treasurer or an Assistant Secretary of such person and otherwise complying with
the requirements of Sections 11.04 and 11.05, as they relate to the making of an
Officers' Certificate.
"Opinion of Counsel" means a written opinion from legal counsel,
who may be counsel for the Company and who is reasonably acceptable to the
Trustee, complying with the requirements of Sections 11.04 and 11.05, as they
relate to the giving of an Opinion of Counsel.
"Paying Agent" has the meaning provided in Section 2.03.
"Payment Default" has the meaning provided in Section 10.02(a).
"Permitted Holders" means Vinod Gupta and his spouse, their
lineal descendants and adopted children and spouses of their lineal descendants
and adopted children, any foundation controlled by any of the foregoing persons,
any trusts for the benefit of any of the foregoing persons and any Affiliates of
the foregoing persons.
"Permitted Indebtedness" means, without duplication, each of the
following:
(i) Indebtedness under the Initial Notes issued on the Issue Date and this
Indenture;
(ii) Indebtedness incurred pursuant to the Credit Facility in an aggregate
principal amount at any time outstanding not to exceed $100,000,000;
(iii) other Indebtedness of the Company and its Subsidiaries outstanding on the
Issue Date reduced by the amount of any scheduled amortization payments or
mandatory prepayments when actually paid or permanent reductions thereon;
(iv) Interest Swap Obligations of the Company or any of its Restricted
Subsidiaries covering Indebtedness of the Company or such Restricted Subsidiary;
provided, however, that such Interest Swap Obligations are entered into to
protect the Company and its Restricted Subsidiaries from fluctuations in
interest rates on Indebtedness incurred in accordance with this Indenture to the
extent the notional principal amount of such Interest Swap Obligation does not
exceed the principal amount of the Indebtedness to which such Interest Swap
Obligation relates;
<PAGE> 23
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(v) Indebtedness under Currency Agreements; provided that in the case of
Currency Agreements which relate to Indebtedness, such Currency Agreements do
not increase the Indebtedness of the Company and its Restricted Subsidiaries
outstanding other than as a result of fluctuations in foreign currency exchange
rates or by reason of fees, indemnities and compensation payable thereunder;
(vi) Indebtedness of a Wholly Owned Restricted Subsidiary of the Company to the
Company or to a Wholly Owned Restricted Subsidiary of the Company for so long as
such Indebtedness is held by the Company, a Wholly Owned Restricted Subsidiary
of the Company or the lenders or collateral agent under the Credit Facility, in
each case subject to no Lien held by a Person other than the Company, a Wholly
Owned Restricted Subsidiary of the Company or the lenders or collateral agent
under the Credit Facility; provided that if as of any date any Person other than
the Company, a Wholly Owned Restricted Subsidiary of the Company or the lenders
or collateral agent under the Credit Facility owns or holds any such
Indebtedness or holds a Lien in respect of such Indebtedness, on such date the
Company shall be deemed to have incurred Indebtedness not constituting Permitted
Indebtedness;
(vii) Indebtedness of the Company to a Restricted Subsidiary of the Company for
so long as such Indebtedness is held by a Restricted Subsidiary of the Company
or the lenders or collateral agent under the Credit Facility, in each case
subject to no Lien other than in favor of the lenders or collateral agent under
the Credit Facility; provided that (a) any Indebtedness of the Company to any
Restricted Subsidiary of the Company is unsecured and subordinated in right of
payment in an insolvency, bankruptcy, liquidation or any other similar
proceeding, pursuant to a written agreement, to the Company's Obligations under
this Indenture and the Notes and (b) if as of any date any Person other than a
Restricted Subsidiary of the Company owns or holds any such Indebtedness or any
Person other than the lenders or collateral agent under the Credit Facility
holds a Lien in respect of such Indebtedness, on such date the Company shall be
deemed to have incurred Indebtedness not constituting Permitted Indebtedness;
(viii) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently (except in the
case of daylight overdrafts) drawn against insufficient funds in the ordinary
course of business; provided, however, that such Indebtedness is extinguished
within two business days of incurrence;
(ix) Indebtedness of the Company or any of its Restricted Subsidiaries
represented by letters of credit for the account of the Company or such
Restricted Subsidiary, as the case may
<PAGE> 24
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be, in order to provide security for workers' compensation claims, payment
obligations in connection with self-insurance or similar requirements in the
ordinary course of business;
(x) Indebtedness represented by Capitalized Lease Obligations and Purchase Money
Indebtedness of the Company and its Restricted Subsidiaries incurred in the
ordinary course of business not to exceed $30,000,000 at any one time
outstanding;
(xi) Refinancing Indebtedness;
(xii) Indebtedness in respect of bid, performance, advance payment, appeal or
surety bonds;
(xiii) guarantees of Indebtedness otherwise permitted under this Indenture,
provided that in the case of a guarantee by a Restricted Subsidiary, such
Restricted Subsidiary complies with Section 4.20; and
(xiv) additional Indebtedness of the Company or any Restricted Subsidiary in an
aggregate principal amount not to exceed $25,000,000 at any one time
outstanding.
For purposes of determining compliance with Section 4.12, in the
event that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Indebtedness described in the above clauses or is
otherwise entitled to be incurred pursuant to Section 4.12, the Company shall,
in its sole discretion, classify such item of Indebtedness in any manner that
complies with such covenant and such item of Indebtedness will be treated as
having been incurred pursuant to only one of such clauses or pursuant to such
covenant or as having been divided and incurred pursuant to more than one of
such clauses or such covenant. Accrual of interest, the accretion of accreted
value and the payment of interest will not be deemed to be an incurrence of
Indebtedness for purposes of this covenant. If the Indebtedness is incurred,
denominated and payable in other than United States currency, then the
Indebtedness shall be converted into United States currency using the spot
foreign exchange rate of the currency in which such Indebtedness is incurred,
denominated and payable on the date of Incurrence of such Indebtedness.
"Permitted Investments" means (i) Investments by the Company or
any Restricted Subsidiary of the Company in any Person that is or will become
immediately after such Investment a Restricted Subsidiary of the Company or that
will merge or consolidate into the Company or a Restricted Subsidiary of the
Company; (ii) Investments in the Company by any Restricted Subsidiary of the
Company; provided that any Indebtedness evidencing such Investment is unsecured
and subordinated in right of payment in an insolvency, bankruptcy, liquidation
or any other similar proceeding, pursuant to a written agreement, to the
Company's Obligations under the Notes and this
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Indenture; (iii) investments in cash and Cash Equivalents; (iv) loans and
advances to employees and officers of the Company and its Restricted
Subsidiaries in the ordinary course of business for bona fide business purposes
not in excess of $1,000,000 at any one time outstanding; (v) Currency Agreements
and Interest Swap Obligations entered into in the ordinary course of the
Company's or its Restricted Subsidiaries' businesses and otherwise in compliance
with this Indenture; (vi) Investments in securities of trade creditors or
customers received pursuant to any plan of reorganization or similar arrangement
upon the bankruptcy, workout or insolvency of such trade creditors or customers
or in settlement of delinquent Obligations; (vii) Investments made by the
Company or its Restricted Subsidiaries as a result of consideration received in
connection with an Asset Sale made in compliance with Section 4.16; (viii) any
acquisition of assets or securities of another Person to the extent it is in
exchange for the issuance of Qualified Capital Stock of the Company or a
Restricted Subsidiary; (ix) Investments existing on the Issue Date; and (x)
Investments in prepaid expenses, negotiable instruments held for collection,
utility, workers' compensation, performance and similar deposits; (xi)
guarantees of Indebtedness otherwise permitted under this Indenture, provided
that in the case of a guarantee by a Restricted Subsidiary, such Restricted
Subsidiary complies with Section 4.20; and (xii) any other Investments not to
exceed $30,000,000 at any one time outstanding.
"Permitted Liens" means the following types of Liens:
(i) Liens for taxes, assessments or governmental charges or claims either (a)
not delinquent or (b) contested in good faith by appropriate proceedings and as
to which the Company or its Restricted Subsidiaries shall have set aside on its
books such reserves as may be required pursuant to GAAP;
(ii) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen and other Liens imposed by law
incurred in the ordinary course of business for sums not yet delinquent or being
contested in good faith, if such reserve or other appropriate provision, if any,
as shall be required by GAAP shall have been made in respect thereof;
(iii) Liens incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other types of
social security, including any Lien securing letters of credit issued in the
ordinary course of business consistent with past practice in connection
therewith, or to secure the performance of tenders, statutory obligations,
surety and appeal bonds, bids, leases, government
<PAGE> 26
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contracts, performance and return-of-money bonds and other similar obligations
(exclusive of Obligations for the payment of borrowed money);
(iv) judgment Liens not giving rise to an Event of Default;
(v) easements, rights-of-way, zoning restrictions and other similar charges or
encumbrances in respect of real property not interfering in any material respect
with the ordinary conduct of the business of the Company or any of its
Restricted Subsidiaries;
(vi) Liens upon specific items of inventory or other goods and proceeds of any
Person securing such Person's obligations in respect of bankers' acceptances
issued or created for the account of such Person to facilitate the purchase,
shipment or storage of such inventory or other goods;
(vii) Liens securing reimbursement obligations with respect to commercial
letters of credit which encumber documents and other property relating to such
letters of credit and products and proceeds thereof;
(viii) Liens securing Interest Swap Obligations which Interest Swap Obligations
relate to Indebtedness that is otherwise permitted under this Indenture;
(ix) Liens securing Capitalized Lease Obligations and Purchase Money
Indebtedness permitted pursuant to clause (x) of the definition of "Permitted
Indebtedness" or the proviso to Section 4.12; provided, however, that (A) the
Indebtedness shall not exceed the cost of such property or assets and shall not
be secured by any property or assets of the Company or any Restricted Subsidiary
of the Company other than the property and assets so leased, acquired or
constructed (and with respect to Capitalized Lease Obligations, together with
the proceeds thereof, substitutions and replacements thereof and accessions
thereto) and (B) the Lien securing such Indebtedness shall be created within 180
days of such lease, acquisition or construction or, in the case of a refinancing
thereof, within 180 days of such refinancing;
(x) Liens securing Indebtedness under Currency Agreements;
(xi) Liens securing Acquired Indebtedness incurred in accordance with Section
4.12; provided that (A) such Liens secured such Acquired Indebtedness at the
time of and prior to the incurrence of such Acquired Indebtedness by the Company
or a Restricted Subsidiary of the Company and were not granted in connection
with, or in anticipation of, the incurrence of such Acquired Indebtedness by the
Company or a Restricted Subsidiary of the Company and (B) such Liens do not
extend to or cover any property or assets of the Company or of any of its
Restricted Subsidiaries other than the property or assets that secured the
Acquired Indebtedness prior to the time such Indebtedness became Acquired
Indebtedness of the Company or a Restricted
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Subsidiary of the Company and are no more favorable to the lienholders than
those securing the Acquired Indebtedness prior to the incurrence of such
Acquired Indebtedness by the Company or a Restricted Subsidiary of the Company;
(xii) Liens existing on the Issue Date;
(xiii) Liens to secure any Refinancing Indebtedness which is incurred to
Refinance any Indebtedness which has been secured by a Lien permitted under this
Indenture and which has been incurred in accordance with the provisions of this
Indenture; provided, however, that such Liens (A) are no less favorable to the
Holders and are not more favorable to the lienholders with respect to such Liens
than the Liens in respect of the Indebtedness being Refinanced and (B) do not
extend to or cover any property or assets of the Company or any of its
Restricted Subsidiaries not securing the Indebtedness so Refinanced;
(xiv) Liens in favor of the Company;
(xv) Liens in favor of customs and revenue authorities to secure payment of
customs duties in connection with the importation of goods in the ordinary
course of business and other similar Liens arising in the ordinary course of
business;
(xvi) leases or subleases granted to third Persons not interfering with the
ordinary course of business of the Company or its Restricted Subsidiaries;
(xvii) Liens arising by virtue of any common law, statutory, regulatory,
contractual or warranty provision relating to bankers' liens, rights of set-off
or similar rights and remedies as to deposit or securities accounts maintained
in the ordinary course of business;
(xviii) Liens under licensing agreements for use of intellectual property
entered into in the ordinary course of business;
(xix) Liens under the Credit Facility and other Senior Debt permitted to be
incurred under Section 4.12; and
(xx) Liens on property existing at the time of the acquisition thereof by the
Company or any Restricted Subsidiary of the Company; provided, that (x) such
Liens were in existence at the time of and prior to the acquisition of such
property and were not granted in connection with, or in anticipation of , the
acquisition thereof and (y) such Liens extend only to the property so acquired
and the proceeds thereof.
"Person" means an individual, partnership, corporation,
unincorporated organization, association, limited liability company, joint stock
company, trust or joint venture, or a governmental agency or political
subdivision thereof or any other entity.
"Physical Notes" has the meaning provided in Section 2.01.
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"Preferred Stock" of any Person means any Capital Stock of such
Person that has preferential rights to any other Capital Stock of such Person
with respect to dividends or redemptions or upon liquidation.
"principal" of any Indebtedness (including the Notes) means the
principal amount of such Indebtedness plus the premium, if any, on such
Indebtedness.
"Private Exchange Notes" has the meaning set forth in the
Registration Rights Agreement.
"Private Placement Legend" means the legend initially set forth
on the Initial Notes in the form set forth in Exhibit A(1).
"pro forma" means, with respect to any calculation made or
required to be made pursuant to the terms of this Indenture, a calculation in
accordance with Article 11 of Regulation S-X under the Act, as determined by the
Board of Directors of the Company in consultation with its independent public
accountants.
"Proceeds Purchase Date" has the meaning provided in Section
4.16.
"Purchase Money Indebtedness" means Indebtedness of the Company
and its Restricted Subsidiaries incurred in the normal course of business for
the purpose of financing all or any part of the purchase price, or the cost of
installation, construction or improvement, of property or equipment.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock.
"Qualified Institutional Buyer" or "QIB" shall have the meaning
specified in Rule 144A under the Act.
"Record Date" means, with respect to any Note, any of the Record
Dates specified in such Note, whether or not a Legal Holiday.
"Redemption Date," when used with respect to any Note to be
redeemed, means the date fixed for such redemption pursuant to this Indenture
and the Notes.
"Redemption Price," when used with respect to any Note to be
redeemed, means the price fixed for such redemption
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pursuant to this Indenture and the Notes.
"Reference Date" has the meaning provided in Section 4.10.
"Refinance" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.
"Refinancing Indebtedness" means any Refinancing by the Company
or any Restricted Subsidiary of the Company of Indebtedness incurred in
accordance with Section 4.12 (other than pursuant to clause (ii), (iv), (v),
(vi), (vii), (viii), (ix),(x), (xiii) or (xiv) of the definition of Permitted
Indebtedness), in each case that does not (1) result in an increase in the
aggregate principal amount of Indebtedness of such Person as of the date of such
proposed Refinancing (plus the amount of any interest and premium required to be
paid under the terms of the instrument governing such Indebtedness, market-based
premiums and reasonable fees and expenses incurred by the Company in connection
with such Refinancing) or (2) create Indebtedness with (A) a Weighted Average
Life to Maturity that is less than the Weighted Average Life to Maturity of the
Indebtedness being Refinanced or (B) a final maturity earlier than the final
maturity of the Indebtedness being Refinanced; provided that (x) if such
Indebtedness being Refinanced is Indebtedness of the Company, then such
Refinancing Indebtedness shall be Indebtedness solely of the Company and (y) if
such Indebtedness being Refinanced is subordinate or junior to the Notes, then
such Refinancing Indebtedness shall be subordinate to the Notes at least to the
same extent and in the same manner as the Indebtedness being Refinanced.
"Registrar" has the meaning provided in Section 2.03.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of the Issue Date among the Company and the Initial
Purchasers.
"Representative" means the indenture trustee or other trustee,
agent or representative in respect of any Designated Senior Debt; provided that
if, and for so long as, any Designated Senior Debt lacks such a representative,
then the Representative for such Designated Senior Debt shall at all
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times constitute the holders of a majority in outstanding principal amount of
such Designated Senior Debt in respect of any Designated Senior Debt.
"Restricted Payment" has the meaning provided in Section 4.10.
"Restricted Security" has the meaning assigned to such term in
Rule 144(a)(3) under the Act; provided that the Trustee shall be entitled to
request and conclusively rely on an Opinion of Counsel with respect to whether
any Note constitutes a Restricted Security.
"Restricted Subsidiary" of any Person means any Subsidiary of
such Person which at the time of determination is not an Unrestricted
Subsidiary.
"Rule 144A" means Rule 144A under the Act.
"Sale And Leaseback Transaction" means any direct or indirect
arrangement with any Person or to which any such Person is a party, providing
for the leasing to the Company or a Restricted Subsidiary of any property,
whether owned by the Company or any Restricted Subsidiary at the Issue Date or
later acquired, which has been or is to be sold or transferred by the Company or
such Restricted Subsidiary to such Person or to any other Person from whom funds
have been or are to be advanced by such Person on the security of such property.
"SEC" means the United States Securities and Exchange Commission.
"Senior Debt" means the principal of, premium, if any, and
interest (including any interest accruing subsequent to the filing of a petition
of bankruptcy at the rate provided for in the documentation with respect
thereto, whether or not such interest is an allowed claim under applicable law)
on any Indebtedness of the Company, whether outstanding on the Issue Date or
thereafter created, incurred or assumed, unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such Indebtedness shall
not be senior in right of payment to the Notes. Without limiting the generality
of the foregoing, "Senior Debt" shall also include the principal of, premium, if
any, interest (including any interest accruing subsequent to the filing of a
petition of bankruptcy at the rate provided for in the documentation with
respect thereto, whether or not such interest is an allowed
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claim under applicable law) on, and all other amounts owing in respect of, (x)
all monetary obligations (including guarantees thereof) of every nature of the
Company under the Credit Facility, including, without limitation, obligations to
pay principal and interest, reimbursement obligations under letters of credit,
fees, expenses and indemnities, (y) all Interest Swap Obligations (including
guarantees thereof) and (z) all obligations (including guarantees thereof) under
Currency Agreements, in each case whether outstanding on the Issue Date or
thereafter incurred. Notwithstanding the foregoing, "Senior Debt" shall not
include (i) any Indebtedness of the Company to a Subsidiary of the Company or
any Affiliate of the Company or any of such Affiliate's Subsidiaries, (ii)
Indebtedness to, or guaranteed on behalf of, any shareholder, director, officer
or employee of the Company or any Subsidiary of the Company (including, without
limitation, amounts owed for compensation), (iii) Indebtedness to trade
creditors and other amounts incurred in connection with obtaining goods,
materials or services, (iv) Indebtedness represented by Disqualified Capital
Stock, (v) any liability for federal, state, local or other taxes owed or owing
by the Company, (vi) that portion of any Indebtedness incurred in violation of
the Indenture provisions set forth under Section 4.12 (but, as to any such
obligation, no such violation shall be deemed to exist for purposes of this
clause (vi) if the holder(s) of such obligation or their Representative and the
Trustee shall have received an Officers' Certificate of the Company to the
effect that the incurrence of such Indebtedness does not (or, in the case of
revolving credit Indebtedness, that the incurrence of the entire committed
amount thereof at the date on which the initial borrowing thereunder is made
would not) violate such provisions of this Indenture), (vii) Indebtedness which,
when incurred and without respect to any election under Section 1111(b) of Title
11, United States Code, is without recourse to the Company and (viii) any
Indebtedness which is, by its express terms, subordinated in right of payment to
any other Indebtedness of the Company.
"Shelf Registration Statement" has the meaning specified in the
Registration Rights Agreement.
"Significant Subsidiary", with respect to any Person, means any
Restricted Subsidiary of such Person that satisfies the criteria for a
"significant subsidiary" set forth in Rule 1.02(w) of Regulation S-X under the
Securities Act.
"Subsidiary", with respect to any Person, means (i) any
corporation of which the outstanding Capital Stock having
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at least a majority of the votes entitled to be cast in the election of
directors under ordinary circumstances shall at the time be owned, directly or
indirectly, by such Person or (ii) any other Person of which at least a majority
of the voting interest under ordinary circumstances is at the time, directly or
indirectly, owned by such Person.
"Surviving Entity" has the meaning provided in Section 5.01.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb), as amended, as in effect on the date of this
Indenture, except as otherwise provided in Section 9.04.
"Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
"Trust Officer" means any officer of the Trustee assigned by the
Trustee to administer this Indenture, or in the case of a successor trustee, an
officer assigned to the department, division or group performing the corporation
trust work of such successor and assigned to administer this Indenture.
"U.S. Government Obligations" means non-callable direct
obligations of, and non-callable obligations guaranteed by, the United States of
America for the payment of which the full faith and credit of the United States
of America is pledged.
"U.S. Legal Tender" means such coin or currency of the United
States of America as at the time of payment shall be legal tender for the
payment of public and private debts.
"Unrestricted Notes" means one or more Notes that do not and are
not required to bear the Private Placement Legend, including, without
limitation, the Exchange Notes in the form set forth as Exhibit A(2) hereto.
"Unrestricted Subsidiary" of any Person means (i) any Subsidiary
of such Person that at the time of determination shall be or continue to be
designated an Unrestricted Subsidiary by the Board of Directors of such Person
in the manner provided below and (ii) any Subsidiary of an Unrestricted
Subsidiary. The Board of Directors may designate
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any Subsidiary (including any newly acquired or newly formed Subsidiary) to be
an Unrestricted Subsidiary unless such Subsidiary owns any Capital Stock of, or
owns or holds any Lien on any property of, the Company or any other Subsidiary
of the Company that is not a Subsidiary of the Subsidiary to be so designated;
provided that (x) the Company certifies to the Trustee that such designation
complies with Section 4.10 and (y) each Subsidiary to be so designated and each
of its Subsidiaries has not at the time of designation, and does not thereafter,
create, incur, issue, assume, guarantee or otherwise become directly or
indirectly liable with respect to any Indebtedness pursuant to which the lender
has recourse to any of the assets of the Company or any of its Restricted
Subsidiaries. The Board of Directors may designate any Unrestricted Subsidiary
to be a Restricted Subsidiary only if (x) immediately after giving effect to
such designation, the Company is able to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with Section 4.12
and (y) immediately before and immediately after giving effect to such
designation, no Default or Event of Default shall have occurred and be
continuing. Any such designation by the Board of Directors shall be evidenced to
the Trustee by promptly filing with the Trustee a copy of the Board Resolution
giving effect to such designation and an Officers' Certificate certifying that
such designation complied with the foregoing provisions.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the sum of
the total of the products obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity or other required payment
of principal, including payment at final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Wholly Owned Restricted Subsidiary" of any Person means any
Restricted Subsidiary of such Person of which all the outstanding voting
securities (other than in the case of a foreign Restricted Subsidiary,
directors' qualifying shares or an immaterial amount of shares required to be
owned by other Persons pursuant to applicable law) are owned by such Person or
any Wholly Owned Restricted Subsidiary of such Person.
SECTION 1.02. Incorporation by Reference of TIA.
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Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in, and made a part of, this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Notes.
"indenture security holder" means a Holder or a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company, the
Guarantors, if any, or any other obligor on the Notes or the Guarantees, if any.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule and
not otherwise defined herein have the meanings assigned to them therein.
SECTION 1.03. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the
plural include the singular; and
(5) "herein," "hereof" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or
other subdivision.
ARTICLE TWO
THE NOTES
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SECTION 2.01. Form and Dating.
The Initial Notes and the Trustee's certificate of authentication
relating thereto shall be substantially in the form of Exhibit A(1) hereto. The
Exchange Notes and the Trustee's certificate of authentication relating thereto
shall be substantially in the form of Exhibit A(2) hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
depositary rule or usage. The Company and the Trustee shall approve the form of
the Notes and any notation, legend or endorsement on them. Each Note shall be
dated the date of its issuance and shall show the date of its authentication.
The terms and provisions contained in the Notes, annexed hereto
as Exhibits A(1) and A(2), shall constitute, and are hereby expressly made, a
part of this Indenture and, to the extent applicable, the Company and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby.
Notes offered and sold in reliance on Rule 144A shall be issued
initially in the form of one or more permanent global Notes in registered form,
substantially in the form set forth in Exhibit A(1) (the "Global Note"),
deposited with the Trustee, as custodian for the Depositary, and shall bear the
legend set forth in Exhibit B, duly executed by the Company and authenticated by
the Trustee as hereinafter provided. The aggregate principal amount of the
Global Note may from time to time be increased or decreased by adjustments made
on the records of the Trustee, as custodian for the Depositary, as hereinafter
provided.
Notes offered and sold in reliance on any other exemption from
registration under the Act other than as described in the preceding paragraph
shall be issued, and Notes offered and sold in reliance on Rule 144A may be
issued, in the form of permanent certificated Notes in registered form, in
substantially the form set forth in Exhibit A(1) (the "Physical Notes").
SECTION 2.02. Execution and Authentication; Aggregate Principal
Amount.
Two Officers, or an Officer and an Assistant Secretary, shall
sign, or one Officer shall sign and one Officer or an Assistant Secretary (each
of whom shall, in each
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case, have been duly authorized by all requisite corporate actions) shall attest
to, the Notes for the Company by manual or facsimile signature.
If an Officer or Assistant Secretary whose signature is on a Note
was an Officer or Assistant Secretary at the time of such execution but no
longer holds that office or position at the time the Trustee authenticates the
Note, the Note shall nevertheless be valid.
A Note shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Note. The
signature shall be conclusive evidence that the Note has been authenticated
under this Indenture.
The Trustee shall authenticate (i) Initial Notes for original
issue on the Issue Date in the aggregate principal amount not to exceed
$115,000,000 in one or more series, (ii) Private Exchange Notes from time to
time only in exchange for a like principal amount of Initial Notes, (iii)
Unrestricted Notes from time to time in exchange for a like principal amount of
Initial Notes, or (iv) one or more series of Notes for original issuance after
the Issue Date (such Notes to be substantially in the form of Exhibit A(1) or
A(2), as applicable) in an aggregate principal amount not to exceed $85,000,000
so long as the incurrence of Indebtedness thereof is permitted under the proviso
to Section 4.12, in each case upon a written order of the Company in the form of
an Officers' Certificate of the Company. Each such written order shall specify
the amount of Notes to be authenticated and the date on which the Notes are to
be authenticated, whether the Notes are to be Initial Notes, Private Exchange
Notes, Unrestricted Notes or Notes issued under clause (iv) of the preceding
sentence, and whether the Notes are to be issued as Physical Notes or Global
Notes or such other information as the Trustee may reasonably request. In
addition, with respect to authentication pursuant to clauses (ii) or (iii) of
the first sentence of this paragraph, the first such written order from the
Company shall be accompanied by an Opinion of Counsel of the Company in a form
reasonably satisfactory to the Trustee stating that the issuance of the Private
Exchange Notes or the Unrestricted Notes, as the case may be, does not give rise
to an Event of Default, complies with this Indenture and has been duly
authorized by the Company. The aggregate principal amount of Notes outstanding
at any time may not exceed $200,000,000, except as provided in Section 2.07.
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In the event that the Company shall issue and the Trustee shall
authenticate any Notes issued under this Indenture subsequent to the Issue Date
pursuant to clauses (ii), (iii) and (iv) of the first sentence of the
immediately preceding paragraph, the Company shall use its best efforts to
obtain the same "CUSIP" number for such Notes as is printed on the Notes
outstanding at such time. Notwithstanding the foregoing, all Notes issued under
this Indenture shall vote and consent together on all matters as one class and
no series of Notes will have the right to vote or consent as a separate class on
any matter.
The Trustee may appoint an authenticating agent (the
"Authenticating Agent") reasonably acceptable to the Company to authenticate
Notes. Unless otherwise provided in the appointment, an Authenticating Agent may
authenticate Notes whenever the Trustee may do so. Each reference in this
Indenture to authentication by the Trustee includes authentication by such
Authenticating Agent. An Authenticating Agent has the same rights as an Agent to
deal with the Company and Affiliates of the Company.
The Notes shall be issuable in fully registered form only,
without coupons, in denominations of $1,000 and any integral multiple thereof.
SECTION 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency (which shall be
located in the Borough of Manhattan in the City of New York, State of New York)
where (a) Notes may be presented or surrendered for registration of transfer or
for exchange ("Registrar"), (b) Notes may be presented or surrendered for
payment ("Paying Agent") and (c) notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served. The Registrar shall keep
a register of the Notes and of their transfer and exchange. The Company, upon
prior written notice to the Trustee, may have one or more co-Registrars and one
or more additional paying agents reasonably acceptable to the Trustee. The term
"Paying Agent" includes any additional Paying Agent. Neither the Company nor any
Affiliate of the Company may act as Paying Agent.
The Company shall enter into an appropriate agency agreement with
any Agent not a party to this Indenture, which agreement shall incorporate the
provisions of the TIA and implement the provisions of this Indenture that relate
to such Agent. The Company shall notify the Trustee, in advance, of
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the name and address of any such Agent. If the Company fails to maintain a
Registrar or Paying Agent, or fails to give the foregoing notice, the Trustee
shall act as such and shall be entitled to appropriate compensation in
accordance with Section 7.07.
The Company initially appoints the Trustee, who has an Affiliate
in New York with an office at 61 Broadway, 15th Floor, New York, NY 10006, as
Registrar, Paying Agent and agent for service of demands and notices in
connection with the Notes, until such time as either of such Persons has
resigned or a successor has been appointed. Any Paying Agent or Registrar may
resign upon 30 days' prior written notice to the Company.
SECTION 2.04. Paying Agent To Hold Assets in Trust.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that, subject to Articles Ten and Eleven, each
Paying Agent shall hold in trust for the benefit of the Holders or the Trustee
all assets held by the Paying Agent for the payment of principal of, or interest
on, the Notes (whether such assets have been distributed to it by the Company or
any other obligor on the Notes), and the Company and the Paying Agent shall
notify the Trustee in writing of any Default by the Company (or any other
obligor on the Notes) in making any such payment. The Company at any time may
require a Paying Agent to distribute all assets held by it to the Trustee and
account for any assets disbursed and the Trustee may at any time during the
continuance of any payment Default, upon written request to a Paying Agent,
require such Paying Agent to distribute all assets held by it to the Trustee and
to account for any assets distributed. Upon distribution to the Trustee of all
assets that shall have been delivered by the Company to the Paying Agent, the
Paying Agent shall have no further liability for such assets.
SECTION 2.05. Noteholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Noteholders. If the Trustee is not the Registrar, the Company shall furnish or
cause the Registrar to furnish to the Trustee as of each Record Date and before
each related Interest Payment Date and at such other times as the Trustee may
request in writing a list as of such date and in such form as the Trustee may
reasonably require of the names
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and addresses of Noteholders, which list may be conclusively relied upon by the
Trustee.
SECTION 2.06. Transfer and Exchange.
Subject to the provisions of Sections 2.15 and 2.16, when Notes
are presented to the Registrar or a co-Registrar with a request to register the
transfer of such Notes or to exchange such Notes for an equal principal amount
of Notes of other authorized denominations, the Registrar or co-Registrar shall
register the transfer or make the exchange as requested if its requirements for
such transaction are met; provided, however, that the Notes presented or
surrendered for registration of transfer or exchange shall be duly endorsed or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Registrar or co-Registrar, duly executed by the Holder thereof
or his attorney duly authorized in writing. To permit registrations of transfer
and exchanges, the Company shall issue and execute and the Trustee shall
authenticate Notes at the Registrar's or co-Registrar's request. No service
charge shall be made to a Noteholder for any registration of transfer or
exchange. The Company may require from such Noteholder payment of a sum
sufficient to cover any transfer tax or similar governmental charge payable in
connection therewith (other than any such transfer taxes or similar governmental
charge payable upon exchanges or transfers pursuant to Sections 2.10, 3.06,
4.15, 4.16 or 9.06, in which event the Company shall be responsible for the
payment of such taxes).
The Registrar or co-Registrar shall not be required to register
the transfer of or exchange of any Note (i) during a period beginning at the
opening of business 15 days before the mailing of a notice of redemption of
Notes and ending at the close of business on the day of such mailing and (ii)
selected for redemption in whole or in part pursuant to Article Three, except
the unredeemed portion of any Note being redeemed in part.
Any Holder of the Global Note shall, by acceptance of such Global
Note, agree that transfers of beneficial interests in such Global Notes may be
effected only through a book entry system maintained by the Holder of such
Global Note (or its agent) and that ownership of a beneficial interest in the
Note shall be required to be reflected in a book entry.
SECTION 2.07. Replacement Notes.
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If a mutilated Note is surrendered to the Trustee or if the
Holder of a Note claims that the Note has been lost, destroyed or wrongfully
taken, the Company shall issue and execute and the Trustee shall authenticate a
replacement Note if the Trustee's requirements are met. If required by the
Trustee or the Company, such Holder must provide an affidavit of lost
certificate and an indemnity bond or other indemnity, sufficient in the judgment
of both the Company and the Trustee, to protect the Company, the Trustee or any
Agent from any loss which any of them may suffer if a Note is replaced. The
Company may charge such Holder for its reasonable, out-of-pocket expenses in
replacing a Note, including reasonable fees and expenses of the Trustee and
counsel, and the Trustee may charge the Company for the Trustee's reasonable
out-of-pocket expenses in replacing such Note. Every replacement Note shall
constitute an additional Obligation of the Company.
SECTION 2.08. Outstanding Notes.
Notes outstanding at any time are all the Notes that have been
authenticated by the Trustee except those canceled by it, those delivered to it
for cancellation and those described in this Section as not outstanding. Subject
to the provisions of Section 2.09, a Note does not cease to be outstanding
because the Company or any of its Affiliates holds the Note.
If a Note is replaced pursuant to Section 2.07 (other than a
mutilated Note surrendered for replacement), it ceases to be outstanding unless
the Trustee receives proof satisfactory to it that the replaced Note is held by
a bona fide purchaser. A mutilated Note ceases to be outstanding upon surrender
of such Note and replacement thereof pursuant to Section 2.07.
If on a Redemption Date or the Maturity Date, the Paying Agent
holds U.S. Legal Tender or U.S. Government Obligations sufficient to pay all of
the principal and interest due on the Notes payable on that date and is not
prohibited from paying such money to the Holders thereof pursuant to the terms
of this Indenture, then on and after that date such Notes cease to be
outstanding and interest on them ceases to accrue.
SECTION 2.09. Treasury Notes.
In determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver, consent or notice,
Notes owned by the Company or any of
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its Affiliates shall be considered as though they are not outstanding, except
that for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Notes which a Trust
Officer of the Trustee actually knows are so owned shall be so considered. The
Company shall notify the Trustee, in writing, when it or any of its Affiliates
repurchases or otherwise acquires Notes, and of the aggregate principal amount
of such Notes so repurchased or otherwise acquired.
SECTION 2.10. Temporary Notes.
Until definitive Notes are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Notes upon receipt of a
written order of the Company in the form of an Officers' Certificate. The
Officers' Certificate shall specify the amount of temporary Notes to be
authenticated and the date on which the temporary Notes are to be authenticated,
and shall direct the Trustee to authenticate such Notes and certify that all
conditions precedent to the issuance of such Notes contained herein have been
complied with. Temporary Notes shall be substantially in the form of definitive
Notes but may have variations that the Company and the Trustee consider
appropriate for temporary Notes. Without unreasonable delay, the Company shall
prepare and the Trustee shall authenticate upon receipt of a written order of
the Company pursuant to Section 2.02 definitive Notes in exchange for temporary
Notes.
SECTION 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Notes surrendered to them for transfer, exchange or payment. The Trustee, or
at the direction of the Trustee, the Registrar or the Paying Agent, and no one
else, shall cancel and, at the written direction of the Company, shall dispose
of all Notes surrendered for registration of transfer, exchange, payment or
cancellation. Subject to Section 2.07, the Company may not issue new Notes to
replace Notes that it has paid or delivered to the Trustee for cancellation. If
the Company shall acquire any of the Notes, such acquisition shall not operate
as a redemption or satisfaction of the Indebtedness represented by such Notes
unless and until the same are surrendered to the Trustee for cancellation
pursuant to this Section 2.11.
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SECTION 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest, plus (to the extent lawful) any interest
payable on the defaulted interest to the Persons who are Holders on a subsequent
special record date, which date shall be the fifteenth day next preceding the
date fixed by the Company for the payment of defaulted interest or the next
succeeding Business Day if such date is not a Business Day. At least 15 days
before the subsequent special record date, the Company shall mail to each
Holder, with a copy to the Trustee, a notice that states the subsequent special
record date, the payment date and the amount of defaulted interest, and interest
payable on such defaulted interest, if any, to be paid.
SECTION 2.13. CUSIP Numbers.
The Company in issuing the Notes may use one or more "CUSIP"
numbers, and if so, the appropriate CUSIP number(s) shall be included in all
notices of redemption or exchange as a convenience to Holders; provided that any
such notice may state that no representation is made by the Trustee as to the
correctness or accuracy of any CUSIP number printed in the notice or on the
Notes, and that reliance may be placed only on the other identification numbers
printed on the Notes. The Company shall promptly notify the Trustee of any
change in the CUSIP numbers.
SECTION 2.14. Deposit of Moneys.
Prior to 10:00 a.m., New York City time, on each Interest Payment
Date and on the Maturity Date, the Company shall have deposited with the Paying
Agent in immediately available funds money sufficient to make cash payments, if
any, due on such Interest Payment Date or Maturity Date, as the case may be, in
a timely manner which permits the Paying Agent to remit payment to the Holders
on such Interest Payment Date or Maturity Date, as the case may be.
SECTION 2.15. Book-Entry Provisions for Global Note.
(a) The Global Note initially shall (i) be registered in the name
of the Depositary or the nominee of such
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Depositary, (ii) be delivered to the Trustee as custodian for such Depositary
and (iii) bear legends as set forth in Exhibit B.
Members of, or participants in, the Depositary ("Agent Members")
shall have no rights under this Indenture with respect to any Global Note held
on their behalf by the Depositary, or the Trustee as its custodian, or under the
Global Note, and the Depositary may be treated by the Company, the Trustee and
any agent of the Company or the Trustee as the absolute owner of the Global Note
for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Company, the Trustee or any agent of the Company or the Trustee from
giving effect to any written certification, proxy or other authorization
furnished by the Depositary or impair, as between the Depositary and its Agent
Members, the operation of customary practices governing the exercise of the
rights of a holder of any Note.
(b) Transfers of the Global Note shall be limited to transfers in
whole, but not in part, to the Depositary, its successors or their respective
nominees. Interests of beneficial owners in the Global Note may be transferred
or exchanged for Physical Notes in accordance with the rules and procedures of
the Depositary and the provisions of Section 2.16. In addition, Physical Notes
shall be transferred to all beneficial owners in exchange for their beneficial
interests in the Global Note if (i) the Depositary notifies the Company that it
is unwilling or unable to continue as Depositary for the Global Note and a
successor depositary is not appointed by the Company within 90 days of such
notice or (ii) an Event of Default has occurred and is continuing and the
Registrar has received a request from the Depositary to issue Physical Notes.
(c) In connection with any transfer or exchange of a portion of
the beneficial interest in the Global Note to beneficial owners pursuant to
paragraph (b), the Registrar shall (if one or more Physical Notes are to be
issued) reflect on its books and records the date and a decrease in the
principal amount of the Global Note in an amount equal to the principal amount
of the beneficial interest in the Global Note to be transferred, and the Company
shall execute, and the Trustee shall authenticate and deliver, one or more
Physical Notes of like tenor and amount.
(d) In connection with the transfer of the entire Global Note to
beneficial owners pursuant to paragraph (b), the Global Note shall be deemed to
be surrendered to the Trustee
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for cancellation, and the Company shall execute, and the Trustee shall
authenticate and deliver, to each beneficial owner identified by the Depositary
in exchange for its beneficial interest in the Global Note, an equal aggregate
principal amount of Physical Notes of authorized denominations.
(e) Any Physical Note constituting a Restricted Security
delivered in exchange for an interest in the Global Note pursuant to paragraph
(b) or (c) shall, except as otherwise provided by paragraphs (a)(i)(x) and (c)
of Section 2.16, bear the legend regarding transfer restrictions applicable to
the Physical Notes set forth in Exhibit A(1).
(f) The Holder of the Global Note may grant proxies and otherwise
authorize any person, including Agent Members and persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Notes.
SECTION 2.16. Special Transfer Provisions.
(a) Transfers to Non-QIB Institutional Accredited Investors and
Non-U.S. Persons. The following provisions shall apply with respect to the
registration of any proposed transfer of a Note constituting a Restricted
Security to any Institutional Accredited Investor which is not a QIB:
(i) the Registrar shall register the transfer of any Note
constituting a Restricted Security, whether or not such Note bears the
Private Placement Legend, if (x) the requested transfer is after June
18, 2000 and the transferor certifies that the Restricted Security was
not acquired from the Company or Affiliate of the Company less than two
years prior to the date of the proposed transfer or (y) in the case of a
transfer to an Institutional Accredited Investor which is not a QIB, the
proposed transferee has delivered to the Registrar a certificate
substantially in the form of Exhibit C; and
(ii) if the proposed transferor is an Agent Member holding a
beneficial interest in the Global Note, upon receipt by the Registrar of
(x) the certificate, if any, required by paragraph (i) above and (y)
instructions given in accordance with the Depositary's and the
Registrar's procedures,
whereupon (a) the Registrar shall reflect on its books and records the date and
(if the transfer does not involve a
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transfer of outstanding Physical Notes) a decrease in the principal amount of
the Global Note in an amount equal to the principal amount of the beneficial
interest in the Global Note to be transferred, and (b) the Company shall execute
and the Trustee shall authenticate and deliver one or more Physical Notes of
like tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of a Note constituting a
Restricted Security to a QIB:
(i) the Registrar shall register the transfer if such transfer is
being made by a proposed transferor who has checked the box provided for
on the form of Note stating, or has otherwise advised the Company and
the Registrar in writing, that the sale has been made in compliance with
the provisions of Rule 144A to a transferee who has signed the
certification provided for on the form of Note stating, or has otherwise
advised the Company and the Registrar in writing, that it is purchasing
the Note for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is
a QIB within the meaning of Rule 144A, and is aware that the sale to it
is being made in reliance on Rule 144A and acknowledges that it has
received such information regarding the Company as it has requested
pursuant to Rule 144A or has determined not to request such information
and that it is aware that the transferor is relying upon its foregoing
representations in order to claim the exemption from registration
provided by Rule 144A; and
(ii) if the proposed transferee is an Agent Member, and the Notes
to be transferred consist of Physical Notes which after transfer are to
be evidenced by an interest in the Global Note, upon receipt by the
Registrar of instructions given in accordance with the Depositary's and
the Registrar's procedures, the Registrar shall reflect on its books and
records the date and an increase in the principal amount of the Global
Note in an amount equal to the principal amount of the Physical Notes to
be transferred, and the Trustee shall cancel the Physical Notes so
transferred.
(c) Private Placement Legend. Upon the registration of transfer,
exchange or replacement of Notes not bearing the Private Placement Legend, the
Registrar shall deliver Notes that do not bear the Private Placement Legend.
Upon the
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registration of transfer, exchange or replacement of Notes bearing the Private
Placement Legend, the Registrar shall deliver only Notes that bear the Private
Placement Legend unless (i) the circumstance contemplated by paragraph (a)(i)(x)
of this Section 2.16 exist or (ii) there is delivered to the Registrar an
Opinion of Counsel reasonably satisfactory to the Company and the Trustee to the
effect that neither such legend nor the related restrictions on transfer are
required in order to maintain compliance with the provisions of the Act.
(d) General. By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture.
The Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 2.15 or this Section
2.16 for a period of three years. The Company shall have the right to inspect
and make copies of all such letters, notices or other written communications at
any reasonable time upon the giving of reasonable written notice to the
Registrar.
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee.
If the Company elects to redeem Notes pursuant to Paragraph 6 of
the Notes, it shall notify both the Trustee and the Paying Agent in writing of
the Redemption Date and the principal amount of the Notes to be redeemed.
The Company shall give each notice provided for in this Section
3.01 at least 45 days, but not more than 60 days, before the Redemption Date
(unless a shorter notice period shall be satisfactory to the Trustee, as
evidenced in a writing signed on behalf of the Trustee), together with an
Officers' Certificate and Opinion of Counsel stating that such redemption shall
comply with the conditions contained herein and in the Notes.
SECTION 3.02. Selection of Notes To Be Redeemed.
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If fewer than all of the Notes are to be redeemed, the Trustee
shall select the Notes to be redeemed on a pro rata basis, by lot or in such
other fair and appropriate manner chosen at the discretion of the Trustee and,
if the Notes are listed on any national securities exchange, by a method that
complies with the requirements of such exchange; provided, however, that if
partial redemption is made with the proceeds of an Equity Offering prior to June
15, 2001, selection of the Notes or portions thereof for redemption shall be
made by the Trustee only on a pro rata basis or on as nearly a pro rata basis as
is practicable (subject to the applicable procedures of the Depositary) unless
such method is otherwise prohibited. The Trustee shall make the selection from
the Notes outstanding and not previously called for redemption and shall
promptly notify the Company in writing of the Notes selected for redemption and,
in the case of any Note selected for partial redemption, the principal amount
thereof to be redeemed. Notes in denominations of $1,000 or less may be redeemed
only in whole. The Trustee may select for redemption portions (equal to $1,000
or any integral multiple thereof) of the principal of Notes that have
denominations larger than $1,000. Provisions of this Indenture that apply to
Notes called for redemption also apply to portions of Notes called for
redemption.
SECTION 3.03. Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption
Date, the Company shall mail or cause to be mailed a notice of redemption by
first-class mail, postage prepaid, to each Holder whose Notes are to be
redeemed, with a copy to the Trustee and any Paying Agent.
Each notice for redemption shall identify the Notes to be
redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price and the amount of accrued interest, if
any, to be paid;
(3) the name and address of the Paying Agent;
(4) the subparagraph of the Notes pursuant to which such
redemption is being made;
(5) that Notes called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price plus accrued interest, if
any;
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(6) that, unless the Company defaults in making the redemption
payment, interest on Notes called for redemption ceases to accrue on and
after the Redemption Date, and the only remaining right of the Holders
of such Notes is to receive payment of the Redemption Price plus accrued
interest, if any, upon surrender to the Paying Agent of the Notes
redeemed;
(7) if any Note is being redeemed in part, the portion of the
principal amount (equal to $1,000 or any integral multiple thereof) of
such Note to be redeemed and that, on or after the Redemption Date, and
upon surrender of such Note, a new Note or Notes in the aggregate
principal amount equal to the unredeemed portion thereof will be issued;
and
(8) if fewer than all the Notes are to be redeemed, the
identification of the particular Notes (or portion thereof) to be
redeemed, as well as the aggregate principal amount of Notes to be
redeemed and the aggregate principal amount of Notes to be outstanding
after such partial redemption.
SECTION 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section
3.03, Notes called for redemption become due and payable on the Redemption Date
and at the Redemption Price plus accrued interest, if any. Upon surrender to the
Trustee or Paying Agent, such Notes called for redemption shall be paid at the
Redemption Price (which shall include accrued interest thereon to the Redemption
Date), but installments of interest, the maturity of which is on or prior to the
Redemption Date, shall be payable to Holders of record at the close of business
on the relevant record dates referred to in the Notes.
SECTION 3.05. Deposit of Redemption Price.
On or before the Redemption Date, the Company shall deposit with
the Paying Agent in immediately available funds U.S. Legal Tender sufficient to
pay the Redemption Price plus accrued interest, if any, of all Notes or portions
thereof to be redeemed on that date. The Paying Agent shall promptly return to
the Company any U.S. Legal Tender so deposited which is not required for that
purpose, except with respect to monies owed as obligations to the Trustee
pursuant to Article Seven.
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If the Company complies with the preceding paragraph, then,
unless the Company defaults in the payment of such Redemption Price plus accrued
interest, if any, interest on the Notes to be redeemed will cease to accrue on
and after the applicable Redemption Date, whether or not such Notes are
presented for payment.
SECTION 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is to be redeemed in part, the
Company shall issue and execute, and the Trustee shall authenticate for the
Holder, a new Note or Notes equal in principal amount to the unredeemed portion
of the Note surrendered.
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes.
The Company shall pay the principal of and interest on the Notes
on the dates and in the manner provided in the Notes and in this Indenture. An
installment of principal of or interest on the Notes shall be considered paid on
the date it is due if the Trustee or Paying Agent (other than the Company or an
Affiliate of the Company) holds on that date U.S. Legal Tender designated for
and sufficient to pay the installment in full and is not prohibited from paying
such money to the Holders pursuant to the terms of this Indenture.
The Company shall pay, to the extent such payments are lawful,
interest on overdue principal and on overdue installments of interest (without
regard to any applicable grace periods) from time to time on demand at the rate
borne by the Notes. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months.
SECTION 4.02. Maintenance of Office or Agency.
The Company shall maintain each office or agency required under
Section 2.03. The Company shall give prior written notice to the Trustee of the
location, and any change in the location, of any such office or agency. If at
any time the Company shall fail to maintain any such required office or
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agency or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
address of the Trustee set forth in Section 11.02.
SECTION 4.03. Corporate Existence.
Except as otherwise permitted by Article Five, the Company shall
do or cause to be done, at its own cost and expense, all things necessary to
preserve and keep in full force and effect its corporate existence and the
corporate existence of each of its Restricted Subsidiaries in accordance with
the respective organizational documents of each such Restricted Subsidiary and
the material rights (charter and statutory) and franchises of the Company and
each such Restricted Subsidiary; provided, however, that the Company shall not
be required to preserve, with respect to itself, any right or franchise and,
with respect to any of its Restricted Subsidiaries, any such existence, right or
franchise, if the Board of Directors of the Company shall determine in good
faith that the preservation thereof is no longer desirable in the conduct of the
business of the Company and its Restricted Subsidiaries, taken as a whole.
SECTION 4.04. Payment of Taxes and Other Claims.
The Company shall pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (i) all material taxes,
assessments and governmental charges (including withholding taxes and any
penalties, interest and additions to taxes) levied or imposed upon it or any of
its Subsidiaries or its properties or any of its Subsidiaries' properties and
(ii) all material lawful claims for labor, materials and supplies that, if
unpaid, might by law become a Lien upon its properties or any of its
Subsidiaries' properties; 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 or
will be contested in good faith by appropriate proceedings properly instituted
and diligently conducted for which adequate reserves, to the extent required
under GAAP, have been taken.
SECTION 4.05. Maintenance of properties and Insurance.
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(a) The Company shall, and shall cause each of its Restricted
Subsidiaries to, maintain its properties in good working order and condition
(subject to ordinary wear and tear) and make all necessary repairs, renewals,
replacements, additions, betterments and improvements thereto and actively
conduct and carry on its business; provided, however, that nothing in this
Section 4.05 shall prevent the Company or any of its Restricted Subsidiaries
from discontinuing the operation and maintenance of any of its properties if
such discontinuance is, in the ordinary course of business or, in the good faith
judgment of the Board of Directors or other governing body of the Company or the
Restricted Subsidiary concerned, as the case may be, desirable in the conduct of
its businesses and is not disadvantageous in any material respect to the
Holders.
(b) The Company shall maintain insurance (including appropriate
self-insurance) against loss or damage of the kinds that, in the good faith
judgment of the Company, are adequate and appropriate for the conduct of the
business of the Company and its Restricted Subsidiaries in a prudent manner,
with reputable insurers or with the government of the United States of America
or an agency or instrumentality thereof, in such amounts, with such deductibles,
and by such methods as shall be consistent with past practice or customary, in
the good faith judgment of the Company, for companies similarly situated in the
industry.
SECTION 4.06. Compliance Certificate; Notice of Default.
(a) The Company shall deliver to the Trustee, within 90 days
after the end of the Company's fiscal year, an Officers' Certificate stating
that a review of its activities has been made under the supervision of the
signing Officers with a view to determining whether it has kept, observed,
performed and fulfilled its Obligations under this Indenture and further
stating, as to each such Officer signing such certificate, that to the best of
such Officer's knowledge the Company during such period has kept, observed,
performed and fulfilled each and every such covenant and the Obligations
contained in this Indenture and the Notes and no Default or Event of Default
occurred during such year and at the date of such certificate there is no
Default or Event of Default that has occurred and is continuing or, if such
signers do know of any such Default or Event of Default, the certificate shall
describe the Default or Event of Default and its status with
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particularity. The Officers' Certificate shall also notify the Trustee should
the Company elect to change the manner in which it fixes its fiscal year end.
(b) The annual financial statements delivered pursuant to Section
4.08 shall be accompanied by a written report of the Company's independent
accountants (who shall be a firm of established national reputation) that in
conducting their audit of such financial statements nothing has come to their
attention that would lead them to believe that the Company has violated any
provisions of Article Four, Five or Six of this Indenture insofar as they relate
to accounting matters or, if any such violation has occurred, specifying the
nature and period of existence thereof, it being understood that such
accountants shall not be liable directly or indirectly to any Person for any
failure to obtain knowledge of any such violation.
(c) (i) If any Default or Event of Default has occurred and is
continuing or (ii) if any Holder seeks to exercise any remedy hereunder with
respect to a claimed Event of Default under this Indenture or the Notes, the
Company shall deliver to the Trustee, at its address set forth in Section 11.02
hereof, by registered or certified mail or by telegram, telex or facsimile
transmission followed by hard copy by registered or certified mail an Officers'
Certificate specifying such event, notice or other action (including any action
the Company is taking or proposes to take in respect thereof) within five
Business Days of becoming aware of such occurrence.
SECTION 4.07. Compliance with Laws.
The Company shall, and shall cause each of its Subsidiaries to,
comply with all applicable statutes, rules, regulations, orders and restrictions
of the United States of America, all states and municipalities thereof, and of
any governmental department, commission, board, regulatory authority, bureau,
agency and instrumentality of the foregoing, in respect of the conduct of its
businesses and the ownership of its properties, except for such noncompliances
as are not in the aggregate reasonably likely to have a material adverse effect
on the business or financial condition of the Company and its Subsidiaries,
taken as a whole.
SECTION 4.08. SEC Reports.
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(a) The Company shall file with the SEC all information,
documents and reports to be filed with the SEC pursuant to Sections 13 or 15(d)
of the Exchange Act, whether or not the Company is subject to such filing
requirements so long as the SEC will accept such filings. The Company (at its
own expense) shall file with the Trustee within 15 days after it files them with
the SEC, copies of the quarterly and annual reports and of the information,
documents and other reports, if any, which the Company is required to file with
the SEC pursuant to Section 13 or 15(d) of the Exchange Act. Upon qualification
of this Indenture under the TIA, the Company shall also comply with the
provisions of TIA Section 314(a).
(b) At the Company's expense, the Company shall cause an annual
report if furnished by it to stockholders generally and each quarterly or other
financial report if furnished by it to stockholders generally to be filed with
the Trustee and mailed to the Holders at their addresses appearing in the
register of Notes maintained by the Registrar at the time of such mailing or
furnishing to stockholders.
(c) The Company shall provide to any Holder any information
reasonably requested by such Holder concerning the Company (including financial
statements) necessary in order to permit such Holder to sell or transfer Notes
in compliance with Rule 144A under the Act, as presently required by Rule
144A(d)(4) under the Act.
SECTION 4.09. Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do so)
that it shall not at any time insist upon, plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law or any
usury law or other law that would prohibit or forgive the Company from paying
all or any portion of the principal of or interest on the Notes and as
contemplated herein, wherever enacted, now or at any time hereafter in force, or
which may affect the covenants or the performance of this Indenture; and (to the
extent that it may lawfully do so) the Company hereby expressly waives all
benefit or advantage of any such law, and covenants that it shall not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
shall suffer and permit the execution of every such power as though no such law
had been enacted.
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SECTION 4.10. Limitation on Restricted Payments.
The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, (a) declare or pay any
dividend or make any distribution (other than dividends or distributions payable
in Qualified Capital Stock of the Company) on or in respect of shares of the
Company's Capital Stock to holders of such Capital Stock, (b) purchase, redeem
or otherwise acquire or retire for value any Capital Stock of the Company or any
warrants, rights or options to purchase or acquire shares of any class of such
Capital Stock, (c) make any principal payment on, purchase, defease, redeem,
prepay, decrease or otherwise acquire or retire for value, prior to any
scheduled final maturity, scheduled repayment or scheduled sinking fund payment,
any Indebtedness of the Company that is subordinate or junior in right of
payment to the Notes or (d) make any Investment (other than Permitted
Investments) (each of the foregoing actions set forth in clauses (a), (b), (c)
and (d) being referred to as a "Restricted Payment"), if at the time of such
Restricted Payment or immediately after giving effect thereto, (i) a Default or
an Event of Default shall have occurred and be continuing or (ii) the Company is
not able to incur at least $1.00 of additional Indebtedness (other than
Permitted Indebtedness) in compliance with Section 4.12 or (iii) the aggregate
amount of Restricted Payments (including such proposed Restricted Payment) made
subsequent to the Issue Date shall exceed the sum of: (A) 50% of the cumulative
Consolidated Net Income (or if cumulative Consolidated Net Income shall be a
loss, minus 100% of such loss) of the Company earned during the period beginning
on the first day of the first full fiscal quarter occurring after the Issue Date
and ending on the last day of the fiscal quarter immediately preceding the date
the Restricted Payment occurs (the "Reference Date") (treating such period as a
single accounting period); plus (B) 100% of the aggregate net cash proceeds
received by the Company from any Person (other than a Subsidiary of the Company)
from the issuance and sale of Qualified Capital Stock of the Company or from any
equity contribution from a holder of the Company's Capital Stock subsequent to
the Issue Date and on or prior to the Reference Date; plus (C) the principal
amount (or accreted amount as of such Reference Date) of any Indebtedness of the
Company or any Restricted Subsidiary of the Company incurred after the Issue
Date which has been converted into or exchanged for Qualified Capital Stock of
the Company (minus the amount of any cash or the fair market value (as
determined in good faith by the Board of Directors of the Company) of property
distributed by the Company or any Restricted Subsidiary of the
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Company upon such conversion or exchange); plus (D) without duplication, the sum
of (1) the aggregate amount returned in cash on or with respect to Investments
(other than Permitted Investments) made subsequent to the Issue Date whether
through interest payments, principal payments, dividends or other distributions
or payments, (2) the net cash proceeds received by the Company or any of its
Restricted Subsidiaries from the disposition of all or any portion of such
Investments (other than to a Subsidiary of the Company) and (3) upon
redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary, the fair
market value of such Subsidiary; provided, however, that the sum of clauses (1),
(2) and (3) above shall not exceed the aggregate amount of all such Investments
made subsequent to the Issue Date; plus (E) $20,000,000.
Notwithstanding the foregoing, the provisions set forth in the
immediately preceding paragraph do not prohibit: (1) the payment of any dividend
or the consummation of any irrevocable redemption within 60 days after the date
of declaration of such dividend or the giving of such irrevocable redemption
notice if the dividend or redemption would have been permitted on the date of
declaration or the giving of such irrevocable redemption notice; (2) if no
Default or Event of Default shall have occurred and be continuing, the
redemption or acquisition of any shares of Capital Stock of the Company, either
(i) solely in exchange for shares of Qualified Capital Stock of the Company or
(ii) through the application of net proceeds of a substantially concurrent sale
for cash (other than to a Subsidiary of the Company) of shares of Qualified
Capital Stock of the Company; (3) payments by the Company to purchase, redeem or
acquire for value shares of Qualified Capital Stock of the Company or options on
such shares held by officers or employees upon the death, disability, retirement
or termination of employment of such employees pursuant to the terms of an
employee benefit plan or any other agreement pursuant to which such shares of
Qualified Capital Stock or options were issued or pursuant to a severance,
buy-sell or right of first refusal agreement with such employees, (4)
Investments in securities not constituting cash or Cash Equivalents and received
in connection with an Asset Sale made pursuant to the provisions of the covenant
described under Section 4.16, (5) if no Default or Event of Default shall have
occurred and be continuing, the acquisition of any Indebtedness of the Company
that is subordinate or junior in right of payment to the Notes either (i) solely
in exchange for shares of Qualified Capital Stock of the Company or (ii) through
the application of net proceeds of a substantially concurrent sale for cash
(other than to a Subsidiary of the Company) of (A)
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shares of Qualified Capital Stock of the Company or (B) Refinancing Indebtedness
and (6) the redemption of the Company's preferred stock purchase rights under
the Company's stockholder's rights plans in an aggregate amount not to exceed
$500,000. In determining the aggregate amount of Restricted Payments made
subsequent to the Issue Date in accordance with clause (iii) of the immediately
preceding paragraph, amounts expended pursuant to clauses (1), (2)(ii), (3), (4)
and (5)(ii)(A) shall be included in such calculation.
The amount of any non-cash Restricted Payment shall be the fair
market value, on the date such Restricted Payment is made, of the assets or
securities proposed to be transferred or issued by the Company or such
Restricted Subsidiary, as the case may be, pursuant to such Restricted Payment.
The fair market value of any non-cash Restricted Payment shall be determined by
the Board of Directors of the Company whose resolution with respect to the fair
market value of any Restricted Payment in excess of $5,000,000 shall be
delivered to the Trustee, such determination to be based upon an opinion or
appraisal issued by an accounting, appraisal or investment banking firm of
national standing if such fair market value exceeds $10,000,000. At least
semi-annually the Company shall deliver to the Trustee an Officers' Certificate
stating that all Restricted Payments made during the prior six month period were
permitted and setting forth the basis upon which the calculations required by
this covenant were computed, together with a copy of any opinion or appraisal
required by this Indenture.
SECTION 4.11. Limitation on Transactions with Affiliates.
(a) The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, enter into or permit to
exist any transaction or series of related transactions (including, without
limitation, the purchase, sale, lease or exchange of any property or the
rendering of any service) with, or for the benefit of, any of its Affiliates
(each an "Affiliate Transaction"), other than (x) Affiliate Transactions
permitted under paragraph (b) below and (y) Affiliate Transactions on terms that
are no less favorable than those that might reasonably have been obtained in a
comparable transaction at such time on an arm's-length basis from a Person that
is not an Affiliate of the Company or such Restricted Subsidiary. All Affiliate
Transactions (and each series of
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related Affiliate Transactions which are similar or part of a common plan)
involving aggregate payments or other property with a fair market value in
excess of $1,000,000 shall be approved by the Board of Directors of the Company
or such Restricted Subsidiary, as the case may be, such approval to be evidenced
by a Board Resolution stating that such Board of Directors has determined that
such transaction complies with the foregoing provisions. If the Company or any
Restricted Subsidiary of the Company enters into an Affiliate Transaction (or a
series of related Affiliate Transactions related to a common plan) that involves
an aggregate fair market value of more than $5,000,000 the Company or such
Restricted Subsidiary, as the case may be, shall, prior to the consummation
thereof, obtain a favorable opinion as to the fairness of such transaction or
series of related transactions to the Company or the relevant Restricted
Subsidiary, as the case may be, from a financial point of view, from an
Independent Financial Advisor and file the same with the Trustee.
(b) The restrictions set forth in clause (a) above shall not
apply to (i) reasonable fees and compensation paid to and indemnity provided on
behalf of, officers, directors, employees or consultants of the Company or any
Restricted Subsidiary of the Company as determined in good faith by the
Company's Board of Directors or senior management; (ii) transactions exclusively
between or among the Company and any of its Wholly Owned Restricted Subsidiaries
or exclusively between or among such Wholly Owned Restricted Subsidiaries,
provided such transactions are not otherwise prohibited by this Indenture; (iii)
any agreement as in effect as of the Issue Date or any amendment thereto or any
transaction contemplated thereby (including pursuant to any amendment thereto)
in any replacement agreement thereto so long as any such amendment or
replacement agreement is not more disadvantageous to the Holders in any material
respect than the original agreement as in effect on the Issue Date; (iv)
advances and loans to employees for relocation, entertainment and travel
expenses, drawing accounts and other matters in the ordinary course of business;
(v) transactions with Annapurna Corporation aggregating not more than $500,000
in any fiscal year; and (vi) Restricted Payments permitted by this Indenture.
SECTION 4.12. Limitation on Incurrence of Additional
Indebtedness.
The Company will not, and will not permit any of its
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Restricted Subsidiaries to, directly or indirectly, create, incur, assume,
guarantee, acquire, become liable, contingently or otherwise, with respect to,
or otherwise become responsible for payment of (collectively, "incur") any
Indebtedness (other than Permitted Indebtedness); provided, however, that if no
Default or Event of Default shall have occurred and be continuing at the time of
or as a consequence of the incurrence of any such Indebtedness, the Company or
any Restricted Subsidiary may incur Indebtedness (including, without limitation,
Acquired Indebtedness), in each case if on the date of the incurrence of such
Indebtedness, after giving effect to the incurrence thereof, the Consolidated
Fixed Charge Coverage Ratio of the Company is greater than 2.25 to 1.0 if such
Indebtedness is incurred prior to June 15, 2000 and 2.50 to 1.0 thereafter.
SECTION 4.13. Limitation on Dividend and Other Payment
Restrictions Affecting Subsidiaries.
The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
permit to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary of the Company to (a) pay dividends or make
any other distributions on or in respect of its Capital Stock; (b) make loans or
advances or to pay any Indebtedness or other obligation owed to the Company or
any other Restricted Subsidiary of the Company; or (c) transfer any of its
property or assets to the Company or any other Restricted Subsidiary of the
Company, except for such encumbrances or restrictions existing under or by
reason of: (1) applicable law; (2) this Indenture; (3) customary non-assignment,
subletting or restriction on transfer or net worth provisions of any contract,
license or any lease governing a leasehold interest of any Restricted Subsidiary
of the Company; (4) any instrument governing Acquired Indebtedness, which
encumbrance or restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person or the properties or assets of the
Person so acquired; (5) agreements existing on the Issue Date to the extent and
in the manner such agreements are in effect on the Issue Date; (6) the Credit
Facility; (7) restrictions on the transfer of assets subject to any Lien
permitted under this Indenture imposed by the holder of such Lien; (8) any
agreement for the sale or disposition of the Capital Stock or assets of any
Subsidiary of the Company;
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provided, that such encumbrances and restrictions are only applicable to such
Subsidiary or assets, as applicable, and any such sale or disposition is made in
compliance with Section 4.16 to the extent applicable thereto; or (9) an
agreement governing Indebtedness incurred to Refinance the Indebtedness issued,
assumed or incurred pursuant to an agreement referred to in clause (2), (4), (5)
or (6) above; provided, however, that the provisions relating to such
encumbrance or restriction contained in any such Indebtedness are no less
favorable to the Company in any material respect as determined by the Board of
Directors of the Company in their reasonable and good faith judgment than the
provisions relating to such encumbrance or restriction contained in agreements
referred to in such clause (2), (4), (5) or (6).
SECTION 4.14. Prohibition on Incurrence of Senior Subordinated
Debt.
The Company shall not, directly or indirectly, incur or suffer to
exist Indebtedness that is senior in right of payment to the Notes and
subordinate in right of payment to any other Indebtedness of the Company.
SECTION 4.15. Limitation on Change of Control.
(a) Upon the occurrence of a Change of Control, each Holder shall
have the right to require that the Company purchase all or a portion of such
Holder's Notes pursuant to the offer described below (the "Change of Control
Offer"), at a purchase price equal to 101% of the principal amount thereof plus
accrued and unpaid interest to the date of purchase. However, the Company is not
required to make a Change of Control Offer if a third party makes a Change of
Control Offer that would be in compliance with the provisions described in this
Section 4.15 if it were made by the Company and such third party purchases (for
the consideration referred to in the immediate preceding sentence) the Notes
validly tendered and not withdrawn.
(b) Within 30 days following the date upon which the Change of
Control occurred, the Company shall send, by first class mail, a notice to each
Holder, with a copy to the Trustee, which notice shall govern the terms of the
Change of Control Offer. The notice to the Holders shall contain all
instructions and materials necessary to enable such Holders to
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tender Notes pursuant to the Change of Control Offer. Such notice shall state:
(1) that the Change of Control Offer is being made pursuant to
this Section 4.15 and that all Notes tendered will be accepted for
payment;
(2) the purchase price (including the amount of accrued
interest) and the purchase date (which shall be no earlier than 30 days
nor later than 45 days from the date such notice is mailed, other than
as may be required by law) (the "Change of Control Payment Date");
(3) that any Note not tendered will continue to accrue interest
if interest is then accruing;
(4) that, unless the Company defaults in making payment
therefor, any Note accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after the Change of Control
Payment Date;
(5) that Holders electing to have a Note purchased pursuant to a
Change of Control Offer will be required to surrender the Note, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the
Note completed, to the Paying Agent at the address specified in the
notice prior to the close of business on the third business day prior to
the Change of Control Payment Date;
(6) that Holders will be entitled to withdraw their election if
the Paying Agent receives, not later than three Business Days preceding
the Change of Control Payment Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the
principal amount of the Notes the Holder delivered for purchase and a
statement that such Holder is withdrawing his election to have such Note
purchased; and
(7) the circumstances and relevant facts regarding such Change
of Control.
On or before the Change of Control Payment Date, the Company
shall (i) accept for payment Notes or portions thereof tendered pursuant to the
Change of Control Offer, (ii) deposit with the Paying Agent U.S. Legal Tender
sufficient to pay the purchase price plus accrued interest, if any, of all Notes
or portions thereof so tendered and accepted and (iii) deliver to the Trustee
Notes so accepted together with an Officers'
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Certificate stating the Notes or portions thereof being purchased by the
Company. The Paying Agent shall promptly mail or deliver to the Holders of Notes
so accepted payment in an amount equal to the purchase price plus accrued
interest, if any, and the Company shall execute and issue, and the Trustee shall
promptly authenticate and mail or deliver to such Holders new Notes equal in
principal amount to any unpurchased portion of the Notes surrendered. Any Notes
not so accepted shall be promptly mailed or delivered by the Company to the
Holder thereof. The Company shall publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Payment
Date. For purposes of this Section 4.15, the Trustee shall act as the Paying
Agent.
(c) If the Credit Facility is in effect, or any amounts are owing
thereunder, in either case at the time of the occurrence of the Change of
Control, prior to the mailing of the notice referred to in clause (b) above, but
in any event within 30 days following any Change of Control, the Company shall
(i) repay in full and terminate all commitments under the Indebtedness under the
Credit Facility and all other Senior Debt the terms of which require repayment
upon a Change of Control or offer to repay in full and terminate all commitments
under all Indebtedness under the Credit Facility and all other Senior Debt and
to repay the Indebtedness owed to, and terminate the commitments of, each lender
which has accepted such offer or (ii) obtain the requisite consents under the
Credit Facility and all such other Senior Debt to permit the repurchase of the
Notes as provided in this Section 4.15. The Company shall first comply with the
covenant in the immediately preceding sentence before it shall be required to
repurchase Notes pursuant to this Section 4.15; provided that the Company's
failure to comply with the covenant described in the immediately preceding
sentence shall constitute an Event of Default described in Section 6.01(3) and
not in Section 6.01(2).
The Company will comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Change of Control Offer. To the extent that
the provisions of any securities laws or regulations conflict with this Section
4.15, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Section 4.15 by virtue thereof.
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SECTION 4.16. Limitation on Asset Sales.
(a) The Company will not, and will not permit any of its
Restricted Subsidiaries to, consummate an Asset Sale unless (i) the Company or
the applicable Restricted Subsidiary, as the case may be, receives consideration
at the time of such Asset Sale at least equal to the fair market value of the
assets sold or otherwise disposed of (as determined in good faith by the
Company's Board of Directors), (ii) at least 75% of the consideration received
by the Company or the Restricted Subsidiary, as the case may be, from such Asset
Sale shall be in the form of cash or Cash Equivalents and is received at the
time of such disposition; provided, that the amount of (x) any liabilities of
the Company or any Restricted Subsidiary (other than contingent liabilities and
liabilities of the Company that are by their terms subordinated to the Notes or
any guarantee thereof) that are assumed by the transferee of any such assets
pursuant to a novation agreement that releases the Company or such Restricted
Subsidiary from further liability and (y) any notes or other obligations
received by the Company or any such Restricted Subsidiary from such transferee
that are converted by the Company or such Restricted Subsidiary into cash or
Cash Equivalents (to the extent of the cash or Cash Equivalents received) within
365 days following the closing of such Asset Sale, will be deemed to be cash for
purposes of this provision; provided, further, that the 75% limitation referred
to above shall not apply to any sale, transfer or other disposition of assets in
which the cash portion of the consideration received therefor, determined in
accordance with the foregoing proviso, is equal to or greater than what the
after-tax net proceeds would have been had such transaction complied with the
aforementioned 75% limitation; and (iii) upon the consummation of an Asset Sale,
the Company shall apply, or cause such Restricted Subsidiary to apply, the Net
Cash Proceeds relating to such Asset Sale within 365 days of receipt thereof
either (A) to prepay any Senior Debt and, in the case of any Senior Debt under
any revolving credit facility, effect a permanent reduction in the availability
under such revolving credit facility if required by the terms of such revolving
credit facility, or prepay the Indebtedness of any Restricted Subsidiary of the
Company that was incurred in accordance with Section 4.12 and, in the case of
any such Indebtedness under any revolving credit facility, effect a permanent
reduction in the availability under such revolving credit facility if required
by the terms of such revolving credit facility, (B) to make an investment in
properties and assets that replace the properties and assets that were the
subject of such Asset Sale or in properties and assets (including Qualified
Capital Stock
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of a Person which becomes a Restricted Subsidiary) that will be used in the
business of the Company and its Restricted Subsidiaries as existing on the Issue
Date or in businesses reasonably related or incidental thereto ("Replacement
Assets"), or (C) a combination of prepayment and investment permitted by the
foregoing clauses (iii)(A) and (iii)(B). On the 366th day after an Asset Sale or
such earlier date, if any, as the Board of Directors of the Company or of such
Restricted Subsidiary determines not to apply the Net Cash Proceeds relating to
such Asset Sale as set forth in clauses (iii)(A), (iii)(B) and (iii)(C) of the
next preceding sentence (each, a "Net Proceeds Offer Trigger Date"), such
aggregate amount of Net Cash Proceeds which have not been applied on or before
such Net Proceeds Offer Trigger Date as permitted in clauses (iii)(A), (iii)(B)
and (iii)(C) of the next preceding sentence (each a "Net Proceeds Offer Amount")
shall be applied by the Company or such Restricted Subsidiary to make an offer
to purchase (the "Net Proceeds Offer") on a date (the "Net Proceeds Offer
Payment Date") not less than 30 nor more than 45 days following the applicable
Net Proceeds Offer Trigger Date, from all Holders on a pro rata basis, that
amount of Notes equal to the Net Proceeds Offer Amount at a price equal to 100%
of the principal amount of the Notes to be purchased, plus accrued interest to
the date of purchase; provided, however, that if at any time any non-cash
consideration received by the Company or any Restricted Subsidiary of the
Company, as the case may be, in connection with any Asset Sale is converted into
or sold or otherwise disposed of for cash (other than interest received with
respect to any such non-cash consideration), then such conversion or disposition
shall be deemed to constitute an Asset Sale hereunder and the Net Cash Proceeds
thereof shall be applied in accordance with this covenant. The Company may defer
the Net Proceeds Offer until there is an aggregate unutilized Net Proceeds Offer
Amount equal to or in excess of $10,000,000 resulting from one or more Asset
Sales (at which time, the entire unutilized Net Proceeds Offer Amount, and not
just the amount in excess of $10,000,000, shall be applied as required pursuant
to this paragraph).
In the event of the transfer of substantially all (but not all)
of the property and assets of the Company and its Restricted Subsidiaries as an
entirety to a Person in a transaction permitted under Section 5.01, the
successor corporation shall be deemed to have sold the properties and assets of
the Company and its Restricted Subsidiaries not so transferred for purposes of
this covenant, and shall comply with the provisions of this covenant with
respect to such deemed sale as if it were an Asset Sale. In addition, the fair
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market value of such properties and assets of the Company or its Restricted
Subsidiaries deemed to be sold shall be deemed to be Net Cash Proceeds for
purposes of this covenant.
Notwithstanding the two immediately preceding paragraphs, the
Company and its Restricted Subsidiaries will be permitted to consummate an Asset
Sale without complying with such paragraphs to the extent (i) at least 75% of
the consideration for such Asset Sale constitutes Replacement Assets and (ii)
such Asset Sale is for fair market value; provided, that any consideration not
constituting Replacement Assets received by the Company or any of its Restricted
Subsidiaries in connection with any Asset Sale permitted to be consummated under
this paragraph shall constitute Net Cash Proceeds subject to the provisions of
the two preceding paragraphs.
(b) Each Net Proceeds Offer will be mailed to the record Holders
as shown on the register of Holders within 25 days following the Net Proceeds
Offer Trigger Date, with a copy to the Trustee. A Net Proceeds Offer shall
remain open for a period of 20 business days or such longer period as may be
required by law. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Net Proceeds
Offer and shall state the following terms:
(1) that the Net Proceeds Offer is being made pursuant to
Section 4.16 and that all Notes tendered will be accepted for payment;
provided, however, that if the aggregate principal amount of Notes
tendered in a Net Proceeds Offer plus accrued interest at the expiration
of such offer exceeds the aggregate amount of the Net Proceeds Offer,
the Company shall select the Notes to be purchased on a pro rata basis
(based on amounts tendered) (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000
or multiples thereof shall be purchased);
(2) the purchase price (including the amount of accrued
interest) and the purchase date (which shall be no earlier than 30 days
nor later than 60 days from the date such notice is mailed, other than
as may be required by law) (the "Proceeds Purchase Date");
(3) that any Note not tendered will continue to accrue interest
if interest is then accruing;
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(4) that, unless the Company defaults in making payment
therefor, any Note accepted for payment pursuant to the Net Proceeds
Offer shall cease to accrue interest after the Proceeds Purchase Date;
(5) that Holders electing to have a Note purchased pursuant to a
Net Proceeds Offer will be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, to the Paying Agent at the address specified in the notice
prior to the close of business on the third Business Day prior to the
Proceeds Purchase Date;
(6) that Holders will be entitled to withdraw their election if
the Paying Agent receives, not later than three Business Days preceding
the Proceeds Purchase Date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of the
Notes the Holder delivered for purchase and a statement that such Holder
is withdrawing his election to have such Note purchased; and
(7) that Holders whose Notes were purchased only in part will be
issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered.
On or before the Proceeds Purchase Date, the Company shall (i)
accept for payment Notes or portions thereof tendered pursuant to the Net
Proceeds Offer which are to be purchased in accordance with item (b)(1) above,
(ii) deposit with the Paying Agent U.S. Legal Tender sufficient to pay the
purchase price of all Notes to be purchased and (iii) deliver to the Trustee
Notes so accepted together with an Officers' Certificate stating the Notes or
portions thereof being purchased by the Company. The Paying Agent shall promptly
mail to the Holders of Notes so accepted payment in an amount equal to the
purchase price plus accrued interest, if any, and the Company shall execute and
issue, and the Trustee shall promptly authenticate and mail or deliver to such
Holders new Notes equal in principal amount to any unpurchased portion of the
Notes surrendered. The Company shall publicly announce the results of the Net
Proceeds Offer on or as soon as practicable after the Proceeds Purchase Date.
For purposes of this Section 4.16, the Trustee shall act as the Paying Agent.
If the aggregate purchase price of Notes tendered pursuant to the
Net Proceeds Offer is less than the Net Cash Proceeds allotted to the purchase
of the Notes, the Company may
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apply the remaining Net Cash Proceeds for general corporate purposes.
The agreements governing certain outstanding Senior Debt of the
Company may require that the Company and its Subsidiaries apply all proceeds
from asset sales to repay in full outstanding obligations under such Senior Debt
prior to the application of such proceeds to repurchase outstanding Notes.
The Company will comply with all applicable securities laws in
connection with any Net Proceeds Offer, including Rule l4e-1 under the Exchange
Act. To the extent that the provisions of any securities laws or regulations
conflict with the provisions of this Section 4.16, the Company shall comply with
the applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Section 4.16 by virtue thereof.
SECTION 4.17. Limitation on Preferred Stock of Restricted
Subsidiaries.
The Company shall not permit any of its Restricted Subsidiaries
to issue any Preferred Stock (other than to the Company or to a Wholly Owned
Restricted Subsidiary of the Company) or permit any Person (other than the
Company or a Wholly Owned Restricted Subsidiary of the Company) to own any
Preferred Stock of any Restricted Subsidiary of the Company.
SECTION 4.18. Limitation on Liens.
The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
permit or suffer to exist any Liens of any kind against or upon any property or
assets of the Company or any of its Restricted Subsidiaries whether owned on the
Issue Date or acquired after the Issue Date, or any proceeds therefrom, or
assign or otherwise convey any right to receive income or profits therefrom, to
secure any Indebtedness, unless (i) in the case of Liens securing Indebtedness
that is expressly subordinate or junior in right of payment to the Notes, the
Notes are secured by a Lien on such property, assets or proceeds that is senior
in priority to such Liens and (ii) in all other cases, the Notes are equally and
ratably secured, except for (A) Liens existing as of the Issue Date to the
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extent and in the manner such Liens are in effect on the Issue Date; (B) Liens
securing Senior Debt; (C) Liens securing the Notes; (D) Liens of the Company or
a Wholly Owned Restricted Subsidiary of the Company on assets of any Restricted
Subsidiary of the Company; (E) Liens securing Refinancing Indebtedness which is
incurred to Refinance any Indebtedness which has been secured by a Lien
permitted under this Indenture and which has been incurred in accordance with
the provisions of this Indenture; provided, however, that such Liens (x) are no
less favorable to the Holders and are not more favorable to the lienholders with
respect to such Liens than the Liens in respect of the Indebtedness being
Refinanced and (y) do not extend to or cover any property or assets of the
Company or any of its Restricted Subsidiaries not securing the Indebtedness so
Refinanced; and (F) Permitted Liens.
SECTION 4.19. Conduct of Business.
The Company and its Restricted Subsidiaries shall not engage in
any businesses which are not the same as or similar, reasonably related or
incidental to the businesses in which the Company and its Restricted
Subsidiaries are engaged on the Issue Date.
SECTION 4.20. Limitation of Guarantees by Subsidiaries.
The Company will not permit any Restricted Subsidiary, directly
or indirectly, by way of the pledge of any intercompany note or otherwise, to
assume, guarantee or in any other manner become liable with respect to any
Indebtedness of the Company or any other Subsidiary (other than (A) Indebtedness
and other obligations under the Credit Facility, (B) Permitted Indebtedness of a
Restricted Subsidiary, (C) Indebtedness under Currency Agreements in reliance on
clause (v) of the definition of Permitted Indebtedness or (D) Interest Swap
Obligations incurred in reliance on clause (iv) of the definition of Permitted
Indebtedness), unless, in any such case, such Restricted Subsidiary executes and
delivers a supplemental indenture to this Indenture providing a guarantee of
payment of the Notes by such Restricted Subsidiary (the "Guarantee").
Notwithstanding the foregoing, any such Guarantee by a Restricted
Subsidiary of the Notes shall provide by its terms
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that it shall be automatically and unconditionally released and discharged,
without any further action required on the part of the Trustee or any Holder,
upon: (i) the unconditional release of such Restricted Subsidiary from its
liability in respect of the Indebtedness in connection with which such Guarantee
was executed and delivered pursuant to the preceding paragraph; or (ii) any sale
or other disposition (by merger or otherwise) to any Person which is not a
Restricted Subsidiary of the Company of all of the Company's Capital Stock in,
or all or substantially all of the assets of, such Restricted Subsidiary;
provided, that (a) such sale or disposition of such Capital Stock or assets is
otherwise in compliance with the terms of this Indenture and (b) such
assumption, guarantee or other liability of such Restricted Subsidiary has been
released by the holders of the other Indebtedness so guaranteed.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. When Company May Merge, Etc.
(a) The Company shall not, in a single transaction or series of
related transactions, consolidate or merge with or into any Person, or sell,
assign, transfer, lease, convey or otherwise dispose of (or cause or permit any
Restricted Subsidiary of the Company to sell, assign, transfer, lease, convey or
otherwise dispose of) all or substantially all of the Company's assets
(determined on a consolidated basis for the Company and the Company's Restricted
Subsidiaries) whether as an entirety or substantially as an entirety to any
Person unless: (i) either (1) the Company shall be the surviving or continuing
corporation or (2) the Person (if other than the Company) formed by such
consolidation or into which the Company is merged or the Person which acquires
by sale, assignment, transfer, lease, conveyance or other disposition the
properties and assets of the Company and of the Company's Restricted
Subsidiaries substantially as an entirety (the "Surviving Entity") (x) shall be
a corporation organized and validly existing under the laws of the United States
or any State thereof or the District of Columbia and (y) shall expressly assume,
by supplemental indenture (in form and substance satisfactory to the Trustee),
executed and delivered to the Trustee, the due and punctual payment of the
principal of, and premium, if any, and interest on all of the Notes and the
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performance of every covenant of the Notes, this Indenture and the Registration
Rights Agreement on the part of the Company to be performed or observed; (ii)
immediately after giving effect to such transaction and the assumption
contemplated by clause (i)(2)(y) above (including giving effect to any
Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred in
connection with or in respect of such transaction), the Company or such
Surviving Entity, as the case may be, (1) shall have a Consolidated Net Worth
equal to or greater than the Consolidated Net Worth of the Company immediately
prior to such transaction and (2) shall be able to incur at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) pursuant to Section
4.12; (iii) immediately before and immediately after giving effect to such
transaction and the assumption contemplated by clause (i)(2)(y) above
(including, without limitation, giving effect to any Indebtedness and Acquired
Indebtedness incurred or anticipated to be incurred and any Lien granted in
connection with or in respect of the transaction), no Default or Event of
Default shall have occurred or be continuing; and (iv) the Company or the
Surviving Entity shall have delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger, sale,
assignment, transfer, lease, conveyance or other disposition and, if a
supplemental indenture is required in connection with such transaction, such
supplemental indenture comply with the applicable provisions of this Indenture
and that all conditions precedent in this Indenture relating to such transaction
have been satisfied.
(b) For purposes of clause (a) above, the transfer (by lease,
assignment, sale or otherwise, in a single transaction or series of
transactions) of all or substantially all of the properties or assets of one or
more Restricted Subsidiaries of the Company, the Capital Stock of which
constitutes all or substantially all of the properties and assets of the
Company, shall be deemed to be the transfer of all or substantially all of the
properties and assets of the Company.
SECTION 5.02. Successor Corporation Substituted.
Upon any consolidation, combination or merger or any transfer of
all or substantially all of the assets of the Company in accordance with this
Article Five, in which the Company is not the continuing corporation, the
Surviving Entity formed by such consolidation or into which the Company is
merged or to which such conveyance, lease or transfer is made shall succeed to,
and be substituted for, and may exercise
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every right and power of, the Company under this Indenture and the Notes with
the same effect as if such surviving entity had been named as such, and
thereafter the predecessor corporation shall be relieved of all Obligations and
covenants under this Indenture and the Notes; provided that solely for the
purpose of calculating amounts described in clause (iii) of the first paragraph
of Section 4.10, any such Surviving Entity shall only be deemed to have
succeeded to and be substituted for the Company with respect to the period
subsequent to the effective time of this transaction (and the Company shall be
deemed to be the "Company" for such purposes for all prior periods).
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default.
An "Event of Default" is:
(1) the failure to pay interest on any Notes when the same
becomes due and payable and the default continues for a period of 30
days (whether or not such payment shall be prohibited by Article Ten of
this Indenture);
(2) the failure to pay the principal on any Notes, when such
principal becomes due and payable, at maturity, upon redemption or
otherwise (including the failure to make a payment to purchase Notes
tendered pursuant to a Change of Control Offer or a Net Proceeds Offer)
(whether or not such payment shall be prohibited by Article Ten of this
Indenture);
(3) a default in the observance or performance of any other
covenant or agreement contained in this Indenture which default
continues for a period of 30 days after the Company receives written
notice specifying the default (and demanding that such default be
remedied) from the Trustee or the Holders of at least 25% of the
outstanding principal amount of the Notes (except in the case of a
default with respect to Section 5.01, which will constitute an Event of
Default with such notice requirement but without such passage of time
requirement);
(4) the failure to pay at final maturity (giving effect to any
applicable grace periods and any extensions
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thereof) the principal amount of any Indebtedness of the Company or any
Restricted Subsidiary of the Company and such failure continues for a
period of 20 days or more, or the acceleration of the final stated
maturity of any such Indebtedness (which acceleration is not rescinded,
annulled or otherwise cured within 20 days of receipt by the Company or
such Restricted Subsidiary of notice of any such acceleration) if the
aggregate principal amount of such Indebtedness, together with the
principal amount of any other such Indebtedness in default for failure
to pay principal at final maturity or which has been accelerated, in
each case with respect to which the 20-day period described above has
passed, aggregates $15,000,000 or more at any time;
(5) one or more judgments in an aggregate amount in excess of
$15,000,000 shall have been rendered against the Company or any of its
Significant Subsidiaries and such judgments remain undischarged, unpaid
or unstayed for a period of 60 days after such judgment or judgments
become final and non-appealable;
(6) the Company or any of its Significant Subsidiaries (A)
commences a voluntary case or proceeding under any Bankruptcy Law with
respect to itself, (B) consents to the entry of a judgment, decree or
order for relief against it in an involuntary case or proceeding under
any Bankruptcy Law, (C) consents to the appointment of a Custodian of it
or for substantially all of its property, (D) consents to or acquiesces
in the institution of a bankruptcy or an insolvency proceeding against
it, (E) makes a general assignment for the benefit of its creditors, or
(F) takes any corporate action to authorize or effect any of the
foregoing;
(7) a court of competent jurisdiction enters a judgment, decree
or order for relief in respect of the Company or any of its Significant
Subsidiaries in an involuntary case or proceeding under any Bankruptcy
Law, which shall (A) approve as properly filed a petition seeking
reorganization, arrangement, adjustment or composition in respect of the
Company or any of its Significant Subsidiaries, (B) appoint a Custodian
of the Company or any of its Significant Subsidiaries or for
substantially all of its property or (C) order the winding-up or
liquidation of its affairs; and such judgment, decree or order shall
remain unstayed and in effect for a period of 60 consecutive days; or
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SECTION 6.02. Acceleration.
(a) If an Event of Default (other than an Event of Default
specified in Section 6.01(6) or (7) with respect to the Company) occurs and is
continuing and has not been waived pursuant to Section 6.04, either the Trustee
or the Holders of at least 25% in aggregate principal amount of the Notes then
outstanding, by notice in writing to the Company and the Trustee specifying the
respective Event of Default and that it is a "notice of acceleration" (the
"Acceleration Notice"), may declare the entire principal amount of and accrued
interest on the Notes to be immediately due and payable, and the same (i) shall
become immediately due and payable or (ii) if there are any amounts outstanding
under the Credit Facility, shall become due and payable upon the first to occur
of an acceleration under the Credit Facility, or 5 Business Days after receipt
by the Company and the Representative under the Credit Facility of such
Acceleration Notice (but only if such Event of Default is then continuing). If
an Event of Default specified in Section 6.01(6) or (7) occurs with respect to
the Company, the principal amount of and accrued interest on the Notes shall
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any holder.
(b) At any time after a declaration of acceleration with respect
to the Notes as described in the preceding paragraph, the Holders of a majority
in principal amount of the Notes may rescind and cancel such declaration and its
consequences (i) if the rescission would not conflict with any judgment or
decree, (ii) if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of the
acceleration, (iii) to the extent the payment of such interest is lawful,
interest on overdue installments of interest and overdue principal, which has
become due otherwise than by such declaration of acceleration, has been paid,
(iv) if the Company has paid the Trustee its reasonable compensation and
reimbursed the Trustee for its expenses, disbursements and advances and (v) in
the event of the cure or waiver of an Event of Default of the type described in
clause (6) or (7) of Section 6.01, the Trustee shall have received an Officers'
Certificate and an Opinion of Counsel (which opinion shall be subject to
customary qualifications and assumptions reasonably acceptable to the Trustee)
that such Event of Default has been cured or waived. No such rescission shall
affect any subsequent Default or impair any right consequent thereto.
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SECTION 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of or interest on the Notes or to enforce the performance
of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. No remedy is exclusive of any
other remedy. All available remedies are cumulative to the extent permitted by
law.
SECTION 6.04. Waiver of Past Defaults.
Subject to Sections 2.09, 6.07 and 9.02, the Holders of a
majority in principal amount of the outstanding Notes by notice to the Trustee
may waive any existing Default or Event of Default and its consequences, except
a Default in the payment of principal of or interest on any Note as specified in
clauses (1) and (2) of Section 6.01. When a Default or Event of Default is
waived, it is cured and ceases.
SECTION 6.05. Control by Majority.
Subject to Section 2.09, the Holders of a majority in principal
amount of the outstanding Notes may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on it, including, without limitation, any remedies
provided for in Section 6.03. Subject to Section 7.01, however, the Trustee may
refuse to follow any direction that the Trustee reasonably believes conflicts
with any law or this Indenture, that the Trustee determines may be unduly
prejudicial to the rights of another Holder, or that may involve the Trustee in
personal liability; provided that the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such direction.
SECTION 6.06. Limitation on Suits.
A Holder may not pursue any remedy with respect to this Indenture
or the Notes unless:
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(1) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(2) Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the
remedy;
(3) such Holder or Holders offer to the Trustee indemnity
reasonably satisfactory to the Trustee against any loss, liability or
expense to be incurred in compliance with such request;
(4) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of satisfactory indemnity;
and
(5) during such 60-day period the Holders of a majority in
principal amount of the outstanding Notes do not give the Trustee a
direction which, in the opinion of the Trustee, is inconsistent with the
request.
The foregoing limitations shall not apply to a suit instituted by
a Holder for the enforcement of the payment of principal and premium, if any, or
interest on such Note on or after the respective due dates set forth in such
Note (including upon acceleration thereof); provided that upon institution of
any proceeding or exercise of any remedy, such Holders provide the Trustee with
prompt written notice thereof.
A Holder may not use this Indenture to prejudice the rights of
another Holder or to obtain a preference or priority over such other Holder.
SECTION 6.07. Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture, the right
of any Holder to receive payment of principal of and interest on a Note, on or
after the respective due dates expressed in such Note, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee.
If an Event of Default in payment of principal or interest
specified in clause (1) or (2) of Section 6.01 occurs
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and is continuing, the Trustee may recover judgment in its own name and as
trustee of an express trust against the Company or any other obligor on the
Notes for the whole amount of principal and accrued interest remaining unpaid,
together with interest on overdue principal and, to the extent that payment of
such interest is lawful, interest on overdue installments of interest, in each
case at the rate per annum borne by the Notes, and such further amount as shall
be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
SECTION 6.09. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses, taxes,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceedings relating to the Company or any other
obligor upon the Notes, any of their respective creditors or any of their
respective property and shall be entitled and empowered to collect and receive
any monies or other property payable or deliverable on any such claims and to
distribute the same, and any Custodian in any such judicial proceedings is
hereby authorized by each Holder to make such payments to the Trustee and, in
the event that the Trustee shall consent to the making of such payments directly
to the Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, taxes, disbursements and advances of the Trustee, its
agent and counsel, and any other amounts due the Trustee under Section 7.07. The
Company's payment obligations under this Section 6.09 shall be secured in
accordance with the provisions of Section 7.07 hereunder. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Holder in any such proceeding.
SECTION 6.10. Priorities.
If the Trustee collects any money or property pursuant to this
Article Six, it shall pay out the money in the following order:
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First: to the Trustee for amounts due under Section 7.07;
Second: subject to Article Ten, to Holders for amounts due and
unpaid on the Notes for principal and interest, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Notes for principal and interest, respectively;
Third: subject to Article Ten, to the Company or any other
obligor on the Notes, as their interests may appear, or as a court of
competent jurisdiction may direct.
The Trustee, upon prior notice to the Company, may fix a record
date and payment date for any payment to Holders pursuant to this Section 6.10.
SECTION 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07, or a suit by a Holder or Holders of more than 10% in
principal amount of the outstanding Notes.
SECTION 6.12. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture or any Note 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 the
Company, the Trustee and the Holders shall, subject to any determination in such
proceeding, be restored severally and respectively to their former positions
hereunder, and thereafter all rights and remedies of the Trustee and the Holders
shall continue as though no such proceeding had been instituted.
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ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in its exercise thereof as a
prudent person would exercise or use under the circumstances in the conduct of
his own affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties as are
specifically set forth in this Indenture and the TIA and no others and
no covenants or obligations shall be implied in this Indenture against
the Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this
Indenture. However, in the case of any such certificate or opinion which
by any provision hereof is specifically required to be furnished to the
Trustee, the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture.
(c) Notwithstanding anything to the contrary herein contained,
the Trustee may not be relieved from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b) of
this Section 7.01.
(2) The Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in
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accordance with a direction received by it pursuant to Section 6.02,
6.04 or 6.05.
(d) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(e) Every provision of this Indenture that in any way relates to
the Trustee is subject to paragraphs (a), (b), (c), (d) and (f) of this Section
7.01 and Section 7.02.
(f) The Trustee shall not be liable for interest on any money or
assets received by it except as the Trustee may agree in writing with the
Company. Assets held in trust by the Trustee need not be segregated from other
assets except to the extent required by law.
SECTION 7.02. Rights of Trustee.
Subject to Section 7.01:
(a) The Trustee may rely and shall be fully protected in acting
or refraining from acting upon any document believed by it to be genuine
and to have been signed or presented by the proper Person. The Trustee
need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
consult with counsel and may require an Officers' Certificate or an
Opinion of Counsel, or both, which shall conform to Sections 11.04 and
11.05. The Trustee shall not be liable for any action it takes or omits
to take in good faith in reliance on such Officers' Certificate or
Opinion of Counsel.
(c) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any
attorney or agent appointed with due care.
(d) The Trustee shall not be liable for any action that it takes
or omits to take in good faith which it reasonably believes to be
authorized or within its rights
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or powers.
(e) The Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, notice, request, direction, consent, order, bond,
debenture, or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit.
(f) The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request,
order or direction of any of the Holders pursuant to the provisions of
this Indenture, unless such Holders shall have offered to the Trustee
security or indemnity reasonably satisfactory to the Trustee against the
costs, expenses and liabilities which may be incurred by it in
compliance with such request, order or direction.
(g) The Trustee may consult with counsel and the advice or
opinion of such counsel as to matters of law shall be full and complete
authorization and protection from liability in respect of any action
taken, omitted or suffered by it hereunder in good faith and in
accordance with the advice or opinion of such counsel.
(h) The Trustee shall not be charged with knowledge of any
Defaults or Events of Default unless either (1) a Trust Officer of the
Trustee shall have actual knowledge of such Default or Event of Default
or (2) written notice of such Default or Event of Default shall have
been given to the Trustee by any Holder or by the Company or any other
obligor on the Notes or any holder of Senior Debt or any Representative
thereof.
SECTION 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with the Company, any
Subsidiary of the Company, or their respective Affiliates with the same rights
it would have if it were not Trustee. Any Agent may do the same with like
rights. However, the Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer.
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The Trustee makes no representation as to the validity or
adequacy of this Indenture or the Notes, and it shall not be accountable for the
Company's use of the proceeds from the Notes, and it shall not be responsible
for any statement of the Company in this Indenture or the Notes other than the
Trustee's certificate of authentication.
SECTION 7.05. Notice of Default.
If a Default or an Event of Default occurs and is continuing and
if it is known to the Trustee, the Trustee shall mail to each Holder notice of
the uncured Default or Event of Default within 90 days after such Default or
Event of Default becomes known to the Trustee. Except in the case of a Default
or an Event of Default in payment of principal of, or interest on, any Note, the
Trustee may withhold the notice if and so long as its Board of Directors, the
executive committee of its Board of Directors or a committee of its directors
and/or Trust Officers in good faith determines that withholding the notice is in
the interest of the Holders.
SECTION 7.06. Reports by Trustee to Holders.
Within 60 days after each May 15 following initial issuance, the
Trustee shall, to the extent that any of the events described in TIA Section
313(a) occurred within the previous twelve months, but not otherwise, mail to
each Holder a brief report dated as of such date that complies with TIA Section
313(a). The Trustee also shall comply with TIA Sections 313(b) and (c).
A copy of each report at the time of its mailing to Holders shall
be mailed to the Company and filed with the SEC and each stock exchange, if any,
on which the Notes are listed.
The Company shall promptly notify the Trustee in writing if the
Notes become listed on any stock exchange and the Trustee shall comply with TIA
Section 313(d).
SECTION 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time reasonable
compensation for its services. The Trustee's compensation shall not be limited
by any law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable out-of-pocket expenses
incurred or made by it in connection with the performance of its duties under
this Indenture. Such expenses shall include
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the reasonable fees and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee and its agents,
employees, officers, directors and shareholders for, and hold it harmless
against, any loss, liability or expense incurred by it except for such actions
to the extent caused by any negligence, bad faith or willful misconduct on its
part, arising out of or in connection with the administration of this trust
including the reasonable costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of its
rights, powers or duties hereunder. The Trustee shall notify the Company
promptly of any claim asserted against the Trustee for which it may seek
indemnity. Failure by the Trustee to so notify the Company shall not relieve the
Company of its obligations hereunder. At the Trustee's sole discretion, the
Company shall defend the claim and the Trustee shall provide reasonable
cooperation and may participate at the Company's expense in the defense.
Alternatively, the Trustee may at its option have separate counsel of its own
choosing and the Company shall pay the reasonable fees and expenses of such
counsel; provided that the Company will not be required to pay such fees and
expenses if it assumes the Trustee's defense, there is no conflict of interest
between the Company and the Trustee in connection with such defense as
reasonably determined by the Trustee and no Default or Event of Default has
occurred and is continuing. The Company need not pay for any settlement made
without its written consent, which consent shall not be unreasonably withheld.
The Company need not reimburse any expense or indemnify against any loss or
liability to the extent incurred by the Trustee which is attributable to its
negligence, bad faith or willful misconduct.
To secure the Company's payment obligations in this Section 7.07,
the Trustee shall have a lien prior to the Notes on all assets or money held or
collected by the Trustee, in its capacity as Trustee, except assets or money
held in trust to pay principal of or interest on particular Notes.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(6) or (7) occurs, such expenses and
the compensation for such services are intended to constitute expenses of
administration under any Bankruptcy Law.
The obligations of the Company under this Section 7.07 and any
lien arising hereunder shall survive the
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resignation or removal of the Trustee, the discharge of the Company's
Obligations pursuant to Article Eight or the termination of this Indenture.
SECTION 7.08. Replacement of Trustee.
The Trustee may resign by so notifying the Company in writing,
such resignation to be effective upon the appointment of a successor Trustee.
The Holders of a majority in principal amount of the outstanding Notes may
remove the Trustee by so notifying the Company and the Trustee in writing and
may appoint a successor Trustee with the Company's consent which consent shall
not be unreasonably withheld. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall notify each Holder of
such event and shall promptly appoint a successor Trustee. Within one year after
the successor Trustee takes office, the Holders of a majority in principal
amount of the Notes may appoint a successor Trustee to replace the successor
Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that,
the retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee, subject to the lien provided in Section 7.07, the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. A successor Trustee shall mail notice of its succession to each
Holder.
If a successor Trustee does not take office within 60 days after
the retiring Trustee resigns or is removed, the retiring Trustee, the Company or
the Holders of at least 10% in principal amount of the outstanding Notes may
petition any court of competent jurisdiction for the appointment of a
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successor Trustee.
If the Trustee fails to comply with Section 7.10, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this
Section 7.08, the Company's obligations under Section 7.07 shall continue for
the benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business (including
the trust created under this Indenture) to, another corporation or national
banking association, the resulting, surviving or transferee corporation without
any further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee; provided that such
corporation shall be otherwise qualified and eligible under this Article Seven.
SECTION 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirement of TIA Sections 310(a)(1), (2) and (5). The Trustee (or, in the case
of a corporation included in a bank holding company system, the related bank
holding company) shall have a combined capital and surplus of at least
$100,000,000 as set forth in its most recent published annual report of
condition. In addition, if the Trustee is a corporation included in a bank
holding company system, the Trustee, independently of such bank holding company,
shall meet the capital requirements of TIA Section 310(a)(2). The Trustee shall
comply with TIA Section 310(b); provided, however, that there shall be excluded
from the operation of TIA Section 310(b)(1) any indenture or indentures under
which other securities, or certificates of interest or participation in other
securities, of the Company are outstanding, if the requirements for such
exclusion set forth in TIA Section 310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against Company.
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The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated
therein.
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. Termination of the Company's Obligations.
The Company may terminate its obligations under the Notes and
this Indenture, except those obligations referred to in the penultimate
paragraph of this Section 8.01, if all Notes previously authenticated and
delivered (other than destroyed, lost or stolen Notes which have been replaced
or paid or Notes for whose payment U.S. Legal Tender has theretofore been
deposited with the Trustee or the Paying Agent in trust or segregated and held
in trust by the Company and thereafter repaid to the Company, as provided in
Section 8.05) have been delivered to the Trustee for cancellation and the
Company has paid all sums payable by it hereunder, or if:
(a) either (i) pursuant to Article Three, the Company shall have
given notice to the Trustee and mailed a notice of redemption to each
Holder of the redemption of all of the Notes under arrangements
satisfactory to the Trustee for the giving of such notice or (ii) all
Notes have otherwise become due and payable hereunder;
(b) the Company shall have irrevocably deposited or caused to be
deposited with the Trustee or a trustee satisfactory to the Trustee,
under the terms of an irrevocable trust agreement in form and substance
satisfactory to the Trustee, as trust funds in trust solely for the
benefit of the Holders for that purpose, U.S. Legal Tender in such
amount as is sufficient without consideration of reinvestment of such
interest, to pay principal of, premium, if any, and interest on the
outstanding Notes to maturity or redemption; provided that the Trustee
shall have been irrevocably instructed to apply such U.S. Legal Tender
to the payment of said principal, premium, if any, and interest with
respect to the Notes and, provided, further, that from and after the
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time of deposit, the money deposited shall not be subject to the rights
of holders of Senior Debt pursuant to the provisions of Article Ten;
(c) no Default or Event of Default with respect to this Indenture
or the Notes shall have occurred and be continuing on the date of such
deposit or shall occur as a result of such deposit and such deposit will
not result in a breach or violation of, or constitute a default under,
any other instrument to which the Company is a party or by which it is
bound;
(d) the Company shall have paid all other sums payable by it
hereunder; and
(e) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent providing for the termination of the Company's Obligations
under the Notes and this Indenture have been complied with. Such Opinion
of Counsel shall also state that such satisfaction and discharge does
not result in a default under the Credit Facility (if then in effect) or
any other agreement or instrument then known to such counsel that binds
or affects the Company.
Notwithstanding the foregoing paragraph, the Company's
Obligations in Sections 2.05, 2.06, 2.07, 2.08, 4.01, 4.02, 7.07, 8.05 and 8.06
shall survive until the Notes are no longer outstanding pursuant to the last
paragraph of Section 2.08. After the Notes are no longer outstanding, the
Company's Obligations in Sections 7.07, 8.05 and 8.06 shall survive.
After such delivery or irrevocable deposit, the Trustee upon
request shall acknowledge in writing the discharge of the Company's Obligations
under the Notes and this Indenture except for those surviving Obligations
specified above.
SECTION 8.02. Legal Defeasance and Covenant Defeasance.
(a) The Company may, at its option by Board Resolution of the
Board of Directors of the Company, at any time, elect to have either paragraph
(b) or (c) below be applied to all outstanding Notes upon compliance with the
conditions set forth in Section 8.03.
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(b) Upon the Company's exercise under paragraph (a) hereof of the
option applicable to this paragraph (b), the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.03, be deemed to have been
discharged from its Obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 8.04 hereof and the other Sections of this Indenture
referred to in (i) and (ii) below, and to have satisfied all its other
Obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), and Holders of the Notes and any amounts deposited
under Section 8.03 hereof shall cease to be subject to any Obligations to, or
the rights of, any holder of Senior Debt under Article Ten, or otherwise, except
for the following provisions, which shall survive until otherwise terminated or
discharged hereunder: (i) the rights of Holders of outstanding Notes to receive
solely from the trust fund described in Section 8.04 hereof, and as more fully
set forth in such Section, payments in respect of the principal of, premium, if
any, and interest on such Notes when such payments are due, (ii) the Company's
Obligations with respect to such Notes under Article Two and Section 4.02
hereof, (iii) the rights, powers, trusts, duties and immunities of the Trustee
hereunder and the Company's Obligations in connection therewith and (iv) this
Article Eight. Subject to compliance with this Article Eight, the Company may
exercise its option under this paragraph (b) notwithstanding the prior exercise
of its option under paragraph (c) hereof.
(c) Upon the Company's exercise under paragraph (a) hereof of the
option applicable to this paragraph (c), the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.03 hereof, be released
from its Obligations under the covenants contained in Sections 4.10 through 4.20
and Article Five hereof with respect to the outstanding Notes on and after the
date the conditions set forth below are satisfied (hereinafter, "Covenant
Defeasance"), and the Notes shall thereafter be deemed not "outstanding" for the
purposes of any direction, waiver, consent or declaration or act of Holders (and
the consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for
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accounting purposes) and Holders of the Notes and any amounts deposited under
Section 8.03 hereof shall cease to be subject to any Obligations to, or the
rights of, any holder of Senior Debt under Article Ten or otherwise. For this
purpose, such Covenant Defeasance means that, with respect to the outstanding
Notes, 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 covenant,
whether directly or indirectly, by reason of any reference elsewhere herein to
any such covenant or by reason of any reference in any such covenant to any
other provision herein or in any other document and such omission to comply
shall not constitute a Default or an Event or Default under Section 6.01(3)
hereof, but, except as specified above, the remainder of this Indenture and such
Notes shall be unaffected thereby. In addition, upon the Company's exercise
under paragraph (a) hereof of the option applicable to this paragraph (c),
subject to the satisfaction of the conditions set forth in Section 8.03 hereof,
those events described in Section 6.01 (except those events described in Section
6.01(1), (2), (6) and (7)) shall not constitute Events of Default.
SECTION 8.03. Conditions to Legal Defeasance or Covenant
Defeasance.
The following shall be the conditions to the application of
either Section 8.02(b) or 8.02(c) hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant
Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders, U.S. Legal Tender or U.S.
Government Obligations, or a combination thereof, in such amounts as
will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, premium, if
any, and interest on the Notes on the stated date for payment thereof or
on the applicable redemption date, as the case may be, of such principal
or installment of principal of or interest on the Notes; provided that
the Trustee shall have received an irrevocable written order from the
Company instructing the Trustee to apply such U.S. Legal Tender or the
proceeds of such U.S. Government Obligations to said payments with
respect to the Notes;
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(b) in the case of an election under Section 8.02(b) hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the
United States reasonably acceptable to the Trustee confirming that (A)
the Company has received from, or there has been published by, the
Internal Revenue Service a ruling or (B) since the date of this
Indenture, there has been a change in the applicable United States
federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of the
Notes will not recognize income, gain or loss for United States federal
income tax purposes as a result of such Legal Defeasance and will be
subject to United States federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such
Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.02(c) hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the
United States reasonably acceptable to the Trustee confirming that the
Holders of the Notes will not recognize income, gain or loss for United
States federal income tax purposes as a result of such Covenant
Defeasance and will be subject to United States federal income tax on
the same amounts, in the same manner and at the same times as would have
been the case if such Covenant Defeasance had not occurred;
(d) immediately after giving effect to such deposit on a pro
forma basis, no Default or Event of Default with respect to the Notes
shall have occurred and be continuing on the date of such deposit (other
than a Default or Event of Default resulting from the incurrence of
Indebtedness all or a portion of the proceeds of which will be used to
defease the Notes pursuant to this Article Eight concurrently with such
incurrence) or insofar as Sections 6.01(6) and 6.01(7) hereof are
concerned, at any time in the period ending on the 91st day after the
date of such deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result
in a breach or violation of or constitute a default under this Indenture
(other than a Default or Event of Default resulting from the incurrence
of Indebtedness, all or a portion of the proceeds of which will be used
to defease the Notes) or any other material agreement or instrument to
which the Company or any of
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its Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with
the intent of preferring the Holders over any other creditors of the
Company or with the intent of defeating, hindering, delaying or
defrauding any other creditors of the Company;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the
Covenant Defeasance have been complied with;
(h) the Company shall have delivered to the Trustee an Opinion
of Counsel to the effect that (A) the trust funds will not be subject to
any rights of any holders of Senior Debt, including, without limitation,
those arising under this Indenture and (B) after the 91st day following
the deposit, the trust funds will not be subject to the effect of any
applicable Bankruptcy Law;
(i) The Company shall have paid or duly provided for payment of
all amounts then due to the Trustee pursuant to Section 7.07 hereof; and
(j) No such deposit will result in a Default under this
Indenture (other than a Default or Event of Default resulting from the
incurrence of Indebtedness, all or a portion of the proceeds of which
will be used to defease the Notes) or a breach or violation of, or
constitute a default under, any other instrument or agreement
(including, without limitation, the Credit Facility) to which the
Company or any of its subsidiaries is a party or by which it or its
property is bound.
Notwithstanding the foregoing, the Opinion of Counsel required
by clause (b) or (c) above need not be delivered if all Notes not theretofore
delivered to the Trustee for cancellation (x) have become due and payable, (y)
will become due and payable on the maturity date within one year or (z) 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.
SECTION 8.04. Application of Trust Money.
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The Trustee or Paying Agent shall hold in trust U.S. Legal
Tender or U.S. Government Obligations deposited with it pursuant to Article
Eight, and shall apply the deposited U.S. Legal Tender and the money from U.S.
Government Obligations in accordance with this Indenture to the payment of
principal of and interest on the Notes. The Trustee shall be under no obligation
to invest said U.S. Legal Tender or U.S. Government Obligations except as it may
agree with the Company.
The Company shall pay and indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against the U.S. Legal Tender or U.S.
Government Obligations deposited pursuant to Section 8.03 hereof 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 Eight to the contrary not withstanding,
the Trustee shall deliver or pay to the Company from time to time upon the
Company's request any U.S. Legal Tender or U. S. Government Obligations held by
it as provided in Section 8.03 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, are in excess of the amount
thereof that would then be required to be deposited to effect an equivalent
Legal Defeasance or Covenant Defeasance.
SECTION 8.05. Repayment to the Company
Subject to Article Eight, the Trustee and the Paying Agent shall
promptly pay to the Company upon request any excess U.S. Legal Tender or U.S.
Government Obligations held by them at any time and thereupon shall be relieved
from all liability with respect to such money. The Trustee and the Paying Agent
shall pay to the Company upon request any money held by them for the payment of
principal or interest that remains unclaimed for two years; provided that the
Trustee or such Paying Agent, before being required to make any payment, may at
the expense of the Company cause to be published once in a newspaper of general
circulation in the City of New York or mail to each Holder entitled to such
money notice that such money remains unclaimed and that after a date specified
therein which shall be at least 30 days from the date of such publication or
mailing any unclaimed balance of such money then remaining will be repaid to the
Company. After payment to the Company, Noteholders entitled to such money must
look to the Company for payment as general creditors unless an applicable law
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designates another Person.
SECTION 8.06. Satisfaction and Discharge.
This Indenture will be discharged and will cease to be of
further effect (except as to surviving rights of registration of transfer or
exchange of the Notes, as expressly provided for in this Indenture) as to all
outstanding Notes when (i) either (a) all the Notes theretofore authenticated
and delivered (except lost, stolen or destroyed Notes which have been replaced
or paid and 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) have been delivered to the Trustee
for cancellation or (b) all Notes not theretofore delivered to the Trustee for
cancellation have become due and payable and the Company has irrevocably
deposited or caused to be deposited with the Trustee funds in an amount
sufficient to pay and discharge the entire Indebtedness on the Notes not
theretofore delivered to the Trustee for cancellation, for principal of,
premium, if any, and interest on the Notes to the date of deposit together with
irrevocable instructions from the Company directing the Trustee to apply such
funds to the payment thereof at maturity or redemption, as the case may be; (ii)
the Company has paid all other sums payable under this Indenture by the Company;
and (iii) the Company has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel stating that all conditions precedent under this Indenture
relating to the satisfaction and discharge of this Indenture have been complied
with.
SECTION 8.07. Reinstatement.
If the Trustee or Paying Agent is unable to apply any U.S. Legal
Tender or U.S. Government Obligations in accordance with this Article Eight by
reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company's Obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Article Eight until such time as the Trustee or Paying Agent is permitted to
apply all such U.S. Legal Tender or U.S. Government Obligations in accordance
with Article Eight; provided that if the Company has made any payment of
interest on or principal of any Notes because of the reinstatement of its
Obligations, the Company shall be subrogated to the rights of the Holders of
such Notes to
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receive such payment from the U.S. Legal Tender or U.S. Government Obligations
held by the Trustee or Paying Agent.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders.
The Company, when authorized by a Board Resolution, and the
Trustee, together, may amend or supplement this Indenture or the Notes without
notice to or consent of any Holder:
(1) to cure any ambiguity, defect or inconsistency; provided
that such amendment or supplement does not, in the opinion of the
Trustee, adversely affect the rights of any Holder in any material
respect;
(2) to evidence the assumption of the Obligations hereunder by
any successor corporation in connection with any transaction complying
with Article Five;
(3) to provide for uncertificated Notes in addition to or in
place of certificated Notes;
(4) to comply with any requirements of the SEC in order to
effect or maintain the qualification of this Indenture under the TIA; or
(5) to make any change that would provide any additional benefit
or rights to the Holders or that does not adversely affect the rights of
any Holder;
provided that the Company has delivered to the Trustee an Opinion of Counsel and
an Officers' Certificate stating that such amendment or supplement complies with
the provisions of this Section 9.01.
SECTION 9.02. With Consent of Holders.
Subject to Section 6.07, the Company, when authorized by a Board
Resolution, and the Trustee, together, with the written consent of the Holder or
Holders of at least a majority in aggregate principal amount of the outstanding
Notes, may amend or supplement this Indenture or the Notes without notice
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to any other Holders. Subject to Section 6.07, the Holder or Holders of a
majority in aggregate principal amount of the outstanding Notes may waive
compliance by the Company with any provision of this Indenture or the Notes
without notice to any other Holder. No amendment, supplement or waiver,
including a waiver pursuant to Section 6.04, shall, without the consent of each
Holder of each Note affected thereby:
(1) reduce the principal amount of Notes whose Holders must
consent to an amendment, supplement or waiver of any provision of this
Indenture or the Notes;
(2) reduce the rate of or change or have the effect of changing
the time for payment of interest, including defaulted interest, on any
Notes;
(3) reduce the principal amount of or change or have the effect
of changing the fixed maturity of the Notes, or change the date on which
any Notes may be subject to redemption or repurchase, or reduce the
redemption or repurchase price therefor;
(4) make any changes in provisions concerning waivers of
Defaults or Events of Default by Holders of the Notes or the rights of
Holders to recover the principal of, interest on, premium, if any, or
redemption payment with respect to, any Note;
(5) make the principal of, or the interest on any Note payable
with anything or in any manner other than as provided for in this
Indenture and the Notes as in effect on the date hereof;
(6) make any change in provisions of this Indenture protecting
the right of each Holder to receive payment of principal of and interest
on such Note on or after the due date thereof or to bring suit to
enforce such payment, or permitting Holders of a majority in principal
amount of Notes to waive Defaults or Events of Default;
(7) after the Company's obligation to purchase Notes hereunder,
amend, change or modify in any material respect the obligation of the
Company to make and consummate a Change of Control Offer after the
occurrence of an event which constitutes a Change of Control or make and
consummate a Net Proceeds Offer with respect to any Asset Sale that has
been consummated or modify any of the provisions or definitions with
respect thereto; or
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(8) modify or change any provision of this Indenture or the
related definitions affecting the subordination or ranking of the Notes
in a manner which adversely affects the Holders.
It shall not be necessary for the consent of the Holders under
this Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such supplemental indenture.
SECTION 9.03. Effect on Senior Debt.
No amendment, supplement or waiver of this Indenture shall
adversely affect the rights of any holder of Senior Debt, if any (including
their rights under Article Ten of this Indenture), without the consent of such
holder.
SECTION 9.04. Compliance with TIA.
Every amendment, waiver or supplement of this Indenture or the
Notes shall comply with the TIA as then in effect.
SECTION 9.05. Revocation and Effect of Consents.
Until an amendment, waiver or supplement becomes effective, a
consent to it by a Holder is a continuing consent by the Holder and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder's Note, even if notation of the consent is not made on any
Note. Subject to the following paragraph, any such Holder or subsequent Holder
may revoke the consent as to such Holder's Note or portion of such Note by
written notice to the Trustee or the Company received before the date on which
the Trustee receives an Officers' Certificate certifying that the Holders of the
requisite principal amount of Notes have consented (and not theretofore revoked
such consent) to the amendment, supplement or waiver.
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The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent to any
amendment, supplement or waiver, which record date shall be at least 30 days
prior to the first solicitation of such consent. If a record date is fixed, then
notwithstanding the last sentence of the immediately preceding paragraph, those
Persons who were Holders at such record date (or their duly designated proxies),
and only those Persons, shall be entitled to revoke any consent previously
given, whether or not such Persons continue to be Holders after such record
date. No such consent shall be valid or effective for more than 90 days after
such record date.
After an amendment, supplement or waiver becomes effective, it
shall bind every Holder, unless it makes a change described in any of clauses
(1) through (8) of Section 9.02, in which case, the amendment, supplement or
waiver shall bind only each Holder of a Note who has consented to it and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder's Note; provided that any such waiver shall not impair or
affect the right of any Holder to receive payment of principal of and interest
on a Note, on or after the respective due dates expressed in such Note, or to
bring suit for the enforcement of any such payment on or after such respective
dates without the consent of such Holder.
SECTION 9.06. Notation on or Exchange of Notes.
If an amendment, supplement or waiver changes the terms of a
Note, the Trustee may, at the written direction of the Company, require the
Holder of the Note to deliver it to the Trustee. The Trustee at the written
direction of the Company may place an appropriate notation on the Note about the
changed terms and return it to the Holder. Alternatively, if the Company or the
Trustee so determines, the Company in exchange for the Note shall issue and the
Trustee shall authenticate a new Note that reflects the changed terms. Any such
notation or exchange shall be made at the sole cost and expense of the Company.
Failure to make the appropriate notation or issue a new Note shall not affect
the validity and effect of such amendment, supplement or waiver.
SECTION 9.07. Trustee To Sign Amendments, Etc.
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article Nine; provided
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that the Trustee may, but shall not be obligated to, execute any such amendment,
supplement or waiver which affects the Trustee's own rights, duties or
immunities under this Indenture. The Trustee shall be entitled to receive, if
requested, an indemnity reasonably satisfactory to it and to receive, and shall
be fully protected in relying upon, an Opinion of Counsel and an Officers'
Certificate each stating that the execution of any amendment, supplement or
waiver authorized pursuant to this Article Nine is authorized or permitted by
this Indenture. Such Opinion of Counsel shall not be an expense of the Trustee.
ARTICLE TEN
SUBORDINATION
SECTION 10.01. Notes Subordinated to Senior Debt of the Company.
The Company covenants and agrees and the Trustee and each Holder
of the Notes, by its acceptance thereof, likewise covenants and agrees, that all
Notes shall be issued subject to the provisions of this Article Ten; and the
Trustee and each Person holding any Note, whether upon original issue or upon
transfer, assignment or exchange thereof, accepts and agrees that the payment of
all Obligations on the Notes by the Company shall, to the extent and in the
manner herein set forth, be subordinated in right of payment to the prior
payment in full in cash of all Obligations on Senior Debt; that the
subordination is for the benefit of, and shall be enforceable directly by, the
holders of Senior Debt, and that each holder of Senior Debt whether now
outstanding or hereinafter created, incurred, assumed or guaranteed shall be
deemed to have acquired Senior Debt in reliance upon the covenants and
provisions contained in this Indenture and the Notes.
SECTION 10.02. No Payment on Notes in Certain Circumstances.
(a) If any default occurs and is continuing in the payment when
due, whether at maturity, upon any redemption, by declaration or otherwise, of
any principal of, interest on, unpaid drawings for letters of credit issued in
respect of, or
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regularly accruing fees with respect to, any Senior Debt (a "Payment Default"),
no payment of any kind or character shall be made by or on behalf of the Company
or any other Person on its or their behalf with respect to any Obligations on
the Notes or to acquire any of the Notes for cash or property or otherwise. In
addition, if any event of default other than a Payment Default (a "Non-payment
Default") occurs and is continuing with respect to any Designated Senior Debt,
as such event of default is defined in the instrument creating or evidencing
such Designated Senior Debt, permitting the holders of such Designated Senior
Debt then outstanding to accelerate the maturity thereof and if the
Representative for the respective issue of Designated Senior Debt gives written
notice of the Non-payment Default to the Trustee (a "Default Notice"), then,
unless and until all Non-payment Defaults have been cured or waived or have
ceased to exist or the Trustee receives notice from the Representative for the
respective issue of Designated Senior Debt terminating the Blockage Period (as
defined below), during the 180 days after the delivery of such Default Notice
(the "Blockage Period"), neither the Company nor any other Person on its behalf
shall (x) make any payment of any kind or character with respect to any
Obligations on the Notes or (y) acquire any of the Notes for cash or property or
otherwise. For all purposes of this Section 10.02(a), in no event will a
Blockage Period extend beyond 180 days from the date the payment on the Notes
was due and only one such Blockage Period may be commenced within any 360
consecutive days. No Non-payment Default which existed or was continuing on the
date of the commencement of any Blockage Period with respect to the Designated
Senior Debt shall be, or be made, the basis for commencement of a second
Blockage Period by the Representative of such Designated Senior Debt whether or
not within a period of 360 consecutive days, unless such Non-payment Default
shall have been cured or waived for a period of not less than 90 consecutive
days (it being acknowledged that any subsequent action or any breach of any
financial covenants for a period commencing after the date of commencement of
such Blockage Period, that in either case, would give rise to a Non-payment
Default pursuant to any provisions under which a Non-payment Default previously
existed or was continuing shall constitute a new Non-payment Default for this
purpose).
(b) In the event that, notwithstanding the foregoing, any
payment shall be received by the Trustee or any Holder when such payment is
prohibited by Section 10.02(a), such payment shall be held in trust for the
benefit of, and shall be paid over or delivered to, the holders of Senior Debt
(pro rata to such holders on the basis of the respective amount
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of Senior Debt held by such holders) or their respective Representatives, as
their respective interests may appear. The Trustee shall be entitled to rely on
information regarding amounts then due and owing on the Senior Debt, if any,
received from the holders of Senior Debt (or their Representatives) or, if such
information is not received from such holders or their Representatives, from the
Company and only amounts included in the information provided to the Trustee
shall be paid to the holders of Senior Debt.
Nothing contained in this Article Ten shall limit the right of
the Trustee or the Holders of Notes to take any action to accelerate the
maturity of the Notes pursuant to Section 6.02 or to pursue any rights or
remedies hereunder; provided that all Senior Debt thereafter due or declared to
be due shall first be paid in full in cash or Cash Equivalents before the
Holders are entitled to receive any payment of any kind or character with
respect to the Obligations on the Notes.
SECTION 10.03. Payment Over of Proceeds Upon Dissolution, Etc.
(a) Upon any payment or distribution of assets of the Company of
any kind or character, whether in cash, property or securities, to creditors
upon any total or partial liquidation, dissolution, winding-up, reorganization,
assignment for the benefit of creditors or marshaling of assets of the Company,
or in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to the Company or its property, whether voluntary or
involuntary, all Obligations with respect to all Senior Debt shall first be paid
in full, in cash, or such payment has been duly provided for to the satisfaction
of the holders of Senior Debt, before any payment or distribution of any kind or
character is made on account of any Obligations on the Notes, or for the
acquisition of any of the Notes for cash or property or otherwise; and until all
such Obligations with respect to all Senior Debt are paid in full in cash, any
distribution to which the Holders of the Notes would be entitled but for the
subordination provisions will be made to the holders of Senior Debt as their
interests may appear. Upon any such dissolution, winding-up, liquidation,
reorganization, bankruptcy, insolvency, receivership or similar proceeding or
assignment for the benefit of creditors or marshaling of assets, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, to which the Holders of the Notes or the Trustee under
this Indenture would be entitled, except for the
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provisions hereof, shall be paid by the Company or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other person making such payment or
distribution, or by the Holders of the Notes or by the Trustee under this
Indenture if received by them, directly to the holders of Senior Debt (pro rata
to such holders on the basis of the respective amounts of Senior Debt held by
such holders) or their respective Representatives, or to the trustee or trustees
under any indenture pursuant to which any of such Senior Debt may have been
issued, as their respective interests may appear, for application to the payment
of Senior Debt remaining unpaid until all such Senior Debt has been paid in full
in cash or Cash Equivalents after giving effect to any concurrent payment,
distribution or provision therefor to or for the holders of Senior Debt.
(b) To the extent any payment of Senior Debt (whether by or on
behalf of the Company, as proceeds of security or enforcement of any right of
setoff or otherwise) is declared to be fraudulent or preferential, set aside or
required to be paid to any receiver, trustee in bankruptcy, liquidating trustee,
agent or other similar person under any bankruptcy, insolvency, receivership,
fraudulent conveyance or similar law, then, if such payment is recovered by, or
paid over to, such receiver, trustee in bankruptcy, liquidating trustee, agent
or other similar person, 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.
(c) In the event that, notwithstanding the foregoing, any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, shall be received by the Trustee or any
Holder when such payment or distribution is prohibited by Section 10.03(a), such
payment or distribution shall be held in trust for the benefit of, and shall be
paid over or delivered to, the holders of Senior Debt (pro rata to such holders
on the basis of the respective amount of Senior Debt held by such holders) or
their respective Representatives, or to the trustee or trustees under any
indenture pursuant to which any of such Senior Debt may have been issued, as
their respective interests may appear, for application to the payment of Senior
Debt remaining unpaid until all such Senior Debt has been paid in full in cash
or Cash Equivalents, after giving effect to any concurrent payment, distribution
or provision therefor to or for the holders of such Senior Debt.
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SECTION 10.04. Payments May Be Paid Prior to Dissolution.
Nothing contained in this Article Ten or elsewhere in this
Indenture shall prevent (i) the Company, except under the conditions described
in Sections 10.02 and 10.03, from making payments at any time for the purpose of
making payments of principal of and interest on the Notes, or from depositing
with the Trustee any moneys for such payments, or (ii) in the absence of actual
knowledge of the Trustee that a given payment would be prohibited by Section
10.02 or 10.03, the application by the Trustee of any moneys deposited with it
for the purpose of making such payments of principal of and interest on the
Notes to the Holders entitled thereto unless at least one Business Day prior to
the date upon which such payment would otherwise become due and payable, the
Trustee shall have received the written notice provided for in Section 10.02(a)
or in Section 10.07 (provided that, notwithstanding the foregoing, such
application shall otherwise be subject to the provisions of the first sentence
of Section 10.02(a) and Section 10.03). The Company shall give prompt written
notice to the Trustee of any dissolution, winding-up, liquidation or
reorganization of the Company.
SECTION 10.05. Subrogation.
Subject to the payment in full in cash or Cash Equivalents of
all Senior Debt, the Holders of the Notes shall be subrogated to the rights of
the holders of Senior Debt to receive payments or distributions of cash,
property or securities of the Company applicable to the Senior Debt until the
Notes shall be paid in full; and, for the purposes of such subrogation, no such
payments or distributions to the holders of the Senior Debt by or on behalf of
the Company or by or on behalf of the Holders by virtue of this Article Ten
which otherwise would have been made to the Holders shall, as between the
Company and the Holders of the Notes, be deemed to be a payment by the Company
to or on account of the Senior Debt, it being understood that the provisions of
this Article Ten are and are intended solely for the purpose of defining the
relative rights of the Holders of the Notes, on the one hand, and the holders of
the Senior Debt, on the other hand.
If any payment or distribution to which the Holders would
otherwise have been entitled but for the provisions of this Article Ten shall
have been applied, pursuant to the provisions of this Article Ten, to the
payment of amounts payable under the Senior Debt, then the Holders shall be
<PAGE> 101
-101-
entitled to receive from the holders of such Senior Debt any payments or
distributions received by such holders of Senior Debt in excess of the amount
sufficient to pay all amounts payable under or in respect of the Senior Debt in
full in cash or Cash Equivalents.
SECTION 10.06. Obligations of the Company Unconditional.
Nothing contained in this Article Ten or elsewhere in this
Indenture or in the Notes is intended to or shall impair, as among the Company,
its creditors other than the holders of Senior Debt, and the Holders of the
Notes, the obligation of the Company, which is absolute and unconditional, to
pay to the Holders of the Notes the principal of and any interest on the Notes
as and when the same shall become due and payable in accordance with their
terms, or is intended to or shall affect the relative rights of the Holders of
the Notes and creditors of the Company other than the holders of the Senior
Debt, nor shall anything herein or therein prevent the Holder of any Note or the
Trustee on its behalf from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if any,
in respect of cash, property or securities of the Company received upon the
exercise of any such remedy.
SECTION 10.07. Notice to Trustee; Rights of Trustee and Paying
Agent.
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 pursuant to the provisions of this
Article Ten. Regardless of anything to the contrary contained in this Article
Ten or elsewhere in this Indenture, neither the Trustee nor any Paying Agent
shall be charged with knowledge of the existence of any default or event of
default with respect to any Senior Debt or of any other facts which would
prohibit the making of any payment to or by the Trustee or any Paying Agent
unless and until a Trust Officer of the Trustee shall have received at least two
Business Days before a payment is required to be made, notice in writing from
the Company, or from a holder of Senior Debt or a Representative therefor, and,
prior to the receipt of any such written notice, the Trustee shall be entitled
to assume (in the absence of actual knowledge of a Trust Officer to the
contrary) that no such facts exist.
<PAGE> 102
-102-
In the event that the Trustee determines in good faith that any
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 Ten, the Trustee may request such person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amounts 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 Ten 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 10.08. Reliance on Judicial Order or Certificate of
Liquidating Agent.
Upon any payment or distribution of assets of the Company
referred to in this Article Ten, the Trustee, subject to the provisions of
Article Seven hereof, and the Holders of the Notes shall be entitled to rely
upon any order or decree made by any court of competent jurisdiction in which
bankruptcy, dissolution, winding-up, liquidation or reorganization proceedings
are pending, or upon certificate of the receiver, trustee in bankruptcy,
liquidating trustee, agent or other person making such payment or distribution,
delivered to the Trustee or the Holders of the Notes, for the purpose of
ascertaining the Persons entitled to participate in such distribution, the
holders of the Senior Debt and other Indebtedness of the Company, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article Ten.
SECTION 10.09. Trustee's Relation to Senior Debt.
The Trustee and any agent of the Company or the Trustee shall be
entitled to all the rights set forth in this Article Ten with respect to any
Senior Debt which may at any time be held by it in its individual or any other
capacity to the same extent as any other holder of Senior Debt and nothing in
this Indenture shall deprive the Trustee or any such agent of any of its rights
as such holder.
With respect to the holders of Senior Debt, the Trustee
undertakes to perform or to observe only such of its covenants and Obligations
as are specifically set forth in this
<PAGE> 103
-103-
Article Ten, and no implied covenants or Obligations with respect to the holders
of Senior Debt shall be read into this Indenture against the Trustee. The
Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior
Debt and shall not be liable to any such holders if the Trustee shall pay over
or distribute to or on behalf of Holders or the Company or any other person
money or assets to which any holders of Senior Debt shall be entitled by virtue
of this Article Ten, except if such payment is made as a result of willful
misconduct or gross negligence of the Trustee.
Whenever a distribution is to be made or a notice given to
holders or owners of Senior Debt, the distribution may be made and the notice
given to their Representatives, if any.
SECTION 10.10. Subordination Rights Not Impaired by Acts or
Omissions of the Company or Holders of Senior
Debt.
No right of any present or future holders of any Senior Debt to
enforce subordination as provided herein 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 of this Indenture, regardless of any
knowledge thereof which any such holder may have or otherwise be 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, without incurring
responsibility to the Trustee or the Holders of the Notes and without impairing
or releasing the subordination provided in this Article Ten or the obligations
hereunder of the Holders of the Notes to the holders of the Senior Debt, do any
one or more of the following: (i) change the manner, place or terms of payment
or extend the time of payment of, or renew or alter, Senior Debt, or otherwise
amend or supplement in any manner Senior Debt, or any instrument evidencing the
same or any agreement under which Senior Debt is outstanding; (ii) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Debt; (iii) release any Person liable in any manner
for the payment or collection of Senior Debt; and (iv) exercise or refrain from
exercising any rights against the Company and any other Person.
<PAGE> 104
-104-
SECTION 10.11. Noteholders Authorize Trustee To Effectuate
Subordination of Notes.
Each Holder of Notes by its acceptance of them authorizes and
expressly directs the Trustee on its behalf to take such action as may be
necessary or appropriate to effectuate, as between the holders of Senior Debt
and the Holders of Notes, the subordination provided in this Article Ten, and
appoints the Trustee its attorney-in-fact for such purposes, including, in the
event of any dissolution, winding-up, liquidation or reorganization of the
Company (whether in bankruptcy, insolvency, receivership, reorganization or
similar proceedings or upon an assignment for the benefit of creditors or
otherwise) tending towards liquidation of the business and assets of the
Company, and the filing of a claim for the unpaid balance of its or his Notes
and accrued interest in the form required in those proceedings.
If the Trustee does not file a proper claim or proof of debt in
the form required in such proceeding prior to 30 days before the expiration of
the time to file such claim or claims, then the holders of the Senior Debt or
their Representative are or is hereby authorized to have the right to file and
are or is hereby authorized to file an appropriate claim for and on behalf of
the Holders of said Notes. Nothing herein contained shall be deemed to authorize
the Trustee or the holders of Senior Debt or their Representative to authorize
or consent to or accept or adopt on behalf of any Holders any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee or the holders of
Senior Debt or their Representative to vote in respect of the claim of any
Holder in any such proceeding.
SECTION 10.12. This Article Ten Not To Prevent Events of
Default.
The failure to make a payment on account of principal of or
interest on the Notes by reason of any provision of this Article Ten will not be
construed as preventing the occurrence of a Default or an Event of Default under
Section 6.01.
Nothing contained in this Article Ten shall limit the right of
the Trustee or the Holders of Notes to take any action to accelerate the
maturity of the Notes pursuant to Article Six or to pursue any rights or
remedies hereunder or under
<PAGE> 105
-105-
applicable law, subject to the rights, if any, under this Article Ten of the
holders, from time to time, of Senior Debt.
SECTION 10.13. Trustee's Compensation Not Prejudiced.
Nothing in this Article Ten will apply to amounts due to the
Trustee, in its capacity as such, pursuant to other sections in this Indenture.
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. TIA Controls.
If any provision of this Indenture limits, qualifies, or
conflicts with another provision which is required to be included in this
Indenture by the TIA, the required provision shall control.
SECTION 11.02. Notices.
Any notices or other communications required or permitted
hereunder shall be in writing, and shall be sufficiently given if made by hand
delivery, by private courier service guaranteeing next day delivery, by telex,
by telecopier or registered or certified mail, postage prepaid, return receipt
requested, addressed as follows:
if to the Company:
American Business Information, Inc.
5711 South 86th Circle
P.O. Box 27347
Omaha, Nebraska 68127-0347
Attention: Chief Financial Officer
Telecopy: (402) 331-1505
with a copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: Francis S. Currie
<PAGE> 106
-106-
Telecopy: (650) 493-6811
if to the Trustee:
State Street Bank and Trust Company of California,
N.A.
633 West 5th Street
12th Floor
Los Angeles, California 90071
Attention: Corporate Trust Administration (American Business
Information, Inc./9 1/2% Senior Subordinated Notes
due 2008)
Telecopy: (213) 362-7357
Each of the Company and the Trustee by written notice to each
other such Person may designate additional or different addresses for notices to
such Person. Any notice or communication to the Company or the Trustee shall be
deemed to have been given or made as of the date so delivered if personally
delivered or delivered by private courier service guaranteeing next day
delivery; when answered back, if telexed; when receipt is acknowledged, if
faxed; and five (5) calendar days after mailing if sent by registered or
certified mail, postage prepaid (except that a notice of change of address shall
not be deemed to have been given until actually received by the addressee).
Any notice or communication mailed to a Holder shall be mailed
to such Holder by first class mail or other equivalent means at such Holder's
address as it appears on the registration books of the Registrar and shall be
sufficiently given to such Holder if so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other Holders. If
a notice or communication is mailed to the Company in the manner provided above,
it is duly given, whether or not the addressee receives it. Notices delivered to
the Trustee shall be effective only upon receipt by a Trust Officer.
SECTION 11.03. Communications by Holders with Other Holders.
Holders may communicate pursuant to TIA Section 312(b) with
<PAGE> 107
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other Holders with respect to their rights under this Indenture or the Notes.
The Company, the Trustee, the Registrar and any other Person shall have the
protection of TIA Section 312(c).
SECTION 11.04. Certificate and Opinion as to Conditions
Precedent.
Upon any request or application by the Company to the Trustee to
take any action under this Indenture, the Company shall furnish to the Trustee
upon request:
(1) an Officers' Certificate, in form and substance reasonably
satisfactory to the Trustee, stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with;
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such
counsel, all such conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(3) where applicable, a certificate or opinion by an independent
certified public accountant reasonably satisfactory to the Trustee that
complies with TIA Section 314(c).
SECTION 11.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture, other than the Officers'
Certificate required by Section 4.06, shall include:
(1) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(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
<PAGE> 108
-108-
based;
(3) a statement that, in the opinion of such Person, he has made
such examination or investigation as is reasonably 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 Person, such condition or covenant has been complied with.
SECTION 11.06. Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules in accordance with the
Trustee's customary practices for action by or at a meeting of Holders. The
Paying Agent or Registrar may make reasonable rules for its functions.
SECTION 11.07. Legal Holidays.
A "Legal Holiday" used with respect to a particular place of
payment is a Saturday, a Sunday or a day on which banking institutions in New
York, New York, or the city in which the corporate trust office of the Trustee
at which the trust created by this Indenture is located, or at such place of
payment are not required to be open. If a payment date is a Legal Holiday at
such place, payment may be made at such place on the next succeeding day that is
not a Legal Holiday, and no interest shall accrue for the intervening period.
SECTION 11.08. Governing Law.
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT
TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THE APPLICATION OF
THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. EACH OF THE PARTIES
HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW
YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE.
<PAGE> 109
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SECTION 11.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Company or any of its Subsidiaries. Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.
SECTION 11.10. No Recourse Against Others.
A director, officer, employee, stockholder or incorporator, as
such, of the Company or of the Trustee shall not have any liability for any
Obligations of the Company under the Notes or this Indenture. Each Holder by
accepting a Note waives and releases all such liability. Such waiver and release
are part of the consideration for the issuance of the Notes. This provision does
not affect any possible claims under federal securities laws.
SECTION 11.11. Successors.
All agreements of the Company in this Indenture and the Notes
shall bind their successors. All agreements of the Trustee in this Indenture
shall bind its successors.
SECTION 11.12. Duplicate Originals.
All parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together shall represent
the same agreement.
SECTION 11.13. Severability.
In case any one or more of the provisions in this Indenture or
in the Notes shall be held invalid, illegal or unenforceable, in any respect for
any reason, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions shall not in any way be
affected or impaired thereby, it being intended that all of the provisions
hereof shall be enforceable to the full extent permitted by law.
<PAGE> 110
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, all as of the date first written above.
AMERICAN BUSINESS INFORMATION,
INC.
By:
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A.,
as Trustee
By:
Name:
Title:
<PAGE> 111
EXHIBIT A(1)
[FORM OF INITIAL NOTE]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS
SECURITY EXCEPT (A) TO THE ISSUER THEREOF OR ANY SUBSIDIARY THEREOF, (B) TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) IN A MINIMUM PRINCIPAL AMOUNT OF $250,000, TO AN "ACCREDITED INVESTOR"
(AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) (AN
"ACCREDITED INVESTOR") THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED
ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE FOR
THIS SECURITY), (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (E) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE
TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY IF
THE PROPOSED TRANSFEREE IS AN ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO
SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE ISSUER SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
A.1-115
<PAGE> 112
CUSIP No.:
AMERICAN BUSINESS INFORMATION, INC.
9 1/2% SENIOR SUBORDINATED NOTE DUE 2008
No. $
AMERICAN BUSINESS INFORMATION, INC., a Delaware corporation (the
"Company," which term includes any successor entity), for value received
promises to pay to ___________ or registered assigns, the principal sum of
$_________ Dollars, on June 15, 2008.
Interest Payment Dates: June 15 and December 15
Record Dates: June 1 and December 1
Reference is made to the further provisions of this Note
contained herein, which will for all purposes have the same effect as if set
forth at this place.
A.1-116
<PAGE> 113
IN WITNESS WHEREOF, the Company has caused this Note to be
signed manually or by facsimile by its duly authorized officers.
AMERICAN BUSINESS INFORMATION,
INC.
By:
Name:
Title:
By:
Name:
Dated: [ ], 1998 Title:
Certificate of Authentication
This is one of the 9 1/2% Senior Subordinated Notes due 2008
referred to in the within-mentioned Indenture.
STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A.,
as Trustee
By:
Authorized Signatory
A.1-117
<PAGE> 114
(REVERSE OF SECURITY)
9 1/2% Senior Subordinated Note due 2008
1. Interest. AMERICAN BUSINESS INFORMATION, INC., a Delaware
corporation (the "Company"), promises to pay interest on the principal amount of
this Note at the rate per annum shown above. Interest on the Notes will accrue
from the most recent date on which interest has been paid or, if no interest has
been paid, from June 18, 1998. The Company will pay interest semi-annually in
arrears on each Interest Payment Date, commencing December 15, 1998. Interest
will be computed on the basis of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and on
overdue installments of interest from time to time on demand at the rate borne
by the Notes and on overdue installments of interest (without regard to any
applicable grace periods) to the extent lawful.
2. Method of Payment. The Company shall pay interest on the
Notes (except defaulted interest) to the Persons who are the registered Holders
at the close of business on the Record Date immediately preceding the Interest
Payment Date even if the Notes are canceled on registration of transfer or
registration of exchange after such Record Date. Holders must surrender Notes to
a Paying Agent to collect principal payments. The Company shall pay principal
and interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts ("U.S. Legal Tender"). However,
the Company may pay principal and interest by its check payable in such U.S.
Legal Tender. The Company may deliver any such interest payment to the Paying
Agent or to a Holder at the Holder's registered address.
3. Paying Agent and Registrar. Initially, STATE STREET BANK AND
TRUST COMPANY OF CALIFORNIA, N.A. (the "Trustee") will act as Paying Agent and
Registrar. The Company may change any Paying Agent, Registrar or co-Registrar
without notice to the Holders.
4. Indenture. The Company issued the Notes under an Indenture,
dated as of June 18, 1998 (the "Indenture"), by and among the Company and the
Trustee. Capitalized terms herein are used as defined in this Indenture unless
otherwise defined herein. This Note is one of a duly authorized issue of Initial
Notes of the Company designated as its 9 1/2% Senior Subordinated Notes due 2008
(the "Initial Notes"). The Notes include the Initial Notes, the Private Exchange
Notes (if any) and the
A.1-118
<PAGE> 115
Unrestricted Notes issued in exchange for the Initial Notes pursuant to the
Registration Rights Agreement. The Initial Notes and the Unrestricted Notes are
treated as a single class of securities under the Indenture. The terms of the
Notes include those stated in this Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code Sections
77aaa-77bbbb) (the "TIA"), as in effect on the date of the Indenture.
Notwithstanding anything to the contrary herein, the Notes are subject to all
such terms, and Holders of Notes are referred to the Indenture and said Act for
a statement of them. The Notes are general unsecured Obligations of the Company
limited in aggregate principal amount to $200,000,000. Each Holder, by accepting
a Note, agrees to be bound by all of the terms and provisions of the Indenture,
as the same may be amended from time to time.
5. Subordination. The Notes are subordinated in right of
payment, in the manner and to the extent set forth in the Indenture, to the
prior payment in full in cash of all Senior Debt of the Company, whether
outstanding on the date of the Indenture or thereafter created, incurred,
assumed or guaranteed. Each Holder by its acceptance hereof agrees to be bound
by such provisions and authorizes and expressly directs the Trustee, on its
behalf, to take such action as may be necessary or appropriate to effectuate the
subordination provided for in the Indenture and appoints the Trustee its
attorney-in-fact for such purposes.
6. Redemption Provisions. Except as provided below, the Notes
may not be redeemed prior to June 15, 2003.
(a) Optional Redemption. On or after such date, the Notes may be
redeemed at the option of the Company, at any time as a whole, or from
time to time in part, on not less than 30 nor more than 60 days' notice,
at the following redemption prices (expressed as percentages of
principal amount), plus accrued and unpaid interest (if any) to the date
of redemption, if redeemed during the 12-month period commencing June
15:
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<PAGE> 116
<TABLE>
<CAPTION>
REDEMPTION
PRICE
<S> <C> <C>
2003...................................... 104.750%
2004...................................... 103.167%
2005...................................... 101.583%
2006 and thereafter....................... 100.000%
</TABLE>
(b) Optional Redemption Upon Equity Offerings. Notwithstanding
the foregoing, at any time prior to June 15, 2001, the Company may, at
its option, redeem, in part and from time to time, with the net cash
proceeds of one or more Equity Offerings, up to 35% of the sum of (i)
the initial aggregate principal amount of the Notes originally issued in
the Offering and (ii) the aggregate principal amount of any additional
Notes issued under the Indenture after the Issue Date at a redemption
price equal to 109.500% of the principal amount thereof plus accrued and
unpaid interest thereon, if any, to the redemption date; provided that
at least 65% of the sum of (i) the initial aggregate principal amount of
the Notes issued in the Offering and (ii) the aggregate principal amount
of any additional Notes issued under the Indenture after the Issue Date
remains outstanding immediately after the occurrence of any such
redemption and that any such redemption occurs within 120 days following
the closing of any such Equity Offering.
7. Notice of Redemption. Notice of redemption shall be mailed by
first-class mail at least 30 days but not more than 60 days before the
Redemption Date to each Holder of Notes to be redeemed at its registered
address. Notes in denominations larger than $1,000 may be redeemed in part. If
any Note is to be redeemed in part only, the notice of redemption that relates
to such Note shall state the portion of the principal amount thereof to be
redeemed. A new Note in a principal amount equal to the unredeemed portion
thereof will be issued in the name of the Holder thereof upon cancellation of
the original Note. On and after the Redemption Date, interest will cease to
accrue on Notes or portions thereof called for redemption as long as the Company
has deposited with the Paying Agent funds in satisfaction of the applicable
redemption price pursuant to the Indenture.
Except as set forth in the Indenture, if monies for the
redemption of the Notes called for redemption shall have been deposited with the
Paying Agent for redemption on such Redemption Date, then, unless the Company
defaults in the payment of such Redemption Price plus accrued interest, if any,
A.1-120
<PAGE> 117
the Notes called for redemption will cease to bear interest from and after such
Redemption Date and the only right of the Holders of such Notes will be to
receive payment of the Redemption Price plus accrued interest, if any.
8. Offers to Purchase. Section 4.15 of the Indenture provides
that, upon a Change of Control if the Company does not redeem the Notes, each
holder will have the right, subject to certain conditions set forth in the
Indenture, to require the Company to repurchase such holder's Notes at a price
equal to 101% of the principal amount thereof plus accrued interest to the date
of repurchase. Section 4.16 of the Indenture provides that, after certain Asset
Sales, and subject to further limitations contained therein, the Company will
make an offer to purchase certain amounts of the Notes in accordance with the
procedures set forth in the Indenture.
9. Denominations; Transfer; Exchange. The Notes are in
registered form, without coupons, in denominations of $1,000 and integral
multiples of $1,000. A Holder shall register the transfer or exchange of Notes
in accordance with the Indenture. The Registrar may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and to
pay certain transfer taxes or similar governmental charges payable in connection
therewith as permitted by the Indenture. The Registrar need not register the
transfer of or exchange of any Notes or portions thereof selected for
redemption.
10. Persons Deemed Owners. The registered Holder of a Note shall
be treated as the owner of it for all purposes.
11. Unclaimed Money. If money for the payment of principal or
interest remains unclaimed for two years, the Trustee and the Paying Agent will
pay the money back to the Company. After that, all liability of the Trustee and
such Paying Agent with respect to such money shall cease.
12. Discharge Prior to Redemption or Maturity. If the Company at
any time deposits with the Trustee U.S. Legal Tender or U.S. Government
Obligations sufficient to pay the principal of, premium, if any, and interest on
the Notes to redemption or maturity and complies with the other provisions of
the Indenture relating thereto, the Company will be discharged from certain
provisions of the Indenture and the Notes (including certain covenants, but
excluding its obligation to pay the principal of and interest on the Notes).
13. Amendment; Supplement; Waiver. Subject to certain
exceptions, the Indenture or the may be amended or supplemented with the written
consent of the Holders of at least a majority in aggregate principal amount of
the Notes
A.1-121
<PAGE> 118
then outstanding, and any existing Default or Event of Default or noncompliance
with any provision may be waived with the written consent of the Holders of a
majority in aggregate principal amount of the Notes then outstanding. Without
notice to or consent of any Holder, the parties thereto may amend or supplement
the Indenture or the Notes to, among other things, cure any ambiguity, defect or
inconsistency, provide for uncertificated Notes in addition to or in place of
certificated Notes, or comply with Article Five of the Indenture or make any
other change that does not adversely affect in any material respect the rights
of any Holder of a Note.
14. Restrictive Covenants. The Indenture imposes certain
limitations on the ability of the Company and its Restricted Subsidiaries to,
among other things, incur additional Indebtedness or Liens, make payments in
respect of its Capital Stock or certain Indebtedness, enter into transactions
with Affiliates, create dividend or other payment restrictions affecting
Subsidiaries, incur additional senior subordinated Indebtedness, merge or
consolidate with any other Person, sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its assets or adopt a plan of
liquidation and sell Capital Stock of a Restricted Subsidiary. Such limitations
are subject to a number of important qualifications and exceptions. The Company
must annually report to the Trustee on compliance with such limitations.
15. Successors. When a successor assumes, in accordance with the
Indenture, all the Obligations of its predecessor under the Notes and the
Indenture, the predecessor will be released from those Obligations.
16. Defaults and Remedies. If an Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of Notes then outstanding may declare all the Notes to be due and payable
in the manner, at the time and with the effect provided in the Indenture.
Holders of Notes may not enforce the Indenture or the Notes except as provided
in the Indenture. The Trustee is not obligated to enforce the Indenture or the
Notes unless it has received indemnity reasonably satisfactory to it. The
Indenture permits, subject to certain limitations therein provided, Holders of a
majority in aggregate principal amount of the Notes then outstanding to direct
the Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of Notes notice of any continuing Default or Event of Default (except a
Default in payment of principal or interest) if it determines that withholding
notice is in their interest.
17. Trustee Dealings with Company. The Trustee
A.1-122
<PAGE> 119
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Notes and may otherwise deal with the Company, its
Subsidiaries or their respective Affiliates as if it were not the Trustee.
18. No Recourse Against Others. No stockholder, director,
officer, employee or incorporator, as such, of the Company shall have any
liability for any obligation of the Company under the Notes or the Indenture.
Each Holder of a Note by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
19. Authentication. This Note shall not be valid until the
Trustee or Authenticating Agent manually signs the certificate of authentication
on this Note.
20. Governing Law. The laws of the State of New York shall
govern this Note and the Indenture, without regard to principles of conflict of
laws.
21. Abbreviations and Defined Terms. Customary abbreviations may
be used in the name of a Holder of a Note or an assignee, such as: TEN COM (=
tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
22. CUSIP Numbers. Pursuant to a recommendation promulgated by
the Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Notes as a convenience to the Holders
of the Notes. No representation is made as to the accuracy of such numbers as
printed on the Notes and reliance may be placed only on the other identification
numbers printed hereon.
23. Registration Rights.
Pursuant to the Registration Rights Agreement, the Company will
be obligated to consummate an exchange offer pursuant to which the Holder of
this Note shall have the right to exchange this Note for the Company's 9 1/2%
Senior Subordinated Notes due 2008 which have been registered under the
Securities Act, in like principal amount and having terms identical in all
material respects as this Note (other than as relates to registration rights and
transfer restrictions). The Holders shall be entitled to receive certain
additional interest payments in the event such exchange offer is not consummated
and upon certain other conditions, all pursuant to and in accordance with the
terms of the Registration Right Agreement.
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<PAGE> 120
24. Indenture. Each Holder, by accepting a Note, agrees to be
bound by all of the terms and provisions of the Indenture, as the same may be
amended from time to time.
The Company will furnish to any Holder of a Note upon written
request and without charge a copy of the Indenture, which has the text of this
Note in larger type. Requests may be made to: American Business Information,
Inc., 5711 South 86th Circle, P.O. Box 27347, Omaha, Nebraska 68127-0347 Attn:
Chief Financial Officer.
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<PAGE> 121
ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in the form
below and have your signature guaranteed:
I or we assign and transfer this Note to:
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint , _______ , _______ agent to transfer this Note on the
books of the Company. The agent may substitute another to act for him.
Date: Signed:
(Sign exactly as your name
appears on the other side of
this Note)
Signature Guarantee: Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor
program reasonably acceptable to the Trustee.
In connection with any transfer of this Note occurring prior to
the date which is the earlier of (i) the date of the declaration by the SEC of
the effectiveness of a registration statement under the Securities Act of 1933,
as amended (the "Securities Act") covering resales of this Note (which
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) June 18, 2000, the undersigned confirms that it has not
utilized any general solicitation or general advertising in connection with the
transfer and that this Note is being transferred:
[Check One]
(1) to the Company or a subsidiary thereof; or
(2) pursuant to and in compliance with Rule 144A under the Securities Act;
or
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<PAGE> 122
(3) in a minimum principal amount of $250,000, to an institutional
"accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act) that has furnished to the Trustee a signed
letter containing certain representations and agreements (the form of
which letter can be obtained from the Trustee); or
(4) pursuant to the exemption from registration provided by Rule 144 under
the Securities Act; or
(5) pursuant to an effective registration statement under the Securities
Act; or
(6) pursuant to another available exemption from the registration
requirements of the Securities Act.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Notes evidenced by this certificate in the name of any person other than the
registered Holder thereof; provided that if box (3), (4) or (6) is checked, the
Company or the Trustee may require, prior to registering any such transfer of
the Notes, in its sole discretion, such legal opinions, certifications
(including an investment letter in the case of box (3)) and other information as
the Trustee or the Company has reasonably requested to confirm that such
transfer is being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act.
If none of the foregoing boxes is checked, the Trustee or Registrar
shall not be obligated to register this Note in the name of any person other
than the Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.16 of the Indenture shall have
been satisfied.
Date: Signed:
(Sign exactly as your name
appears on the other side of
this Note)
Signature Guarantee: Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor
program reasonably acceptable to the Trustee.
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
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<PAGE> 123
The undersigned represents and warrants that it is purchasing
this Note for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Date: Signed:
NOTICE: To be executed by
an executive officer
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<PAGE> 124
[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.15 or Section 4.16 of the Indenture, check the appropriate
box:
Section 4.15 [ ]
Section 4.16 [ ]
If you want to elect to have only part of this Note purchased by
the Company pursuant to Section 4.15 or Section 4.16 of the Indenture, state the
amount you elect to have purchased:
$
Dated:
NOTICE: The signature on this assignment must
correspond with the name as it appears upon the
face of the within Note in every particular
without alteration or enlargement or any change
whatsoever and be guaranteed by the endorser's
bank or broker.
Signature Guarantee:
Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor program
reasonably acceptable to the Trustee.
A.1-128
<PAGE> 125
EXHIBIT A(2)
[FORM OF EXCHANGE NOTE]
CUSIP No.:
AMERICAN BUSINESS INFORMATION, INC.
9 1/2% SENIOR SUBORDINATED NOTE DUE 2008
No. $
AMERICAN BUSINESS INFORMATION, INC., a Delaware corporation (the
"Company," which term includes any successor entity), for value received
promises to pay to ___________ or registered assigns, the principal sum of
____________ Dollars, on June 15, 2008.
Interest Payment Dates: June 15 and December 15
Record Dates: June 1 and December 1
Reference is made to the further provisions of this Note
contained herein, which will for all purposes have the same effect as if set
forth at this place.
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<PAGE> 126
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers.
AMERICAN BUSINESS INFORMATION,
INC.
By:
Name:
Title:
By:
Name:
Dated: [ ], 1998 Title:
Certificate of Authentication
This is one of the 9 1/2% Senior Subordinated Notes due 2008
referred to in the within-mentioned Indenture.
STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A.,
as Trustee
By:
Authorized Signatory
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<PAGE> 127
(REVERSE OF SECURITY)
9 1/2% Senior Subordinated Note due 2008
1. Interest. AMERICAN BUSINESS INFORMATION, INC., a Delaware
corporation (the "Company"), promises to pay interest on the principal amount of
this Note at the rate per annum shown above. Interest on the Notes will accrue
from the most recent date on which interest has been paid or, if no interest has
been paid, from June 18, 1998. The Company will pay interest semi-annually in
arrears on each Interest Payment Date, commencing December 15, 1998. Interest
will be computed on the basis of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and on
overdue installments of interest from time to time on demand at the rate borne
by the Notes and on overdue installments of interest (without regard to any
applicable grace periods) to the extent lawful.
2. Method of Payment. The Company shall pay interest on the
Notes (except defaulted interest) to the Persons who are the registered Holders
at the close of business on the Record Date immediately preceding the Interest
Payment Date even if the Notes are canceled on registration of transfer or
registration of exchange after such Record Date. Holders must surrender Notes to
a Paying Agent to collect principal payments. The Company shall pay principal
and interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts ("U.S. Legal Tender"). However,
the Company may pay principal and interest by its check payable in such U.S.
Legal Tender. The Company may deliver any such interest payment to the Paying
Agent or to a Holder at the Holder's registered address.
3. Paying Agent and Registrar. Initially, STATE STREET BANK AND
TRUST COMPANY OF CALIFORNIA, N.A. (the "Trustee") will act as Paying Agent and
Registrar. The Company may change any Paying Agent, Registrar or co-Registrar
without notice to the Holders.
4. Indenture. The Company issued the Notes under an Indenture,
dated as of June 18, 1998 (the "Indenture"), by and among the Company and the
Trustee. Capitalized terms herein are used as defined in the Indenture unless
otherwise defined herein. This Note is one of a duly authorized issue of
Unrestricted Notes of the Company designated as its 9 1/2% Senior Subordinated
Notes due 2008 (the "Unrestricted Notes"). The Notes include the Initial Notes,
the Private Exchange Notes (if any)and the Unrestricted Notes issued in exchange
for the
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<PAGE> 128
Initial Notes pursuant to the Registration Rights Agreement. The Initial Notes
and the Unrestricted Notes are treated as a single class of securities under the
Indenture. The terms of the Notes include those stated in this Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of 1939
(15 U.S. Code Sections 77aaa-77bbbb) (the "TIA"), as in effect on the date of
the Indenture. Notwithstanding anything to the contrary herein, the Notes are
subject to all such terms, and Holders of Notes are referred to the Indenture
and said Act for a statement of them. The Notes are general unsecured
Obligations of the Company limited in aggregate principal amount to
$200,000,000. Each Holder, by accepting a Note, agrees to be bound by all of the
terms and provisions of the Indenture, as the same may be amended from time to
time.
5. Subordination. The Notes are subordinated in right of
payment, in the manner and to the extent set forth in the Indenture, to the
prior payment in full in cash of all Senior Debt of the Company, whether
outstanding on the date of the Indenture or thereafter created, incurred,
assumed or guaranteed. Each Holder by its acceptance hereof agrees to be bound
by such provisions and authorizes and expressly directs the Trustee, on its
behalf, to take such action as may be necessary or appropriate to effectuate the
subordination provided for in the Indenture and appoints the Trustee its
attorney-in-fact for such purposes.
6. Redemption Provisions. Except as provided below, the Notes
may not be redeemed prior to June 15, 2003.
(a) Optional Redemption. On or after such date, the Notes may be
redeemed at the option of the Company, at any time as a whole, or from time to
time in part, on not less than 30 nor more than 60 days' notice, at the
following redemption prices (expressed as percentages of principal amount), plus
accrued and unpaid interest (if any) to the date of redemption (subject to the
rights of holders of record on the relevant record date to receive interest due
on the relevant interest payment date), if redeemed during the 12-month period
commencing June 15:
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<PAGE> 129
<TABLE>
<CAPTION>
REDEMPTION
PRICE
<S> <C>
2003...................................... 104.750%
2004...................................... 103.167%
2005...................................... 101.583%
2006 and thereafter....................... 100.000%
</TABLE>
(b) Optional Redemption Upon Equity Offerings. Notwithstanding
the foregoing, at any time prior to June 15, 2001, the Company may, at its
option, redeem, in part and from time to time, with the net cash proceeds of one
or more Equity Offerings, up to 35% of the sum of (i) the initial aggregate
principal amount of the Notes originally issued in the Offering and (ii) the
aggregate principal amount of any additional Notes issued under the Indenture
after the Issue Date at a redemption price equal to 109.500% of the principal
amount thereof plus accrued and unpaid interest thereon, if any, to the
redemption date; provided that at least 65% of the sum of (i) the initial
aggregate principal amount of the Notes issued in the Offering and (ii) the
aggregate principal amount of any additional Notes issued under the Indenture
after the Issue Date remains outstanding immediately after the occurrence of any
such redemption and that any such redemption occurs within 120 days following
the closing of any such Equity Offering.
7. Notice of Redemption. Notice of redemption shall be mailed by
first-class mail at least 30 days but not more than 60 days before the
Redemption Date to each Holder of Notes to be redeemed at its registered
address. Notes in denominations larger than $1,000 may be redeemed in part. If
any Note is to be redeemed in part only, the notice of redemption that relates
to such Note shall state the portion of the principal amount thereof to be
redeemed. A new Note in a principal amount equal to the unredeemed portion
thereof will be issued in the name of the Holder thereof upon cancellation of
the original Note. On and after the Redemption Date, interest will cease to
accrue on Notes or portions thereof called for redemption as long as the Company
has deposited with the paying agent funds in satisfaction of the applicable
redemption price pursuant to the Indenture.
Except as set forth in the Indenture, if monies for the
redemption of the Notes called for redemption shall have been deposited with the
Paying Agent for redemption on such Redemption Date, then, unless the Company
defaults in the payment of such Redemption Price plus accrued interest, if any,
the Notes called for redemption will cease to bear interest from and after such
Redemption Date and the only right of the Holders of such Notes will be to
receive payment of the
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<PAGE> 130
Redemption Price plus accrued interest, if any.
8. Offers to Purchase. Section 4.15 of the Indenture provides
that, upon a Change of Control if the Company does not redeem the Notes, each
holder will have the right, subject to certain conditions set forth in the
Indenture, to require the Company to repurchase such holder's Notes at a price
equal to 101% of the principal amount thereof plus accrued interest to the date
of repurchase. Section 4.16 of the Indenture provides that, after certain Asset
Sales, and subject to further limitations contained therein, the Company will
make an offer to purchase certain amounts of the Notes in accordance with the
procedures set forth in the Indenture.
9. Denominations; Transfer; Exchange. The Notes are in
registered form, without coupons, in denominations of $1,000 and integral
multiples of $1,000. A Holder shall register the transfer or of exchange Notes
in accordance with the Indenture. The Registrar may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and to
pay certain transfer taxes or similar governmental charges payable in connection
therewith as permitted by the Indenture. The Registrar need not register the
transfer of or exchange of any Notes or portions thereof selected for
redemption.
10. Persons Deemed Owners. The registered Holder of a Note shall
be treated as the owner of it for all purposes.
11. Unclaimed Money. If money for the payment of principal or
interest remains unclaimed for two years, the Trustee and the Paying Agent will
pay the money back to the Company. After that, all liability of the Trustee and
such Paying Agent with respect to such money shall cease.
12. Discharge Prior to Redemption or Maturity. If the Company at
any time deposits with the Trustee U.S. Legal Tender or U.S. Government
Obligations sufficient to pay the principal of, premium, if any, and interest on
the Notes to redemption or maturity and complies with the other provisions of
the Indenture relating thereto, the Company will be discharged from certain
provisions of the Indenture and the Notes (including certain covenants, but
excluding its obligation to pay the principal of and interest on the Notes).
13. Amendment; Supplement; Waiver. Subject to certain
exceptions, the Indenture or the Notes may be amended or supplemented with the
written consent of the Holders of at least a majority in aggregate principal
amount of the Notes then outstanding, and any existing Default or Event of
Default or noncompliance with any provision may be waived with the written
consent of the Holders of a majority in aggregate
A.2-134
<PAGE> 131
principal amount of the Notes then outstanding. Without notice to or consent of
any Holder, the parties thereto may amend or supplement the Indenture or the
Notes to, among other things, cure any ambiguity, defect or inconsistency,
provide for uncertificated Notes in addition to or in place of certificated
Notes, or comply with Article Five of the Indenture or make any other change
that does not adversely affect in any material respect the rights of any Holder
of a Note.
14. Restrictive Covenants. The Indenture imposes certain
limitations on the ability of the Company and its Restricted Subsidiaries to,
among other things, incur additional Indebtedness or Liens, make payments in
respect of its Capital Stock or certain Indebtedness, enter into transactions
with Affiliates, create dividend or other payment restrictions affecting
Subsidiaries, incur additional senior subordinated Indebtedness, merge or
consolidate with any other Person, sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its assets or adopt a plan of
liquidation and sell Capital Stock of a Restricted Subsidiary. Such limitations
are subject to a number of important qualifications and exceptions. The Company
must annually report to the Trustee on compliance with such limitations.
15. Successors. When a successor assumes, in accordance with the
Indenture, all the Obligations of its predecessor under the Notes and the
Indenture, the predecessor will be released from those Obligations.
16. Defaults and Remedies. If an Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of Notes then outstanding may declare all the Notes to be due and payable
in the manner, at the time and with the effect provided in the Indenture.
Holders of Notes may not enforce the Indenture or the Notes except as provided
in the Indenture. The Trustee is not obligated to enforce the Indenture or the
Notes unless it has received indemnity reasonably satisfactory to it. The
Indenture permits, subject to certain limitations therein provided, Holders of a
majority in aggregate principal amount of the Notes then outstanding to direct
the Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of Notes notice of any continuing Default or Event of Default (except a
Default in payment of principal or interest) if it determines that withholding
notice is in their interest.
17. Trustee Dealings with Company. The Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Notes and may otherwise deal with the Company, its Subsidiaries or
their respective
A.2-135
<PAGE> 132
Affiliates as if it were not the Trustee.
18. No Recourse Against Others. No stockholder, director,
officer, employee or incorporator, as such, of the Company shall have any
liability for any obligation of the Company under the Notes or the Indenture.
Each Holder of a Note by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
19. Authentication. This Note shall not be valid until the
Trustee or Authenticating Agent manually signs the certificate of authentication
on this Note.
20. Governing Law. The laws of the State of New York shall
govern this Note and the Indenture, without regard to principles of conflict of
laws.
21. Abbreviations and Defined Terms. Customary abbreviations may
be used in the name of a Holder of a Note or an assignee, such as: TEN COM (=
tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
22. CUSIP Numbers. Pursuant to a recommendation promulgated by
the Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Notes as a convenience to the Holders
of the Notes. No representation is made as to the accuracy of such numbers as
printed on the Notes and reliance may be placed only on the other identification
numbers printed hereon.
23. Indenture. Each Holder, by accepting a Note, agrees to be
bound by all of the terms and provisions of the Indenture, as the same may be
amended from time to time.
The Company will furnish to any Holder of a Note upon written
request and without charge a copy of the Indenture, which has the text of this
Note in larger type. Requests may be made to: American Business Information,
Inc., 5711 South 86th Circle, P.O. Box 27347, Omaha, Nebraska 68127-0347 Attn:
Chief Executive Officer.
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<PAGE> 133
ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in the form
below and have your signature guaranteed:
I or we assign and transfer this Note to:
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint, _______________, _______________ agent to transfer
this Note on the books of the Company. The agent may substitute another to act
for him.
Date: Signed:
(Sign exactly as your name
appears on the other side of
this Note)
Signature Guarantee: Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor program
reasonably acceptable to the Trustee.
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<PAGE> 134
[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.15 or Section 4.16 of the Indenture, check the appropriate
box:
Section 4.15 [ ]
Section 4.16 [ ]
If you want to elect to have only part of this Note purchased by
the Company pursuant to Section 4.15 or Section 4.16 of the Indenture, state the
amount you elect to have purchased:
$
Dated:
NOTICE: The signature on this assignment must
correspond with the name as it appears upon the
face of the within Note in every particular
without alteration or enlargement or any change
whatsoever and be guaranteed by the endorser's
bank or broker.
Signature Guarantee:
Participant in a recognized Signature Guarantee Medallion
Program (or other signature guarantor program reasonably
acceptable to the Trustee.
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<PAGE> 135
EXHIBIT B
FORM OF LEGEND FOR GLOBAL NOTES
Any Global Note authenticated and delivered hereunder shall bear
a legend (which would be in addition to any other legends required in the case
of a Restricted Security) in substantially the following form:
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 OF A DEPOSITARY OR A SUCCESSOR DEPOSITARY. THIS NOTE IS NOT
EXCHANGEABLE FOR NOTES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITARY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER OF
THIS NOTE AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR
BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF
THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE INDENTURE.
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.
B-139
<PAGE> 136
EXHIBIT C
Form of Certificate To Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
-----------, ----
STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A.
633 West 5th Street
12th Floor
Los Angeles, California 90071
Attention: Corporate Trust Administration
Re: AMERICAN BUSINESS INFORMATION, INC.
(the "Company")
9 1/2% Senior Subordinated
Notes due 2008 (the "Notes")
Ladies and Gentlemen:
In connection with our proposed purchase of $_______ aggregate
principal amount of the Notes, we confirm that:
1. We have received a copy of the Offering Memorandum (the
"Offering Memorandum"), dated [ ], 1998, relating to the Notes and such other
information as we deem necessary in order to make our investment decision. We
acknowledge that we have read and agreed to the matters stated on pages
(i)-(iii) of the Offering Memorandum and in the section entitled "Transfer
Restrictions" of the Offering Memorandum, including the restrictions on
duplication and circulation of the Offering Memorandum.
2. We understand that any subsequent transfer of the Notes is
subject to certain restrictions and conditions set forth in the Indenture dated
as of [ ], 1998 relating to the Notes (the "Indenture") and the undersigned
agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes
except in compliance with, such restrictions and conditions and the Securities
Act of 1933, as amended (the "Securities Act").
3. We understand that the offer and sale of the Notes have not
been registered under the Securities Act, and that the Notes may not be offered
or sold within the United States or to, or for the account or benefit of,
Persons except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as
C-140
<PAGE> 137
hereinafter stated, that if we should sell or otherwise transfer any Notes we
will do so only (i) to the Company or any subsidiary thereof, (ii) in accordance
with Rule 144A under the Securities Act to a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act), (iii) to an institutional
"accredited investor" (as defined below) that, prior to such transfer, furnishes
(or has furnished on its behalf by a U.S. broker-dealer) to you a signed letter
containing certain representations and agreements relating to the restrictions
on transfer of the Notes, substantially in the form of this letter, (iv)
pursuant to the exemption from registration provided by Rule 144 under the
Securities Act (if available), or (v) pursuant to an effective registration
statement under the Securities Act, and we further agree to provide to any
person purchasing any of the Notes from us a notice advising such purchaser that
resales of the Notes are restricted as stated herein.
4. We are not acquiring the Notes for or on behalf of, and will
not transfer the Notes to, any pension or welfare plan (as defined in Section 3
of the Employee Retirement Income Security Act of 1974), except as permitted in
the section entitled "Transfer Restrictions" of the Offering Memorandum.
5. We understand that, on any proposed resale of any Notes, we
will be required to furnish to you and the Company such certification, legal
opinions and other information as you and the Company may reasonably require to
confirm that the proposed sale complies with the foregoing restrictions. We
further understand that the Notes purchased by us will bear a legend to the
foregoing effect.
6. We are an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Notes, and
we and any accounts for which we are acting are each able to bear the economic
risk of our or their investment, as the case may be.
C-141
<PAGE> 138
7. We are acquiring the Notes purchased by us for our own
account or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion.
You, the Company and the Initial Purchasers (as defined in the
Offering Memorandum) are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceedings or official inquiry with respect to the
matters covered hereby.
Very truly yours,
[Name of Transferee]
By:
Authorized Signature
C-142
<PAGE> 1
REGISTRATION RIGHTS AGREEMENT
Dated as of June 18, 1998
by and among
AMERICAN BUSINESS INFORMATION, INC.
and
BT ALEX. BROWN INCORPORATED
GOLDMAN, SACHS & CO.
and
HAMBRECHT & QUIST LLC
as Initial Purchasers
--------------------------
US$115,000,000
9 1/2% SENIOR SUBORDINATED NOTES DUE 2008
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
1. Definitions...................................................................................... 1
2. Exchange Offer................................................................................... 4
3. Shelf Registration............................................................................... 6
4. Additional Interest.............................................................................. 7
5. Registration Procedures.......................................................................... 9
6. Registration Expenses............................................................................ 15
7. Indemnification.................................................................................. 15
8. Rules 144 and 144A............................................................................... 18
9. Underwritten Registrations....................................................................... 18
10. Miscellaneous.................................................................................... 18
</TABLE>
-2-
<PAGE> 3
<TABLE>
<CAPTION>
Page
<S> <C> <C>
(a) Remedies..................................................................................... 18
(b) No Inconsistent Agreements................................................................... 18
(c) Adjustments Affecting Registrable Notes...................................................... 19
(d) Amendments and Waivers....................................................................... 19
(e) Notices ..................................................................................... 19
(f) Successors and Assigns....................................................................... 20
(g) Counterparts................................................................................. 20
(h) Headings..................................................................................... 20
(i) Governing Law................................................................................ 20
(j) Severability................................................................................. 20
(k) Notes Held by an Issuer or its Affiliates.................................................... 21
(l) Third Party Beneficiaries.................................................................... 21
(m) Entire Agreement............................................................................. 21
(n) Agent for Service; Submission to Jurisdiction; Waiver of Immunities.......................... 21
(o) Judgment Currency............................................................................ 21
</TABLE>
-3-
<PAGE> 4
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and
entered into as of June 18, 1998, by and among American Business Information,
Inc., a Delaware corporation (the "Company") and BT Alex. Brown Incorporated,
Goldman, Sachs & Co. and Hambrecht & Quist LLC (the "Initial Purchasers").
This Agreement is entered into in connection with the Purchase
Agreement, dated as of June 12, 1998, by and among the Company and the Initial
Purchasers (the "Purchase Agreement") relating to the sale by the Company to the
Initial Purchasers of US$115,000,000 aggregate principal amount of the Company's
9 1/2% Senior Subordinated Notes due 2008 (the "Notes"). In order to induce the
Initial Purchasers to enter into the Purchase Agreement, the Issuer (as defined)
has agreed to provide the registration rights set forth in this Agreement for
the benefit of the holders of Registrable Notes (as defined), including, without
limitation, the Initial Purchasers. The execution and delivery of this Agreement
is a condition to the Initial Purchasers' obligation to purchase the Notes under
the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the
following meanings:
Additional Interest: See Section 4(a).
Advice: See the last paragraph of Section 5.
Agreement: See the first introductory paragraph to this Agreement.
Applicable Period: See Section 2(b).
Business Day: A day that is not a Saturday, a Sunday, or a day on
which banking institutions in New York, New York are required to be closed.
Closing Date: The Closing Date as defined in the Purchase Agreement.
Commission: The Securities and Exchange Commission.
Company: See the first introductory paragraph to this Agreement.
Effectiveness Date: The 150th day after the Issue Date.
Effectiveness Period: See Section 3(a).
Event Date: See Section 4(b).
Exchange Act: The Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
<PAGE> 5
-5-
Exchange Notes: See Section 2(a).
Exchange Offer: See Section 2(a).
Exchange Registration Statement: See Section 2(a).
Filing Date: The 60th day after the Issue Date, or if the 60th day
is not a business day the first business day thereafter (regardless of whether
the actual filing precedes such date).
Holder: Any registered holder of Registrable Notes.
Indemnified Person: See Section 7(c).
Indemnifying Person: See Section 7(c).
Indenture: The Indenture, dated as of June , 1998, by and between
the Company and State Street Bank and Trust Company of California, N.A., as
trustee, pursuant to which the Notes are being issued, as amended or
supplemented from time to time in accordance with the terms thereof.
Initial Purchasers: See the first introductory paragraph to this
Agreement.
Initial Shelf Registration: See Section 3(a).
Inspectors: See Section 5(o).
Issue Date: The date on which the original Notes were sold to the
Initial Purchasers pursuant to the Purchase Agreement.
Issuer: The Company.
NASD: National Association of Securities Dealers, Inc.
Notes: See the second introductory paragraph to this Agreement.
Participant: See Section 7(a).
Participating Broker-Dealer: See Section 2(b).
Person: Any individual, corporation, partnership, limited liability
company, joint venture, association, joint stock company, trust, unincorporated
organization or government (including any agency or political subdivision
thereof).
Private Exchange: See Section 2(b).
Private Exchange Notes: See Section 2(b).
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously
<PAGE> 6
-6-
omitted from a prospectus filed as part of an effective registration statement
in reliance upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Notes covered by such Registration
Statement, and all other amendments and supplements to the Prospectus, including
post-effective amendments, and all material incorporated by reference or deemed
to be incorporated by reference in such Prospectus.
Purchase Agreement: See the second introductory paragraph to this
Agreement.
Records: See Section 5(o).
Registrable Notes: Each Note upon original issuance thereof and at
all times subsequent thereto, each Exchange Note as to which Section 2(c)(iv)
hereof is applicable upon original issuance thereof and at all times subsequent
thereto and each Private Exchange Note (if any) upon original issuance thereof
and at all times subsequent thereto, until, in the case of any such Note,
Exchange Note or Private Exchange Note, as the case may be, the earliest to
occur of (i) a Registration Statement (other than, with respect to any Exchange
Note as to which Section 2(c)(iv) hereof is applicable) covering such Note,
Exchange Note or Private Exchange Note, as the case may be, has been declared
effective by the Commission and such Note, Exchange Note or Private Exchange
Note, as the case may be, has been disposed of in accordance with such effective
Registration Statement, (ii) such Note, Exchange Note or Private Exchange Note,
as the case may be, is sold in compliance with Rule 144, or is saleable pursuant
to Rule 144(k) under the Securities Act (iii) in the case of any Note, such Note
has been exchanged pursuant to the Exchange Offer for an Exchange Note or
Exchange Notes which may be resold without restriction under federal securities
laws, or (iv) such Note, Exchange Note or Private Exchange Note, as the case may
be, ceases to be outstanding for purposes of the Indenture.
Registration Statement: Any registration statement of the Company,
including, but not limited to, the Exchange Registration Statement, that covers
any of the Registrable Notes pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such registration
statement, including post-effective amendments, all exhibits, and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.
Rule 144: Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the Commission providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
Rule 144A: Rule 144A under the Securities Act, as such Rule may be
amended from time to time, or any similar rule (other than Rule 144) or
regulation hereafter adopted by the Commission.
Rule 415: Rule 415 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the Commission.
Securities Act: The Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
Shelf Notice: See Section 2(c).
Shelf Registration: See Section 3(b).
<PAGE> 7
-7-
Subsequent Shelf Registration: See Section 3(b).
TIA: The Trust Indenture Act of 1939, as amended.
Trustee: The trustee under the Indenture and, if existent, the
trustee under any indenture governing the Exchange Notes and Private Exchange
Notes (if any).
Underwritten registration or underwritten offering: A registration
in which securities of the Issuer are sold to an underwriter for reoffering to
the public.
2. Exchange Offer
(a) The Issuer agrees to file with the Commission no later than
the Filing Date, a Registration Statement with respect to an offer to exchange
(the "Exchange Offer") any and all of the Registrable Notes (other than Private
Exchange Notes, if any) for a like aggregate principal amount of debt securities
of the Issuer which are identical in all material respects to the Notes (the
"Exchange Notes") (and which are entitled to the benefits of the Indenture or a
trust indenture which is identical in all material respects to the Indenture
(other than such changes to the Indenture or any such identical trust indenture
as are necessary to comply with any requirements of the Commission to effect or
maintain the qualification thereof under the TIA) and which, in either case, has
been qualified under the TIA), except that the Exchange Notes shall have been
registered pursuant to an effective Registration Statement under the Securities
Act and shall contain no restrictive legend thereon. Interest on the Exchange
Notes will accrue from (A) the later of (i) the last interest payment date on
which interest was paid on the Notes surrendered in exchange therefor or (ii) if
the Notes are surrendered for exchange on a date in a period which includes the
record date for an interest payment date to occur on or after the date of such
exchange and as to which interest will be paid, the date of such interest
payment date or (B) if no interest has been paid on the Notes from the Issue
Date. The Exchange Offer shall be registered under the Securities Act on the
appropriate form (the "Exchange Registration Statement") and shall comply with
all applicable tender offer rules and regulations under the Exchange Act. The
Issuer agrees to use its best efforts to (x) cause the Exchange Registration
Statement to be declared effective under the Securities Act on or before the
Effectiveness Date; (y) keep the Exchange Offer open for at least 20 days (or
longer if required by applicable law) after the date that notice of the Exchange
Offer is first mailed to Holders; and (z) consummate the Exchange Offer on or
prior to the 45th day following the date on which the Exchange Registration
Statement is declared effective. If after such Exchange Registration Statement
is initially declared effective by the Commission, the Exchange Offer or the
issuance of the Exchange Notes thereunder is interfered with by any stop order,
injunction or other order or requirement of the Commission or any other
governmental agency or court, such Exchange Registration Statement shall be
deemed not to have become effective for purposes of this Agreement. Each Holder
who participates in the Exchange Offer will be required to represent that any
Exchange Notes received by it will be acquired in the ordinary course of its
business, that at the time of the consummation of the Exchange Offer such Holder
will have no arrangement or understanding with any Person to participate in the
distribution of the Exchange Notes, that such Holder is not an affiliate of the
Issuer within the meaning of Rule 405 promulgated under the Securities Act, or
if it is an affiliate, that it will comply with the registration and prospectus
delivery requirements of the Securities Act, to the extent applicable, and any
additional representations that in the written opinion of counsel to the Company
are necessary under then-existing interpretations of the Commission in order for
the Exchange Registration Statement to be declared effective. Upon consummation
of the Exchange Offer in accordance with this Section 2, the provisions of this
Agreement shall continue to apply, mutatis mutandis, solely with respect to
Registrable Notes that are Private Exchange Notes (if any) and Exchange Notes
held by Participating Broker-Dealers, and the Issuer shall have no further
obligation to register Registrable Notes (other than Private Exchange Notes (if
any) and other than in
<PAGE> 8
-8-
respect of any Exchange Notes as to which clause 2(c)(iv) hereof applies)
pursuant to Section 3 of this Agreement.
(b) The Issuer shall include within the Prospectus contained in
the Exchange Registration Statement a section entitled "Plan of Distribution,"
reasonably acceptable to the Initial Purchasers, which shall contain a summary
statement of the positions taken or policies made by the Staff of the Commission
with respect to the potential "underwriter" status of any broker-dealer that is
the beneficial owner (as defined in Rule 13d-3 promulgated under the Exchange
Act) of Exchange Notes received by such broker-dealer in the Exchange Offer (a
"Participating Broker-Dealer"), whether such positions or policies have been
publicly disseminated by the Staff of the Commission or such positions or
policies, in the reasonable judgment of the Initial Purchasers, represent the
prevailing views of the Staff of the Commission. Such "Plan of Distribution"
section shall also allow, to the extent permitted by applicable policies and
regulations of the Commission, the use of the Prospectus by all Persons subject
to the prospectus delivery requirements of the Securities Act, including, to the
extent so permitted, all Participating Broker-Dealers, and include a statement
describing the manner in which Participating Broker-Dealers may resell the
Exchange Notes.
The Issuer shall use its best efforts to keep the Exchange
Registration Statement effective and to amend and supplement the Prospectus
contained therein, in order to permit such Prospectus to be lawfully delivered
by all Persons subject to the prospectus delivery requirements of the Securities
Act for such period of time as such Persons must comply with such requirements
in connection with offers and sales of the Exchange Notes, provided that such
period shall not exceed 180 days (or such longer period if extended pursuant to
the last paragraph of Section 5) (the "Applicable Period").
If, upon consummation of the Exchange Offer, any Initial Purchaser
holds any Notes acquired by it and having the status of an unsold allotment in
the initial distribution, the Issuer, if permitted under the Securities Act and
upon the request of any such Initial Purchaser shall, simultaneously with the
delivery of the Exchange Notes in the Exchange Offer, issue and deliver to such
Initial Purchaser, in exchange (the "Private Exchange") for the Notes held by
such Initial Purchaser, a like principal amount of debt securities of the
Company that are identical in all material respects to the Exchange Notes except
for the existence of restrictions on transfer thereof under the Securities Act
and securities laws of the several states of the U.S. (the "Private Exchange
Notes") (and which are issued pursuant to the same indenture as the Exchange
Notes). If possible, the Private Exchange Notes shall bear the same CUSIP number
as the Exchange Notes. Interest on the Exchange Notes and Private Exchange Notes
will accrue from (A) the later of (i) the last interest payment date on which
interest was paid on the Notes surrendered in exchange therefor or (ii) if the
Notes are surrendered for exchange on a date in a period which includes the
record date for an interest payment date to occur on or after the date of such
exchange and as to which interest will be paid, the date of such interest
payment date or (B), if no interest has been paid on the Notes, from the Issue
Date.
In connection with the Exchange Offer, the Issuer shall:
(1) mail to each Holder a copy of the Prospectus forming part of
the Exchange Registration Statement, together with an appropriate letter
of transmittal and related documents;
(2) utilize the services of a depositary for the Exchange Offer
with an address in the Borough of Manhattan, The City of New York, which
may be the Trustee or an affiliate thereof; and
(3) permit Holders to withdraw tendered Registrable Notes at any
time prior to the close of business, New York time, on the last Business
Day on which the Exchange Offer shall remain open;
<PAGE> 9
-9-
and
As soon as practicable after the close of the Exchange Offer or the
Private Exchange (if any), as the case may be, the Issuer shall:
(1) accept for exchange all Registrable Notes validly tendered and
not validly withdrawn pursuant to the Exchange Offer or the Private
Exchange;
(2) deliver to the Trustee for cancellation all Registrable Notes
so accepted for exchange; and
(3) cause the Trustee to authenticate and deliver promptly to each
Holder tendering such Registrable Notes, Exchange Notes or Private
Exchange Notes, as the case may be, equal in principal amount to the Notes
of such Holder so accepted for exchange.
The Exchange Notes and the Private Exchange Notes may be issued
under (i) the Indenture or (ii) an indenture identical in all material respects
to the Indenture, which in either event will provide that the Exchange Notes
will not be subject to the transfer restrictions set forth in the Indenture and
that the Exchange Notes, the Private Exchange Notes and the Notes, if any, will
vote and consent together on all matters as one class and that none of the
Exchange Notes, the Private Exchange Notes or the Notes, if any, will have the
right to vote or consent as a separate class on any matter.
(c) If, (i) because of any change in law or in currently
prevailing interpretations of the staff of the Commission, the Company is not
permitted to effect an Exchange Offer, (ii) the Exchange Offer is not
consummated within 195 days of the Issue Date, (iii) any holder of Private
Exchange Notes so requests in writing to the Company or (iv) in the case of any
Holder that participates in the Exchange Offer (and tenders its Registrable
Notes prior to the expiration thereof), such Holder does not receive Exchange
Notes on the date of the exchange that may be sold without restriction under
federal securities laws (other than due solely to the status of such Holder as
an affiliate of any Issuer within the meaning of the Securities Act) and so
notifies the Company within 30 days following the consummation of the Exchange
Offer (and providing a reasonable basis for its conclusions), in the case of
each of clauses (i)-(iv), then the Issuer shall promptly deliver to the Holders
and the Trustee written notice thereof (the "Shelf Notice") and shall file a
Shelf Registration pursuant to Section 3.
3. Shelf Registration
If a Shelf Notice is delivered as contemplated by Section 2(c),
then:
(a) Shelf Registration. The Issuer shall promptly file with the
Commission a Registration Statement for an offering to be made on a continuous
basis pursuant to Rule 415 covering all of the Registrable Notes (the "Initial
Shelf Registration"). If the Issuer shall not have yet filed the Exchange
Registration Statement, the Issuer shall file with the Commission the Initial
Shelf Registration on or prior to the Filing Date and shall use its best efforts
to cause such Initial Shelf Registration to be declared effective under the
Securities Act on or prior to the Effectiveness Date. Otherwise, the Issuer
shall file with the Commission the Initial Shelf Registration within 30 days of
the delivery of the Shelf Notice and the Issuer shall use its best efforts to
cause
<PAGE> 10
-10-
such Shelf Registration to be declared effective under the Securities Act as
soon as practicable, and in no event later than 90 days after the filing of the
Initial Shelf Registration. The Initial Shelf Registration shall be on Form S-3
or another appropriate form permitting registration of such Registrable Notes
for resale by Holders in the manner or manners designated by them (including,
without limitation, one or more underwritten offerings). The Issuer shall not
permit any securities other than the Registrable Notes to be included in any
Shelf Registration. The Issuer shall use its best efforts to keep the Initial
Shelf Registration continuously effective under the Securities Act until the
date which is 24 months from the Issue Date (or, if Rule 144(k) under the
Securities Act is amended to permit unlimited resales by non-affiliates within a
lesser period, such lesser period) (subject to extension pursuant to the last
paragraph of Section 5 hereof) (the "Effectiveness Period") or such shorter
period ending when (i) all Registrable Notes covered by the Initial Shelf
Registration have been sold in the manner set forth and as contemplated in the
Initial Shelf Registration or (ii) a Subsequent Shelf Registration covering all
of the Registrable Notes has been declared effective under the Securities Act.
(b) Subsequent Shelf Registrations. If the Initial Shelf
Registration or any Subsequent Shelf Registration ceases to be effective for any
reason at any time during the Effectiveness Period (other than because of the
sale of all of the securities registered thereunder), the Issuer shall use its
best efforts to obtain the prompt withdrawal of any order suspending the
effectiveness thereof, and in any event shall within 45 days of such cessation
of effectiveness amend the Shelf Registration in a manner expected to obtain the
withdrawal of the order suspending the effectiveness thereof, or file an
additional "shelf" Registration Statement pursuant to Rule 415 covering all of
the Registrable Notes (a "Subsequent Shelf Registration"). If a Subsequent Shelf
Registration is filed, the Issuer shall use its best efforts to cause the
Subsequent Shelf Registration to be declared effective as soon as practicable
after such filing and to keep such Subsequent Shelf Registration continuously
effective for a period equal to the number of days in the Effectiveness Period
less the aggregate number of days during which the Initial Shelf Registration or
any Subsequent Shelf Registrations was previously continuously effective. As
used herein the term "Shelf Registration" means the Initial Shelf Registration
and any Subsequent Shelf Registration.
(c) Supplements and Amendments. The Issuer shall promptly
supplement and amend any Shelf Registration if required by the rules,
regulations or instructions applicable to the registration form used for such
Shelf Registration, if required by the Securities Act, or if reasonably
requested by the Holders of a majority in aggregate principal amount of the
Registrable Notes covered by such Shelf Registration or by any underwriter of
such Registrable Notes, in each case, with the Issuer's consent, which consent
shall not be unreasonably withheld or delayed.
4. Additional Interest
(a) The Issuer and the Initial Purchasers agree that the Holders
of Registrable Notes will suffer damages if the Issuer fails to fulfill its
obligations under Section 2 or Section 3 hereof and that it would not be
feasible to ascertain the extent of such damages with precision. Accordingly,
the Issuer agrees to pay, as liquidated damages, additional interest on the
Registrable Notes ("Additional Interest") under the circumstances and to the
extent set forth below (each of which shall be given independent effect):
(i) if (A) neither the Exchange Registration Statement nor
the Initial Shelf Registration has been filed on or prior to the Filing
Date or (B) notwithstanding that the Issuer has consummated or will
consummate an Exchange Offer, the Issuer is required to file a Shelf
Registration and such Shelf Registration is not filed on or prior to the
30th day after delivery of the Shelf Notice, then, in the case of
subclause (A), commencing on the day after the Filing Date or, in the case
of subclause (B),
<PAGE> 11
-11-
commencing on the 31st day following delivery of the Shelf Notice,
Additional Interest shall accrue on the Registrable Notes over and above
the stated interest at a rate of 0.25% per annum for the first 90 days
immediately following the Filing Date or such 30th day, as the case may
be, such Additional Interest rate increasing by an additional 0.25% per
annum at the beginning of each subsequent 90-day period;
(ii) if (A) neither the Exchange Registration Statement nor
the Initial Shelf Registration is declared effective on or prior to the
Effectiveness Date applicable thereto or (B) notwithstanding that the
Issuer has consummated or will consummate an Exchange Offer, the Issuer is
required to file a Shelf Registration and such Shelf Registration is not
declared effective by the Commission on or prior to the 90th day following
the date such Shelf Registration was required to be filed, then, in the
case of subclause (A), commencing on the day after such Effectiveness Date
or, in the case of subclause (B), commencing on the 91st day following the
date such Shelf Registration was required to be filed, Additional Interest
shall accrue on the Registrable Notes over and above the stated interest
at a rate of 0.25% per annum for the first 90 days immediately following
the day after the Effectiveness Date or such 91st day, as the case may be,
such Additional Interest rate increasing by an additional 0.25% per annum
at the beginning of each subsequent 90-day period; and
(iii) if (A) the Company has not exchanged Exchange Notes for
all Notes validly tendered in accordance with the terms of the Exchange
Offer on or prior to 45 days after the date on which the Exchange
Registration Statement was declared effective, (B) the Exchange
Registration Statement ceases to be effective prior to consummation of the
Exchange Offer or (C) if applicable, a Shelf Registration has been
declared effective and such Shelf Registration ceases to be effective at
any time during the Effectiveness Period, then Additional Interest shall
accrue on the Registrable Notes over and above the stated interest at a
rate of 0.25% per annum for the first 90 days commencing on the (x) 46th
day after such effective date in the case of (A) above or (y) the day such
Exchange Registration Statement or Shelf Registration ceases to be
effective in the case of (B) and (C) above, such Additional Interest rate
increasing by an additional 0.25% per annum at the beginning of each such
subsequent 90-day period;
provided, however, that the Additional Interest rate on the Registrable Notes
may not exceed in the aggregate 1.0% per annum; provided further that (1) upon
the filing of the Exchange Registration Statement or each Shelf Registration (in
the case of (i) above), (2) upon the effectiveness of the Exchange Registration
Statement or each Shelf Registration, as the case may be (in the case of (ii)
above), or (3) upon the exchange of Exchange Notes for all Registrable Notes
tendered (in the case of (iii)(A) above) or upon the effectiveness of an
Exchange Registration Statement or Shelf Registration which had ceased to remain
effective (in the case of (iii)(B) and (C) above), Additional Interest on any
Registrable Notes then accruing Additional Interest as a result of such clause
(or the relevant subclause thereof), as the case may be, shall cease to accrue.
(b) The Issuer shall notify the Trustee within two business days
after each and every date on which an event occurs in respect of which
Additional Interest is required to be paid (an "Event Date"). Any amounts of
Additional Interest due pursuant to (a)(i), (a)(ii) or (a)(iii) of this Section
4 will be payable in cash semi-annually on each regular interest payment date
specified in the Indenture (to the Holders of Registrable Notes of record on the
regular record date therefor (specified in the Indenture) immediately preceding
such dates), commencing with the first such regular interest payment date
occurring after any such Additional Interest commences to accrue. The amount of
Additional Interest will be determined by multiplying the applicable Additional
Interest rate by the principal amount of the Notes subject thereto, multiplied
by a fraction, the numerator of which is the number of days such Additional
Interest rate was applicable during such period
<PAGE> 12
-12-
(determined on the basis of a 360-day year comprised of twelve 30-day months),
and the denominator of which is 360.
5. Registration Procedures
In connection with the filing of any Registration Statement pursuant
to Sections 2 or 3 hereof, the Issuer shall effect such registrations to permit
the sale of such securities covered thereby in accordance with the intended
method or methods of disposition thereof, and pursuant thereto and in connection
with any Registration Statement filed by the Issuer hereunder, the Issuer shall:
(a) Prepare and file with the Commission prior to the Filing Date,
the Exchange Registration Statement or if the Exchange Registration Statement is
not filed or is unavailable, a Shelf Registration as prescribed by Section 2 or
3, and the Issuer shall use its best efforts to cause each such Registration
Statement to become effective and remain effective as provided herein; provided,
however, that, if (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period and has advised the Company that it is a Participating
Broker-Dealer, before filing any Registration Statement or Prospectus or any
amendments or supplements thereto, the Issuer shall, if requested, furnish to
and afford the Holders of the Registrable Notes to be registered pursuant to
such Shelf Registration or each such Participating Broker-Dealer, as the case
may be, covered by such Registration Statement, their counsel and the managing
underwriters, if any, a reasonable opportunity to review copies of all such
documents (including copies of any documents to be incorporated by reference
therein and all exhibits thereto) proposed to be filed (in each case at least
five Business Days prior to such filing). The Issuer shall not file any such
Registration Statement or Prospectus or any amendments or supplements thereto if
the Holders of a majority in aggregate principal amount of the Registrable Notes
covered by such Registration Statement, or any such Participating Broker-Dealer,
as the case may be, their counsel, or the managing underwriters, if any, shall
reasonably object, unless the Issuer is advised by its counsel that such filing
is required by law.
(b) Prepare and file with the Commission such amendments and
post-effective amendments to each Shelf Registration or Exchange Registration
Statement, as the case may be, as may be necessary to keep such Registration
Statement continuously effective for the Effectiveness Period or the Applicable
Period, as the case may be; cause the related Prospectus to be supplemented by
any Prospectus supplement required by applicable law, and as so supplemented to
be filed pursuant to Rule 424 (or any similar provisions then in force) under
the Securities Act; and comply with the provisions of the Securities Act and the
Exchange Act applicable to it with respect to the disposition of all securities
covered by such Registration Statement as so amended or in such Prospectus as so
supplemented and with respect to the subsequent resale of any securities being
sold by a Participating Broker-Dealer covered by any such Prospectus. The Issuer
shall be deemed not to have used its best efforts to keep a Registration
Statement effective during the Applicable Period if it voluntarily takes any
action that would result in selling Holders of the Registrable Notes covered
thereby or Participating Broker-Dealers seeking to sell Exchange Notes not being
able to sell such Registrable Notes or such Exchange Notes during that period
unless such action is required by applicable law, rule or regulation or unless
the Issuer complies with this Agreement, including, without limitation, the
provisions of paragraph 5(k) hereof and the last paragraph of Section 5.
(c) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period from
<PAGE> 13
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whom the Company has received written notice that it will be a Participating
Broker-Dealer, notify the selling Holders of Registrable Notes, and each such
Participating Broker-Dealer, their counsel and the managing underwriters, if
any, promptly (but in any event within two Business Days), and confirm such
notice in writing, (i) when a Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to a Registration
Statement or any post-effective amendment, when the same has become effective
(including in such notice a written statement that any Holder may, upon request,
obtain, without charge, one conformed copy of such Registration Statement or
post-effective amendment including financial statements and schedules, documents
incorporated or deemed to be incorporated by reference and exhibits), (ii) of
the issuance by the Commission of any stop order suspending the effectiveness of
a Registration Statement or of any order preventing or suspending the use of any
preliminary prospectus or the initiation of any proceedings for that purpose,
(iii) if at any time when a prospectus is required by the Securities Act to be
delivered in connection with sales of the Registrable Notes the representations
and warranties of the Issuer contained in any agreement (including any
underwriting agreement contemplated by Section 5(n) hereof) cease to be true and
correct in any material respect, (iv) of the receipt by the Issuer of any
notification with respect to the suspension of the qualification or exemption
from qualification of a Registration Statement or any of the Registrable Notes
or the Exchange Notes to be sold by any Participating Broker-Dealer for offer or
sale in any jurisdiction, or the initiation or threatening of any proceeding for
such purpose, (v) of the happening of any event, the existence of any condition
or any information becoming known that makes any statement made in such
Registration Statement or related Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or
that requires the making of any changes in, or amendments or supplements to,
such Registration Statement, Prospectus or documents so that the Registration
Statement and the Prospectus 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 light of the circumstances under
which they were made, not misleading, and (vi) of the Issuer's reasonable
determination that a post-effective amendment to a Registration Statement would
be appropriate.
(d) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, use its best efforts to prevent the issuance of any order
suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of a Prospectus or suspending the qualification
(or exemption from qualification) of any of the Registrable Notes or the
Exchange Notes to be sold by any Participating Broker-Dealer, for sale in any
jurisdiction, and, if any such order is issued, to use its best efforts to
obtain the withdrawal of any such order at the earliest possible date.
(e) If a Shelf Registration is filed pursuant to Section 3 and if
requested by the managing underwriters, if any, or the Holders of a majority in
aggregate principal amount of the Registrable Notes being sold in connection
with an underwritten offering, (i) as promptly as practicable incorporate in a
prospectus supplement or post-effective amendment such information or revisions
to information therein relating to such underwriters or selling Holders as the
managing underwriters, if any, or such Holders or their counsel reasonably
request to be included or made therein, (ii) make all required filings of such
prospectus supplement or such post-effective amendment as soon as practicable
after the Issuer has received notification of the matters to be incorporated in
such prospectus supplement or post-effective amendment, and (iii) supplement or
make amendments to such Registration Statement.
(f) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities
<PAGE> 14
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Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, furnish to each selling Holder of Registrable Notes and
to each such Participating Broker-Dealer who so requests and to counsel and each
managing underwriter, if any, without charge, one conformed copy of the
Registration Statement or Registration Statements and each post-effective
amendment thereto, including financial statements and schedules, and, if
requested, all documents incorporated or deemed to be incorporated therein by
reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer, deliver to each selling Holder of Registrable Notes
or each such Participating Broker-Dealer, as the case may be, their respective
counsel, and the underwriters, if any, without charge, as many copies of the
Prospectus or Prospectuses (including each form of preliminary prospectus) and
each amendment or supplement thereto and any documents incorporated by reference
therein as such Persons may reasonably request; and, subject to the last
paragraph of this Section 5, the Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
Holders of Registrable Notes and each Participating Broker-Dealer, and the
underwriters or agents, if any, and dealers (if any), in connection with the
offering and sale of the Registrable Notes covered by, or the sale by
Participating Broker-Dealers of the Exchange Notes pursuant to, such Prospectus
and any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Notes or any
delivery of a Prospectus contained in the Exchange Registration Statement by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, use its best efforts to register or qualify, and cooperate
with the selling Holders of Registrable Notes and each such Participating
Broker-Dealer, the underwriters, if any, and their respective counsel in
connection with the registration or qualification (or exemption from such
registration or qualification) of such Registrable Notes or Exchange Notes, as
the case may be, for offer and sale under the securities or Blue Sky laws of
such jurisdictions within the United States as any selling Holder, Participating
Broker-Dealer, or the managing underwriter or underwriters, if any, reasonably
request in writing; provided, however, that where Exchange Notes held by
Participating Broker-Dealers or Registrable Notes are offered pursuant to an
underwritten offering, counsel to the underwriters shall, at the cost and
expense of the Issuer, perform the Blue Sky investigations and file
registrations and qualifications required to be filed pursuant to this Section
5(h); keep each such registration or qualification (or exemption therefrom)
effective during the period such Registration Statement is required to be kept
effective and do any and all other acts or things reasonably necessary or
advisable to enable the disposition in such jurisdictions of the Exchange Notes
by Participating Broker-Dealers or the Registrable Notes covered by the
applicable Registration Statement; provided, however, that the Issuer shall not
be required to (A) qualify generally to do business in any jurisdiction where it
is not then so qualified, (B) take any action that would subject it to general
service of process in any such jurisdiction where it is not then so subject or
(C) subject itself to taxation in excess of a nominal dollar amount in any such
jurisdiction where it is not then so subject.
(i) If a Shelf Registration is filed pursuant to Section 3,
cooperate with the selling Holders of Registrable Notes, any Participating
Broker-Dealer and the managing underwriter or underwriters, if any, to
facilitate the timely preparation and delivery of certificates representing
Registrable Notes to be sold, which certificates shall not bear any restrictive
legends and shall be in a form eligible for deposit with The Depository Trust
Company; and enable such Registrable Notes to be in such denominations and
registered in such names as the managing underwriter or underwriters, if any, or
Holders may reasonably request.
(j) Use its best efforts to cause the Registrable Notes covered by
the Registration
<PAGE> 15
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Statement to be registered with or approved by such governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof or the
underwriters, if any, to consummate the disposition of such Registrable Notes,
in which case the Issuer will cooperate in all reasonable respects with the
filing of such Registration Statement and the granting of such approvals.
(k) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, upon the occurrence of any event contemplated by paragraph
5(c)(v) or 5(c)(vi) hereof, as promptly as practicable (but in no event later
than the 30th day after the occurrence of any such event) prepare and file with
the Commission, at the Issuer's sole expense, a supplement or post-effective
amendment to the Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be incorporated therein by
reference, or file any other required document so that, as thereafter delivered
to the purchasers of the Registrable Notes being sold thereunder or to the
purchasers of the Exchange Notes to whom such Prospectus will be delivered by a
Participating Broker-Dealer, any such Prospectus will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(l) Use its best efforts to cause the Registrable Notes covered by
a Registration Statement to have any existing rating confirmed by the
appropriate rating agencies, if so requested by the Holders of a majority in
aggregate principal amount of Registrable Notes covered by such Registration
Statement or the managing underwriter or underwriters, if any.
(m) Prior to the effective date of the first Registration
Statement relating to the Registrable Notes, (i) provide the Trustee with
printed certificates for the Registrable Notes in a form eligible for deposit
with The Depository Trust Company and (ii) provide a CUSIP number for the
Registrable Notes.
(n) In connection with an underwritten offering of Registrable
Notes pursuant to a Shelf Registration, enter into an underwriting agreement as
is customary in underwritten offerings of debt securities similar to the Notes
and take all such other actions as are reasonably requested by the managing
underwriter or underwriters in order to expedite or facilitate the registration
or the disposition of such Registrable Notes and, in such connection, (i) make
such representations and warranties to the underwriters, with respect to the
business of the Issuer and its subsidiaries and the Registration Statement,
Prospectus and documents, if any, incorporated or deemed to be incorporated by
reference therein, in each case, as are customarily made by issuers to
underwriters in underwritten offerings of debt securities similar to the Notes,
and confirm the same in writing if and when requested; (ii) obtain the opinion
of counsel to the Issuer and updates thereof in form and substance reasonably
satisfactory to the managing underwriter or underwriters, addressed to the
underwriters covering the matters customarily covered in opinions requested in
underwritten offerings of debt securities similar to the Notes and such other
matters as may be reasonably requested by underwriters; (iii) obtain "cold
comfort" letters and updates thereof in form and substance reasonably
satisfactory to the managing underwriter or underwriters from the independent
certified public accountants of the Issuer (and, if necessary, any other
independent certified public accountants of any subsidiary of the Issuer or of
any business acquired by the Issuer for which financial statements and financial
data are, or are required to be, included in the Registration Statement),
addressed to each of the underwriters, such letters to be in customary form and
covering matters of the type customarily covered in "cold comfort" letters in
connection with underwritten offerings of debt securities similar to the Notes
and such other matters as reasonably requested by the managing underwriter or
underwriters; and (iv) if an underwriting agreement is entered into, the same
shall contain indemnification provisions and procedures no less favorable than
those set forth in Section 7 hereof (or such other provisions and procedures
acceptable to Holders
<PAGE> 16
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of a majority in aggregate principal amount of Registrable Notes covered by such
Registration Statement and the managing underwriter or underwriters or agents)
with respect to all parties to be indemnified pursuant to said Section. The
above shall be done at each closing under such underwriting agreement, or as and
to the extent required thereunder.
(o) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, make available for inspection by any selling Holder of such
Registrable Notes being sold, and each Participating Broker-Dealer, any
underwriter participating in any such disposition of Registrable Notes, if any,
and any attorney, accountant or other agent retained by any such selling Holder,
each Participating Broker-Dealer, as the case may be, or underwriter
(collectively, the "Inspectors"), at the offices where normally kept, during
reasonable business hours, all financial and other records, pertinent corporate
documents and properties of the Issuer and its subsidiaries (collectively, the
"Records") as shall be reasonably necessary to enable them to exercise any
applicable due diligence responsibilities, and cause the officers, directors and
employees of the Issuer and its subsidiaries to supply all information
reasonably requested by any such Inspector in connection with such Registration
Statement. Records which the Issuer determines, in good faith, to be
confidential and any Records which it notifies the Inspectors are confidential
shall not be disclosed by the Inspectors unless (i) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in such
Registration Statement, (ii) the release of such Records is ordered pursuant to
a subpoena or other order from a court of competent jurisdiction, (iii) the
information in such Records has been made generally available to the public
other than as a result of a disclosure or failure to safeguard by such Inspector
or (iv) disclosure of such information is, in the opinion of counsel for any
Inspector, necessary or advisable in connection with any action, claim, suit or
proceeding, directly or indirectly, involving or potentially involving such
Inspector and arising out of, based upon, related to, or involving this
Agreement, or any transactions contemplated hereby or arising hereunder. Each
selling Holder of such Registrable Notes and each Participating Broker-Dealer
will be required to agree that information obtained by it as a result of such
inspections shall be deemed confidential and shall not be used by it as the
basis for any market transactions in the securities of the Issuer or for any
other purpose not related to this Agreement unless and until such is made
generally available to the public. Each Inspector, each selling Holder of such
Registrable Notes and each Participating Broker-Dealer will be required to
further agree that it will, upon learning that disclosure of such Records is
sought in a court of competent jurisdiction pursuant to clauses (ii) or (iv) of
the previous sentence or otherwise, give notice to the Issuer and allow the
Issuer to undertake appropriate action to obtain a protective order or otherwise
prevent disclosure of the Records deemed confidential at its expense.
(p) Provide an indenture trustee for the Registrable Notes or the
Exchange Notes, as the case may be, and cause the Indenture or the trust
indenture provided for in Section 2(a), as the case may be, to be qualified
under the TIA not later than the effective date of the Exchange Offer or the
first Registration Statement relating to the Registrable Notes; and in
connection therewith, cooperate with the trustee under any such indenture and
the Holders of the Registrable Notes, to effect such changes to such 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 best efforts to cause such trustee to
execute, all documents as 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.
(q) Comply with all applicable rules and regulations of the
Commission and make generally available to its securityholders earnings
statements satisfying the provisions of Section 11(a) of the
<PAGE> 17
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Securities Act and Rule 158 thereunder (or any similar rule promulgated under
the Securities Act) no later than 45 days after the end of any 12-month period
(or 90 days after the end of any 12-month period if such period is a fiscal
year) (i) commencing at the end of any fiscal quarter in which Registrable Notes
are sold to underwriters in a firm commitment or best efforts underwritten
offering and (ii) if not sold to underwriters in such an offering, commencing on
the first day of the first fiscal quarter of the Company after the effective
date of a Registration Statement, which statements shall cover said 12-month
periods.
(r) Upon consummation of the Exchange Offer or a Private Exchange,
obtain an opinion of counsel to the Issuer, in a form customary for underwritten
transactions, addressed to the Company and a separate letter from such counsel
addressed to the Trustee for the benefit of all Holders of Registrable Notes
participating in the Exchange Offer of Private Exchange Offer, as the case may
be, stating that the Trustee may rely on such opinion to the Company, that the
Exchange Notes or the Private Exchange Notes, as the case may be, and the
related indenture constitute legally valid and binding obligations of the
Issuer, enforceable against the Issuer in accordance with their respective terms
(with customary exceptions).
(s) If the Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Registrable Notes by Holders to the Issuer (or
to such other Person as directed by the Company) in exchange for the Exchange
Notes or the Private Exchange Notes, as the case may be, the Issuer shall mark,
or caused to be marked, on such Registrable Notes that such Registrable Notes
are being canceled in exchange for the Exchange Notes or the Private Exchange
Notes, as the case may be; in no event shall such Registrable Notes be marked as
paid or otherwise satisfied.
(t) Cooperate with each seller of Registrable Notes covered by any
Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Notes and their respective counsel in connection
with any filings required to be made with the NASD.
(u) Use its best efforts to take all other steps reasonably
necessary to effect the registration of the Registrable Notes covered by a
Registration Statement contemplated hereby.
The Issuer may require each seller of Registrable Notes as to which
any registration is being effected to furnish to the Issuer such information
regarding such seller and the distribution of such Registrable Notes as the
Issuer may, from time to time, reasonably request. The Issuer may exclude from
such registration the Registrable Notes of any seller who fails to furnish such
information within a reasonable time after receiving such request. Each seller
as to which any Shelf Registration Statement is being effected agrees to furnish
promptly to the Issuer all information required to be disclosed in order to make
the information previously furnished to the Issuer by such seller not materially
misleading.
Each Holder of Registrable Notes and each Participating
Broker-Dealer agrees by acquisition of such Registrable Notes or Exchange Notes
to be sold by such Holder or Participating Broker-Dealer, as the case may be,
that, upon receipt of any notice from the Issuer of the happening of any event
of the kind described in Section 5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi), such
Holder, or Participating Broker-Dealer will forthwith discontinue disposition of
such Registrable Notes covered by such Registration Statement or Prospectus or
Exchange Notes to be sold by such Holder or Participating Broker-Dealer, as the
case may be, and, in each case, dissemination of such Prospectus until such
Holder's or Participating Broker-Dealer's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 5(k), or until it is
advised in writing (the "Advice") by the Company that the use of the applicable
Prospectus may be resumed, and has received copies of any amendments or
supplements thereto. In the event the Issuer shall give any such notice, the
Applicable Period shall be extended by the number of days during such periods
from and including the date of the giving of
<PAGE> 18
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such notice to and including the date when each seller of Registrable Notes
covered by such Registration Statement or Exchange Notes to be sold by such
Participating Broker-Dealer, as the case may be, shall have received (x) the
copies of the supplemented or amended Prospectus contemplated by Section 5(k) or
(y) the Advice.
6. Registration Expenses
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Issuer shall be borne by the Issuer,
whether or not the Exchange Offer or a Shelf Registration is filed or becomes
effective, including, without limitation, (i) all registration and filing fees
(including, without limitation, (A) fees with respect to filings required to be
made with the NASD in connection with an underwritten offering and (B) fees and
expenses of compliance with state securities or Blue Sky laws (including,
without limitation, reasonable fees and disbursements of counsel in connection
with Blue Sky qualifications of the Registrable Notes or Exchange Notes and
determination of the eligibility of the Registrable Notes or Exchange Notes for
investment under the laws of such jurisdictions in the United States (x) where
the Holders of Registrable Notes are located, in the case of the Exchange Notes,
or (y) as provided in Section 5(h), in the case of Registrable Notes or Exchange
Notes to be sold by a Participating Broker-Dealer during the Applicable
Period)), (ii) printing expenses (including, without limitation, expenses of
printing certificates for Registrable Notes or Exchange Notes in a form eligible
for deposit with The Depository Trust Company and of printing Prospectuses if
the printing of Prospectuses is reasonably requested by the managing underwriter
or underwriters, if any, or, in respect of Registrable Notes or Exchange Notes
to be sold by any Participating Broker-Dealer during the Applicable Period, by
the Holders of a majority in aggregate principal amount of the Registrable Notes
included in any Registration Statement or of such Exchange Notes, as the case
may be), (iii) messenger, telephone and delivery expenses, (iv) fees and
disbursements of counsel for the Issuer and fees and disbursements of special
counsel for the sellers of Registrable Notes (subject to the provisions of
Section 6(b), (v) fees and disbursements of all independent certified public
accountants referred to in Section 5(n)(iii) (including, without limitation, the
expenses of any special audit and "cold comfort" letters required by or incident
to such performance), (vi) rating agency fees, (vii) Securities Act liability
insurance, if the Issuer desires such insurance, (viii) fees and expenses of the
Trustee, (ix) fees and expenses of all other Persons retained by the Issuer, (x)
internal expenses of the Issuer (including, without limitation, all salaries and
expenses of officers and employees of the Issuer performing legal or accounting
duties), (xi) the expense of any annual audit, (xii) the fees and expenses
incurred in connection with any listing of the securities to be registered on
any securities exchange, (xiii) the fees and disbursements of underwriters, if
any, customarily paid by issuers or sellers of securities (but not including any
underwriting discounts or commissions or transfer taxes, if any, attributable to
the sale of the Registrable Notes which discounts, commissions or taxes shall be
paid by Holders or such Registrable Notes) and (xiv) the expenses relating to
printing, word processing and distributing all Registration Statements,
underwriting agreements, securities sales agreements, indentures and any other
documents necessary in order to comply with this Agreement.
(b) In connection with any Shelf Registration hereunder, the
Issuer shall reimburse the Holders of the Registrable Notes being registered in
such registration for the reasonable fees and disbursements of not more than one
counsel (in addition to appropriate local counsel) chosen by the Holders of a
majority in aggregate principal amount of the Registrable Notes to be included
in such Registration Statement and other reasonable out-of-pocket expenses of
the Holders of Registrable Notes incurred in connection with the registration of
the Registrable Notes. The Issuer shall not have any obligation to pay any
underwriting fees, discounts or commissions attributable to the sale of
Registrable Securities.
7. Indemnification
<PAGE> 19
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(a) The Issuer agrees to indemnify and hold harmless each Holder
of Registrable Notes and each Participating Broker-Dealer, the officers,
directors, employees and agents of each such Person, and each Person, if any,
who controls any such Person within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act (each, a "Participant"), from
and against any and all losses, claims, damages and liabilities (including,
without limitation, the reasonable legal fees and other reasonable expenses
actually incurred in connection with any suit, action or proceeding or any claim
asserted) caused by, arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement or Prospectus (as amended or supplemented if the Issuer shall have
furnished any amendments or supplements thereto) or caused by, arising out of or
based upon any omission or alleged omission to state therein a 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 insofar as such losses, claims, damages or liabilities are caused by any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with information relating to any Participant
furnished to the Issuer in writing by or on behalf of such Participant expressly
for use therein; provided, however, that the Issuer shall not be liable if such
untrue statement or omission or alleged untrue statement or omission was
contained or made in any preliminary prospectus and corrected in the Prospectus
or any amendment or supplement thereto and the Prospectus does not contain any
other untrue statement or omission or alleged untrue statement or omission of a
material fact that was the subject matter of the related proceeding and any such
loss, liability, claim, damage or expense suffered or incurred by the
Participants resulted from any action, claim or suit by any Person who purchased
Registrable Notes or Exchange Notes which are the subject thereof from such
Participant and it is established in the related proceeding that such
Participant failed to deliver or provide a copy of the Prospectus (as amended or
supplemented) to such Person with or prior to the confirmation of the sale of
such Registrable Notes or Exchange Notes sold to such Person, unless such
failure to deliver or provide a copy of the Prospectus (as amended or
supplemented) was a result of noncompliance by the Issuer with Section 5 of this
Agreement.
(b) Each Participant will be required to agree, severally and not
jointly, to indemnify and hold harmless the Issuer, its directors and officers
and each Person who controls the Issuer within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Issuer to each Participant, but only with reference
to information relating to such Participant furnished to the Issuer in writing
by such Participant expressly for use in any Registration Statement or
Prospectus, any amendment or supplement thereto, or any preliminary prospectus.
The liability of any Participant under this paragraph shall in no event exceed
the proceeds received by such Participant from sales of Registrable Notes or
Exchange Notes giving rise to such obligations.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such Person (the "Indemnified Person") shall promptly
notify the Person against whom such indemnity may be sought (the "Indemnifying
Person") in writing, and the Indemnifying Person, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may reasonably designate in such proceeding and shall pay
the reasonable fees and expenses actually incurred by such counsel related to
such proceeding; provided, however, that the failure to so notify the
Indemnifying Person shall not relieve it of any obligation or liability which it
may have hereunder or otherwise, unless and to the extent that such failure
results in the forfeiture by the Indemnifying Person of substantial rights or
defenses. In any such proceeding, any Indemnified Person shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Person unless (i) the Indemnifying Person and
the Indemnified Person shall have mutually agreed in writing to the contrary,
(ii) the Indemnifying Person has failed within a reasonable time to retain
counsel reasonably satisfactory to the
<PAGE> 20
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Indemnified Person or (iii) the named parties in any such proceeding (including
any impleaded parties) include both the Indemnifying Person and the Indemnified
Person and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. It is
understood that, unless there is a conflict among Indemnified Persons, the
Indemnifying Person shall not, in connection with any proceeding or related
proceeding in the same jurisdiction, be liable for the fees and expenses of more
than one separate firm (in addition to any local counsel) for all Indemnified
Persons, and that all such fees and expenses shall be reimbursed as they are
incurred. Any such separate firm for the Participants and such control Persons
of Participants shall be designated in writing by Participants who sold a
majority in interest of Registrable Notes sold by all such Participants and any
such separate firm for the Issuer, its directors, officers and such control
Persons of the Issuer shall be designated in writing by the Company. The
Indemnifying Person shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there is a final non-appealable judgment for the plaintiff, the Indemnifying
Person agrees to indemnify any Indemnified Person from and against any loss or
liability by reason of such settlement or judgment. No Indemnifying Person
shall, without the prior written consent of the Indemnified Person, effect any
settlement of any pending or threatened proceeding in respect of which any
Indemnified Person is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Person, unless such settlement (A) includes
an unconditional release of such Indemnified Person, in form and substance
satisfactory to such Indemnified Person, from all liability on claims that are
the subject matter of such proceeding and (B) does not include any statement as
to an admission of fault, culpability or failure to act by or on behalf of an
Indemnified Person.
(d) If the indemnification provided for in the first and second
paragraphs of this Section 7 is unavailable to, or insufficient to hold
harmless, an Indemnified Person in respect of any losses, claims, damages or
liabilities referred to therein, then each Indemnifying Person under such
paragraphs, in lieu of indemnifying such Indemnified Person thereunder and in
order to provide for just and equitable contribution, shall contribute to the
amount paid or payable by such Indemnified Person as a result of such losses,
claims, damages or liabilities in such proportion as is appropriate to reflect
(i) the relative benefits received by the Indemnifying Person or Persons or
parties on the one hand and the indemnified party on the other from the sale of
the Notes or (ii) if the allocation provided by the foregoing clause (i) is not
permitted by applicable law, not only such relative benefits but also the
relative fault of the Indemnifying Person or Persons on the one hand and the
Indemnified Person or Persons on the other in connection with the statements or
omissions (or alleged statements or omissions) that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof) as well as any
other relevant equitable considerations. The relative benefits received by the
Issuer on the one hand and the Participants on the other shall be deemed to be
in the same proportion as the total proceeds from the offering of the Notes,
discounts and commissions received by such Participant. The relative fault of
the parties 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 Participants or such other Indemnified Person, as the
case may be, on the other, the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission and
any other equitable considerations appropriate under the circumstances.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
(even if the Participants were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any reasonable
legal or other expenses actually incurred by
<PAGE> 21
-21-
such Indemnified Person in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7, in no event
shall a Participant be required to contribute any amount in excess of the amount
by which proceeds received by such Participant from sales of Registrable Notes
or Exchange Notes, as the case may be, exceeds the amount of any damages that
such Participant 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.
(f) The indemnity and contribution agreements contained in this
Section 7 will be in addition to any liability which the Indemnifying Persons
may otherwise have to the Indemnified Persons referred to above.
8. Rules 144 and 144A
The Issuer covenants that it will file the reports required to be
filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the Commission thereunder in a timely manner and, if at
any time it is not required to file such reports, it will, upon the request of
any Holder of Registrable Notes, make publicly available other information so
long as necessary to permit sales pursuant to Rule 144 and Rule 144A under the
Securities Act. The Issuer further covenants, for so long as any Registrable
Notes remain outstanding, to make available to any Holder or beneficial owner of
Registrable Notes in connection with any sale thereof and any prospective
purchaser of such Registrable Notes from such Holder or beneficial owner, the
information required by Rule 144A(d)(4) under the Securities Act in order to
permit resales of such Registrable Notes pursuant to Rule 144A.
9. Underwritten Registrations
If any of the Registrable Notes covered by any Shelf Registration
are to be sold in an underwritten offering, the investment banker or investment
bankers and manager or managers that will manage the offering will be selected
by the Holders of a majority in aggregate principal amount of such Registrable
Notes included in such offering and reasonably acceptable to the Issuer.
No Holder of Registrable Notes may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Notes on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.
10. Miscellaneous
(a) Remedies. In the event of a breach by the Issuer of any of its
obligations under this Agreement, each Holder of Registrable Notes and each
Participating Broker-Dealer holding Exchange Notes, in addition to being
entitled to exercise all rights provided herein, in the Indenture or, in the
case of an Initial Purchaser, in the Purchase Agreement, or granted by law,
including recovery of damages, will be entitled to specific performance of its
rights under this Agreement. The Issuer agrees that monetary damages would not
be adequate compensation for any loss incurred by reason of a breach by it of
any of the provisions of this Agreement and hereby further agrees that, in the
event of any action for specific performance in respect of such breach, it shall
waive the defense that a remedy at law would be adequate.
<PAGE> 22
-22-
(b) No Inconsistent Agreements. The Issuer has not entered, as of
the date hereof, and the Issuer shall not enter, after the date of this
Agreement, into any agreement with respect to any of its securities that is
inconsistent with the rights granted to the Holders of Registrable Notes in this
Agreement or otherwise conflicts with the provisions hereof. The Issuer has not
entered and the Issuer shall not enter into any agreement with respect to any of
its securities which will grant to any Person piggy-back rights with respect to
a Registration Statement covering the Notes, the Exchange Notes or the Private
Exchange Notes (if any).
(c) Adjustments Affecting Registrable Notes. The Issuer shall not,
directly or indirectly, take any action with respect to the Registrable Notes as
a class that would adversely affect the ability of the Holders of Registrable
Notes to include such Registrable Notes in a registration undertaken pursuant to
this Agreement.
(d) Amendments and Waivers. The provisions of this Agreement may
not be amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given, otherwise than with the prior
written consent of (A) the Holders of not less than a majority in aggregate
principal amount of the then outstanding Registrable Notes and (B) in
circumstances that would adversely affect Participating Broker-Dealers, the
Participating Broker-Dealers holding not less than a majority in aggregate
principal amount of the Exchange Notes held by all Participating Broker-Dealers;
provided, however, that Section 7 and this Section 10(d) may not be amended,
modified or supplemented without the prior written consent of each Holder and
each Participating Broker-Dealer (including any person who was a Holder or
Participating Broker-Dealer of Registrable Notes or Exchange Notes, as the case
may be, disposed of pursuant to any Registration Statement). Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of Holders of Registrable
Notes whose securities are being tendered pursuant to the Exchange Offer or sold
pursuant to a Registration Statement and that does not directly or indirectly
affect, impair, limit or compromise the rights of other Holders of Registrable
Notes may be given by Holders of at least a majority in aggregate principal
amount of the Registrable Notes being tendered or being sold by such Holders
pursuant to such Registration Statement.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day air courier or telecopier:
1. if to a Holder of Registrable Notes or any Participating
Broker-Dealer, at the most current address of such Holder or Participating
Broker-Dealer, as the case may be, set forth on the records of the
registrar under the Indenture, with a copy in like manner to the Initial
Purchasers as follows:
BT ALEX. BROWN INCORPORATED
GOLDMAN, SACHS & CO.
HAMBRECHT & QUIST LLC
c/o BT Alex. Brown Incorporated
One Bankers Trust Plaza
130 Liberty Street
New York, New York 10006
Facsimile No.: (212) 250-2500
Attention: Corporate Finance Department
with a copy to:
<PAGE> 23
-23-
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Facsimile No.: (212) 269-5420
Attention: William M. Hartnett, Esq.
2. if to the Initial Purchasers, at the address specified in
Section 10(e)(1);
3. if to the Company, as follows:
AMERICAN BUSINESS INFORMATION, INC.
5711 South 86th Circle
P.O. Box 27347
Omaha, Nebraska 68127-0347
Facsimile No.: (402) 331-1505
Attention: Scott Dahnke
with copies to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
Facsimile No.: (650) 493-6811
Attention: Francis S. Currie
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; one business day
after being timely delivered to a next-day air courier guaranteeing overnight
delivery; and when receipt is acknowledged by the addressee, if telecopied.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee under the
Indenture at the address specified in such Indenture.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the parties
hereto and the Holders; provided, however, that this Agreement shall not inure
to the benefit of or be binding upon a successor or assign of a Holder unless
and to the extent such successor or assign holds Registrable Notes.
(g) 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.
(h) Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED
<PAGE> 24
-24-
TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
(j) Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(k) Notes Held by an Issuer or its Affiliates. Whenever the
consent or approval of Holders of a specified percentage of Registrable Notes is
required hereunder, Registrable Notes held by the Issuer or its affiliates (as
such term is defined in Rule 405 under the Securities Act) shall not be counted
in determining whether such consent or approval was given by the Holders of such
required percentage.
(l) Third Party Beneficiaries. Holders of Registrable Notes and
Participating Broker-Dealers are intended third party beneficiaries of this
Agreement and this Agreement may be enforced by such Persons.
(m) Entire Agreement. This Agreement, together with the Purchase
Agreement and the Indenture, is intended by the parties as a final and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein and any and all prior oral or
written agreements, representations, or warranties, contracts, understandings,
correspondence, conversations and memoranda among the Initial Purchasers on the
one hand and the Issuer on the other, or between or among any agents,
representatives, parents, subsidiaries, affiliates, predecessors in interest or
successors in interest with respect to the subject matter hereof and thereof are
merged herein and replaced hereby.
(n) Submission to Jurisdiction; Waiver of Immunities. By the
execution and delivery of this Agreement, the Issuer submits to the jurisdiction
of any federal or state court in The City of New York, Borough of Manhattan,
State of New York , in any suit or proceeding arising out of or relating to this
Agreement which may be instituted in any such court or brought under federal or
state securities laws.
To the extent that the Issuer has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service of notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property and
assets or this Agreement or any of the Notes, Exchange Notes or Private Exchange
Notes or actions to enforce judgments in respect of any thereof, it hereby
irrevocably waives such immunity in respect of its obligations under the
above-referenced documents, to the extent permitted by law.
(o) Judgment Currency. The Issuer shall indemnify each Initial
Purchaser, each Participating Broker-Dealer, each underwriter who participates
in an offering of Registrable Notes, their respective affiliates, each Person,
if any, who controls any of such parties within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act and each of their respective
officers, directors, employees and agents and each Holder against any loss
incurred by such party as a result of any judgment or order being given or made
for any amount due under this Agreement and such judgment or order being
expressed and paid in a currency (the "Judgment Currency") other than United
States dollars and as a result of any variation as
<PAGE> 25
-25-
between (i) the rate of exchange at which the United States dollar amount is
converted into the Judgment Currency for the purpose of such judgment or order
and (ii) the spot rate of exchange in The City of New York at which such party
on the date of payment of such judgment or order is able to purchase United
States dollars with the amount of the Judgment Currency actually received by
such party. The foregoing indemnity shall continue in full force and effect
notwithstanding any such judgment or order as aforesaid. The term "spot rate of
exchange" shall include any premiums and costs of exchange payable in connection
with the purchase of, or conversion into, United States dollars.
<PAGE> 26
-26-
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
AMERICAN BUSINESS INFORMATION, INC.
By:
Name:
Title:
<PAGE> 27
-27-
The foregoing Agreement is hereby confirmed and
accepted as of the date first above written.
BT ALEX. BROWN INCORPORATED,
By:_______________________________
Name:
Title:
GOLDMAN, SACHS & CO.,
By:_______________________________
Name:
Title:
HAMBRECHT & QUIST LLC,
By:_______________________________
Name:
Title:
<PAGE> 1
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE OF A
DEPOSITORY OR A SUCCESSOR DEPOSITARY. THIS NOTE IS NOT EXCHANGEABLE FOR NOTES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE
EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER
OF THIS NOTE (OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITORY TO
A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY
OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO 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.
<PAGE> 2
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS
SECURITY EXCEPT (A) TO THE ISSUER THEREOF OR ANY SUBSIDIARY THEREOF, (B) TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) IN A MINIMUM PRINCIPAL AMOUNT OF $250,000, TO AN "ACCREDITED INVESTOR"
(AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) (AN
"ACCREDITED INVESTOR") THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED
ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE FOR
THIS SECURITY), (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (E) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE
TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY IF
THE PROPOSED TRANSFEREE IS AN ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO
SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE ISSUER SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
<PAGE> 3
CUSIP No.:02476FAA5
AMERICAN BUSINESS INFORMATION, INC.
9 1/2% SENIOR SUBORDINATED NOTE DUE 2008
No. 001 $115,000,000
AMERICAN BUSINESS INFORMATION, INC., a Delaware corporation (the "Company,"
which term includes any successor entity), for value received promises to pay to
Cede & Co. or registered assigns, the principal sum of ONE HUNDRED FIFTEEN
MILLION Dollars, on June 15, 2008.
Interest Payment Dates: June 15 and December 15
Record Dates: June 1 and December 1
Reference is made to the further provisions of this Note contained herein,
which will for all purposes have the same effect as if set forth at this place.
2
<PAGE> 4
IN WITNESS WHEREOF, the Company has caused this Note to be signed manually
or by facsimile by its duly authorized officers.
AMERICAN BUSINESS INFORMATION,
INC.
By: _______________________________
Name:
Title:
By: _______________________________
Name:
Dated: June 18, 1998 Title:
Certificate of Authentication
This is one of the 9 1/2% Senior Subordinated Notes due 2008 referred to in
the within-mentioned Indenture.
STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A.
as Trustee
By: _______________________________
Authorized Signatory
3
<PAGE> 5
(REVERSE OF SECURITY)
9 1/2% Senior Subordinated Note due 2008
1. Interest. AMERICAN BUSINESS INFORMATION, INC., a Delaware corporation
(the "Company"), promises to pay interest on the principal amount of this Note
at the rate per annum shown above. Interest on the Notes will accrue from the
most recent date on which interest has been paid or, if no interest has been
paid, from June 18, 1998. The Company will pay interest semi-annually in arrears
on each Interest Payment Date, commencing December 15, 1998. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and on overdue
installments of interest from time to time on demand at the rate borne by the
Notes and on overdue installments of interest (without regard to any applicable
grace periods) to the extent lawful.
2. Method of Payment. The Company shall pay interest on the Notes (except
defaulted interest) to the Persons who are the registered Holders at the close
of business on the Record Date immediately preceding the Interest Payment Date
even if the Notes are canceled on registration of transfer or registration of
exchange after such Record Date. Holders must surrender Notes to a Paying Agent
to collect principal payments. The Company shall pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts ("U.S. Legal Tender"). However, the Company
may pay principal and interest by its check payable in such U.S. Legal Tender.
The Company may deliver any such interest payment to the Paying Agent or to a
Holder at the Holder's registered address.
3. Paying Agent and Registrar. Initially, STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A. (the "Trustee") will act as Paying Agent and
Registrar. The Company may change any Paying Agent, Registrar or co-Registrar
without notice to the Holders.
4. Indenture. The Company issued the Notes under an Indenture, dated as of
June 18, 1998 (the "Indenture"), by and among the Company and the Trustee.
Capitalized terms herein are used as defined in the Indenture unless otherwise
defined herein. This Note is one of a duly authorized issue of Initial Notes of
the Company designated as its 9 1/2% Senior Subordinated Notes due 2008 (the
"Initial Notes"). The Notes include the Initial Notes, the Private Exchange
Notes and the Unrestricted Notes issued in exchange for the Initial Notes
pursuant to the Registration Rights Agreement. The Initial Notes and the
Unrestricted Notes are treated as a single class of securities under the
Indenture. The terms of the Notes include those stated in this Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of 1939
(15 U.S. Code ss.ss. 77aaa-77bbbb) (the "TIA"), as in effect on the date of the
4
<PAGE> 6
Indenture. Notwithstanding anything to the contrary herein, the Notes are
subject to all such terms, and Holders of Notes are referred to the Indenture
and said Act for a statement of them. The Notes are general unsecured
Obligations of the Company limited in aggregate principal amount to
$200,000,000. Each Holder, by accepting a Note, agrees to be bound by all of the
terms and provisions of the Indenture, as the same may be amended from time to
time.
5. Subordination. The Notes are subordinated in right of payment, in the
manner and to the extent set forth in the Indenture, to the prior payment in
full in cash of all Senior Debt of the Company, whether outstanding on the date
of the Indenture or thereafter created, incurred, assumed or guaranteed. Each
Holder by its acceptance hereof agrees to be bound by such provisions and
authorizes and expressly directs the Trustee, on its behalf, to take such action
as may be necessary or appropriate to effectuate the subordination provided for
in the Indenture and appoints the Trustee its attorney-in-fact for such
purposes.
6. Redemption Provisions. Except as provided below, the Notes may not be
redeemed prior to June 15, 2003.
(a) Optional Redemption. On or after such date, the Notes may be
redeemed at the option of the Company, at any time as a whole, or from time
to time in part, on not less than 30 nor more than 60 days' notice, at the
following redemption prices (expressed as percentages of principal amount),
plus accrued and unpaid interest (if any) to the date of redemption
(subject to the rights of holders of record on the relevant record date to
receive interest due on the relevant interest payment date), if redeemed
during the 12-month period commencing June 15:
<TABLE>
<CAPTION>
Redemption
Price
----------
<S> <C>
2003............................................... 104.750%
2004............................................... 103.167%
2005............................................... 101.583%
2006 and thereafter................................ 100.000%
</TABLE>
(b) Optional Redemption Upon Equity Offerings. Notwithstanding the
foregoing, at any time prior to June 15, 2001, the Company may, at its
option, redeem, in part and from time to time, with the net cash proceeds
of one or more Equity Offerings, up to 35% of the sum of (i) the initial
5
<PAGE> 7
aggregate principal amount of the Notes originally issued in the Offering
and (ii) the aggregate principal amount of any additional Notes issued
under the Indenture after the Issue Date at a redemption price equal to
109.500% of the principal amount thereof plus accrued and unpaid interest
thereon, if any, to the redemption date; provided that at least 65% of the
sum of (i) the initial aggregate principal amount of the Notes issued in
the Offering and (ii) the aggregate principal amount of any additional
Notes issued under the Indenture after the Issue Date remains outstanding
immediately after the occurrence of any such redemption and that any such
redemption occurs within 120 days following the closing of any such Equity
Offering.
7. Notice of Redemption. Notice of redemption shall be mailed by
first-class mail at least 30 days but not more than 60 days before the
Redemption Date to each Holder of Notes to be redeemed at its registered
address. Notes in denominations larger than $1,000 may be redeemed in part. If
any Note is to be redeemed in part only, the notice of redemption that relates
to such Note shall state the portion of the principal amount thereof to be
redeemed. A new Note in a principal amount equal to the unredeemed portion
thereof will be issued in the name of the Holder thereof upon cancellation of
the original Note. On and after the Redemption Date, interest will cease to
accrue on Notes or portions thereof called for redemption as long as the Company
has deposited with the Paying Agent funds in satisfaction of the applicable
redemption price pursuant to the Indenture.
Except as set forth in the Indenture, if monies for the redemption of the
Notes called for redemption shall have been deposited with the Paying Agent for
redemption on such Redemption Date, then, unless the Company defaults in the
payment of such Redemption Price plus accrued interest, if any, the Notes called
for redemption will cease to bear interest from and after such Redemption Date
and the only right of the Holders of such Notes will be to receive payment of
the Redemption Price plus accrued interest, if any.
8. Offers to Purchase. Section 4.15 of the Indenture provides that, upon a
Change of Control if the Company does not redeem the Notes, each holder will
have the right, subject to certain conditions set forth in the Indenture, to
require the Company to repurchase such holder's Notes at a price equal to 101%
of the principal amount thereof plus accrued interest to the date of repurchase.
Section 4.16 of the Indenture provides that, after certain Asset Sales, and
subject to further limitations contained therein, the Company will make an offer
to purchase certain amounts of the Notes in accordance with the procedures set
forth in the Indenture.
9. Denominations; Transfer; Exchange. The Notes are in registered form,
without coupons, in denominations of $1,000 and integral multiples of $1,000. A
Holder shall register the transfer or exchange of Notes in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay certain transfer
taxes or similar governmental charges payable in connection therewith as
permitted by the Indenture. The Registrar need not register the transfer of or
exchange of any Notes or portions thereof selected for redemption.
10. Persons Deemed Owners. The registered Holder of a Note shall be treated
as the owner of it for all purposes.
6
<PAGE> 8
11. Unclaimed Money. If money for the payment of principal or interest
remains unclaimed for two years, the Trustee and the Paying Agent will pay the
money back to the Company. After that, all liability of the Trustee and such
Paying Agent with respect to such money shall cease.
12. Discharge Prior to Redemption or Maturity. If the Company at any time
deposits with the Trustee U.S. Legal Tender or U.S. Government Obligations
sufficient to pay the principal of, premium, if any, and interest on the Notes
to redemption or maturity and complies with the other provisions of the
Indenture relating thereto, the Company will be discharged from certain
provisions of the Indenture and the Notes (including certain covenants, but
excluding its obligation to pay the principal of and interest on the Notes).
13. Amendment; Supplement; Waiver. Subject to certain exceptions, the
Indenture or the Notes may be amended or supplemented with the written consent
of the Holders of at least a majority in aggregate principal amount of the Notes
then outstanding, and any existing Default or Event of Default or noncompliance
with any provision may be waived with the written consent of the Holders of a
majority in aggregate principal amount of the Notes then outstanding. Without
notice to or consent of any Holder, the parties thereto may amend or supplement
the Indenture or the Notes to, among other things, cure any ambiguity, defect or
inconsistency, provide for uncertificated Notes in addition to or in place of
certificated Notes, or comply with Article Five of the Indenture or make any
other change that does not adversely affect in any material respect the rights
of any Holder of a Note.
14. Restrictive Covenants. The Indenture imposes certain limitations on the
ability of the Company and its Restricted Subsidiaries to, among other things,
incur additional Indebtedness or Liens, make payments in respect of its Capital
Stock or certain Indebtedness, enter into transactions with Affiliates, create
dividend or other payment restrictions affecting Subsidiaries, incur additional
senior subordinated Indebtedness, merge or consolidate with any other Person,
sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its assets or adopt a plan of liquidation and sell Capital
Stock of a Restricted Subsidiary. Such limitations are subject to a number of
important qualifications and exceptions. The Company must annually report to the
Trustee on compliance with such limitations.
15. Successors. When a successor assumes, in accordance with the Indenture,
all the Obligations of its predecessor under the Notes and the Indenture, the
predecessor will be released from those Obligations.
16. Defaults and Remedies. If an Event of Default occurs and is continuing,
the Trustee or the Holders of at least 25% in aggregate principal amount of
Notes then outstanding may declare all the Notes to be due and payable in the
manner, at the time and with the effect provided in the Indenture. Holders of
Notes may not enforce the Indenture or the Notes except as provided in the
Indenture. The Trustee is not obligated to enforce the Indenture or the Notes
unless it has received indemnity reasonably satisfactory to it. The Indenture
permits, subject to certain limitations therein provided, Holders of a majority
7
<PAGE> 9
in aggregate principal amount of the Notes then outstanding to direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of Notes notice of any continuing Default or Event of Default (except a
Default in payment of principal or interest) if it determines that withholding
notice is in their interest.
17. Trustee Dealings with Company. The Trustee under the Indenture, in its
individual or any other capacity, may become the owner or pledgee of Notes and
may otherwise deal with the Company, its Subsidiaries or their respective
Affiliates as if it were not the Trustee.
18. No Recourse Against Others. No stockholder, director, officer, employee
or incorporator, as such, of the Company shall have any liability for any
obligation of the Company under the Notes or the Indenture. Each Holder of a
Note by accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Notes.
19. Authentication. This Note shall not be valid until the Trustee or
Authenticating Agent manually signs the certificate of authentication on this
Note.
20. Governing Law. The laws of the State of New York shall govern this Note
and the Indenture, without regard to principles of conflict of laws.
21. Abbreviations and Defined Terms. Customary abbreviations may be used in
the name of a Holder of a Note or an assignee, such as: TEN COM (= tenants in
common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with
right of survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A (= Uniform Gifts to Minors Act).
22. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes as a convenience to the Holders of the
Notes. No representation is made as to the accuracy of such numbers as printed
on the Notes and reliance may be placed only on the other identification numbers
printed hereon.
23. Registration Rights.
Pursuant to the Registration Rights Agreement, the Company will be
obligated to consummate an exchange offer pursuant to which the Holder of this
Note shall have the right to exchange this Note for the Company's 9 1/2% Senior
Subordinated Notes due 2008, Series B which have been registered under the
Securities Act, in like principal amount and having terms identical in all
material respects as this Note (other than as relates to registration rights and
transfer restrictions). The Holders shall be entitled to receive certain
additional interest payments in the event such exchange offer is not consummated
8
<PAGE> 10
and upon certain other conditions, all pursuant to and in accordance with the
terms of the Registration Right Agreement.
24. Indenture. Each Holder, by accepting a Note, agrees to be bound by all
of the terms and provisions of the Indenture, as the same may be amended from
time to time.
The Company will furnish to any Holder of a Note upon written request and
without charge a copy of the Indenture, which has the text of this Note in
larger type. Requests may be made to: American Business Information, Inc., 5711
South 86th Circle, P.O. Box 27347, Omaha, Nebraska 68127-0347 Attn: Chief
Financial Officer.
9
<PAGE> 11
ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in the form below and have
your signature guaranteed:
I or we assign and transfer this Note to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint, _________________ ,agent to transfer this Note on the
books of the Company. The agent may substitute another to act for him.
Date: ______________ Signed: ______________________________________________
(Sign exactly as your name
appears on the other side of
this Note)
Signature Guarantee:_______________________________________________
Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor
program reasonably acceptable to the Trustee)
<PAGE> 12
In connection with any transfer of this Note occurring prior to the date
which is the earlier of (i) the date of the declaration by the SEC of the
effectiveness of a registration statement under the Securities Act of 1933, as
amended (the "Securities Act") covering resales of this Note (which
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) June 18, 2000, the undersigned confirms that it has not
utilized any general solicitation or general advertising in connection with the
transfer and that this Note is being transferred:
[Check One]
(1) _______ to the Company or a subsidiary thereof; or
(2) _______ pursuant to and in compliance with Rule 144A under the
Securities Act; or
(3) _______ in a minimum principal amount of $250,000, to an institutional
"accredited investor" (as defined in Rule 501(a)(1), (2), (3)
or (7) under the Securities Act) that has furnished to the
Trustee a signed letter containing certain representations and
agreements (the form of which letter can be obtained from the
Trustee); or
(4) _______ pursuant to the exemption from registration provided by Rule
144 under the Securities Act; or
(5) _______ pursuant to an effective registration statement under the
Securities Act; or
(6) _______ pursuant to another available exemption from the registration
requirements of the Securities Act.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Notes evidenced by this certificate in the name of any person other than the
registered Holder thereof; provided that if box (3), (4) or (6) is checked, the
Company or the Trustee may require, prior to registering any such transfer of
the Notes, in its sole discretion, such legal opinions, certifications
(including an investment letter in the case of box (3)) and other information as
the Trustee or the Company has reasonably requested to confirm that such
transfer is being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act.
2
<PAGE> 13
If none of the foregoing boxes is checked, the Trustee or Registrar shall
not be obligated to register this Note in the name of any person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.16 of the Indenture shall have
been satisfied.
Date: ______________ Signed: ______________________________________________
(Sign exactly as your name
appears on the other side of
this Note)
Signature Guarantee:_______________________________________________
Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor
program reasonably acceptable to the Trustee)
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this Note for
its own account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a "qualified institutional buyer"
within the meaning of Rule 144A under the Securities Act and is aware that the
sale to it is being made in reliance on Rule 144A and acknowledges that it has
received such information regarding the Company as the undersigned has requested
pursuant to Rule 144A or has determined not to request such information and that
it is aware that the transferor is relying upon the undersigned's foregoing
representations in order to claim the exemption from registration provided by
Rule 144A.
Date: ______________ Signed: ______________________________________________
NOTICE: To be executed by
an executive officer
3
<PAGE> 14
[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by the Company pursuant to
Section 4.15 or Section 4.16 of the Indenture, check the appropriate box:
Section 4.15 [ ]
Section 4.16 [ ]
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.15 or Section 4.16 of the Indenture, state the
amount you elect to have purchased:
$___________________________________
Dated: ______________ ______________________________________________
NOTICE: The signature on this assignment must
correspond with the name as it appears upon the
face of the within Note in every particular
without alteration or enlargement or any change
whatsoever and be guaranteed by the endorser's
bank or broker.
Signature Guarantee: __________________________________________________________
Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor
program reasonably acceptable to the Trustee)
4
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0
0
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