UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
X THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
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 33-69286
WRIGHT MEDICAL TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
Delaware 62-1532765
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5677 Airline Road, Arlington, Tennessee 38002-0100
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (901)867-9971
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Number of shares outstanding of Class A Common Stock, par value
$.001 at June 30, 1997: 9,198,270
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Wright Medical Technology, Inc. & Subsidiaries:
Consolidated Balance Sheets - June 30, 1997
and December 31, 1996.......................................3
Condensed Consolidated Statements of Operations
for the Three and Six Month Periods Ended
June 30, 1997 and June 30, 1996.............................4
Consolidated Statements of Cash Flows for the
Six Month Periods Ended June 30, 1997 and
June 30, 1996...............................................5
Notes to Consolidated Financial Statements..................6
ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS................................9
Page 2 of 155
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<TABLE>
WRIGHT MEDICAL TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
June 30, December 31,
1997 1996
----------------- ------------------
(in thousands) (in thousands)
(unaudited)
ASSETS
Current Assets:
<S> <C> <C>
Cash and cash equivalents $ 1,234 $ 910
Trade receivables, net 22,901 18,289
Inventories, net 57,347 59,107
Prepaid expenses 1,281 1,692
Deferred income taxes 978 978
Other 2,602 2,540
----------------- ------------------
Total Current Assets 86,343 83,516
----------------- ------------------
Property, Plant and Equipment, net 30,180 33,659
Investment in Joint Venture 3,005 3,597
Other Assets 44,158 45,554
----------------- ------------------
$ 163,686 $ 166,326
================= ==================
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Current portion of long-term debt $ 86 $ 138
Short-term borrowing 15,775 8,390
Accounts payable 6,543 6,063
Accrued expenses and other current liabilities 14,887 18,453
----------------- ------------------
Total Current Liabilities 37,291 33,044
----------------- ------------------
Long-Term Debt 84,707 84,668
Preferred Stock Dividends 20,134 17,999
Other Liabilities 3,402 3,189
Deferred Income Taxes 978 978
----------------- ------------------
Total Liabilities 146,512 139,878
----------------- ------------------
Commitments and Contingencies
Mandatorily Redeemable Series B Preferred Stock, $.01 par value, (aggregate
liquidation value of $79.1 million, including accrued and unpaid dividends
of $2.6 million, 800,000 shares authorized, 765,395 and 711,910 shares
issued and outstanding) 66,314 59,959
Redeemable Convertible Series C Preferred Stock, $.01 par value, (aggregate
liquidation value of $42.4 million, including accrued and unpaid dividends
of $7.4 million, 350,000 shares authorized, issued and outstanding) 27,218 24,995
Stockholders' Investment:
Series A preferred stock, $.01 par value, (aggregate liquidation value of
$26.6 million, including accrued and unpaid dividends of $10.1 million),
1,200,000 shares authorized, 915,325 shares issued 9 9
Undesignated preferred stock, $.01 par value, 650,000 shares authorized,
no shares issued - -
Class A common stock, $.001 par value, 46,000,000 shares authorized,
10,077,650 and 10,023,421 shares issued 10 10
Class B common stock, $.01 par value, 1,000,000 shares authorized,
no shares issued - -
Additional capital 55,000 53,853
Accumulated deficit (129,659) (111,855)
Other (678) 516
----------------- ------------------
(75,318) (57,467)
Less - Notes receivable from stockholders (1,038) (1,037)
Series A preferred treasury stock, 86,688 shares (1) (1)
Class A common treasury stock, 879,380 shares (1) (1)
----------------- ------------------
Total Stockholders' Investment (76,358) (58,506)
----------------- ------------------
$ 163,686 $ 166,326
================= ==================
The accompanying notes are an integral part of these consolidated balance sheets.
Page 3 of 155
</TABLE>
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<TABLE>
WRIGHT MEDICAL TECHNOLOGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except earnings per share)
(unaudited)
<CAPTION>
Three Months Ended Six Months Ended
---------------------------------- ------------------------------------
June 30, 1997 June 30, 1996 June 30, 1997 June 30, 1996
--------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Net sales $ 32,130 $ 31,430 $ 64,383 $ 62,137
Cost of goods sold 11,080 10,557 23,524 20,134
--------------- ---------------- ---------------- ----------------
Gross profit 21,050 20,873 40,859 42,003
--------------- ---------------- ---------------- ----------------
Operating expenses:
Selling 13,494 12,578 25,744 24,034
General and administrative 4,590 4,027 9,102 9,023
Research and development 3,235 3,251 6,172 6,299
Equity in loss of joint venture 275 - 592 -
---------------- ---------------- ---------------- ----------------
21,594 19,856 41,610 39,356
---------------- ---------------- ---------------- ----------------
Operating income (loss) (544) 1,017 (751) 2,647
Interest expense, net 3,153 2,948 6,227 5,913
Other (income) expense, net 196 (422) 125 (293)
---------------- ---------------- ----------------- ----------------
Loss before income taxes (3,893) (1,509) (7,103) (2,973)
Provision for income taxes - - - 25
---------------- ---------------- ----------------- ----------------
Net loss $ $(3,893) $ (1,509) $ (7,103) $ (2,998)
================ ================ ================= ================
Loss applicable to common stock $ (9,257) $ (6,688) $ (17,816) $ (13,368)
================ ================ ================= ================
Loss per share of common stock $ (1.01) $ (0.74) $ (1.94) $ (1.49)
================ ================ ================= ================
Weighted average common shares outstanding 9,198 9,016 9,167 8,987
================ ================ ================= ================
The accompanying notes are an integral part of these statements.
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</TABLE>
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<TABLE>
WRIGHT MEDICAL TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<CAPTION>
Six Months Ended
--------------------------------------
June 30, June 30,
1997 1996
---------------- -----------------
Cash Flows From Operating Activities:
<S> <C> <C>
Net loss $ (7,103) $ (2,998)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation 3,328 3,750
Instrument amortization 2,881 2,065
Provision for instrument reserves 1,874 -
Provision for excess/obsolete inventory 1,471 (475)
Provision for sales returns 12 (109)
Deferred income - 870
Amortization of intangible assets 1,760 1,446
Amortization of deferred financing costs 694 702
Loss on disposal of equipment 35 96
Equity in loss of joint venture 592 -
Amortization of deferred income 180 -
Other (1,065) 165
Changes in assets and liabilities net of effect of purchases of
businesses:
Increase in Accounts Receivable (4,634) (2,549)
Increase in Inventories (1,579) (2,316)
Decrease in Other Current Assets 349 926
Increase in Accounts Payable 480 423
Decrease in Accrued Expenses and Other Liabilities (689) (3,829)
Increase in Other Assets (799) (283)
---------------- -----------------
Net cash used in operating activities (2,213) (2,116)
---------------- -----------------
Cash Flows From Investing Activities:
Capital expenditures (2,708) (3,951)
Other (119) (61)
---------------- -----------------
Net cash used in investing activities (2,827) (4,012)
---------------- -----------------
Cash Flows From Financing Activities:
Net proceeds from short-term borrowings 7,385 5,875
Proceeds from issuance of stock and stock warrants - 633
Payments of debt (1,964) (228)
Other (57) (26)
---------------- -----------------
Net cash provided by financing activities 5,364 6,254
---------------- -----------------
Net increase in cash and cash equivalents 324 126
Cash and cash equivalents, beginning of period 910 1,126
---------------- -----------------
Cash and cash equivalents, end of period $ 1,234 $ 1,252
================ =================
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $ 5,399 $ 5,205
================ =================
Cash paid for income taxes $ - $ -
================ =================
The accompanying notes are an integral part of these statements.
Page 5 of 155
</TABLE>
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WRIGHT MEDICAL TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The consolidated financial statements as of June 30, 1997 and for the
three and six month periods ended June 30, 1997 and June 30, 1996 include the
accounts of Wright Medical Technology, Inc. and its wholly-owned domestic and
foreign subsidiaries and joint ventures ("the Company").
The accompanying unaudited financial information, in management's
opinion, includes all adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the financial position, results of
operations and cash flows for the periods presented. The results of the periods
presented are not necessarily indicative of the results to be expected for the
full year.
The financial information has been prepared in accordance with the
instructions to Form 10-Q and, therefore, does not include all information and
footnote disclosures necessary for fair presentation of financial statements
prepared in accordance with generally accepted accounting principles. These
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the Company's
1996 Annual Report on Form 10-K.
NOTE 2 - INVENTORIES
Components of inventory are as follows (in thousands):
June 30, Dec. 31,
1997 1996
--------------------- -------------------
(unaudited)
Raw materials $ 2,378 $ 2,214
Work in process 8,983 10,186
Finished goods 35,405 36,388
Surgical instrument 10,581 10,319
--------------------- -------------------
Total $ 57,347 $ 59,107
===================== ===================
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NOTE 3 - ACCRUED EXPENSES
A detail of accrued expenses is as follows (in thousands):
June 30, Dec. 31,
1997 1996
------------------- -----------------
(unaudited)
Interest $ 4,718 $ 4,668
Employee benefits 2,004 3,489
Joint venture 1,488 2,105
Commissions 1,383 1,358
Professional fees 779 1,088
Taxes - other than income 892 761
Other 3,623 4,984
------------------- -----------------
Total $ 14,887 $ 18,453
=================== =================
NOTE 4 - LEGAL PROCEEDINGS
No material developments occurred in the Company's legal proceedings in
the period covered by this report.
NOTE 5 - NEW ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS
No. 128"), which establishes new standards for computing and presenting earnings
per share. SFAS No. 128 is in effect for financial statements for both interim
and annual periods ending after December 15, 1997. At this time, management does
not believe that adoption of this standard will have a material impact on the
Company's earnings per share.
SUBSEQUENT EVENT
On August 6, 1997, the Company accepted the tender to exchange $84.95
million of its 10 3/4% Series B Senior Secured Notes (the "Series B Notes") for
11 3/4% Series C Senior Secured Step Up Notes ("Series C Notes"). The terms of
those Series C Notes are governed by a new indenture ("New Indenture") which is
similar to the indenture for the Series B Notes (The "Old
Page 7 of 155
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Indenture") except that i)the Series B Notes bear interest at 10 3/4% and the
Series C Notes will bear interest at 11 3/4% which may increase to 12 1/4% on
the first anniversary of the effective date of the Exchange Offer under certain
circumstances; ii)the New Indenture does not contain the sinking fund
requirements of the Old Indenture, and, iii)certain covenants in the New
Indenture are less restrictive than those in the Old Indenture, specifically (1)
the definition of Consolidated Net Worth does not require a deduction for
accrued dividends on the Company's Series B and Series C Preferred Stock, and
(2) the limit on Purchase Money indebtedness is $10 million as opposed to $5
million in the Old Indenture.
The terms of The Series B Notes which were not tendered in the Exchange
Offer in the aggregate amount of $0.05 million are governed by the Old Indenture
as modified by the Third Supplemental Indenture that eliminated most restrictive
covenants of the Old Indenture, but did not modify the Company's sinking fund
obligations with respect to those notes.
In consideration of the Exchange Offer, the Company has entered into a
Registration Rights Agreement with the holders of the Series C Notes to use its
reasonable best efforts, by September 1997, to file a registration statement,
and upon becoming effective, to offer the holders of the Series C Notes the
opportunity to exchange the Series C Notes for registered notes. In the
alternative, under certain circumstances, the Company will be required to file a
shelf registration statement with respect to the Series C Notes. The Company may
be required to pay liquidated damages if the Company does not fulfill its
obligations under the Registration Rights Agreement.
Jeffries & Company, Inc. is the Dealer Manager in connection with the
Exchange Offer. The expenses related to the Exchange Offer will be approximately
$2.8 million and will be expensed in the Company's third quarter operating
results.
Page 8 of 155
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ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Overview
This discussion includes forecasts and projections that are forward
looking statements based on management's current expectations of the Company's
near term results, based on currently available information pertaining to the
Company. Actual future results and trends may differ materially depending on a
variety of factors, including competition in the marketplace, changing market
conditions, demographic trends, product research and development, government
approvals, government reimbursement schedules and other factors. The Company
assumes no obligation for updating any such forward looking statements.
The Company was satisfied with second quarter 1997 results. Sales for
the second quarter were $32.1 million representing a slight improvement over the
prior year period bringing the Company's sales increase to approximately 4% over
the prior year to date. The Company believes these rates of increase approximate
those of the reconstructive orthopaedic industry. Adjusted earnings before
interest, taxes, depreciation, and amortization for the six months ended June
30, 1997, increased 15% when compared to the same period for the prior year. The
Company was particularly encouraged by its strong international sales growth,
with sales increasing 18% over the same period in the prior year. Sales of its
OSTEOSET(R) products, its new ADVANCE(R) Knee System and its VERSALOK(R) Spine
System continued to accelerate in the quarter. Also, net of interest expenses,
the Company had positive cash flow from operations during the first half of the
year.
In July 1997, the Company received regulatory approval to market and
sell its OSTEOSET(R) T product in both Australia and Canada. OSTEOSET(R) T is
the Company's first medicated OSTEOSET(R) product and is indicated to treat bone
voids that are infected. It contains 4% of the antibiotic tobramycin sulfate.
With OSTEOSET(R) T, a therapeutic dose of tobramycin sulfate is released at the
local infection site over an extended period of time with little or no systemic
traces of the drug. At the same time that the antibiotic is being released, the
OSTEOSET(R) causes a bone healing response that fills the bone defect or void
with new
Page 9 of 155
<PAGE>
bone. The Company recently filed for FDA clearance for OSTEOSET(R) T. The
Company believes that this product is unique and has no real counterparts in the
market.
Results of Operations
The Company's net sales for the quarter ended June 30, 1997 were $32.1
million as compared to prior year's sales of $31.4 million for the same period.
Net sales for the six months ended June 30, 1997 were $64.4 million representing
an increase in sales of $2.2 million compared to the same period in 1996.
Contributing to the sales growth over prior quarters were increases in sales of
spinal products, including the Company's VERSALOK(R) Spine Fixation System,
OSTEOSET(R) and the Company's new ADVANCE(R) Knee.
International sales were strong during the second quarter with sales
increasing 16% over the same period in the prior year, while domestic sales
growth remained relatively flat. Year-to- date international sales for 1997
increased $2.9 million or 18% when compared to the same period in 1996.
Cost of Sales
Cost of sales for the three months and six months ended June 30, 1997,
increased $0.5 million and $3.4 million respectively, over the same periods in
the prior year. Regarding the three month period ended June 30, 1997, the
increase was primarily due to higher unit sales, although domestic discounting
and a higher mix of lower unit price international sales adversely impacted
second quarter sales when compared to prior year, and an unfavorable variance of
$0.7 million due to instrument reserves attributable to the 1996 reclass of
instruments from property, plant and equipment. Offsetting these unfavorable
variances was a favorable adjustment of $1.3 million due to reserve adjustments
related to surgical instrument sales.
For the six month period ended June 30, 1997 cost of sales increased
$3.4 million compared to the same period primarily due to those factors noted
above.
Page 10 of 155
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Selling
Selling expenses for the three months ended June 30, 1997 were $13.5
million, or $0.9 million higher than the same period in 1996. The increase was
primarily due to the first quarter purchase of two of the Company's independent
distributorships and to the reorganization of operations in the New England
territories.
For the six month period ended June 30, 1997 selling expenses were
$25.7 million, or $1.7 million higher when compared to the same period in 1996.
Domestic selling expenses increased $1.8 million, whereas international selling
expenses remained relatively flat in comparison to the prior year. The domestic
selling expense increases were attributable to increased instrument amortization
($1.0 million), non employee stock compensation expense ($0.2 million), freight
expense for customer shipments ($0.3 million), and purchase of the independent
distributorships and the New England territory reorganization.
General and Administrative
General and administrative expenses for the three months ended June 30,
1997 increased $0.6 million, or approximately 14% when compared to the same
period in 1996. For the six months ended June 30, 1997, general and
administrative expenses remained relatively flat with less than a 1% increase
over prior year.
Research and Development
Research and development expenses of $3.2 million for the second
quarter of 1997 remained consistent with the second quarter of 1996. For the six
months ended June 30, 1997, expenses were $6.2 million compared to $6.3 million
in 1996.
Other
Equity in loss of joint venture of $0.3 million and $0.6 million for
the second quarter and 1997 year to date respectively, represented the Company's
50% share of expenses incurred related to the joint venture with Tissue
Engineering, Inc. Progress continues to be made in that venture in the
development of a collagen based tissue patch, a collagen and
Page 11 of 155
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calcium phosphate based bone cement, and a collagen based
ligament prosthesis.
Interest expense remained relatively flat for the three month and six
month periods ending June 30, 1997 when compared to the same period in 1996.
Other (income) expense for the three months and six month periods ended
June 30, 1997, decreased $0.6 million and $0.4 million respectively, due
primarily to the sale of the company jet in 1996 which had a favorable impact
during the second quarter of 1996.
For the three and six month periods ended June 30, 1997 earnings before
interest, taxes, depreciation, and amortization ("EBITDA") is detailed in the
table below.
Three Six
Months Months
Ended Ended
June 30, June 30,
1997 1997
-------------- --------------
Operating Loss $ (544) $ (751)
Depreciation and Instrument Amortization 3,181 6,209
Provision for Instrument Reserves 871 1,874
Provision for Excess/Obsolete Inventory 545 1,471
Amortization of Intangibles 922 1,760
Amortization of Other Assets 134 267
Other Non Cash Addbacks 107 211
-------------- --------------
EBITDA after Certain Adjustments $ 5,216 $ 11,041
============== ==============
Liquidity and Capital Resources
Since the DCW Acquisition, the Company's strategy has been to attain
growth aggressively through new product development and acquisition of new
technologies through license agreements, joint ventures and purchases of other
companies in the orthopaedic field. As anticipated, the Company's substantial
needs for working capital have been funded through the sale of $85 million of
senior debt securities and $15 million of equity at the time of the DCW
Acquisition, through the issuance of Series B
Page 12 of 155
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Preferred Stock in 1994 to the California Public Employees' Retirement System
($60 million), through the issuance of Series C Preferred Stock to the Princes
Gate purchasers in September 1995 ($35 million), and through borrowings on the
Company's revolving line of credit, that are discussed below.
The Company has available to it a $25 million revolving line of credit
under the Sanwa Agreement (the "Sanwa Agreement") which provided an eligible
borrowing base at June 30, 1997 of $23.7 million. That borrowing base is likely
to increase under the Sanwa Agreement as a result of the Exchange Offer. As of
June 30, 1997, the Company had drawn $15.8 million under this agreement. The
Company's continued growth has resulted in an increase in its capital
requirements and it has been dependent upon the Sanwa Agreement and other
funding sources to meet working capital needs. During the first half of 1997,
borrowings under the Sanwa Agreement reached $18.1 million compared to the first
half of 1996 when borrowings (under the former Heller Agreement) reached $14.4
million.
The Company's capitalization includes debt facilities totaling $86.7
million of which $84.95 million were recently exchanged pursuant to an Exchange
Offer (See Subsequent Event above) and various series of preferred stock with an
aggregate liquidation value of $148.1 million including accrued but unpaid
dividends of $20.1 million at June 30, 1997. These securities currently bear
interest or dividend rates ranging from 10.0% to 18.9% and, in certain
circumstances, these rates can increase to 21.7%. The New Indenture eliminated
provisions related to the Company's obligation to make the sinking fund payments
and certain restrictive covenants of the Old Indenture; there was no assurance
that the Company could have met the obligations of these provisions prior to the
Exchange Offer.
The expenses of soliciting the tenders will be borne by the
Company. Jeffries & Company, Inc. acted as the Dealer Manager in
connection with the Exchange Offer. The estimated aggregate
expenses of the Exchange Offer will be approximately $2.8
million.
At June 30, 1997, the Company had approximately $4.2 million in
outstanding capital commitments, and has budgeted expenditures for 1997 of
approximately $4.3 million for the purchase of machinery and related capital
equipment. The Company has spent $2.7 million through the first half of the
year. In assessing
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the impact of the "Year 2000" on the Company's information systems, as well as
other information system needs, management has begun discussion with a limited
number of computer software companies. Currently, management estimates the cost
of new information system software to approximate $1.5 million, a portion of
which may be incurred during the remainder of calendar year 1997.
As of June 30, 1997, the Company had net working capital (current
assets less current liabilities) of $49.1 million, compared with $50.5 million
as of December 31, 1996. Of this $1.4 million decline, $1.8 million was due to a
decrease in inventories and $7.4 million was attributed to growth in short term
borrowings against the Company's line of credit. These decreases to working
capital were offset principally by $4.6 million growth in accounts receivable
and $3.6 million decrease to accrued expenses.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
See Note 4. in the "NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS" On Page 7.
ITEM 2. CHANGES IN SECURITIES.
See Subsequent Event in the "NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS" On Pages 7-8.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
ITEM 5. OTHER INFORMATION.
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
A) See Exhibit Index at page 17.
B) No reports on Form 8-K were filed during the
quarter for which this report on Form 10-Q is
filed.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
Date: 8/11/97 /s/Richard D. Nikolaev
Richard D. Nikolaev
President and Chief Executive Officer
Date: 8/11/97 /s/Gregory K. Butler
Gregory K. Butler
Vice President and
Chief Financial Officer
Page 16 of 155
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Exhibit Index
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT PAGE
4.1 Form of Indenture to 11 3/4% Series C Senior 18
Secured Step Up Notes between The Company
and State Street Bank and Trust Company, as
Trustee
4.2 Form of Series C 11 3/4% Senior Secured Step 101
Up Note
4.3 Form of Registration Rights Agreement, 112
between the Company and holders of the
Company's 11 3/4% Series C Senior Secured
Step Up Notes
4.4 Form of Third Supplemental Indenture to 10 143
3/4% Series B Senior Secured Notes between
the Company and State Street Bank and Trust
Company, as Trustee
11.1 Statement regarding Computation of Earnings 153
Per Share
12.1 Statement regarding Computation of Ratio of 154
Earnings to Fixed Charges and Preferred
Dividends
27.1 Financial Data Schedule 155
Page 17 of 155
Wright Medical Technology, Inc.
$85,000,000
11 3/4 % Senior Secured Step-Up Notes
due July 1, 2000
FORM OF INDENTURE
Dated as of August 6, 1997
State Street Bank and Trust Company
Trustee
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TABLE OF CONTENTS
Article 1 Definitions And Incorporation By Reference.........................1
Section 1.01. Definitions.................................................1
Section 1.02. Other Definitions..........................................12
Section 1.03. Incorporation By Reference Of Trust Indenture Act..........12
Section 1.04. Conflict With Trust Indenture Act..........................13
Section 1.05. Rules Of Construction......................................13
Article 2 The Securities....................................................13
Section 2.01. Form And Dating............................................13
Section 2.02. Execution And Authentication...............................14
Section 2.03. Registrar And Paying Agent.................................15
Section 2.04. Paying Agent To Hold Money In Trust........................15
Section 2.05. Securityholder Lists.......................................16
Section 2.06. Transfer And Exchange......................................16
Section 2.07. Replacement Securities.....................................21
Section 2.08. Outstanding Securities.....................................22
Section 2.09. Treasury Securities........................................22
Section 2.10. Temporary Securities.......................................22
Section 2.11. Cancellation...............................................23
Section 2.12. Defaulted Interest.........................................23
Article 3 Redemption........................................................23
Section 3.01. Notices To Trustee.........................................23
Section 3.02. Selection Of Securities To Be Redeemed.....................23
Section 3.03. Notice Of Redemption.......................................24
Section 3.04. Effect Of Notice Of Redemption.............................25
Section 3.05. Deposit Of Redemption Price................................25
Section 3.06. Securities Redeemed In Part................................25
Section 3.07. Optional Redemption............................... ........25
Section 3.08. Offer To Redeem By Application Of Net Proceeds.............25
Article 4 Covenants..........................................................26
Section 4.01. Payment Of Securities......................................26
Section 4.02. Sec Reports: Financial Statements.........................27
Section 4.03. Compliance Certificate.....................................28
Section 4.04. Stay, Extension And Usury Laws.............................29
Section 4.05. Corporate Existence........................................29
Section 4.06. Taxes......................................................29
Section 4.07. Limitations On Restricted Payments.........................29
Section 4.08. Limitations On Incurrence Of Indebtedness And Issuance
Of Preferred Stock.......................................31
Section 4.09. Limitation On Liens........................................32
Section 4.10. Limitation On Granting Liens And Restrictions On
Subsidiary Dividends....................................33
Section 4.11. Limitations On Certain Asset Sales.........................34
Section 4.12. Change Of Control..........................................35
Section 4.13. Transactions With Affiliates...............................37
Section 4.14. Maintenance Of Consolidated Net Worth......................37
Section 4.15. Liquidation................................................37
Section 4.16. Rule 144a Information Requirement..........................38
Section 4.17. Payments For Consent.......................................38
Section 4.18. Restrictions On Indirect Subsidiaries......................38
Article 5 Successors.........................................................39
Section 5.01. When Company May Merge, Etc................................39
Page 19 of 155
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Section 5.02. Successor Corporation Substituted..........................39
Article 6 Defaults And Remedies..............................................40
Section 6.01. Events Of Default..........................................40
Section 6.02. Acceleration...............................................42
Section 6.03. Other Remedies.............................................42
Section 6.04. Waiver Of Past Defaults....................................42
Section 6.05. Control By Majority........................................42
Section 6.06. Limitation On Suits........................................43
Section 6.07. Rights Of Holders To Receive Payment.......................43
Section 6.08. Collection Suit By Trustee.................................43
Section 6.09. Trustee May File Proofs Of Claim...........................44
Section 6.10. Priorities.................................................44
Section 6.11. Undertaking For Costs......................................45
Article 7 Trustee, Collateral, Agent And Co-Trustee..........................45
Section 7.01. Duties Of Trustee..........................................45
Section 7.02. Rights Of Trustee..........................................46
Section 7.03. Individual Rights Of Trustee...............................46
Section 7.04. Trustee's Disclaimer.......................................47
Section 7.05. Notice Of Defaults.........................................47
Section 7.06. Reports By Trustee To Holders..............................47
Section 7.07. Compensation And Indemnity.................................47
Section 7.08. Replacement Of Trustee.....................................48
Section 7.09. Successor Trustee By Merger, Etc...........................49
Section 7.10. Eligibility; Disqualification..............................49
Section 7.11. Preferential Collection Of Claims Against Company..........49
Section 7.12. Appointment Of Co-Trustee And Collateral Agent.............49
Section 7.13. Trustee And Collateral Agent To Cooperate..................50
Article 8 Discharge Of Indenture.............................................50
Section 8.01. Termination Of Company's Obligations.......................50
Section 8.02. Application Of Trust Money.................................51
Section 8.03. Repayment To Company.......................................52
Section 8.04. Reinstatement..............................................52
Article 9 Amendments.........................................................52
Section 9.01. Without Consent Of Holders.................................52
Section 9.02. With Consent Of Holders....................................53
Section 9.03. Compliance With Trust Indenture Act........................53
Section 9.04. Revocation And Effect Of Consents..........................54
Section 9.05. Notation On Or Exchange Of Securities......................54
Section 9.06. Trustee Protected..........................................54
Article 10 Security..........................................................54
Section 10.01. Collateral Agreements.....................................54
Section 10.02. Recording, Etc............................................57
Section 10.03. Authorization Of Actions To Be Taken By The Collateral
Agent Under The Collateral Agreements....................58
Section 10.04. Release Of Lien...........................................58
Section 10.05. Lien Subordination........................................59
Section 10.06. Reliance On Opinion Of Counsel............................60
Section 10.07. Purchaser May Rely........................................60
Section 10.08. Payment Of Expenses.......................................60
Section 10.09. Trustee's And Collateral Agent's Duties...................60
Section 10.10. Authorization Of Receipt Of Funds By The Trustee
And The Collateral Agent
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Under The Collateral Agreements...........................61
Section 10.11. Termination Of Security Interests.........................61
Section 10.12. Certificates And Opinions.................................61
Article 11 Miscellaneous.....................................................62
Section 11.01. Trust Indenture Act Controls..............................62
Section 11.02. Notices...................................................62
Section 11.03. Communication By Holders With Other Holders...............62
Section 11.04. Certificate And Opinion As To Conditions Precedent........62
Section 11.05. Statements Required In Certificate Or Opinion.............63
Section 11.06. Rules By Trustee And Agents...............................63
Section 11.07. Legal Holidays............................................63
Section 11.08. No Recourse Against Others................................63
Section 11.09. Counterparts..............................................64
Section 11.10. Variable Provisions.......................................64
Section 11.11. Governing Law.............................................65
Section 11.12. No Adverse Interpretation Of Other Agreements.............66
Section 11.13. Successors................................................66
Section 11.14. Severability..............................................66
Section 11.15. Table Of Contents, Headings, Etc..........................66
Section 11.16. Qualification Of Indenture................................66
Section 11.17. Amendments To Collateral Agreements.......................66
Section 11.18. Registration Rights.......................................67
Page 21 of 155
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INDENTURE dated as of August 6, 1997 between Wright Medical Technology,
Inc., a Delaware corporation ("Company"), and State Street Bank and Trust
Company, a Massachusetts trust company
("Trustee").
Each party agrees as follows for the benefit of the other party and for
the equal and ratable benefit of the Holders of the Company's 11 3/4 % Series C
Senior Secured Step-Up Notes due July 1, 2000 (the "Series C Notes") and the
class of 11 3/4 % Series D Senior Secured Step-Up Notes due July 1, 2000 to be
exchanged for the Series C Notes (the "Exchange Notes" and, together with the
Series C Notes, the "Securities"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions.
"Acquired Debt" means, with respect to any specified Person,
Indebtedness of any other Person existing at the time such other person merged
with or into or became a Subsidiary of such specified person, including
Indebtedness incurred in connection with, or in contemplation of, such other
person merging with or into or becoming a Subsidiary of such specified person.
"Acquisition" means the acquisition of substantially all of the assets
of the large joint orthopedic implant business of Dow Corning Corporation and
its subsidiary Dow Corning Wright Corporation by the Company pursuant to that
certain Purchase and Sale Agreement, dated as of May 14, 1993, by and among the
Company, Dow Corning Corporation and its subsidiary Dow Corning Wright
Corporation.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" (including, with correlative meanings, the terms "controlled by" and
"under common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided, however,
that beneficial ownership of
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10% or more of the voting securities of a Person shall be deemed to
control. Notwithstanding the above, neither Jefferies & Company, Inc.
nor any of its Affiliates shall be deemed to be Affiliates of the
Company.
"Agent" means any Registrar, Paying Agent, or co-registrar.
"Board of Directors" means the Board of Directors of the Company or
any authorized committee of the Board.
"Business Day" means any day other than a Legal Holiday.
"Business Segment" means (i) each Significant Subsidiary or (ii) any
assets or properties of the Company or any of its Subsidiaries, now owned or
hereafter acquired, with an aggregate value of $5 million or greater. For the
purposes of determining the "value" for this definition, such assets or
properties shall be deemed to be valued at $5 million or greater if (a) they are
sold by the Company or any of its Subsidiaries for $5 million or more or (b)
they otherwise have a fair market value at the time of transfer of $5 million or
more.
"capital lease obligation" means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be so required to be capitalized on the balance sheet in
accordance with GAAP.
"Capital Stock" means any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock, including,
without limitation, partnership interests.
"Cash Equivalents" means (i) readily marketable obligations of or
obligations guaranteed by the United States of America or issued by any agency
thereof and backed by the full faith and credit of the United States of America,
(ii) readily marketable direct obligations issued by any state of the United
States of America or any political subdivision thereof having the highest rating
obtainable from either Moody's Investors Service, Inc. or Standard & Poor's
Corporation, Inc., (iii) commercial paper having a rating in one of the two
highest rating categories of Moody's Investors Services, Inc. or Standard &
Poor's Corporation, Inc., (iv) certificates of deposit issued by, bankers'
acceptances and deposit accounts of, and time deposits with, commercial banks of
recognized standing chartered in the United States of America or Canada with
capital, surplus and undivided profits aggregating in excess of $500,000,000,
(v) readily marketable debt securities issued by domestic corporations and (vi)
shares of money market funds that invest solely in Investments of the kind
described in clauses (i) through (v) above.
Page 23 of 155
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"Collateral" means (i) all "Collateral" as defined in the Security
Agreement and the Intellectual Property Security Agreements; (ii) all "Pledged
Collateral" as defined in the Pledge Agreement; (iii) all real property
mortgaged pursuant to the Deed of Trust; and (iv) any property or interest, in
which a security interest is required to be, or has been,
granted pursuant to Section 10.01(b) hereof.
"Collateral Agent" means State Street Bank and Trust Company, N.A.
or any successor thereto and thereafter means the successor.
"Collateral Agreements" means, collectively, the following agreements
between the Company and the Collateral Agent, each dated the date hereof: (i)
the Security Agreement attached hereto as Exhibit C; (ii) the Pledge Agreement
attached hereto as Exhibit D; (iii) the Intellectual Property Security
Agreements; (iv) the Deed of Trust attached hereto as Exhibit E; and (v) all
other agreements, documents and instruments from time to time required to create
or grant a Security Interest as contemplated in Section 10.01(b) hereof.
"Company" means the party named as such above until a successor
replaces it in accordance with Article 5 and thereafter means the successor.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus (a) an
amount equal to any extraordinary loss plus any net loss realized in connection
with an Asset Sale (to the extent such losses were deducted in computing
consolidated Net Income), plus (b) provision for taxes based on income or
profits to the extent such provision for taxes was included in computing
Consolidated Net Income, plus (c) consolidated interest expense of such Person
for such period, whether paid or accrued (including amortization of original
issue discount, non-cash interest payments and the interest component of capital
lease obligations), to the extent such expense was deducted in computing
Consolidated Net Income, plus (d) amortization (including amortization of
goodwill and other intangibles) of such person for such period to the extent
such amortization was deducted in computing Consolidated Net Income, in each
case, on a consolidated basis and determined in accordance with GAAP.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP;
provided, that (i) the Net Income of any Person that is not a Subsidiary or that
is accounted for by the equity method of accounting shall be included only to
the extent of the amount of dividends or distributions paid to the referent
Person or a wholly owned Subsidiary, (ii) the Net Income of any Person that is a
Subsidiary (other than a Subsidiary of which at least 80% of the Capital Stock
having
Page 24 of 155
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ordinary voting power for the election of directors or other governing body of
such Subsidiary is owned by the referent Person directly or indirectly through
one or more Subsidiaries) shall be included only to the extent of the amount of
dividends or distributions paid to the referent Person or a wholly owned
Subsidiary, (iii) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition shall
be excluded and (iv) the cumulative effect of a change in accounting principles
shall be excluded.
"Consolidated Net Worth" means, with respect to any Person, the sum of
(i) the consolidated equity of the common stockholders of such Person and its
consolidated Subsidiaries plus (ii) the respective amounts reported on such
Person's most recent balance sheet with respect to any series of preferred stock
(other than Disqualified Stock) that by its terms is not entitled to the payment
of dividends unless such dividends may be declared and paid only out of net
earnings in respect of the year of such declaration and payment, but only to the
extent of (i) any cash received by such Person upon issuance of such preferred
stock and (ii) the fair market value of any non-cash consideration received by
such Person upon issuance of such preferred stock provided that such value has
been determined in good faith by a nationally-recognized investment bank, plus
(iii) with respect to the Company, the respective amounts reported on the
Company's most recent balance sheet for the Series A Preferred Stock, less (x)
all write-ups, subsequent to the date of the Indenture, in the book value of
assets owned by such Person or a consolidated Subsidiary of such Person, other
than (A) write-ups resulting from foreign currency translations and (B)
write-ups upon the acquisition of assets acquired in a transaction to be
accounted for by purchase accounting under GAAP, (y) all investments in
unconsolidated Subsidiaries and in persons that are not Subsidiaries (except, in
each case, a Permitted Investment), and (z) all unamortized debt discount and
expense and unamortized deferred financing charges (except deferred financing
charges arising from this issuance of the Securities), all of the foregoing
determined in accordance with GAAP; provided, however, that for the purposes of
Section 4.14 herein, the calculation of consolidated equity of the common
stockholders of the Company and its consolidated Subsidiaries as expressed in
the first clause (i) of this definition shall not require a deduction for
accrued dividends on the Company's Series B Preferred Stock and Series C
Preferred Stock.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 11.10 or such other address as the Trustee may give
notice to the Company.
"Co-Trustee" means any Person appointed by the Trustee pursuant to
Section 7.12 hereof.
"Deed of Trust" means the Deed of Trust dated as of the date hereof,
Page 25 of 155
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among the Company, the Collateral Agent and J. Martin Regan, Jr., as trustee for
the benefit of the Collateral Agent, for the further benefit of the Trustee and
the Holders, the form of which is attached hereto as Exhibit E.
"Default" means any event known to the Company or which should have
been known to the Company after due inquiry that is or with the passage of time
or the giving of notice or both would be an Event of Default.
"Definitive Securities" means Securities that are in the form of the
Series C Note (attached hereto as Exhibit A-1) or the Series D Note (attached
hereto as Exhibit A-2), that do not include the information called for by
footnotes 1 and 2 thereof.
"Depository" means, with respect to the Securities issuable or issued
in whole or in part in global form, the person specified in Section 2.03 as the
Depository with respect to the Securities, until a successor shall have been
appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depository" shall mean or include such successor.
"Disqualified Stock" means any Capital Stock which, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures, or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the
maturity date of the Securities.
"Equity Interests" means Capital Stock or warrants, options or other
rights to acquire capital stock (but excluding any debt security which is
convertible into, or exchangeable for, Capital Stock).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Notes" means the Series D Senior Secured Notes due 2000 to be
issued pursuant to this Indenture in connection with the offer to exchange such
notes for Series C Notes that may be made by the Company pursuant to the
Registration Rights Agreement.
"Fixed Charges" means, with respect to any Person for any period, the
sum of (a) consolidated interest expense of such Person for such period, whether
paid or accrued, to the extent such expense was deducted in computing
Consolidated Net Income (including amortization of original issue discount,
non-cash interest payments and the interest component of capital leases but
excluding amortization of deferred financing fees) and (b) the product of (i)
all cash dividend payments (and non-cash dividend payments in the case of a
person that is a Subsidiary) on any series of
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preferred stock of such Person, times (ii) a fraction, the numerator of which is
one and the denominator of which is one minus the then current combined federal,
state and local statutory tax rate of such person, expressed as a decimal, in
each case, on a consolidated basis and in accordance with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person for such period. In the event that the
Company or any of its Subsidiaries incurs, assumes, guarantees, repays,
repurchases or redeems any Indebtedness (other than any Indebtedness under the
Revolving Credit Facility, or any other revolving credit borrowings) or issues
preferred stock subsequent to the commencement of the period for which the Fixed
Charge Coverage Ratio is being calculated but prior to the event for which the
calculation of the Fixed Charge Coverage Ratio is made, then the Fixed Charge
Coverage Ratio shall be calculated giving pro forma effect to such incurrence,
assumption, guarantee, repayment, repurchase or redemption of Indebtedness, or
such issuance or redemption of preferred stock, as if the same had occurred at
the beginning of the applicable period.
"Foreign Subsidiary" means, for any Person, any Subsidiary of such
Person that derives substantially all of its revenues from sales to non-
U.S. Persons.
"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 approved by a significant segment of the accounting profession,
which are in effect on the date of the Indenture.
"Global Security" means a Security that contains the paragraph referred
to in footnote 1 and the additional schedule referred to in footnote 2 to the
form of the Series C Note attached hereto as Exhibit A- 1 or the Series D Note
attached hereto as Exhibit A-2.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person
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against fluctuations in interest rates.
"Holder" or "Securityholder" means a Person in whose name a Security
is registered.
"Indebtedness" means, with respect to any Person, any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or representing the
balance deferred and unpaid of the purchase price of any property (including
pursuant to capital leases, but excluding the balance deferred and unpaid of the
purchase price of currency) or representing any Hedging Obligations, except any
such balance that constitutes an accrued expense or trade payable, if and to the
extent any of the foregoing indebtedness (other than Hedging Obligations) would
appear as a liability upon a balance sheet of such person prepared in accordance
with GAAP, and also includes, to the extent not otherwise included, the
Guarantee of items which would be included within this definition.
"Indenture" means this Indenture dated as of August 6, 1997, as further
amended or supplemented from time to time.
"Intellectual Property" means patents, patent applications, trademarks,
trademark applications and registrations, trade names, service marks, service
mark applications and registrations, copyrights, designs, rights in confidential
and proprietary information (other than personal property described in Section
10.01(d)(i)(C)(3)) and other intellectual property and any license to use any of
the same and rights in any thereof.
"Intellectual Property Security Agreements" means, collectively, (i)
the Confirmation and Grant of Security Interest in Trademarks, the form of which
is attached hereto as Exhibit F, and (ii) the Confirmation and Grant of Security
Interest in Patents, the form of which is attached hereto as Exhibit G, each
dated the date hereof, between the Company and the Collateral Agent.
"Investments" means, with respect to any Person, all investments by
such Person in other persons (including Affiliates) in the forms of loans
(including Guarantees), advances or capital contributions (excluding commission,
travel and similar advances to officers and employees made in the ordinary
course of business), purchases or other acquisitions for consideration of
Indebtedness, Equity Interests or other securities and all other items that are
or would be classified as investments on a balance sheet prepare in accordance
with GAAP.
"Kidd Kamm" means Kidd Kamm Equity Partners, L.P., and any successor
thereto.
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"Letters of Transmittal" means, collectively, those certain Letters of
Transmittal and Exit Consents by and among the Company and those Holders of
Series B Notes tendering in the offer to exchange Series B Notes for Series C
Notes.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Liquidated Damages" means all liquidated damages then owing pursuant
to Section 2.4 of the Registration Rights Agreement.
"Management Services Agreement" means that certain Management Services
Agreement, dated as of June 30, 1993, by and between the Company and Kidd, Kamm
& Company, pursuant to which Kidd, Kamm & Company will provide management
consulting services from time to time.
"Net Income" means, with respect to any person, the net income (loss)
of such person, determined in accordance with GAAP, excluding, however, any gain
(but not loss), together with any related provision for taxes on such gain (but
not loss), realized in connection with any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions), and
excluding any extraordinary gain (but not loss), together with any related
provision for taxes on such extraordinary gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Subsidiaries in respect of any Asset Sale, net of the
direct costs relating to such Asset Sale (including, without limitation, legal,
accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be applied to
the repayment of Indebtedness secured by a Lien on the asset or assets the
subject of such Asset Sale and any reserve for adjustment in respect of the sale
price of such asset or assets.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering Circular" means the Offering Circular, dated the date
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hereof, and all supplements thereto, and all exhibits, schedules or other
attachments thereto.
"Officer" means the Chairman of the Board, the Vice Chairman, the
President, any Vice-President, the Treasurer, the Controller, the Secretary, any
Assistant Treasurer or any Assistant Secretary of the Company.
"Officers' Certificate" means a certificate signed by two Officers, one
of whom must be the Chairman of the Board, the President, the Treasurer or a
Vice-President of the Company. See Sections 11.04 and 11.05.
"Old Indenture" means the Indenture, dated as of June 30, 1993, between
the Company and State Street Bank and Trust Company as successor trustee for the
holders of the Company's Series A and B 10 3/4% Senior Secured Notes, as amended
and supplemented.
"Opinion of Counsel" means a written opinion from legal counsel who
is acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee. See Sections 11.04 and 11.05
"Permitted Investments" means (a) any Investments in the Company; (b)
any Investments in Cash Equivalents; (c) Investments by the Company in a Person,
if as a result of such Investment (i) such Person becomes a wholly owned
Subsidiary of the Company and the Capital Stock of such Subsidiary is pledged to
secure the obligations under the Securities or (ii) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, the Company or a wholly owned
Subsidiary of the Company; (d) Investments by the Company in any other Person
(whether or not the Investment is in the form of Capital Stock or Indebtedness
issued by, or other Equity Interests relating to, such other Person), provided
that (i) such other Person is not then, and does not thereby become, a
Subsidiary of the Company, (ii) the Board of Directors has adopted a resolution
evidencing its determination that such Investment is in furtherance of a
corporate purpose of the Company, (iii) no Default under Section 4.08 of the
Indenture would result from such Investment and (iv) the aggregate amount of all
Investments under this clause (d) does not exceed $10.0 million at any one time
outstanding; and (e) other Investments that do not exceed in the aggregate $2.0
million at any time outstanding.
"Permitted Liens" means (a) Liens in favor of the Company and/or its
Subsidiaries other than with respect to intercompany Indebtedness; (b) Liens on
property of a Person existing at a time such Person is acquired by, merged into
or consolidated with the Company or any Subsidiary of the Company; (c) Liens on
property existing at the time of
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acquisition thereof by the Company or any Subsidiary of the Company; provided,
that such Liens were not created in contemplation of such acquisition; (d) Liens
incurred in the ordinary course of business in respect of Hedging Obligations or
to support trade letters of credit; (e) Liens to secure Indebtedness for
borrowed money of a Subsidiary to the Company or to another wholly owned
Subsidiary; (f) Liens (other than pursuant to ERISA or environmental laws) to
secure the performance of statutory obligations, surety or appeal bonds,
performance bonds or other obligations of a like nature incurred in the ordinary
course of business; (g) Liens existing on the date of the Indenture including
those securing the Securities; (h) Liens for taxes, assessments or governmental
charges or claims that are not yet delinquent or that are being contested or
remedied in good faith by appropriate proceedings promptly instituted and
diligently concluded; provided, that any reserve or other appropriate provision
as shall be required in conformity with GAAP shall have been made therefor; (i)
Liens arising by reason of any judgment, decree or order of any court with
respect to which the Company or any of its Subsidiaries shall then in good faith
be prosecuting appeal or other proceedings for review, the existence of which
judgment, order or decree is not an Event of Default under the Indenture; (j)
encumbrances consisting of zoning restrictions, survey exceptions, utility
easements, licenses, rights of way, easements of ingress or egress over property
of the Company or any of its Subsidiaries, rights or restrictions of record on
the use of real property, minor defects in title, landlord's and lessor's liens
under leases on property located on the premises rented, any interest or title
of a lessor in respect of any capital lease, and similar encumbrances, rights or
restrictions on personal or real property not interfering in any material
respect with the ordinary conduct of the business of the Company or any of its
Subsidiaries; (k) Liens and priority claims incidental to the conduct of
business or the ownership of properties incurred in the ordinary course of
business and not in connection with the borrowing of money or the obtaining of
advances or credit, including, without limitation, liens incurred or deposits
made in connection with mechanic's liens, workers' compensation, unemployment
insurance and other types of social security, or to secure the performance of
tenders, bids, and government contracts; and (l) any extension, renewal, or
replacement (or successive extensions, renewals or replacements), in whole or in
part, of Liens described in clauses (a) through (k) above.
"Person" or "person" means any individual, corporation, partnership,
joint venture, association, joint stock company, limited liability company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Pledge Agreement" means the Pledge Agreement, dated the date hereof,
between the Company and the Collateral Agent, the form of which
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is attached hereto as Exhibit D.
"principal" of a debt security means the principal of the security plus
the premium, if any, on the security.
"Purchase Money Lienholder" means a lienholder of a Purchase Money Lien
permitted by this Indenture.
"Purchase Money Obligations" means Indebtedness representing, or
incurred to finance, the cost of acquiring any assets (including Purchase Money
Obligations of any other Person at the time such other Person is merged with or
into or is otherwise acquired by the Company), other than the assets acquired in
the Acquisition; provided that (i) the principal amount of such Indebtedness
does not exceed 100% of such cost, (ii) any Lien securing such Indebtedness does
not extend to or cover any other asset or property other than the asset or
property being so acquired and (iii) such Indebtedness is incurred, and any
Liens with respect thereto are granted, within 180 days of the acquisition of
such property or asset.
"Purchase Money Liens" means (i) Liens to secure or securing Purchase
Money Obligations permitted to be incurred under the Indenture and (ii) Liens to
secure Refinancing Indebtedness incurred solely to Refinance Purchase Money
Obligations provided that such Refinancing Indebtedness is incurred no later
than six (6) months after the
satisfaction of such Purchase Money Obligations.
"Registration Rights Agreement" means the Registration Rights Agreement
dated the date hereof, by and among the Tenderors and the Company, as such
agreement may be amended, modified or supplemented from time to time.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Securities" means Securities which were acquired by the
Holder thereof other than pursuant to an effective registration statement under
the Securities Act of 1933, as amended, or Rule 144 (or any successor rule)
thereunder.
"Revolving Credit Facility" means the credit facility which may provide
for revolving credit borrowings and/or trade letters of credit and/or standby
letters of credit, in an aggregate principal amount (as to borrowings) and
aggregate undrawn face amount (as to letters of credit) that does not in the
aggregate exceed $50 million at any one time outstanding, and which credit
facility does or may include one or more Subsidiaries of the Company or others
as obligors thereunder, and does or may include any related notes, guarantees,
collateral documents,
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instruments and agreements from time to time executed in connection therewith,
and in each case as amended, modified, renewed, refunded, replaced or refinanced
from time to time as permitted in this Indenture.
"Sale" means (i) the sale, lease or transfer of all or substantially
all of the Company's assets to any Person or group (other than the Principals
and their Related Parties (as defined in Section 4.12(b)) or (ii) the
acquisition by any Person or group (as such term is used in Section 13(d)(3) of
the Exchange Act) (other than the Principals and their Related Parties (as
defined in Section 4.12(b)) of a direct or indirect majority interest (more than
50%) in the voting power of the Voting Stock of the Company by way of merger or
consolidation or otherwise.
"SEC" means the Securities and Exchange Commission.
"Securities" means, collectively, the Series C Notes issued pursuant to
this Indenture, and when and if issued as provided in the Registration Rights
Agreement, the Series D Notes.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Custodian" means the Trustee, as custodian with respect to
the Securities in global form, or any successor entity thereto.
"Security Agreement" means the Security Agreement, dated as of the date
hereof, between the Company and the Collateral Agent, the form of which is
attached hereto as Exhibit C.
"Security Interest" means the Liens on the Collateral created by this
Indenture and the Collateral Agreements (including the Liens required to be
granted and/or granted pursuant to Section 10.01(b)) in favor of the Collateral
Agent for the benefit of the Collateral Agent, the Trustee and the Holders.
"Series C Notes" means the Series C Notes issued pursuant to this
Indenture.
"Series D Notes" means the Exchange Notes.
"Series A Preferred Stock" means the Company's Series A Preferred
Stock, par value $.01 per share, issued and outstanding as of the date of this
Indenture.
"Series B Preferred Stock" means the Company's issued and outstanding
Series B Preferred Stock, par value $.01 per share.
"Series C Preferred Stock" means the Company's issued and outstanding
Series C Preferred Stock, par value $.01 per share.
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"Significant Subsidiary" means any Subsidiary which would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulations S-X,
promulgated pursuant to the Act, as such Regulation is in effect on the date
hereof.
"Subsidiary" means, with respect to any person, any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
person or one or more of the other Subsidiaries of that person or a combination
thereof.
"Tenderors" means the persons named on the signature pages attached to
the Letters of Transmittal who have tendered Securities.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code ss.ss. 77aaa-
77bbbb), as amended, and as in effect on the date of execution of this
Indenture.
"Transfer Restricted Securities" means Securities that bear or are
required to bear the legend set forth in Section 2.06(g) hereof.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor.
"Trust Officer" means any officer in the Corporate Trust Office of the
Trustee or any other officer or assistant officer of the Trustee assigned by the
Trustee to administer its corporate trust matters.
"Voting Stock" means, with respect to any Person, one or more classes
of the Capital Stock of such Person having general voting power under ordinary
circumstances to elect at least a majority of the board of directors, managers
or trustees of such Person (irrespective of whether or not at the time Capital
Stock of any other class or classes shall have or might have voting power by
reason of the happening of any contingency).
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years (rounded to the nearest
one-twelfth) obtained by dividing (a) the then outstanding principal amount of
such Indebtedness into (b) the total of the product obtained by multiplying (x)
the amount of each then remaining installment, sinking fund, serial maturity or
other required payments of principal, including payment at final maturity, in
respect thereof, by (y) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making of such payment.
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Section 1.02. Other Definitions.
Defined in Term Section
"Affiliate Transaction".........................................4.13(a)
"Asset Sale"....................................................4.11(a)
"Asset Sale Offer"................................................3.08
"Asset Sale Application Period"...................................4.11
"Bankruptcy Law"..................................................6.01
"Change of Control"...............................................4.12
"Change of Control Date"..........................................4.12
"Change of Control Offer".........................................4.12
"Change of Control Payment Date"..................................4.12
"Custodian".......................................................6.01
"DTC".............................................................2.03
"Event of Default"................................................6.01
"Excess Proceeds".................................................4.11
"Incur"...........................................................4.08
"Legal Holiday"..................................................11.07
"Minimum Equity"..................................................4.15
"Offer"...........................................................4.15
"Offer Amount"....................................................4.15
"Offer Period"....................................................4.15
"Paying Agent"....................................................2.03
"Purchase Money Indebtedness".....................................4.08
"Refinance".......................................................4.08
"Refinancing Indebtedness"........................................4.08
"Registrar".......................................................2.03
"Restricted Payments".............................................4.07
"Specified Asset"..............................................10.01(b)
"U.S. Government Obligations".................................. . 8.01
Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Securities;
"indenture security holder" means a Securityholder;
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"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee;
"obligor" on the Securities means the Company.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
Section 1.04. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a provision
of the Trust Indenture Act or another provision that would be required or deemed
under such Act to be a part of and govern this Indenture if this Indenture were
subject thereto, the latter provision shall control. If any provision of this
Indenture modifies or excludes any provision of the Trust Indenture Act that may
be so modified or excluded, the latter provision shall be deemed to apply to
this Indenture as so modified or to be excluded, as the case may be.
Section 1.05. 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 in the
plural include the singular; and
(5) provisions apply to successive events and transactions.
ARTICLE 2
THE SECURITIES
Section 2.01. Form and Dating.
The Securities and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A-1 to this Indenture. The Exchange Notes
and the Trustee's certificate of authentication shall be
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substantially in the form of Exhibit A-2 to this Indenture. The aggregate
principal amount of Securities shall initially be no greater than $85,000,000.
In the event Exchange Notes are issued pursuant to the exchange offer
contemplated by the Registration Rights Agreement, the principal amount of
Series C Notes outstanding shall be reduced by the amount of Exchange Notes so
issued. The Securities may have notations, legends or endorsements required by
law, stock exchange rule or usage. Each Security shall be dated the date of its
authentication. The Securities shall be in denominations of $1,000 and integral
multiples thereof. After the Securities have ceased to be Restricted Securities,
the Company shall from time to time prepare and deliver to the Trustee printed
and engraved forms of Note certificates in quantities specified by the Trustee.
The terms and provisions contained in the Securities 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, and the Holders by accepting the Securities, expressly agree to such
terms and provisions and to be bound thereby. In case of a conflict, the
provisions of this Indenture shall control.
The Series C Notes will initially be issued in registered form as
Definitive Securities. Certain of the Series C Notes (after satisfaction of the
restrictions in Section 2.06 hereof) and Exchange Notes will be issued in global
form, substantially in the form of Exhibits A-1 and A-2, respectively, attached
hereto (including footnotes 1 and 2 thereto). The Global Securities shall
represent such of the outstanding Securities as shall be specified therein and
each shall provide that it shall represent the aggregate amount of outstanding
Securities from time to time endorsed thereon and that the aggregate amount of
outstanding Securities represented thereby may from time to time be reduced or
increased, as appropriate, to reflect exchanges and redemptions. Any endorsement
of a Global Security to reflect the amount of any increase or decrease in the
amount of outstanding Securities represented thereby shall be made by the
Trustee or the Securities Custodian, at the direction of the Trustee, in
accordance with instructions given by the Holder thereof.
Section 2.02. Execution and Authentication.
Two Officers shall sign the Securities for the Company by manual or
facsimile signature. The Company's seal shall be reproduced on the Securities
and may be in facsimile form.
If an Officer whose signature is on a Security no longer holds that
office at the time the Security is authenticated by the Trustee, the Security
shall nevertheless be valid.
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A Security shall not be valid until authenticated by the authorized
manual signature of the Trustee. The signature shall be conclusive evidence that
the Security has been authenticated under this Indenture.
The Trustee shall authenticate Securities for original issue up to the
aggregate principal amount stated in paragraph 4 of the Securities, upon a
written order of the Company signed by two Officers or by one Officer and either
an Assistant Treasurer or Assistant Secretary of the Company, delivered to a
Trust Officer of the Trustee. The aggregate principal amount of Securities
outstanding at any time may not exceed such amount except as provided in Section
2.07 hereof. Such order shall specify the amount of the Series C Notes to be
authenticated and the date upon which the original issue thereof is to be
authenticated. In addition, on or prior to the registered exchange offer
consummation date contemplated hereby, the Trustee shall authenticate Exchange
Notes to be issued in the registered exchange offer in the same aggregate
principal amount as Series A Notes upon a written order of the Company signed by
two Officers or by one Officer and either an Assistant Treasurer or an Assistant
Secretary of the Company. Such order shall specify the amount of the Exchange
Notes to be authenticated in the registered exchange offer.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. An authenticating agent may authenticate
Securities whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company or
an Affiliate of the Company.
Section 2.03. Registrar and Paying Agent.
The Company shall maintain in the Borough of Manhattan, City of New
York, State of New York, and in such other locations as it shall determine, (i)
an office or agency where Securities may be presented for registration of
transfer or for exchange ("Registrar") and (ii) an office or agency where
Securities may be presented for payment ("Paying Agent"). The Registrar shall
keep a register of the Securities and of their transfer and exchange. The
Company may appoint one or more co-registrars and one or more additional paying
agents. The term "Registrar" includes any co-registrar and the term "Paying
Agent" includes any additional paying agent. The Company may change any Paying
Agent or Registrar without notice to any Holder. The Company shall notify the
Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.
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The Company initially appoints The Depository Trust Company ("DTC") to
act as Depository with respect to the Global Securities.
The Company initially appoints State Street Bank and Trust Company,
N.A., to act as Securities Custodian with respect to the Global Securities.
Section 2.04. Paying Agent to Hold Money in Trust.
Prior to each due date of the principal or interest on any Security,
the Company shall deposit with the Paying Agent sufficient funds to pay
principal, premium, if any, and interest then so becoming due. The Company shall
require each Paying Agent other than the Trustee to agree in writing that the
Paying Agent will hold in trust for the benefit of Holders or the Trustee all
money held by the Paying Agent for the payment of principal or interest on the
Securities, and will notify the Trustee of any default by the Company in making
any such payment. While any such default continues, the Trustee may require a
Paying Agent to pay all money held by it to the Trustee. The Company at any time
may require a Paying Agent to pay all money held by it to the Trustee. Upon
payment over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. The
Company shall notify the Trustee in writing of the name and address of the
Paying Agent if a person other than the Trustee is named Paying Agent at any
time or from time to time.
Section 2.05. Securityholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is not
the Registrar, the Company shall furnish to the Trustee at least seven Business
Days before each Interest Payment Date and, at such other times as the Trustee
may request in writing, a list in such form and as of such date as the Trustee
may reasonably require of the names and addresses of Holders, and the Company
shall otherwise comply with TIA ss. 312(a).
Section 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Definitive Securities. When
Definitive Securities are presented to the Registrar with the request:
(x) to register the transfer of the Definitive Securities;
or
(y) to exchange such Definitive Securities for an equal
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principal amount of Definitive Securities of other
authorized denominations.
the Registrar shall register the transfer or make the exchange as requested if
its requirements for such transactions are met; provided, however, that the
Definitive Securities presented or surrendered for register of transfer or
exchange:
(i) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the
Registrar duly executed by the Holder thereof or by his
attorney, duly authorized in writing; and
(ii) in the case of Transfer Restricted Securities that are
Definitive Securities, shall be accompanied by the
following additional information and documents, as
applicable:
(A) if such Transfer Restricted Securities is being
delivered to the Registrar by a Holder for
registration in the name of such Holder, without
transfer, a certification from such Holder to that
effect in substantially the form of Exhibit B
hereto); or
(B) if such Transfer Restricted Security is being
transferred pursuant to any available exemption
from the registration requirements of the
Securities Act, a certification to that effect (in
substantially the form of Exhibit B hereto),
subject to the Company's right prior to any such
transfer to further require the delivery of an
Opinion of Counsel, certifications and other
information reasonably acceptable to the Company
and to the Registrar to the effect that such
transfer is in compliance with the Securities Act,
provided, however, that an Opinion of Counsel shall
not be required in the event of a transfer pursuant
to Rule 144 or Rule 144A under the Securities Act.
(b) Restrictions on Transfer of a Definitive Security for a Beneficial
Interest in a Global Security. A Definitive Security may not be exchanged for a
beneficial interest in a Global Security except upon satisfaction of the
requirements set forth below. Upon receipt by the Trustee of a Definitive
Security, duly endorsed or accompanied by appropriate instruments of transfer,
in form satisfactory to the Trustee, together with:
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(i) if such Definitive Security is a Transfer Restricted
Security, certification, substantially in the form of
Exhibit B hereto, that such Definitive Security is being
transferred to a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act) in
accordance with Rule 144A under the Securities Act; and
(ii) whether or not such Definitive Security is a Transfer
Restricted Security, written instructions directing the
Trustee to make, or to direct the Securities Custodian to
make, an endorsement on the Global Security to reflect an
increase in the aggregate principal amount of the
Securities represented by the Global Security.
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depository and the Securities Custodian, the
aggregate principal amount of Securities represented by the Global Security to
be increased accordingly. If no Global Securities are then outstanding, the
Company shall issue and the Trustee shall authenticate a new Global Security in
the appropriate principal amount.
(c) Transfer and Exchange of Global Securities. The transfer and
exchange of Global Securities or beneficial interests therein shall be effected
through the Depository, in accordance with this Indenture (including the
restrictions on transfer set forth herein and the procedures of the Depository
therefor.
(d) Transfer of a Beneficial Interest in a Global Security for a
Definitive Security.
(i) Any Person having a beneficial interest in a Global
Security may upon request exchange such beneficial
interest for a Definitive Security. Upon receipt by the
Trustee of written instructions or such other form of
instructions as is customary for the Depository from the
Depository or its nominee on behalf of any Person having
a beneficial interest in a Global Security and upon
receipt by the Trustee of a written order or such other
form of instructions as is customary for the Depository
or the Person designated by the Depository as having
such a beneficial interest in a Transfer Restricted
Security only, the following additional information and
documents (all of which may be submitted by facsimile):
(A) if such beneficial interest is being transferred to
the Person designated by the Depository as being
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the beneficial owner, a certification from such
person to that effect (in substantially the form of
Exhibit B hereto); or
(B) if such beneficial interest is being transferred to
a "qualified institutional buyer" (as defined in
Rule 144A under the Securities Act) in accordance
with Rule 144A under the Securities Act or pursuant
to an exemption from registration in accordance
with Rule 144 or Regulation S under the Securities
Act or pursuant to an effective registration
statement under the Securities Act, a certification
to that effect from the transferor (in
substantially the form of Exhibit B hereto); or
(C) if such beneficial interest is being transferred in
reliance on another exemption from the registration
requirements of the Securities Act, a certification
to that effect from the transferee or transferor
(in substantially the form of Exhibit B hereto) and
an Opinion of Counsel from the transferee or
transferor reasonably acceptable to the Company and
to the Registrar to the effect that such transfer
is in compliance with the Securities Act.
then the Trustee or the Securities Custodian, at the direction of the Trustee,
will cause, in accordance with the standing instructions and procedures existing
between the Depository and the Securities Custodian, the aggregate principal
amount of the Global Security to be reduced and following such reduction, the
Company will execute and, upon receipt of an authentication order in the form of
an Officers' Certificate, the Trustee will authenticate and deliver to the
transferee a Definitive Security.
(ii) Definitive Securities issued in exchange for a
beneficial interest in a Global Security pursuant to
this Section 2.06(d) shall be registered in such names
and in such authorized denominations as the Depository,
pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee.
The Trustee shall deliver such Definitive Securities to
the persons in whose names such Securities are so
registered.
(e) Restrictions on Transfer and Exchange of Global Securities.
Notwithstanding any other provisions of this Indenture (other than the
provision set forth in subsection (f) of this Section 2.06), a Global
Security may not be transferred as a whole except by the Depository to
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a nominee of the Depository or by a nominee of the Depository to the Depository
or another nominee of the Depository or by the Depository or any such nominee to
a successor Depository or a nominee of such successor Depository.
(f) Authentication of Definitive Securities in Absence of
Depository. If at any time:
(i) the Depository for the Securities notifies the Company
that the Depository is unwilling or unable to continue
as Depository for the Global Securities and a successor
Depository for the Global Securities is not appointed by
the Company within 90 days after deliver of such notice;
or
(ii) the Company, at its sole discretion, notifies the
Trustee in writing that it elects to cause the issuance
of Definitive Securities under this Indenture.
then the Company will execute, and the Trustee, upon receipt of an Officers'
Certificate requesting the authentication and delivery of Definitive Securities,
will authenticate and deliver Definitive Securities, in an aggregate principal
amount equal to the principal amount of the Global Securities, in exchange for
Global Securities.
(g) Legends.
(i) Except as permitted by the following paragraph (ii),
each Security certificate evidencing the Global
Securities and the Definitive Securities (and all
Securities issued in exchange therefor or substitution
thereof) shall bear a legend in substantially the
following form:
THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR
ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
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THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE
DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO
YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND
THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATED PERSON OR
THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR
OF SUCH SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER
THE SECURITIES ACT, OR (C) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, SUBJECT TO THE COMPANY'S RIGHT PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER PURSUANT TO CLAUSE (C), TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND OTHER
INFORMATION SATISFACTORY TO IT, AND SUBJECT TO THE REQUIREMENT
THAT IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER
IN THE FORM APPEARING ON THIS SECURITY IS COMPLETED AND
DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL
BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE
RESTRICTION TERMINATION DATE.
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security
represented by a Global Security) pursuant to Rule 144
under the Act or an effective registration statement
under the Act.
(A) in the case of any Transfer Restricted Security
that is a Definitive Security, the Registrar shall
permit the Holder thereof to exchange such Transfer
Restricted Security for a Definitive Security that
does not bear the legend set forth above and
rescind any restriction on the transfer of such
Transfer Restricted Security; and
(B) any such Transfer Restricted Security represented
by a Global Security shall not be subject to the
provisions set forth in (i) above (such sales or
transfers being subject only to the provisions of
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Section 2.06(c) hereof); provided, however, that
with respect to any request for an exchange of a
Transfer Restricted Security that does not bear a
legend, which request is made in reliance upon Rule
144, the Holder thereof shall certify in writing to
the Registrar that such request is being made
pursuant to Rule 144 (such certification to be
substantially in the form of Exhibit B hereto).
(h) Cancellation and/or Adjustment of Global Security. At such time as
all beneficial interest in a Global Security have either been exchanged for
Definitive Securities, redeemed, repurchased or canceled, such Global Security
shall be returned to or retained and canceled by the Trustee. At any time prior
to such cancellation, if any beneficial interest in a Global Security is
exchanged for Definitive Securities, redeemed, repurchased or canceled, the
principal amount of Securities represented by such Global Security shall be
reduced and an endorsement shall be made on such Global Security, by the Trustee
or the Securities Custodian, at the direction of the Trustee, to reflect such
reduction.
(i) Obligations with respect to Transfers and Exchanges of
Definitive Securities.
(A) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate
Definitive Securities and Global Securities at the
Registrar's request.
(B) No service charge shall be made to a Holder for any
registration or transfer or exchange, but the Company
may require payment of a sum sufficient to cover any
transfer tax or similar governmental charge payable in
connection therewith (other than any such transfer taxes
or similar governmental charge payable upon exchange or
transfer pursuant to Sections 3.07, 3.08, 4.12 or 9.05
hereof).
(C) The Registrar shall not be required to register the
transfer or exchange of any Definitive Security selected
for redemption in whole or in part, except the
unredeemed portion of any Definitive Security being
redeemed in part.
(D) All Definitive Securities and Global Securities issued
upon any registration of transfer or exchange of
Definitive Securities or Global Securities shall be the
valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under the
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Indenture, as the Definitive Securities or Global
Securities surrendered upon such registration of
transfer or exchange.
(E) The Company shall not be required
(1) to issue, register the transfer of or exchange
Securities during a period beginning at the opening
of business 15 days before the day of any selection
of Securities for redemption under Section 3.02 and
ending at the close of business on the day of
selection, or
(2) to register the transfer of any Security so
selected for redemption in whole or in part, except
the unredeemed portion of any Security being
redeemed in part.
(F) Prior to due presentment for registration of transfer of
any Security, the Trustee, any Agent and the Company may
deem and treat the person in whose name any Security is
registered as the absolute owner of such Security for
the purpose of receiving payment of principal of and
interest on such Security is overdue, and neither the
Trustee, any Agent nor the Company shall be affected by
notice to the contrary.
Section 2.07. Replacement Securities.
If any mutilated Security is surrendered to the Trustee, or the Company
and the Trustee receive evidence to their satisfaction of the destruction, loss
or theft of any Security, the Company shall issue and the Trustee, upon the
written order of the Company signed by an Officer, shall authenticate a
replacement Security if the Trustee's requirements are met. If required by the
Trustee or the Company, an indemnity bond must be supplied by the Holder that is
sufficient in the judgment of the Trustee and the Company to protect the
Company, the Trustee, any Agent or any authenticating agent from any loss which
any of them may suffer if a Security is replaced. The Company may charge for its
expenses in replacing a Security.
Every replacement Security is an additional obligation of the Company
and shall be entitled to all benefits of this Indenture equally and
proportionately with all other Securities duly issued hereunder.
Section 2.08. Outstanding Securities.
The Securities outstanding at any time are all the Securities
authenticated by the Trustee except for those canceled by it, those
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delivered to it for cancellation, those reductions in the interest in a Global
Security effected by the Trustee hereunder, and those described in this Section
as not outstanding.
If a Security is replaced pursuant to Section 2.07 hereof, it ceases to
be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If the principal amount of any Security is considered paid under
Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to
accrue.
Except as set forth in Section 2.09 hereof, a Security does not cease
to be outstanding because the Company or an Affiliate holds the Security.
Section 2.09. Treasury Securities.
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, waiver or consent, Securities owned
by the Company or an Affiliate of the Company shall be considered as though they
are not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Securities which the Trustee knows are so owned shall be so disregarded.
Section 2.10. Temporary Securities.
Until Definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Securities. Temporary
Securities shall be substantially in the form of definitive Securities but may
have variations that the Company considers appropriate for temporary Securities.
Without unreasonable delay, the Company shall prepare and the Trustee shall
authenticate definitive Securities in exchange for temporary Securities. Holders
of temporary Securities shall be entitled to all benefits of this Indenture.
Section 2.11. Cancellation.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Securities surrendered to them for registration of transfer, exchange or
payment. The Trustee shall cancel all Securities surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall dispose of
canceled Securities as the Company directs, subject to requirements of
applicable law. The Company may not issue new Securities to replace Securities
that it has paid or that have been delivered to the Trustee for cancellation.
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Section 2.12. Defaulted Interest.
If the Company fails to make a payment of interest on the Securities,
it shall pay such defaulted interest plus any interest payable on the defaulted
interest, in any lawful manner. It may pay such defaulted interest, plus any
such interest payable on it, to the persons who are Securityholders on a
subsequent special record date. The Company shall fix any such record date and
payment date. At least 15 days before any such record date, the Company shall
mail to Securityholders a notice that states the record date, payment date, and
amount of such interest to be paid.
ARTICLE 3
REDEMPTION
Section 3.01. Notices to Trustee.
If the Company elects to redeem Securities pursuant to the optional
redemption provisions of paragraph 5 of the Securities and Section 3.07 hereof,
it shall notify the Trustee by delivery of an Officers' Certificate at least 45
days but not more than 60 days (unless a shorter notice period shall be
satisfactory to the Trustee) prior to the redemption date and the principal
amount of Securities to be redeemed and the redemption price.
If the Registrar is not the Trustee, the Company shall, concurrently
with each notice of redemption, cause the Registrar to deliver to the Trustee a
certificate (upon which the Trustee may rely) setting forth the principal
amounts of and identifying Restricted Securities held by any Holder.
Section 3.02. Selection of Securities to Be Redeemed.
If less than all the Securities are to be redeemed, the Trustee shall
select the Securities to be redeemed pro rata or by lot or by a method that
occupies with the requirements of any exchange on which the Securities are
listed, if any, and that the Trustee considers fair and appropriate. The Trustee
shall make the selection not more than 60 days and not less than 30 days before
the redemption date form Securities outstanding not previously called for
redemption. The Trustee may select for redemption portions of the principal of
Securities that have denominations larger than $1,000. Securities and portions
of them it selects shall be in amounts of $1,000 or integral multiples of
$1,000; except that if all of the Securities of a Holder are to be redeemed, the
entire outstanding amount of Securities held by such Holder shall be redeemed.
Provisions of this Indenture that apply to Securities called
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for redemption also apply to portions of Securities called for redemption. The
Trustee shall notify the Company promptly of the Securities or portions of
Securities to be called for redemption.
Section 3.03. Notice of Redemption.
Subject to the provisions of Section 3.08 hereof, at least 30 days but
not more than 60 days before a redemption date, the Company shall mail a notice
of redemption to each Holder whose Securities are to be redeemed.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the redemption date;
(2) the redemption price;
(3) if any security is being redeemed in part, the portion of
the principal amount of such Security to be redeemed and that, after
the redemption date, upon surrender of such Security, a new Security or
Securities in principal amount equal to the unredeemed portion will be
issued;
(4) the name and address of the Paying Agent;
(5) that Securities called for redemption must be surrendered
to the Paying Agent to collect the redemption price, that upon
surrender to the Paying Agent such Securities shall be paid at the
redemption price stated in the notice plus accrued interest to the
redemption date, that if fewer than all of the outstanding Securities
are to be redeemed, the identification numbers and principal amounts of
particular Securities to be redeemed and that no representation is made
as to the correctness or accuracy of the Cusip number, if any, set
forth in such notice or printed on the Securities;
(6) that, unless the Company defaults in making the redemption
payment, interest on Securities or portions thereof called for
redemption ceases to accrue on and after the redemption date; and
(7) the paragraph of the Securities pursuant to which the
Securities called for redemption are being redeemed. Failure to give
notice or any defect in the notice to any Holder shall not affect the
validity of notice given to any other Holder.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense.
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Section 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed, Securities called for redemption
become due and payable on the redemption date at the price set forth in the
notice.
Section 3.05. Deposit of Redemption Price.
On or before the redemption date, the Company shall deposit with the
Trustee or with the Paying Agent (or, if the Company or a subsidiary of the
Company is acting as Paying Agent, sufficient funds are deposited with, and
segregated and held in trust by, such Paying Agent in accordance with the terms
of this Indenture) money sufficient to pay the redemption price of and accrued
interest on all Securities to be redeemed on that date (other than Securities or
portions of Securities which have been surrendered by the Company to the Trustee
for cancellation in accordance with the terms of the Indenture). The Trustee or
the Paying Agent shall, after paying itself any sums due it from the Company,
return to the Company promptly any money not required for that purpose.
Section 3.06. Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, the Company
shall issue and the Trustee shall authenticate for the Holder at the expense of
the Company a new Security equal in principal amount to the unredeemed portion
of the Security surrendered.
Section 3.07. Optional Redemption.
The Company may redeem all or any of the Securities, upon the terms and
subject to the conditions set forth in paragraph 5 of the Securities. Any
redemption pursuant to this Section 3.07 shall be made pursuant to the
provisions of Sections 3.01 through 3.06 hereof. The restrictions set forth in
paragraph 5 of the Securities shall not be deemed to limit the Company's right
to make open market purchases of the Securities from time to time.
Section 3.08. Offer to Redeem by Application of Net Proceeds.
No later than 5 days following the expiration of the Asset Sale
Application Period for any Asset Sale in which Excess Proceeds remain from such
Asset Sale (or in the event that the Excess Proceeds from such Asset Sale, plus
the Excess Proceeds from all prior Asset Sales which have not been applied to an
Asset Sale Offer pursuant to Section 3.08, are less than $2.0 million, no later
than 5 days after such time as such aggregate Excess Proceeds, plus the
aggregate amount of Excess Proceeds resulting from any subsequent Asset Sale(s)
which have not been applied to an Asset Sale Offer pursuant to Section 3.08, are
at least equal to $2.0 million), the Company shall notify the Trustee in writing
setting
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forth (i) that an Asset Sale Offer shall be made, (ii) the redemption date,
(iii) the amount of Excess Proceeds and the maximum principal amount of
Securities that may be purchased out of the Excess Proceeds and (iv) the
redemption price, and shall furnish to the Trustee an Officer's Certificate to
the effect and setting forth that (x) the Company has consummated (an) Asset
Sale(s), (y) the conditions set forth in Section 4.11 hereof have been satisfied
and (z) the total amount of Net Proceeds from the Asset Sale(s), the amount of
Net Proceeds, if any, applied by the Company to permanently reduce the
availability under the Revolving Credit Facility and the amount of Net Proceeds,
if any, reinvested by the Company in accordance with Section 4.11. Within 15
days thereafter, the Trustee shall select the Securities to be offered to be
redeemed in accordance with Section 3.02 hereof. Within 10 days thereafter, the
Company shall mail or cause the Trustee to mail (in the Company's name and at
its expense) an offer to redeem (the "Asset Sale Offer") to each Holder of
Securities whose Securities are to be offered to be redeemed. The Asset Sale
Offer shall identify the Securities to which it relates and shall contain the
information required by clauses (1) through (7) of Section 3.03 hereof. The
redemption price shall be 100% of principal amount of the Securities plus
accrued interest to the redemption date. The redemption date shall be at least
75 but not more than 90 days after the mailing of Notice of the Asset Sale
Offer.
A Holder receiving an Asset Sale Offer may elect to have redeemed the
Securities to which the Asset Sale Offer relates by completing and delivering to
the Trustee and the Company, on or before 50 days preceding the redemption date,
the form entitled "Option of Holder to Elect Purchase" on the reverse side of
the Security. A Holder may not elect to have redeemed less than all of the
Securities to which the Asset Sale Offer relates. In the event that less than
all of the Holders receiving an Asset Sale Offer elect to have Securities
redeemed, the Trustee shall promptly select, in accordance with Section 3.02
hereof, additional Securities held by Holders who have elected to have
Securities redeemed in an amount equal to the Securities held by Holders who
received the Asset Sale Offer but did not elect to have Securities redeemed. The
Company or the Trustee (in the Company's name and at its expense) shall, no
later than 40 days preceding the redemption date, mail an additional Asset Sale
Offer to the Holders of the Securities so selected. Such additional Asset Sale
Offer shall be deemed accepted by the Holder unless such Holder provides written
notice of non-acceptance to the Trustee and to the Company on or before 30 days
preceding the redemption date. The Trustee shall thereafter mail a notice of
redemption in accordance with Section 3.03 hereof at least 15 days prior to the
redemption date.
In the event the Excess Proceeds are not evenly divisible by $1,000,
the Trustee shall promptly refund to the Company the remaining portion of such
Excess Proceeds that are not so divisible. The Trustee shall, after paying
itself any sums due it from the Company, return promptly to
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the Company any Excess Proceeds remaining after the redemption of Securities
pursuant to offers to redeem.
Other than as specifically provided in this Section 3.08, any
redemption pursuant to this Section 3.08 shall be made pursuant to the
provisions of Section 3.01 through 3.06 hereof.
ARTICLE 4
COVENANTS
Section 4.01. Payment of Securities.
The Company shall duly pay the principal of and interest on the
Securities on the dates and in the manner provided in the Securities. Principal
and interest shall be considered paid on the date due if the Paying Agent (other
than the Company or a subsidiary of the Company) holds on that date money
designated for and sufficient to pay all principal and interest then due or, if
the Company or a subsidiary of the Company is then acting as Paying Agent, such
Paying Agent holds on that date the full amount of such sufficient money
segregated and held in trust in accordance with the terms of this Indenture. To
the extent lawful, the Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on (i) overdue principal,
at the rate borne by the Securities, compounded semiannually; and (ii) overdue
installments of interest (without regard to any applicable grace period) at the
same rate, compounded semiannually.
Section 4.02. SEC Reports: Financial Statements.
(a) The Company and any other obligor upon the Securities shall file
with the Trustee, within 15 days after filing with the SEC, copies of the annual
reports and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the SEC may by rules and regulations
prescribe) which the Company or any other obligor upon the Securities is
required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange
Act. If either the Company or any other obligor upon the Securities is not
subject to the requirements of such Section 13 or 15(d) of the Exchange Act, the
Company or such other obligor, as the case may be, shall file with the Trustee,
within 15 days after it would have been required to file with the SEC, financial
statements, including any notes thereto (and with respect to annual reports, an
auditors' report by a firm of established national reputation reasonably
satisfactory to the Trustee), and a "Management's Discussion and Analysis of
Financial Condition and Results of Operations," both comparable to that which
the Company or such other obligor, as the case may be, would have been required
to include in such annual reports,
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information, documents or other reports if the Company or such other obligor, as
the case may be, were subject to the requirements of such Section 13 or 15(d) of
the Exchange Act. Subsequent to the qualification of the Indenture under the
TIA, the Company and any other obligor upon the Securities shall also comply
with the provisions of TIA ss. 314(a).
(b) If the Company or any other obligor upon the Securities is required
to furnish annual or quarterly reports to its stockholders pursuant to the
Exchange Act, the Company or such other obligor, as the case may be, shall cause
any annual report furnished to its stockholders generally and any quarterly or
other financial reports furnished by it to its stockholders generally to be
filed with the Trustee and mailed to the Holders at their addresses appearing in
the register of Securities maintained by the Registrar. If either the Company or
any other obligor upon the Securities is not required to furnish annual or
quarterly reports to its stockholders pursuant to the Exchange Act, the Company
or such other obligor, as the case may be, shall cause its financial statements
referred to in Section 4.02(a) above, including any notes thereto (and with
respect to annual reports, an auditors' report by a firm of established national
reputation), and a "Management's Discussion and Analysis of Financial Condition
and Results of Operations," to be so mailed to the Holders within 120 days after
the end of each of its fiscal years and within 60 days after the end of each of
its first three fiscal quarters. The Company and any other obligor upon the
Securities will cause to be disclosed in a statement accompanying any annual
report or comparable information as of the date of the most recent financial
statements in each such report or comparable information the amount available
for payments pursuant to Section 4.07(a) hereof. As of the date hereof, the
Company's fiscal year ends on December 31.
Section 4.03. Compliance Certificate.
(a) The Company (and any other obligor upon the Securities) shall
deliver to the Trustee, within 120 days after the end of each fiscal year of the
Company, an Officers' Certificate stating that a review of the activities of the
Company and its Subsidiaries (or of such obligor) during the preceding fiscal
year has been made under the supervision of the signing Officers with a view to
determining whether each 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 his knowledge each has kept,
observed, performed and fulfilled each and every covenant contained in this
Indenture and is not in default in the performance or observance of any of the
terms, provisions and conditions hereof (or, if a Default or Event of Default
shall have occurred, describing all such Defaults or Events of Default of which
he may have knowledge and what action the Company or such other obligor, as the
case may be is taking or proposes to take with respect thereto) and that to the
best of his knowledge no event has occurred and
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remains in existence by reason of which payments on account of the principal of
or interest, if any, on the Securities are prohibited or if such event has
occurred, a description of the event and what action the Company or such other
obligor, as the case may be, is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the annual financial
statements delivered pursuant to Section 4.02 above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements nothing has come to
their attention which would lead them to believe that the Company has violated
any provisions of Article 4 (other than Sections 4.02, 4.03, 4.04 and 4.16
thereof) or 5 of this Indenture 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) The Company (and any obligor upon the Securities) will, so long as
any of the Securities are outstanding, deliver to the Trustee, forthwith upon
any Officer becoming aware of (i) any Default or Event of Default or (ii) any
event of default (continuing beyond any applicable grace period) under any other
mortgage, indenture or instrument under which there may be issued or by which
there may be secured or evidenced any Indebtedness for money borrowed by the
Company or any of its Subsidiaries (or the payment of which is guaranteed by the
Company or any of its Subsidiaries) whether such Indebtedness or guarantee now
exists, or is created after the date of the Indenture, an Officers' Certificate
specifying such Default, Event of Default or event of default and what action
each is taking or proposes to take with respect thereto.
Section 4.04. Stay, Extension and Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not, by resort to any such law, hinder, delay or
impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law has been
enacted.
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Section 4.05. Corporate Existence.
Subject to Article 5, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and the corporate, partnership or other existence of each Subsidiary
of the Company in accordance with the respective organization documents of each
Subsidiary of the Company and the rights (charter and statutory), licenses and
franchises of the Company and its Subsidiaries; provided, however, that the
Company shall not be required to preserve any such right, license or franchise,
or the corporate, partnership or other existence of any Subsidiary, if the Board
of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its subsidiaries
taken as a whole and that the loss thereof is not adverse in any material
respect to the Holders.
Section 4.06. Taxes.
The Company shall, and shall cause each of its Subsidiaries to, pay
prior to delinquency all material taxes, assessments and governmental levies,
except as contested in good faith and by appropriate proceedings or where
failure to effect such payment is not adverse in any material respect to the
Holders.
Section 4.07. Limitations on Restricted Payments.
(a) The Company will not, and will not permit any of its Subsidiaries
to, directly or indirectly: (i) declare or pay any dividend or make any
distribution on account of the Company's or any of its Subsidiaries' Equity
Interests (other than dividends or distributions payable in Equity Interests
(other than Disqualified Stock) of the Company or such Subsidiary or dividends
or distributions payable to the Company or any Wholly Owned Subsidiary of the
Company); (ii) purchase, redeem or otherwise acquire or retire for value any
Equity Interests of the Company or any Subsidiary or other Affiliate of the
Company (other than any such Equity Interests owned by the Company or any Wholly
Owned Subsidiary of the Company) in each case except for Permitted Investments;
(iii) voluntarily purchase, redeem or otherwise acquire or retire for value any
Indebtedness that is pari passu with or subordinated to the Securities; or (iv)
make any Restricted Investment (all such payments and other actions set forth in
clauses (i) through (iv) above being collectively referred to as "Restricted
Payments") unless, at the time of such Restricted Payment:
(1) no Default or Event of Default shall have
occurred and be continuing or would occur as a
consequence thereof; and
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(2) immediately after such Restricted Payment (the value of
any such payment, if other than cash, being determined by the Board of
Directors and evidenced by a resolution) and after giving effect
thereto on a pro forma basis, the Consolidated Net Worth of the Company
would be at least $25 million; and
(3) the Company's Fixed Charge Coverage Ratio for the
Company's most recently ended four full fiscal quarters for which
internal financial statements are available immediately preceding the
date on which such Restricted Payment is made, calculated on a pro
forma basis as if such Restricted Payment had been made at the
beginning of such four-quarter period, would have been at least 3 to 1;
and
(4) such Restricted Payment, together with the aggregate of
all other Restricted Payments made by the Company and its Subsidiaries
after the date of the Old Indenture (including Restricted Payments
permitted by clause (ii) of Section 4.07(b) hereof), is less than the
sum of (x) 50% of the Consolidated Net Income of the Company for the
period (taken as one accounting period) from the beginning of the first
quarter immediately after the first date on which the Company's
Consolidated Net Worth exceeds $25 million to the end of the Company's
most recently ended four full fiscal quarters for which internal
financial statements are available at the time of such Restricted
Payment (or, if such Consolidated Net Income for such period is a
deficit, 100% of such deficit), plus (y) 100% of the aggregate net cash
proceeds received by the Company from the issue or sale of Equity
Interests of the Company (other than Equity Interests sold to a
Subsidiary of the Company and other than Disqualified Stock) since the
date of the Old Indenture, plus (z) 100% of the net cash proceeds
received by the Company from the issuance or sale, other than to a
Subsidiary of the Company, of any debt security of the Company that has
been converted into Equity Interests of the Company (other than
Disqualified Stock) since the date of the Old Indenture.
For purposes of Section 4.07(a)(4) hereof, the net proceeds from the
issuance of shares of Capital Stock of the Company or any Subsidiary issued upon
conversion of debt securities shall be deemed to be the net
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book value of such debt securities at the date of conversion (plus the
additional amount required to be paid upon such conversion, if any), less any
cash payment on account of fractional shares. For the purposes of this
paragraph, the net book value of a security shall be the amount received by the
Company on the issuance of such security, as adjusted on the books of the
Company to the date of conversion. The foregoing shall not be interpreted to
limit the authority of the Board of Directors, as set forth above, to determine
the value of other securities of the Company or other property received as net
proceeds; provided, however, that the value of the other property shall not
exceed the net book value on the Company's books of such property. For purposes
of determining under clause (iv) above the amount expended for Restricted
Payments, cash distributed shall be valued at the face amount thereof and
property other than cash shall be valued at its fair market value.
(b) Notwithstanding the foregoing provisions, the provisions of this
Section 4.07 shall not prohibit: (i) the payment of any dividend within 60 days
after the date of declaration thereof, if at said date of declaration such
payment would have complied with the provisions of the Indenture; (ii) the
redemption, repurchase, retirement or other acquisition of any Equity Interests
of the Company in exchange for, or out of the proceeds of, the substantially
concurrent sale (other than to a Subsidiary of the Company) of other Equity
Interests of the Company (other than any Disqualified Stock); (iii) the
redemption, repurchase or payoff of Indebtedness (whether revolving credit
borrowings, letters of credit, or otherwise) under the Revolving Credit
Facility; (iv) the redemption, repurchase or payoff of Purchase Money
Indebtedness; (v) the redemption, repurchase or payoff of any Indebtedness with
proceeds of any Refinancing Indebtedness permitted to be incurred under Section
4.08; or (vi) the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of the Company or any Subsidiary of the Company
held by any officer or employee of the Company (other than Principals or any
Related Party) or any of the Company's distributors or sales representatives;
provided, however, that the aggregate amount of all such repurchases,
redemptions and other acquisitions and retirements under this clause (vi) on or
after the date of the Indenture shall not exceed $2 million.
Not later than the date of making any Restricted Payment, the Company
shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by the covenant "Restricted Payments" were computed, which
calculations may be based upon the Company's latest available financial
statements.
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Section 4.08. Limitations on Incurrence of Indebtedness and Issuance of
Preferred Stock.
(a) The Company will not, and will not permit any of its Subsidiaries
to, directly or indirectly, create, incur, issue, assume, guaranty or otherwise
become directly or indirectly liable with respect to (collectively, "incur") any
Indebtedness (including Acquired Debt) and will not issue any Disqualified Stock
and will not permit any of its Subsidiaries to issue any shares of preferred
stock; provided, however, that the Company may incur Indebtedness or issue
shares of Disqualified Stock if:
(i) the Fixed Charged Coverage Ratio for the Company's most
recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date on which such
additional Indebtedness is incurred or such Disqualified Stock is
issued would have been at least equal to the ratio of 2.5:1, determined
on a pro forma basis (including a pro forma application of the net
proceeds therefrom), as if the additional Indebtedness had been
incurred, or the Disqualified Stock had been issued, as the case may
be, at the beginning of such four-quarter period; and
(ii) the Weighted Average Life to Maturity of such
Indebtedness is greater than the remaining Weighted Average Life to
Maturity of the Securities.
(b) The limitations of Section 4.08(a) will not apply to (i) the incurrence by
the Company and its Subsidiaries of Indebtedness (whether revolving credit
borrowings, trade letters of credit, standby letters of credit or a combination
thereof) pursuant to the Revolving Credit Facility in an aggregate principal
amount (as to borrowings) and in an aggregate undrawn face amount (as to letters
of credit, whether or not constituting Indebtedness) not to exceed $50 million
in the aggregate at any one time outstanding (as such aggregate amount may be
permanently reduced from time to time pursuant to Section 4.11 of this
Indenture); (ii) the incurrence by the Company and its Foreign Subsidiaries of
Hedging Obligations incurred to fix the interest rate on any variable rate
Indebtedness otherwise permitted by this Section 4.08; (iii) the incurrence by
the Company and its Foreign Subsidiaries of Indebtedness in connection with or
arising out of sale and leaseback transactions, capital lease obligations or
Purchase Money Obligations, provided, that the aggregate principal amount at any
one time outstanding of all such otherwise unpermitted sale and leaseback
transactions, capital lease obligations and Purchase Money Obligations does not
exceed $10 million (collectively, "Purchase Money Indebtedness"); (iv) the
incurrence by the Company of Indebtedness represented by the Securities; (v)
Indebtedness owed by the Company to any of its Subsidiaries or any such
Subsidiary to
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the Company or any other Subsidiary of the Company; (vi) the incurrence by the
Company (and its Subsidiaries, as to clause (i) above; and its Foreign
Subsidiaries, as to clause (iii) above) of Indebtedness issued in exchange for,
or the proceeds of which are contemporaneously used to extend, refinance, renew,
replace, or refund (collectively, "Refinance") Indebtedness referred to in
clauses (i), (iii) and (iv) above, and outstanding Indebtedness incurred in
compliance with Section 4.08(a) hereof (the "Refinancing Indebtedness");
provided, however, that such Refinancing Indebtedness (A) in the case of a
Refinance of Indebtedness under the Revolving Credit Facility, is limited to an
aggregate commitment (inclusive of revolving credit borrowings and the undrawn
face amount of letters of credit, whether or not constituting Indebtedness) not
in excess of $50 million (as such amount may be permanently reduced from time to
time pursuant to Section 4.11 of this Indenture), and (B) in the case of other
Refinancing Indebtedness (1) the principal amount of such Refinancing
Indebtedness shall not exceed the principal amount of Indebtedness so Refinanced
(plus the amount of reasonable expenses incurred in connection therewith), (2)
the Refinancing Indebtedness shall have a Weighted Average Life to Maturity
equal to or greater than the Weighted Average Life to Maturity of the
Indebtedness being extended, refinanced, renewed, replaced or refunded, and (3)
the Refinancing Indebtedness shall rank in right of payment no more senior (and
at least as subordinated) to the Securities than did the Indebtedness being
Refinanced; or (vii) the incurrence by the Company of trade letters of credit
incurred in the ordinary course of business in an amount not to exceed $5
million at any one time outstanding.
Section 4.09. Limitation on Liens.
The Company will not, and will not permit its Subsidiaries to, directly or
indirectly create, incur, assume or suffer to exist any Lien on any asset now
owned or hereafter acquired, or any income or profits therefrom or assign or
convey any right to receive income therefrom, except: (i) Liens on accounts
receivable and inventory of the Company and its Subsidiaries, and on the other
assets described in clause (C) of subdivision (i) of Section 10.01(d) of this
Indenture, and the proceeds thereof, securing Indebtedness (and, whether or not
included as Indebtedness, trade letters of credit and/or standby letters of
credit and/or reimbursement obligations in respect thereof, and any and all
related interest, fees and related obligations) pursuant to the Revolving Credit
Facility in an aggregate principal amount (as to borrowings) and an aggregate
undrawn face amount (as to letters of credit, whether or not constituting
Indebtedness) not to exceed $50 million in the aggregate at any one time
outstanding (as such aggregate amount may be permanently reduced from time to
time pursuant to Section 4.11 of this Indenture), (ii) Purchase Money Liens and
Liens for construction mortgages created on any type of property, construction
or improvement of such property by the Company or a Foreign Subsidiary to secure
the purchase price or
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construction cost or improvement cost of only such property in an amount up to
100% of the total cost of such property, construction or improvement, (iii)
Liens to secure obligations for which the Company is fully indemnified by Dow
Corning, provided that the Company provides the Trustee with an Officer's
Certificate setting forth the good faith opinion of the Company's Board of
Directors that Dow Corning is indemnifying the Company in full for all
liabilities, damages and costs relating to such Lien and the obligations it
secures, (iv) Liens on property of the Company or its Subsidiaries which secure
environmental claims of any governmental authority, provided that all such
claims do not exceed $1 million in the aggregate, provided further that such
environmental claims are being contested or remedied in good faith by the
Company, and provided further that if the Company obtains security (in the form
of a letter of credit, cash collateral, escrow account or third party indemnity
from a third party which the Company deems financially capable of performing its
obligations under said indemnity) to secure the payment and satisfaction of any
such claim, such adequately secured environmental claim shall not be counted
towards such $1 million aggregate limitation to the extent such security secures
such payment and satisfaction, (v) Liens securing the obligations under the
Securities and the Indenture, and (vi) Permitted Liens.
For the purposes of determining "adequate security" under clause (iv)
above, the Company shall provide the Trustee with an Officer's Certificate
certifying the basis for the Company's opinion that such security (in both
amount and form) secures the payment of, and satisfaction of liabilities with
respect to, the environmental claim for which such security relates and the
extent to which such security secures such payment and satisfaction.
Section 4.10. Limitation on Granting Liens and Restrictions on Subsidiary
Dividends.
The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction on the ability of (a) the Company or
any Subsidiary to grant Liens on the assets of such Person in favor of the
Holders, or (b) any Subsidiary to (i) pay dividends or make any other
distributions to the Company or any of its Subsidiaries (A) on its Capital Stock
or (B) with respect to any other interest or participation in, or measured by,
its profits, or (ii) pay any Indebtedness owed to the Company or any of its
Subsidiaries or (c) any Subsidiary to make loans or advances to the Company or
any of its Subsidiaries or (d) any Subsidiary to transfer any of its properties
or assets to the Company or any of its Subsidiaries, except for such
encumbrances or restrictions existing under or by reasons of (i) the Revolving
Credit Facility, provided that such restrictions do not restrict the granting or
perfecting of Liens on the Collateral to the Collateral Agent, Trustee and
Holders as contemplated by this Indenture
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and the Collateral Agreements, (ii) the Indenture and the Securities, (iii)
applicable law, (iv) any instrument governing Indebtedness or Capital Stock of a
Person acquired (including by way of merger or consolidation) by the Company or
any of its Subsidiaries as in effect at the time of such acquisition (except to
the extent such Indebtedness was incurred in contemplation of such acquisition),
which encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person, or the property or
assets of the Person, so acquired, (v) with respect to clauses (a) and (d)
above, (1) restrictions on encumbering in leases and other agreements entered
into prior to the date of the Indenture or acquired from a third party into on
or after the date of the Indenture in the ordinary course of business, (vi) with
respect to clauses (a) and (d) above, Purchase Money Obligations, provided that
such encumbrance or restriction does not apply to any other property or asset of
the Company or its Subsidiaries, and (vii) permitted Refinancing Indebtedness,
provided that such restrictions contained in any agreement governing such
Refinancing Indebtedness are no more restrictive taken as a whole than those
contained in any agreements governing the Indebtedness being refinanced.
Section 4.11. Limitations on Certain Asset Sales.
(a) The Company will not, and will not permit any of its Subsidiaries
to, (i) sell, lease, transfer or otherwise dispose of (including by way of a
sale-and-leaseback) any Business Segment, other than the sale of inventory or
materials in the ordinary course of business (provided that the sale, lease,
conveyance or other disposition of all or substantially all of the assets of the
Company shall be governed by Section 5.01 hereof), or (ii) sell Equity Interests
of any of its Subsidiaries for net proceeds in excess of $5 million, in each
case whether in a single transaction or a series of related transactions (each
of the foregoing, an "Asset Sale"), unless (x) the Company (or the Subsidiary,
as the case may be) receives consideration at the time of such Asset Sale at
least equal to the fair market value (evidenced by a resolution of the Board of
Directors set forth in an Officers' Certificate delivered to the Trustee) of the
assets sold or otherwise disposed of and (y) at least 80% of the consideration
therefor received by the Company or such Subsidiary is in the form of cash;
provided, however, that the amount of (A) any liabilities (as shown on the
Company's or such Subsidiary's most recent balance sheet or in the notes
thereto), of the Company or any Subsidiary that are assumed by the transferee of
any such assets and (B) any notes or other obligations received by the Company
or any such Subsidiary from such transferee that are promptly, but in no event
more than 30 days after receipt, converted by the Company or such Subsidiary
into cash, shall be, deemed to be cash (to the extent of the cash received) for
purposes of this provision.
(b) Within 180 days after any Asset Sale (the "Asset Sale
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Application Period"), the Company may apply the Net Proceeds from such Asset
Sale to either (i) permanently reduce the availability under the Revolving
Credit Facility (and if the outstanding principal amount under the Revolving
Credit Facility exceeds the availability thereunder after such reduction, then
reduce the amount outstanding to an amount at least equal to such availability),
or (ii) make an investment in another business or capital expenditure or a
purchase of other fixed assets in the same or a similar line of business as the
Company was engaged in on the date of the Old Indenture. Any Net Proceeds from
the Asset Sale that are not applied or invested as provided in the preceding
sentence constitute "Excess Proceeds." Prior to each application of Net Proceeds
from an Asset Sale, excluding any application pursuant to any Asset Sale Offer,
the Company shall deliver an Officers' Certificate to the Trustee setting forth
the intended application of such Net Proceeds and certifying that such Net
Proceeds are being applied in accordance with this Section 4.11(b).
In accordance with the provisions of Section 3.08 hereof, the Company
shall make an Asset Sale Offer to all Securityholders to purchase the maximum
principal amount of Securities that may be purchased out of the Excess Proceeds,
at an offer price in cash in an amount equal to 100% of the outstanding
principal amount thereof plus accrued and unpaid interest, if any, to the date
fixed for the closing of such offer; provided, however, that in the event that
the Excess Proceeds from such Asset Sale, plus the Excess Proceeds from all
prior Asset Sales which have not been applied to an Asset Sale Offer pursuant to
the Old Indenture or Section 3.08 of this Indenture, are less than $2.0 million,
the application of such aggregate Excess Proceeds to an Asset Sale Offer may be
deferred until such time as such aggregate Excess Proceeds, plus the aggregate
amount of Excess Proceeds resulting from any subsequent Asset Sale(s), are at
least equal to $2.0 million.
Section 4.12. Change of Control.
(a) Upon the occurrence of a Change of Control, each Securityholder
shall have the right to require the Company to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of such Holder' Securities pursuant
to the offer described below (the "Change of Control Offer") at a purchase price
equal to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest, if any, to the date of purchase (the "Change of Control Payment"). The
Change of Control Offer shall remain open for a period of at least 20 Business
Days after its commencement unless a longer offering period is required by law.
(b) Within 40 days following any Change of Control, the Company
shall mail a notice to each holder stating: (1) that the Change of
Control Offer is being made pursuant to the covenant entitled "Change of
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Control" and that all Securities tendered will be accepted for payment; (2) the
purchase price and the purchase date, which shall be no earlier than 30 days nor
later than 40 days from the date such notice is mailed (the "Change of Control
Payment Date"); (3) that any Security not tendered will continue to accrue
interest; (4) that, unless the Company defaults in the payment of the Change of
Control Payment, all Securities 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 any Securities purchased pursuant to a
Change of Control Offer will be required to surrender the Securities, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the
Securities completed, to the Paying Agent at the address specified in the notice
prior to the close of business on the third Business Day preceding the Change of
Control Payment Date; (6) that Holders will be entitled to withdraw their
election if the Paying Agent receives, not later than the close of business on
the second Business Day 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 Securities delivered for purchase, and a
statement that such Holder is withdrawing his election to have Securities
purchased; and (7) that Holders whose Securities are being purchased only in
part will be issued new Securities equal in principal amount to the unpurchased
portion of the Securities surrendered, which unpurchased portion must be equal
to $1,000 in principal amount or an integral multiple thereof. 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 the Securities
in connection with a Change of Control.
On the Change of Control Payment Date, the Company will, to the extent
lawful, (1) accept for payment Securities or portions thereof tendered pursuant
to the Change of Control Offer, (2) deposit with the Paying Agent an amount
equal to the Change of Control Payment in respect of all Securities or portions
thereof so tendered and (3) deliver or cause to be delivered to the Trustee the
Securities so accepted together with an Officers' Certificate stating the
Securities or portions thereof tendered to the Company. The Paying Agent shall
promptly mail to each Security Holder of Securities so accepted payment in an
amount equal to the purchase price for such Securities, and the Trustee shall
promptly authenticate and mail to each Holder a new Security equal in principal
amount to any unpurchased portion of the Securities surrendered, if any;
provided, that each such new Security shall be in a principal amount of $1,000
or an integral multiple thereof. The Company will publicly announce the results
of the Change of Control Offer on or as soon as practicable after the Change of
Control Payment Date.
"Change of Control" means (i) the sale, lease or transfer of all or
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substantially all of the Company's assets to any Person or group (as such term
is used in Section 13(d)(3) of the Exchange Act) (other than the Principals (as
defined below)), (ii) the liquidation or dissolution of the Company, (iii) the
acquisition by any Person or group (as such term is used in Section 13(d)(3) of
the Exchange Act) (other than the Principals and their Related Parties) of a
direct or indirect majority in interest (more than 50%) of the voting power of
the Voting Stock of the Company by way of merger or consolidation or otherwise
or (iv) any transaction the result of which is (x) if such transaction occurs
prior to the first sale of common equity of the Company pursuant to a
registration statement under the Securities Act that results in at least 25% of
the then outstanding common equity of the Company being sold to the public, that
the Principals and their Related Parties beneficially own less, directly or
indirectly, than 35% of the voting power of the Voting Stock of the Company
beneficially owned by the Principals, directly or indirectly, on the date of the
Indenture, and (y) if such transaction occurs thereafter, that any Person or
group (as defined above) (other than the Principals and their Related Parties)
owns, directly or indirectly, more of the voting power of the Voting Stock of
the Company than the Principals and their Related Parties.
"Related Party" with respect to any Principal means (A) the general
partner and each limited partner of Kidd Kamm as of the date of the Indenture,
(B) any 50% (or more) owned Subsidiary of either Principal or both Principals
jointly, or (C) any spouse or immediate family member or trust (in the case of
an individual) of such Principal.
"Principals" means Kidd Kamm and Herbert W. Korthoff.
Section 4.13. Transactions with Affiliates.
The Company will not, and will not permit any of its Subsidiaries to,
sell, lease, transfer or otherwise dispose of any of its properties or assets
to, or purchase any property or assets from, or enter into any contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), except
for (a) Affiliate Transactions of aggregate value less than $1 million which is
on terms that are no less favorable to the Company or the relevant Subsidiary
than those that would have been obtained in a comparable transaction by the
Company or such Subsidiary with an unrelated person and which are conducted in
good faith and (b) Affiliate Transactions in which the Company delivers to the
Trustee an opinion as to the fairness to the Company or such Subsidiary from a
financial point of view issued by an investment banking firm of national
standing; provided, however, that (i) any employment agreement entered into by
the Company or any of its Subsidiaries in the ordinary course of business and
with the approval of the Company's board of directors, (ii) transactions between
or among the Company and/or its Subsidiaries,
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(iii) transactions permitted by Section 4.07 hereof, (iv) the rendering of
management services by Kidd, Kamm & Company and the payment by the Company for
such services pursuant to the Management Services Agreement and (v) the
rendering of services by Kidd, Kamm & Company in connection with the Acquisition
and the payment for such services by the Company on the closing date of the
Acquisition, in each case, shall not be deemed Affiliate Transactions.
Section 4.14. Maintenance of Consolidated Net Worth.
The Company shall not permit its Consolidated Net Worth at the end of
each fiscal year set forth below to be less than the amount set forth opposite
such fiscal year:
Minimum
Consolidated
Year Ending Net Worth
December 31, 1997........................17,500,000
Thereafter...............................20,000,000
Section 4.15. Liquidation.
The Board of Directors or the stockholders of the Company may not adopt
a plan of liquidation which provides for, contemplates or the effectuation of
which is preceded by (i) the sale, lease, conveyance or other disposition of all
or substantially all of the assets of the Company otherwise than substantially
as an entirety (Section 5.01 of this Indenture being the Section hereof which
governs any such sale, lease, conveyance or other disposition substantially as
an entirety) and (ii) the distribution of all or substantially all of the
proceeds of such sale, lease, conveyance or other disposition and of the
remaining assets of the Company to the holders of capital stock of the Company,
unless the Company, prior to making any liquidating distribution pursuant to
such plan, makes provision for the satisfaction of the Company's obligations
hereunder and under the Securities as to the payment of principal and interest.
The Company shall be deemed to make provision for such payments only if the
Company delivers in trust to the Trustee or Paying Agent (other than the
Company) money or U.S. Government Obligations maturing as to principal and
interest in such amounts and at such times as are sufficient without
consideration of any reinvestment of such interest to pay, when due, the
principal of and interest on the Securities and also delivers to the Trustee an
Opinion of Counsel to the effect that Holders of the Securities will not
recognize income, gain or loss for Federal income tax purposes as a result of
such action and will
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be subject to Federal income tax on the same amount and in the same manner and
at the same times as would have been the case if such action had not been taken
and a favorable accountants' certificate as to the sufficiency of such
Obligations, without consideration of any reinvestment of interest, to pay, when
due, the principal of and interest on the Securities; provided, however, that
the Company shall not make any liquidating distribution until after the Company
shall have certified to the Trustee with an Officers' Certificate at least five
days prior to the making of any liquidating distribution that it has complied
with the provisions of this Section 4.15 and that no Default or Event of Default
then exists or would occur as a result of any such liquidating distribution. The
Company will pay the reasonable compensation and expenses of the Trustee and the
reasonable fees and expenses of the Trustee's agents and counsel incurred in
connection with this Section 4.15.
Section 4.16. Rule 144A Information Requirement.
The Company shall furnish to the Holders or beneficial holders of the
Securities and to prospective purchasers of Securities designated by the Holders
of Transfer Restricted Securities, upon their request, the information required
to be delivered pursuant to Rule 144A(d)(4) under the Securities Act until such
time as the Company either exchanges the Series C Notes for the Exchange Notes
or has registered the Series C Notes for resale under the Securities Act. The
Company will provide a copy of the Registration Rights Agreement to prospective
investors upon request.
Section 4.17. Payments for Consent.
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder for or as an inducement to any
consent, waiver or amendment of any of the terms or provisions of the Indenture
or the Securities unless such consideration is offered to be paid or agreed to
be paid to all Holders that consent, waive or agree to amend in the time frame
set forth in the solicitation documents relating to such consent, waiver or
agreement.
Section 4.18. Restrictions on Indirect Subsidiaries.
The Company will not create, cause its Subsidiaries to create, or
otherwise suffer to exist any Subsidiary of a Subsidiary of the Company.
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ARTICLE 5
SUCCESSORS
Section 5.01. When Company May Merge, etc.
The Company shall not consolidate or merge with or into (whether or not
the Company is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions to, another corporation, person or
entity unless:
(1) the Company is the surviving corporation or the entity or
the Person formed by or surviving any such consolidation or merger (if
other than the Company) or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made is a
corporation organized or existing under the laws of the United States,
any state thereof or the District of Columbia;
(ii) the corporation formed by or surviving any such
consolidation or merger (if other than the Company) or to which such
sale, assignment, transfer, lease, conveyance or other disposition will
have been made assumes all the obligations of the Company pursuant to a
supplemental indenture in a form reasonably satisfactory to the
Trustee, under the Securities and the Indenture;
(iii) immediately after such transaction no Default or
Event of Default exists; and
(iv) the Company or any corporation formed by or surviving any
such consolidation or merger, or to which such sale, assignment,
transfer, lease, conveyance or other disposition will have been made
(A) will have Consolidated Net Worth (immediately after the transaction
but prior to any purchase accounting adjustments resulting from the
transaction) equal to or greater than the Consolidated Net Worth of the
Company immediately preceding the transaction and (B) will, at the time
of such transaction and after giving pro forma effect thereto as if
such transaction had occurred at the beginning of the applicable
four-quarter period, be permitted to incur at least $1.00 of additional
indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth
in Section 4.08(a) hereof.
The Company shall deliver to the Trustee prior to the consummation of
the proposed transaction an Officers' Certificate to the foregoing effect and an
Opinion of Counsel stating that the proposed transaction and such supplemental
indenture comply with this Indenture.
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Section 5.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, lease, conveyance or
other disposition of all or substantially all of the assets of the Company in
accordance with Section 5.01, the successor corporation formed by such
consolidation or into or with which the Company is merged or to which such sale,
lease, conveyance or other disposition is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor person has been named
as the Company herein; provided, however, that the predecessor Company in the
case of a sale, lease, conveyance or other disposition shall not be released
from the obligation to pay the principal of and interest on the Securities.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
An "Event of Default" occurs if:
(1) the Company defaults in the payment of interest on any
Security when the same becomes due and payable and the default
continues for a period of 30 days;
(2) the Company defaults in the payment of the principal of
any Security when the same becomes due and payable at maturity, upon
redemption or otherwise;
(3) the Company fails to comply with any of its other
agreements or covenants in, or provisions of, the Securities, this
Indenture, the Registration Rights Agreement or the Collateral
Agreements and the default continues for the period and after the
notice specified below;
(4) a default under (after giving effect to any applicable
grace periods or any extension of any maturity date) any mortgages,
indenture or instrument under which there may be issued or by which
there may be secured or evidenced any Indebtedness for money borrowed
by the Company or any of its Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Subsidiaries) whether such
Indebtedness or guarantee now exists, or is created after the date of
the Indenture, if (a) either (A) such default results from the failure
to pay principal of or interest on such Indebtedness or (B) as a result
of such default the maturity of such Indebtedness has been accelerated,
and (b) the principal amount of such Indebtedness with respect to which
a default (after the expiration of any applicable grace period or any
extension of the
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maturity date) has occurred, or the maturity of which has been
accelerated, exceeds $2 million in the aggregate;
(5) a final judgment or final judgments for the payment of
money are entered by a court or courts of competent jurisdiction
against the Company or any of its Subsidiaries (other than any judgment
as to which a reputable insurance company has accepted full liability)
aggregating in excess of $1 million which judgments are not stayed or
discharged within 60 days after their entry;
(6) (a) a breach by the Company of any material representation
or warranty set forth in the Collateral Agreements, (b) a repudiation
by the Company of its obligations under the Collateral Agreements, or
(c) the unenforceability of the Collateral Agreements against the
Company for any reason;
(7) the Company or any of its Subsidiaries pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief
against it in an involuntary case,
(C) consents to the appointment of a Custodian of it or
for all or substantially all of its property,
(D) makes a general assignment for the benefit of its
creditors, or
(E) generally is unable to pay its debts as the same
become due;
(8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any of its
Subsidiaries in an involuntary case,
(B) appoints a Custodian of the Company or any of its
Subsidiaries or for all or substantially all of its property,
or
(C) orders the liquidation of the Company or any of its
Subsidiaries,
and the order or decree remains unstayed and in effect for 60 days.
The term "Bankruptcy Law" means title 11 U.S. Code or any similar
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Federal or State law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.
A Default under clauses (3) (other than a Default under Sections 4.05,
4.07, 4.08, 4.11, 4.12, 4.15 or 5.01 which Default shall be an Event of Default
without the notice or passage of time specified in this paragraph), (5) or
(6)(a) is not an Event of Default until the Trustee or the Holders of at least
25% in principal amount of the then outstanding Securities notify the Company of
the Default and the Company does not cure the Default or such Default is not
waived within 30 days after receipt of the notice. The notice must specify the
Default, demand that it be remedied and state that the notice is a "Notice of
Default."
In the case of any Event of Default pursuant to the provisions of this
Section 6.01 occurring by reason of any willful action (or inaction) taken (or
not taken) by or on behalf of the Company with the intention of avoiding payment
of the premium which the Company would have to pay if the Company then had
elected to redeem the Securities pursuant to paragraph 5 of the Securities, an
equivalent premium (or in the event that the Company would not be permitted to
redeem the Securities pursuant to Section 5 of the Securities, the premium
payable on the first date thereafter on which such redemption would be
permissible) shall also become and be immediately due and payable to the extent
permitted by law, anything in this Indenture or in the Securities contained to
the contrary notwithstanding.
Section 6.02. Acceleration.
If an Event of Default (other than an Event of Default specified in
clauses (7) and (8) of Section 6.01) occurs and is continuing, the Trustee by
notice to the Company, or the Holders of at least 25% in principal amount of the
then outstanding Securities by notice to the Company and the Trustee, may
declare the unpaid principal of and any accrued interest on all the Securities
to be due and payable. Upon such declaration the principal and interest shall be
due and payable immediately. If an Event of Default specified in clause (7) or
(8) of Section 6.01 occurs, such an amount shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holder. The Holders of a majority in principal amount of the
then outstanding Securities by notice to the Trustee may rescind an acceleration
and its consequences if the rescission would not conflict with any judgment or
decree and if all existing Event of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of the
acceleration.
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Section 6.03. Other Remedies.
If an Event of Default occurs and its continuing, the Trustee may
pursue any available remedy to collect the payment of principal or interest on
the Securities or to enforce the performance of any provision of the Securities,
its rights in and to the Collateral, this Indenture or the Collateral
Agreements, including without limitation directing the Collateral Agent to act
under any or all of the Collateral Agreements as contemplated by Section 7.13
hereof.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder 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. All remedies are
cumulative to the extent permitted by law.
Section 6.04. Waiver of Past Defaults.
The Holders of a majority in principal amount of the then outstanding
Securities by notice to the Trustee may, on behalf of all the Holders, waive an
existing Default or Event of Default and its consequences except a continuing
Event of Default in the payment of the principal of or interest on any Security.
Section 6.05. Control by Majority.
The Holders of a majority in principal amount of the then outstanding
Securities 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 the Trustee. However, the Trustee (i) may refuse to follow any
direction that conflicts with law or this Indenture or, subject to Section 7.01,
that the Trustee determines is unduly prejudicial to the rights of other
Securityholders, or would involve the Trustee in personal liability or (ii) may
take any other action deemed proper by the Trustee that is not inconsistent with
such direction. Prior to taking any action hereunder, the Trustee shall be
entitled to indemnification satisfactory to it in its sole discretion against
all losses, liabilities and expenses, including the reasonable fees and expenses
of the Trustee's agents and counsel, caused by taking or not taking such action.
Section 6.06. Limitation on Suits.
A Securityholder may pursue a remedy with respect to this Indenture or
the Securities only if:
(1) the Holder gives to the Trustee notice of a continuing
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Event of Default;
(2) the Holders of at least 25% in principal amount of the
then outstanding Securities make a request to the Trustee to pursue the
remedy;
(3) such Holder or Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of indemnity; and
(5) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Securities do not give the
Trustee a direction inconsistent with the request.
A Securityholder may not use this Indenture to prejudice the rights of another
Securityholder or to obtain a preference or priority over another
Securityholder.
Section 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Security to receive payment of principal and interest on the
Security, on or after the respective due dates expressed in the Security, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of the Holder;
provided, however, that no Holder shall have the right to institute any such
suit, if and to the extent that the institution or prosecution thereof or the
entry of judgment therein would under applicable law result in the surrender,
impairment, waiver, or loss of any Liens of the Collateral Agreements upon any
property subject to such Lien.
Section 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(1) or (2) occurs and
is continuing, the Trustee may recover judgment in its own name and as trustee
of an express trust against the Company for the whole amount of principal and
interest remaining unpaid on the Securities and interest on overdue principal
and interest and such further amount as shall be sufficient to cover the costs
and, to the extent lawful, 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 is authorized to file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have the
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claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel) and
the Securityholders allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Securities), its creditors or its property and
shall be entitled and empowered to collect, receive and distribute any money or
other property payable or deliverable on any such claims and any custodian in
any such judicial proceeding is hereby authorized by each Securityholder to make
such payments to the Trustee, and in the event that the Trustee shall consent to
the making of such payment directly to the Securityholders, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07 hereof. To the extent that the
payment of any such compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof out of the estate is any such proceeding, shall be denied
for any reason, payment of the same shall be secured by a Lien on, and shall be
paid out of, any and all distributions, dividends, money, securities and other
properties which the Holders of the Securities may be entitled to receive in
such proceeding whether in liquidation or under any plan of reorganization or
arrangement or otherwise. Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Securityholder in
any such proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee and the Collateral Agent for amounts
due under Section 7.07;
Second: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably,
without preference or priority of any kind,
according to the amounts due and payable on the
Securities for principal and interest, respectively;
and
Third: to the Company.
The Trustee may fix a record date and payment date for any payment to
Securityholders.
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Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, 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 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07, or a suit by Holders of more than 10% in principal
amount of the then outstanding Securities.
ARTICLE 7
TRUSTEE, COLLATERAL, AGENT AND CO-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 their exercise, as a prudent man 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 that are
specifically set forth in this Indenture and no others, and no implied
covenants or obligations shall be read into 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, the Trustee shall examine the certificates and
opinions furnished to the Trustee to determine whether or not they
conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b)
of this Section 7.01.
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(2) The Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(4) The Trustee shall not be required to risk or expend its
own funds or otherwise incur financial liability in the performance of
any of its duties hereunder or the exercise of any of its rights or
powers if it shall have reasonable grounds to believe that repayment of
such funds or adequate indemnification against such risk or loss,
including the reasonable fees and expenses of the Trustee's agents and
counsel, is not reasonably assured to it.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section 7.01.
(e) The Trustee may refuse to perform any duty or exercise any right or
power unless it receives indemnity satisfactory to its against any loss,
liability or expense, including but not limited to reasonable fees and expenses
of the Trustee's agents and counsel.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
Section 7.02. Rights of Trustee.
(a) The Trustee may rely on any document believed by it to be genuine
and to have been signed or presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel, or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with
due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers.
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Section 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company or an
Affiliate with the same rights it would have if it were not Trustee. Any Agent
may do the same with like rights. However, the Trustee is subject to Sections
7.10 and 7.11.
Section 7.04. Trustee's Disclaimer.
The Trustee is not responsible for and makes no representation as to
the validity or adequacy of this Indenture, the Collateral Agreements or the
Securities, it shall not be accountable for the Company's use of the proceeds
from the Securities, and it shall not be responsible for any statement of the
Company in the Indenture, any of the Collateral Agreements or any other document
in connection with the offer and sale or any of the Securities or any statement
in the Securities other than its authentication. The Trustee makes no
representation as to the validity, value or condition of any property covered or
intended to be covered by the Lien of the Collateral Agreements or any part
thereof or as to the title of the Company thereto or as to the security afforded
hereby or thereby. The Trustee may rely on the opinions delivered pursuant to
Section 10.2 and need not make any independent inquiry into the creation or
perfection of any Liens required by this Indenture or the Collateral Agreements.
Section 7.05. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Securityholders a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default in payment on any Security (including any
failure to make any mandatory redemption payment required hereunder), the
Trustee may withhold the notice if and so long as a committee of its Trust
Officers in good faith determines that withholding the notice is in the
interests of Securityholders.
Section 7.06. Reports by Trustee to Holders.
Within 60 days after the reporting date stated in Section 11.10, the
Trustee shall mail to Securityholders a brief report dated as of such reporting
date that complies with TIA ss. 313(a). The Trustee also shall comply with TIA
ss. 313(b). The Trustee shall also transmit by mail all reports as required by
TIA ss. 313(c).
A copy of each report at the time of its mailing to Securityholders shall
be filed with the SEC and each stock exchange on which the Securities are
listed. The Company shall notify the Trustee when the
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Securities are listed on any stock exchange.
Section 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee and the Collateral Agent from time to
time reasonable compensation for their services hereunder. The Trustee's and
Collateral Agent's compensation shall not be limited by any law on compensation
of a trustee of an express trust. The Company shall reimburse the Trustee and
the Collateral Agent upon request for all reasonable out-of-pocket expenses
incurred by them (including costs of collection in addition to its compensation
for its services). Such expenses shall include the reasonable fees and expenses
of the Trustee's and the Collateral Agent's agents, accountants, experts and
counsel.
The Company shall indemnify the Trustee and the Collateral Agent (in their
individual and fiduciary capacities) and each of their officers, directors,
employees, attorneys-in-fact and agents for, and shall hold each of such persons
harmless against any loss, liability, expense, disbursement (including any and
all environmental claims, liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses and disbursements of any kind or
nature whatsoever incurred by or asserted against the Trustee, its officers,
directors, employees, attorneys-in-fact, agents or counsel) in connection with
the administration of the Trust created by this Indenture, the performance of
its duties hereunder or the exercise of its rights hereunder. Each of the
Trustee and the Collateral Agent shall notify the Company promptly of any claim
for which it may seek indemnity. The Company shall defend the claim and the
Trustee and the Collateral Agent shall cooperate in the defense. The Trustee and
the Collateral Agent may have separate counsel and the Company shall pay the
reasonable fees and expenses of such counsel. The Company need not pay for any
settlement made without its consent, which consent shall not be unreasonably
withheld.
Notwithstanding the preceding paragraph, the Company need not reimburse any
expense or indemnify against any loss or liability incurred by the Trustee or
the Collateral Agent (or any other party listed in the foregoing paragraph)
through its own negligent action, its own negligent failure to act or own
willful misconduct.
To secure the Company's payment obligations in this Section, the Trustee
and the Collateral Agent shall have a lien prior to the Securities on all money
or property held or collected by the Trustee, except that held in trust to pay
principal and interest on particular Securities.
When the Trustee or the Collateral Agent incurs expenses or renders
services after an Event of Default specified in Section 6.01(7) or (8) occurs,
the expenses and the compensation for the services are intended
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to constitute expenses of administration under any Bankruptcy Law.
Section 7.08. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 7.08.
The Trustee may resign by so notifying the Company. The Holders of
a majority in principal amount of the then outstanding Securities may
remove the Trustee by so notifying the Trustee and the Company. The
Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(3) a custodian or public officer takes charge of the
Trustee or it 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 promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Securities may appoint
a successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 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 then outstanding Securities
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon the resignation or removal
of the retiring Trustee shall become effective, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under this Indenture. The
successor Trustee shall mail a notice of its succession to Securityholders. The
retiring Trustee shall promptly transfer all property held by it as Trustee to
the successor Trustee, subject to the lien provided for in Section 7.07.
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Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the
Company's obligations under Section 7.07 hereof shall continue for the benefit
of the retiring trustee with respect to expenses and liabilities incurred by it
prior to such replacement.
Section 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Trustee.
Section 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the requirements
of TIA ss. 310(a). The Trustee shall always have a combined capital and surplus
as stated in Section 11.16. The Trustee is subject to TIA ss. 310(b), including
the optional provision permitted by the second sentence of TIA ss. 310(b)(9).
Section 7.11. Preferential Collection of Claims Against Company.
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
Section 7.12. Appointment of Co-Trustee and Collateral Agent.
If the Trustee deems it necessary or desirable in connection with the
ownership of the Collateral and the enforcement of the Collateral Agreements,
the Trustee may appoint a Collateral Agent or Co-Trustee with such powers of the
Trustee as may be designated by the Trustee at the time of such appointment or
subsequent thereto or as may be contemplated herein. Concurrently with the
execution of this Indenture, the Trustee hereby appoints The State Street Bank
and Trust Company, N.A., as the Collateral Agent to act as required by this
Indenture and the Collateral Agreements. The provisions of this Article 7 other
than the provisions of Section 7.05, 7.06 and 7.10 shall apply in favor of the
Collateral Agent or any Co-Trustee and each of their officers, directors,
employees, attorneys-in-fact and agents.
Section 7.13. Trustee and Collateral Agent To Cooperate.
In exercising any remedies under this Indenture and any or all of the
Collateral Agreements, the Trustee and the Collateral Agent shall cooperate. In
addition, in exercising any remedies under any or all of the Collateral
Agreements, the Collateral Agent shall act only upon the direction of the
Trustee. If the Collateral Agent fails to so act, the Trustee, as
attorney-in-fact of the Collateral Agent, may act for the
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Collateral Agent. When any notice to, or consent by, the Collateral Agent is
required by the provisions of this Indenture or any of the Collateral
Agreements, such notice or consent shall be sufficient if given to, or made by,
the Trustee, who shall for such purposes act as attorney-in-fact for the
Collateral Agent.
ARTICLE 8
DISCHARGE OF INDENTURE
Section 8.01. Termination of Company's Obligations.
This Indenture shall cease to be of further effect (except that the
Company's obligations under Section 7.07 and the Trustee's and Paying Agent's
obligations under Section 8.03 shall survive) when all outstanding Securities
theretofore authenticated and issued have been delivered (other than destroyed,
lost or stolen Securities which have been replaced or paid) to the Trustee for
cancellation and the Company has paid all sums payable hereunder. In addition,
the Company may terminate all of its obligations under this Indenture if:
(1) the Company irrevocably deposits in trust with the Trustee
or, at the option of the Trustee, with a trustee satisfactory to the
Trustee and the Company under the terms of an irrevocable trust
agreement in form and substance satisfactory to the Trustee, money or
U.S. Government Obligations sufficient to pay when due principal and
interest on the Securities to maturity or redemption, as the case may
be, and to pay all other sums payable by it hereunder accompanied by a
favorable accountants' certificate as to the sufficiency of such
Obligations, without consideration of any reinvestment of interest, to
pay, when due, the principal of and interest on the Securities,
provided that (i) the trustee of the irrevocable trust shall have been
irrevocably instructed to pay such money or the proceeds of such U.S.
Government Obligations to the Trustee and (ii) the Trustee shall have
been irrevocably instructed to apply such money or the proceeds of such
U.S. Government Obligations to the payment of said principal and
interest with respect to the Securities;
(2) the Company delivers to the Trustee an Officer's
Certificate stating that all conditions precedent to satisfaction and
discharge of this Indenture have been complied with, and an Opinion of
Counsel to the same effect;
(3) no Default or Event of Default shall have occurred and
be continuing on the date of such deposit; and
(4) the Company shall have delivered to the Trustee an
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Opinion of Counsel or a ruling received from the Internal Revenue
Service to the effect that the Holders of the Securities will not
recognize income, gain or loss for Federal income tax purposes as a
result of the Company's exercise of its option under this Section 8.01
and will be subject to Federal income tax on the same amount and in the
same manner and as the same times as would have been the case if such
option had not been exercised.
Then, this Indenture shall cease to be of further effect (except as
aforesaid and except as provided in the next succeeding paragraph), and the
Trustee, on demand of the Company, shall execute proper instruments
acknowledging confirmation of and discharge under this Indenture and the release
of the Collateral under the Collateral Agreements. However, the Company's
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 4.01, 4.04, 7.07, 7.08 and
8.04 and the Trustee's and Paying Agent's obligations in Section 8.03 shall
survive until the Securities are no longer outstanding. Thereafter, only the
Company's obligations in Section 7.07 and the Company's and the Trustee's and
Paying Agent's obligations in Section 8.03 shall survive.
After such irrevocable deposit made pursuant to this Section 8.01 and
satisfaction of the other conditions set forth herein, the Trustee and the
Collateral Agent, as applicable, upon request shall acknowledge in writing the
discharge of the Company's obligations under this Indenture and the Collateral
Agreements except for those surviving obligations specified above.
In order to have money available on a payment date to pay principal or
interest on the Securities, the U.S. Government Obligations shall be payable as
to principal or interest on or before such payment date in such amounts as will
provide the necessary money. U.S. Government Obligations shall not be callable
at the issuer's option.
"U.S. Government Obligations" means direct obligations of the United States
of America, or any agency or instrumentality thereof, for the payment of which
the full faith and credit of the United States of America is pledged.
Section 8.02. Application of Trust Money.
The Trustee shall hold in trust money or U.S. Government Obligations
deposited with it pursuant to Section 8.01. It shall apply the deposited money
and the money from U.S. Government Obligations through the Paying Agent and in
accordance with this Indenture to the payment of principal and interest on the
Securities.
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Section 8.03. Repayment to Company.
The Trustee and the Paying Agent shall promptly pay to the Company upon
request any excess money or securities held by them at any time.
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 after the date upon which such payment shall have become
due; provided, however, that the Company shall have first caused notice of such
payment to the Company to be mailed to each Securityholder entitled thereto no
less than 30 days prior to such payment. After payment to the Company,
Securityholders entitled to the money must look to the Company for payment as
general creditors unless an applicable abandoned property law designates another
person.
Section 8.04. Reinstatement.
If (i) the Trustee or Paying Agent is unable to apply any money in
accordance with Section 8.02 by reason of any order or judgment of any court or
governmental authority enjoining restraining or otherwise prohibiting such
application and (ii) the Holders of at least a majority in principal amount of
the then outstanding Securities so request by written notice to the Trustee, the
Company's obligations under this Indenture, the Securities and the Collateral
Agreements shall be revived and reinstated as though no deposit had occurred
pursuant to Section 8.01 until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02; provided,
however, that if the Company makes any payment of interest on or principal of
any Security following the reinstatement of its obligations, the Company shall
be subrogated to the rights of the Holders of such Securities to receive such
payment from the money held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENTS
Section 9.01. Without Consent of Holders.
The Company and the Trustee may amend this Indenture, the Securities or the
Collateral Agreements without the consent of any Securityholder:
(1) to cure any ambiguity, defect or inconsistency,
(2) to comply with Section 5.01;
(3) to provide for uncertificated Securities in addition to
or in place of certificated Securities;
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(4) to make any change that does not adversely affect the
legal rights hereunder of any Securityholder; or
(5) to comply with any requirement of the SEC in connection
with the qualification of this Indenture under the TIA.
Section 9.02. With Consent of Holders.
Subject to Section 6.07, the Company and the Trustee may amend this
Indenture, the Securities or the Collateral Agreements with the written consent
of the Holders of at least a majority in principal amount of the then
outstanding Securities. Subject to Sections 6.04 and 6.07, the Holders of a
majority in principal amount of the Securities then outstanding may also waive
compliance in a particular instance by the Company with any provision of this
Indenture, the Securities or the Collateral Agreements. However, without the
consent of each Securityholder affected, an amendment or waiver under this
Section may not (with respect to any Securities held by non-consenting Holders):
(1) reduce the amount of Securities whose Holders must
consent to an amendment or waiver;
(2) reduce the rate of or change the time for payments of
interest on any Security;
(3) reduce the principal of or change the fixed maturity of
any Security or alter the redemption provisions of Section 3.07 hereof
or of paragraph 5 of the Securities with respect thereto;
(4) make any Security payable in money other than that stated
in the Security;
(5) make any change in Section 6.04, 6.07 or 9.02 (this
sentence); or
(6) waive a Default in the payment of the principal of, or
interest on, any Security.
To secure a consent of the Holders under this Security, it shall not be
necessary for the Holders to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment or waiver under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing the amendment
or waiver. Any failure of the Company to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such amended or supplemental Indenture or waiver.
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Section 9.03. Compliance with Trust Indenture Act.
Every amendment to this Indenture or the Securities shall be set forth in a
supplemental indenture that complies with the TIA as then in effect.
Section 9.04. Revocation and Effect of Consents.
Until an amendment or waiver becomes effective, a consent to it by a Holder
of a Security is a continuing consent by the Holder and every subsequent Holder
of a Security or portion of a Security that evidences the same debt as the
consenting Holder's Security, even if notation of the consent is not made on any
Security. However, any such Holder or subsequent Holder may revoke the consent
as to his Security or portion of a Security if the Trustee receives the notice
of revocation before the date on which the Trustee receives an Officer's
Certificate certifying that the Holders of the requisite principal amount of
Securities have consented to the amendment or waiver, but in any event before
the effective date thereof.
The Company may, but shall not be obligated to fix a record date for the
purpose of determining the Holders entitled to consent to any amendment or
waiver. If a record date is fixed, then notwithstanding the provisions of the
immediately preceding paragraph, those persons who were Holders at such record
date (or their duly designated proxies), and only those persons shall be
entitled to consent to such amendment or waiver or to revoke any consent
previously given, whether or not such persons continue to be Holders after such
record date. No consent shall be valid or effective for more than 90 days after
such record date unless consents from Holders of the principal amount of
Securities required hereunder for such amendment or waiver to be effective shall
have also been given and not revoked within such 90-day period.
After an amendment or waiver becomes effective it shall bind every
Securityholder, unless it is of the type described in any of clauses (1) through
(6) of Section 9.02. In such case, the amendment or waiver shall bind each
Holder of a Security who has consented to it and every subsequent Holder or a
Security that evidences the same debt as the consenting Holder's Security.
Section 9.05. Notation on or Exchange of Securities.
The Trustee may place an appropriate notion about an amendment or waiver on
any Security thereafter authenticated. The Company in exchange for all
Securities may issue and the Trustee shall authenticate new Security that
reflect the amendment or waiver.
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Section 9.06. Trustee Protected.
The Trustee shall sign all supplemental Indentures, except that the Trustee
need not sign any supplemental indenture that adversely affects its rights.
ARTICLE 10
SECURITY
Section 10.01. Collateral Agreements.
(a) The Company hereby agrees to grant to the Collateral Agent for the
benefit of the Collateral Agent (it being understood that, except as expressly
stated otherwise, throughout this Indenture and the Collateral Agreements and in
this Article 10 specifically, references to the Collateral Agent are to it
solely as Collateral Agreements and not in its individual capacity), the Trustee
and Securityholders a Security Interest in the Collateral, all as more
particularly set forth in this Indenture and the Collateral Agreements.
(b) After the original issuance of the Securities, if the Company shall
from time to time acquire any asset or property (including real property) (i)
which, in the case of any asset or property other than real property,
constitutes or, but for any release provide pursuant to Section 10.04, would
constitute "Collateral" under the Security Agreement or the Intellectual
Property Security Agreements or "Pledged Collateral" under the Pledge Agreement,
(ii) which, at any time after acquisition by the Company, is not subject to any
Purchase Money Lien permitted by this Indenture for a period of 180 consecutive
days or more, and (iii) which is not a Specified Asset, then within thirty (30)
days of the expiration of the applicable 180 day period, the Company agrees to
grant to the Collateral Agent (provided such asset or property is not already
subject to, or which will not upon acquisition by the Company, become subject
to, a perfected Security Interest) for the benefit of the Trustee, the
Collateral Agent and the Holders a Lien in such asset or property and shall from
time to time execute, acknowledge, deliver and cause to be recorded all further
agreements, instruments and documents, and take all further action that may be
necessary or desirable, or that the Trustee, the Collateral Agent or the Holders
may reasonably request, to grant, perfect, protect and preserve such security
interest and Lien in favor of the Collateral Agent, for the benefit of itself,
the Trustee and the Holders in such asset or property (provided such asset or
property is not already subject to, or which will not, upon acquisition by the
Company, become subject to, a perfected Security Interest) as security for the
Obligations of the Company under this Indenture. "Specified Asset" means any
asset or property of the Company which (i) with respect to any real
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property, is acquired after the date of this Indenture and (ii) (A) has a fair
market value of $50,000 or less or (B) is an interest in real property the
encumbrance of which is prohibited by the agreement, document or instrument
governing such interest in real property or (C) constitutes a fixture which is
located on real property leased by the Company under an operating lease or (D)
is personal property the encumbrance of which is prohibited by a lease or other
agreement governing or evidencing that particular property or (E) is personal
property the encumbrance of which is prohibited by applicable law; provided,
that (i) Capital Stock of a Subsidiary, (ii) Intellectual Property, (iii) any
new lease of any significant manufacturing facility(ies) of the Company and (iv)
any asset or property already subject to, or which will, upon acquisition by the
Company, become subject to, a perfected Security Interest (whether or not it has
a fair market value of $50,000 or less) shall be excluded from this definition
and shall not under any circumstance constitute Specified Assets.
(c) Notwithstanding anything to the contrary in this Indenture (except
Section 10.1(d)) or the Collateral Agreements, the Holders acknowledge that
neither the Trustee, the Collateral Agent nor any other security trustee is or
will be perfecting Liens under the laws of jurisdictions other than the United
States and states and territories (including local jurisdictions) thereof,
taking possession of any instrument or document of title (other than
certificated securities in a Subsidiary), complying with the Assignment of
Claims Act, or perfecting or making effective Liens other than pursuant to (i)
the applicable Uniform Commercial Code (including any successor statute), (ii)
laws of the United States and states and territories (including local
jurisdictions) thereof pertaining to patents, trademarks, copyrights or other
Intellectual Property, (iii) laws of the United States and states and
territories (including local jurisdictions) thereof governing interests in real
property, and (iv) laws of the United States and states and territories
(including local jurisdictions) thereof governing Liens and security interests
in aircraft, ships, motor vehicles, trailers and similar personal property.
(d) Notwithstanding anything to the contrary in this Indenture or the
Collateral Agreements, (i) under no circumstance will the Company be required to
or will be deemed to (A) grant or perfect any Lien with respect to any Specified
Asset except to the extent granted under the Security Agreement, (B) continue
the perfection of any Security Interest in any Specified Asset having a fair
market value of $50,000 or less, or (C) grant or perfect any Lien against (1)
cash, "deposit accounts" (as such term is defined in Section 9105 of Uniform
Commercial Code as in effect in the State of New York), or Cash Equivalents, or
(2) "accounts" or "inventory" (as such terms are defined in the Uniform
Commercial Code as in effect in the State of New York), including receivables
and other rights to the payment of money arising out of the sale or other
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disposition of inventory, contractual obligations of account debtors relating to
accounts owing to the Company, and the Company's rights under purchase orders
for inventory or proceeds thereof or (3) books, records and information of the
Company pertaining to accounts or inventory, or proceeds thereof, including
without limitation, all documents, books, records and other media for the
storage of information (including without limitation, computer programs, tapes,
disks, punch cards, data processing software and related property and rights)
maintained by the Company or any of its agents or representatives with respect
to accounts or inventory, suppliers or purchasers of inventory or persons or
entities obligated under accounts, or (4) general intangibles and any other
intangible personal property (other than Intellectual Property) relating or
pertaining to accounts or inventory and (ii) no property set forth in the
foregoing clause (C) shall be included in the definition of "Collateral" or be
deemed to constitute collateral under the Indenture or any Collateral Agreement,
and (iii) no Security Interest or Lien against the property set forth in the
foregoing clause (C) shall be deemed to have been granted or to exist under the
Indenture or under any Collateral Agreement.
(e) Each Securityholder, by accepting a Security, agrees to all of the
terms and provisions of the Collateral Agreements as the same may be in effect
or may be amended from time to time. The due and punctual payment of the
principal, and premium, if any, of, and interest on the Securities when and as
the same shall be due an payable, whether on an interest payment date, at
maturity, by acceleration, call for redemption or otherwise, and interest on the
overdue principal, premium, if any, and interest, if any, of the Securities and
payment and performance of all other Obligations of the Company to the Holders,
the Collateral Agent or the Trustee under this Indenture and the Securities,
according to the terms hereunder or thereunder, shall be secured as provided
hereunder and in the Collateral Agreements.
(f) The Securityholders acknowledge that the Company has granted a prior
perfected security interest in the Collateral to a collateral agent under the
Old Indenture (the "Old Collateral Agent") for the benefit of the holders of the
Company's Series A and Series B 10 3/4% Senior Secured Notes, due 2000
(collectively, the "Old Notes"). The Trustee and the Collateral Agent hereby
agree to enter into an intercreditor agreement with the Old Trustee and the Old
Collateral Agent, pursuant to which the benefit of the Collateral will be shared
by the Old Trustee, the Old Collateral Agent, the holders of the Old Notes, the
Trustee, the Collateral Agent, and the Holders of the Securities, such sharing
to be ratable based on the aggregate principal amount outstanding of Securities
and Old Notes.
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Section 10.02. Recording, Etc.
The Company will cause the applicable Collateral Agreements including the
Deed of Trust, the Security Agreement, the Intellectual Property Security
Agreements, the Pledge Agreement, any financing statement and any fixture
filing, all amendments or supplements to each of the foregoing and any other
similar security documents as necessary to be registered, recorded and filed
and/or re-recorded, re-filed and renewed in such manner and in such place or
places, if any, as may be required by law or reasonably requested by the Trustee
in order to fully preserve and protect the Security Interests and to effectuate
and preserve the security therein of the Securityholders and all rights of the
Trustee.
The Company shall furnish to the Trustee:
(a) promptly after the execution and delivery of this Indenture, and
promptly after the execution and delivery of any other instrument of further
assurance or amendment granting, perfecting, protecting, preserving or making
effective a Security Interest pursuant to any Collateral Agreement, an Opinion
of Counsel either (i) stating that, in the opinion of such counsel, subject to
Sections 10.01(b), (c) and (d), this Indenture and the Collateral Agreements,
financing statements and fixture filings then executed and delivered, as
applicable, and all other instruments of further assurance or amendment then
executed and delivered have been properly recorded, registered and filed to the
extent necessary to perfect the Security Interests created by this Indenture and
the Collateral Agreements and reciting the details of such action or referring
to prior Opinions of Counsel in which such details are given, and stating that
as to such Collateral Agreements and such other instruments, such recording,
registering and filing are the only recordings, registerings and filings
necessary to perfect such Security Interests and that no re-recordings,
re-registerings or re-filings are then necessary to maintain such perfection,
and further stating that all financing statements and continuation statements
have been executed and filed that are then necessary to perfect such Security
Interests or (ii) stating that, in the opinion of such counsel, subject to
Sections 10.01(b), (c) and (d), no such action is necessary to perfect any
Security Interest created under this Indenture or any of the Collateral
Agreements as intended by this Indenture and such Collateral Agreements; and
(b) within 30 days after January 1, in each year beginning with the year
19984, an Opinion of Counsel, dated as of such date, either (i) stating that, in
the opinion of such counsel, such action has been taken with respect to the
recording, registering, filing, re-recording, re- registering and re-filing of
this Indenture, all Collateral Agreements, financing statements, continuation
statements or other instruments of
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further assurance as are then necessary to perfect or continue the perfection of
the Security Interests created thereunder and reciting the details of such
action or referring to prior Opinions of Counsel in which such details are
given, and stating that, subject to Section 10.01(b), (c) and (d), all financing
statements and continuation statements have been executed and filed that are
then necessary to perfect or continue the perfection of such Security Interests
or (ii) stating that, in the opinion of such counsel, subject to Sections
10.01(b), (c) and (d), no such action is then necessary to perfect or continue
the perfection of such Security Interests.
Section 10.03. Authorization of Actions to be Taken by the Collateral Agent
Under the Collateral Agreements.
The Collateral Agent upon the direction of the Trustee may, in its sole
discretion and without the consent of the Securityholders (but shall have no
obligation to), take all actions it deems necessary or appropriate in order to
(a) enforce any of the terms of the Collateral Agreements and (b) collect and
receive any and all amounts payable in respect of the Obligations of the Company
hereunder. Subject to the provisions of the Collateral Agreements, the
Collateral Agent upon the direction of the Trustee shall have power (but no
obligation) to institute and to maintain such suits and proceedings as it may
deem expedient to prevent any impairment of the Collateral by any acts which may
be unlawful or in violation of the Collateral Agreements or this Indenture, and
such suits and proceedings as the Trustee may deem expedient to preserve or
protect its interests and the interests of the Securityholders in the Collateral
(including power to institute and maintain suits or proceedings to restrain the
enforcement of or compliance with any legislative or other governmental
enactment, rule or order that may be unconstitutional or otherwise invalid if
the enforcement of, or compliance with, such enactment, rule or order would
impair the security hereunder or be prejudicial to the interests of the
Securityholders or of the Trustee).
Section 10.04. Release of Lien.
(a) All or any part of the Collateral may be released from the Security
Interests at any time or from time to time in accordance with the provisions of
the Collateral Agreements and as provided hereby.
(b) So long as no Default or Event of Default exists, upon the request of
the Company and the furnishing of an Officers' Certificate and Opinion of
counsel certifying that all conditions precedent to the release of the
Collateral have been met and any report, appraisal or other document required by
the TIA (including, without limitation, under TIA ss.ss. 314(b) and (d), to the
extent applicable) in connection with such release have been delivered, the
Collateral Agent upon the direction of
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the Trustee shall release (i) Collateral or any part thereof or interest therein
which is proposed to be sold by the Company, and (ii) Collateral which is
subject to a Purchase Money Lien permitted by this Indenture; provided that, in
the case of Section 10.04(b)(ii), the Trustee shall have received an Officers'
Certificate of the Company (x) stating that (A) the property or assets
constituting such Collateral has been subjected to a Purchase Money Lien
permitted by this Indenture and (B) the release is requested by a Purchase Money
Lienholder and (y) describing in reasonable detail the property or asset subject
to such Purchase Money Lien and setting forth the name and address of such
Purchase Money Lienholder.
(c) Upon receipt of such Officers' Certificates and Opinion of Counsel (and
other documents if applicable), the Collateral Agent upon the direction of the
Trustee shall execute, deliver or acknowledge any necessary or proper
instruments of termination, satisfaction or release to evidence the release of
any Collateral permitted to be released pursuant to this Indenture and the
Collateral Agreements, all without recourse or warranty and at the expense of
the Company.
(d) The release of any Collateral from the terms hereof and of the
Collateral Agreements will not be deemed to impair the security under this
Indenture in contravention of the provisions hereof if and to the extent the
Collateral is released pursuant to the applicable terms hereof and of the
Collateral Agreements. The Trustee, the Collateral Agent and each of the Holders
acknowledge that a release of the Collateral in accordance with the terms hereof
and of the Collateral Agreements will not be deemed for any purpose to be an
impairment of security under this Indenture.
(e) Notwithstanding the foregoing, the Company may, without requesting the
release or consent of the Trustee, sell, assign, transfer, or otherwise dispose
of, free from the Security Interests, any machinery, equipment, or other
personal property constituting Collateral that has become worn out, obsolete, or
unserviceable.
Section 10.05. Lien Subordination.
(a) Purchase Money Liens permitted by this Indenture shall be automatically
senior and prior in right to the Security Interests. The Trustee, the Collateral
Agent and each Holder acknowledge that the rights of any Purchase Money
Lienholders to receive proceeds from the disposition of Collateral subject to a
Purchase Money Lien permitted by this Indenture is senior to the rights of the
Holders, the Collateral Agent and those of the Trustee to receive proceeds from
the disposition of such Collateral.
(b) The priorities set forth in Section 10.05(a) are applicable
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irrespective of the order of creation, attachment or perfection of any Purchase
Money Liens permitted by this Indenture or the Security Interests or any
priority that might otherwise be available to the Holders, the Trustee, or any
Purchase Money Lienholder under the applicable law.
(c) The priorities set forth in Section 10.05(a) are premised upon the
assumption that Purchase Money Liens permitted by this Indenture are duly and
properly created and perfected and are not avoidable for any reason.
Accordingly, to the extent that (but only for so long as) any Purchase Money
Liens permitted by this Indenture are not duly and properly created an perfected
or are avoidable for any reason, then the subordinations provided for in this
Section 10.05 or as requested by a Purchase Money Lienholder as evidence of such
subordination shall not be effective as to the particular Collateral subject to
such Purchase Money Liens; provided, however, that the Trustee, the Collateral
Agent and each Holder, by accepting a Security, agree not to contest, or to
bring (or voluntarily join in) any action or proceeding for the purpose of
contesting, the validity, perfection or priority (as herein provided) of, or
seeking to avoid, any Purchase Money Liens permitted by this Indenture, and
provided further, that nothing herein shall be deemed or construed to prevent
any Purchase Money Lienholder from commencing an action or proceeding to assert
any right or claim it may have arising in connection with this Indenture or any
documents evidencing Purchase Money Liens permitted by this Indenture.
(d) If requested by a Purchase Money Lienholder to confirm that the rights
of Purchase Money Lienholders are prior to those of the Collateral Agent, the
Holders and the Trustee in any Collateral, the Collateral Agent upon the
direction of the Trustee shall execute such reasonable documents as such
Purchase Money Lienholder requests to evidence such prior rights upon delivery
to the Trustee of (i) such documents and (ii) an Officers' Certificate of the
Company (A) stating that (1) the property or assets constituting such Collateral
are subject to a Purchase Money Lien permitted by this Indenture and (2) the
execution of the documents is necessary to make effective the subordination of
the Security Interests to such Purchase Money Lien intended to be created by
this Section 10.05 or is requested by such Purchase Money Lienholder as evidence
of such subordination and (B) describing in reasonable detail the property
subject to such Purchase Money Lien and setting forth the name and address of
such Purchase Money Lienholder.
Section 10.06. Reliance on Opinion of Counsel.
The Trustee and the Collateral Agent shall, before taking any action under
this Article 10, be entitled to receive an Opinion of Counsel, stating the legal
effect of such action, and that such action will not
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be in contravention of the provisions hereof, and such opinion shall be full
protection to the Trustee and the Collateral Agent for any action taken or
omitted to be taken in reliance thereon; provided, that the Trustee's action
under this Article 10 shall at all times be and remain subject to its duties to
determine whether or not the evidence required to be provided by this Indenture
and by the Collateral Agreements conforms to the requirements of this Indenture
and the Collateral Agreements, as the case may be.
Section 10.07. Purchaser May Rely.
A purchaser in good faith of the Collateral or any part thereof or interest
therein which is purported to be transferred, granted or released by the
Collateral Agent as provided in this Article 10 shall not be bound (i) to
ascertain, and may rely on, the authority of the Collateral Agent to execute
such transfer, grant or release, or (ii) to inquire as to the satisfaction of
any conditions precedent to the exercise of such authority, or (iii) to
determine whether the application of the purchase price therefor complies with
the terms hereof.
Section 10.08. Payment of Expenses.
On demand of the Trustee, the Company forthwith shall pay or satisfactorily
provide for all reasonable expenditures incurred by Trustee or the Collateral
Agent under this Article 10 including the reasonable fees and expenses of
counsel and all such sums shall be a Lien upon the Collateral and shall be
secured thereby.
Section 10.09. Trustee's and Collateral Agent's Duties.
The powers and duties conferred upon the Trustee and the Collateral Agent
by this Article 10 are solely to protect the Security Interests and shall not
impose any duty upon the Trustee or the Collateral Agent to exercise any such
powers and duties except as expressly provided in this Indenture. The Trustee
and the Collateral Agent shall be under no duty to the Company whatsoever to
make or given any presentment, demand for performance, notice of nonperformance,
protest, notice of protest, notice of dishonor, or other notice or demand in
connection with any Collateral, or to take any steps necessary to preserve any
rights against prior parties except as expressly provided in this Indenture. The
Trustee and the Collateral Agent shall not be liable to the Company for failure
to collect or realize upon any or all of the Collateral, or for any delay in so
doing, nor shall the Trustee or the Collateral Agent be under any duty to the
Company to take any action whatsoever with regard thereto. Except for the
exercise of reasonable care in the custody of any Collateral in its possession
and the accounting for any monies actually received by it hereunder or under the
Collateral Agreements, the Trustee and the Collateral Agent shall have no duty
as to any Collateral or as
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to the taking of any Collateral. The Trustee and the Collateral Agent shall be
deemed to have exercised reasonable care in the custody of any Collateral in its
possession if such Collateral is accorded treatment substantially equal to that
which the Trustee or the Collateral Agent accords its own property of like
tenor.
Section 10.10. Authorization of Receipt of Funds by the Trustee and the
Collateral Agent Under the Collateral Agreements.
The Collateral Agent is authorized to receive any funds for the benefit of
the Trustee distributed under the Collateral Agreements, and upon receipt
thereof, immediately will distribute such funds to the Trustee for further
distributions of such funds to the Holders according to the provisions of this
Indenture.
Section 10.11. Termination of Security Interests.
Upon the payment in full of all Obligations of the Company under this
Indenture and the Securities, the Security Interests shall terminate and all
rights to the Collateral shall revert to the Company. Upon such termination of
the Security Interests, the Trustee and the Collateral Agent will reassign and
redeliver to the Company all of the Collateral which has not been sold, disposed
of, retained or applied by the Trustee or the Collateral Agent in accordance
with the terms hereof and the Collateral Agreements, and shall execute and
deliver to the Company such documents as the Company shall reasonably request to
evidence the termination of the Security Interests, all without recourse to or
warranty by the Trustee, the Collateral Agent or the Holders and at the expense
of the Company.
Section 10.12. Certificates and Opinions.
To the extent applicable, the Company shall cause (a) TIA ss. 314(b),
relating to Opinions of Counsel regarding the Security Interest and (b) TIA ss.
314(d), relating to the release of Collateral from the Security Interests and
Officers' Certificates or other documents regarding fair value of the
Collateral, to be complied with. Any certificate or opinion required by TIA ss.
314(d) may be made by an Officer or the Company to the extent permitted by TIA
ss. 314(d).
ARTICLE 11
MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies, or conflicts
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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 notice or communication by the Company or the Trustee to the other is
duly given if in writing and delivered in person or mailed by certified or
registered mail, return receipt requested, to the other's address stated in
Section 11.10. The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications. If a
notice or communication is mailed in the manner so provided, it is duly given
when received.
Any notice or communication to a Securityholder shall be mailed by
first-class mail to his address shown on the register kept by the Registrar.
Failure to mail a notice or communication to a Securityholder or any defect in
it shall not affect its sufficiency with respect to other Securityholders.
If a notice or communication is mailed to a Securityholder in the manner
provided above within the time prescribed, it is duly given, whether or not the
addressee receives it.
If the Company mails a notice or communication to Securityholders, it shall
mail a copy to the Trustee and each Agent at the same time.
All other notices or communications shall be in writing.
Section 11.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA ss. 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA ss. 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:
(a) an Officer's Certificate stating that, in the opinion of the
signers, all conditions precedent, if any provided for in this
Indenture relating to the proposed action have been complied with; and
(b) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
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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 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 based;
(3) a statement that, in the opinion of such person, he has made
such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
Section 11.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 11.07. Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions are not required to be open. If a payment date is a Legal Holiday
at a place of payment, payments may be made at that place on the next succeeding
day that is not a Legal Holiday, and no interest shall accrue for the
intervening period. Notwithstanding anything to the contrary contained in this
Section 11.07, if the principal amount of a Transfer Restricted Security is
payable on a Legal Holiday, and is paid on the next succeeding day which is not
a Legal Holiday, interest shall accrue on such principal amount until the date
on which such principal amount is paid and payment of such accrued interest
shall be made concurrently with the payment of such principal amount.
Section 11.08. No Recourse Against Others.
A director, officer, employee, incorporator or stockholder, as such, of the
Company shall not have any liability for any obligations of the Company under
the Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Securityholder by excepting a
Security waives and releases all such liability. The waiver and release are part
of the consideration for the issue of the Securities.
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Section 11.09. Counterparts.
This Indenture 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.
Section 11.10. Variable Provisions.
The Company initially appoints the Trustee as Paying Agent, Registrar and
authenticating agent.
The first certificate pursuant to Section 4.03 shall be for the fiscal year
ending on December 31, 1997.
The reporting date for Section 7.06 is May 15 of each year. The first
reporting date is May 15, 1998.
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<PAGE>
The Company's address is:
Wright Medical Technology, Inc.
5677 Airline Road
Arlington, Tennessee 38002
Attn: Treasurer
The Trustee's address is:
State Street Bank and Trust Company
Two International Place, 4th Floor
Boston, MA 02110
ATTN: Corporate Trust Department
(Wright Medical Technology, Inc.
11 3/4% Senior Secured Step-Up Notes)
The Collateral Agent's address is:
State Street Bank and Trust Company, N.A.
61 Broadway
Corporate Trust Window
New York, NY 10006
ATTN: Corporate Trust Department
(Wright Medical Technology, Inc.
11 3/4% Senior Secured Step-Up Notes)
Until such time as the Indenture shall have been qualified under the TIA
and one or more Securities shall be registered pursuant to a registration
statement filed under the Securities Act, and said Securities shall be
transferred pursuant to the terms of an effective registration statement, or
such earlier time as transfer of the Securities is no longer subject to the
legend requirements imposed by Section (e) of the Letter of Transmittal, the
Securities to the extent not so registered shall bear a legend to that effect,
and except as otherwise provided in Section (e) of the Letter of Transmittal,
transfer of such legended Securities shall be subject to the requirement that
the Company and the Trustee receive a Certificate of Transfer and to the
Company's right to require an Opinion of Counsel, reasonably satisfactory in
form and substance to the Company and to the Trustee, that an exemption from
registration under such Act is available.
Section 11.11. Governing Law.
THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN THIS
INDENTURE AND THE SECURITIES, WITHOUT REGARD TO THE CONFLICT OF LAWS
PROVISIONS THEREOF.
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Section 11.12. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or a Subsidiary of the Company. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture. In the event
of any inconsistency between the Indenture and the Collateral Documents, the
Indenture shall govern.
Section 11.13. Successors.
All agreements of the Company in this Indenture and the Securities shall
bind its successor. All agreements of the Trustee in this Indenture shall bind
its successor.
Section 11.14. Severability.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 11.15. Table of Contents, Headings, Etc.
The Table of Contents, Cross-Reference Table, and headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof, and shall in no way modify or
restrict any of the terms or provisions hereof.
Section 11.16. Qualification of Indenture.
The Company shall qualify this Indenture under the TIA in accordance with
the terms and conditions of the Registration Rights Agreement and shall pay all
costs and expenses (including attorneys' fees and expenses for the Company, the
Trustee and the Holders of the Securities) incurred in connection therewith,
including, but not limited to, costs and expenses of qualification of the
Indenture and the Securities and printing this Indenture and the Securities. The
Trustee shall be entitled to receive from the Company any such Officers'
Certificates, Opinions of Counsel or other documentation as it may reasonably
request in connection with any such qualification of this Indenture under the
TIA. The Trustee shall always have a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of
condition.
Section 11.17. Amendments to Collateral Agreements.
Unless the context otherwise requires, any reference to any of the
Collateral Agreements shall be deemed to be a reference to such
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Collateral Agreement as it may be amended, supplemented or otherwise modified
from time to time as permitted by this Indenture.
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Section 11.18. Registration Rights.
Certain Holders of Restricted Securities are entitled to certain
Registration Rights with respect to such Securities pursuant to, and subject to
the terms of, the Registration Rights Agreement.
SIGNATURES
Dated: as of ________________ WRIGHT MEDICAL TECHNOLOGY, INC.
By:_______________________________
Attest:_____________________ Title:____________________________
_____________________
Dated: as of ________________ STATE STREET BANK AND TRUST
COMPANY, AS TRUSTEE
By:_________________________________
Title:____________________________
(SEAL)
Agreement to Act and Acknowledgment
We agree to act as Collateral Agent as contemplated by Section 7.12 hereof,
acknowledge the provisions of this Indenture and agree to the terms hereof
including, in particular, the provisions of Section 7.12 hereof.
Dated: as of ________________
Dated: as of ________________ STATE STREET BANK AND TRUST
COMPANY, N.A., AS COLLATERAL
AGENT
By:________________________________
Title:_____________________________
Page 100 of 155
(Face of Security)
Form of
11 3/4% Series C SENIOR SECURED STEP-UP NOTE
DUE JULY 1, 2000
No.
$--------------
WRIGHT MEDICAL TECHNOLOGY, INC.
promises to pay to
or registered assigns
the principal sum of __________________________________ Dollars on July 1, 2000.
Interest Payment Dates: July 1, and January 1
commencing January 1, 1998
Record Dates: June 15 and December 15
Authenticated: Date:_____________________
STATE STREET BANK and TRUST WRIGHT MEDICAL TECHNOLOGY,
COMPANY, as Trustee INC.
By:___________________________ By: _______________________
Authorized Officer Officer of the Company
Attest:___________________
Officer of the Company
(SEAL)
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(Back of Security)
--------------
11 3/4% Series C Senior Secured Step-Up Note due July 1, 2000
[Unless and until it is exchanged in whole or in part for Securities in
definitive form, this Security may not be transferred except 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 or by the Depository or any
such nominee to a successor Depository or a nominee of such successor
Depository. Unless this certificate is presented by an authorized representative
of The Depository Trust Company (55 Water Street, New York, New York) ("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 such other
name as requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or 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.]1
THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR
ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE
DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO
YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND
THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATED PERSON OF
THE COMPANY WAS THE OWNER OF THIS SECURITY (OR
- --------
1 This paragraph should be included only if the Security is in global form.
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ANY PREDECESSOR OF SUCH SECURITY) ONLY (A) TO THE COMPANY, (B)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, OR (C) PURSUANT TO ANY
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, SUBJECT TO THE COMPANY'S RIGHT PRIOR TO ANY
SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (C) TO REQUIRE
THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND
OTHER INFORMATION SATISFACTORY TO IT, AND SUBJECT TO THE
REQUIREMENT THAT IN EACH OF THE FOREGOING CASES, A CERTIFICATE
OF TRANSFER IN THE FORM APPEARING ON THIS SECURITY IS
COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS
LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER
THE RESALE RESTRICTION TERMINATION DATE.
Capitalized terms used herein shall have the meanings ascribed to them in
the Indenture unless otherwise indicated.
1. Interest. Wright Medical Technology, Inc., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this 11 3/4%
Series C Senior Secured Step-up Note (the "Series C Note") at 11 3/4% per annum
from the date of issuance until maturity provided that the interest rate will be
12 1/4% on the first anniversary of the consummation of the Exchange Offer if a
Sale (as defined in the Indenture), including a sale of all or substantially all
of the assets of the Company or a transaction whereby an unrelated person
acquires a direct or an indirect majority interest in the voting power of the
Company by way of merger, consolidation or similar transaction, has not
occurred. The Company will pay interest semiannually on July 1 and January 1 of
each year, or if any such day is not a Business Day, on the next succeeding
Business Day (each an "Interest Payment Date").
Interest on the Series C Notes will accrue from the most recent date on
which interest has been paid or, if no interest has been paid, from the date of
issuance; provided that if there is no existing Default in the payment of
interest, and if this Series C Note is authenticated between a record date
referred to on the face hereof and the next succeeding Interest Payment Date,
interest shall accrue from such next succeeding Interest Payment Date; provided,
further, that the first Interest Payment Date shall be January 1, 1998. The
Company shall pay interest (including post-petition interest in any proceeding
under Bankruptcy Law) on overdue principal and premium, if any, from time to
time on demand at the
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same rate per annum on the Series C Notes then in effect; it shall pay interest
(including post-petition interest in any proceeding under Bankruptcy Law) on
overdue installments of interest (without regard to any applicable grace
periods) from time to time on demand at the same rate to the extent lawful.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
2. Method of Payment. The Company will pay interest on the Series C Notes
(except defaulted interest) by check or wire transfer to the Persons who are
registered Holders of Series C Notes at the close of business on the record date
next preceding the Interest Payment Date, even if such Series C Notes are
cancelled after such record date and on or before such Interest Payment Date.
The Series C Notes will be payable both as to principal and interest at the
office of the Paying Agent maintained for such purpose within the City and State
of New York. The Company will pay or cause to be paid all amounts payable with
respect to any Series C Note (without any presentment of such Security and
without any notation of such payment being made thereon) by crediting by federal
funds bank wire transfer to the Holder's account in any bank in the United
States only as may be designated and specified in writing by such Holder. The
Purchaser's initial bank account for this purpose is set forth on its signature
page to the Purchase Agreement.
3. Paying Agent and Registrar. Initially, the Trustee under the Indenture
will act as Paying Agent and Registrar. The Company may change any Paying Agent
or Registrar without notice to any Holder. The Company or any of its
subsidiaries may act in any such capacity.
4. Indenture. The Company issued the Series C Notes under an Indenture
dated as of August 6, 1997 ("Indenture") between the Company and the Trustee.
The terms of the Series C Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S. Code ss.ss.77aaa-77bbbb) (the "TIA"). The Series C Notes are
subject to all such terms, and Holders are referred to the Indenture and such
Act for a statement of such terms. The Series C Notes are limited to $85 million
in aggregate principal amount, plus amounts, if any, sufficient to pay interest
and premium, if any, on outstanding Series C Notes as set forth in Paragraph 2
hereof.
5. Optional Redemption. The Company may redeem all or any of the
Securities, in whole or in part, at any time on or after July 1, 1997, at a
redemption price equal to the percentages of the principal amount thereof set
forth below, plus accrued and unpaid interest to the redemption date if redeemed
during the twelve months commencing on or after July 1, in the years set forth
below:
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Year Percentage
1997.......................................... 103%
1998 and thereafter........................... 100%
6. Mandatory Offers to Repurchase.
(a) Following the occurrence of any Change of Control, the Company will be
required to offer (a "Change of Control Offer") to purchase all outstanding
Securities at a purchase price equal to 101% of the aggregate principal amount
of such Securities plus accrued and unpaid interest, if any, to the date of
purchase (the "Change of Control Payment"), in each case in accordance with and
to the extent provided in the Indenture. The Change of Control Offer shall
remain open for a period of 20 Business Days after its commencement unless a
longer offering period is required by law. No earlier than 30 days nor later
than 40 days after the notice of the Change of Control Offer has been mailed
(the "Change of Control Payment Date"), the Company shall deposit, to the extent
lawful, with the Paying Agent an amount equal to the Change of Control Payment
in respect of all Securities or portions thereof tendered by Holders. The Paying
Agent shall promptly mail or deliver payment for all Securities tendered in the
Change of Control Offer.
A Holder of Series C Notes may tender or refrain from tendering all or any
portion of his Series C Notes at his discretion by completing the form entitled
"Option of Holder to Elect Purchase" appearing on the reverse side of this
Series C Note. Any portion of Series C Notes tendered must be in integral
multiples of $1,000.
(b) If the Company consummates any Asset Sale (as such term is defined in
the Indenture), the Company may be required to utilize a certain portion of the
Net Proceeds received from such Asset Sale to offer to redeem Securities at par.
Holders of Series C Notes which are the subject of an offer to redeem will
receive an offer to redeem from the Company prior to any related redemption
date, and may elect to have such Series C Notes redeemed by completing the form
entitled "Option of Holder to Elect Purchase" appearing on the reverse side of
this Series C Note.
7. Notice of Redemption. Subject to Section 3.08 of the Indenture relating
to repurchases in connection with Asset Sales, notice of redemption will be
mailed at least 30 days but not more than 60 days before the redemption date to
each Holder whose Series C Notes are to be redeemed at such Holder's registered
address. Series C Notes in denominations larger than $1,000 may be redeemed in
part but only in whole multiples of $1,000 unless all of the Series C Notes held
by a Holder are to be redeemed. On and after the redemption date interest ceases
to accrue on Series C Notes or
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<PAGE>
portions thereof called for redemption.
8. Denominations, Transfer, Exchange. The Series C Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Series C Notes may be registered and Series C Notes may
be exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements,
transfer documents and opinions and the Company may require a Holder to pay any
taxes and fees required by law or permitted by the Indenture. The Company need
not exchange or register the transfer of any Series C Note or portion of a
Series C Note selected for redemption, except for the unredeemed portion of any
Series C Note being redeemed in part. Also, it need not exchange or register the
transfer of any Series C Notes for a period of 15 days before a selection of
Series C Notes to be redeemed or during the period between a record date and the
corresponding Interest Payment Date.
9. Persons Deemed Owners. The registered Holder of a Series
C Note may be treated as its owner for all purposes.
10. Amendments and Waivers. Subject to certain exceptions, the Indenture or
the Series C Notes may be amended or supplemented and any existing Default
under, or compliance with any provision of, the Indenture may be waived with the
written consent of the Holders of at least a majority in principal amount of the
Securities then outstanding (including consents obtained in connection with a
tender offer or exchange offer for Securities). Without the consent of any
Holder, the Company and the Trustee may amend or supplement the Indenture or the
Securities to cure any ambiguity, defect or inconsistency; to provide for
uncertificated Securities in addition to or in place of certificated Securities;
to comply with Section 5.01 of the Indenture; to make any change that would
provide any additional rights or benefits to the Holders or that does not
adversely affect the rights under the Indenture of any Holder; or to comply with
requirements of the SEC in order to effect or maintain the qualification of the
Indenture under the TIA.
11. Defaults and Remedies. An Event of Default is (i) default for 30 days
in payment of interest on the Securities; (ii) default in payment of principal
on them; (iii) failure by the Company for 30 days after notice to it to comply
with any of its other agreements in the Indenture, the Securities, the
Registration Rights Agreement or the Collateral Agreements or, in the case of
failure of the Company to maintain its corporate existence or its consolidated
net worth, or to comply with the restrictions on restricted payments, incurrence
of indebtedness, asset sales, changes of control or on consolidation, merger or
transfer or sale of substantially all its assets, without such notice or passage
of
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time; (iv) certain defaults under and acceleration prior to maturity of other
indebtedness; (v) certain final judgments which remain undischarged; (vi) and
certain events of bankruptcy or insolvency. If an Event of Default occurs and is
continuing, the Trustee or the holders of at least 25% in principal amount of
the then outstanding Securities may declare all the Securities to be due and
payable immediately, except that in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, all outstanding Securities become
due and payable immediately without further action or notice. Holders of
Securities may not enforce the Indenture or the Securities except as provided in
the Indenture. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Securities. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Securities may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Security Holders notice of any continuing default (except a
default in payment of principal or interest) if it determines that withholding
notice is in their interests. The Company must furnish an annual compliance
certificate to the Trustee.
12. Trustee Dealings with Company. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates, as if it were not Trustee.
13. No Recourse Against Others. A director, officer, employee, incorporator
or stockholder, of the Company, as such, shall not have any liability for any
obligations of the Company under the Series C Notes or the Indenture or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder by accepting a Series C Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Series C Notes.
14. Authentication. This Series C Notes shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
15. Additional Rights of Holders of Transfer Restricted Securities. In
addition to the rights provided to Holders of Series C Notes under the
Indenture, Holders shall have all the rights set forth in the Registration
Rights Agreement.
16. Collateral Agreements, Etc. Each Holder of Series C Notes, by accepting
a Series C Note, agrees to be bound to all of the terms and provisions of the
Collateral Agreements (as defined in the Indenture), as such Collateral
Agreements may be amended from time to time.
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17. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as : TEN COM (= tenants in common), TEN ENT ( =
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts
to Minors Act).
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
WRIGHT MEDICAL TECHNOLOGY, INC.
5677 Airline Road
Arlington, Tennessee 38002
Attn: Treasurer
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ASSIGNMENT FORM
To assign this Series C Note, fill in the form below: (I) or (we) assign and
transfer this Series C Note to
- -----------------------------------------------------------------------------
(Insert assignee's So. Sec. or Tax I.D. No.)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint------------------------------------------------------
to transfer this Series C Note on the books of the Company. The
agent may substitute another to act for him.
- -----------------------------------------------------------------------------
Date:
Your Signature:
----------------------------------------------
(Sign exactly as your name appears on the face
of the Series C Note)
Signature Guarantee.
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Option of Holder to Elect Purchase
If you receive notice of an offer to repurchase pursuant to the terms of
the Indenture and if you want to elect to have this Series C Note purchased by
the Company pursuant to Section 4.11 or 4.12 of the Indenture, check the
appropriate box below:
------- Section 4.11 (Asset Sales)
------- Section 4.12 (Change of Control)
If you want to elect to have only part of the Series C Note purchased by
the Company pursuant to Section 4.11 or 4.12 of the Indenture, state the amount
you elect to have purchased:
$-------------.
Date: Your Signature:
-----------------------------------------
(Sign exactly as your name appears on the
Series C Note)
Tax Identification No.:
---------------------
Signature Guarantee.
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SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITIES2
The following exchanges of a part of this Global Series C Note
for Definitive Securities have been made:
Principal
Amount of Amount of Amount Signature of
Date decrease increase of this Global authorized
of in Principal in Principal Series C Note officer of
Exchange Amount Amount following such Trustee or
of this Global of this Global decrease (or Securities
Series C Note Series C Note increase) Custodian
- --------- -------------- -------------- -------------- -------------
- --------
2 This should be included only if the Security is issued in global form.
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Registration Rights Agreement
Dated As of August 6, 1997
among
Wright Medical Technology, Inc.
and
the Initial Holders
of its
11 3/4 % Series C Senior Secured Step-Up Notes,
due July 1, 2000
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<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of August 6, 1997, among WRIGHT MEDICAL TECHNOLOGY, INC., a
Delaware corporation (the "Company"), and the INITIAL HOLDERS of the Company's
11 3/4 % Series C Senior Secured Step-Up Notes due July 1, 2000 signatory hereto
(collectively, the "Initial Holders").
This Agreement is made in connection with the Company's offer to
the holders of the Company's $85 million principal amount Series B Senior
Secured Notes due July 1, 2000 (the "Old Notes") to exchange the Old Notes for
$85 million principal amount Series D Senior Secured Step-Up Notes due July 1,
2000 (the "New Notes"). The terms of this offer (the "Exchange Offer") are set
forth in an Exchange of Offer and Exit Consent Solicitation dated July 9, 1997.
To induce the Initial Holders to participate in the Exchange Offer, the Company
has agreed to provide to the Initial Holders and their direct and indirect
transferees the registration rights set forth in this Agreement. The execution
of this Agreement is a condition to the consummation of the Exchange Offer.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions.
As used in this Agreement, the following capitalized defined
terms shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended
from time to time, and the rules and regulations of the SEC promulgated
thereunder.
"1934 Act" shall mean the Securities Exchange Act of l934, as
amended from time to time, and the rules and regulations of the SEC
promulgated thereunder.
"Business Days" shall mean any day other than (i) Saturday or
Sunday, or (ii) a day on which banking institutions in the State of New
York are authorized or obligated by law or executive order to be closed.
"Closing Date" shall mean August __, 1997.
"Company" shall have the meaning set forth in the preamble and
shall also include the Company's successors.
"Delay Period" shall have the meaning set forth in
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Section 3(k).
"Depository" shall mean The Depository Trust Company, or any
other depository appointed by the Company, provided, however, that such
depository must have an address in the Borough of Manhattan, in the City
of New York.
"Event Date" shall have the meaning set forth in
Section 2.4(a).
"Exchange Offer Registration" shall mean a registration under
the 1933 Act effected pursuant to Section 2.1 hereof.
"Exchange Offer Registration Statement" shall mean an exchange
offer registration statement on Form S-4 (or, if applicable, on another
appropriate form), and all amendments and supplements to such
registration statement, including the Prospectus contained therein, all
exhibits thereto and all documents incorporated by reference therein.
"Exchange Period" shall have the meaning set forth in
Section 2.1 hereof.
"Holder" shall mean an Initial Holder, for so long as it owns
any Registrable New Notes, and each of its successors, assigns and
direct and indirect transferees who become registered owners of
Registrable New Notes under the Indenture.
"Indenture" shall mean the Indenture relating to the New Notes,
dated as of the date hereof, between the Company and State Street Bank
and Trust Company, as trustee, as the same may be amended, supplemented,
waived or otherwise modified from time to time in accordance with the
terms thereof.
"Initial Holder" shall have the meaning set forth in
the preamble.
"Liquidated Damages Amount" shall have the meaning
set forth in Section 2.4(a).
"Majority Holders" shall mean the Holders of a majority of the
aggregate principal amount of outstanding Registrable New Notes;
provided that whenever the consent or approval of Holders of a specified
percentage of Registrable New Notes is required hereunder, Registrable
New Notes held by the Company and other obligors on the New Notes or any
Affiliate
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(as defined in the Indenture) of the Company shall be disregarded in
determining whether such consent or approval was given by the Holders of
such required percentage amount.
"NASD" shall mean the National Association of
Securities Dealers, Inc.
"Participating Broker-Dealer" shall mean any broker-dealer which
makes a market in the New Notes and exchanges Registrable New Notes in
the Exchange Offer for Registered
New Notes.
"Person" shall mean an individual, trustee, joint stock company,
joint venture, partnership, corporation, trust or unincorporated
organization, or a government or agency or political subdivision
thereof, union, business association, firm or other entity.
"Prospectus" shall mean the prospectus included in a
Registration Statement, including, without limitation, a prospectus that
discloses information previously omitted from a prospectus filed as part
of an effective registration statement in reliance upon Rule 430A
promulgated under the 1933 Act, as amended or supplemented by any
prospectus supplement, including any such prospectus supplement with
respect to the terms of the offering of any portion of the Registrable
New Notes covered by a Shelf Registration Statement, and by all other
amendments and supplements to a prospectus, including post-effective
amendments, and in each case including all material incorporated by
reference therein or deemed to be incorporated by reference in the
prospectus.
"Registered Exchange Offer" shall mean the exchange offer by the
Company of Registered Exchange New Notes for Registrable New Notes
pursuant to Section 2.1 hereof.
"Registered New Notes" shall mean the 11 3/4 % Series D Senior
Secured Step-Up Notes due 2000 issued by the Company under the Indenture
containing terms identical to the New Notes in all material respects
(except for references to certain interest rate provisions, restrictions
on transfers and restrictive legends), to be offered to Holders of in
exchange for Registrable New Notes pursuant to the Registered Exchange
Offer.
"Registrable New Notes" shall mean the New Notes;
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<PAGE>
provided, however, that New Notes shall cease to be Registrable New
Notes when (i) a Registration Statement with respect to such New Notes
shall have been declared effective under the 1933 Act and such New Notes
shall have been disposed of pursuant to such Registration Statement,
(ii) such New Notes have been sold to the public pursuant to Rule l44
(or any similar provision then in force, but not Rule 144A) under the
1933 Act, (iii) such New Notes shall have ceased to be outstanding or
(iv) the Registered Exchange Offer is consummated (except in the case of
New Notes purchased from the Company and continued to be held by the
Holders described in Section 2.2(iii)).
"Registration Default" shall have the meaning set forth
in Section 2.4(a).
"Registration Expenses" shall mean any and all expenses incident
to performance of or compliance by the Company with this Agreement,
including without limitation: (i) all SEC, stock exchange or NASD
registration and filing fees (but not including, if applicable, the fees
and expenses of any "qualified independent underwriter" (and its
counsel) that is required to be retained by any holder of Registrable
New Notes in accordance with the rules and regulations of the NASD),
(ii) all fees and expenses incurred in connection with compliance with
state securities or blue sky laws and compliance with the rules of the
NASD (including reasonable fees and disbursements of counsel for any
underwriters or Holders in connection with blue sky qualification of any
of the Registered New Notes or Registrable New Notes and any filings
with the NASD), (iii) all expenses of any Persons in preparing or
assisting in preparing, word processing, printing and distributing any
Registration Statement, any Prospectus, any amendments or supplements
thereto, any underwriting agreements, securities sales agreements and
other documents relating to the performance of and compliance with this
Agreement, (iv) all fees and expenses incurred in connection with the
listing, if any, of any of the Registrable New Notes on any securities
exchange or exchanges, (v) all rating agency fees, (vi) the fees and
disbursements of counsel for the Company and of the independent public
accountants of the Company, including the expenses of any special audits
or "cold comfort" letters required by or incident to such performance
and compliance, (vii) the fees and expenses of the Trustee, and any
escrow agent or custodian, (viii) the reasonable fees and disbursements
of one special counsel representing the
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<PAGE>
Holders of Registrable New Notes in connection with a Shelf
Registration, such special counsel to be selected by the Majority
Holders and (ix) any fees and disbursements of the underwriters
customarily required to be paid by issuers or sellers of New Notes and
the fees and expenses of any special experts retained by the Company in
connection with any Registration Statement, but excluding underwriting,
brokerage, finder's or similar fees, discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of
Registrable New Notes by a Holder.
"Registration Statement" shall mean any registration statement
of the Company which covers any of the Registered New Notes or
Registrable New Notes pursuant to the provisions of this Agreement, and
all amendments and supplements to any such registration statement,
including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein or deemed to be incorporated by
reference in such registration statement.
"Rule 144" shall mean Rule 144 under the 1933 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 SEC.
"Rule 144A" shall mean Rule 144A under the 1933 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 SEC.
"Rule 415" shall mean Rule 415 under the 1933 Act, as such Rule
may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC.
"SEC" shall mean the Securities and Exchange
Commission.
"Shelf Registration" shall mean a registration effected
pursuant to Section 2.2 hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
statement of the Company pursuant to the provisions of Section 2.2 of
this Agreement which covers all of the Registrable New Notes on an
appropriate form under Rule 415, or any similar rule that may be adopted
by the SEC, and all amendments and supplements to such registration
statement, including post-effective amendments, in each case
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<PAGE>
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"TIA" shall mean the Trust Indenture Act of 1939, as
amended.
"Trustee" shall mean the trustee with respect to the New Notes
under the Indenture.
"Underwritten Registration or Underwritten
Offering" shall mean a registration in which securities of the Company are
sold to an underwriter for reoffering to the public.
2. Registration Under the 1933 Act.
2.1 Registered Exchange Offer. The Company shall (A) prepare
and, as soon as practicable but not later than 30 days following the Closing
Date, file with the SEC an Exchange Offer Registration Statement on an
appropriate form under the 1933 Act with respect to a proposed Registered
Exchange Offer and the issuance and delivery to the Holders, in exchange for the
Registrable New Notes, a like aggregate principal amount of Registered New
Notes, (B) use its reasonable best efforts to cause the Exchange Offer
Registration Statement to be declared effective under the 1933 Act within 90
days following the Closing Date, (C) use its reasonable best efforts to keep the
Exchange Offer Registration Statement effective until consummation of the
Registered Exchange Offer pursuant to its terms and (D) unless the Registered
Exchange Offer would not be permitted by a policy of the SEC, use its reasonable
best efforts to cause the Registered Exchange Offer to be consummated not later
than 120 days following the Closing Date. The Registered New Notes will be
issued under, and entitled to the benefits of, the Indenture or a trust
indenture that is identical to the Indenture (other than such changes as are
necessary to comply with any requirements of the SEC to effect or maintain the
qualification thereof under the TIA). Upon the effectiveness of the Exchange
Offer Registration Statement, the Company shall promptly commence the Registered
Exchange Offer, it being the objective of such Registered Exchange Offer to
enable each Holder eligible and electing to exchange Registrable New Notes for
Registered New Notes (assuming that such Holder (a) is not an affiliate of the
Company within the meaning of Rule 405 under the 1933 Act, (b) is not a
broker-dealer tendering Registrable New Notes acquired directly from the Company
for its own account, (c) acquired the Registered New Notes in the ordinary
course of such Holder's business and (d) has no arrangements or understandings
with any person to participate in the Registered Exchange Offer for the purpose
of distributing the Registered New Notes) to transfer such Registered New Notes
from and after their receipt without any limitations or restrictions under the
1933 Act and without material restrictions under the securities laws of a
substantial
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proportion of the several states of the United States.
In connection with the Registered Exchange Offer, the Company
shall:
(a) mail to each Holder a copy of the Prospectus
forming part of the Exchange Offer Registration Statement, together with an
appropriate letter of transmittal that is an exhibit to the Exchange Offer
Registration Statement and related documents;
(b) keep the Registered Exchange Offer open for
acceptance for a period of not less than 30 calendar days after the date notice
thereof is mailed to the Holders (or longer if required by applicable law) (such
period referred to herein as the "Exchange Period");
(c) utilize the services of the Depository for the
Registered Exchange Offer;
(d) permit Holders to withdraw tendered
Registrable New Notes at any time prior to 5:00 p.m. (Eastern Standard Time), on
the last Business Day of the Exchange Period, by sending to the institution
specified in the notice, a telegram, telex, facsimile transmission or letter
setting forth the name of such Holder, the principal amount of Registrable New
Notes delivered for exchange, and a statement that such Holder is withdrawing
his election to have such New Notes exchanged;
(e) notify each Holder that any Registrable New
Note not tendered will remain outstanding and continue to accrue interest, but
will not retain any rights under this Agreement (except in the case of the
Initial Holders and Participating Broker-Dealers as provided herein); and
(f) otherwise comply in all respects with all
applicable laws relating to the Registered Exchange Offer.
As soon as practicable after the close of the Registered
Exchange Offer, the Company shall:
(i) accept for exchange all Registrable New Notes
validly tendered and not validly withdrawn pursuant to the
Registered Exchange Offer in accordance with the terms of the
Exchange Offer Registration Statement and the letter of
transmittal which shall be an exhibit thereto;
(ii) deliver to the Trustee for cancellation
all Registrable New Notes so accepted for exchange;
and
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(iii) cause the Trustee promptly to authenticate and
deliver Registered New Notes to each Holder of Registrable New
Notes so accepted for exchange in a principal amount equal to
the aggregate principal amount of the Registrable New Notes of
such Holder so accepted for exchange.
Interest on each Registered Exchange New Note will accrue from
the last date on which interest was paid on the Registrable New Notes
surrendered in exchange therefor or, if no interest has been paid on the
Registrable New Notes, from the date of original issuance. Each Registered
Exchange New Note shall bear interest at the rate set forth thereon; provided,
that interest with respect to the period prior to the issuance thereof shall
accrue at the rate or rates borne by the Registrable New Notes from time to time
during such period. The Registered Exchange Offer shall not be subject to any
conditions, other than (i) that the Registered Exchange Offer, or the making of
any exchange by a Holder, does not violate applicable law or any applicable
interpretation of the staff of the SEC, (ii) the due tendering of Registrable
New Notes in accordance with the Exchange Offer, (iii) that each Holder of
Registrable New Notes exchanged in the Registered Exchange Offer shall have
represented that all Registered New Notes to be received by it shall be acquired
in the ordinary course of its business and that at the time of the consummation
of the Registered Exchange Offer it shall have no arrangement or understanding
with any Person to participate in the distribution (within the meaning of the
1933 Act) of the Registered New Notes and shall have made such other
representations as may be reasonably necessary under applicable SEC rules,
regulations or interpretations to render the use of Form S-4 or other
appropriate form under the 1933 Act available, (iv) if such Holder is not a
broker-dealer, that it is not engaged in and does not intend to engage in, the
distribution of the Registered New Notes, (v) if such Holder is a broker-dealer
that will receive Registered New Notes that were acquired as a result of
market-making or other trading activities and that it will deliver a prospectus,
as required by law, in connection with any resale of such Registered New Notes,
and (vi) if such Holder is an affiliate of the Company, that it will comply with
the registration and prospectus delivery requirements of the 1933 Act applicable
to it and (vii) that no action or proceeding shall have been instituted or
threatened in any court or by or before any governmental agency with respect to
the Registered Exchange Offer which, in the Company's judgment, would reasonably
be expected to impair the ability of the Company to proceed with the Exchange
Offer.
2.2 Shelf Registration. (i) If, because of any changes
in law, SEC rules or regulations or applicable interpretations thereof by the
staff of the SEC, the Company is not permitted to effect the Registered
Exchange Offer as contemplated by Section 2.1 hereof, (ii) if for any
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other reason the Exchange Offer Registration Statement is not declared effective
within 90 days following the original issue of the Registrable New Notes or the
Registered Exchange Offer is not consummated prior to 120 days after the
original issue of the Registrable New Notes, or (iii) if a Holder is not
permitted by applicable law to participate in the Registered Exchange Offer
based upon written advice to counsel to the effect that such Holder may not
legally be able to participate in the Registered Exchange Offer or if a Holder
elects to participate in the Registered Exchange Offer but does not receive
fully tradable Registered New Notes pursuant to the Registered Exchange Offer,
the Company shall, at its cost:
(a) As promptly as practicable, file with the SEC, and
thereafter shall use its reasonable best efforts to cause to be declared
effective as promptly as practicable, a Shelf Registration Statement relating to
the offer and sale of the Registrable New Notes by the Holders from time to time
in accordance with the methods of distribution elected by the Majority Holders
participating in the Shelf Registration and set forth in such Shelf Registration
Statement.
(b) Use its reasonable best efforts to keep the Shelf
Registration Statement continuously effective in order to permit the prospectus
forming part thereof to be usable by Holders for a period of two years from the
date the Shelf Registration Statement is declared effective by the SEC, or for
such shorter period that will terminate when all Registrable New Notes covered
by the Shelf Registration Statement have been sold pursuant to the Shelf
Registration Statement or cease to be outstanding or otherwise to be Registrable
New Notes.
(c) Notwithstanding any other provisions hereof, use its
reasonable best efforts to ensure that (i) any Shelf Registration Statement and
any amendment thereto and any Prospectus forming part thereof and any supplement
thereto complies in all material respects with the 1933 Act and the rules and
regulations thereunder, (ii) any Shelf Registration Statement and any amendment
thereto does not, when it becomes effective, 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 (iii) any Prospectus
forming part of any Shelf Registration Statement, and any supplement to such
Prospectus (as amended or supplemented from time to time), does not include an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements, in light of the circumstances under which they
were made, not misleading.
The Company further agrees, if necessary, to supplement or amend
the Shelf Registration Statement, as required by Section 3(b) below, and to
furnish to the Holders of Registrable New Notes copies of any such supplement or
amendment promptly after its being used or filed with the
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SEC.
The Company agrees (i) not to effect any public or private
offer, sale or distribution of its debt securities, or any other security
convertible into or exchangeable or exercisable for such debt securities,
including a sale pursuant Regulation D under the 1933 Act, during the 10- day
period prior to, and during the 90-day period beginning on, the closing date of
each underwritten offering made pursuant to the Shelf Registration Statement, to
the extent timely notified in writing by the underwriter(s) (except as part of
such registration, if permitted, or pursuant to registration on Forms S-4 or S-8
or any successor form to such Forms) and (ii) to cause each holder of its
privately placed debt securities, or any other security convertible into or
exchangeable or exercisable for such debt securities purchased from the Company
at any time on or after the date of this Agreement to agree not to effect any
public sale or distribution of any such securities during such period, including
a sale pursuant to Rule 144 under the 1933 Act (except as part of such
underwritten offering, if permitted).
2.3 Expenses. The Company shall pay all Registration Expenses in
connection with the registration pursuant to Section 2.1 or 2.2. Each Holder
shall pay all underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of such Holders Registrable New Notes
pursuant to the Shelf Registration Statement.
2.4 Liquidated Damages.
(a) The Company acknowledges and agrees that the
holders of Registrable New Notes will suffer damages, and that it would not be
feasible to ascertain the extent of such damages with precision, if the Company
fails to fulfill its obligations hereunder. Accordingly, in the event of such
failure, the Company agrees to pay liquidated damages to each Holder under the
circumstances and to the extent set forth below:
(i) if the Exchange Offer Registration
Statement has not been filed with the SEC on or
prior to 30 days after the date hereof; or
(ii) if the Exchange Offer Registration
Statement is not declared effective by the SEC on or
prior to 90 days after the date hereof; or
(iii) if the Company has not accepted for
exchange Registered New Notes for all New Notes validly
tendered in accordance with the terms of the Exchange Offer
within 30 days after the date on which an Exchange Offer
Registration Statement is declared effective by the SEC; or
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(iv) if a Shelf Registration is filed and
declared effective by the SEC but thereafter ceases to be
effective without being succeeded within 30 days by a
subsequent Shelf Registration filed and declared effective;
(each of the foregoing a "Registration Default," and the date on which the
Registration Default occurs being referred to herein as an "Event Date").
Upon the occurrence of any Registration Default, the Company
shall pay, or cause to be paid, in addition to amounts otherwise due under the
Indenture and the Registrable New Notes, as liquidated damages, and not as a
penalty, to each holder of a Registrable New Note, an additional amount (the
"Liquidated Damages Amount") equal to, during the first 90-day period
immediately following the Event Date, .50% per annum on the principal amount of
Registrable New Notes held by such holder, increasing by an additional .50% per
annum at the beginning of each subsequent 90-day period up to a maximum of 2.0%
per annum; provided that such liquidated damages will, in each case, cease to
accrue (subject to the occurrence of another Registration Default) on the date
on which all Registration Defaults have been cured. A Registration Default under
clause (i) above shall be cured on the date that the Exchange Offer Registration
Statement is filed with the SEC; a Registration Default under clause (ii) above
shall be cured on the date that the Exchange Offer Registration Statement is
declared effective by the SEC; a Registration Default under clause (iii) above
shall be cured on the earlier of the date (A) the Exchange Offer is consummated
with respect to all Old Notes validly tendered or (B) the Company delivers
notice of the consummation of the Exchange Offer to the Holders; and a
Registration Default under clause (iv) above shall be cured on the earlier of
(A) the date on which the applicable Shelf Registration is no longer subject to
an order suspending the effectiveness thereof or proceedings relating thereto or
(B) a subsequent Shelf Registration is declared effective.
(b) The Company shall notify the Trustee within
five Business Days after each Event Date. The Company shall pay the liquidated
damages due on the Registrable New Notes by depositing with the Trustee, in
trust, for the benefit of the Holders thereof, by 12:00 noon, New York City
time, on or before the applicable semi-annual interest payment date for the
Registrable New Notes, immediately available funds in sums sufficient to pay the
liquidated damages then due. The liquidated damages amount due shall be payable
on each interest payment date to the Holder entitled to receive the interest
payment to be made on such date as set forth in the Indenture.
2.5 Effectiveness.
(a) Subject to the following Section 2.5(b),
the Company
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will be deemed not to have used its reasonable best efforts to cause the
Exchange Offer Registration Statement or the Shelf Registration Statement, as
the case may be, to become, or to remain, effective during the requisite period
if the Company voluntarily takes any action that would result in any such
Registration Statement not being declared effective or in the holders of
Registrable New Notes covered thereby not being able to exchange or offer and
sell such Registrable New Notes during that period as and to the extent
contemplated hereby, unless such action is required by applicable law.
(b) Notwithstanding the foregoing Section 2.5(a),
subject to the Holders rights under Section 2.4, if the Board of Directors of
the Company, in its good faith judgment, determines that the Registered Exchange
Offer should not be made or continued because it would materially interfere with
any material financing, acquisition, corporate reorganization or merger or other
material transaction involving the Company or any of its subsidiaries (a "Valid
Business Reason"), (x) the Company may postpone filing a registration statement
relating to the Registered Exchange Offer until such Valid Business Reason no
longer exists, but in no event for more than three months, and (y) in case a
registration statement has been filed relating to the Registered Exchange Offer,
the Company may cause registration statement to be withdrawn and its
effectiveness terminated or may postpone amending or supplementing such
registration statement until such Valid Business Reason no longer exists, but in
no event for more than three months (such period of postponement or withdrawal
under sub clause (x) or (y) of this Section 2.5(b), the "Postponement Period");
and the Company shall give the Trustee and the Holders written notice of its
determination to postpone or withdraw the Registered Exchange Offer and of the
fact that the Valid Business Reason for such postponement or withdrawal no
longer exists, in each case, promptly after the occurrence thereof provided,
however, that any such postponement or withdrawal shall be subject to the
payment by the Company of liquidated damages pursuant to Section 2.4 hereof.
The Holders agree that, upon receipt of any notice from the Company
that the Company has determined to withdraw any registration statement pursuant
to clause (y) above, the Holders will discontinue any disposition of Registrable
New Notes pursuant to such registration statement and, if so directed by the
Company, will deliver to the Company (at the Company's expense) all copies,
other than permanent file copies, then in such Holders possession of the
prospectus covering such Registrable New Notes that was in effect at the time of
receipt of such notice. If the Company shall give any notice of withdrawal or
postponement of a registration statement, the Company shall, at such time as the
Valid Business Reason that caused such withdrawal or postponement no longer
exists (but in no event later than three months after the date
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<PAGE>
of the postponement or withdrawal), use its best efforts to effect the
registration under the Securities Act of Registrable New Notes covered by the
withdrawn or postponed registration statement.
(c) An Exchange Offer Registration Statement
pursuant to Section 2.1 hereof or a Shelf Registration Statement pursuant to
Section 2.2 hereof will not be deemed to have become effective unless it has
been declared effective by the SEC; provided, however, that if, after it has
been declared effective, the Exchange Offer, the Exchange Offer Registration
Statement or offering of Registrable New Notes pursuant to a Shelf Registration
Statement is interfered with by any stop order, injunction or other order or
requirement of the SEC or any other governmental agency or court, such
Registration Statement will be deemed not to have become effective during the
period of such interference, until the offering of Registrable New Notes
pursuant to such Registration Statement may legally resume.
3. Registration Procedures.
In connection with the obligations of the Company with respect
to Registration Statements pursuant to Sections 2.1 and 2.2 hereof, the Company
shall:
(a) prepare and file with the SEC a Registration Statement,
within the relevant time period specified in Section 2, on the appropriate form
under the 1933 Act, which form (i) shall be selected by the Company, (ii) shall,
in the case of a Shelf Registration, be available for the sale of the
Registrable New Notes by the selling Holders thereof and (iii) shall comply as
to form in all material respects with the requirements of the applicable form
and include or incorporate by reference all financial statements required by the
SEC to be filed therewith or incorporated by reference therein, and use its best
efforts to cause such Registration Statement to become effective and remain
effective in accordance with Section 2 hereof;
(b) prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be necessary
under applicable law to keep such Registration Statement continuously effective
for the time periods required hereby; and cause each 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 1933 Act and comply with the provisions of the 1933 Act and the
1934 Act applicable to them with respect to the disposition of all New Notes
covered by such Registration Statement, as so amended, or in such Prospectus, as
so supplemented, in accordance with the intended methods of distribution by the
selling Holders set forth in such Registration Statement or Prospectus as so
amended;
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(c) in the case of a Shelf Registration, (i) notify each Holder
of Registrable New Notes, at least five business days prior to filing, that a
Shelf Registration Statement with respect to the Registrable New Notes is being
filed and advising such Holders that the distribution of Registrable New Notes
will be made in accordance with the method selected by the Majority Holders
participating in the Shelf Registration; (ii) furnish to each Holder of
Registrable New Notes and to each underwriter of an underwritten offering of
Registrable New Notes, if any, without charge, as many copies of each
Registration Statement, Prospectus, including each preliminary Prospectus, and
any amendment or supplement thereto and such other documents as such Holder or
underwriter may reasonably request, including financial statements and schedules
and, if the Holder so requests, all exhibits in order to facilitate the public
sale or other disposition of the Registrable New Notes; and (iii) hereby consent
to the use of the Prospectus or any amendment or supplement thereto by each of
the selling Holders of Registrable New Notes in connection with the offering and
sale of the Registrable New Notes covered by the Prospectus or any amendment or
supplement thereto;
(d) use its reasonable best efforts to register or qualify the
Registrable New Notes under all applicable state securities or "blue sky" laws
of such jurisdictions as any Holder of Registrable New Notes covered by a
Registration Statement and each underwriter of an underwritten offering of
Registrable New Notes shall reasonably request by the time the applicable
Registration Statement is declared effective by the SEC, and do any and all
other acts and things which may be reasonably necessary or advisable to enable
each such Holder and underwriter to consummate the disposition in each such
jurisdiction of such Registrable New Notes owned by such Holder; provided,
however, that the Company shall not be required to (i) qualify as a foreign
corporation or as a dealer in securities in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(d), or (ii) take any
action which would subject it to general service of process or taxation in any
such jurisdiction where it is not then so subject;
(e) notify promptly each Holder of Registrable New Notes under a
Shelf Registration or any Participating Broker-Dealer who has notified the
Company that it is utilizing the Exchange Offer Registration Statement as
provided in paragraph (f) below and, if requested by such Holder or
Participating Broker-Dealer, confirm such advice in writing promptly (i) when a
Registration Statement has become effective and when any post-effective
amendments and supplements thereto become effective, (ii) of any request by the
SEC or any state securities authority for post-effective amendments and
supplements to a Registration Statement and Prospectus or for additional
information after the Registration Statement has become effective, (iii) of the
issuance by the SEC or any state securities authority of any stop order
suspending the effectiveness of a Registration
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Statement or the initiation of any proceedings for that purpose, (iv) in the
case of a Shelf Registration, if, between the effective date of a Registration
Statement and the closing of any sale of Registrable New Notes covered thereby,
the representations and warranties of the Company contained in any underwriting
agreement, securities sales agreement or other similar agreement, if any,
relating to the offering cease to be true and correct in all material respects,
(v) of the happening of any event or the discovery of any facts during the
period a Shelf Registration Statement is effective which makes any statement
made in such Registration Statement or the related Prospectus or any document
incorporated or deemed to be incorporated by reference untrue in any material
respect or which requires the making of any changes in such Registration
Statement, Prospectus or document in order to make the statements therein, in
light of the circumstances under which they were made, not misleading and (vi)
of the receipt by the Company of any notification with respect to the suspension
of the qualification of the Registrable New Notes or the Registered New Notes,
as the case may be, for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose;
(f) (A) in the case of the Exchange Offer Registration Statement
(i) include in the Exchange Offer Registration Statement a section entitled
"Plan of Distribution" which shall contain a summary statement of the positions
taken or policies made by the staff of the SEC with respect to the potential
"underwriter" status of any Participating Broker-Dealer that will be the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of Registered
New Notes to be received by such Participating Broker-Dealer in the Registered
Exchange Offer, whether such positions or policies have been publicly
disseminated by the staff of the SEC or such positions or policies, in the
reasonable judgment of the Company and its counsel, represent the prevailing
views of the staff of the SEC, including a statement that any such Participating
Broker-Dealer who receives Registered New Notes for Registrable New Notes
pursuant to the Registered Exchange Offer may be deemed a statutory underwriter
and must deliver a prospectus meeting the requirements of the 1933 Act in
connection with any resale of such Registered New Notes, (ii) furnish to each
Participating Broker-Dealer who has delivered to the Company the notice referred
to in Section 3(e), without charge, as many copies of each Prospectus included
in the Exchange Offer Registration Statement, including any preliminary
prospectus, and any amendment or supplement thereto, as such Participating
Broker-Dealer may reasonably request, (iii) hereby consent to the use of the
Prospectus forming part of the Exchange Offer Registration Statement or any
amendment or supplement thereto, by any person subject to the prospectus
delivery requirements of the SEC, including all Participating Broker-Dealers, in
connection with the sale or transfer of the Registered New Notes covered by the
Prospectus or any amendment or supplement thereto, and (iv) include in the
transmittal letter or similar documentation to be executed by an exchange
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offeree in order to participate in the Registered Exchange Offer (x) the
following provision:
"If the exchange offeree is a broker-dealer holding Registrable
New Notes acquired for its own account as a result of
market-making activities or other trading activities, it will
deliver a prospectus meeting the requirements of the 1933 Act in
connection with any resale of Registered New Notes received in
respect of such Registrable New Notes pursuant to the Registered
Exchange Offer;" and
(y) a statement to the effect that by a broker-dealer making the acknowledgment
described in clause (x) and by delivering a Prospectus in connection with the
exchange of Registrable New Notes, the broker-dealer will not be deemed to admit
that it is an underwriter within the meaning of the 1933 Act; and
(B) in the case of any Exchange Offer Registration Statement
or Shelf Registration, the Company agrees to deliver to the Holders upon the
effectiveness of the Registered Exchange Offer Registration Statement or Shelf
Registration (i) an opinion of counsel substantially in the form attached hereto
as Exhibit A, (ii) an officers' certificate substantially in the form
customarily delivered in a public offering of debt securities and (iii) a
comfort letter in customary form if permitted by Statement on Auditing Standards
No. 72 of the American Institute of Certified Public Accountants (or if such a
comfort letter is not permitted, an agreed upon procedures letter in customary
form);
(g) (i) in the case of a Registered Exchange Offer, furnish
counsel for the Holders and (ii) in the case of a Shelf Registration, furnish
counsel for the Holders of Registrable New Notes copies of any request by the
SEC or any state securities authority for amendments or supplements to a
Registration Statement and Prospectus or for additional information;
(h) make every reasonable effort to obtain the withdrawal
of any order suspending the effectiveness of a Registration Statement at the
earliest possible moment;
(i) in the case of a Shelf Registration, furnish to each Holder
of Registrable New Notes, and each underwriter, if any, without charge, at least
one conformed copy of each Registration Statement and any post-effective
amendment thereto, including financial statements and schedules (without
documents incorporated therein by reference and all exhibits thereto, unless
requested);
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(j) in the case of a Shelf Registration, cooperate with the
selling Holders of Registrable New Notes to facilitate the timely preparation
and delivery of certificates representing Registrable New Notes to be sold and
not bearing any restrictive legends; and enable such Registrable New Notes to be
in such denominations (consistent with the provisions of the Indenture) and
registered in such names as the selling Holders or the underwriters, if any, may
reasonably request at least three business days prior to the closing of any sale
of Registrable New Notes;
(k) in the case of a Shelf Registration, upon the occurrence of
any event or the discovery of any facts, each as contemplated by Sections
3(e)(v) and 3(e)(vi) hereof, use its best efforts to prepare a supplement or
post-effective amendment to the Registration Statement or the related Prospectus
or any document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of the Registrable
New Notes or Participating Broker- Dealers, such Prospectus will not contain at
the time of such delivery any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that once the Shelf Registration Statement has been declared effective the
Company may delay effecting or causing to be effected a supplement or
post-effective amendment to the Registration Statement or the related
Prospectus, for a period (the "Delay Period") (i) not to exceed 30 days during
the period beginning 121 days after the original issue of the New Notes and
ending 365 days after the original issue of the New Notes, (ii) not to exceed 90
days during the 365-day period beginning after the first anniversary of the
original issue of the New Notes and (iii) not to exceed 90 days during the
365-day period beginning after the second anniversary of the original issue of
the New Notes; provided, further, that the Company shall notify the Holders in
writing both of its intention to effect such delay and of the date on which such
supplement or post-effective amendment has been filed with the SEC or declared
effective, as the case may be and the Company shall extend the period during
which the Shelf Registration Statement shall be maintained effective pursuant to
this Agreement by the number of days in any Delay Period;
(l) in the case of a Shelf Registration, a reasonable time prior
to the filing of any Registration Statement, any Prospectus, any amendment to a
Registration Statement or amendment or supplement to a Prospectus or any
document which is to be incorporated by reference into a Registration Statement
or a Prospectus after initial filing of a Registration Statement, provide copies
of such document to the Holders; and make representatives of the Company as
shall be reasonably requested by the Holders of Registrable New Notes, available
for discussion of such document;
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(m) obtain a CUSIP number for all Registered New Notes or
Registrable New Notes, as the case may be, not later than the effective date of
a Registration Statement, and provide the Trustee with printed certificates for
the Registered New Notes or the Registrable New Notes, as the case may be, in a
form eligible for deposit with the Depositary;
(n) (i) provide an indenture trustee for the Registered New
Notes or the Registrable New Notes, as the case may be, and cause the Indenture
(or other indenture relating to the Registrable New Notes) to be qualified under
the TIA not later than the effective date of the first Registration Statement,
(ii) cooperate with the Trustee and the Holders to effect such changes to the
Indenture as may be required for the Indenture to be so qualified in accordance
with the terms of the TIA and (iii) execute, and use its best efforts to cause
the 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 SEC to enable
the Indenture to be so qualified in a timely manner;
(o) in the case of a Shelf Registration, enter into agreements
(including underwriting agreements) and take all other customary and appropriate
actions in order to expedite or facilitate the disposition of such Registrable
New Notes and in such connection whether or not an underwriting agreement is
entered into and whether or not the registration is an underwritten
registration:
(i) make such representations and warranties to the
Holders of such Registrable New Notes and the underwriters, if
any, in form, substance and scope as are customarily made by
issuers to underwriters in similar underwritten offerings as may
be reasonably requested by them;
(ii) obtain opinions of counsel to the Company and
updates thereof (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the managing
underwriters, if any, and the holders of a majority in principal
amount of the Registrable New Notes being sold) addressed to
each selling Holder and the underwriters, if any, covering the
matters customarily covered in opinions requested in sales of
New Notes or underwritten offerings and such other matters as
may be reasonably requested by such Holders and underwriters;
(iii) obtain "cold comfort" letters and updates thereof
from the Company's independent certified public accountants
addressed to the underwriters, if any, and use reasonable
efforts to have such letter
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addressed to the selling Holders of Registrable New Notes (to
the extent consistent with Statement on Auditing Standards No.
72 of the American Institute of Certified Public Accounts), such
letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters to underwriters in
connection with similar underwritten offerings;
(iv) enter into a securities sales agreement with the
Holders and an agent of the Holders providing for, among other
things, the appointment of such agent for the selling Holders
for the purpose of soliciting purchases of Registrable New
Notes, which agreement shall be in form, substance and scope
customary for similar offerings;
(v) if an underwriting agreement is entered into, cause
the same to set forth indemnification provisions and procedures
substantially equivalent to the indemnification provisions and
procedures set forth in Section 4 hereof with respect to the
underwriters and all other parties to be indemnified pursuant to
said Section or, at the request of any underwriters, in the form
customarily provided to such underwriters in similar types of
transactions;
(vi) deliver such documents and certificates as may be
reasonably requested and as are customarily delivered in similar
offerings to the Holders of a majority in principal amount of
the Registrable New Notes being sold and the managing
underwriters, if any, to evidence the continued validity of the
representations and warranties of the Company and its
subsidiaries made pursuant to clause (i) above and to evidence
compliance with any conditions contained in the underwriting
agreement or other similar agreement entered into by the
Company; and
(vii) use its reasonable 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 New Notes for sale
in any jurisdiction, and, if any such order is issued, to use
its reasonable best efforts to obtain the withdrawal of any such
order at the
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earliest possible time.
The above shall be done at (i) the effectiveness of such Registration Statement
(and each post-effective amendment thereto) and (ii) each closing under any
underwriting or similar agreement as and to the extent required thereunder;
(p) in the case of a Shelf Registration, make available for
inspection by representatives of the Holders of the Registrable New Notes and
any underwriters participating in any disposition pursuant to a Shelf
Registration Statement and any counsel or accountant retained by such Holders or
underwriters (collectively, the "Inspectors"), all financial and other records,
pertinent corporate documents and properties of the Company reasonably requested
by any such persons, and cause the respective officers, directors, employees,
and any other agents of the Company to supply all information reasonably
requested by any such representative, underwriter, special counsel or accountant
in connection with a Registration Statement, and make such representatives of
the Company available for discussion of such documents as shall be reasonably
requested by the Inspectors;
(q) in the case of a Shelf Registration, a reasonable time prior
to filing any Shelf Registration Statement, any Prospectus forming a part
thereof, any amendment to such Shelf Registration Statement or amendment or
supplement to such Prospectus, provide copies of such document to the Holders of
Registrable New Notes, to the Initial Holders, to counsel on behalf of the
Holders and to the underwriter or underwriters of an underwritten offering of
Registrable New Notes, if any, and make the representatives of the Company
available for discussion of such document as shall be reasonably requested by
the Holders of Registrable New Notes, or any underwriter;
(r) in the case of a Shelf Registration, use its best efforts to
cause all Registrable New Notes to be listed on any Securities exchange on which
similar debt securities issued by the Company are then listed if requested by
the Majority Holders, or if requested by the underwriter or underwriters of an
underwritten offering of Registrable New Notes, if any;
(s) in the case of a Shelf Registration, use its reasonable best
efforts to cause the Registrable New Notes to be rated by the appropriate rating
agencies, if so requested by the Majority Holders, or if requested by the
underwriter or underwriters of an underwritten offering of Registrable New
Notes, if any;
(t) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the SEC and make available to its
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security holders, as soon as reasonably practicable, an earnings statement
covering at least 12 months which shall satisfy the provisions of Section 11(a)
of the 1933 Act and Rule 158 thereunder or any similar rule promulgated under
the 1934 Act;
(u) cooperate and assist in any filings required to be made with
the NASD and, in the case of a Shelf Registration, in the performance of any due
diligence investigation by any underwriter and its counsel (including any
"qualified independent underwriter" that is required to be retained in
accordance with the rules and regulations of the NASD); and
(v) upon consummation of a Registered Exchange Offer, obtain a
customary opinion of counsel to the Company addressed to the Trustee for the
benefit of all Holders of Registrable New Notes participating in the Registered
Exchange Offer, and which includes an opinion that (i) the Company has duly
authorized, executed and delivered the Registered New Notes and the related
indenture, and (ii) each of the Registered New Notes and related indenture
constitute a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its respective terms (with customary
exceptions).
In the case of a Shelf Registration Statement, the Company may
(as a condition to such Holder's participation in the Shelf Registration)
require each Holder of Registrable New Notes to furnish to the Company such
information regarding the Holder and the proposed distribution by such Holder of
such Registrable New Notes as the Company may from time to time reasonably
request in writing.
In the case of a Shelf Registration Statement, each Holder and
each Participating Broker-Dealer agrees that, upon receipt of any notice from
the Company of the happening of any event or the discovery of any facts, each of
the kind described in Section 3(e)(v) hereof, such Holder will forthwith
discontinue disposition of Registrable New Notes pursuant to a Registration
Statement until such Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 3(k) hereof, and, if so directed by
the Company, such Holder will deliver to the Company (at its expense) all copies
in such Holders possession, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Registrable New Notes
current at the time of receipt of such notice. If the Company shall give any
such notice to suspend the disposition of Registrable New Notes pursuant to a
Shelf Registration Statement as a result of the happening of any event or the
discovery of any facts, each of the kind described in Section 3(e)(v) hereof,
the Company shall be deemed to have used its reasonable best efforts to keep the
Shelf Registration Statement effective during such period of suspension provided
that the Company shall use its reasonable best efforts to file and have declared
effective (if an amendment) as soon as practicable an amendment or supplement to
the Shelf Registration
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Statement and shall extend the period during which the Shelf Registration
Statement shall be maintained effective pursuant to this Agreement by the number
of days during the period from and including the date of the giving of such
notice to and including the date when the Holders shall have received copies of
the supplemented or amended Prospectus necessary to resume such dispositions.
In the event that the Company fails to effect the Registered
Exchange Offer or file any Shelf Registration Statement and maintain the
effectiveness of any Shelf Registration Statement as provided herein, the
Company shall not file any Registration Statement with respect to any debt
securities of the Company other than Registrable New Notes and debt securities
issued or issuable by the Company and registered pursuant to Form S-4 under the
1933 Act or issuable under an employee benefit plan of the Company and
registered pursuant to Form S-8 under the 1933 Act.
If any of the Registrable New Notes covered by any Shelf
Registration Statement are to be sold in an underwritten offering, the
underwriter or underwriters and manager or managers that will manage such
offering will be selected by the Majority Holders of such Registrable New Notes
included in such offering and shall be reasonably acceptable to the Company. No
Holder of Registrable New Notes may participate in any underwritten registration
hereunder unless such Holder (a) agrees to sell such Holder's Registrable New
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.
(w) As a condition to its participation in a Registered Exchange
Offer pursuant to the terms of this Agreement, each Holder of Registrable New
Notes shall furnish, upon the request of the Company, prior to the consummation
thereof, a written representation to the Company that it is not engaged in, does
not intend to engage in, and has no arrangement or understanding with any person
to participate in, a distribution of the Registered Exchange Notes to be issued
in the Exchange Offer and that it is acquiring the Registered Exchange Notes in
its ordinary course of business and shall otherwise cooperate in the Company's
preparations for the Exchange Offer. Each Holder hereby acknowledges and agrees
that any such Holder using the Exchange Offer to participate in a distribution
of the securities to be acquired in the Exchange Offer (x) could not rely on the
position of the Commission enunciated in Morgan Stanley and Co., Inc. (available
June 5, 1991), Exxon Capital Holdings Corporation (available April 13, 1989) and
similar no-action letters (including any no-action letter by the Company in
connection with the transactions contemplated hereby), (y) must comply with
registration and
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prospectus delivery requirements of the 1933 Act in connection with a secondary
resale transaction, and (z) that such a secondary resale transaction should be
covered by an effective registration statement containing the selling security
holder information required by Item 507 of Regulation S-K.
4. Indemnification; Contribution.
(a) The Company agrees to indemnify and hold harmless each
Holder, each Participating Broker-Dealer, each Person who participates as an
underwriter (any such Person being an "Underwriter") and each Person, if any,
who controls any Holder or Underwriter within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act and the officers, directors, partners,
employees, representatives of each such Holder, Participating Broker-Dealer and
Underwriter to the fullest extent lawful, as follows:
(i) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, arising out of any untrue statement
or alleged untrue statement of a material fact contained in any
Registration Statement (or any amendment or supplement thereto) pursuant
to which Registered New Notes or Registrable New Notes were registered
under the 1933 Act, including all documents incorporated therein by
reference, or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements
therein not misleading, or arising out of any untrue statement or
alleged untrue statement of a material fact contained in any Prospectus
or form of prospectus (or any amendment or supplement thereto) or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission; provided
that (subject to Section 4(d) below) any such settlement is effected
with the written consent of the Company; and
(iii) against any and all expense whatsoever,
as incurred (including the fees and disbursements of
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counsel chosen by any indemnified party), reasonably incurred in
investigating, preparing, pursuing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under
subparagraph (i) or (ii) above; provided, however, that this indemnity
agreement shall not apply to any loss, liability, claim, damage or
expense to the extent arising out of any untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in
conformity with written information furnished to the Company by such
Holder or Underwriter expressly for use in a Registration Statement (or
any amendment thereto) or any Prospectus (or any amendment or supplement
thereto).
(b) Each Holder severally, but not jointly, agrees to indemnify
and hold harmless the Company, the other Holders and any Underwriter and the
other selling Holders, and each of their respective directors and officers
(including each officer of the Company who signed the Registration Statement),
agents and employees and each Person, if any, who controls the Company, the
other Holders or any Underwriter within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act, and the directors, officers, agents or
employees of such controlling persons, to the fullest extent lawful, against any
and all loss, liability, claim, damage and expense described in the indemnity
contained in Section 4(a) hereof, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Shelf Registration Statement (or any amendment thereto) or any Prospectus or
form of prospectus included therein (or any amendment or supplement thereto) or
in any preliminary prospectus in reliance upon and in conformity with written
information relating to such Holder furnished by such Holder to the Company
expressly for use in the Shelf Registration Statement (or any amendment thereto)
or such Prospectus or form of prospectus (or any amendment or supplement
thereto) or in any preliminary prospectus; provided, however, that no such
Holder shall be liable for any claims hereunder in excess of the amount of net
proceeds received by such Holder from the sale of Registrable New Notes pursuant
to such Shelf Registration Statement.
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action or proceeding
commenced against it in respect of which indemnity may be sought hereunder, but
failure so to notify an indemnifying party shall not relieve such indemnifying
party from any liability hereunder to the extent it is not materially prejudiced
as a result thereof and in any event shall
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not relieve it from any liability which it may have otherwise than on account of
this indemnity agreement. An indemnifying party may participate at its own
expense in the defense of such action; provided, however, that counsel to the
indemnifying party shall not (except with the consent of the indemnified party)
also be counsel to the indemnified party. In no event shall the indemnifying
party or parties be liable for the fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever in respect of which indemnification or contribution could
be sought under this Section 4 (whether or not the indemnified parties are
actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 4(a)(ii) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
(e) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in this Section 4 is
for any reason held to be unenforceable by the indemnified parties although
applicable in accordance with its terms, the Company and the Holders shall have
a joint and several obligation to contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by such
indemnity agreement incurred by the Company and the Holders; provided, however,
that no Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation. As between the Company
and the Holders, the Company and the applicable Holders shall contribute to the
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aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by such indemnity agreement in such proportions as shall be
appropriate to reflect the relative benefits received by the Company and the
Holders, from the offering of the New Notes, the Registered New Notes and the
Registrable New Notes (taken together) included in such offering as well as any
other relevant equitable considerations. The Company and the Holders of the
Registrable New Notes agree that it would not be just and equitable if
contribution pursuant to this Section 4 were to be determined by pro rata
allocation or by any other method of allocation which does not take into account
the relevant equitable considerations. In no event shall a Holder be required to
contribute any amount in excess of the amount by which proceeds received by such
Holder from sales of Registrable New Notes exceeds the amount of damages that
such Holder has otherwise been required to pay or has paid by reason of such
untrue statements or omissions, or alleged untrue statements or omissions. For
purposes of this Section 4, each Person, if any, who controls a Holder within
the meaning of Section 15 of the 1933 Act shall have the same rights to
contribution as such Holder, and each director of the Company, each officer of
the Company who signed the Registration Statement, and each Person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act shall have
the same rights to contribution as the Company, as the case may be.
5. Miscellaneous.
5.1 Rule 144 and Rule 144A. For so long as the Company is
subject to the reporting requirements of Section 13 or 15 of the 1934 Act, the
Company covenants that it will file the reports required to be filed by it under
the 1933 Act and Section 13(a) or 15(d) of the 1934 Act and the rules and
regulations adopted by the SEC thereunder. If the Company ceases to be so
required to file such reports, it will upon the request of any Holder of
Registrable New Notes (a) make publicly available such information as is
necessary to permit sales pursuant to Rule 144 under the 1933 Act, (b) deliver
such information to a prospective purchaser as is necessary to permit sales
pursuant to Rule 144A under the 1933 Act and it will take such further action as
any Holder of Registrable New Notes may reasonably request, and (c) take such
further action that is reasonable in the circumstances, in each case, to the
extent required from time to time to enable such Holder to sell its Registrable
New Notes without registration under the 1933 Act within the limitation of the
exemptions provided by (i) Rule 144 under the 1933 Act, as such Rule may be
amended from time to time, (ii) Rule 144A under the 1933 Act, as such Rule may
be amended from time to time, or (iii) any similar rules or regulations
hereafter adopted by the SEC. Upon the request of any Holder of Registrable New
Notes, the Company will deliver to such Holder a written statement as to whether
it has complied with such requirements.
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5.2 Underwritten Registrations. If any of the Registrable New
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 Majority Holders and shall
be reasonably acceptable to the Company.
No Holder may participate in any Underwritten Registration
hereunder unless such Holder (a) agrees to sell such Holders Registrable New
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, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements.
5.3 Remedies. In the event of a breach by the Company of any of
its obligations under this Agreement, each Holder, in addition to being entitled
to exercise all rights provided herein, in the Indenture or granted by law,
including recovery of damages, will be entitled to specific performance of its
rights under this Agreement. The Company 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.
5.4 No Inconsistent Agreements. The Company has not entered into
and the Company will not after the date of this Agreement enter into any
agreement which is inconsistent with the rights granted to the Holders of
Registrable New Notes in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the Holders hereunder do not in any way
conflict with the rights granted to the holders of the Company's other issued
and outstanding securities under any such agreements.
5.5 Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of Holders
of at least a majority in aggregate principal amount of the outstanding
Registrable New Notes affected by such amendment, modification, supplement,
waiver or departure, excluding Registrable New Notes held by the Company and
other obligors on the New Notes and any Affiliate (as defined in the Indenture)
of the Company. 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 whose securities are being sold pursuant to a Registration
Statement and that does not directly or indirectly affect the rights of other
Holders
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may be given by Holders of at least a majority in aggregate principal amount of
the Registrable New Notes being sold by such Holders pursuant to such
Registration Statement, provided that the provisions of this sentence may not be
amended, modified or supplemented except in accordance with the provisions of
the immediately preceding sentence.
5.6 Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (a) if to a Holder, at the most current address given by such Holder to
the Company by means of a notice given in accordance with the provisions of this
Section 5.4, which address initially is the address set forth on the signature
pages hereof with respect to the Initial Holders; and (b) if to the Company,
initially at the Company's address set forth on the signature pages hereof, and
thereafter at such other address of which notice is given in accordance with the
provisions of this Section 5.4.
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt is acknowledged, if telecopied; and
on the next business day if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands, or other communications
shall be concurrently delivered by the person giving the same to the Trustee
under the Indenture, at the address specified in such Indenture.
5.7 Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders. If any transferee of any Holder shall
acquire Registrable New Notes, in any manner, whether by operation of law or
otherwise, such Registrable New Notes shall be held subject to all of the terms
of this Agreement, and by taking and holding such Registrable New Notes such
person shall be conclusively deemed to have agreed to be bound by and to perform
all of the terms and provisions of this Agreement, and such person shall be
entitled to receive the benefits hereof.
5.8 Third Party Beneficiaries. Each Holder of Registrable New
Notes not a party hereto shall be a third party beneficiary to the agreements
made hereunder and shall have the right to enforce such agreements directly to
the extent it deems such enforcement necessary or advisable to protect its
rights hereunder.
5.9 Counterparts. This Agreement may be executed in any number
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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.
5.10 Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
5.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.
5.12 Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
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IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
WRIGHT MEDICAL TECHNOLOGY, INC.
By:_____________________________
Name:
Title:
Confirmed and accepted as
of the date first above
written:
- --------------------------------------
[Type or print name of Initial Holder]
By:_________________________________
Name:
Title:
Address:
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WRIGHT MEDICAL TECHNOLOGY, INC.
and
STATE STREET BANK AND TRUST COMPANY
as Successor Trustee
--------------------------------------------------
THIRD SUPPLEMENTAL INDENTURE
Dated as of August 6, 1997
to INDENTURE
Dated as of June 30, 1993
---------------------------------------------------
$85,000,000
10 3/4% Series A Senior Secured Notes due July 1, 2000
10 3/4% Series B Senior Secured Notes due July 1, 2000
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This Third Supplemental Indenture, dated as of August 6, 1997, is by
and between Wright Medical Technology, Inc., a Delaware corporation, (the
"Company"), and State Street Bank and Trust Company, a Massachusetts trust
company, as successor Trustee (the "Trustee").
Recitals
WHEREAS, the Company and the Trustee are parties to the Indenture,
dated as of June 30, 1993, as amended by the First Supplemental Indenture, dated
as of November 1, 1993 and the Second Supplemental Indenture, dated as of
September 28, 1995, (the "Existing Indenture"), and as amended by this Third
Supplemental Indenture (the "Indenture"), providing for the issuance thereunder
by the Company, and the authentication and delivery by the Trustee, of the
Company's 10 3/4% Series A Senior Secured Notes due July 1, 2000 (and providing
for the future issuance, authentication and delivery of the Company's 10 3/4%
Series B Senior Secured Notes due July 1, 2000) (the "Securities"). Capitalized
terms used and not otherwise defined in this Third Supplemental Indenture shall
have the meanings respectively assigned to them in the Existing Indenture.
WHEREAS, the Company has commenced an exchange offer (the "Exchange
Offer") for the Securities and, in connection therewith, a solicitation of exit
consents (the "Exit Consent Solicitation") from the Holders to certain
amendments to the Existing Indenture as set forth in the Offering Circular and
Exit Consent Solicitation Statement of the Company dated August 6, 1997 (the
"Proposed Amendments");
WHEREAS, pursuant to the Exit Consent Solicitation, the Holders of at
least a majority in aggregate principal amount of the Securities outstanding
have consented (the "Requisite Consent") to the amendments effected by this
Third Supplemental Indenture in accordance with the provisions of the Existing
Indenture; and
WHEREAS, the Third Supplemental Indenture evidences the Proposed
Amendments described in the Offering Circular.
Agreement
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
and agreements set forth herein and other good and valuable consideration (the
receipt and adequacy of which are hereby acknowledged), the Company and the
Trustee hereby agree as follows:
Section 1. Amendments to Existing Indenture and the
Securities. The amendments set forth in this Third Supplemental Indenture
shall become operative on the date that the Company notifies the
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Depository and the Trustee in connection with the Exchange Offer that the
Securities tendered are accepted for exchange pursuant to the Exchange Offer
(the "Acceptance Date"). If a majority in aggregate principal amount of the
Securities (the "Requisite Consent") are not accepted for exchange by the
Company for any reason and the Exchange Offer not effected, the amendments set
forth herein will not become operative. The Article and Section headings in this
Third Supplemental Indenture are for convenience only and shall not affect the
construction of the Existing Indenture or this Third Supplemental Indenture. The
Existing Indenture is hereby amended as follows:
1.1 Deletion of Sections. From and after the Acceptance Date, the
Existing Indenture is hereby automatically amended by deleting in their entirety
the following Sections of the Existing Indenture:
(a) Section 4.04. Stay, Extension and Usury Laws.
(b) Section 4.05. Corporate Existence.
(c) Section 4.06. Taxes.
(d) Section 4.07. Limitations on Restricted Payments.
(e) Section 4.08. Limitations on Incurrence of
Indebtedness and Issuance of Preferred Stock.
(f) Section 4.09. Limitation on Liens.
(g) Section 4.10. Limitation on Granting Liens and
Restrictions on Subsidiary Dividends.
(h) Section 4.13. Transactions with Affiliates.
(i) Section 4.14. Maintenance of Consolidated Net Worth.
(j) Section 4.15. Liquidation.
(k) Section 4.17. Payments for Consent.
(l) Section 4.18. Restrictions on Indirect Subsidiaries.
(m) Section 5.01. When Company May Merge, etc.
All other Articles and Sections of the Existing Indenture shall remain
in effect and shall retain their Article or Section numbers.
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1.2. The following defined terms are hereby added, in their
appropriate alphabetical order, to Section 1.01 of the Existing Indenture:
(a) "New Indenture" means that indenture dated as of the date
thereof by and between the Company and the New Trustee with respect to the New
Notes.
(b) "New Notes" means the Company's Series C and Series D 11
3/4% Senior Secured Step-Up Notes due July 1, 2000.
(c) "New Trustee" means State Street Bank and Trust
Company as Trustee under the New Indenture.
1.3 Addition of a New Section 10.06.
From and after the Acceptance Date, the Existing Indenture is
hereby amended as follows:
(a) Sections 10.06 through 10.12 inclusive are renumbered
to become Sections 10.07 through 10.13 inclusive.
(b) A new Section 10.06 is added to read in its entirety
as follows:
Section 10.06. Sharing of Collateral
(a) Notwithstanding any other provision of this Indenture
or the Collateral Agreements, the Company is
expressly authorized to grant security interests in
the Collateral to the New Trustee or a collateral
agent acting on behalf of the New Trustee, for the
benefit of the holders of the New Notes.
(b) Notwithstanding any other provision of this Indenture
or the Collateral Agreements, the Trustee and the
Collateral Agent hereby agree to enter into an
intercreditor agreement (the "Intercreditor
Agreement") with the New Trustee and the New
Collateral Agent, pursuant to which the benefit of
Collateral will be shared by the Trustee, the
Collateral Agent, the Holders, the New Trustee, the
New Collateral Agent, and the holders of the New
Notes, such sharing to be ratable among the Holders
and the holders of the New Notes, based upon the
aggregate principal amount outstanding of Securities
and New Notes.
Page 146 of 155
<PAGE>
1.4 Deletion of Cross-References and Modification of Certain
Provisions. From and after the Acceptance Date, the Existing Indenture is
hereby automatically amended as follows:
(a) From and after the Acceptance Date, Sections 4.03 and
8.01 are hereby automatically amended to delete the
references made to existing Section 4.04.
(b) From and after the Acceptance Date, Section 5.02 is
hereby automatically amended by deleting in its entirety
the phrase "in accordance with Section 5.01."
(c) From and after the Acceptance Date, Section 6.01 is
hereby automatically amended (i) by deleting in their
entirety existing subsections (3), (4), (5) and (6) and
by renumbering existing subsections (7) and (8) as
subsections (3) and (4) and (ii) by deleting in its
entirety the paragraph beginning with the phrase "A
Default under clauses (3)" and ending with "state that
the notice is a "Notice of Default." Section 7.07 is
hereby automatically amended by replacing references to
existing subsections "6.01(7)" and "6.01(8)" with the
renumbered subsections "6.01(3) and "6.01(4)."
(d) From and after the Acceptance Date, Section 6.03 is
hereby automatically amended by deleting in its entirety
the remainder of the first paragraph following the first
appearance of the term "Securities."
(e) From and after the Acceptance Date, Section 9.01 is
hereby automatically amended by deleting in its entirety
existing subsection (2) and renumbering existing
subsections (3), (4) and (5) as subsections (2), (3) and
(4), respectively.
(f) From and after the Acceptance Date, the definition of
"Transfer Restricted Security" contained in Section 1.01
is hereby automatically amended by inserting the letter
"(g)" after "Section 2.06."
1.5 Deletion of Definitions. From and after the Acceptance Date, the
Existing Indenture is hereby automatically amended by deleting in their entirety
the definitions of each of the following defined terms from Section 1.01 of the
Existing Indenture:
(a) "Acquired Debt"
Page 147 of 155
<PAGE>
(b) "Permitted Liens"
1.6 Deletion of Other Definitions. From and after the Acceptance Date,
the Existing Indenture is hereby automatically amended by deleting in their
entirety the references to definitions of each of the following defined terms
from Section 1.02 of the Existing Indenture.
(a) "Affiliate Transaction"
(b) "Incur"
(c) "Minimum Equity"
(d) "Offer"
(e) "Offer Amount"
(f) "Offer Period"
(g) "Purchase Money Indebtedness"
(h) "Refinance"
(i) "Refinancing Indebtedness"
(j) "Restricted Payments"
1.7 Stop Transfer and Legend. From and after the Acceptance Date, the
Securities may not be transferred prior to the Resale Restriction Termination
Date (as defined below) unless (a) sold to the Company, (b) transferred pursuant
to a registration statement declared effective under the Securities Act of 1933,
as amended (the "Securities Act") or (c) transferred pursuant to another
available exemption from the registration requirements of the Securities Act.
The Company shall have the right to require the delivery of an opinion of
counsel, certification and other information satisfactory to it prior to any
transfer under clause (c) above. Further, the Company shall place a stop
transfer order with the Transfer Agent prohibiting any transfer of the
Securities unless the conditions of clauses (a), (b) or (c) of this subsection
have been met.
From and after the Acceptance Date, the Existing Indenture is hereby
automatically amended by deleting in its entirety existing Section 2.06(g) and
inserting the following in its place:
"(g) Legends. Notwithstanding any
other provision of this Indenture, all
Securities (and all Securities issued in
exchange therefor or substitution thereof
Page 148 of 155
<PAGE>
after the Third Supplemental Indenture takes effect) are
Transfer Restricted Securities for the purposes of the
Indenture and shall bear a legend in substantially the
following form:
THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR
ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT), OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE
DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO
YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND
THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATED PERSON OF
THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR
OF SUCH SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER
THE SECURITIES ACT, OR (C) PURSUANT TO ANY AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE COMPANY'S RIGHT PRIOR TO ANY SUCH OFFER, SALE
OR TRANSFER PURSUANT TO CLAUSE (C), TO REQUIRE THE DELIVERY OF
AN OPINION OF COUNSEL, CERTIFICATIONS AND OTHER INFORMATION
SATISFACTORY TO IT, AND SUBJECT TO THE REQUIREMENT THAT IN
EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE
FORM APPEARING ON THIS
Page 149 of 155
<PAGE>
SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE TRUSTEE. THIS LEGEND
WILL BE REMOVED UPON THE REQUEST OF THE
HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE.
1.8 Deletion of Certain Provisions of the Securities.
From and after the Acceptance Date, the Securities are hereby automatically
amended by deleting the following text from Section 12 of the Securities
regarding Defaults and Remedies:
"failure by the Company for 30 days after notice to it to
comply with any of its other agreements in the Indenture, the
Securities, the Registration Rights Agreement or the Collateral
Agreements or, in the case of failure of the Company to maintain its
corporate existence or its consolidated net worth, or to comply with
the restrictions on restricted payments, incurrence of investedness,
asset sales, changes of control or on consolidation, merger or transfer
or sale of substantially all its assets, without such notice or passage
of time; certain defaults under and acceleration prior to maturity of
other indebtedness; certain final judgments which remain undischarged;"
1.9 Additional Amendments. If and to the extent that any provision of
the covenants set forth in the sections and subsections of the Existing
Indenture deleted by Section 1.1 of this Third Supplemental Indenture would
impair the Company's ability to effect the Exchange Offer and the Exit Consent
Solicitation, compliance with such provision is hereby waived by the Trustee.
Section 2. Counterparts. This Third Supplemental Indenture may
be executed in two or more counterpart copies of the entire document or of
signature pages to the document, each of which may be executed by one or more of
the parties hereto, but all of which, when taken together, shall not be
necessary in making proof of this Third Supplemental Indenture to produce or
account for more than one such complete counterpart copy.
Section 3. Governance, Etc. This Third Supplemental Indenture
shall be governed and construed in accordance with the applicable terms and
provisions of the Existing Indenture as amended hereby, including (without
limitation) Sections 11.01, 11.02, 11.08, 11.09, 11.10, 11.11, 11.12, 11.13,
11.14 and 11.15 thereof, which terms and provisions are incorporated herein by
reference, as if this Third Supplemental Indenture were the "Indenture" referred
to therein.
Section 4. Applicability to all Holders. This Amendment and
all terms and provisions contained herein shall be effective and binding
Page 150 of 155
<PAGE>
upon and inure to the benefit of the Trustee, the Holders and the Company and
their respective successors and permitted assigns whether so expressed or not.
This Third Supplemental Indenture shall form a part of the Existing Indenture
for all purposes, and every Holder of Securities heretofore or hereafter
authenticated and delivered under the Indenture shall be bound hereby.
Section 5. No Trustee Liability, Etc. This Third Supplemental
Indenture is executed and accepted by the Trustee subject to all of the terms
and conditions of its acceptance of the trust under the Indenture, as fully as
if those terms and conditions were set forth herein. The Trustee assumes no
duties, responsibilities or liabilities by reason of this Third Supplemental
Indenture other than as set forth in the Indenture. The Trustee assumes no
responsibility for the correctness of the statements contained herein, which
shall be taken as statements of the Company.
Section 6. Indenture to Continue as Amended. The Existing
Indenture as modified and amended by this Third Supplemental Indenture, shall
remain and continue in full force and effect after the date hereof. Any and all
references, whether within the Existing Indenture or in any notice, certificate
or other instrument or document, shall be deemed to include a reference to this
Third Supplemental Indenture (whether or not made), unless the context shall
otherwise require.
Section 7. Entire Agreement. This Third Supplemental
Indenture, together with the Existing Indenture as amended hereby and the
Securities, contains the entire agreement of the parties, and supersedes all
other representations, warranties, agreements and understandings between the
parties, oral or otherwise, with respect to the matters contained herein and
therein.
Section 8. Instruments To Be Read Together. The Third
Supplemental Indenture is an indenture supplemental to the Existing Indenture,
and the Existing Indenture and this Third Supplemental Indenture shall
henceforth be read together.
Page 151 of 155
<PAGE>
In Witness Whereof, the parties hereto have caused this Third
Supplemental Indenture to be duly executed and delivered as of the date first
written above by their respective officers thereunto duly authorized.
Wright Medical Technology, Inc.
By:________________________________
Name:______________________________
Title:_______________________________
ATTEST:
- ---------------------------
Secretary
State Street Bank and Trust Company,
as Successor Trustee
By:________________________________
Name:______________________________
Title:_______________________________
ATTEST:
- ----------------------------
Page 152 of 155
<TABLE>
WRIGHT MEDICAL TECHNOLOGY, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(in thousands, except loss per share)
(unaudited)
<CAPTION>
Three Months Ended Six Months Ended
----------------------------------- -----------------------------------
June 30, 1997 June 30, 1996 June 30, 1997 June 30, 1996
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Net loss $ (3,893) $ (1,509) $ (7,103) $ (2,998)
Dividends on preferred stock (3,749) (3,564) (7,484) (7,141)
Accretion of preferred stock discount (1,615) (1,615) (3,229) (3,229)
---------------- ---------------- ---------------- ----------------
Net loss applicable to common
and common equivalent shares $ (9,257) $ (6,688) $ (17,816) $ (13,368)
================ ================ ================ ================
Weighted average shares of
common stock outstanding (a) 9,198 9,016 9,167 8,987
================ ================ ================ =================
Loss per share of common stock $ (1.01) $ (0.74) $ (1.94) $ (1.49)
================ ================ ================ =================
<FN>
(a) Because of the net loss applicable to common stock for the three and six
months ended June 30, 1997 and June 30, 1996, the assumed exercise of
common stock equivalents has not been included in the computation of
weighted average shares outstanding because their effect would be
anti-dilutive.
</FN>
Page 153 of 155
</TABLE>
<TABLE>
WRIGHT MEDICAL TECHNOLOGY, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS
(in thousands, except ratios)
(unaudited)
<CAPTION>
Six Months Ended Year Ended Year Ended Year Ended
------------------------------
June 30, 1997 June 30, 1996 Dec. 31, 1996 Dec. 31, 1995 Dec. 31, 1994
------------- -------------- ------------- ------------- -------------
Earnings:
<S> <C> <C> <C> <C> <C>
Loss before income taxes $ (7,103) $ (2,973) $ (14,589) $ (4,873) $ (57,261)
Add back: Interest expense 5,622 5,249 10,718 10,899 9,311
Amortization of debt issuance cost 693 702 1,361 1,036 829
Portion of rent expense
representative of interest factor 246 238 459 451 349
------------- ------------- ------------- -------------- -------------
Earnings (loss) as adjusted $ (542) $ 3,216 $ (2,051) $ 7,513 $ (46,772)
============= ============== ============= ============== =============
Fixed charges:
Interest expense $ 5,622 $ 5,249 $ 10,718 $ 10,899 $ 9,311
Amortization of debt issuance cost 693 702 1,361 1,036 829
Portion of rent expense representative
of interest factor 246 238 459 451 349
------------- -------------- ------------- -------------- -------------
$ 6,561 $ 6,189 $ 12,538 $ 12,386 $ 10,489
============= ============== ============= ============== =============
Preferred dividends $ 7,484 $ 11,518 $ 14,251 $ 16,863 $ 3,997
Accretion of preferred stock 3,229 5,208 6,458 4,573 394
------------- -------------- ------------- -------------- -------------
$ 10,713 $ 16,726 $ 20,709 $ 21,436 $ 4,391
============= ============== ============= ============== =============
Ratio of earnings to fixed charges (a) (a) (a) (a) (a)
============= ============== ============= ============== =============
Ratio of earnings to fixed charges, preferred
dividends and accretion of preferred stock (b) (b) (b) (b) (b)
============= ============== ============= ============== =============
<FN>
(a) Earnings were inadequate to cover fixed charges by $7.1 million, $3.0
million, $14.6 million, $4.9 million and $57.3 million, respectively, for
the six months ended June 30, 1997 and June 30, 1996, for the years ended
December 31, 1996, December 31, 1995, and December 31, 1994.
(b) Earnings were inadequate to cover fixed charges, preferred dividends and
accretion of preferred stock by $17.8 million, $19.7 million, $35.3
million, $26.3 million and $61.7 million, respectively, for the six months
ended June 30, 1997 and June 30, 1996, for the years ended December 31,
1996, December 31, 1995 and December 31, 1994. Certain of the preferred
dividends are, at the option of the Company, payable in kind.
</FN>
Page 154 of 155
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Financial Statements and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<CURRENCY> U.S. dollars
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-01-1997
<EXCHANGE-RATE> 1
<CASH> 1,234
<SECURITIES> 0
<RECEIVABLES> 23,557
<ALLOWANCES> 656
<INVENTORY> 57,347
<CURRENT-ASSETS> 86,343
<PP&E> 61,184
<DEPRECIATION> 31,004
<TOTAL-ASSETS> 163,686
<CURRENT-LIABILITIES> 37,291
<BONDS> 84,510
93,532
9
<COMMON> 10
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 163,686
<SALES> 64,383
<TOTAL-REVENUES> 64,383
<CGS> 23,524
<TOTAL-COSTS> 23,524
<OTHER-EXPENSES> 41,610
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,227
<INCOME-PRETAX> (7,103)
<INCOME-TAX> 0
<INCOME-CONTINUING> (7,103)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,103)
<EPS-PRIMARY> (1.94)
<EPS-DILUTED> (1.94)
</TABLE>
