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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
January 17, 1997
Commission File Number 0-22906
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ABC RAIL PRODUCTS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 36-3498749
(State or other jurisdiction (IRS Employer
of incorporation) Identification Number)
200 SOUTH MICHIGAN AVENUE
SUITE 1300
CHICAGO, ILLINOIS 60604
(312) 322-0360
(Address and telephone number of principal executive offices)
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ITEM 5. OTHER EVENTS.
ABC Rail Products Corporation (the "Company") is filing herewith
certain exhibits that relate to the Company's Registration Statement on Form
S-3, filed with the Securities and Exchange Commission on November 15, 1996
(Registration No. 333-16241).
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
4.1 Form of First Supplemental Indenture to the Indenture dated
January __, 1997 between the Company and First Trust National
Association, as Trustee.
4.2 Form of Officer's Certificate pursuant to Section 301 of the Indenture
dated January ___, 1997 between the Company and First Trust National
Association, as Trustee.
2
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Current Report on Form 8-K to be signed on
its behalf by the undersigned hereunto duly authorized.
ABC RAIL PRODUCTS CORPORATION
By /s/ D. Chisholm MacDonald
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D. Chisholm MacDonald
Senior Vice President, Chief Financial Officer
and Director (Principal Financial and
Accounting Officer)
Date: January 17, 1997
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EXHIBIT INDEX
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<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DOCUMENT DESCRIPTION PAGE NUMBER
- --------- --------------------- -----------
<S> <C> <C>
4.1 Form of First Supplemental Indenture to
the Indenture dated January __, 1997
between the Company and First Trust
National Association, as Trustee.
4.2 Form of Officer's Certificate pursuant to
Section 301 of the Indenture dated January ,
1997 between the Company and First Trust
National Association, as Trustee.
</TABLE>
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EXHIBIT 4.1
ABC RAIL PRODUCTS CORPORATION
THE COMPANY
AND
FIRST TRUST NATIONAL ASSOCIATION
THE TRUSTEE
----
FIRST SUPPLEMENTAL INDENTURE
DATED AS OF JANUARY __, 1997
SUPPLEMENTING THAT CERTAIN
INDENTURE
DATED AS OF JANUARY ___, 1997
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FIRST SUPPLEMENTAL INDENTURE
This FIRST SUPPLEMENTAL INDENTURE, dated as of January __, 1997 (the
"AMENDMENT"), is made and entered into by and between ABC RAIL PRODUCTS
CORPORATION, a Delaware corporation (the "COMPANY") and FIRST TRUST NATIONAL
ASSOCIATION, Chicago, Illinois, a national banking association, as trustee (the
"TRUSTEE") under the Indenture, dated as of January __, 1997 (the "INDENTURE")
between the Company and the Trustee. Capitalized terms used herein that are not
defined herein shall have the meanings assigned to such terms in the Indenture.
RECITALS
WHEREAS, pursuant to Section 901 of the Indenture, the Company, when
authorized by or pursuant to a Board Resolution, and the Trustee may enter into
an indenture or indentures supplemental to the Indenture for any of the
following purposes:
(1) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company in the
Indenture and in the Securities; or
(2) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities (and if such covenants are to be
for the benefit of less than all series of Securities, stating that such
covenants are expressly being included solely for the benefit of such
series) or to surrender any right or power in the Indenture conferred upon
the Company; or
(3) to add to or change any of the provisions of the Indenture to such
extent as shall be necessary to permit or facilitate the issuance of
Securities of any series in bearer form, registrable or not registrable as
to principal, and with or without interest coupons, or to permit or
facilitate the issuance of Securities of any series in uncertificated form;
or
(4) to add to, change or eliminate any of the provisions of the
Indenture in respect of one or more series of Securities; provided,
however, that any such addition, change or elimination shall either (i) not
adversely affect the rights of the Holders of Outstanding Securities of any
series in any material respect, or (ii) not apply to any Outstanding
Securities of any series created prior to the execution of such
supplemental indenture where such addition, change or elimination has an
adverse effect on the rights of the Holders of such Outstanding Securities
in any material respect; or
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(5) to secure the Securities of any series; or
(6) to establish the form or terms of Securities of any series as
permitted by Sections 201 and 301 of the Indenture;
(7) to evidence and provide for the acceptance of appointment under
the Indenture by a successor Trustee with respect to the Securities of one
or more series and to add to or change any of the provisions of the
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, pursuant
to the requirements of Section 611(b); or
(8) to cure any ambiguity or defect in and to correct or supplement
any provision in the Indenture or any Security of any series that may be
inconsistent with any other provision in the Indenture or in the Security
of such series, or to make any other provisions with respect to matters or
questions arising under the Indenture; provided, however, that any such
action pursuant to this clause (8) shall not adversely affect the rights of
the Holders of Outstanding Securities of any series in any material
respect; or
(9) to modify, eliminate or add to the provisions of the Indenture to
such extent as shall be necessary to effect qualification of this Indenture
under the Trust Indenture Act, or under any similar federal statute
hereafter enacted, and to add to the Indenture such other provisions as may
be expressly permitted by the Trust Indenture Act; or
(10) to amend or supplement the restrictions on and procedures for
resale, attempted resale and other transfers of any series of Securities
(whether or not Outstanding) to reflect any change in applicable law or
regulation (or interpretation thereof) or in practices relating to the
resale or transfer of Restricted Securities generally;
WHEREAS, the Company and the Trustee desire to (i) amend Article Ten of the
Indenture by adding Sections 1006, 1007, 1008, 1009 and 1010 thereto to add to
the covenants of the Company for the benefit of the Holders of all or any series
of Securities and (ii) add Article Sixteen to the Indenture in order to add
certain subordination provisions applicable to all or any series of Securities;
WHEREAS, the amendments to Article Ten of the Indenture and the addition of
Article Sixteen to the Indenture that are contemplated by this Amendment are not
otherwise prohibited by Section 902 of the Indenture;
NOW, THEREFORE, in consideration of the premises, and for other good and
valuable consideration, the receipt and
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sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
ARTICLE I AMENDMENTS
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SECTION 1.1 DEFINITIONS. The Company and the Trustee hereby agree to add
the following definitions to Section 101 of the Indenture:
"Agent Bank" means ANB, as agent under the Amended Credit Agreement
and any successor to ANB in such capacity under the Amended Credit Agreement.
"Amended Credit Agreement" means, collectively, the Second Amended and
Restated Loan and Security Agreement, dated as of January , 1997, among the
Company, ABC Deco Inc., the Lenders and the Agent Bank, together with all other
"Financing Agreements" (as defined therein), in each case as the same may be
amended, amended and restated, supplemented or otherwise modified from time to
time, and including any agreement extending the maturity of, changing the
principal amount of, changing the terms (including the pricing) of, refinancing
or otherwise refunding or restructuring (including, but not limited to, the
inclusion of additional or different borrowers thereunder that are Subsidiaries
of the Company and additional or different lenders thereunder) all or any
portion of the Obligations under such Second Amended and Restated Loan and
Security Agreement or any successor agreement.
"ANB" means American National Bank and Trust Company of Chicago.
"Commitments" shall mean any and all commitments, agreements or other
obligations of the Lenders to make loans, advance funds, issue letters of credit
or otherwise extend or maintain any credit for or on behalf of the Company or
any subsidiary of the Company under or in connection with the Amended Credit
Agreement (including, without limitation, any such obligation under Subsections
2.3 or 2.20 of the Amended Credit Agreement).
"Derivative Transaction" means (i) any rate, basis, commodity,
currency, debt or equity swap, (ii) any cap, collar or floor agreement, (iii)
any rate, basis, commodity, currency, debt or equity exchange or forward
agreement, (iv) any rate, basis, commodity, currency, debt or equity option, (v)
any other similar agreement, (vi) any option to enter into any of the foregoing,
(vii) any master agreement or other agreement providing for any of the foregoing
and (viii) any combination of any of the foregoing.
"Designated Senior Indebtedness" means all Indebtedness and
Obligations heretofore, now or hereinafter arising under or in connection with
the Amended Credit Agreement, including,
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without limitation, all "Liabilities" (as such term is defined in the Amended
Credit Agreement).
"Incur" means, with respect to any Indebtedness, Lien or other
obligation of any Person, to create, issue, assume, guarantee, incur or
otherwise become liable in respect of such Indebtedness (including in the case
of Indebtedness, the extension of the maturity of or becoming responsible for
the payment of, any Indebtedness), Lien or other obligation (the "Incurrence,"
"Incurred" and "Incurring" have meanings correlative to the foregoing), provided
that a change in GAAP that results in an obligation of such Person that exists
at such time becoming Indebtedness does not constitute an Incurrence of such
Indebtedness.
"Indebtedness" means, with respect to any Person, (i) every obligation
of such Person for money borrowed, (ii) every obligation of such Person
evidenced by bonds, debentures, notes or other similar instruments, (iii) every
reimbursement obligation of such Person with respect to letters of credit,
bankers' acceptances or similar facilities issued for the account of such
Person, (iv) every obligation of such Person issued or assumed as the deferred
purchase price of property (including pursuant to capitalized lease
obligations), every conditional sale obligation and every obligation under any
title retention agreement, in each case if on terms permitting any portion of
the purchase price to be paid beyond one year from the date of purchase, (v)
every obligation of such Person issued or contracted for as payment in
consideration of the purchase by such Person or an Affiliate of such Person of
all or substantially all of the stock or all or substantially all of the assets
of another Person or a merger or consolidation to which such Person or an
Affiliate of such Person was a party, (vi) every obligation of such Person with
respect to any Derivative Transaction, (vii) every obligation of the type
referred to in clauses (i) through (vi) of other Persons for the payment of
which such Person is responsible or liable, directly or indirectly, as obligor,
guarantor or otherwise and (viii) every obligation of the type referred to in
clauses (i) through (vii) of other Persons secured by any Lien on any property
or asset of such Person (whether or not such obligation is assumed by such
Person), the amount of such obligation being deemed to be the lesser of the
value of such property or assets or the amount of the obligation so secured.
"Lenders" means the financial institutions identified on Schedule I to
the Amended Credit Agreement and their successors and assigns (including,
without limitation, the "Issuing Bank" (as such term is defined in the Amended
Credit Agreement) and any comparable term which may be used to designate a
Lender issuing one or more letters of credit).
"Lien" means any lien, claim, charge, pledge, security interest, deed
of trust, mortgage or other encumbrance or other
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arrangement having the practical effect of the foregoing or other preferential
arrangement of any other kind and includes the interest of a vendor or lessor
under any conditional sale agreement, capital lease or other title retention
agreement.
"Material Adverse Effect" means a material adverse effect on (i) the
Company's business, operations, condition (financial or otherwise) or properties
or (ii) the Company's ability to pay any liabilities or otherwise perform its
other obligations under the Amended Credit Agreement or the Indenture.
"Non-Payment Default" means (a) any "Default" or "Event of Default"
(as such terms are defined in the Amended Credit Agreement), other than a
Payment Default; or (b) any other event of default with respect to any Senior
Indebtedness, other than a Payment Default.
"Obligations" means all obligations for the reimbursement of amounts
drawn under any letter of credit or for the payment of principal, premium or
interest (including, without limitation, interest whether or not allowed after
the filing of a petition initiating any proceeding referred to in Section 501(5)
or (6) at the rate specified in the instrument governing the relevant
Indebtedness), penalties, fees, expenses, indemnities or other amounts, now or
hereafter existing, with respect to any Indebtedness.
"Pari Passu," as applied to the ranking of any Indebtedness of a
Person in relation to other Indebtedness of such Person, means that each such
Indebtedness either (i) is not expressly subordinated in right of payment to any
Indebtedness or (ii) is expressly subordinated in right of payment to the same
Indebtedness as is the other Indebtedness, and is so subordinated in right of
payment to the other Indebtedness or to any Indebtedness as to which the other
Indebtedness is not so expressly subordinated.
"Payment Blockage Period" has the meaning specified in Section 1603.
"Payment Default" means any default in the payment of any Senior
Indebtedness when due.
"Senior Indebtedness" means (i) all Designated Senior Indebtedness up
to a maximum principal amount of $90,000,000 plus the amount of all interest and
other Obligations at any time due thereon or with respect thereto (the sum of
such maximum principal amount, interest and other Obligations being the "Base
Amount"), and (ii) any other Indebtedness (and related Obligations) permitted to
be incurred by the Company under the terms of the Indenture (including, without
limitation, Indebtedness (and related Obligations) arising under or with respect
to the Amended Credit Agreement in excess of the Base Amount), unless the
instrument under which such Indebtedness is
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incurred expressly provides that it is on a parity with or subordinated in right
of payment to the Securities. Notwithstanding anything to the contrary in the
foregoing, Senior Indebtedness described in clause (ii) above will not include
(1) any liability for federal, state, local or other taxes owed or owing by the
Company; (2) any Obligation of the Company to any of its Subsidiaries; (3) any
accounts payable or trade liabilities arising in the ordinary course of business
(including instruments evidencing such liabilities); (4) any Indebtedness that
is incurred in violation of the Indenture; provided, however, that for purposes
of this clause (4), Indebtedness (and related Obligations) arising under or with
respect to the Amended Credit Agreement in an amount in excess of the Base
Amount (such amount being the "Excess Amount") shall be deemed not to have been
incurred in violation of the Indenture (and shall be Senior Indebtedness) so
long as the amount of the Excess Amount constituting principal (or a
reimbursement obligation with respect to a letter of credit) could be incurred
under the terms of the Indenture (as in effect on the date hereof) on the date
that the Company was first permitted to borrow such principal amount (or have
such a letter of credit issued), without giving effect to any conditions
precedent that may exist in the Amended Credit Agreement with respect thereto;
(5) Indebtedness which, when incurred and without respect to any election under
Section 1111(b) of Title 11, United States Code, is without recourse to the
Company; (6) any Indebtedness, guarantee or Obligation of the Company which is
subordinate or junior to any other Indebtedness, guarantee or Obligation of the
Company; (7) Indebtedness evidenced by any series of the Securities and (8)
capital stock of the Company.
"Subordinated Indebtedness" means all Indebtedness now or hereafter
existing under the Securities and the Indenture (whether created directly or
acquired by assignment or otherwise), and all interest and premiums, if any,
thereon and all other amounts payable in respect thereof (including, without
limitation, sinking fund payments (if any), defeasance payments (if any), and
any and all amounts payable to acquire any Securities or on account of any
redemption, repurchase, retirement or other purchase of Securities.
SECTION 1.2 PAYMENT OF TAXES AND OTHER CLAIMS. The Company and the
Trustee hereby agree to add Section 1006 to the Indenture. Section 1006 reads
as follows:
"SECTION 1006. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company will pay or discharge or cause to be paid or discharged, before
the same shall become delinquent, (1) all taxes, assessments and governmental
charges levied or imposed upon the Company or any Subsidiary or upon the income,
profits or property of the Company or any Subsidiary and (2) all lawful claims
for labor, materials and supplies which, if unpaid, might by law become a Lien
upon the property of the Company or any
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Subsidiary; provided, however, that the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge,
claim or Lien if either (a) the amount, applicability or validity is being
contested in good faith by appropriate proceedings and an adequate reserve has
been established therefore to the extent required by GAAP or (b) the failure to
pay or discharge any such tax, assessment, charge, claim or Lien could not
reasonably be expected to have a Material Adverse Effect."
SECTION 1.3 CORPORATE EXISTENCE. The Company and the Trustee hereby
agree to add Section 1007 to the Indenture. Section 1007 reads as follows:
"SECTION 1007. CORPORATE EXISTENCE.
Subject to Article Eight of the Indenture, the Company will do or cause to
be done all things necessary to preserve and keep in full force and effect the
corporate existence, rights (charter and statutory) and franchises of the
Company and its Subsidiaries, and will comply with all laws, orders, regulations
and ordinances of any federal, foreign, state or local governmental authority,
except for such laws, orders, regulations and ordinances the violation of which
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect; provided, however, that the Company shall not be
required to preserve any right or franchise of the Company or its Subsidiaries
if the Company shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company or its Subsidiaries and
that the loss thereof would not have a Material Adverse Effect."
SECTION 1.4 MAINTENANCE OF PROPERTIES. The Company and the Trustee hereby
agree to add Section 1008 to the Indenture:
"SECTION 1008. MAINTENANCE OF PROPERTIES.
The Company will:
(a) cause its properties and the properties of its Subsidiaries used or
useful in the conduct of the business of the Company and its Subsidiaries to be
maintained and kept in good condition, repair and working order and supplied
with all necessary facilities and equipment and will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Company may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times; provided, however, that nothing in this subsection (a) shall
prevent the Company or a Subsidiary from discontinuing the operation and
maintenance of any of its properties if such discontinuance is, in the judgment
of the Company, desirable in the conduct of its business and not could not
reasonably be expected to have a Material Adverse Effect, and
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(b) take all appropriate steps to preserve, protect and maintain the
trademarks, trade names, copyrights, licenses and permits used in the conduct of
the business of the Company and its Subsidiaries; provided, however, that
nothing in this Subsection shall prevent the Company or a Subsidiary from
selling, abandoning or otherwise disposing of any such trademark, trade name,
copyright, license or permit if such sale, abandonment or disposition is, in the
judgment of the Company, desirable in the conduct of its business and could not
reasonably be expected to have a Material Adverse Effect."
SECTION 1.5 INSURANCE. The Company and the Trustee hereby agree to add
Section 1009 to the Indenture. Section 1009 reads as follows:
"SECTION 1009. INSURANCE.
Subject to the right to sell, abandon or otherwise dispose of any building
or property whenever in the opinion of the Company the retention thereof is
inadvisable or not necessary to the business of the Company and its
Subsidiaries, the Company will at all times cause all buildings, equipment and
other insurable properties owned or operated by it or any Subsidiary that are
material to the business of the Company to be properly insured and kept insured
with responsible insurance carriers, or adequately insured by means of proper
inter-insurance contracts, against loss or damage by fire and other hazards, to
the extent that such properties are usually insured by corporations owning or
operating properties of a similar character; provided, however, that nothing in
this Section shall prevent the Company or any Subsidiary from maintaining any
self-insurance program covering minor risks if adequate reserves are maintained
in connection with such program."
SECTION 1.6 BOOKS AND RECORDS. The Company and the Trustee hereby agree
to add Section 1010 to the Indenture. Section 1010 reads as follows:
"SECTION 1010. BOOKS AND RECORDS.
The Company shall, and shall cause each Subsidiary to, at all times keep
proper books of record and account in which proper entries shall be made in
accordance with GAAP."
SECTION 1.7 SUBORDINATION. The Company and the Trustee hereby agree to
add Article Sixteen to the Indenture. Article Sixteen reads as follows:
"ARTICLE SIXTEEN
Subordination of the Securities
SECTION 1601. Securities Subordinate to Senior Indebtedness.
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The Company covenants and agrees, and each Holder of a Security, by
his acceptance thereof, likewise covenants and agrees, that, to the extent and
in the manner hereinafter set forth in this Article Sixteen the Subordinated
Indebtedness is hereby expressly made subordinate and subject in right of
payment to the prior payment in full in cash of all Senior Indebtedness.
SECTION 1602. Payment Over of Proceeds Upon Dissolution, etc.
In the event of (a) any insolvency or bankruptcy case or proceeding,
or any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to the Company or to its creditors,
as such, or to its assets, or (b) any liquidation, dissolution or winding up of
the Company, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy or (c) any assignment for the benefit of creditors or
any marshaling of assets and liabilities of the Company, then and in any such
event the holders of Senior Indebtedness shall be entitled to receive payment in
full in cash of all amounts due or to become due on or in respect of all Senior
Indebtedness, and all Commitments shall be fully and finally terminated, before
the Holders of the Securities are entitled to receive any payment on account of
principal (including, without limitation, sinking fund payments, if any) of (or
premium, if any) or interest on the Securities and before any other payment of
Subordinated Indebtedness may be made or otherwise provided for, and to that end
the holders of Senior Indebtedness shall be entitled to receive, for application
to the payment of all Senior Indebtedness remaining unpaid (to the extent
necessary to pay all Senior Indebtedness in full in cash, after giving effect to
any concurrent indefeasible payment or distribution in cash to or for the
holders of Senior Indebtedness), any payment or distribution of any kind or
character, whether in cash, property or securities, including any such payment
or distribution which may be payable or deliverable by reason of the payment of
any other Indebtedness of the Company being subordinated to the payment of the
Securities, that may be payable or deliverable in respect of the Securities in
any such case, proceeding, dissolution, liquidation, winding up or other event.
In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Security shall have received any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, including any such payment or
distribution that may be payable or deliverable by reason of the payment of any
other Indebtedness of the Company being subordinated to the payment of the
Securities, before all Senior Indebtedness is paid in full in cash, then and in
such event such payment or distribution shall be held in trust by the Trustee or
any such Holder for the holders of Senior Indebtedness, and if such fact shall,
at or prior to the time of such payment or distribution, have been made known to
the Trustee, shall be held
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by the Trustee in a separate account, and shall be paid over or delivered
forthwith to the holders of Senior Indebtedness pro rata (or, if otherwise
required by applicable law, to the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee, agent or other person making payment or
distribution of assets of the Company for application to the payment of all
Senior Indebtedness) until all Commitments have been fully and finally
terminated and all Senior Indebtedness has been paid in full in cash, after
giving effect to any concurrent indefeasible payment or distribution in cash to
or for the holders of Senior Indebtedness.
SECTION 1603. No Payment When Senior Indebtedness in Default.
The Company may not pay any Subordinated Indebtedness if (i) any Payment
Default occurs with respect to any Senior Indebtedness (and such default is not
cured or waived in accordance with the express terms (if any) of the instruments
and agreements (as the case may be) evidencing such Senior Indebtedness) or
would occur upon making such payment on Subordinated Indebtedness, (ii) any Non-
Payment Default occurs with respect to any Senior Indebtedness and the maturity
of such Senior Indebtedness is accelerated in accordance with its terms (and
such acceleration is not rescinded in accordance with the express terms (if any)
of the instruments and agreements (as the case may be) evidencing such Senior
Indebtedness), or (iii) any judicial proceedings shall be pending with respect
to any Payment Default or Non-Payment Default. In addition (and without
limiting the preceding sentence), following the occurrence of any Non-Payment
Default with respect to any Designated Senior Indebtedness (or if a Non-Payment
Default with respect to any Designated Senior Indebtedness would occur upon
making such payment on Subordinated Indebtedness), upon the receipt by the
Trustee of written notice from the holder of such Designated Senior Indebtedness
or any agent for any such holder (including, with respect to the Amended Credit
Agreement, the Agent Bank), neither the Trustee nor the Company may pay any
Subordinated Indebtedness during the period (the "Payment Blockage Period")
commencing on the date of such receipt by the Trustee of such written notice and
ending on the earliest of (i) the date on which such Non-Payment Default shall
have been cured or waived in accordance with the express terms (if any) of the
instruments and agreements (as the case may be) evidencing such Designated
Senior Indebtedness, (ii) the date on which all Designated Senior Indebtedness
shall have been discharged and paid in full in cash and all Commitments have
been fully and finally terminated, and (iii) the 180th day after the date of the
receipt by the Trustee of such written notice; any number of such notices may be
given. Notwithstanding any other provision of this Indenture, only one Payment
Blockage Period may be commenced within any consecutive 365-day period and no
Non-Payment Default with respect to Designated Senior Indebtedness that existed
or was continuing on the date of the commencement of any Payment Blockage Period
shall be, or shall be made, the basis for the commencement of a second
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Payment Blockage Period, whether or not within a period of 365 consecutive days,
unless such event of default shall have been cured or waived for a period of not
less than 90 consecutive days.
In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section, then and in such event such payment shall
be held in trust by any such Holder for the holders of Senior Indebtedness, and
if such facts shall, at or prior to the time of such payment, have been made
known to the Trustee, shall be held by the Trustee in a separate account, and
shall be paid over and delivered forthwith to the holders of Senior
Indebtedness.
The provisions of this Section shall not apply to any payment with
respect to which Section 1602 would be applicable.
SECTION 1604. Subrogation to Rights of Holders of Senior Indebtedness.
Subject to the prior payment in full in cash of all Senior
Indebtedness the Holders of the Securities shall be subrogated to the extent of
the payments or distributions made to the holders of such Senior Indebtedness
pursuant to the provisions of this Article Sixteen (equally and ratably with the
holders of all Indebtedness of the Company that is Pari Passu to the Securities)
to the rights of the holders of such Senior Indebtedness to receive payments and
distributions of cash, property and securities applicable to the Senior
Indebtedness until the principal of and interest on the Securities shall be paid
in full. For purposes of such subrogation, no payments or distributions to the
holders of the Senior Indebtedness of any cash, property or securities to which
the Holders of the Securities or the Trustee would be entitled except for the
provisions of this Article Sixteen, and no payments over pursuant to the
provisions of this Article Sixteen to the holders of Senior Indebtedness by
Holders of the Securities or the Trustee, shall, as among the Company, its
creditors other than holders of Senior Indebtedness and the Holders of the
Securities, be deemed to be a payment or distribution by the Company to or on
account of the Senior Indebtedness.
SECTION 1605. Provisions Solely to Define Relative Rights.
The provisions of this Article Sixteen are and are intended solely for
the purpose of defining the relative rights of the Holders of the Securities on
the one hand and the holders of Senior Indebtedness on the other hand. Nothing
contained in this Article Sixteen or elsewhere in this Indenture or in the
Securities is intended to or shall, as between the Company and the Holders of
Securities: (a) impair the obligation of the Company, which is absolute and
unconditional (and which, subject to the right under this Article Sixteen of the
holders of Senior
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Indebtedness, is intended to rank equally with all other general obligations of
the Company), to pay to the Holders of the Securities the principal of (and
premium, if any) and interest on the Securities as and when the same shall
become due and payable in accordance with their terms; (b) affect the relative
rights against the Company of the Holders of the Securities or (c) prevent the
Trustee or the Holder of any Security from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the
rights, if any, under this Article Sixteen of the holders of Senior Indebtedness
to receive cash, property and securities otherwise payable or deliverable to the
Trustee or such Holder.
SECTION 1606. Trustee to Effectuate Subordination.
(a) Each Holder of a Security by his acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate, as between the Holders and the holders of Senior
Indebtedness, the subordination provided in this Article Sixteen and appoints
the Trustee his attorney-in-fact for any and all such purposes.
(b) The Agent Bank is hereby irrevocably authorized to demand specific
performance of the provisions of this Article Sixteen, whether or not the
Company shall have complied with any of the provisions hereof applicable to it,
any time when the Holders of Securities or the Trustee shall have failed, or
threatened to fail, to comply with any of the provisions of this Article Sixteen
applicable to them. The Holders of Securities and the Trustee hereby
irrevocably waive any defense based on the adequacy of a remedy at law that
might be asserted as a bar to such remedy of specific performance. The Holders
of Securities and the Trustee hereby acknowledge that the provisions of this
Article Sixteen are intended to be enforceable at all times, whether before or
after the commencement of a proceeding referred to in Section 1602.
SECTION 1607. No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act by any such holder, or by any non-compliance by
the Company with the terms, provisions and covenants of this Indenture,
regardless of any knowledge thereof any such holder may have or be otherwise
charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Trustee or the Holders of
the Securities and without impairing or releasing the subordination
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provided in this Article Sixteen or the obligations hereunder of the Trustee or
the Holders of the Securities to the holders of Senior Indebtedness, do any one
or more of the following:
(i) supplement, renew, extend, accelerate or otherwise change the time
for payment of, or other terms relating to, the Senior Indebtedness, or any
portion thereof, or otherwise modify, amend or change the terms of any
promissory note or other agreement, document or instrument (including,
without limitation, the Amended Credit Agreement) relating to any Senior
Indebtedness, including, without limitation, any increase or decrease of
the principal amount thereof, the rate of interest thereon or the fees
payable in connection therewith;
(ii) waive or otherwise consent to noncompliance with any provision of
any agreement, document or instrument (including, without limitation, the
Amended Credit Agreement) relating to any Senior Indebtedness;
(iii) accept partial payments on any Senior Indebtedness;
(iv) receive, take and hold security or collateral for the payment or
performance of any Senior Indebtedness and exchange, enforce, waive,
substitute, liquidate, terminate, abandon, impair, fail to perfect,
subordinate, transfer, alter, release or otherwise deal with any such
security or collateral;
(v) apply any and all such security or collateral and direct the order
or manner of sale thereof;
(vi) settle, release, compromise, collect or otherwise liquidate any
Senior Indebtedness;
(vii) add, release or substitute any one or more guarantors, makers or
endorsers of all or any part of any Senior Indebtedness and otherwise deal
with the Company, or any guarantor, maker or endorser;
(viii) apply any and all payments or recoveries from the Company or
from any guarantor, maker or endorser of all or any part of the Senior
Indebtedness in such order as any holder of Senior Indebtedness (or any
agent therefor) may determine, whether such Senior Indebtedness is secured
or unsecured or guaranteed or not guaranteed by others; and
(ix) exercise or refrain from exercising any rights against the
Company and any other Person.
SECTION 1608. Notice to Trustee.
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The Company shall give prompt written notice to the Trustee of any
fact known to the Company that would prohibit the making of any payment to or by
the Trustee in respect of the Securities. Notwithstanding the provisions of this
Article Sixteen or any other provision of this Indenture, the Trustee shall not
be charged with knowledge of the existence of any facts that would prohibit the
making of any payment to or by the Trustee in respect of the Securities, unless
and until the Trustee shall have received written notice thereof at least three
Business Days prior to any such payment date from the Company, any Holder, the
Agent Bank, a holder of any class of Senior Indebtedness or any one or more
agents acting on behalf of any one or more holders of any class of Senior
Indebtedness who (other than the Agent Bank) shall have been certified by the
Company or otherwise established to the reasonable satisfaction of the Trustee
to be such holder, or from any trustee therefor; and, prior to the receipt of
any such written notice, the Trustee, subject to the provisions of Section 601
of the Indenture, shall be entitled in all respects to assume that no such facts
exist.
Subject to the provisions of Section 601 of the Indenture, the Trustee
shall be entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness (or a trustee or
agent therefor) to establish that such notice has been given by a holder of
Senior Indebtedness (or a trustee or agent therefor). In the event that the
Trustee determines in good faith that further evidence is required with respect
to the right of any Person as a holder of Senior Indebtedness to participate in
any payment or distribution pursuant to this Article Sixteen, the Trustee may
request such Person to furnish evidence to the reasonable satisfaction of the
Trustee, as to the amount of Senior Indebtedness held by such Person, the extent
to which such person is entitled to participate in such payment or distribution
and any other acts pertinent to the rights of such Person under this Article
Sixteen, and if such evidence is not furnished, the Trustee may defer any
payment to such Person pending judicial determination as to the right of such
Person to receive such payment.
SECTION 1609. Reliance on Judicial Order or Certificate of Liquidating Agent.
Upon any payment or distribution of assets of the Company referred to
in this Article Sixteen, the Trustee, subject to the provisions of Section 601
of the Indenture, and the Holders of the Securities shall be entitled to rely
upon any order or decree entered by any court of competent jurisdiction in which
such insolvency, bankruptcy, receivership, liquidation, reorganization,
dissolution, winding up or similar case or proceeding is pending, or a
certificate of the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee for the benefit of creditors, agent or other Person making
such
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<PAGE>
payment or distribution, delivered to the Trustee or to the Holders of
Securities, for the purpose of ascertaining the Persons entitled to participate
in such payment or distribution, the holders of the Senior Indebtedness and
other Indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article Sixteen.
SECTION 1610. Trustee Not Fiduciary for Holders of Senior Indebtedness.
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and shall not be liable to any such holders,
absent negligence or wilful misconduct, if it shall pay over or distribute to
Holders of Securities or to the Company or to any other Person cash, property or
securities to which any holders of Senior Indebtedness shall be entitled by
virtue of this Article Sixteen or otherwise.
SECTION 1611. Rights of Trustee as Holder of Senior Indebtedness; Indebtedness;
Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article Sixteen with respect to any Senior Indebtedness
that may at any time be held by it, to the same extent as any other holder of
Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of
any of its rights as such holder.
SECTION 1612. Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article Sixteen shall in such case (unless the context otherwise
requires) be constructed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article Sixteen in addition to or in place of the Trustee;
provided, however, that this Section 1612 shall not apply to the Company or any
Affiliate of the Company if it or such Affiliate acts as Paying Agent.
SECTION 1613. Authorization to File Claims: Reinstatement of Subordination.
(a) The Agent Bank is hereby irrevocably authorized and empowered (in
its own name or in the name of the Holders or the Trustee or otherwise), but
shall have no obligation, to file claims and proofs of claim in respect of the
Securities in proceedings referred to in Section 1602 in the event such claims
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<PAGE>
or proofs of claim have not been filed prior to 30 days before such filings
would be barred.
(b) The provisions of this Article Sixteen shall continue to be
effective or be immediately reinstated, as the case may be, if at any time any
payment of any Senior Designated Indebtedness is rescinded or must otherwise be
returned by the Agent Bank, any Lender or any other holder of any Senior
Designated Indebtedness in connection with the insolvency, bankruptcy or
reorganization of the Company or otherwise, all as though such payment had not
been made.
SECTION 1614. No Suspension of Remedies.
(a) The failure to make a payment on account of principal of or
interest on the Securities by reason of any provision of this Article Sixteen
shall not be construed as preventing the occurrence of an Event of Default under
Section 501. Nothing contained in this Article Sixteen shall limit the right of
the Trustee or the Holders of the Securities to take any action to accelerate
the maturity of the Securities pursuant to Article Five or to pursue any rights
or remedies hereunder or under applicable law, subject to the rights, if any,
under this Article Sixteen of the holders, from time to time, of Senior
Indebtedness.
(b) Notwithstanding any provisions to the contrary in the Indenture,
so long as any Payment Blockage Period exists, neither the Trustee nor any
Holder of any Security may for 120 days after the first date of such Payment
Blockage Period (i) ask, demand or sue for any payment, distribution or any
other remedy in respect of the Subordinated Indebtedness or (ii) commence or
join with any other creditor (other than the Lenders and the Agent Bank) in
commencing any proceeding referred to in Section 1602.
SECTION 1615. Miscellaneous.
(a) The Holders of the Securities and the Trustee and the Company
each will, at the Company's sole expense and at any time and from time to time,
promptly execute and deliver all further instruments and documents, and take all
further action, that may be necessary or desirable, or that the Agent Bank may
request, in order to protect any right or interest granted or purported to be
granted by the provisions of this Article Sixteen or to enable the Agent Bank to
exercise and enforce its rights and remedies hereunder.
(b) All rights and interests under this Article Sixteen of the
Lenders, the Agent Bank and any other holder of Senior Indebtedness, and all
agreements and obligations of the Holders of the Securities and the Trustee and
the Company under this Article Sixteen shall remain in full force and effect
irrespective of:
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(i) the invalidity or unenforceability of any security or collateral
for or guaranty of all or any part of the Senior Indebtedness or of any
promissory note or other agreement, document or instrument (including,
without limitation, the Amended Credit Agreement) evidencing or in respect
of all or any Senior Indebtedness, or the lack of perfection or continuing
perfection or failure of priority of any security or collateral for all or
any part of the Senior Indebtedness or any guaranty therefor;
(ii) the absence of any attempt to collect the Senior Indebtedness, or
any portion thereof, or other action to enforce the same;
(iii) any failure to acquire, perfect or maintain any security
interest in, or to preserve any rights to, any security or collateral for
all or any part of the Senior Indebtedness or any guaranty therefor;
(iv) any election in any proceeding instituted under Chapter 11 of
Title 11 of the United States Code (11 U.S.C (S) 101 et seq.) (the
"Bankruptcy Code");
(v) any borrowing or grant of a security interest or other Lien by the
Company as debtor-in-possession, or extension of credit, under the
Bankruptcy Code;
(vi) the disallowance, under the Bankruptcy Code, of all or any
portion of any claim(s) for repayment of the Senior Indebtedness;
(vii) any use of cash collateral under the Bankruptcy Code;
(viii) any agreement or stipulation as to the provision of adequate
protection in any bankruptcy proceeding;
(ix) the avoidance of any lien in favor of any holder of Senior
Indebtedness (or any agent therefor) for any reason;
(x) any bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, liquidation or dissolution proceeding commenced by or
endorser, including without limitation, any discharge of, or bar or stay
against collecting or accelerating, all or any of the Senior Indebtedness
in or as a result of any such proceeding;
(xi) any failure to file or enforce a claim against the Company or its
estate in any bankruptcy or insolvency case or proceeding;
(xii) any election under Section 9-501(4) of the Uniform Commercial
Code as enacted in any relevant
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<PAGE>
jurisdiction as to any security for any Senior Indebtedness or any part of
the Senior Indebtedness; or
(xiii) any other circumstance which might otherwise constitute a legal
or equitable defense to, or discharge of, the Company or a subordinated
creditor.
(c) The Holders of the Securities, the Trustee and the Company each
hereby waive promptness, diligence, notice of acceptance and any other notice
with respect to any of the Senior Indebtedness and this Article Sixteen and any
requirement that the Agent Bank, any Lender or any other holder of Senior
Indebtedness protect, secure, perfect or insure any security interest or lien or
any property subject thereto or exhaust any right or take any action against the
Company or any other person or entity or any collateral.
(d) No failure on the part of the Agent Bank, any Lender, or any other
holder of Senior Indebtedness to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof, and no single or partial exercise
of any right hereunder shall preclude any other or further exercise thereof or
the exercise of any other right. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.
(e) The provisions of this Article Sixteen constitute a continuing
agreement and shall (i) remain in full force and effect until the Senior
Indebtedness shall have been paid in full in cash, (ii) be binding upon the
Holders of the Securities and the Trustee, the Company and their successors and
assigns, and (iii) inure to the benefit of and be enforceable by the Agent Bank,
Lenders and each other holder of Senior Indebtedness and their successors,
participants, transferees and assigns. Without limiting the generality of the
foregoing clause any Lender may assign or otherwise transfer any promissory note
issued under the Amended Credit Agreement held by it, or grant any participation
in any of its rights or obligations under the Amended Credit Agreement, to any
other person or entity, and such other person or entity shall thereupon become
vested with all the rights in respect thereof granted to such Lender herein or
otherwise. The provisions of this Article Sixteen are intended to be for the
benefit of, and shall be enforceable directly by, the holders of Senior
Indebtedness or any one or more agents acting on their respective behalf
(including, without limitation, the Agent Bank).
ARTICLE II MISCELLANEOUS
-------------------------
SECTION 2.1 SEVERABILITY. If any provision of this Amendment is held to
be in conflict with any applicable statute or rule of law, or is otherwise held
to be unenforceable for any reason whatsoever, such circumstances shall not have
the effect of rendering the provision in question inoperative or unenforceable
in any other part or circumstance, or of rendering
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<PAGE>
any other provision or provisions herein contained invalid, inoperative or
unenforceable to any extent whatsoever.
The invalidity of any one or more phrases, sentences, clauses or Sections
of this Amendment shall not affect the remaining portions of this Amendment, or
any part hereof.
SECTION 2.2 GOVERNING LAW. This Amendment shall be governed by and
construed in accordance with the laws of the State of Illinois.
SECTION 2.3 EXECUTION IN COUNTERPARTS. This Amendment may be executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
[the remainder of this page is intentionally left blank]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto had caused this Amendment to be
executed and attested in their names by their respective duly authorized
officers, all as of the day and year first above written.
ABC RAIL PRODUCTS CORPORATION
By:
--------------------------------
Title:
(SEAL)
Attest:
- ----------------------
Title:
FIRST TRUST NATIONAL ASSOCIATION,
as Trustee
By:
--------------------------------
Title:
(SEAL)
Attest:
- ----------------------
Title:
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<PAGE>
Exhibit 4.2
OFFICER'S CERTIFICATE
---------------------
Reference is hereby made to the Indenture dated as of January ___, 1997 (as
supplemented, amended or modified, including hereunder, the "Indenture") between
ABC Rail Products Corporation, a Delaware corporation (the "Company") and First
Trust National Association, Chicago, Illinois, a national banking association
(the "Trustee"), as supplemented by the First Supplemental Indenture dated as of
January __, 1997 (the "First Supplemental Indenture") between the Company and
the Trustee. Capitalized terms used herein that are not defined herein have the
meanings assigned to such terms in the Indenture or the First Supplemental
Indenture. Pursuant to Section 301 of the Indenture, this Officer's Certificate
hereby establishes a series of Securities. All references in this Officer's
Certificate to the "Company" include its consolidated Subsidiaries unless the
context otherwise requires.
1. Pursuant to Section 301(1) of the Indenture, the title of the
Securities of the series established by this Officer's Certificate is "__%
Senior Subordinated Notes Due 2004." Such series will be hereinafter referred to
as the "Notes."
2. Pursuant to Section 301(2) of the Indenture, the limit upon the
aggregate principal amount of the Notes which may be authenticated and delivered
under the Indenture is $50,000,000.
3. Pursuant to Section 301(4) of the Indenture, the principal of the
Notes shall be payable on January ___, 2004, subject to the terms of Paragraphs
5 and 6 hereof and Articles Eleven and Fourteen of the Indenture.
4. Pursuant to Section 301(5) of the Indenture, (a) the rate at which the
Notes shall bear interest is ___%, (b) such interest will accrue from the date
of delivery of the Notes and (c) such interest is payable on the first day of
each month, commencing March 1, 1997.
5. Pursuant to Section 301(8) of the Indenture, the Notes are not
redeemable prior to January 15, 1999. On or after such date, the Company may, at
its option, redeem the Notes in whole or in part, from time to time, under the
circumstances set forth in this Paragraph 5 and Article Eleven of the Indenture.
At the option of the Company and upon 30 days written notice to the Trustee, the
Notes may be redeemed at any time on or after January 15, 1999 and through
January 14, 2000, in whole or in part, at 102% of the principal amount, plus
accrued and unpaid interest to the Redemption Date. Pursuant to Article Eleven
of the Indenture and at the option of the Company, and upon 30 days' written
notice to the Trustee, the Notes may be redeemed in whole or in part at any time
on or after January 15, 2000, at 100% of
<PAGE>
the principal amount, plus accrued and unpaid interest to the Redemption Date.
6. Pursuant to Section 301(9) of the Indenture, the Company has no
obligation to redeem, repay or repurchase the Notes pursuant to any sinking
fund; however, the Company is obligated to redeem, repay or repurchase the Notes
pursuant to Articles Eleven and Fourteen of the Indenture under the following
circumstances:
If a Change of Control (defined below) occurs each Holder will have the right
to require the Company to repurchase such Holder's Notes pursuant to Article
Fourteen of the Indenture, in whole or in part in integral multiples of
$1,000, at a cash purchase price equal to 103% of the principal amount
thereof, plus accrued and unpaid interest, if any, if prior to January 15,
2000, or 101% of the principal amount thereof, plus accrued and unpaid
interest, if any, if on or after January 15, 2000. Pursuant to Article
Fourteen of the Indenture, the Repurchase Date will be no earlier than 30
days nor more than 60 days from the date the holders of the Notes are notified
of the occurrence of a Change of Control. If a Change of Control Default Event
(defined below) occurs, the Company must redeem all of the Notes pursuant to
Article Eleven of the Indenture, at a cash purchase price equal to 103% of the
principal amount thereof, plus accrued and unpaid interest, if any, if prior
to January 15, 2000 or 101% of the principal amount thereof, plus accrued and
unpaid interest, if any, if on or after January 15, 2000. Pursuant to Article
Eleven of the Indenture, the Redemption Date will be no earlier than 30 days
nor more than 60 days from the date the holders of the Notes are notified of
the occurrence of a Change of Control Default Event.
The Trustee shall be under no obligation to ascertain the occurrence of a
Change of Control or a Change of Control Default Event, or to give notice with
respect thereto other than as may be required under certain circumstances
described in Articles Eleven and Fourteen of the Indenture, upon receipt of
the written notice of Change of Control or Change of Control Default Event
from the Company. The Trustee may conclusively assume, in the absence of
written notice to the contrary from the Company, that no Change of Control or
Change of Control Default Event has occurred.
"Change of Control" means the occurrence of one or more of the following
events, whether or not approved by the Board of Directors:
(1) any Person or any Persons acting together that would constitute a
"group" for purposes of Section 13(d) of the Securities Exchange Act, as
amended (a "Group"), together with any Affiliates thereof, other than any
2
<PAGE>
employee stock ownership plan of the Company or the trusts for any other
employee stock ownership, benefit or pension plans of the Company or any
Subsidiary, shall beneficially own (as defined in Rule 13d-3 of the
Commission) at least 50% of the Voting Stock of the Company;
(2) any one Person or Group (other than the Board of Directors as it
may be constituted from time to time), or any Affiliates thereof, shall
succeed in having sufficient of its or their nominees elected to the Board of
Directors such that such nominees, when added to any existing director
remaining on the Board of Directors after such election who is an Affiliate of
such Group, shall constitute a majority of the Board of Directors;
(3) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially all, the assets of
the Company to any Person or Group;
(4) the shareholders of the Company shall approve any plan for the
liquidation or dissolution of the Company; or
(5) the merger or consolidation of the Company with or into another
corporation or the merger of another corporation into the Company with the
effect that immediately after such transaction any Person or Group holds more
than 50% of the Voting Stock of the surviving corporation of such merger or
consolidation.
"Change of Control Default Event" means (i) the Company or the successor
corporation, as the case may be, is immediately after the Change of Control,
in default in the performance of any covenant or condition under the Indenture
or the Notes or (ii) after giving effect to the Change of Control, an Event of
Default or an event that, after notice or lapse of time or both, would become
an Event of Default, shall have occurred or be continuing.
7. Pursuant to Section 301(15) of the Indenture, Section 1302 and Section
1303 of the Indenture will apply to the Notes.
8. Pursuant to Section 301(16) of the Indenture, in addition to the
Events of Default described in Section 501 of the Indenture, the following
events will constitute Events of Default with respect to the Notes:
(a) the entry by a court having jurisdiction in the premises of a decree
or order or decrees or orders adjudging the Company or any of its
Subsidiaries liable for the payment of money of at least in the aggregate
$6,000,000, and the continuance of any such decrees or orders unstayed,
unbonded or uncontested and in effect for a period of 90 consecutive
3
<PAGE>
days; and (b) if because of an event of default as defined in any mortgage,
indenture, bond, debenture, note, or instrument under which there may be
issued, or by which there may be secured or evidenced, any indebtedness of the
Company or any of its Subsidiaries for money borrowed, whether such
indebtedness now exists or shall hereafter be created, more than $6,000,000
(either individually or in the aggregate) (or its equivalent in any other
currency) in principal amount of such indebtedness becomes or is declared due
and payable before the date on which it would otherwise become due and payable
(in which case the Company shall give notice to the Trustee of such default as
soon as is reasonably practicable), and that acceleration shall not be
rescinded or annulled, or such indebtedness shall not have been discharged,
within a period of 30 days after there has been given, by registered or
certified mail, to the Company by the Trustee or to the Company and the
Trustee by holders of at least 25% in principal amount of Notes a written
notice specifying such acceleration and requiring the Company to cause the
acceleration to be rescinded or annulled or to cause that indebtedness to be
discharged and stating that the notice is a Notice of Default under the
Indenture.
9. Pursuant to Section 301(17) of the Indenture, with respect to the
Notes, the following covenants will be added to the covenants set forth in
Article Ten of the Indenture:
(a) The Company will not pay dividends or other distributions of its
capital stock or purchase such capital stock (whether through redemption or
purchase), unless after giving effect thereto, the aggregate amount expended
for those purposes subsequent to October 31, 1996, does not exceed the sum of
(i) $8.6 million (the aggregate Consolidated Net Income for fiscal 1996), plus
(ii) 50% of the aggregate Consolidated Net Income for each fiscal year
commencing subsequent to fiscal 1996, plus (iii) 100% of the aggregate net
proceeds received by the Company on account of any capital stock offering
subsequent to January 1, 1997, plus (iv) 100% of the aggregate net proceeds
received by the Company on account of any disposition of property received by
the Company from such sales, less (v) 100% of the aggregate Consolidated Net
Loss for each fiscal year commencing subsequent to fiscal 1996.
Notwithstanding the foregoing, the Company is not prohibited from (1) (a)
issuing capital stock or (b) purchasing its capital stock (whether through
redemption or purchase) in connection with the investment by the Company in
another asset or business or (2) paying dividends or making other
distributions with respect to its capital stock pursuant to the Rights
Agreement, dated as of September 29, 1995 (the "Rights Agreement"), between
the Company and LaSalle National Trust, N.A., as Rights Agent (the "Rights
Agent") as amended by
4
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Amendment Number One to the Rights Agreement, dated as of November 18, 1996,
between the Company and the Rights Agent;
(b) The Company will maintain Consolidated Net Worth at the end of
each of its fiscal quarters at an amount not less than the sum of (i) $55.1
million, plus (ii) 35% of Consolidated Net Income for each of its fiscal
quarters occurring after October 31, 1996 plus (iii) 85% of the amount of the
net proceeds from the sale of any of the Company's or its Subsidiaries'
capital stock, options or warrants computed on a cumulative basis;
(c) The Company will not, and will not permit any Subsidiary to, Incur
any Funded Debt if, immediately after giving effect to any such creation,
incurrence, assumption or guarantee (including the retirement of any existing
Indebtedness from the proceeds of such additional Funded Debt), the aggregate
amount of Funded Debt outstanding would exceed 75% of Consolidated
Capitalization;
(d) The Company will maintain, at the end of each of its fiscal quarters,
an Operating Coverage Ratio with respect to the four consecutive fiscal
quarters then ended taken as a whole of at least 2.4:1.0; and
(e) The Company will not, directly or indirectly, incur any Indebtedness
that by its terms (or by the terms of the agreement governing such
Indebtedness) is subordinate in right of payment to any other Indebtedness of
the Company unless such Indebtedness is also by its terms (or the terms of the
agreement governing such Indebtedness) made expressly either (i) Pari Passu in
right of payment with the Notes or (ii) subordinate in right of payment to the
Notes in the same manner and at least to the same extent as the Notes are
subordinate to Senior Indebtedness.
The following defined terms relate to the covenants that will be added to
the covenants currently set forth in Article Ten of the Indenture pursuant to
this Paragraph 9:
"Consolidated Capitalization" means at any time the sum of (i) Funded Debt
plus (ii) Consolidated Net Worth.
"Consolidated EBITDA" means the sum of (i) Consolidated Net Income for a
period (which excludes special charges or gains (including income taxes
thereon), the cumulative effect of accounting changes and extraordinary items),
plus (ii) provision for income taxes of the Company during such period, plus
(iii) depreciation and amortization expense of the Company accrued during such
period (but only to the extent not included in Consolidated Interest Expense)
plus (iv) Consolidated Interest Expense during such period.
5
<PAGE>
"Consolidated Interest Expense" means the sum of (i) interest expense for
borrowed money for a period, plus (ii) imputed interest expense on capitalized
leases for such period plus (iii) one-third of rent expense under operating
leases for such period.
"Consolidated Net Income" means the amount of net income (loss) of the
Company and its Subsidiaries, for a period; provided, however, that there shall
not be included in Consolidated Net Income (i) any net income (loss) of a
Subsidiary for any period during which it was not a consolidated Subsidiary,
(ii) any net income (loss) of businesses, properties or assets acquired or
disposed of (by way of merger, consolidation, purchase, sale or otherwise) by
the Company or any Subsidiary for any period prior to the acquisition thereof or
subsequent to the disposition thereof, (iii) the cumulative effect of accounting
changes and extraordinary items during such period or (iv) special charges or
gains during such period.
"Consolidated Net Worth" means at any time the excess, after making
appropriate deductions for any minority interest in the net worth of
consolidated Subsidiaries, of (i) the assets of the Company and its consolidated
Subsidiaries over (ii) the liabilities of the Company and its consolidated
Subsidiaries; provided, however, that any write-up in the book value of any
assets acquired subsequent to the date of this Officer's Certificate other than
a write-up required for assets acquired in connection with the purchase of a
Person or business and taken at the time of such acquisition) shall not be taken
into account.
"Funded Debt" means any of the following obligations of the Company or any
Subsidiary which by its terms matures at or is extendible or renewable at the
sole option of the obligor without requiring the consent of the obligee to a
date more than twelve months after the date of the creation of incurrence of
such obligation: (i) any Obligations (including all Senior Indebtedness),
contingent or otherwise, for borrowed money or for the deferred purchase price
of property or services (including, without limitation, any interest accrued
subsequent to any Event of Default), (ii) all Obligations (including the Notes)
evidenced by bonds, notes, debentures or other similar instruments, (iii) all
Indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired (even though the rights
and remedies of the seller or lender under such agreement in the event of
default are limited to repossession or sale of such property), except any such
obligation that constitutes a trade payable or an accrued liability arising in
the ordinary course of business, if and to the extent any of the Indebtedness
under this clause (iii) would appear as a liability upon a balance sheet
prepared in accordance with generally accepted accounting principles, (iv) all
capitalized lease Obligations, (v) all Indebtedness of the type referred to in
clause (i), (ii), (iii) or (iv) above secured by (or for which the holder of
such Indebtedness has an existing
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right, contingent or otherwise, to be secured by) any Lien upon property of the
Company or any Subsidiary (including, without limitation, accounts and contract
rights), even though the Company or any Subsidiary has not assumed or become
liable for the payment of such Indebtedness and (vi) any guarantee of any
obligation of the type referred to in any of the foregoing clauses (i) through
(v), regardless of whether such obligation would appear on a balance sheet.
"Operating Coverage Ratio" means the ratio of (i) Consolidated EBITDA
during any period to (ii) Consolidated Interest Expense during any such period.
10. Pursuant to Section 301(18) of the Indenture, the Notes shall be
issuable in whole or in part in the form of one or more Global Securities and
The Depository Trust Company will be the Depositary for such Global Security or
Global Securities.
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IN WITNESS WHEREOF, the undersigned officers of the Company have executed
this Officer's Certificate on January __, 1997.
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