<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 14, 1998
REGISTRATION NO. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
--------------
SAMSONITE CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C> <C>
DELAWARE 3161 36-3511556
(State or Other (Primary Standard Industrial (I.R.S. Employer Identification Number)
Jurisdiction of Classification Code Number)
Incorporation or 11200 EAST 45TH AVENUE
Organization) DENVER, COLORADO 80239
(303) 373-2000
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrants' Principal Executive Offices)
--------------
D. MICHAEL CLAYTON
SAMSONITE CORPORATION
GENERAL COUNSEL AND VICE PRESIDENT--LEGAL
11200 EAST 45TH AVENUE
DENVER, COLORADO 80239
(303) 373-2000
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)
--------------
Copy to:
GREGORY A. FERNICOLA, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
919 THIRD
AVENUE NEW YORK, NEW YORK 10022
(212) 735-3000
--------------
</TABLE>
<TABLE>
<CAPTION>
PRIMARY STANDARD
INDUSTRIAL I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION IDENTIFICATION
NAME OF ADDITIONAL REGISTRANT INCORPORATION NUMBER NUMBER
- ----------------------------- --------------- ---------------- ---------------
<S> <C> <C> <C>
Samsonite Holdings Inc.*........................................... Delaware 9999 84-1469898
</TABLE>
- -------
* Address and telephone number of principal executive offices are same as
Samsonite Corporation.
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this registration
statement.
--------------
If any of the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, as amended ( the
"Securities Act"), please check the following box and list the Securities Act
registration number of the earlier effective registration statement for the
same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
--------------
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Proposed Proposed
Amount Maximum Maximum
Title of each Class of to be Offering Price Aggregate Amount of
Securities to be Registered Registered Per Unit Offering Price(1) Registration Fee
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
13 7/8% Senior
Redeemable Exchangeable
Preferred Stock of
Samsonite
Corporation(2)........ 175,000 shares $1,000 $175,000,000 $51,625
- ---------------------------------------------------------------------------------------------
13 7/8% Junior
Subordinated Debentures
due 2010 of Samsonite
Corporation(2)........ (2) (2)
- ---------------------------------------------------------------------------------------------
13 7/8% Senior
Debentures due 2010 of
Samsonite Holdings
Inc.(2)............... (2) (2)
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) Estimated solely for purposes of calculating the registration fee.
(2) The 13 7/8% Senior Redeemable Exchangeable Preferred Stock is exchangeable
at the option of Samsonite Corporation for 13 7/8% Junior Subordinated
Debentures due 2010 of Samsonite Corporation or at the option of Samsonite
Corporation for 13 7/8% Senior Debentures due 2010 of Samsonite Holdings
Inc. No additional registration fee is payable in respect of the 13 7/8%
Junior Subordinated Debentures of Samsonite Corporation and the 13 7/8%
Senior Debentures of Samsonite Holdings Inc.
--------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
In addition to the preferred stock and debt securities being registered by
Samsonite Corporation, a Delaware corporation (the "Company"), hereby, this
registration statement also relates to the possible issuance, at the election
of the Company, of debt securities of Samsonite Holdings Inc. ("Holdings") in
redemption of and in exchange for the preferred stock being registered hereby.
If such election were made, it is currently contemplated that Holdings would
become a holding company of the Company through a merger transaction pursuant
to Section 251(g) of the Delaware General Corporation Law and, accordingly,
the Certificate of Incorporation and By-Laws of Holdings immediately following
the effective time of the merger would contain provisions identical to the
Certificate of Incorporation and By-Laws of the Company immediately prior to
the effective time of the merger and the directors of the Company immediately
prior to the effective time of the merger would become or remain the directors
of Holdings upon the effective time of the merger. In addition, if such
election were made, pursuant to the Certificate of Designation filed with the
Secretary of State of the State of Delaware on June 23, 1998, the sole
material asset of Holdings would be the capital stock of the Company, and
immediately prior to and at the date of election, Holdings would have no
material liabilities other than in respect of the debt securities being
registered hereby. Holdings is currently a wholly owned subsidiary of the
Company with no business operations and no material assets or liabilities.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THIS PROSPECTUS SHALL NOT CONSTITUTE AN +
+OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY +
+SALE OF THESE SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER, +
+SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION +
+UNDER THE SECURITIES LAWS OF ANY SUCH JURISDICTION. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED AUGUST 14, 1998
PROSPECTUS
OFFER FOR ALL OUTSTANDING
13 7/8% SENIOR REDEEMABLE EXCHANGEABLE PREFERRED STOCK IN EXCHANGE FOR
13 7/8% SENIOR REDEEMABLE EXCHANGEABLE PREFERRED STOCK, WHICH HAS
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
OF
SAMSONITE CORPORATION
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ,
1998, UNLESS EXTENDED.
----------
Samsonite Corporation (the "Company") hereby offers, upon the terms and
subject to the conditions set forth in this Prospectus and the accompanying
Letter of Transmittal (which together constitute the "Exchange Offer"), to
exchange up to 175,000 shares of its 13 7/8% Senior Redeemable Exchangeable
Preferred Stock, liquidation preference $1,000 per share (the "New Senior
Preferred Stock"), which has been registered under the Securities Act of 1933,
as amended (the "Securities Act"), for a like number of shares of its issued
and outstanding 13 7/8% Senior Redeemable Exchangeable Preferred Stock (the
"Old Senior Preferred Stock" and, together with the New Senior Preferred Stock,
the "Senior Preferred Stock"). The terms of the New Senior Preferred Stock are
identical in all material respects to the Old Senior Preferred Stock, except
for certain transfer restrictions and registration rights relating to the Old
Senior Preferred Stock and except for certain provisions for Additional
Dividends (as defined herein) on the Old Senior Preferred Stock under certain
circumstances relating to the timing of the Exchange Offer, which rights will
terminate upon consummation of the Exchange Offer.
On June 24, 1998, the Company issued 175,000 units consisting of $175,000,000
aggregate liquidation preference of its Old Senior Preferred Stock and warrants
to acquire an aggregate of 1,959,000 shares of the common stock, $0.01 par
value per share, of the Company (the "Common Stock"). The Old Senior Preferred
Stock was issued pursuant to an offering exempt from, or not subject to,
registration under the Securities Act and applicable state securities laws.
The Old Senior Preferred Stock was issued as part of the financing necessary
to effect the Recapitalization (as defined herein) which included the
repurchase in a tender offer (the "Tender Offer") of 10.5 million shares of
Common Stock at a price of $40.00 per share ($420 million in the aggregate).
Concurrently with the consummation of the offering of the Old Senior Preferred
Stock, the Company and its principal European subsidiary entered into the New
Credit Facility (as defined herein) to obtain funds that, together with the net
proceeds from the offering of the Old Senior Preferred Stock and a concurrent
offering (the "Concurrent Offering") of $350,000,000 aggregate principal amount
of the Company's 10 3/4% Senior Subordinated Notes due 2008 (the "Notes"), were
used to finance the Recapitalization.
Holders of the Senior Preferred Stock are entitled to receive, when, as and
if declared by the Board of Directors of the Company out of funds legally
available therefor, dividends on the Senior Preferred Stock at a rate per annum
of 13 7/8% of the liquidation preference per share of Senior Preferred Stock,
payable quarterly in arrears on each March 15, June 15, September 15 and
December 15 (each, a "Dividend Payment Date"), commencing September 15, 1998.
Dividends may be paid, at the Company's option, on any Dividend Payment Date
occurring on or prior to June 15, 2003, either in cash or by the issuance of
additional shares of Senior Preferred Stock with a liquidation preference equal
to the amount of such dividends; thereafter, dividends will be payable in cash.
If any dividend payable on any Dividend Payment Date subsequent to June 15,
2003 is not paid in full in cash, or if, at any time, any of the events
described in clauses (ii) through (vi) of the definition of the Voting Rights
Triggering Event (as defined herein) shall have occurred, the per annum
dividend rate will be increased by 2% from such Dividend Payment Date or during
the continuance of any such Voting Rights Triggering Event, as the case may be.
See "Description of Senior Preferred Stock and Exchange Debentures--The Senior
Preferred Stock--Dividends" and "--Voting Rights." The New Credit Facility
contains certain limitations on the ability of the Company to pay cash
dividends on the Senior Preferred Stock. In addition, the Notes Indenture (as
defined herein) contains certain limitations on the Company's ability to pay
cash dividends on the Senior Preferred Stock. See "Risk Factors--Restrictions
on Cash Dividends on the Senior Preferred Stock; Restrictive Covenants,"
"Concurrent Offering" and "New Credit Facility."
(continued on the following page)
----------
SEE "RISK FACTORS" BEGINNING ON PAGE 19 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS WHO TENDER THEIR OLD SENIOR
PREFERRED STOCK IN THE EXCHANGE OFFER.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is , 1998.
<PAGE>
(continued from the cover page)
The Company is required, subject to certain conditions, to redeem all of the
Senior Preferred Stock outstanding on June 15, 2010, at a redemption price
equal to 100% of the liquidation preference thereof, plus, without
duplication, all accumulated and unpaid dividends to the redemption date. The
Senior Preferred Stock is redeemable at the option of the Company in whole or
in part, at any time and from time to time on or after June 15, 2001, at the
redemption prices set forth herein, plus, without duplication, all accumulated
and unpaid dividends to the redemption date. In addition, the Company, at its
option, may redeem up to an aggregate of 35% of the shares of Senior Preferred
Stock (whether initially issued or issued as a dividend payment) at any time
and from time to time prior to June 15, 2001, at a redemption price equal to
113.875% of the liquidation preference thereof plus, without duplication, all
accumulated and unpaid dividends to the redemption date, with the Net Proceeds
(as defined herein) of one or more Equity Offerings (as defined herein);
provided that at least $113.75 million aggregate liquidation preference of the
Senior Preferred Stock remains outstanding immediately after the occurrence of
any such redemption. Any such redemption will be required to occur within 90
days after the receipt by the Company of the proceeds of such Equity Offering.
See "Description of Senior Preferred Stock and Exchange Debentures--The Senior
Preferred Stock--Optional Redemption." Upon the occurrence of a Change of
Control (as defined herein), each holder of the Senior Preferred Stock will be
entitled to require the Company to purchase such holder's Senior Preferred
Stock at a purchase price equal to 101% of the liquidation preference thereof,
plus, without duplication, all accumulated and unpaid dividends to the
purchase date. See "Description of Senior Preferred Stock and Exchange
Debentures--The Senior Preferred Stock--Change of Control."
The Senior Preferred Stock, with respect to dividend rights and rights upon
liquidation, dissolution or winding-up of the Company, ranks as the most
senior class or series of preferred stock issued by the Company. The Company
may not issue shares of any other class or series of common stock or preferred
stock ranking, with respect to dividend rights and rights upon liquidation,
dissolution or winding-up of the Company, senior to or on a parity with the
Senior Preferred Stock without the approval of the holders of at least two-
thirds of the Senior Preferred Stock outstanding, voting or consenting, as the
case may be, as a single class. See "Description of Senior Preferred Stock and
Exchange Debentures--The Senior Preferred Stock--Ranking."
The Company, at its option, on any Dividend Payment Date may from time to
time exchange, in whole or in part, on a pro rata basis, the then outstanding
shares of Senior Preferred Stock for 13 7/8% Junior Subordinated Debentures
due 2010 of the Company (the "Company Exchange Debentures"); provided that
immediately after giving effect to any partial exchange, there shall be
outstanding shares of Senior Preferred Stock with an aggregate liquidation
preference of not less than $75 million and not less than $75 million
aggregate principal amount of Company Exchange Debentures or (ii) exchange all
of the outstanding shares of Senior Preferred Stock for 13 7/8% Senior
Debentures due 2010 of Samsonite Holdings Inc. (the "Holdings Exchange
Debentures" and, together with the Company Exchange Debentures, the "Exchange
Debentures"). The Notes Indenture (as defined herein) and the New Credit
Facility restrict the Company's ability to exchange the Senior Preferred Stock
for Company Exchange Debentures. The Exchange Debentures when, as and if
issued, will bear interest at the same rate as the dividend rate on the Senior
Preferred Stock and will contain covenants substantially identical to the
Senior Preferred Stock. The Company Exchange Debentures when, as and if
issued, will rank subordinate in right of payment to all Senior Debt (as
defined herein) of the Company to the extent set forth in the Exchange
Indenture (as defined herein). The Holdings Exchange Debentures will
constitute general unsecured obligations of Samsonite Holdings Inc.
("Holdings"). The Exchange Debentures, when, as and if issued, will also be
effectively subordinated to the obligations of the issuer's subsidiaries and
will not be guaranteed by any of the issuer's subsidiaries. See "Description
of Senior Preferred Stock and Exchange Debentures--The Senior Preferred
Stock--Exchange."
Holders of the Senior Preferred Stock have no voting rights with respect to
general corporate matters, except as provided by Delaware law or as set forth
in the Certificate of Designation (as defined herein). The Certificate of
Designation provides that if the Company: (i) after June 15, 2003, fails to
pay cash dividends on the Senior Preferred Stock for two or more quarterly
dividend periods (whether or not consecutive); (ii) fails to redeem the Senior
Preferred Stock on or before the redemption date thereof; (iii) fails to make
an offer to purchase upon a Change of Control or fails to purchase shares
validly tendered in such offer; (iv) fails to comply with certain covenants
described herein or make certain principal or interest payments in respect of
certain indebtedness, then the holders of a majority of the then outstanding
shares of Senior Preferred Stock, voting separately and as
-i-
<PAGE>
a class, will have the right to elect the lesser of two directors and that
number of directors constituting 25% of the members of the Board of Directors
of the Company, in each case until such failure is remedied or cured. See
"Description of Senior Preferred Stock and Exchange Debentures--The Senior
Preferred Stock--Voting Rights."
For each of the shares of Old Senior Preferred Stock accepted for exchange,
the holder of such shares of Old Senior Preferred Stock will receive shares of
New Senior Preferred Stock having a liquidation preference equal to that of
the surrendered shares of Old Senior Preferred Stock. The shares of New Senior
Preferred Stock will accrue dividends from the last date on which dividends
were paid on the Old Senior Preferred Stock or, if no dividends have been paid
on the Old Senior Preferred Stock, from June 24, 1998. Old Senior Preferred
Stock accepted for exchange will cease to accrue dividends from and after the
date of consummation of the Exchange Offer. Holders of Old Senior Preferred
Stock whose Old Senior Preferred Stock is accepted for exchange will not
receive any payment in respect of accrued dividends on such Old Senior
Preferred Stock.
The New Senior Preferred Stock is being offered hereunder in order to
satisfy certain obligations of the Company contained in a Registration Rights
Agreement (the "Registration Rights Agreement") entered into in connection
with the offering of Old Senior Preferred Stock. Based on interpretations by
the staff of the Securities and Exchange Commission (the "Commission"), as set
forth in no-action letters issued to third parties, the Company believes that
New Senior Preferred Stock issued pursuant to the Exchange Offer in exchange
for Old Senior Preferred Stock may be offered for resale, resold and otherwise
transferred by holders thereof (other than any holder which is an "affiliate"
of the Company within the meaning of Rule 405 under the Securities Act),
without compliance with the registration and prospectus delivery provisions of
the Securities Act, provided that such New Senior Preferred Stock is acquired
in the ordinary course of such holders' business and such holders have no
arrangement with any person to participate in the distribution of such New
Senior Preferred Stock. However, the Commission has not considered the
Exchange Offer in the context of a no-action letter and there can be no
assurance that the staff of the Commission would make a similar determination
with respect to the Exchange Offer as in such other circumstances. Each holder
of New Senior Preferred Stock, other than a broker-dealer, must acknowledge
that it is not engaged in, and does not intend to engage in, a distribution of
such New Senior Preferred Stock and has no arrangement or understanding to
participate in a distribution of New Senior Preferred Stock. Each broker-
dealer that receives New Senior Preferred Stock for its own account pursuant
to the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Senior Preferred Stock. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of New Senior Preferred Stock received in exchange for Old Senior
Preferred Stock where such Old Senior Preferred Stock was acquired by such
broker-dealer as a result of market-making activities or other trading
activities. For a period of 180 days after the Expiration Date (as defined
herein), the Company will make this Prospectus, as amended or supplemented
from time to time, available to any broker-dealer for use in connection with
any such resale. See "Plan of Distribution."
The Company will not receive any proceeds from the Exchange Offer. The
Company will pay all the expenses incident to the Exchange Offer. Tenders of
shares of Old Senior Preferred Stock pursuant to the Exchange Offer may be
withdrawn at any time prior to the Expiration Date. In the event the Company
terminates the Exchange Offer and does not accept for exchange any Old Senior
Preferred Stock, the Company will promptly return the Old Senior Preferred
Stock to the holders thereof. See "The Exchange Offer."
There is no existing trading market for the New Senior Preferred Stock, and
there can be no assurance regarding the future development of a market for the
New Senior Preferred Stock, or the ability of holders of the New Senior
Preferred Stock to sell their shares of New Senior Preferred Stock or the
price at which such holders may be able to sell their shares of New Senior
Preferred Stock. CIBC Oppenheimer Corp. (the "Initial Purchaser") has advised
the Company that it currently intends to make a market in the New Senior
Preferred Stock. The Initial Purchaser is not obligated to do so, however, and
any market-making with respect to the New Senior Preferred Stock may be
discontinued at any time without notice. The Company does not intend to apply
for listing or quotation of the New Senior Preferred Stock on any securities
exchange or stock market.
-ii-
<PAGE>
FORWARD-LOOKING STATEMENTS
This Prospectus contains certain "Forward-Looking Statements" within the
meaning of Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act of 1934 (the "Exchange Act") concerning, among other things,
increases in revenue and cash flow and reductions in operating expenses and
discussions of the Company's business strategy and expectations concerning the
Company's future operations, liquidity and capital resources. When used in
this Prospectus, the words "anticipate," "believe," "estimate," "intend,"
"plan" and "expect" and similar expressions are generally intended to identify
forward-looking statements. Prospective investors are cautioned that any
forward-looking statements, including statements regarding intent, belief or
current expectations of the Company or its management, are not guarantees of
future performance and involve risks and uncertainties, and that actual
results may differ materially from those in the forward-looking statements.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange Act
and, in accordance therewith, files reports and other information with the
Commission. Reports, proxy statements and other information may be inspected
and copied at the public reference facilities maintained by the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549 and the Commission's regional
offices located at Seven World Trade Center, 13th Floor, New York, New York
10048 and at Citicorp Center, 500 West Madison, Suite 1400, Chicago, Illinois
60661. Copies of such materials also may be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. In addition, the Commission maintains a Web site that
contains reports, proxy and information statements and other information
regarding registrants, such as the Company, that file electronically with the
Commission. The address of such site is http://www.sec.gov. The Company's
common stock is listed on the Nasdaq Stock Market, and reports, proxy
statements and other information concerning the Company may be inspected and
copied at the offices of the Nasdaq Stock Market, Reports Section, at 1735 K
Street, Washington, D.C. 20006.
This Prospectus constitutes a part of a registration statement on Form S-4
filed by the Company and Holdings with the Commission under the Securities
Act. This Prospectus omits certain of the information contained in the
registration statement, and reference is hereby made to the registration
statement and to the exhibits filed or incorporated as a part thereof for
further information with respect to the Company, Holdings, the New Senior
Preferred Stock, the Company Exchange Debentures and the Holdings Exchange
Debentures offered hereby. Any statements contained herein concerning the
provisions of any documents are not necessarily complete, and, in each
instance, reference is made to such copy filed as an exhibit to the
registration statement or otherwise filed with the Commission. Each such
statement is qualified in its entirety by such reference. The registration
statement and the exhibits thereto may be inspected without charge at the
office of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and copies thereof may be obtained from the Commission
at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
This Prospectus incorporates by reference documents which are not presented
herein or delivered herewith. Copies of any such documents relating to the
Company, other than exhibits to such documents (unless such exhibits
specifically are incorporated by reference in such documents), are available
without charge, upon written or oral request, from Samsonite Corporation,
11200 East 45th Avenue, Denver, Colorado 80239, Attention: D. Michael Clayton,
Esq., General Counsel and Vice President-Legal. In order to ensure timely
delivery of the documents, any request should be made no less than five
business days prior to the expiration of the Exchange Offer.
The following documents filed by the Company with the Commission pursuant to
the Exchange Act are incorporated in this Prospectus by reference and made a
part hereof:
1. The Company's Annual Report on Form 10-K, as amended by Form 10-K/A,
for the fiscal year ended January 31, 1998;
-iii-
<PAGE>
2. The Company's reports on Form 8-K dated March 24, 1998, May 13, 1998,
May 20, 1998, June 17, 1998, June 19, 1998, July 7, 1998 and August 12,
1998;
3. The Company's Quarterly Report on Form 10-Q for the three months ended
April 30, 1998;
4. The Company's definitive proxy statement for the 1998 Annual Meeting
of its stockholders; and
5. All other documents subsequently filed by the Company pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the
date of this Prospectus and prior to the termination of the Exchange Offer.
Any statement contained herein or in a document, all or a portion of which
is incorporated or deemed to be incorporated by reference herein, shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is, or is deemed to be incorporated by reference herein,
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
-iv-
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and financial statements
(including the notes thereto) appearing elsewhere in this Prospectus or
incorporated herein by reference. Unless the context otherwise requires all
references herein to the "Company" and "Samsonite" are to Samsonite
Corporation, a Delaware corporation, and its consolidated subsidiaries. The
Company's fiscal year ends on January 31 and references to a fiscal year denote
the calendar year in which the fiscal year ended (for example, "fiscal 1998"
refers to the 12 months ended January 31, 1998).
THE COMPANY
Samsonite is one of the world's largest manufacturers and distributors of
luggage. The Company markets its products primarily under the Samsonite(R),
American Tourister(R) and Lark(R) brand names. The Samsonite brand enjoys
worldwide recognition and is the leading brand of luggage products in the
United States and Europe. American Tourister is the second most recognized
brand of luggage in the United States. Following the Company's acquisition of
American Tourister, Inc. ("American Tourister") in 1993, the Company introduced
the American Tourister brand in Europe. The Lark brand is well-recognized in
the United States and competes in the premium segment of the luggage market.
Samsonite and American Tourister luggage products have been manufactured and
sold continuously since the 1930s.
The Company is a major factor in the worldwide luggage market, with net sales
of $736.9 million for fiscal 1998. Competition in the luggage market is highly
fragmented with the vast majority of individual competitors having less than
10% of the Company's annual luggage sales. Samsonite offers the broadest range
of products in the luggage industry, including hardside suitcases, softside
suitcases, garment bags, casual bags, hardside and softside business cases and
other travel bags. Many of today's most successful luggage products and
features--such as suitcases on wheels, suitcases with a built-in luggage cart,
full-featured structured garment bags, ultra-light softside suitcases and
innovative new wheel systems--were introduced or popularized by Samsonite.
The Company benefits from its large size through scale driven purchasing and
manufacturing economies. The Company's products are sourced through a global
network consisting of 14 Company-operated manufacturing facilities and various
third-party suppliers throughout the world. By operating its own facilities to
produce hardside luggage and more complex softside products, the Company is
better able to control manufacturing quality and achieve shorter product
introduction lead times and lower delivery costs. In addition, the Company
takes advantage of its global sourcing capabilities by buying less complex
products from various countries when their product costs or currency exchange
rates are favorable.
The Company's marketing and distribution strategy focuses on the broad middle
segment of the luggage market as opposed to the more commodity driven low end
of the market or the premium priced high end. In the United States, the
Samsonite brand has historically been positioned as high quality, innovative
luggage, targeted at frequent business travelers. The American Tourister brand
has been positioned as quality luggage at an affordable price, and the Lark
brand has been positioned as premium luggage targeted at first and business
class travelers. In Europe, the Samsonite brand enjoys more of a premium image
than in the United States, and is targeted at first class and frequent business
travelers. The Company's marketing theme centers around the Samsonite
"Worldproof(TM)" brand image which represents strength, durability, quality and
style.
The Company's products are sold throughout the world in more than 100
countries through approximately 23,000 retail outlets, including department and
specialty stores, catalog showrooms, mass merchant retailers, warehouse clubs
and Company-owned retail stores located primarily in factory outlet malls in
the United States. In addition, Samsonite licenses its trademarks for use on
non-luggage products, such as travel accessories, personal leather goods,
handbags and furniture. These products are made and sold primarily by
independent licensees which pay royalties to Samsonite.
1
<PAGE>
COMPETITIVE STRENGTHS AND NEW GROWTH INITIATIVES
Management believes that the Company's leading position in the global luggage
industry is due to its widely recognized brand names, broad range of innovative
luggage products and global manufacturing and distribution network.
Brand Names. The Company markets its products primarily under the Samsonite,
American Tourister and Lark brand names. The Company commits substantial
resources to aggressive brand advertising programs that promote the features,
durability and quality of the Company's products and target particular segments
of the luggage market based on consumer demographics. For each of the last five
fiscal years, the Company has invested, either directly or through co-op
advertising programs, approximately $50 million in television and print
advertising and related promotional activities. A 1994 market survey, the most
recent Company sponsored survey conducted by an independent surveying
organization, indicated that approximately 93% and 79% of travelers surveyed in
the United States recognized the Samsonite and American Tourister brand names,
respectively, compared to less than 15% for the next most recognized luggage
brand. Similar surveys show that recognition of the Samsonite brand name in
most major Western European countries ranges from 60% to 80%.
Innovative Products. The Company is the industry leader in offering
innovative products that meet travelers' needs. The Company has spent over $40
million on product design and development during the last five fiscal years.
Many of today's most successful luggage products and features--such as
suitcases on wheels, suitcases with a built-in luggage cart, full-featured,
structured garment bags, ultra-lightweight, softside suitcases, and innovative
new wheel systems--were introduced or popularized by Samsonite. Sales of
products that were introduced or substantially redesigned by the Company in the
last three years accounted for approximately 60% of the Company's fiscal 1998
sales. The Company currently holds approximately 730 patents worldwide and has
over 300 patent applications pending worldwide.
Global Manufacturing and Distribution Network. The Company's global sourcing
network consists of 14 Company-operated manufacturing facilities and various
third-party suppliers located principally in the Far East, Eastern Europe and
the Dominican Republic. By operating its own facilities to produce hardside
luggage and more complex softside products, the Company is better able to
control manufacturing quality and reduce lead times and delivery costs. The
Company's global sourcing network also enables it to opportunistically source
less complex products from countries with low product costs and favorable
currency exchange rates. The Company has one of the largest and most
technologically advanced luggage distribution networks in both the United
States and Europe. Its pan-European distribution network is capable of billing
customers in their local currency and delivering products within five days
after an order is placed. The Company also has significant distribution
relationships in Asia, Australia, Latin America and the Middle East.
In May 1996, the Company appointed Richard R. Nicolosi as Chief Executive
Officer and shortly thereafter announced a strategic plan intended to further
strengthen the Company's leadership position in the worldwide luggage market
and to improve its financial performance. The plan included a series of
initiatives designed to broaden the product and pricing architecture in the
U.S. and position products and brands on a consistent basis in the U.S. and
Europe; to streamline the organizational structure by adopting a structure
based on channel management instead of brand management which relied upon
separate organizations to manage each of the Company's three principal brands;
and to improve the Company's cost structure by reducing SKUs, standardizing
components and instituting global sourcing.
As a result of the plan initiatives, net sales, EBITDA (as defined herein)
and Adjusted EBITDA (as defined herein) increased from $675.2 million, $78.7
million, and $78.3 million, respectively, in fiscal 1996 to $736.9 million,
$126.2 million and $112.4 million, respectively, in fiscal 1998. During this
period, the Company's European operations posted increases in local currency
sales and operating income of 23.9% and 58.6%, respectively. Samsonite's U.S.
retail business also recorded significant sales and operating income growth
2
<PAGE>
during this period; however, the Company's U.S. wholesale business experienced
difficulty implementing certain of the plan initiatives, and began to perform
below expectations commencing in the third quarter of fiscal 1998. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
In February 1998, Mr. Luc Van Nevel, a 23-year Samsonite veteran, who
previously had responsibility for Samsonite's successful European and
International operations, was promoted to President of Samsonite. In May 1998,
Mr. Van Nevel was appointed to succeed Mr. Nicolosi as Chief Executive Officer
and was elected to the Company's Board of Directors. Mr. Nicolosi will continue
to serve as Chairman of the Board of Directors.
Since the beginning of fiscal 1999, Mr. Van Nevel has continued to refine the
successful strategies initiated in 1996 and has taken aggressive action to
address the issues facing the Company's U.S. wholesale business, as described
below.
. Emphasize Growth Oriented Product Offerings and Channels of
Distribution. The Company plans to introduce more entries in casual bags
and business cases in the U.S. in order to expand the Company's sales in
these two growth categories. This strategy has already proven to be
successful for Samsonite in Europe and Japan. The Company also plans to
increase its presence in channels of distribution where it believes it
is under-represented by using targeted marketing and sales efforts
tailored to each channel. In addition, the Company intends to exploit
its manufacturing and sourcing leverage by aggressively pursuing
opportunities to sell American Tourister and retailer-labeled products
to mass merchant retailers and in other high volume-potential channels
throughout the world.
. Strengthen Marketing and Product Innovation. Samsonite plans to continue
to expand its presence in the worldwide luggage market from both a
consumer and trade standpoint. The Company's marketing program is
expected to include more consumer-preferred products, styles and
features, more effective advertising at higher investment levels,
strengthened point-of-sale support and better customer service. Recent
successful product introductions include the updated ultralite product
line in the U.S., the second generation Oyster(TM) product line in
Europe, and products incorporating the innovative Big Wheel(R) system
worldwide. In addition, other product launches are scheduled for fiscal
1999. For example, the Company's best selling U.S. line, Silhouette(TM)
with sales of approximately $64 million in each of the last two fiscal
years, will be reintroduced as Silhouette 6 in the second half of fiscal
1999. The Company believes Silhouette 6 will have improved aesthetics
and performance and an improved price to value relationship at
competitive price points. Silhouette 6 will include separate designs
targeted at business travelers, women, and "road warriors"--the ultimate
business travelers.
. Continue Worldwide Expansion. The Company plans to continue expansion
worldwide in countries where growing economies and reduced political and
trade barriers provide opportunities for long-term growth. Samsonite
currently has operations in a number of emerging foreign markets,
including China, India, South America and the Pacific Rim. Since the
beginning of fiscal 1997, the Company has: (i) acquired luggage
distribution companies in Hong Kong, Singapore and South Korea;
(ii) established manufacturing and distribution joint ventures in India
and China; and (iii) established a new venture partnership with a former
Samsonite distributor to distribute Samsonite products in Brazil and
other major South American markets. During fiscal 1999, the Company
intends to take over distribution operations in Taiwan from the
Company's current distributor whose contract has expired and also to
form a joint venture with the Company's current Argentinian distributor.
The Company is currently considering the possible disposal or
liquidation of its investment in its manufacturing facilities in China,
although the Company intends to maintain its sales and distribution
presence in China. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Recent Events and
Recapitalization."
. Resolve U.S. Wholesale Issues. In fiscal 1998, the Company's U.S.
wholesale operation (which accounted for 37.2% of the Company's fiscal
1998 consolidated sales) produced significant increases
3
<PAGE>
in operating income of 89.4% as compared to fiscal 1997. However,
commencing with the end of the third quarter of fiscal 1998, this
operation began to perform below expectations causing U.S. wholesale
sales for fiscal 1998 to be 7.4% below fiscal 1997. This decline was due
to various factors including the adverse impact of price increases and
other pricing strategies adopted by the Company, market disruptions and
retailer discounting taken in connection with various forms of cross
distribution-channel selling. In addition, forecasting and production
scheduling errors, along with the reduced level of sales, resulted in
product availability constraints, significant negative production
variances and excess inventory both at the Company and in certain of the
Company's distribution channels.
Since the beginning of fiscal 1999, the Company has taken aggressive
action to resolve these issues. These actions have included: (i)
replacing the management team responsible for U.S. wholesale operations
with experienced luggage industry veterans; (ii) improving customer
relationships by eliminating cross distribution-channel selling and by
modifying the Company's strategy for its retail operations; (iii)
modifying the Company's pricing and co-op advertising strategy by
reducing prices from 4% to 6% on certain products with corresponding
reductions in co-op advertising allowances and sale promotion costs;
(iv) reducing production levels, particularly in the Denver hardside
plant, to bring volume into line with expected sales, and working in
conjunction with the Company's trade customers and Company-owned stores
to reduce excess working capital by approximately $45 million over the
next 18 months; and (v) rightsizing the cost structure of the Company's
U.S. wholesale operations, including implementation of a plan to further
restructure its U.S. manufacturing operations. The restructuring plan,
which is intended to bring the unit volume and workforce in the Denver
plant into line with expected sales and to achieve a better balance
between fixed and variable costs with respect to this facility, calls
for a substantial reduction in workforce, as well as the disposal of
molding and other equipment that represents excess capacity. As a
result, during the second quarter of fiscal 1999, the Company has
recorded a restructuring charge of approximately $5.5 million (of which
approximately $2.2 million is non-cash). The Company also expects to
incur additional cash costs of approximately $0.3 million in connection
with the restructuring plan that will be expensed as they are incurred.
The Company expects that the restructuring will be substantially
completed by July 31, 1998, and that the annualized cost savings from
the restructuring will be approximately $5.9 million. The foregoing
estimate of annual cost savings constitutes forward looking information
and involves known and unknown risks, uncertainties and other factors
that may cause actual cost savings to be materially different from the
foregoing estimate. See "Risk Factors--Implementation of Business
Strategy; Forward-Looking Statements" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Recent Events
and Recapitalization."
Notwithstanding these corrective actions, the Company expects sales and
operating results in U.S. wholesale operations through at least the
first two quarters of fiscal 1999 to continue to be adversely affected
by the factors which adversely affected U.S. wholesale operations in
fiscal 1998.
4
<PAGE>
THE RECAPITALIZATION
The Old Senior Preferred Stock was issued as part of the financing necessary
to effect a recapitalization of the Company (the "Recapitalization") involving
the repurchase pursuant to the Tender Offer of 10.5 million shares of Common
Stock at a purchase price of $40.00 per share ($420 million in the aggregate)
and the refinancing of certain existing indebtedness. Concurrently with the
consummation of the offering of the Old Senior Preferred Stock, the Company and
its principal European subsidiary entered into the New Credit Facility to
obtain funds that, together with the net proceeds of the offering of the Old
Senior Preferred Stock and the Concurrent Offering of Notes, were used to
finance the Recapitalization. See "Concurrent Offering" and "Description of New
Credit Facility."
The following table sets forth the sources and uses of funds in connection
with the Recapitalization (in millions):
<TABLE>
<S> <C>
SOURCES:
New Credit Facility--Term Loan Facilities............................ $ 110.0
Proceeds from sale of Old Senior Preferred Stock and warrants ....... 175.0
Proceeds from sale of Notes.......................................... 350.0
-------
Total.............................................................. $ 635.0
=======
USES:
Tender Offer......................................................... $ 420.0
Repayment of existing indebtedness................................... 180.0
Estimated fees and expenses(a)....................................... 25.9
Working capital...................................................... 9.1
-------
Total.............................................................. $ 635.0
=======
</TABLE>
- --------
(a) Includes discounts and commissions payable in connection with the offering
of the Old Senior Preferred Stock and the Concurrent Offering, fees payable
in connection with the New Credit Facility and investment banking, legal,
accounting, printing and other miscellaneous fees and expenses in
connection with the Recapitalization.
5
<PAGE>
THE EXCHANGE OFFER
Issuer...................... Samsonite Corporation.
Securities Offered.......... Up to 175,000 shares of New Senior Preferred
Stock in exchange for a like number of shares of
issued and outstanding Old Senior Preferred
Stock. The terms of the New Senior Preferred
Stock and the Old Senior Preferred Stock are
identical in all material respects, except for
certain transfer restrictions and registration
rights relating to the Old Senior Preferred Stock
and except for certain provisions providing for
Additional Dividends on the Old Senior Preferred
Stock under certain circumstances relating to the
timing of the Exchange Offer, which rights in
each case will terminate upon consummation of the
Exchange Offer.
The Exchange Offer.......... The New Senior Preferred Stock is being offered
in exchange for a like liquidation preference of
Old Senior Preferred Stock. The issuance of the
New Senior Preferred Stock is intended to satisfy
obligations of the Company contained in the
Registration Rights Agreement. See "The Exchange
Offer."
Expiration Date; Withdrawal
Rights..................... The Exchange Offer will expire at 5:00 p.m., New
York City time, on , 1998, or such later
date and time to which it is extended. The tender
of shares of Old Senior Preferred Stock pursuant
to the Exchange Offer may be withdrawn at any
time prior to the Expiration Date. Any shares of
Old Senior Preferred Stock not accepted for
exchange for any reason will be returned without
expense to the tendering holder thereof as
promptly as practicable after the expiration or
termination of the Exchange Offer. See "The
Exchange Offer--Terms of the Exchange Offer;
Period for Tendering Old Senior Preferred Stock"
and "--Withdrawal Rights."
Procedures for Tendering
Old Senior Preferred
Stock...................... Holders of shares of Old Senior Preferred Stock
wishing to accept the Exchange Offer must
complete, sign and date the Letter of
Transmittal, or a facsimile thereof, in
accordance with the instructions contained herein
and therein, and mail or otherwise deliver such
Letter of Transmittal, or such facsimile,
together with either stock certificates for such
Old Senior Preferred Stock or a Book-Entry
Confirmation (as defined herein) of such Old
Senior Preferred Stock into the Book-Entry
Transfer Facility (as defined herein), if such
procedure is available, and any other required
documentation to United States Trust Company of
New York, acting as the exchange agent (the
"Exchange Agent") at the address set forth
herein. By executing the Letter of Transmittal,
each holder will represent to the Company, among
other things, that (i) the New Senior Preferred
Stock acquired pursuant to the Exchange Offer by
the holder and any other person is being obtained
in the ordinary course of business of the person
receiving such New Senior Preferred Stock, (ii)
neither the holder nor such other person is
6
<PAGE>
participating in, intends to participate in or
has an arrangement or understanding with any
person to participate in the distribution of such
New Senior Preferred Stock and (iii) neither the
holder nor such other person is an "affiliate,"
as defined under Rule 405 of the Securities Act,
of the Company. Each broker-dealer that receives
New Senior Preferred Stock for its own account in
exchange for Old Senior Preferred Stock, where
such Old Senior Preferred Stock was acquired by
such broker or dealer as a result of market-
making activities or other trading activities,
must acknowledge that it will deliver a
prospectus in connection with any resale of such
New Senior Preferred Stock. The Letter of
Transmittal states that by so acknowledging and
by delivering a prospectus, a broker or dealer
will not be deemed to admit that it is an
"underwriter" within the meaning of the
Securities Act. See "The Exchange Offer--
Procedures for Tendering Old Senior Preferred
Stock" and "Plan of Distribution."
Special Procedures for
Beneficial Owners.......... Any beneficial owner whose Old Senior Preferred
Stock is registered in the name of a broker,
dealer, commercial bank, trust company or other
nominee and who wishes to tender should contact
such registered holder promptly and instruct such
registered holder to tender on such beneficial
owner's behalf. If such beneficial owner wishes
to tender on such owner's own behalf, such owner
must, prior to completing and executing the
Letter of Transmittal and delivering its Old
Senior Preferred Stock, either make appropriate
arrangements to register ownership of the Old
Senior Preferred Stock in such owner's name or
obtain a properly completed bond power from the
registered holder. The transfer of registered
ownership may take considerable time. See "The
Exchange Offer--Procedures for Tendering Old
Senior Preferred Stock."
Guaranteed Delivery
Procedures.................. Holders who wish to tender their Old Senior
Preferred Stock and whose Old Senior Preferred
Stock is not immediately available or who cannot
deliver their Old Senior Preferred Stock or any
other documents required by the Letter of
Transmittal to the Exchange Agent must tender
their Old Senior Preferred Stock according to the
guaranteed delivery procedures set forth in "The
Exchange Offer--Guaranteed Delivery Procedures."
Certain U.S. Federal Income
Tax Considerations......... The exchange pursuant to the Exchange Offer
should not result in the recognition of income,
gain or loss to the holders of Old Senior
Preferred Stock for U.S. federal income tax
purposes. See "Certain U.S. Federal Income Tax
Considerations."
Use of Proceeds............. There will be no proceeds to the Company from the
Exchange Offer.
Exchange Agent.............. United States Trust Company of New York is
serving as Exchange Agent in connection with the
Exchange Offer. See "The Exchange Offer--Exchange
Agent."
7
<PAGE>
CONSEQUENCES OF EXCHANGING OLD SENIOR PREFERRED STOCK
Holders who do not exchange their Old Senior Preferred Stock for New Senior
Preferred Stock pursuant to the Exchange Offer will continue to be subject to
the restrictions on transfer of such Old Senior Preferred Stock as set forth in
the legend thereon as a consequence of the issuance of the Old Senior Preferred
Stock pursuant to exemptions from, or in transactions not subject to, the
registration requirements of the Securities Act and applicable state securities
laws. In general, the Old Senior Preferred Stock may not be offered or sold,
unless registered under the Securities Act, except pursuant to an exemption
from, or in a transaction not subject to, the Securities Act and applicable
state securities laws. The Company does not currently anticipate that it will
register Old Senior Preferred Stock under the Securities Act. Based on
interpretations by the staff of the Commission, as set forth in no-action
letters issued to third parties, the Company believes that New Senior Preferred
Stock issued pursuant to the Exchange Offer in exchange for Old Senior
Preferred Stock may be offered for resale, resold or otherwise transferred by
holders thereof (other than any holder which is an "affiliate" of the Company
within the meaning of Rule 405 under the Securities Act) without compliance
with the registration and prospectus delivery provisions of the Securities Act,
provided that such New Senior Preferred Stock is acquired in the ordinary
course of such holders' business and such holders have no arrangement with any
person to participate in the distribution of such New Senior Preferred Stock.
However, the Commission has not considered the Exchange Offer in the context of
a no-action letter and there can be no assurance that the staff of the
Commission would make a similar determination with respect to the Exchange
Offer as in such other circumstances. Each holder, other than a broker-dealer,
must acknowledge that it is not engaged in, and does not intend to engage in, a
distribution of New Senior Preferred Stock and has no arrangement or
understanding to participate in a distribution of New Senior Preferred Stock.
Each broker-dealer that receives New Senior Preferred Stock for its own account
in exchange of Old Senior Preferred Stock must acknowledge that such Old Senior
Preferred Stock was acquired by such broker-dealer as a result of market-making
activities or other trading activities and that it will deliver a prospectus in
connection with any resale of such New Senior Preferred Stock. See "Plan of
Distribution." In addition, to comply with the securities laws of certain
jurisdictions, if applicable, the New Senior Preferred Stock may not be offered
or sold unless it has been registered or qualified for sale in such
jurisdiction or an exemption from registration or qualification is available
and is complied with. See "Risk Factors--Consequences of Failure to Exchange
and Requirements for Transfer of New Senior Preferred Stock" and "The Exchange
Offer--Consequences of Exchanging Old Senior Preferred Stock."
8
<PAGE>
SUMMARY DESCRIPTION OF THE NEW SENIOR PREFERRED STOCK AND EXCHANGE DEBENTURES
The terms of the New Senior Preferred Stock and the Old Senior Preferred
Stock are identical in all material respects, except for certain transfer
restrictions and registration rights relating to the Old Senior Preferred Stock
and except for certain provisions under the Registration Rights Agreement
providing for Additional Dividends on the Old Senior Preferred Stock under
certain circumstances relating to timing of the Exchange Offer, which rights in
each case will terminate upon consummation of the Exchange Offer. The New
Senior Preferred Stock accrues dividends from the last date on which dividends
were paid on the Old Senior Preferred Stock or, if no dividends have been paid
on the Old Senior Preferred Stock, from June 24, 1998. Accordingly, registered
holders of New Senior Preferred Stock on the relevant record date for the first
Dividend Payment Date following the consummation of the Exchange Offer will
receive dividends accruing from the last date on which dividends were paid or,
if no dividends were paid, from June 24, 1998. Old Senior Preferred Stock
accepted for exchange will cease to accrue dividends from and after the date of
consummation of the Exchange Offer. Holders whose Old Senior Preferred Stock is
accepted for exchange will not receive any payment in respect of dividends
otherwise payable on any Dividend Payment Date the record date for which occurs
on or after consummation of the Exchange Offer, which rights will terminate
upon consummation of the Exchange Offer.
NEW SENIOR PREFERRED STOCK
Issuer...................... Samsonite Corporation.
New Senior Preferred Stock
Offered..................... Up to 175,000 shares of 13 7/8% Senior Redeemable
Exchangeable Preferred Stock, which have been
registered under the Securities Act.
Dividends................... Holders of the New Senior Preferred Stock are
entitled to receive, when, as and if declared by
the Board of Directors of the Company out of
funds legally available therefor, dividends on
the Senior Preferred Stock at a rate per annum of
13 7/8% of the liquidation preference per share
of Senior Preferred Stock, payable quarterly in
arrears on each March 15, June 15, September 15
and December 15 (each, a "Dividend Payment
Date"), commencing September 15, 1998. Dividends
may be paid, at the Company's option, on any
dividend payment date occurring on or prior to
June 15, 2003, either in cash or by the issuance
of additional shares of Senior Preferred Stock
with a liquidation preference equal to the amount
of such dividends; thereafter, dividends will be
payable in cash. If any dividend payable on any
Dividend Payment Date subsequent to June 15, 2003
is not paid in full in cash, or if, at any time,
any of the events described in clauses (ii)
through (vi) of the definition of the Voting
Rights Triggering Event shall have occurred, the
per annum dividend rate will be increased by 2%
from such Dividend Payment Date or during the
continuance of any such voting rights triggering
event, as the case may be. See "Description of
Senior Preferred Stock and Exchange Debentures--
The Senior Preferred Stock--Dividends" and "--
Voting Rights."
9
<PAGE>
Optional Redemption......... The Senior Preferred Stock is redeemable, at the
option of the Company, in whole or in part, at
any time and from time to time on or after June
15, 2001, at the redemption prices set forth
herein, plus, without duplication, all
accumulated and unpaid dividends to the
redemption date. In addition, the Company, at its
option, may redeem up to an aggregate of 35% of
the shares of Senior Preferred Stock (whether
initially issued or issued as a dividend payment)
at any time and from time to time prior to June
15, 2001, at a redemption price equal to 113.875%
of the liquidation preference thereof plus,
without duplication, all accumulated and unpaid
dividends to the redemption date, with the Net
Proceeds of one or more Equity Offerings;
provided that at least $113.75 million aggregate
liquidation preference of the Senior Preferred
Stock remains outstanding immediately after the
occurrence of any such redemption. Any such
redemption will be required to occur within 90
days after the receipt by the Company of the
proceeds of such Equity Offering. See
"Description of Senior Preferred Stock and
Exchange Debentures--The Senior Preferred Stock--
Optional Redemption."
Mandatory Redemption........ The Company is required, subject to certain
conditions, to redeem all of the Senior Preferred
Stock outstanding on June 15, 2010, at a
redemption price equal to 100% of the liquidation
preference thereof, plus, without duplication,
all accumulated and unpaid dividends to the
redemption date. See "Description of
Senior Preferred Stock and Exchange Debentures--
The Senior Preferred Stock--Mandatory
Redemption."
Voting Rights............... Holders of the Senior Preferred Stock have no
voting rights with respect to general corporate
matters, except as provided by Delaware law or as
set forth in the Certificate of Designation. The
Certificate of Designation provides that if the
Company: (i) after June 15, 2003, fails to pay
cash dividends on the Senior Preferred Stock for
two or more quarterly dividend periods (whether
or not consecutive); (ii) fails to redeem the
Senior Preferred Stock on or before the maturity
date thereof; (iii) fails to make an offer to
purchase upon a Change of Control or fails to
purchase shares validly tendered in such offer;
or (iv) fails to comply with certain covenants
described herein or make certain principal or
interest payments in respect of certain
indebtedness, then the holders of a majority of
the then outstanding shares of Senior Preferred
Stock, voting separately and as a class, will
have the right to elect the lesser of two
directors and that number of directors
constituting 25% of the members of the Board of
Directors of the Company, in each case until
remedied or cured. See "Description of Senior
Preferred Stock and Exchange Debentures--The
Senior Preferred Stock--Voting Rights."
Ranking..................... The Senior Preferred Stock, with respect to
dividend rights and rights upon liquidation,
dissolution or winding-up of the Company,
10
<PAGE>
ranks senior to the Common Stock and any other
class or series of common stock or preferred
stock of the Company created subsequent to June
24, 1998, the terms of which do not expressly
provide that it ranks senior to or on a parity
with the Senior Preferred Stock. See "Description
of Senior Preferred Stock and Exchange
Debentures--The Senior Preferred Stock--Ranking."
Change of Control........... Upon the occurrence of a Change of Control, each
holder of the Senior Preferred Stock will be
entitled to require the Company to purchase such
holder's Senior Preferred Stock at a purchase
price equal to 101% of the liquidation preference
thereof, plus, without duplication, all
accumulated and unpaid dividends to the purchase
date. There can be no assurance that the Company
will be contractually permitted or have
sufficient funds to pay the required purchase
price for all the shares of Senior Preferred
Stock tendered by holders thereof upon the
occurrence of a Change of Control. See
"Description of Senior Preferred Stock and
Exchange Debentures--The Senior Preferred Stock--
Change of Control."
Certain Covenants........... The Certificate of Designation for the Senior
Preferred Stock contains certain restrictive
covenants that, among other things, limit the
ability of the Company and its Restricted
Subsidiaries (as defined herein) to: (i) incur
additional indebtedness; (ii) pay dividends and
make certain other distributions; (iii) make
certain investments; (iv) enter into transactions
with affiliates; or (v) merge or consolidate.
These covenants are subject to a number of
important exceptions. See "Description of Senior
Preferred Stock and Exchange Debentures--The
Senior Preferred Stock--Certain Covenants."
Exchange.................... The Company, at its option, on any Dividend
Payment Date may either (i) from time to time
exchange, in whole or in part, on a pro rata
basis, the then outstanding shares of Senior
Preferred Stock for Company Exchange Debentures;
provided that immediately after giving effect to
any partial exchange, there shall be outstanding
shares of Senior Preferred Stock with an
aggregate liquidation preference of not less than
$75 million and not less than $75 million
aggregate principal amount of Company Exchange
Debentures or (ii) exchange all of the
outstanding shares of Senior Preferred Stock for
Holdings Exchange Debentures. The Notes Indenture
and the New Credit Facility restrict the
Company's ability to exchange the Senior
Preferred Stock for Company Exchange Debentures.
The Exchange Debentures will: (i) bear interest
at the same rate as the dividend rate on the
Senior Preferred Stock; and (ii) contain
covenants substantially identical to the Senior
Preferred Stock. The Company Exchange Debentures
will rank subordinate in right of payment to all
Senior Debt of the Company to the extent set
forth in the Exchange Indenture. The Holdings
Exchange Debentures will constitute general
unsecured obligations of Holdings. The Exchange
Debentures will also be effectively subordinated
to the obligations of the issuer's subsidiaries
and will not be guaranteed by any of the issuer's
subsidiaries. See "Description of Senior
Preferred Stock
11
<PAGE>
and Exchange Debentures--The Senior Preferred
Stock--Exchange."
For more complete information regarding the New Senior Preferred Stock,
including the definitions of certain capitalized terms used above, see
"Description of Senior Preferred Stock and Exchange Debentures."
EXCHANGE DEBENTURES
Issuer...................... Samsonite Corporation (if Company Exchange
Debentures are issued) or Samsonite Holdings Inc.
(if Holdings Exchange Debentures are issued)
(Samsonite Corporation and Samsonite Holdings
Inc., each, an "Issuer").
Exchange Debentures
Offered..................... The Exchange Debentures will be issuable in
exchange for Senior Preferred Stock in an
aggregate principal amount equal to the
liquidation preference of the Senior Preferred
Stock so exchanged, plus accrued and unpaid
dividends to the date (the "Exchange Date") fixed
for the exchange thereof. See "Description of
Senior Preferred Stock and Exchange Debentures--
The Exchange Debentures."
Maturity Date............... June 15, 2010.
Interest.................... Each Exchange Debenture will bear interest at the
rate of 13 7/8% per annum from the Exchange Date
or from the payment date to which interest has
been paid or provided for or, if no interest has
been paid or provided for, from the Exchange
Date. Interest will be payable quarterly in cash
(or, in the case of interest payable on interest
payment dates that occur on or prior to June 15,
2003, in additional Exchange Debentures at the
option of the issuer) in arrears on each March
15, June 15, September 15 and December 15,
commencing with the first such date after the
Exchange Date. Interest on the Exchange
Debentures will be computed on the basis of a
360-day year comprised of twelve 30-day months
and, for periods not involving a full calendar
month, the actual number of days elapsed but not
to exceed 30 days. See "Description of Senior
Preferred Stock and Exchange Debentures--The
Exchange Debentures."
Optional Redemption......... The Exchange Debentures will be redeemable, at
the option of the Issuer, in whole at any time or
in part from time to time on or after June 15,
2001 at the redemption prices set forth herein,
plus accrued and unpaid interest thereon to the
redemption date. In addition, the Issuer at its
option, may redeem, up to an aggregate of 35% of
the aggregate principal amount of Exchange
Debentures (whether initially issued or issued in
payment of interest obligations thereon) at any
time and from time to time prior to June 15,
2001, at a redemption price equal to 112% of the
aggregate principal amount thereof, plus accrued
and unpaid interest thereon to the redemption
date, with the Net Proceeds of one or more Equity
Offerings; provided that after any such
redemption at least $75 million aggregate
principal amount of Exchange Debentures remain
outstanding immediately after the occurrence of
any such redemption pursuant to an Equity
Offering and that any such redemption occurs on
or prior to 90 days after the receipt by the
Issuer of the proceeds of each such Equity
Offering. See
12
<PAGE>
"Description of Senior Preferred Stock and
Exchange Debentures--The Exchange Debentures--
Optional Redemption."
Change of Control........... Upon the occurrence of a Change of Control, each
holder of Exchange Debentures will be entitled to
require the Issuer to purchase such holders'
Exchange Debentures at a purchase price equal to
101% of the principal amount thereof, plus
accrued and unpaid interest thereon to the
purchase date. There can be no assurance that the
Issuer will be contractually permitted or have
sufficient funds to pay the required purchase
price for all Exchange Debentures tendered by
holders thereof upon the occurrence of a Change
of Control. See "Description of Senior Preferred
Stock and Exchange Debentures--The Exchange
Debentures--Change of Control."
Subordination............... The Company Exchange Debentures will rank
subordinate in right of payment to all Senior
Debt of the Company to the extent set forth in
the Exchange Indenture. The Holdings Exchange
Debentures will constitute general unsecured
obligations of Holdings. The Exchange Debentures
will also be effectively subordinated to the
obligations of the Issuer's subsidiaries and will
not be guaranteed by any of the Issuer's
subsidiaries. See "Description of Senior
Preferred Stock and Exchange Debentures--The
Exchange Debentures--Subordination."
Certain Covenants........... The Exchange Indenture contains certain
restrictive covenants that, among other things,
limit the ability of the Issuer and any
Restricted Subsidiary (as defined herein) of the
Issuer to: (i) incur additional indebtedness;
(ii) pay dividends and make certain other
distributions; (iii) make certain investments;
(iv) enter into transactions with affiliates; or
(v) merge or consolidate. These covenants are
subject to a number of important exceptions. See
"Description of Senior Preferred Stock and
Exchange Debentures--The Exchange Debentures--
Certain Covenants."
For more complete information regarding the Exchange Debentures, including
the definitions of certain capitalized terms used above, see "Description of
Senior Preferred Stock and Exchange Debentures."
Concurrent Offering......... Concurrently with the offering of the Old Senior
Preferred Stock, the Company also issued and sold
$350 million aggregate principal amount of Notes
in the Concurrent Offering. See "Concurrent
Offering."
Use of Proceeds............. The Company will not receive any proceeds from
the Exchange Offer. The net proceeds from the
offering of the Old Senior Preferred Stock,
together with the net proceeds from the
Concurrent Offering and borrowings under the New
Credit Facility were used to finance the
Recapitalization and to pay fees and expenses in
connection therewith. See "The Recapitalization,"
"Use of Proceeds" and "Capitalization."
RISK FACTORS
Holders of Old Senior Preferred Stock should carefully consider the
information set forth under the caption "Risk Factors" and all other
information set forth in this Prospectus, before making a decision to tender
their shares of Old Senior Preferred Stock in the Exchange Offer.
13
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
The summary historical financial information for the Company presented below
has been derived from the Company's audited consolidated financial statements
as of and for the fiscal years ended January 31, 1998, 1997, 1996 and 1995, the
seven months ended January 31, 1994 and the five months ended June 30, 1993
which have been restated for discontinued operations and from the Company's
unaudited consolidated financial statements as of and for the three months
ended April 30, 1998 and 1997. The Company's unaudited consolidated financial
statements as of and for the three months ended April 30, 1998 and 1997
include, in the opinion of management, all adjustments, consisting only of
normal nonrecurring adjustments, which the Company considers necessary for a
fair presentation of the financial position and results of operations of the
Company for these periods. Operating results for the three months ended April
30, 1998 are not necessarily indicative of the results that may be expected for
the full year. The summary historical financial information presented below
should be read in conjunction with the other information contained under the
captions "Capitalization," "Selected Historical and Pro Forma Consolidated
Financial Information," "Management's Discussion and Analysis of Financial
Condition and Results of Operations"and with the Company's consolidated
financial statements and related notes thereto included elsewhere in this
Prospectus. The pro forma financial information presented below gives effect to
the Recapitalization as if it had occurred on February 1, 1997, in the case of
the statement of operations and other data, and on the balance sheet date, in
the case of the balance sheet data. The summary pro forma financial data are
presented for illustrative purposes only and are not necessarily indicative of
the operating results or financial position that would have occurred if the
Recapitalization had been consummated on the dates indicated, nor are they
necessarily indicative of future operating results or financial position.
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
-------------------------------------------------------------------
1994(A) 1995 1996 1997 1998
---------- --------- -------- -------- --------------------
HISTORICAL PRO FORMA
---------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND RATIOS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net Sales(b)............ $ 523,619 $ 635,452 $675,209 $741,138 $736,875 $736,875
Cost of Goods Sold...... 309,809 373,967 414,691 449,333 424,349 424,349
---------- --------- -------- -------- -------- --------
Gross Profit............ 213,810 261,485 260,518 291,805 312,526 312,526
Selling, General and
Administrative
Expenses............... 163,574 197,716 203,701 233,761(c) 234,257 239,485 (d)
Amortization of
Intangible Assets(e)... 40,130 67,189 63,824 31,837 7,101 7,101
Provision for
Restructuring
Operations............. -- -- 2,369 10,670 1,866 1,866
Other Income--Net(f).... 5,864 2,729 3,967 18,821 28,294 28,294
Interest Expense--
Net(g)................. 24,901 34,966 35,265 34,251 17,344 50,344 (h)
Reorganization Items.... 462,447 -- -- -- -- --
Income Tax Expense...... 9,110 10,619 9,095 10,389 23,088 8,561 (i)
Minority Interest in
Earnings of
Subsidiaries........... (2,049) (931) (1,385) (1,041) (287) (287)
---------- --------- -------- -------- -------- --------
Income (Loss) from
Continuing Operations.. 442,357 (47,207) (51,154) (11,323) 56,877 33,176
Income (Loss) from
Operations Discontinued
and Sold, Cumulative
Effect of Change in
Accounting Principles
and Extraordinary
Items.................. 430,946 (64,372) (10,293) -- (16,178) (22,402)
---------- --------- -------- -------- -------- --------
Net Income (Loss)....... $ 873,303 $(111,579) $(61,447) $(11,323) $ 40,699 $ 10,774
========== ========= ======== ======== ======== ========
Senior Preferred Stock
Dividends(j)........... 26,570
--------
Net Income (Loss)
Available to Common
Stockholders........... $(15,796)
========
Income (Loss) per
Share--Basic(j):
Continuing Operations.. $ (3.05) $ (3.24) $ (.71) $ 2.81 $ .68
Net Income (Loss)...... (7.22) (3.89) (.71) 2.01 (1.62)
Income (Loss) per
Share--Assuming
Dilution(j):
Continuing Operations.. (3.05) (3.24) (.71) 2.70 .62
Net Income (Loss)...... (7.22) (3.89) (.71) 1.93 (1.49)
OTHER DATA:
EBIT (k)................ $ 15,970 $ (691) $ (5,409) $ 34,358 $ 97,596 $ 97,596
Depreciation and
Amortization........... 55,024 85,486 84,101 53,889 28,594 28,594
---------- --------- -------- -------- -------- --------
EBITDA(l)............... 70,994 84,795 78,692 88,247 126,190 126,190
Items relating to
Settlement of
Contingent Liabilities
and Other Adjustments.. (4,797) (2,864) (357) (3,368) (13,762) (13,762)
---------- --------- -------- -------- -------- --------
Adjusted EBITDA(m)...... $ 66,197 $ 81,931 $ 78,335 $ 84,879 $112,428 $112,428
========== ========= ======== ======== ======== ========
Ratio of Adjusted EBITDA
to Pro Forma Interest
Expense--Net(n)........ -- -- -- -- -- 2.23x
Ratio of Earnings to
Fixed Charges(o)....... -- -- -- 1.00x 4.39x 1.05x
Capital Expenditures.... $ 13,095 $ 18,453 $ 21,668 $ 31,093 $ 36,313 $ 36,313
BALANCE SHEET DATA (AS
OF END OF PERIOD):
Property, Plant and
Equipment, Net......... $ 131,894(p) $ 137,686 $140,912 $143,959 $142,351 $142,351
Total Assets............ 1,111,735(p) 866,000 607,443 592,658 610,049 654,682
Long-Term Obligations
(Including Current
Installments).......... 573,197(q) 417,175 310,959 290,617 179,223 484,421
Redeemable Preferred
Stock.................. -- -- -- -- -- 163,080
Stockholders' Equity
(Deficit).............. 253,693(q) 148,472 25,116 24,998 208,886 (214,759)
</TABLE>
(see footnotes on the following pages)
14
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED APRIL 30,
------------------------------
1997 1998
-------- --------------------
HISTORICAL PRO FORMA
---------- ---------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER
SHARE AMOUNTS AND RATIOS)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net Sales.................................... $169,562 $156,676 $156,676
Cost of Goods Sold........................... 99,293 97,273 97,273
-------- -------- --------
Gross Profit................................. 70,269 59,403 59,403
Selling, General and Administrative
Expenses.................................... 54,656 59,621 59,621
Amortization of Intangible Assets(e)......... 1,824 1,526 1,526
Provision for Restructuring Operations....... (600) 2,608 2,608
Other Income--Net(f)......................... 6,899 998 998
Interest Expense--Net(g)..................... 5,742 4,017 12,617 (h)
Income Tax Expense (Benefit)................. 6,829 (2,924) (6,192)(i)
Minority Interest in Earnings of
Subsidiaries................................ (218) (256) (256)
-------- -------- --------
Income (Loss) from Continuing Operations..... 8,499 (4,703) (10,035)
Income (Loss) from Operations Discontinued
and Sold, Cumulative Effect of Change in
Accounting Principles and Extraordinary
Items....................................... (6,633) (6,224) --
-------- -------- --------
Net Income (Loss)............................ $ 1,866 $(10,927) $(10,035)
======== ======== ========
Senior Preferred Stock Dividends(j).......... 7,210
--------
Net Income (Loss) Available to Common
Stockholders................................ $(17,245)
========
Income (Loss) per Share--Basic(j):
Continuing Operations....................... $ 0.43 $ (0.23) $ (1.74)
Net Income (Loss)........................... 0.09 (0.54) (1.74)
Income (Loss) per Share--Assuming
Dilution(j):
Continuing Operations....................... 0.41 (0.23) (1.74)
Net Income (Loss)........................... 0.09 (0.54) (1.74)
OTHER DATA:
EBIT (k)..................................... $ 21,288 $ (3,354) $ (3,354)
Depreciation and Amortization................ 7,208 6,943 6,943
-------- -------- --------
EBITDA(l).................................... 28,496 3,589 3,589
Items relating to Settlement of Contingent
Liabilities and Other Adjustments........... (5,296) 2,302 2,302
-------- -------- --------
Adjusted EBITDA(m)........................... $ 23,200 $ 5,891 $ 5,891
======== ======== ========
Ratio of Adjusted EBITDA to Pro Forma
Interest
Expense--Net................................ -- -- (n)
Ratio of Earnings to Fixed Charges(o)........ 3.17x -- --
Capital Expenditures......................... $ 8,002 $ 7,433 $ 7,433
BALANCE SHEET DATA (AS OF END OF PERIOD):
Property, Plant and Equipment, Net........... $141,092 $140,964 $140,964
Total Assets................................. 589,404 617,758 636,718
Long-Term Obligations (Including Current
Installments)............................... 161,728 208,291 481,592
Redeemable Preferred Stock................... -- -- 163,080
Stockholders' Equity (Deficit)............... 173,768 197,509 (219,912)
</TABLE>
(see footnotes on the following pages)
15
<PAGE>
NOTES TO SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(a) Prior to July 14, 1995, the Company was a subsidiary of Astrum International
Corp. ("Astrum"). On July 14, 1995, Astrum merged with Samsonite Corporation
and changed its name to Samsonite Corporation. In June 1993, Astrum
completed a financial restructuring pursuant to a plan of reorganization
under Chapter 11 of the United States Bankruptcy Code (the "Plan").
Effective June 30, 1993 and pursuant to the American Institute of Certified
Public Accountants Statement of Position 90-7 entitled "Financial Reporting
by Entities in Reorganization under the Bankruptcy Code" ("SOP 90-7"), the
Company was required to adjust its assets and liabilities to their fair
("fresh start") values and create a new entity for financial reporting
purposes. For purposes of this presentation and in order to compare full
fiscal years, the results for the five months ended June 30, 1993 and the
seven months ended January 31, 1994 have been combined. As a result of the
effects of SOP 90-7 on amortization of intangibles, depreciation, interest
expense, and reorganization items, the periods before and after June 30,
1993 are not comparable. See "Selected Historical and Pro Forma Consolidated
Financial Data" for a presentation of separate results for such five and
seven month periods in accordance with SOP 90-7.
(b) The Company acquired American Tourister in August 1993. Net sales for the
combined periods comprising the year ended January 31, 1994 include net
sales of $47.7 million of American Tourister for five months. Net sales for
the fiscal years ended January 31, 1995, 1996 and 1997 include net sales
for American Tourister of $117.8 million, $115.0 million and $147.3
million, respectively. Because of the consolidation of American Tourister
wholesale operations with the Company's, comparable American Tourister
sales amount are not available for fiscal year 1998.
(c) Selling, General and Administrative Expenses include $5.4 million of
expenses during the year ended January 31, 1997 for (i) consulting fees to
establish the restructuring plan ($0.8 million), (ii) the cessation of the
former chief executive officer's employment and the change in management
($4.1 million) and (iii) expenses in excess of the original provision in
fiscal 1996 for the consolidation of American Tourister manufacturing
facilities ($0.5 million).
(d) Pro forma Selling, General and Administrative Expenses for the fiscal year
ended January 31, 1998 have been adjusted to reflect a $4.8 million charge
for estimated expenses associated with the process of exploring
alternatives to enhance stockholder value, including the Recapitalization,
and a $0.4 million charge for deferred financing costs related to the
Company's Old Credit Facility (as defined herein). Such expenses will be
charged to operations in fiscal 1999. In connection with the
Recapitalization, certain adjustments and modifications have been made to
outstanding employee stock options as a result of the consummation of the
Tender Offer. Such adjustments will result in increased compensation
expense of approximately $3.9 million in the second quarter of fiscal 1999,
$0.4 million during the remainder of fiscal 1999 and $0.8 million in fiscal
2000. Such increased compensation expense is not reflected in Pro Forma
Selling, General and Administrative Expenses.
(e) As discussed in note (a) above, the Company adjusted its assets and
liabilities to their fresh start values effective June 30, 1993. Since June
30, 1993, the Company's statements of operations include amortization and
depreciation related to these fresh start adjustments. The most significant
fresh start adjustment relates to recording Reorganization Value in Excess
of Identifiable Assets, which was amortized over a three-year period which
ended in June 1996. In addition, fresh start amortization includes
amortization of fresh start adjustments to reflect the fair value of
trademarks, licenses, patents and other intangibles, which are being
amortized over periods from one to forty years. Fresh start amortization
and depreciation also includes depreciation of fresh start adjustments to
reflect the fair value of property and equipment, depreciated over their
estimated useful lives ranging primarily from two to six years.
Fresh Start Amortization and Depreciation consists of the following:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED JANUARY 31, APRIL 30,
------------------------- -------------------
1996 1997 1998 1997 1998
-------- -------- ------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
FRESH START AMORTIZATION:
Amortization of
Reorganization Value in
Excess of Identifiable
Assets...................... $ 55,072 $ 22,947 $ -- $ -- $ --
Amortization of Licenses,
Patents and Trademarks and
Other....................... 7,823 7,976 6,184 1,607 1,432
-------- -------- ------- --------- ---------
Total Fresh Start
Amortization Included in
Amortization of
Intangibles............... 62,895 30,923 6,184 1,607 1,432
-------- -------- ------- --------- ---------
FRESH START DEPRECIATION--
PROPERTY AND EQUIPMENT:
Included in Cost of Goods
Sold........................ 2,895 2,914 2,093 685 411
Included in Selling, General
and Administrative
Expenses.................... 643 647 461 151 90
-------- -------- ------- --------- ---------
Total Fresh Start
Depreciation.............. 3,538 3,561 2,554 836 501
-------- -------- ------- --------- ---------
Total Fresh Start
Amortization and
Depreciation................ $ 66,433 $ 34,484 $ 8,738 $ 2,443 $ 1,933
======== ======== ======= ========= =========
</TABLE>
For information with respect to the impact of fair value adjustments
attributable to the reorganization of Astrum, restructuring and certain
other expenses, see "Selected Historical and Pro Forma Consolidated
Financial Information."
(footnotes continue on the following page)
16
<PAGE>
(f) Other Income--Net for fiscal 1996, 1997 and 1998 and for the three months
ended April 30, 1997 and 1998 consists of the following:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED JANUARY 31, APRIL 30,
------------------------ ----------------------
1996 1997 1998 1997 1998
------ ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net realized gains from
foreign currency
forward delivery
contracts.............. $ (494) $ 2,829 $ 6,463 $ 918 $ 675
Rental income........... 1,735 1,987 1,633 522 252
Equity in loss of uncon-
solidated affiliate.... -- (33) (547) (61) (235)
Pension expense related
to merged plans........ -- -- (706) -- --
Foreign currency trans-
action losses, net..... (1,660) (211) (1,834) (370) (77)
Unrealized gains from
foreign currency
forward delivery
contracts.............. -- -- -- 2,729 753
Gain (Loss) on disposi-
tion of fixed assets,
net.................... (245) (62) (377) (7) 737
Other, net.............. (737) (1,120) (1,247) (418) (1,107)
Favorable settlement of
claims................. -- 3,802 2,060 2,128 --
Adjustment of allowances
relating to previous
operations............. -- 529 5,299 1,458 --
Adjustment of contingent
tax accruals........... -- -- 12,700 -- --
Collection of loans to
settlement trust....... -- -- 4,850 -- --
Adjustment of liability
for PBGC claims........ -- 11,100 -- -- --
Gain on sale of televi-
sion station........... 5,368 -- -- -- --
------ ------- ------- ------- -------
$3,967 $18,821 $28,294 $ 6,899 $ 998
====== ======= ======= ======= =======
</TABLE>
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" for further information with respect to the items
comprising Other Income--Net.
(g) Interest Expense--Net consists of interest expense and amortization of debt
issuance costs and premium less interest income.
(h) Pro forma Interest Expense-Net gives effect to the issuance of the Notes,
and additional borrowings under the New Credit Facility, including the
amortization of debt issuance costs. The foregoing increases Interest
Expense-Net by approximately $33.0 million and $8.6 million for the year
ended January 31, 1998 and the three months ended April 30, 1998,
respectively. Pro forma Interest Expense-Net consists of the following (in
millions):
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
JANUARY 31, 1998 APRIL 30, 1998
---------------- ------------------
<S> <C> <C>
Notes.................................. $37.6 $ 9.4
New Credit Facility (8.4% on U.S. Term
Loan and 6.1% on Europe Term Loan).... 9.2 2.3
Capital lease obligations and other
foreign borrowings.................... 4.4 1.3
Non-cash amortization of capitalized
fees and expenses..................... 1.7 0.4
Less interest income................... (2.6) (0.8)
----- -----
Net Interest Expense................ $50.3 $12.6
===== =====
</TABLE>
(i) Pro forma Income Tax Expense reflects the tax effect of the additional
interest expense described in note (h) above and the tax effect of certain
other expenses referred to in note (d) above (an aggregate decrease of
$14.5 million and $3.3 million in Income Tax Expense for the year ended
January 31, 1998 and the three months ended April 30, 1998, respectively).
(j) Pro forma income (loss) per share data reflects the deduction of pro-forma
dividends, the amortization of issuance costs related to the Senior
Preferred Stock and the amortization of the aggregate value assigned to the
Warrants of $5.82 million, which will be amortized over the twelve-year
term of the Senior Preferred Stock.
(k) EBIT is defined as Income (Loss) from Continuing Operations plus Interest
Expense-Net and Income Tax Expense plus Minority Interest in Earnings of
Subsidiaries less Reorganization Items plus, in the case of pro forma EBIT,
certain expenses described in note (d) above.
(l) EBITDA is defined as EBIT (as defined above) plus amortization and
depreciation. The Company believes that EBITDA provides useful information
regarding the Company's ability to service its indebtedness, but it should
not be considered in isolation or as a
(footnotes continue on the following page)
17
<PAGE>
substitute for operating income or cash flow from operations (in each case
as determined in accordance with generally accepted accounting principles)
as an indicator of the Company's operating performance or as a measure of
the Company's liquidity. Other companies may calculate EBITDA in a different
manner than the Company. EBITDA does not take into consideration substantial
costs and cash flows of doing business, such as interest expense, income
taxes, depreciation, and amortization. EBITDA does not represent funds
available for discretionary use by the Company because those funds are
required for debt service, capital expenditures to replace fixed assets,
working capital and other commitments and contingencies. EBITDA is not an
accounting term and is not used in generally accepted accounting principles.
(m) Adjustments to EBITDA to arrive at Adjusted EBITDA include various income
and expense items included in EBIT and EBITDA which management believes
should be excluded in order to reflect recurring operating performance.
These items include:
(i) Provision for Restructuring Operations of $2.4 million, $10.7 million
and $3.6 million for fiscal 1996, 1997 and 1998, respectively, and
$2.6 million for the three months ended April 30, 1998. In fiscal
1998, the Company's statement of operations reflects a net Provision
for Restructuring Operations of $1.9 million which is comprised of a
gross restructuring charge of $3.6 million for the fiscal year net of
a $1.7 million credit for expenses not incurred with respect to fiscal
1997's $10.7 million Provision of Restructuring Operations;
(ii) Other Income--Net, except for certain recurring transactions including
net gains from foreign currency forward delivery contracts, rental
income, equity in loss of unconsolidated affiliate and pension expense
related to merged plans (which are reflected in the first four line
items in note (f) above); and
(iii) Unfavorable production variances of $4.1 million during the second
half of fiscal 1998 arising from production problems in the Company's
North American manufacturing operations. These problems primarily
related to implementation of the strategic plan announced in May 1996
and, in the judgment of management, were nonrecurring. EBITDA has not
been adjusted for production variances in prior years (which totaled
$3.0 million and $2.4 million in fiscal 1996 and 1997, respectively)
or for $5.0 million of additional production variances in fiscal 1998.
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" for further information with respect to these items.
(n) The ratio of Adjusted EBITDA to Pro forma Interest Expense--Net for the 12
months ended April 30, 1998 was 1.90x.
(o) For purposes of computing the ratio of earnings to fixed charges, fixed
charges consist of interest (including the interest component of rental
expenses), amortization of debt expense and dividends (including the
amortization of issuance costs related to the Senior Preferred Stock and
the amortization of the aggregate value assigned to the Warrants) on
preferred stock. Earnings consist of earnings from continuing operations
before taxes, plus fixed charges. For the seven months ended January 31,
1994, the fiscal years ended January 31, 1995 and 1996, the three months
ended April 30, 1998 and on a pro forma basis for the three months ended
April 30, 1998, earnings were insufficient to cover fixed charges by $19.4
million, $36.6 million, $40.7 million, $7.1 million and $25.9 million,
respectively. No ratio of earnings to fixed charges for the year ended
January 31, 1994 is presented because it is not meaningful due to the
significant effect of applying SOP 90-7. Earnings from continuing
operations before taxes include significant nonrecurring amounts related
to various items from the settlement of certain continuing liabilities
from previous operations.
(p) Includes the effects of SOP 90-7 "fresh start" adjustments recorded at
June 30, 1993, net of depreciation and amortization. Pursuant to SOP 90-7,
the net book value of property and equipment was increased by $34 million
and intangible and other assets were increased by $530 million.
(q) Pursuant to SOP 90-7, under the Plan effected in June 1993, $1.5 billion
in long-term debt subject to compromise, including accrued interest, was
forgiven in exchange for $500 million principal amount of senior secured
notes, approximately $342 million in cash and 15 million shares of common
stock. In July 1995, the senior secured notes were redeemed with the
proceeds from the sale of the 11 1/8% Series A Senior Subordinated Notes
and borrowings under the Company's U.S. banking lines.
18
<PAGE>
RISK FACTORS
Holders should consider carefully all of the information set forth in this
Prospectus and, in particular, should evaluate the following risks before
tendering their Old Senior Preferred Stock in the Exchange Offer, although the
risk factors set forth below (other than "--Consequences of Failure to
Exchange and Requirements for Transfer of New Senior Preferred Stock") are
generally applicable to the Old Senior Preferred Stock as well as the New
Senior Preferred Stock.
CONSEQUENCES OF FAILURE TO EXCHANGE AND REQUIREMENTS FOR TRANSFER OF NEW
SENIOR PREFERRED STOCK
Holders who do not exchange their Old Senior Preferred Stock for New Senior
Preferred Stock pursuant to the Exchange Offer will continue to be subject to
the restrictions on transfer of such Old Senior Preferred Stock as set forth
in the legend thereon as a consequence of the issuance of the Old Senior
Preferred Stock pursuant to exemptions from, or in transactions not subject
to, the registration requirements of the Securities Act and applicable state
securities laws. In general, the Old Senior Preferred Stock may not be offered
or sold unless registered under the Securities Act, except pursuant to an
exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. The Company does not currently anticipate
that it will register Old Senior Preferred Stock under the Securities Act.
Based on interpretations by the staff of the Commission, as set forth in no-
action letters issued to third parties, the Company believes that New Senior
Preferred Stock issued pursuant to the Exchange Offer in exchange for Old
Senior Preferred Stock may be offered for resale, resold or otherwise
transferred by holders thereof (other than any such holder which is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such New Senior Preferred
Stock is acquired in the ordinary course of such holders' business and such
holders have no arrangement with any person to participate in the distribution
of such New Senior Preferred Stock. However, the Commission has not considered
the Exchange Offer in the context of a no-action letter and there can be no
assurance that the staff of the Commission would make a similar determination
with respect to the Exchange Offer as in such other circumstances. Each
holder, other than a broker-dealer, must acknowledge that it is not engaged
in, and does not intend to engage in, a distribution of New Senior Preferred
Stock and has no arrangement or understanding to participate in a distribution
of New Senior Preferred Stock. If any holder is an "affiliate" of the Company
(within the meaning of Rule 405 under the Securities Act), is engaged in or
intends to engage in or has any arrangement or understanding with respect to
the distribution of New Senior Preferred Stock to be acquired pursuant to the
Exchange Offer, such holder (i) could not rely on the applicable
interpretations of the staff of the Commission and (ii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. Each broker-dealer that receives New
Senior Preferred Stock for its own account pursuant to the Exchange Offer must
acknowledge that it will deliver a prospectus in connection with any resale of
such New Senior Preferred Stock. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with resales of New
Senior Preferred Stock received in exchange for Old Senior Preferred Stock
where such Old Senior Preferred Stock was acquired by such broker-dealer as a
result of market-making activities or other trading activities. For a period
of 180 days after the Expiration Date, the Company will make this Prospectus,
as amended or supplemented from time to time, available to any broker-dealer
for use in connection with any such resale. See "Plan of Distribution."
However, to comply with the securities laws of certain jurisdictions, if
applicable, the New Senior Preferred Stock may not be offered or sold unless
it has been registered or qualified for sale in such jurisdictions or an
exemption from registration or qualification is available and is complied
with. See "The Exchange Offer--Consequences of Exchanging Old Senior Preferred
Stock."
SUBSTANTIAL LEVERAGE; ABILITY TO SERVICE INDEBTEDNESS
As a result of the Recapitalization, the Company is highly leveraged. After
giving pro forma effect to the Recapitalization, as of April 30, 1998, the
Company would have had total indebtedness of $490.7 million and stockholders'
equity would have been a deficit of $225.7 million. The New Credit Facility,
the Indenture
19
<PAGE>
governing the Notes (the "Notes Indenture"), and the Certificate of
Designation permit the Company to incur or guarantee certain additional
indebtedness, subject to certain limitations. See "Concurrent Offering" and
"Description of New Credit Facility."
In addition, this substantial leverage will have a negative effect on the
Company's net income. For the fiscal year ended January 31, 1998, the
Company's net income on a pro forma basis as adjusted to give effect to the
Recapitalization would have been $10.8 million, including non-recurring gains,
net of tax expense, of approximately $20.3 million, compared to the historical
net income of $40.7 million for such period. Pro forma net interest expense
would have been $50.3 million for the year ended January 31, 1998, as compared
to $17.3 million for the same period on an historical basis.
The Company's high degree of leverage could have important consequences to
holders of Senior Preferred Stock, including but not limited to the following:
(i) the Company's ability to obtain additional financing for working capital,
capital expenditures, acquisitions or general corporate purposes may be
impaired in the future; (ii) a substantial portion of the Company's cash flow
from operations must be dedicated to the payment of principal and interest on
its indebtedness, thereby reducing the funds available to the Company for its
operations and other purposes, including capital expenditures; (iii) the
Company may be substantially more leveraged than certain of its competitors,
which may place the Company at a competitive disadvantage; (iv) the Company
may be hindered in its ability to adjust rapidly to changing market
conditions; and (v) the Company's substantial degree of leverage could make it
more vulnerable in the event of a downturn in general economic conditions or
its business or changing market conditions.
The Company's ability to repay or to refinance its obligations with respect
to its indebtedness or to pay cash dividends on or to redeem the Senior
Preferred Stock pursuant to the Certificate of Designation will depend on its
future financial and operating performance, which, in turn, will be subject to
prevailing economic and competitive conditions and to certain financial,
business, economic and other factors, many of which are beyond the Company's
control. These factors could include operating difficulties, increased
operating costs, product pricing pressures, the response of competitors, and
delays in implementing strategic plans. The Company's ability to meet its debt
service and other obligations may depend in significant part on the extent to
which the Company can implement successfully its business strategy. There can
be no assurance that the Company will be able to implement its strategy fully
or that the anticipated results of its strategy will be realized. See""--
Implementation of Business Strategy; Forward-Looking Statements."
If the Company's cash flow and capital resources are insufficient to fund
its debt service obligations or its obligations under the Senior Preferred
Stock, the Company may be forced to reduce or delay capital expenditures, sell
assets, or seek to obtain additional equity capital, or to refinance or
restructure its debt. There can be no assurance that the Company's cash flow
and capital resources will be sufficient for payment of principal of, and
premium, if any, and interest on its indebtedness or to meet its other
obligations in the future, or that any such alternative measures would be
successful or would permit the Company to meet its scheduled debt service
obligations. In addition, because the Company's obligations under the New
Credit Facility bear interest at floating rates, an increase in interest rates
could adversely affect, among other things, the Company's ability to meet its
financing obligations.
RECENT EVENTS AND RECAPITALIZATION
On January 7, 1998, the Company announced it had engaged Goldman, Sachs &
Co. as financial advisor to assist in the process of exploring various
strategic alternatives designed to enhance stockholder value. On March 20,
1998, the Company's Board of Directors approved a recapitalization plan,
pursuant to which the Company planned to pay a special cash dividend to
stockholders of $12.50 per share. Consummation of this recapitalization plan
and payment of the $12.50 dividend per share was subject to a number of
conditions, including the closing of a new bank credit facility, the
successful retirement of the Company's outstanding 11 1/8% Series B
Subordinated Notes (the "Series B Notes") (which were substantially retired in
April 1998 as discussed below), and declaration of the dividend by the
Company's Board of Directors. The Company also previously announced
20
<PAGE>
that it was engaged in discussions with third parties concerning a possible
transaction whereby approximately 50% of the Company's equity would be
acquired by a third party and stockholders would receive cash payments in the
range of $30.00 per share and retain a significant equity interest in the
Company. The Company expects to record charges in the second quarter of fiscal
1999 for financial, legal and other expenses associated with the process of
exploring these alternative plans which were not ultimately consummated.
The Company completed a tender offer on April 23, 1998 for $52.3 million out
of the $52.8 million outstanding princpal amount of the Series B Notes at a
price of $115.35 per $100 of principal. The Company's previous senior credit
facility was amended to allow for financing the retirement of the Series B
Notes from borrowings thereunder. The Company incurred a pre-tax charge to
earnings of approximately $10 million during the first quarter of fiscal 1999
for the premium paid to repurchase the Series B Notes and other charges
related to the transaction.
On March 23, 1998, the Company announced a restructuring of its Torhout,
Belgium manufacturing operations. The Company recorded a pre-tax charge of
approximately $2.6 million during the first quarter of fiscal 1999 in
connection with the restructuring. The restructuring provision is primarily
related to termination and severance costs for the elimination of
approximately 111 positions.
As discussed under "Management's Discussion and Analysis of Financial
Condition and Results of Operations," the Company expects U.S. wholesale sales
to be depressed through at least the first half of fiscal 1999 because of
various factors which affected U.S. wholesale sales in fiscal 1998, including
the adverse impact of price increases and pricing strategies, market
disruptions and retailer discounting issues associated with various forms of
cross distribution-channel sales, and forecasting and production scheduling
errors. Commencing in February 1998, management began a detailed study and
evaluation of the Company's U.S. hardside production operations in light of
declining U.S. hardside sales and various marketing issues that the Company is
encountering in the United States. These issues, as well as the decision to
source international hardside products from other production facilities
located closer to the Company's international customers, instead of from its
Denver plant, have resulted in an inventory build-up and reduced hardside
production requirements in the United States. Based on management's
evaluation, on May 14, 1998, the Company approved a plan to further
restructure its U.S. production operations to bring the unit volume and
workforce in the Denver plant into line with expected sales and to achieve a
better balance between fixed and variable costs with respect to this facility.
The restructuring plan calls for a substantial reduction in workforce, as well
as the disposal of molding and other equipment that represents excess
capacity. As a result, during the second quarter of fiscal 1999, the Company
has recorded a restructuring charge of approximately $5.5 million (of which
approximately $2.2 million is non-cash). The Company also expects to incur
additional cash costs of approximately $0.3 million in connection with the
restructuring plan that will be expensed as they are incurred. The Company
expects that the restructuring will be substantially completed by July 31,
1998, and that the annualized cost savings from the restructuring will be
approximately $5.9 million. The foregoing estimate of annual cost savings
constitutes forward looking information and involves known and unknown risks,
uncertainties and other factors that may cause actual cost savings to be
materially different from the foregoing estimate. In addition to the general
factors discussed under "--Implementation of Business Strategy; Forward
Looking Statements" such estimate of annual cost savings is based on a variety
of other factors and was derived utilizing numerous important assumptions,
including (i) achieving estimated reductions in headcount at currently
projected severance cost levels, while maintaining work flow, (ii) achieving a
sufficient level of sales necessary to yield planned production efficiencies
and absorption of fixed costs, (iii) eliminating certain components of fixed
overhead without affecting the Company's ability to manage the downsized
production facility efficiently, (iv) the willingness of the affected
employees to accept more flexible work rules and (v) no disruption to planned
production schedules. The failure of one or more of these assumptions to be
realized may cause the actual annual cost savings to differ materially from
the foregoing estimate.
In connection with the Recapitalization, certain adjustments and
modifications were made to outstanding employee stock options as a result of
the consummation of the Tender Offer. Such adjustments will result in
increased compensation expense of approximately $3.9 million in the second
quarter of fiscal 1999, $0.4 million
21
<PAGE>
during the remainder of fiscal 1999 and $0.8 million in fiscal 2000. See note
(d) of "Notes to Summary Consolidated Financial Information." The pro forma
financial information contained herein does not reflect such increased
compensation expense.
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS; CURRENCY RISKS
Approximately 48% of the Company's net sales for fiscal 1998 were
attributable to its European sales and other foreign operations and export
sales from the United States. In addition to its European manufacturing and
distribution subsidiaries, the Company has a 100% owned Mexican manufacturing
and distribution company and is a partner in joint ventures in Singapore,
South Korea, India, Brazil and China. The Company also has a wholly owned
distribution organization in Hong Kong. The Company's operations may be
affected by economic, political and governmental conditions in some of the
countries where the Company has manufacturing facilities or where its products
are sold. In addition, factors such as changes in economic or political
conditions in any of the countries in which the Company operates could result
in unfavorable exchange rates, new or additional currency or exchange
controls, other restrictions being imposed on the operations of the Company,
or expropriation. The Company's operations may also be adversely affected by
significant fluctuations in the value of the U.S. dollar or the failure of a
partner in an international joint venture to meet performance expectations.
When appropriate, the Company enters into foreign exchange contracts in order
to reduce its economic exposure on certain foreign operations and/or royalty
agreements through the use of forward delivery commitments. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business."
COMPETITION
The Company competes with many domestic and international companies in its
global markets. Samsonite competes on brand name, consumer advertising,
product innovation, quality, differentiation of product features, customer
service and price. The worldwide luggage market is highly fragmented, with the
vast majority of individual competitors having annual sales that are less than
10% of the Company's sales; nevertheless, the Company has many competitors.
Barriers to entry into the manufacturing of softside luggage are very low and
the Company faces competition from many low cost manufacturers of inexpensive,
softside luggage products. In contrast to the softside luggage market, more
significant capital costs are necessary to enter the manufacturing of hardside
luggage; nonetheless, the Company has several hardside luggage competitors in
its major U.S. and European markets. See "Business--Competition."
RESTRICTIONS ON CASH DIVIDENDS ON THE SENIOR PREFERRED STOCK
The New Credit Facility and the Notes Indenture restrict the Company's
ability to pay cash dividends on the Senior Preferred Stock. In addition to
the limitations imposed on the payment of dividends by the New Credit Facility
and the Notes Indenture, under Delaware law the Company is permitted to pay
dividends on its capital stock, including the Senior Preferred Stock, only out
of its surplus or, in the event that it has no surplus, out of its net profits
for the year in which a dividend is declared or for the immediately preceding
fiscal year. Surplus is defined as the excess of a company's total assets over
the sum of its total liabilities plus the par value of its outstanding capital
stock. In order to pay dividends in cash, the Company must have surplus or net
profits equal to the full amount of the cash dividend at the time such
dividend is declared.
In determining the Company's ability to pay dividends, Delaware law permits
the Board of Directors to revalue the Company's assets and liabilities from
time to time to their fair market values in order to create surplus. The
Company cannot predict what the value of its assets or the amount of its
liabilities will be in the future and, accordingly, there can be no assurance
that the Company will be able to pay cash dividends on the Senior Preferred
Stock.
RESTRICTIVE COVENANTS
The New Credit Facility contains numerous financial and operating covenants,
including restrictions on the ability of the Company to pay dividends; incur
indebtedness; merge, consolidate or transfer all or substantially
22
<PAGE>
all of its assets; make certain sales of assets; make investments in joint
ventures; make capital expenditures; create, incur or permit the existence of
certain liens, and requires the Company to achieve and maintain certain
financial ratios. See "Description of New Credit Facility." Such financial
covenants affect the operating flexibility of the Company. The failure to
comply with the covenants would result in a default and permit the lenders
under the New Credit Facility to accelerate the maturity of the indebtedness
issued thereunder. In addition, the Certificate of Designation, the Notes
Indenture and the Exchange Indenture contain a number of restrictive covenants
relating to the Company.
RISKS ASSOCIATED WITH EXCHANGE DEBENTURES
Subject to the satisfaction of certain conditions, the Senior Preferred
Stock is exchangeable at the option of the Company for subordinated debt
securities of the Company ("the Company Exchange Debentures") or general
unsecured debt securities of Holdings ("Holdings Exchange Debentures"). See
"Description of Senior Preferred Stock and Exchange Debentures--The Senior
Preferred Stock--Exchange."
Subordination of Company Exchange Debentures; Absence of Subsidiary
Guarantees. The Company Exchange Debentures, if issued, will be general
unsecured obligations of the Company, subordinated in right of payment to all
existing and future Senior Debt of the Company to the extent set forth in the
Exchange Indenture. As of April 30, 1998, after giving pro forma effect to the
Recapitalization, the aggregate amount of outstanding Senior Debt of the
Company would have been approximately $126.7 million. The subordination
provisions of the Exchange Indenture provide that no payment other than in
Qualified Capital Stock (as defined herein) of the Company or subordinated
debt securities of the Company that require no payment of principal prior to
the stated maturity of the Company Exchange Debentures and that are
subordinated and junior in right of payment to Senior Debt at least to the
same extent as the Company Exchange Debentures (with terms no less favorable
to the Company and the holders of the Designated Senior Debt (as defined
herein) than the terms of the Company Exchange Debentures and the Exchange
Indenture) may be made by or on behalf of the Company or any Subsidiary (as
defined herein), including, without limitation, by way of set-off or
otherwise, for or on account of the Company Exchange Debentures or any
Obligations (as defined herein) under the Company Exchange Debentures or the
Exchange Indenture, or for or on account of the purchase, redemption or other
acquisition of the Company Exchange Debentures or any Obligations under the
Company Exchange Debentures or the Exchange Indenture, and neither the Trustee
(as defined herein) nor any holder or owner of any Company Exchange Debentures
shall take or receive from the Company or any Subsidiary, directly or
indirectly in any manner, payment in respect of all or any portion of Company
Exchange Debentures or for or on account of the purchase, redemption or other
acquisition of the Company Exchange Debentures or in respect of any other
Obligations under the Company Exchange Debentures or the Exchange Indenture
following the occurrence of a Payment Default (as defined herein) and such
prohibition shall continue until such Payment Default is cured, waived in
writing or ceases to exist. In addition, upon the occurrence and during the
continuance of a Non- Payment Event of Default (as defined herein) on any
Designated Senior Debt, no payment or distribution of any assets or securities
of the Company of any kind or character other than Qualified Capital Stock of
the Company or subordinated debt securities of the Company that require no
payment of principal prior to the stated maturity of the Company Exchange
Debentures and that are subordinated and junior in right of payment to Senior
Debt at least to the same extent as the Company Exchange Debentures (with
terms no less favorable to the Company and the holders of the Designated
Senior Debt than the terms of the Company Exchange Debentures and the Exchange
Indenture) may be made by the Company, including, without limitation, by way
of set-off or otherwise, for or on account of the Company Exchange Debentures
or any Obligations under the Company Exchange Debentures or the Exchange
Indenture, or for or on account of the purchase or redemption or other
acquisition of Company Exchange Debentures or any other Obligations under the
Company Exchange Debentures or the Exchange Indenture for a designated period
of time. Upon any payment or distribution of assets of the Company upon
liquidation, dissolution, reorganization, insolvency, or any similar
proceeding, the holders of Senior Debt will be entitled to receive prior
indefeasible payment and satisfaction in full in cash before the holders of
the Company Exchange Debentures are entitled to receive any payment. See
"Description of the Senior Preferred Stock and Exchange Debentures--The
Exchange Debentures--Subordination."
23
<PAGE>
The Company's obligations under the Company Exchange Debentures, if issued,
will be subordinate in right of payment to the New Credit Facility and the
Notes. In addition, the Company's obligations under the New Credit Facility
are secured by a security interest in certain capital stock of certain
subsidiaries of the Company and certain other assets of the Company and
certain of its domestic subsidiaries, and the New Credit Facility contains
certain restrictions and covenants customary to bank credit facilities,
including the maintenance of specified financial ratios. In the event of a
default under the New Credit Facility, or a bankruptcy, liquidation or
reorganization of the Company or certain of its subsidiaries, the lenders
thereunder will have a prior, secured claim on such capital stock and certain
other assets. See "Description of New Credit Facility."
In addition, the rights of the Company and its creditors, including holders
of the Exchange Debentures, to realize upon the assets of a Subsidiary of the
Company upon such Subsidiary's liquidation or reorganization will be subject
to the prior claims of such Subsidiary's creditors, except to the extent that
the Company may itself be a creditor with recognized claims against such
Subsidiary; in such case, the Company's claim would nevertheless be subject to
any security interests in the assets of such Subsidiary and subordinated to
any indebtedness of such Subsidiary senior to claims of the Company. As of
April 30, 1998, after giving pro forma effect to the Recapitalization, the
liabilities of the Company's Subsidiaries would have totaled $211.6 million,
including approximately $109.2 million of trade payables and obligations other
than for borrowed money. Approximately 60% of the Company's net sales and
approximately 58% of the Company's operating income prior to amortization of
intangibles for fiscal 1998 were derived from operations conducted through
Subsidiaries.
Although a majority of the Company's assets is held through Subsidiaries
which will not be guarantors of the Company's obligations under the Company
Exchange Debentures, the Company is an operating company with substantial
assets. In order to afford the Company flexibility to operate its business as
an integrated enterprise, the Exchange Indenture does not restrict the
Company's ability to transfer assets to its Restricted Subsidiaries. While the
Company has no intention of transferring operating assets to its Subsidiaries,
except in the ordinary course of business, there is no restriction on the
Company's ability to transfer all of its assets to its Restricted
Subsidiaries, thereby becoming a holding company whose only assets consist of
the capital stock of its Subsidiaries.
Effective Subordination of Holdings Exchange Debentures. Samsonite Holdings
Inc. will be the issuer of the Holdings Exchange Debentures, if issued. If the
Company transfers its assets to Samsonite Holdings Inc., then Samsonite
Holdings Inc. will be a holding company whose only material asset will be the
capital stock of the Company. As a result, Samsonite Holdings Inc. will be
dependent upon payments or other transfers of funds from the Company to
generate the funds necessary to meet its obligations, including payments in
respect of the Holdings Exchange Debentures. The ability of the Company to
make such payments or transfers of funds will be subject to, among other
things, the availability of sufficient cash and may be subject to the
restrictive covenants contained in the New Credit Facility, the Notes
Indenture and future debt agreements. The New Credit Facility and the Notes
Indenture restrict the Company's ability to make such payments and other
transfers of funds, subject to certain limited exceptions. Therefore, no
assurance can be given that Samsonite Holdings Inc. will have sufficient funds
to make payments in respect of the Holdings Exchange Debentures when due. See
"Concurrent Offering," "Description of Senior Preferred Stock and Exchange
Debentures--The New Senior Preferred Stock--Exchange" and "New Credit
Facility."
CONTROLLING STOCKHOLDER
Affiliates of Apollo Advisors, L.P. (collectively, "Apollo") beneficially
own approximately 34.1% of the outstanding Common Stock. See "Security
Ownership of Certain Beneficial Owners and Management." By reason of such
percentage ownership, Apollo may have significant control over the management
and policies of the Company.
LITIGATION AND CONTINGENT OBLIGATIONS
In May 1993, the United States Bankruptcy Court for the Southern District of
New York confirmed Astrum's Chapter 11 Plan of Reorganization, pursuant to
which Astrum effected a comprehensive restructuring
24
<PAGE>
that, among other things, created certain contingent obligations. In addition,
the Company is a party to certain currently pending litigation, including
recently filed purported class action lawsuits. See "Business--Legal
Proceedings" and Note 14 to the Company's consolidated financial statements
included elsewhere in this Prospectus for a description of these matters.
FRAUDULENT CONVEYANCE RISKS
The incurrence by the Company of indebtedness, including indebtedness in
connection with the New Credit Facility and the Notes offered in the
Concurrent Offering, and the subsequent transfer of a portion of the proceeds
thereof to the Company's stockholders to purchase Common Stock in the Tender
Offer, may be subject to review under relevant federal and state fraudulent
conveyance statutes in a bankruptcy, reorganization or rehabilitation case or
similar proceeding or in a lawsuit by or on behalf of unpaid creditors of the
Company. Under these fraudulent conveyance statues, if a court were to find
that, at the time of the Recapitalization, (i) the Company incurred the
indebtedness and purchased the Common Stock in the Tender Offer with the
intent of hindering, delaying or defrauding current or future creditors or
(ii)(a) the Company received less than reasonably equivalent value or fair
consideration in connection with the Recapitalization and (b) the Company (1)
was insolvent or was rendered insolvent by reason of the Recapitalization,
including the incurrence of the indebtedness related thereto, (2) was engaged
in a business or transaction for which its assets constituted unreasonably
small capital, (3) intended to incur, or believed that it would incur
obligations beyond its ability to pay as such obligations mature (as the
foregoing terms are defined in or interpreted under the fraudulent conveyance
statutes) or (4) was a defendant in an action for money damages, or had a
judgment for money damages docketed against it (if, in either case, after
final judgment the judgment is unsatisfied), such court could determine to
invalidate such indebtedness, in whole or in part, as a fraudulent conveyance
or subordinate such indebtedness to existing or future creditors of the
Company.
IMPLEMENTATION OF BUSINESS STRATEGY; FORWARD-LOOKING STATEMENTS
The Company's business strategy includes plans to broaden product offerings
and channels of distribution, strengthen marketing and product innovation,
continue worldwide expansion, reduce excess working capital and resolve U.S.
wholesale issues. The Company's strategic plan should be considered in light
of the risks and expenses associated with implementing these strategies.
Successful implementation of these strategies will depend on numerous factors,
many of which are beyond the Company's control, including economic,
competitive and other conditions and uncertainties and the ability to retain
qualified management personnel. No assurance can be given that the Company
will be successful in implementing its business strategy.
Certain statements under the captions "Prospectus Summary," "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Business" and elsewhere in this Prospectus (including certain
documents incorporated herein by reference) constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results, performance
or achievements of the Company to be materially different from any future
results, performance or achievements expressed or implied by such forward-
looking statements. Such factors include, among others, the following: general
economic and business conditions, including foreign currency fluctuations;
industry capacity; changes in customer preferences; demographic changes;
competition; changes in methods of distribution and technology; changes in
political, social and economic conditions and local regulations, particularly
in Europe and Asia; general levels of economic growth in emerging market
countries such as India, China, Brazil, Argentina, and other Asian and South
American countries; the loss of any significant customers; completion of new
product developments within anticipated time frames; changes in interest
rates; and various other factors beyond the Company's control.
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, the Issuer will be required to
make an offer to purchase all of the outstanding Senior Preferred Stock and/or
Exchange Debentures, as the case may be, at a price equal to 101%
25
<PAGE>
of the aggregate amount thereof plus accrued and unpaid dividends or interest,
as the case may be, thereon to the purchase date. The occurrence of certain of
the events that would constitute a Change of Control would constitute a
default under the New Credit Facility and might constitute a default under
other indebtedness of the Company. In addition, the New Credit Facility
prohibits the purchase of the Senior Preferred Stock and/or Exchange
Debentures, as the case may be, by the Issuer in the event of a Change of
Control, unless and until such time as the indebtedness under the New Credit
Facility is repaid in full. The Issuer's failure to purchase the Senior
Preferred Stock and/or Exchange Debentures, as the case may be, in such
instance would result in a default under each of the Certificate of
Designation, the Exchange Indenture and the New Credit Facility. The inability
to repay the indebtedness under the New Credit Facility, if accelerated, could
have material adverse consequences to the Company and to the holders of the
Senior Preferred Stock and/or Exchange Debentures, as the case may be. Future
equity or indebtedness of the Issuer may also contain prohibitions of certain
events or transactions that could constitute a Change of Control or require
such equity or indebtedness to be repurchased upon a Change of Control. See
"Description of the Senior Preferred Stock and Exchange Debentures--Change of
Control." In the event of a Change of Control, there can be no assurance that
the Issuer would have sufficient assets to satisfy all of its obligations
under the New Credit Facility and the Senior Preferred Stock and/or Exchange
Debentures, as the case may be.
LIMITATION ON NET OPERATING LOSS CARRYFORWARDS
Following the Recapitalization, the ability of the Company to utilize its
net operating loss carryforwards for United States federal income tax purposes
may be subject to certain limitations. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources."
EFFECT OF YEAR 2000 ISSUES ON COMPANY OPERATIONS
The Company has conducted a review of its computer systems to identify the
systems that could be affected by the Year 2000 issue which results from
computer programs being written using two digits rather than four to define
the applicable year. Any computer programs that have time-sensitive software
may recognize a date using "00" as the year 1900 rather than the year 2000,
resulting in a major system failure or miscalculations. In the U.S., the
Company is installing new financial, manufacturing and distribution software
which is Year 2000 compliant. The Company is experiencing certain difficulties
in connection with the conversion of its systems to its new distribution
software, as described in the press release included as an exhibit to the
Company's report on Form 8-K, dated August 12, 1998, incorporated herein by
reference. See "Available Information" and "Incorporation of Certain Documents
by Reference." These new systems are being installed in response to other
business needs as well as Year 2000 issues. The Company's European division is
updating its systems to be Year 2000 compliant and expects this to be
completed during fiscal 1999. Other operations throughout the world are
generally using recently purchased software which is Year 2000 compliant. The
Company estimates it will spend approximately $8 million in the U.S. for new
systems by the end of fiscal 1999; costs incurred in Europe and the remainder
of the world for Year 2000 compliance are not expected to be material.
Although the Company believes it has identified internal Year 2000 issues
which might have a significant impact on operations, no assurance can be given
that all such issues have been identified or will be corrected. Additionally,
no assurances can be given that the Company's customers, vendors, banks or
other third parties will not experience Year 2000 issues which may have a
significant impact on the Company's operations.
ABSENCE OF PUBLIC MARKET FOR THE SENIOR PREFERRED STOCK
The New Senior Preferred Stock is being offered to the holders of the Old
Senior Preferred Stock. The Old Senior Preferred Stock was issued on June 24,
1998 to a limited number of institutional investors and is eligible for
trading in the Private Offering, Resale and Trading through Automated Linkages
Market, the National Association of Securities Dealers' screenbased, automated
market for trading of securities eligible for resale under Rule 144A. To the
extent that shares of Old Senior Preferred Stock are tendered and accepted in
the Exchange Offer, the trading market for the remaining untendered shares of
Old Senior Preferred Stock could be adversely affected. There is no existing
trading market for the New Senior Preferred Stock, and there can be no
26
<PAGE>
assurance regarding the future development of a market for the New Senior
Preferred Stock, or the ability of holders of the New Senior Preferred Stock
to sell their shares of New Senior Preferred Stock or the price at which such
holders may be able to sell their shares of New Senior Preferred Stock. If
such a market were to develop, the New Senior Preferred Stock could trade at
prices that may be higher or lower than the initial offering price of the Old
Senior Preferred Stock depending on many factors, including prevailing
interest rates, the Company's operating results and the market for similar
securities. Although the Initial Purchaser has informed the Company that it
currently intends to make a market in the New Senior Preferred Stock, it is
not obligated to do so, and any such market making may be discontinued at any
time without notice. Accordingly, there can be no assurance as to the
development or liquidity of any market for the New Senior Preferred Stock. The
Company does not intend to apply for listing of the New Senior Preferred Stock
on any securities exchange or for quotation through the National Association
of Securities Dealers Automated Quotation System.
THE RECAPITALIZATION
The Old Senior Preferred Stock was issued as part of the recapitalization of
the Company (the "Recapitalization") involving the repurchase pursuant to the
Tender Offer of 10.5 million shares of Common Stock at a purchase price of
$40.00 per share ($420 million in the aggregate) and the refinancing of
certain existing indebtedness. Concurrently with the consummation of the
offering of the Old Senior Preferred Stock, the Company and its principal
European subsidiary entered into the New Credit Facility to obtain funds that,
together with the net proceeds of the offering of the Old Senior Preferred
Stock and the Concurrent Offering of Notes, were used to finance the
Recapitalization. See "Concurrent Offering" and "Description of New Credit
Facility."
The following table sets forth the sources and uses of funds in connection
with the Recapitalization (in millions):
<TABLE>
<S> <C>
SOURCES:
New Credit Facility--Term Loan Facilities.......................... $110.0
Proceeds from sale of Old Senior Preferred Stock and warrants...... 175.0
Proceeds from sale of Notes........................................ 350.0
------
Total.......................................................... $635.0
======
USES:
Tender Offer....................................................... $420.0
Repayment of existing indebtedness................................. 180.0
Estimated fees and expenses(a)..................................... 25.9
Working capital.................................................... 9.1
------
Total.......................................................... $635.0
======
</TABLE>
- --------
(a) Includes discounts and commissions payable in connection with the offering
of the Old Senior Preferred Stock and the Concurrent Offering, fees
payable in connection with the New Credit Facility and investment banking,
legal, accounting, printing and other miscellaneous fees and expenses in
connection with the Recapitalization.
27
<PAGE>
CONCURRENT OFFERING
Concurrently with the consummation of the sale of the Old Senior Preferred
Stock, the Company issued and sold $350 million aggregate principal amount of
Notes in a transaction exempt from, or not subject to, the registration
requirements of the Securities Act. The net proceeds to the Company from the
Concurrent Offering were approximately $337.7 million. The interest rate on
the Notes is 10 3/4% per annum, payable in cash semi-annually in arrears. The
Notes will mature on June 15, 2008.
The Notes are redeemable at the option of the Company in whole or in part,
at any time on or after June 15, 2003, at a premium to principal amount
(declining to 100% of principal amount on June 15, 2006), plus accrued and
unpaid interest thereon to the redemption date. In addition, the Company, at
its option, may redeem in the aggregate up to 40% of the principal amount of
the Notes originally issued, at any time and from time to time prior to June
15, 2001, at a redemption price equal to 110.75% of the aggregate principal
amount so redeemed, plus accrued and unpaid interest thereon to the redemption
date with the Net Proceeds of one or more Equity Offerings; provided that at
least $210 million aggregate principal amount of Notes remain outstanding
immediately after any such redemption and that any such redemption occurs
within 90 days after the receipt by the Company of the proceeds of such Equity
Offering. The Notes will be redeemable at the option of the holders thereof
upon a Change of Control of the Company at a redemption price of 101% of
principal amount, plus accrued and unpaid interest thereon to the purchase
date.
The Notes Indenture contains certain restrictive covenants customary for
similar securities, including limitations on the ability of the Company and
its Restricted Subsidiaries to: (i) incur additional indebtedness; (ii) pay
dividends and make certain other distributions; (iii) issue capital stock of
Restricted Subsidiaries; (iv) make certain investments; (v) repurchase stock;
(vi) create liens; (vii) enter into transactions with affiliates; (viii)
create dividend and other payment restrictions affecting Restricted
Subsidiaries; (ix) merge or consolidate; and (x) sell or transfer assets.
These covenants are subject to a number of important exceptions.
USE OF PROCEEDS
The Company will not receive any proceeds from the Exchange Offer. The net
proceeds from the offering of the Old Senior Preferred Stock were
approximately $168.9 million, after deducting discounts and commissions and
expenses related to the offering of the Old Senior Preferred Stock. The
Company used such net proceeds, together with the net proceeds from the
Concurrent Offering and borrowings under the New Credit Facility, to
repurchase 10.5 million shares of its outstanding Common Stock pursuant to the
Tender Offer, to refinance certain existing indebtedness and to pay related
fees and expenses. The existing indebtedness of the Company repaid consisted
of borrowings under the Company's then existing senior credit facility (the
"Old Credit Facility"), which was terminated upon completion of the offering
of the Old Senior Preferred Stock. As of April 30, 1998, there were
approximately $186.7 million of outstanding borrowings under the Old Credit
Facility which bore interest at a weighted average rate of approximately 5.8%
per annum. An affiliate of the Initial Purchaser is an agent under the New
Credit Facility. See "The Recapitalization," "Capitalization," "Selected
Historical and Pro Forma Consolidated Financial Information" and "Plan of
Distribution."
28
<PAGE>
CAPITALIZATION
The following table sets forth the cash and cash equivalents, short-term
obligations, and capitalization of the Company as of April 30, 1998, as
adjusted to give pro forma effect to the Recapitalization as if it had
occurred on April 30, 1998. See "The Recapitalization" and "Use of Proceeds."
The information set forth below should be read in conjunction with "Selected
Historical and Pro Forma Consolidated Financial Information," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Company's consolidated financial statements and the notes thereto included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
AS OF APRIL 30, 1998
--------------------------------
AS
ACTUAL ADJUSTMENTS ADJUSTED
--------- ----------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash and cash equivalents................. $ 6,911 $ 2,301 $ 9,212
========= ========= =========
Short-term debt and current installments
of long-term obligations................. $ 13,746 $ -- $ 13,746
--------- --------- ---------
Long-term obligations:
Old Credit Facility..................... 186,699 (186,699) --
New Credit Facility..................... -- 110,000 110,000
Capital leases and other obligations.... 16,398 -- 16,398
11 1/8% Series B Senior Subordinated
Notes.................................. 532 -- 532
Notes................................... -- 350,000 350,000
--------- --------- ---------
Total long-term obligations........... 203,629 273,301 476,930
--------- --------- ---------
Total obligations................... 217,375 273,301 490,676
--------- --------- ---------
Redeemable Preferred Stock................ -- 163,080 163,080 (a)
Stockholders' equity:
Preferred stock, $.01 par value;
2,000,000 shares authorized; no shares
issued and outstanding................. -- -- --
Common stock, $.01 par value; 60,000,000
shares authorized; 20,420,902 shares
issued and outstanding; 9,920,902
shares outstanding, as adjusted........ 204 -- 204
Additional paid-in capital.............. 419,283 5,820 425,103
Accumulated deficit..................... (206,098) (3,241) (209,339)
Foreign currency translation adjust-
ment................................... (15,857) -- (15,857)
Unearned compensation-restricted stock.. (23) -- (23)
Treasury stock, at cost................. -- (420,000) (420,000)
--------- --------- ---------
Total stockholders' equity (deficit).. $ 197,509 $(417,421) $(219,912)
========= ========= =========
Total capitalization (including
short-term debt, net of cash and
cash equivalents).................. $ 407,973 $ 16,659 $ 424,632
========= ========= =========
</TABLE>
- -------
(a) The carrying value of the Senior Preferred Stock (which is mandatorily
redeemable) is recorded net of issuance costs of approximately $6.1
million and the aggregate value assigned to the warrants to purchase
Common Stock of $5.82 million, which will be amortized over the twelve-
year term of the Senior Preferred Stock.
29
<PAGE>
SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The selected historical consolidated financial information for the Company
presented below has been derived from the Company's audited consolidated
financial statements as of and for the fiscal years ended January 31, 1998,
1997, 1996 and 1995, the seven months ended January 31, 1994 and the five
months ended June 30, 1993 which have been restated for discontinued
operations and from the Company's unaudited consolidated financial statements
as of and for the three months ended April 30, 1998 and 1997. The Company's
unaudited consolidated financial statements as of and for the three months
ended April 30, 1998 and 1997 include, in the opinion of management, all
adjustments, consisting only of normal nonrecurring adjustments, which the
Company considers necessary for a fair presentation of the financial position
and results of operations of the Company for these periods. Operating results
for the three months ended April 30, 1998 are not necessarily indicative of
the results that may be expected for the full year. The selected historical
consolidated financial information presented below should be read in
conjunction with "Capitalization," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Company's consolidated
financial statements and related notes thereto included elsewhere in this
Prospectus. The pro forma financial information presented below gives effect
to the Recapitalization as if it had occurred on February 1, 1997, in the case
of the statement of operations and other data, and on the balance sheet date,
in the case of the balance sheet data. The selected pro forma financial data
are presented for illustrative purposes only and are not necessarily
indicative of the operating results or financial position that would have
occurred if the Recapitalization had been consummated on the dates indicated,
nor are they necessarily indicative of future operating results or financial
position.
<TABLE>
<CAPTION>
PREDECESSOR REORGANIZED
COMPANY(A) COMPANY(A)
----------- -----------------------------------------------------------------------------
COMBINED
FIVE SEVEN TWELVE
MONTHS MONTHS MONTHS
ENDED ENDED ENDED YEAR ENDED JANUARY 31,
JUNE 30, JANUARY 31, JANUARY 31, -----------------------------------------------------
1993 1994 1994 1995 1996 1997 1998
----------- ----------- ----------- --------- -------- -------- --------------------
HISTORICAL PRO FORMA
---------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net Sales(b)................. $192,519 $331,100 $523,619 $ 635,452 $675,209 $741,138 $736,875 $736,875
Cost of Goods Sold........... 113,032 196,777 309,809 373,967 414,691 449,333 424,349 424,349
-------- -------- -------- --------- -------- -------- -------- --------
Gross Profit................. 79,487 134,323 213,810 261,485 260,518 291,805 312,526 312,526
Selling, General and Adminis-
trative
Expenses.................... 66,094 97,480 163,574 197,716 203,701 233,761(c) 234,257 239,485(d)
Amortization of Intangible
Assets(e)................... 206 39,924 40,130 67,189 63,824 31,837 7,101 7,101
Provision for Restructuring
Operations.................. -- -- -- -- 2,369 10,670 1,866 1,866
-------- -------- -------- --------- -------- -------- -------- --------
Operating Income (Loss)...... 13,187 (3,081) 10,106 (3,420) (9,376) 15,537 69,302 64,074
Interest Income.............. -- 4,342 4,342 2,909 4,709 1,419 2,574 2,574
Interest Expense and
Amortization of Debt Issue
Costs and Premium........... 4,404(f) 24,839 29,243 37,875 39,974 35,670 19,918 52,918(g)
Other Income--Net(h)......... 360 5,504 5,864 2,729 3,967 18,821 28,294 28,294
Reorganization Items......... 462,447 -- 462,447 -- -- -- -- --
Income Tax Expense........... 2,313 6,797 9,110 10,619 9,095 10,389 23,088 8,561(i)
Minority Interest in Earnings
of
Subsidiaries................ (901) (1,148) (2,049) (931) (1,385) (1,041) (287) (287)
-------- -------- -------- --------- -------- -------- -------- --------
Income (Loss) from Continuing
Operations.................. 468,376 (26,019) 442,357 (47,207) (51,154) (11,323) 56,877 33,176
Income (Loss) from Operations
Discontinued and Sold,
Cumulative
Effect of Change in
Accounting
Principles and Extraordinary
Items....................... 456,448 (25,502) 430,946 (64,372) (10,293) -- (16,178) (22,402)
-------- -------- -------- --------- -------- -------- -------- --------
Net Income (Loss)............ $924,824 $(51,521) $873,303 $(111,579) $(61,447) $(11,323) $ 40,699 $ 10,774
======== ======== ======== ========= ======== ======== ======== ========
Senior Preferred Stock
Dividends(j)................ 26,570
--------
Net Income (Loss) Available
to Common Stockholders...... $(15,796)
========
</TABLE>
(table continues on the following page)
30
<PAGE>
(table continued from the previous page)
<TABLE>
<CAPTION>
PREDECESSOR REORGANIZED
COMPANY(A) COMPANY(A)
----------- -----------------------------------------------------------------------------
COMBINED
FIVE SEVEN TWELVE
MONTHS MONTHS MONTHS
ENDED ENDED ENDED YEAR ENDED JANUARY 31,
JUNE 30, JANUARY 31, JANUARY 31, --------------------------------------------------
1993 1994 1994 1995 1996 1997 1998
----------- ----------- ----------- -------- -------- -------- --------------------
HISTORICAL PRO FORMA
---------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Income (Loss) per
Share--Basic(j):
Continuing Operations.. $(1.68) $ (3.05) $ (3.24) $ (.71) $ 2.81 $ .68
Net Income (Loss)...... (3.33) (7.22) (3.89) (.71) 2.01 (1.62)
Income (Loss) per
Share--
Assuming Dilution(j):
Continuing Operations.. (1.68) (3.05) (3.24) (.71) 2.70 .62
Net Income (Loss)...... (3.33) (7.22) (3.89) (.71) 1.93 (1.49)
BALANCE SHEET DATA (AS
OF END OF PERIOD):
Property, Plant and
Equipment, Net......... $ 131,894(k) $137,686 $140,912 $143,959 $142,351 $142,351
Total Assets............ 1,111,735(k) 866,000 607,443 592,658 610,049 654,682
Long-Term Obligations
(Including Current
Installments).......... 573,197(l) 417,175 310,959 290,617 179,223 484,421
Redeemable Preferred
Stock.................. -- -- -- -- -- 163,080
Stockholders' Equity
(Deficit).............. 253,693(l) 148,472 25,116 24,998 208,886 (214,759)
OTHER DATA:
EBIT(m)................. $ 15,970 $ (691) $ (5,409) $ 34,358 $ 97,596 $ 97,596
Depreciation and
Amortization........... 55,024 85,486 84,101 53,889 28,594 28,594
---------- -------- -------- -------- -------- --------
EBITDA(n)............... 70,994 84,795 78,692 88,247 126,190 126,190
Items Relating to
Settlement of
Contingent Liabilities
and Other Adjustments.. (4,797) (2,864) (357) (3,368) (13,762) (13,762)
---------- -------- -------- -------- -------- --------
Adjusted EBITDA(o)...... $ 66,197 $ 81,931 $ 78,335 $ 84,879 $112,428 $112,428
========== ======== ======== ======== ======== ========
Ratio of Adjusted EBITDA
to Pro Forma Interest
Expense, Net(p)........ -- -- -- -- -- 2.23x
Ratio of Earnings to
Fixed Charges(q)....... -- -- -- 1.00x 4.39x 1.05x
Capital Expenditures.... $ 13,095 $ 18,453 $ 21,668 $ 31,093 $ 36,313 $ 36,313
</TABLE>
(see footnotes on the following pages)
31
<PAGE>
<TABLE>
<CAPTION>
REORGANIZED
COMPANY(A)
--------------------------------------------
THREE MONTHS ENDED APRIL 30,
--------------------------------------------
1997 1998
------------ ------------------------------
HISTORICAL PRO FORMA
--------------- --------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net Sales(b).................... $ 169,562 $ 156,676 $ 156,676
Cost of Goods Sold.............. 99,293 97,273 97,273
------------ ------------- -------------
Gross Profit.................... 70,269 59,403 59,403
Selling, General and Administra-
tive Expenses.................. 54,656 59,621 59,621
Amortization of Intangible
Assets(e)...................... 1,824 1,526 1,526
Provision for Restructuring
Operations..................... (600) 2,608 2,608
------------ ------------- -------------
Operating Income (Loss)......... 14,389 (4,352) (4,352)
Interest Income................. 465 791 791
Interest Expense and
Amortization of Debt Issue
Costs and Premium.............. 6,207 4,808 13,408 (g)
Other Income--Net(h)............ 6,899 998 998
Income Tax Expense (Benefit).... 6,829 (2,924) (6,192)(i)
Minority Interest in Earnings of
Subsidiaries................... (218) (256) (256)
------------ ------------- -------------
Income (Loss) from Continuing
Operations..................... 8,499 (4,703) (10,035)
Income (Loss) from Operations
Discontinued and Sold,
Cumulative Effect of Change in
Accounting Principles and
Extraordinary Items............ (6,633) (6,224) --
------------ ------------- -------------
Net Income (Loss)............... $ 1,866 $ (10,927) $ (10,035)
============ ============= =============
Senior Preferred Stock
Dividends(j)................... 7,210
-------------
Net Income (Loss) Available to
Common Stockholders............ $ (17,245)
=============
Income (Loss) per Share--
Basic(j):
Continuing Operations.......... $ 0.43 $ (0.23) $ (1.74)
Net Income (Loss).............. 0.09 (0.54) (1.74)
Income (Loss) per Share--
Assuming Dilution(j):
Continuing Operations.......... 0.41 (0.23) (1.74)
Net Income (Loss).............. 0.09 (0.54) (1.74)
BALANCE SHEET DATA (AS OF END OF
PERIOD):
Property, Plant and Equipment,
Net............................ $ 141,092 $ 140,964 $ 140,964
Total Assets.................... 589,404 617,758 636,718
Long-Term Obligations (Including
Current Installments).......... 161,728 208,291 481,592
Redeemable Preferred Stock...... -- -- 163,080
Stockholders' Equity (Deficit).. 173,768 197,509 (219,912)
OTHER DATA:
EBIT(m)......................... $ 21,288 $ (3,354) $ (3,354)
Depreciation and Amortization... 7,208 6,943 6,943
------------ ------------- -------------
EBITDA(n)....................... 28,496 3,589 3,589
Items Relating to Settlement of
Contingent Liabilities and
Other Adjustments.............. (5,296) 2,302 2,302
------------ ------------- -------------
Adjusted EBITDA(o).............. $ 23,200 $ 5,891 $ 5,891
============ ============= =============
Ratio of Adjusted EBITDA to Pro
Forma Interest Expense, Net.... -- -- (p)
Ratio of Earnings to Fixed
Charges(q)..................... 3.17x -- --
Capital Expenditures............ $ 8,002 $ 7,433 $ 7,433
</TABLE>
(see footnotes on the following pages)
32
<PAGE>
IMPACT OF FAIR VALUE ADJUSTMENTS ATTRIBUTABLE TO THE REORGANIZATION OF ASTRUM,
RESTRUCTURINGS AND CERTAIN OTHER EXPENSES:
Included in the Company's statements of operations are amortization and
depreciation related to adjustments of assets and liabilities to fair value in
connection with the adoption of the American Institute of Certified Public
Accountants Statement of Position 90-7 entitled "Financial Reporting by
Entities in Reorganization under the Bankruptcy Code" ("SOP 90-7") in June
1993. The most significant adjustment related to reorganization value in
excess of identifiable assets which was amortized over the three-year period
ended June 1996. The Company also recorded fresh start adjustments to reflect
tradenames, licenses, patents, and other intangibles at their fair values,
which are being amortized over periods ranging from one to forty years.
Property and equipment adjusted to fair values in connection with the adoption
of SOP 90-7 are being depreciated over their respective useful lives,
primarily ranging from two to six years. In addition, the Company's statements
of operations include provisions for restructuring operations in fiscal 1996,
1997 and 1998 as well as certain other expenses associated with the fiscal
1997 restructuring and management team changes. Such other expenses in fiscal
1997 include those incurred for consulting services in connection with
establishing the fiscal 1997 restructuring plan, the cessation of the former
chief executive officer's employment, the hiring of new and additional members
of the executive management team, and for expenses incurred in excess of the
original fiscal 1996 provision for the consolidation of American Tourister
manufacturing facilities.
Due to the significance of these items, management believes that it is
useful to isolate their impact on net income (loss) and operating income
(loss) as shown below. This information does not represent and should not be
considered an alternative to net income, any other measure of performance as
determined by generally accepted accounting principles or as an indicator of
operating performance. The information presented may not be comparable to
similar presentations reported by other companies.
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
--------------------------------------------
1996 1997 1998
------------- -------------- -------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
IMPACT ON NET INCOME OR LOSS
Fresh Start Amortization and
Depreciation(e)................ $ 66,433 $ 34,484 $ 8,738
Provision for Restructuring
Operations..................... 2,369 10,670 1,866
Certain Other Expenses
Associated with the
Restructuring and Management
Changes(c)..................... -- 5,400 --
Tax Benefit..................... (5,629) (11,319) (4,030)
------------- -------------- -------------
After-Tax Impact on Net Income
or Loss........................ $ 63,173 $ 39,235 $ 6,574
============= ============== =============
Impact on Net Income or Loss Per
Share--Assuming Dilution....... $ 4.00 $ 2.38 $ 0.31
============= ============== =============
IMPACT ON OPERATING INCOME
(LOSS)
Operating Income (Loss)......... $ (9,376) $ 15,537 $ 69,302
Fresh Start Amortization and
Depreciation(e)................ 66,433 34,484 8,738
Provision for Restructuring
Operations..................... 2,369 10,670 1,866
Certain Other Expenses
Associated with the
Restructuring and Management
Changes(c)..................... -- 5,400 --
------------- -------------- -------------
Operating Income Before Fresh
Start Amortization and
Depreciation, Provision for
Restructuring Operations and
Certain Other Expenses
Associated with the
Restructuring and Management
Changes........................ $ 59,426 $ 66,091 $ 79,906
============= ============== =============
</TABLE>
(see footnotes on the following pages)
33
<PAGE>
NOTES TO SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
(a) Prior to July 14, 1995, the Company was a subsidiary of Astrum International
Corp. ("Astrum"). On July 14, 1995, Astrum merged with Samsonite Corporation
and changed its name to Samsonite Corporation. In June 1993, Astrum
completed a financial restructuring pursuant to a plan of reorganization
under Chapter 11 of the United States Bankruptcy Code (the "Plan").
Effective June 30, 1993 and pursuant to SOP 90-7, the Company was required
to adjust its assets and liabilities to their fair ("fresh start") values
and create a new entity for financial reporting purposes. The information
for the "Predecessor Company" reflects activity occurring through June 30,
1993, prior to effectiveness of the Plan, and the information for the
"Reorganized Company" reflects activity occurring after such date. As a
result of the effects of SOP 90-7 on amortization of intangibles,
depreciation, interest expense, and reorganization items, the periods before
and after June 30, 1993 are not comparable.
(b) The Company acquired American Tourister in August 1993. Net sales for the
combined periods comprising the year ended January 31, 1994 include net
sales of $47.7 million of American Tourister for five months. Net sales
for the fiscal years ended January 31, 1995, 1996 and 1997 include net
sales for American Tourister of $117.8 million, $115.0 million and $147.3
million, respectively. Because of the consolidation of American Tourister
wholesale operations with the Company's, comparable American Tourister
sales amount are not available for fiscal year 1998.
(c) Selling, General and Administrative Expenses include $5.4 million of
expenses during the year ended January 31, 1997 for (i) consulting fees to
establish the restructuring plan ($0.8 million), (ii) the cessation of the
former chief executive officer's employment and the change in management
($4.1 million) and (iii) expenses in excess of the original provision in
fiscal 1996 for the consolidation of American Tourister manufacturing
facilities ($0.5 million).
(d) Pro forma Selling, General and Administrative Expenses for the fiscal year
ended January 31, 1998 have been adjusted to reflect a $4.8 million charge
for estimated expenses associated with the process of exploring
alternatives to enhance stockholder value, including the Recapitalization
and a $0.4 million charge for deferred financing costs related to the Old
Credit Facility. Such expenses will be charged to operations in fiscal
1999. In connection with the Recapitalization, certain adjustments and
modifications have been made to outstanding employee stock options as a
result of the consummation of the Tender Offer. Such adjustments will
result in increased compensation expense of approximately $3.9 million in
the second quarter of fiscal 1999, $0.4 million during the remainder of
fiscal 1999 and $0.8 million in fiscal 2000. Such increased compensation
expense is not reflected in Pro Forma Selling, General and Administrative
Expenses.
(e) As discussed in note (a) above, the Company adjusted its assets and
liabilities to their fresh start values effective June 30, 1993. Since
June 30, 1993, the Company's statements of operations include amortization
and depreciation related to these fresh start adjustments. The most
significant fresh start adjustment relates to recording Reorganization
Value in Excess of Identifiable Assets, which was amortized over a three-
year period which ended in June 1996. In addition, fresh start
amortization includes amortization of fresh start adjustments to reflect
the fair value of trademarks, licenses, patents and other intangibles,
which are being amortized over periods from one to forty years. Fresh
start amortization and depreciation also includes depreciation of fresh
start adjustments to reflect the fair value of property and equipment,
depreciated over their estimated useful lives ranging primarily from two
to six years.
Fresh Start Amortization and Depreciation consists of the following:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED JANUARY 31, APRIL 30,
---------------------- --------------------
1996 1997 1998 1997 1998
------- ------- ------ ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
FRESH START AMORTIZATION:
Amortization of Reorganization
Value in Excess of Identifi-
able Assets.................. $55,072 $22,947 $ -- $ -- $ --
Amortization of Licenses, Pat-
ents and Trademarks and Oth-
er........................... 7,823 7,976 6,184 1,607 1,432
------- ------- ------ ------- -------
Total Fresh Start Amortiza-
tion Included in Amortiza-
tion of
Intangibles................ 62,895 30,923 6,184 1,607 1,432
------- ------- ------ ------- -------
FRESH START DEPRECIATION--
PROPERTY AND EQUIPMENT:
Included in Cost of Goods
Sold......................... 2,895 2,914 2,093 685 411
Included in Selling, General
and Administrative Expenses.. 643 647 461 151 90
------- ------- ------ ------- -------
Total Fresh Start Deprecia-
tion....................... 3,538 3,561 2,554 836 501
------- ------- ------ ------- -------
Total Fresh Start Amortization
and Depreciation............. $66,433 $34,484 $8,738 $ 2,443 $ 1,933
======= ======= ====== ======= =======
</TABLE>
(footnotes continue on the following page)
34
<PAGE>
(f) In accordance with SOP 90-7, no interest expense on certain indebtedness
outstanding prior to the effectiveness of the Plan was accrued from June
25, 1992 through June 30, 1993.
(g) Pro forma Interest Expense and Amortization of Debt Issue Costs and
Premium gives effect to the issuance of the Notes, and additional
borrowings under the New Credit Facility, including the amortization of
debt issuance costs. The foregoing increase Interest Expense and
Amortization of Debt Issue Costs and Premium by approximately $33.0
million and $8.6 million for the year ended January 31, 1998 and the three
months ended April 30, 1998, respectively. Pro forma Interest Expense and
Amortization of Debt Issue Costs and Premium consists of the following
(in millions):
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
JANUARY 31, 1998 APRIL 30, 1998
----------------- ------------------
<S> <C> <C>
Notes................................. $37.6 $ 9.4
New Credit Facility (8.4% on U.S. Term
Loan and 6.1% on
Europe Term Loan).................... 9.2 2.3
Capital lease obligations and other
foreign borrowings................... 4.4 1.3
Non-cash amortization of capitalized
fees and expenses.................... 1.7 0.4
----- -----
Pro forma Interest Expense and Amor-
tization of Debt Issue Costs and
Premium............................ $52.9 $13.4
===== =====
</TABLE>
(h) Other Income--Net for fiscal 1996, 1997 and 1998 and for the three months
ended April 30, 1997 and 1998 consists of the following:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED JANUARY 31, APRIL 30,
------------------------ --------------------
1996 1997 1998 1997 1998
------ ------- ------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net realized gains from
foreign currency forward
delivery contracts....... $ (494) $ 2,829 $ 6,463 $ 918 $ 675
Rental income............. 1,735 1,987 1,633 522 252
Equity in loss of uncon-
solidated affiliate...... -- (33) (547) (61) (235)
Pension expense related to
merged plans............. -- -- (706) -- --
Foreign currency transac-
tion losses, net......... (1,660) (211) (1,834) (370) (77)
Unrealized gains from for-
eign currency forward de-
livery contracts......... -- -- -- 2,729 753
Gain (Loss) on disposition
of fixed assets, net..... (245) (62) (377) (7) 737
Other, net................ (737) (1,120) (1,247) (418) (1,107)
Favorable settlement of
claims................... -- 3,802 2,060 2,128 --
Adjustment of allowances
relating to previous op-
erations................. -- 529 5,299 1,458 --
Adjustment of contingent
tax accruals............. -- -- 12,700 -- --
Collection of loans to
settlement trust......... -- -- 4,850 -- --
Adjustment of liability
for PBGC claims.......... -- 11,100 -- -- --
Gain on sale of television
station.................. 5,368 -- -- -- --
------ ------- ------- --------- ---------
$3,967 $18,821 $28,294 $ 6,899 $ 998
====== ======= ======= ========= =========
</TABLE>
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" for further information with respect to the items
comprising Other Income--Net.
(i) Pro forma Income Tax Expense reflects the tax effect of the additional
interest expense described in note (g) above and the tax effect of certain
other expenses described in note (d) above (an aggregate decrease of $14.5
million and $3.3 million in Income Tax Expense for the year ended January
31, 1998 and the three months ended April 30, 1998, respectively).
(j) Pro forma income (loss) per share data reflects the deduction of pro forma
dividends, the amortization of issuance costs related to the Senior
Preferred Stock and the amortization of the aggregate value assigned to
the Warrants of $5.82 million, which will be amortized over the twelve-
year term of the Senior Preferred Stock.
(footnotes continue on the following page)
35
<PAGE>
(k) Includes the effects of SOP 90-7 "fresh start" adjustments recorded at
June 30, 1993, net of depreciation and amortization. Pursuant to SOP 90-7,
the net book value of property and equipment was increased by $34 million
and intangible and other assets were increased by $530 million.
(l) Pursuant to SOP 90-7, under the Plan effected in June 1993, $1.5 billion
in long-term debt subject to compromise, including accrued interest, was
forgiven in exchange for $500 million principal amount of senior secured
notes, approximately $342 million in cash and 15 million shares of common
stock. In July 1995, the senior secured notes were redeemed with the
proceeds from the sale of the 11 1/8% Series A Senior Subordinated Notes
and borrowings under the Company's U.S. banking lines.
(m) EBIT is defined as Income (Loss) from Continuing Operations plus Interest
Expense and Amortization of Debt Issue Costs and Premium and Income Tax
Expense plus Minority Interest in Earnings of Subsidiaries less
Reorganization Items plus, in the case of pro forma EBIT, certain expenses
described in note (d) above.
(n) EBITDA is defined as EBIT (as defined above) plus amortization and
depreciation. The Company believes that EBITDA provides useful information
regarding the Company's ability to service its indebtedness, but it should
not be considered in isolation or as a substitute for operating income or
cash flow from operations (in each case as determined in accordance with
generally accepted accounting principles) as an indicator of the Company's
operating performance or as a measure of the Company's liquidity. Other
companies may calculate EBITDA in a different manner than the Company.
EBITDA does not take into consideration substantial costs and cash flows
of doing business, such as interest expense, income taxes, depreciation
and amortization. EBITDA does not represent funds available for
discretionary use by the Company because those funds are required for debt
service, capital expenditures to replace fixed assets, working capital and
other commitments and contingencies. EBITDA is not an accounting term and
is not used in generally accepted accounting principles.
(o) Adjustments to EBITDA to arrive at Adjusted EBITDA include various income
and expense items included in EBIT and EBITDA which management believes
should be excluded in order to reflect recurring operating performance.
These items include:
(i) Provision for Restructuring Operations of $2.4 million, $10.7 million
and $3.6 million for fiscal 1996, 1997 and 1998, respectively, and
$2.6 million for the three months ended April 30, 1998. In fiscal
1998, the Company's statement of operations reflects a net Provision
for Restructuring Operations of $1.9 million which is comprised of a
gross restructuring charge of $3.6 million for the fiscal year net of
a $1.7 million credit for expenses not incurred with respect to fiscal
1997's $10.7 million Provision for Restructuring Operations;
(ii) Other Income--Net, except for certain recurring transactions,
including net gains from foreign currency forward delivery contracts,
rental income, equity in loss of unconsolidated affiliate and pension
expense related to merged plans (which are reflected in the first four
line items in note (h) above); and
(iii) Unfavorable production variances of $4.1 million during the
second half of fiscal 1998 arising from production problems in
the Company's North American manufacturing operations. These
problems primarily related to implementation of the strategic
plan announced in May 1996 and, in the judgment of management,
were nonrecurring. EBITDA has not been adjusted for production
variances in prior years (which totaled $3.0 million and $2.4
million in fiscal 1996 and fiscal 1997, respectively) or for $5.0
million of additional production variances in fiscal 1998.
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" for further information with respect to these items.
(footnotes continue on the following page)
36
<PAGE>
(p) The ratio of Adjusted EBITDA to Pro Forma Interest Expense--Net for the 12
months ended April 30, 1998 was 1.90x.
(q) For purposes of computing the ratio of earnings to fixed charges, fixed
charges consist of interest (including the interest component of rental
expenses), amortization of debt expense and dividends on preferred stock.
Earnings consist of earnings from continuing operations before taxes, plus
fixed charges. For the seven months ended January 31, 1994, the fiscal
years ended January 31, 1995 and 1996, the three months ended April 30,
1998, and on a pro forma basis for the three months ended April 30, 1998,
earnings were insufficient to cover fixed charges by $19.4 million, $36.6
million and $40.7 million, $7.1 million and $25.9 million, respectively.
No ratio of earnings to fixed charges for the year ended January 31, 1994
is presented because it is not meaningful due to the significant effect of
applying SOP 90-7. Earnings from continuing operations before taxes
include significant nonrecurring amounts related to various items from the
settlement of certain continuing liabilities from previous operations.
37
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
"Selected Historical and Pro Forma Consolidated Financial Information" and the
consolidated financial statements of the Company and notes thereto appearing
elsewhere in this Prospectus. The Company's fiscal year ends on January 31.
References to a fiscal year denote the calendar year in which the fiscal year
ended (for example, "fiscal 1998" refers to the 12 months ended January 31,
1998). The Company's continuing operations consist of a single business
segment, the manufacture and sale of luggage and luggage related products.
RESULTS OF OPERATIONS
RECENT OPERATING RESULTS
On August 12, 1998, the Company filed a report on Form 8-K incorporating a
press release issued the previous day. The press release announced that, based
on currently available information, its preliminary estimate of results for
the second quarter ended July 31, 1998 would be substantially below the
forecasts included in the Company's report on Form 8-K filed with the
Commission on May 20, 1998. It said that net sales for the second quarter are
expected to be in the range of $158.0 million to $163.0 million, EBIT is
expected to be a loss in the range of $11.0 million to $13.0 million, and
Adjusted EBITDA is expected to be in the range of $6.5 million to $8.5
million. The Company's estimate of EBIT reflects $9.3 million of expenses
(which were not included in the forecasts prepared in May) associated with the
Tender Offer, including expenses associated with adjustments to employee stock
options as a result of the Tender Offer, which expenses have been excluded
from Adjusted EBITDA. The Company expects to report actual second quarter
results on or about September 14, 1998. See "Available Information" and
"Incorporation of Certain Documents by Reference."
THREE MONTHS ENDED APRIL 30, 1998 ("FISCAL 1999" OR "CURRENT YEAR") COMPARED
TO THREE MONTHS ENDED APRIL 30, 1997 ("FISCAL 1998" OR "PRIOR YEAR")
General. The following discussion analyzes the Company's results of
operations along the lines of the Company's organizational structure as
disclosed in Note 8 to the consolidated financial statements as of April 30,
1998 and for the three months ended April 30, 1998 and 1997 included elsewhere
herein as follows: (i) "European operations" which consist of its European
sales manufacturing and distribution operations whose reporting currency is
the Belgian franc, (ii) "the Americas operations" which include sales,
manufacturing, and distribution operations in the United States, Mexico,
Canada, Latin America, (iii) "Asian operations" which include the sales,
manufacturing and distribution operations in India, China, Singapore, South
Korea and Hong Kong and (iv) non-luggage licensing operations and corporate
overhead.
Results of European operations were translated from Belgian francs to U.S.
dollars in fiscal 1999 and fiscal 1998 at average rates of approximately 37.60
and 33.86 francs to the U.S. dollar, respectively. This decrease in the value
of the Belgian franc of approximately 10% resulted in decreases in reported
sales, cost of sales and other expenses in fiscal 1999 compared to fiscal
1998. The most significant effects from the difference in exchange rates from
last year to the current year are noted in the following analysis and referred
to as an "exchange rate difference". The Company enters into forward foreign
exchange contracts and option contracts to reduce its economic exposure to
fluctuations in currency exchange rates for the Belgian franc and other
foreign currencies. Such instruments are marked to market at the end of each
accounting period; realized and unrealized gains and losses are recorded in
other income. During fiscal 1999, the Company had net gains from such
instruments of $1.4 million ($0.8 million of which was unrealized); during
fiscal 1998, the Company had net gains on such instruments of $3.6 million
($2.7 million of which was unrealized). The Company estimates the reduction in
operating income from the strengthening of the U.S. dollar versus the Belgian
franc from the same quarter in the prior year to be approximately $0.7 million
and $1.1 million for the three months ended April 30, 1998 and 1997,
respectively.
Net Sales. Consolidated net sales decreased from $169.6 million in fiscal
1998 to $156.7 million in fiscal 1999, a decrease of $12.9 million. Fiscal
1999 sales were adversely affected by depressed U.S. wholesale sales and the
strengthening of the U.S. dollar versus the Belgian franc.
38
<PAGE>
Sales from European operations increased from $65.7 million in fiscal 1998
to $71.9 million in fiscal 1999, an increase of $6.2 million. Expressed in the
local European reporting currency (Belgian francs), fiscal 1999 sales
increased by 21.6%, or the U.S. constant dollar equivalent of $14.2 million,
from fiscal 1998; however, the increase was offset by an $8.0 million exchange
rate difference. Sales of hardside product were increased by approximately 18%
from prior year while softside product sales were increased by approximately
17%. Sales in almost all the European countries showed significant improvement
from the prior year.
Sales from the Americas operations decreased from $95.3 million in fiscal
1998 to $77.5 million in fiscal 1999, a decrease of $17.8 million or 18.7%.
U.S. wholesale sales for the first quarter decreased by $25.3 million from the
prior year, retail sales increased by $5.6 million, and sales in the other
Americas operations increased by $1.9 million from the prior year. U.S.
wholesale sales were adversely affected by the impact of price increases and
other pricing strategies instituted during fiscal 1998 and market disruptions
and retailer discounting taken in connection with various forms of cross
distribution-channel selling during fiscal 1998. For a further discussion of
the issues affecting U.S. Wholesale operations and actions being taken with
respect to such operations, see "--Recent Events and Recapitalization." U.S.
retail sales continued to improve, increasing from $20.2 million in the prior
year to $25.8 million in the first quarter of fiscal 1999, an increase of 28%.
Comparable store sales increased by approximately $1.0 million or 4.9% from
the same quarter in the prior year.
First quarter sales in fiscal 1999 from Asian operations of $4.9 million
were approximately equal to the prior year sales of $5.0 million. Sales in the
Pacific Rim operations were decreased by approximately $1.7 million or 34%
from the prior year due to the effect of the Asian economic difficulties. This
decrease was offset by sales from the new manufacturing and distribution
facility in India of approximately $1.6 million.
Revenues from the Japanese licensee declined $0.7 million due to Asian
economic problems and non-luggage licensing revenues also declined $0.3
million from the prior year.
Gross profit. Consolidated gross profit for fiscal 1999 declined from fiscal
1998 by $10.9 million. Consolidated gross margin decreased by 3.5 margin
points, from 41.4% in fiscal 1998 to 37.9% in fiscal 1999.
Gross margins from European operations declined 3.1 percentage points, from
41.4% in fiscal 1998 to 38.3% in fiscal 1999. The decrease in gross profit
margins is due to a higher sales mix of lower gross profit margin mass
merchant sales and obsolescence reserves.
Gross margins for the Americas declined from 41.3% in fiscal 1998 to 36.0%
in fiscal 1999. Margins decreased due to lower absorption of manufacturing
overhead due to the decrease in sales, discounting on slow moving and obsolete
product lines, price reductions on certain product lines, and price markdowns
given to customers for existing inventories.
Selling, General and Administrative Expenses ("SG&A"). Consolidated SG&A
increased by $5.0 million from fiscal 1998 to fiscal 1999. As a percent of
sales, SG&A was 38.1% in fiscal 1999 and 32.2% in fiscal 1998.
As a percent of sales, Europe's SG&A was 25.8% in fiscal 1999 versus 27.7%
in fiscal 1998. On an absolute basis, SG&A for European operations increased
by $0.4 million from fiscal 1998 to fiscal 1999. The exchange rate difference
caused SG&A to decrease by $2.1 million. The remainder, an increase of $2.5
million, resulted from an increase in SG&A expressed in Belgian francs of
13.7%. The increase in SG&A was primarily to support the increased sales
levels in fiscal 1999.
Combined SG&A for the Americas increased by $4.5 million due primarily to an
increase of $3.7 million in the retail division related to the increase in the
number of stores over the prior year and an increase in SG&A for operations in
Mexico and Brazil of $0.7 million.
SG&A for Asia increased by $0.7 million from the prior year primarily due to
operations of the new India manufacturing plant.
SG&A for non-luggage licensing declined by $0.2 million and corporate
overhead declined by $0.4 million.
Provision for restructuring operations. The provision for restructuring
operations in the first quarter of fiscal 1999 results from the a
restructuring of its Torhout, Belgian manufacturing operations. The
restructuring
39
<PAGE>
provision is primarily related to termination and severance costs for the
elimination of approximately 111 positions. In fiscal 1998, certain excess
restructuring reserves of $0.6 million were reversed.
Amortization of intangible assets. Amortization of intangible assets
decreased from $1.8 million in fiscal 1998 to $1.5 million in fiscal 1999
primarily because the cost of intangibles was reduced in fiscal 1998 as a
result of the sale of certain trademarks.
Operating income (loss). Operating income decreased from $14.4 million in
fiscal 1998 to an operating loss in fiscal 1999 of $4.4 million, a decrease of
$18.8 million. This decrease is a result of the decline in sales and resulting
reduction of gross profit of $10.9 million, the increase in SG&A of $5.0
million, the increase in the restructuring provision of $3.2 million, net of
the decrease in amortization of intangibles of $0.3 million.
Interest income. Interest income increased by $0.3 million due to interest
income received on a refund of state income taxes.
Interest expense and amortization of debt issue costs. Interest expense and
amortization of debt issue costs decreased from $6.2 million in fiscal 1998 to
$4.8 million in fiscal 1999. The decrease was caused primarily by lower
average interest rates during fiscal 1999 as a result of the retirement
throughout fiscal 1998 and fiscal 1999 of the 11 1/8% Series B Subordinated
Notes with the proceeds of lower rate bank financing and an equity offering in
fiscal 1998 and lower debt levels in fiscal 1999 as compared to the prior
year.
Other, net. See Note 6 to the consolidated financial statements as of April
30, 1998 and for the three months ended April 30, 1998 and 1997 included
elsewhere herein for a comparative analysis of other income (expense). The
Company has entered into certain forward exchange contracts to hedge its
exposures to changes in exchange rates. The Company estimates the reduction in
operating income from the strengthening of the U.S. dollar versus the Belgian
franc from the same quarter in the prior year to be approximately $0.7 million
and $1.1 million for the three months ended April 30, 1998 and 1997,
respectively. Other income for the first quarter of fiscal 1999 includes
income from forward exchange contracts of $1.4 million, $0.8 million of which
was unrealized. In the first quarter of fiscal 1998, such transactions
resulted in income of $3.6 million, $2.7 million of which was unrealized. The
income recorded for the three months ended April 30, 1998 results primarily
from forward exchange contracts selling forward the Belgian franc which has
declined against the U.S. dollar since the contracts were executed. Of the
income recorded through April 30, 1998, approximately $0.7 million is
unrealized; the ultimate realization of this amount is subject to fluctuations
in the exchange rate of the U.S. dollar against the Belgian franc.
Other income for the three months ended April 30, 1997 includes $2.1 million
from favorable settlement of claims for interest on overdue installments of
interest accruing prior to the commencement of the bankruptcy of the Company's
predecessor in 1993. Other income for the three months ended April 30, 1997
also includes income of approximately $1.5 million for the reversal of
allowances for factored receivables from previous operations which were no
longer necessary upon the favorable settlement of the receivables for which
such allowances were established. See Notes 6(b) and 6(c) to the consolidated
financial statements as of April 30, 1998 and for the three months ended April
30, 1998 and 1997 included elsewhere herein for further discussion of these
items.
Income tax benefit (expense). Income tax expense decreased from $6.8 million
in fiscal 1998 to an income tax benefit of $2.9 million in fiscal 1999. The
decrease in tax expense is due primarily to the consolidated pretax loss in
fiscal 1999 and the receipt of $0.8 million of state income tax refunds which
related to taxes accrued and paid in prior years. The relationship between the
expected income tax benefit computed by applying the U.S. statutory rate to
pretax income (loss) and income tax expense recognized results primarily
because of (i) foreign income tax expense provided on foreign earnings, and
(ii) state and local income taxes.
Extraordinary loss. The extraordinary loss for the three months ended April
30, 1998 resulted from the completion of a tender offer for the Company's 11
1/8% Series B Subordinated Notes. The Company retired $52,269,000 principal
amount of the Notes and paid redemption premiums and other expenses of the
tender offer totaling approximately $8,512,000. These costs along with
$1,527,000 of deferred financing costs were charged to expense and classified
as an extraordinary item, net of tax effects, for the three months ended April
40
<PAGE>
30, 1998. The extraordinary loss for the three months ended April 30, 1997
resulted from redemption premiums of $8.7 million on the early retirement of
$80.8 million principal amount of the Notes and the write-off of related
deferred financing costs of $2.6 million, net of tax effects.
Earnings Before Interest and Taxes. The Company's EBIT (earnings (loss)
before net interest expense and taxes), adjusted for certain items recorded in
other income which the Company believes should be included in its calculation
of EBIT, was $(1.1) million and $15.3 million for the three months ended April
30, 1998 and 1997, respectively. The Company's EBITDA (earnings before
interest, taxes, depreciation and amortization) was $5.9 million and $23.2
million for the three months ended April 30, 1998 and 1997, respectively.
Items recorded in other income (expense) which management believes should be
included in the calculation of EBIT and EBITDA in order to reflect recurring
operating performance include realized gains from foreign currency forward
delivery contracts, rental income, and equity in loss of unconsolidated
affiliate. Other companies may calculate EBIT and EBITDA in a different manner
than the Company. EBIT or EBITDA do not take into consideration substantial
costs and cash flows of doing business such as interest expense, income taxes,
extraordinary items, restructuring provisions, depreciation and amortization
and should not be considered in isolation to or as a substitute for other
measures of performance. EBIT and EBITDA are not accounting terms and are not
used in generally accepted accounting principles.
Net income (loss). The Company had net income in fiscal 1998 of $1.9 million
and a net loss in fiscal 1999 of $10.9 million. The decrease in the net income
from the prior year of $12.8 million is caused by the effect of the decreases
in operating and other income, offset by the decrease in income taxes,
interest expense, and extraordinary loss.
FISCAL 1998 COMPARED TO FISCAL 1997
The Company analyzes its net sales and operations by the following
categories: (i) "European operations," which consist of its European
manufacturing and distribution operations whose reporting currency is the
Belgian franc, (ii) "the Americas operations," which include sales,
manufacturing, and distribution operations in the United States, Mexico,
Canada, South America, and Latin America and (iii) "International operations,"
which include the sales, manufacturing and distribution operations in
Singapore, India, Hong Kong, and South Korea, exports to the Far East and
Middle East, and global licensing operations. Beginning in mid-fiscal year
1998, Middle East sales are reported with European operations.
General. Results of European operations were translated from Belgian francs
to U.S. dollars in fiscal 1998 and fiscal 1997 at average rates of
approximately 35.67 and 30.93 francs to the U.S. dollar, respectively. This
decrease in the value of the Belgian franc of 13% resulted in decreases in
European reported sales, cost of sales and other expenses in fiscal 1998
compared to fiscal 1997. The most significant effects from the difference in
exchange rates from last year to the current year are noted in the following
analysis and referred to as an "exchange rate difference." The Company enters
into forward foreign exchange contracts and option contracts to reduce its
economic exposure to fluctuations in currency exchange rates for the Belgian
franc and other foreign currencies. Such instruments are marked to market at
the end of each accounting period; realized and unrealized gains and losses
are recorded in Other Income--Net. During fiscal 1998, the Company had net
gains from such instruments of $6.5 million; during fiscal 1997, the Company
had net gains on such instruments of $2.8 million. The Company estimates the
reduction in operating income from the year-to-year strengthening of the U.S.
dollar versus the Belgian franc to be approximately $5.6 million and $2.9
million in fiscal 1998 and 1997, respectively.
Net Sales. Consolidated net sales decreased from $741.1 million in fiscal
1997 to $736.9 million in fiscal 1998, a decrease of $4.2 million. Fiscal 1998
sales were adversely affected by the large decrease in the value of the
Belgian franc compared to the U.S. dollar in fiscal 1998. Without the effect
of the European exchange rate difference, fiscal 1998 sales would have
increased by $38.3 million or approximately 5%.
On a U.S. dollar basis, sales from European operations decreased from $280.8
million in fiscal 1997 to $277.2 million in fiscal 1998, a decrease of $3.6
million. Expressed in the local European reporting currency
41
<PAGE>
(Belgian francs), fiscal 1998 sales increased by 13.8%, or the U.S. constant
dollar equivalent of $38.9 million, from fiscal 1997; however, the increase
was more than offset by a $42.5 million exchange rate difference. Despite the
effect of the strong U.S. dollar on reported sales, Europe's local results
were much improved over the prior year. Sales of hardside products were 7%
above the prior year due primarily to the success of the new Oyster II
product. Sales of softside products were 22% above the prior year because of
strong traditional softside luggage sales, the new Trunk & Co product line,
and strong computer and other softside business case lines. Sales in most
European countries increased over the prior year, with the exceptions of
Germany and Belgium, where sales were down approximately 1% from fiscal 1997.
Sales from the Americas operations increased from $417.6 million in fiscal
1997 to $423.5 million in fiscal 1998, an increase of $5.9 million or 1.4%.
The increase was largely due to an increase in U.S. retail sales of $30.4
million or 39% from the prior year. Comparable store sales increased by 15.6%
from fiscal 1997 and the number of stores open increased from 149 at January
31, 1997 to 189 at January 31, 1998. The Company has rapidly expanded the
number of retail locations during the past two fiscal years which, along with
the increase in comparable store sales growth, contributed to the 39% growth
in fiscal 1998 sales over fiscal 1997 sales. The Company does not expect to
continue the rate of growth in retail store openings in fiscal 1999 and
therefore will not sustain the level of retail sales growth achieved in fiscal
1998. U.S. wholesale revenues of $274.0 million were less than the prior year
by $21.8 million, or 7.4%. U.S. wholesale sales decreased due to market
disruptions caused by the adverse impact of higher pricing strategies, various
forms of cross distribution channel selling, dealer bankruptcies and product
availability problems associated with forecasting and production issues. The
Company has addressed these issues by focusing on traditional disciplined
channel management and strategic pricing which targets critical retailer price
points and is working on a long-term resolution of forecasting and production
issues in its U.S. wholesale business. Although the Company is taking these
corrective actions, it expects sales in the U.S. wholesale division to
continue to be negatively impacted by the aforementioned factors through at
least the first two quarters of fiscal 1999. Sales from other Americas
operations, including Mexico, Canada and Latin America, were less than the
prior year by an aggregate of $2.7 million. The decrease in the other Americas
countries was caused primarily by a decline in Canadian sales caused by issues
related to product standardization requirements which have been modified
subsequent to January 31, 1998.
Sales from International operations decreased from $42.7 million in fiscal
1997 to $36.2 million in fiscal 1998, a decrease of $6.5 million. Product
sales from export and emerging markets decreased by $4.7 million from fiscal
1997. During fiscal 1998, the Company moved export responsibility for the
Middle East from the Americas to Europe resulting in a decrease in sales
classified as International operations. Export sales from the U.S. to Asia
have been moved to the Company's subsidiaries in Singapore, Hong Kong, and
South Korea entities which were formerly the Company's regional distributors.
Transition issues resulting from the formation of the joint ventures and the
economic problems in Asia resulted in decreased sales in this region. Sales in
India were $2.7 million for fiscal 1998. Samsonite products were introduced to
the Indian market through the new Indian manufacturing and distribution joint
venture which completed construction and began operations in April 1997.
Royalties from global licensing operations decreased by $2.2 million from the
prior year; $1.7 million of the difference occurred largely because $3.9
million of revenues were realized in fiscal 1997 from a single license sale
transaction while fiscal 1998 included approximately $2.2 million from two
separate license sales.
Gross profit. Consolidated gross profit for fiscal 1998 increased from
fiscal 1997 by $20.7 million. Gross margin increased by 3.0 percentage points,
from 39.4% in fiscal 1997 to 42.4% in fiscal 1998.
Gross margins from European operations increased by 0.7 percentage points,
from 39.2% in fiscal 1997 to 39.9% in fiscal 1998. The improvement is due to
price increases in selected product lines and lower costs from standardized
global production sources.
Gross margins for the Americas operations increased 5.1 percentage points
from 38.2% in fiscal 1997 to 43.3% in fiscal 1998. U.S. wholesale margins
increased from 35.8% to 43.9%, primarily as a result of price increases on
product sales to both trade customers and the Company's retail division and
product cost improvements from global sourcing and product design
improvements. The increase in gross margins was
42
<PAGE>
achieved despite negative production variances incurred during the last half
of fiscal 1998 of approximately $4.1 million. Margins in the Americas also
benefitted from a higher mix of retail versus wholesale sales compared to the
prior year. The Company intends to pursue a different marketing and pricing
strategy in fiscal 1999 and expects to roll back certain prices approximately
4% to 6% to conform to previously successful pricing strategies and make
corresponding reductions in the various co-op advertising and sales promotions
costs. Thus, while gross profit margins may decline somewhat from fiscal 1998
levels, the Company believes this strategy will stimulate sales over the long-
term and achieve an increased level of operating profit margin percentages
from U.S. wholesale sales.
Selling, General and Administrative Expenses ("SG&A"). Consolidated SG&A
increased by $0.5 million from fiscal 1997 to fiscal 1998. As a percent of
sales, SG&A was 31.8% in fiscal 1998 and 31.5% in fiscal 1997.
SG&A for European operations decreased by $5.6 million from fiscal 1997 to
fiscal 1998. The exchange rate difference caused SG&A to decrease by $10.7
million. The remaining increase of $5.1 million was due primarily to higher
variable selling expenses of $2.5 million related to the higher sales levels,
higher advertising expenses of $2.4 million and various other net increases of
$0.2 million.
SG&A for the Americas operations, including worldwide corporate
headquarters, increased by $5.5 million in fiscal 1998 compared to fiscal
1997. In fiscal 1998, U.S. wholesale price increases and the relatively high
rate of new product introductions were supported by increased co-op
advertising allowances and other sales promotion credits given to customers,
particularly during the second half of fiscal 1998. The Company is modifying
this strategy in fiscal 1999 by reducing prices from 4% to 6% on certain
products to better target critical retailer and competitive price points. The
Company will make corresponding reductions in co-op advertising allowances and
sales promotion costs. The Company believes this strategy will better
stimulate sales over the long-term and result in an increased level of
operating profit margin, albeit with lower gross profit margins and lower
selling, general and administrative expenses. SG&A related to U.S. wholesale
operations was approximately equal to fiscal 1997. SG&A related to U.S. retail
operations increased by $10.4 million because of an increase in the number of
stores open and increased sales volume. As a percent of sales, retail SG&A
decreased from 45.9% of sales in fiscal 1997 to 42.6% of sales in fiscal 1998.
SG&A for other Americas operations increased by $1.5 million primarily because
of a new Brazilian joint venture. Corporate SG&A decreased by $6.4 million
from the prior year due primarily to expenses incurred in the prior year
related to expenses associated with a restructuring and changing organization
structure in fiscal 1997.
SG&A for International operations increased by $0.6 million from fiscal 1997
due to the addition of new joint venture subsidiaries in the Far East and
startup of operations in India, net of various cost savings from the
reorganization of export operations from the U.S. to Europe and the Far East.
Amortization of intangible assets. The Company recorded significant
intangible assets as a result of its reorganization in 1993. See Notes 1(b),
1(i) and 7 to the Company's consolidated financial statements included
elsewhere herein for a discussion of the recording and amortization of
intangible assets.
Reorganization value in excess of identifiable assets became fully amortized
in fiscal 1997, which generally accounts for the decrease in amortization of
intangible assets of $24.8 million in fiscal 1998.
Provision for restructuring operations. Over the past three fiscal years,
the Company has recorded a series of restructuring provisions to accrue the
costs of consolidating and reorganizing various operations and realigning its
management and workforce structure. Net restructuring provisions decreased
from $10.7 million in fiscal 1997 to $1.9 million in fiscal 1998. In fiscal
1998, the Company recorded a $3.6 million restructuring provision and reduced
the restructuring provision by $1.7 million for excess accruals related to the
fiscal 1997 restructuring. The fiscal 1998 restructuring includes the
elimination of approximately 180 positions in the Mexico City manufacturing
plant and 20 management positions in the U.S. and is expected to be completed
by July 31, 1998. The provision consists primarily of costs associated with
involuntary employee terminations and is comprised of estimated cash
expenditures of $3.3 million and estimated non-cash charges of $0.3 million.
See the discussion of the fiscal 1997 restructuring provision under Results of
Operations--Fiscal 1997 Compared to Fiscal 1996 and Note 4 to the consolidated
financial statements for further information relative to the restructuring
provisions.
43
<PAGE>
As discussed elsewhere herein, the Company expects U.S. wholesale sales to
be depressed through at least the first half of fiscal 1999 because of various
market factors which affected U.S. wholesale sales in fiscal 1998, including
the adverse impact of price increases and pricing strategies, market
disruptions and retailer discounting issues associated with various forms of
cross distribution channel sales and forecasting and production scheduling
errors. The Company is currently evaluating its U.S. wholesale hardside
production operations in light of various marketing issues the Company is
encountering with its hardside suitcase products in the United States which
have resulted in excess inventory, declining sales and reduced production
requirements. This evaluation may result in additional restructuring charges
related to U.S. wholesale operations in fiscal 1999.
The Company is also evaluating its investment in Chia Tai Samsonite (H.K.)
Ltd., a 50% owned joint venture formed to manufacture and distribute luggage
in China, which is encountering difficulties in achieving an adequate level of
sales and distribution to support operational expenses and finding qualified
personnel to manage the joint venture. As a result of this evaluation, the
Company may dispose of or liquidate this investment. At January 31, 1998, the
Company had a net investment of approximately $2.4 million in this joint
venture.
Operating income (loss). Operating income increased from $15.5 million in
fiscal 1997 to $69.3 million in fiscal 1998. This is a result of increased
gross profit of $20.7 million, the decrease in amortization of intangibles of
$24.8 million and the decrease in restructuring provisions of $8.8 million,
net of the increase in SG&A of $0.5 million.
Interest income. Interest income increased from the prior year by $1.2
million, primarily as a result of nonrecurring interest income received in
fiscal 1998 upon recovery of a loan to the settlement trust created as a
result of the reorganization in 1993. See Note 14 to the consolidated
financial statements included elsewhere herein and the discussion of the
collection of the receivable from the trust under Other income (expense)--net
included elsewhere herein.
Other income (expense)--net. The following is an analysis of other income
(expense)--net for fiscal 1998 compared to fiscal 1997:
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
------------------------
1998 1997
----------- -----------
(IN THOUSANDS)
<S> <C> <C>
Net gains from foreign currency forward delivery
contracts(a)................................... $ 6,463 $ 2,829
Rental income(b)................................ 1,633 1,987
Equity in loss of unconsolidated affiliate(c)... (547) (33)
Pension expense related to merged plans(d)...... (706) --
Foreign currency transaction losses, net (e).... (1,834) (211)
Loss on disposition of fixed assets, net (f).... (377) (62)
Other, net (g).................................. (1,247) (1,120)
Favorable settlement of claims(h)............... 2,060 3,802
Adjustment of allowances relating to previous
operations(i).................................. 5,299 529
Adjustment of contingent tax accruals(j)........ 12,700 --
Collection of loans to settlement trust(k)...... 4,850 --
Adjustment of liability for PBGC claims(l)...... -- 11,100
----------- -----------
$ 28,294 $ 18,821
=========== ===========
</TABLE>
- --------
(a) The Company has entered into certain forward exchange contracts to reduce
its exposures to changes in exchange rates. Other income for fiscal 1998
includes gains from such transactions of $6.5 million. In fiscal 1997,
such transactions resulted in gains of $2.8 million. The income recorded
for fiscal 1998 results primarily from forward exchange contracts selling
forward the Belgian franc which has devalued significantly against the
U.S. dollar since the contracts were executed. The Company estimates that
the reduction in net sales and operating income from the year-to-year
strengthening of the U.S. dollar versus the Belgian franc to be
approximately $42.5 million and $14.8 million, and $5.6 million and $2.9
million during fiscal 1998 and 1997, respectively.
44
<PAGE>
(b) Rental income represents income from rents received from properties
retained by the Company which were used in previous operations and which
are held for sale as of January 31, 1998. The Company expects that all of
these properties will be sold during fiscal 1999 and that rental income
will decline accordingly.
(c) Equity in loss of unconsolidated affiliate represents the Company's 50%
equity interest in the losses of its affiliate, Chia Tai Samsonite (H.K.)
Ltd., a 50% owned joint venture formed to manufacture and distribute
luggage in China. This start-up operation completed construction of a
manufacturing plant in Ningbo, China and began operations in fiscal 1998.
(d) Pension expense related to merged plans represents the net periodic
pension expense for plans merged with a Company pension plan, as discussed
in Note 14 to the consolidated financial statements included elsewhere
herein.
(e) Foreign currency transaction losses represent net realized losses on
payments for goods and services denominated in currencies other than those
used for financial reporting. Foreign currency transaction losses
increased from $0.2 million in fiscal 1997 to $1.8 million in fiscal 1998
due to the strengthening of the U.S. dollar versus the Mexican Peso, the
Canadian dollar, and certain Asian currencies.
(f) Loss on disposition of fixed assets, net represents losses incurred from
the disposition of fixed assets retired or sold in the ordinary course of
business.
(g) Other net represents miscellaneous expenses and increased from $1.1
million in fiscal 1997 to $1.2 million in fiscal 1998.
(h) Other income for fiscal 1998 includes $2.1 million from the favorable
settlement of claims for interest on overdue installments of interest
accruing prior to the commencement of the bankruptcy of the Company's
predecessor in 1993. Additionally, the Company has entered into a non-
binding agreement-in-principle to settle the remainder of these claims for
approximately $9.4 million. The Company has $10.3 million accrued for the
payment of such claims at January 31, 1998. Because these claims are in
the judicial process, final settlement is not expected to occur for
several months.
(i) Other income from the adjustment of allowances for contingencies from
previous operations of $5.3 million in fiscal 1998 includes (i) $3.8
million from the adjustment of an accrual for potential environmental
liability related to real estate used in previous operations, for which no
claims were filed and liability terminated by agreement with the
purchasers of the real estate during fiscal 1998, and (ii) $1.5 million
for the adjustment of allowances for factored receivables from previous
operations which were no longer necessary upon collection of the
receivables. Fiscal 1997 included $0.5 million of income from the reversal
of excess reserves relating to previous operations that were determined to
be unnecessary.
(j) Other income for fiscal 1998 includes adjustments totaling $12.7 million
to reduce accruals for certain tax contingencies established in
conjunction with the Restructuring referred to in Note 1(b) to the
consolidated financial statements included elsewhere herein. The
adjustment was made upon the resolution of these contingencies which did
not result in any cash payment or future liability for taxes.
(k) As described in Note 14 to the consolidated financial statements included
elsewhere herein, under Obligations to Settlement Trust, the Company had
made loans of $4.8 million to a trust (the "Trust") established for the
benefit of the holders of certain classes of pre-bankruptcy claims against
the Company. The Company provided allowances for the full amount of these
loans at the time they were funded and accrued no interest on them. The
Trust repaid the Company's loan during fiscal 1998 with interest of $1.4
million. As a result, the Company recognized $4.8 million of other income
in fiscal 1998 from the collection of the loan, which had no carrying
value, and recorded interest income of $1.4 million. The Company believes
it is very unlikely it will be required to make any additional loans to
the Trust which, under the terms of the Trust Agreement, must settle with
its beneficiaries and dissolve by June 8, 1998.
(l) Other income in fiscal 1997 includes $11.1 million from the adjustment of
a liability accrued from contingent pension liabilities established during
the reorganization in 1993. See Note 14 to the consolidated financial
statements included elsewhere herein for a discussion of this matter.
Interest expense and amortization of debt issue costs and premium. Interest
expense and amortization of debt issue costs decreased from $35.7 million in
fiscal 1997 to $19.9 million in fiscal 1998. The decrease was caused primarily
by retirement of indebtedness out of the proceeds of a public stock offering
completed in
45
<PAGE>
February 1997, a lower interest rate on borrowings under the Old Credit
Facility which was refinanced in June 1997, and interest savings from the
retirement of high interest rate subordinated debt financed by lower rate bank
borrowings. See Notes 9 and 18 to the consolidated financial statements
included elsewhere herein.
Income taxes. Income tax expense increased from $10.4 million in fiscal 1997
to $23.1 million in fiscal 1998. The increase in tax expense is due primarily
to higher consolidated pretax earnings in fiscal 1998. The difference between
expected income tax expense, computed by applying the U.S. statutory rate to
income from continuing operations, and income tax expense recognized, results
primarily because of (i) the nondeductibility for tax purposes of amortization
of reorganization value in excess of identifiable assets, (ii) foreign income
tax expense provided on foreign earnings, (iii) certain nontaxable liability
adjustments, (iv) foreign tax credits and (v) state and local income taxes.
See Note 11 to the consolidated financial statements included elsewhere herein
for further analysis of income tax expenses.
Extraordinary loss. The extraordinary loss of $16.2 million for fiscal 1998
resulted from (i) the payment of $17.3 million of redemption and market
premiums and the write-off of deferred financing costs of $4.6 million related
to the early retirement of $137.2 million principal amount of the Company's 11
1/8% Series B Senior Subordinated Notes, (ii) the payment of $0.3 million of
early retirement fees and the write-off of $3.9 million of deferred financing
costs related to refinancing of the Old Credit Facility, and (iii) the tax
benefit from the aforementioned transactions of $9.9 million. See Note 9 to
the consolidated financial statements included elsewhere herein.
Net income (loss). The Company had a net loss in fiscal 1997 of $11.3
million and net income in fiscal 1998 of $40.7 million. The increase in the
net income from the prior year of $52.0 million is caused by the effect of the
increases in operating income and other income and the decrease in interest
expense, offset by the increase in income tax expense and the extraordinary
loss.
FISCAL 1997 COMPARED TO FISCAL 1996
General. Results of European operations were translated from Belgian francs
to U.S. dollars in fiscal 1997 and fiscal 1996 at average rates of
approximately 30.93 and 29.38 francs to the U.S. dollar, respectively. This
represented a decrease in the value of the Belgian franc of 5.0%, which
resulted in decreases in reported sales, cost of sales and other expenses in
fiscal 1997 compared to fiscal 1996. The most significant effects from the
difference in exchange rates from fiscal 1997 to fiscal 1996 are noted in the
following analysis and referred to as an "exchange rate difference." The
Company enters into forward foreign exchange contracts and option contracts to
reduce its economic exposure to fluctuations in currency exchange rates for
the Belgian franc and other foreign currencies. Such instruments are marked to
market at the end of each accounting period; realized and unrealized gains and
losses are recorded in Other Income. During fiscal 1997, the Company had net
gains from such instruments of $2.8 million.
Net Sales. Consolidated net sales increased to $741.1 million in fiscal 1997
from $675.2 million in fiscal 1996, an increase of $65.9 million or 9.8%.
Adjusted for the European exchange rate difference, sales increased from
fiscal 1996 by 12.0%.
Sales from European operations increased from $271.6 million in fiscal 1996
to $280.8 million in fiscal 1997, an increase of $9.2 million. The exchange
rate difference resulted in a $14.8 million decrease in reported sales versus
fiscal 1996. The remainder, an increase of $24.0 million, represents an
increase in sales expressed in Belgian francs of 8.8% from fiscal 1996.
Despite a generally weak European economy, sales increased due to increased
market share, increased sales of diversified products (which includes
footwear, handbags, and other travel accessories), and consumer acceptance of
new product lines. In fiscal 1997, European sales enjoyed strong third and
fourth quarters, with strong summer and Christmas sales reversing trends
earlier in fiscal 1997.
Sales from the Americas operations increased from $366.4 million in fiscal
1996 to $417.6 million in fiscal 1997, an increase of $51.2 million or 14.0%.
The increase was due to continued broad consumer preference and demand for
Samsonite brand products, particularly lines of upright, lightweight softside
luggage which were redesigned in fiscal 1996. Additionally, the Company began
sales in the third quarter of fiscal 1997 of its new
46
<PAGE>
EZ CART(TM) product. Sales of softside products in the U.S. continued to
increase while sales of hardside products decreased from fiscal 1996 to fiscal
1997. U.S. wholesale sales increased from $266.9 million in fiscal 1996 to
$295.8 million in fiscal 1997, an increase of $28.9 million or 10.8%. Sales
from operations in the other Americas increased from $36.9 million to $43.4
million, an increase of $6.5 million, due to an increase in Mexican sales of
$4.5 million, Canadian sales of $1.0 million, and Latin American exports of
$1.0 million. Sales from the Company's retail stores increased by $15.8
million or 25.2%, from $62.7 million in fiscal 1996 to $78.5 million in fiscal
1997. Same store sales increased by 10.3% from fiscal 1996. The Company had
149 retail outlets open at January 31, 1997, compared to 126 at January 31,
1996.
Sales from International operations increased from $37.2 million in fiscal
1996 to $42.7 million in fiscal 1997, an increase of $5.5 million or 14.8%. Of
the change in revenues from fiscal 1996, $4.0 million was due to revenue from
the sale of McGregor apparel tradenames in certain Pacific Rim countries. The
remainder was due primarily to the Singapore distribution company which began
operations on January 1, 1996.
Gross profit. Consolidated gross profit for fiscal 1997 increased from
fiscal 1996 by $31.3 million. Gross margin increased by 0.8 percentage point,
from 38.6% in fiscal 1996 to 39.4% in fiscal 1997. Without the effect of a
sale of tradenames for $4.0 million, gross margin increased 0.4 percentage
point to 39.0% in fiscal 1997.
Gross margins from European operations increased by 1.5 percentage points,
from 37.7% in fiscal 1996 to 39.2% in fiscal 1997. The improvement was due to
price increases in selected product lines, declining materials costs, and
improving productivity variances compared to fiscal 1996.
Gross profit margins from the Americas operations were 38.2% in fiscal 1997
and fiscal 1996. Certain margin improvements occurred in fiscal 1997,
including lower raw materials costs, product cost improvements on certain
products, the introduction of innovative products at higher margins, price
increases on selected product lines in the fourth quarter of fiscal 1997,
higher retail sales (which produce a higher margin than wholesale sales), and
decreased sales of obsolete products in fiscal 1997. These improvements were
offset by promotional sales discounts, increased sales of certain lower margin
products relative to the previous fiscal year, negative productivity variances
from the startup of production of new hardside products and the restructuring
of operations, and higher than anticipated costs on certain new product lines.
The net result of these factors was consistent year-to-year margin
percentages.
Excluding the effect of the tradename sales in fiscal 1997, gross profit
margins from International operations decreased by 2.7 percentage points. The
decrease was attributable to the lack of price increases and a greater
proportion of sales of lower margin products in fiscal 1997.
In fiscal 1997, the Company began a global standardization project to
standardize its product lineup, product components and finished goods
purchasing in order to continue to increase gross profit margins. To further
enhance gross profit margins, the Company announced price increases in the
United States on many of its product lines effective March 1, 1997.
Selling, General and Administrative Expenses ("SG&A"). Consolidated SG&A
increased by $30.1 million from fiscal 1996 to fiscal 1997. As a percent of
sales, SG&A was 31.5% in fiscal 1997 and 30.2% in fiscal 1996. Expenses
totaling approximately $5.4 million were incurred during fiscal 1997 for
consulting fees to establish the restructuring plan, the cessation of the
former CEO's employment, the hiring of new and additional members of the
executive management team, and for expenses in excess of the original
provision in fiscal 1996 for the consolidation of American Tourister
manufacturing facilities. Without such expenses, SG&A would have been 30.8% of
sales during fiscal 1997.
SG&A for European operations increased by $5.5 million from fiscal 1996 to
fiscal 1997. The exchange rate difference caused SG&A to decrease by $4.0
million. The remainder, an increase of $9.5 million, resulted from an increase
in SG&A expressed in Belgian francs of 13.3%. The increase was due to higher
variable selling and distribution costs related to the higher sales levels
($2.0 million); higher salaries and employee benefits from the hiring of
additional sales and general management personnel to support higher sales
levels and growth oriented projects ($2.7 million); higher bad debt expense
because of the financial difficulties of a few specific
47
<PAGE>
customers ($1.1 million); higher advertising expenses to support new products,
entry into the eastern European markets, and brand image in light of a
generally weak European economy ($2.3 million); and various other expense
categories ($1.4 million).
SG&A for the Americas operations, including worldwide corporate
headquarters, increased by $22.3 million in fiscal 1997 compared to fiscal
1996. The increase was due to higher selling and administrative costs related
to the increase in retail sales ($7.9 million); higher national and co-op
advertising expenses ($6.8 million); expenses relating to the cessation of the
former CEO's employment, expenses of hiring new and additional management team
members, consulting fees and the other expenses incurred related to the
restructuring ($5.4 million); compensation expense related to restricted stock
awards ($0.9 million): and other net increases ($1.3 million).
SG&A for the International operations increased by $2.3 million primarily
due to the expenses incurred in the foreign joint venture operations in
Singapore, which began in fiscal 1997.
Amortization of intangible assets. The Company recorded significant
intangible assets as a result of its reorganization in 1993. See Notes 1(b),
1(i) and 7 to the Company's consolidated financial statements included
elsewhere herein for a discussion of the recording and amortization of
intangible assets.
Reorganization value in excess of identifiable assets became fully amortized
as of June 30, 1996, which generally accounts for the decrease in amortization
of intangible assets from $63.8 million in fiscal 1996 to $31.8 million in
fiscal 1997.
Provision for restructuring operations. The fiscal 1996 provision resulted
from a restructuring of certain manufacturing and administrative functions of
the American Tourister division. The fiscal 1997 provision of $10.7 million
resulted from a program to further consolidate functions and operations in
North America, Europe and the Far East, and to reduce or eliminate certain
other operations. The fiscal 1997 restructuring plan includes further
consolidation of hardside luggage production to Samsonite's largest U.S.
facility located in Denver, CO from other locations in the Americas, as well
as eventual consolidation of many administrative and control functions,
primarily to Denver. The Plan included the elimination of as many as 450
positions worldwide, including approximately 150 manufacturing positions and
approximately 300 managerial, office and clerical positions. The restructuring
provision consisted primarily of costs associated with involuntary employee
terminations and was comprised of estimated cash expenditures of $9.7 million
and estimated non-cash charges of $1.0 million, both on a pretax basis.
Operating income (loss). Operating results improved from a loss in fiscal
1996 of $9.4 million to income in fiscal 1997 of $15.5 million, an increase of
$24.9 million. This increase was a result of higher revenues and improved
margins which increased gross profit by $31.3 million from fiscal 1996 and the
decrease in amortization of intangibles of $32.0 million, both of which were
partially offset by increases in SG&A of $30.1 million and the higher
provision for restructuring of $8.3 million.
Interest income. Interest income decreased from $4.7 million in fiscal 1996
to $1.4 million in fiscal 1997. Fiscal 1996 interest income included $2.9
million realized from a note receivable collected in connection with the sale
of an investment in a television station. Recurring interest income results
from temporary investments of cash on hand and is $0.4 million less than in
fiscal 1996.
48
<PAGE>
Other income (expense)--net. The following is an analysis of other income
(expense)--net for fiscal 1997 compared to fiscal 1996:
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
------------------------
1997 1996
----------- -----------
(IN THOUSANDS)
<S> <C> <C>
Net gains from foreign currency forward delivery
contracts(a)................................... $ 2,829 $ (494)
Rental income(b)................................ 1,987 1,735
Equity in loss of unconsolidated affiliate(c)... (33) --
Foreign currency transaction losses, net(d)..... (211) (1,660)
Loss on disposition of fixed assets, net(e)..... (62) (245)
Other, net(f)................................... (1,120) (737)
Favorable settlement of claims(g)............... 3,802 --
Adjustment of allowances relating to previous
operations(h).................................. 529 --
Adjustment of liability for PBGC claims(i)...... 11,100 --
Gain on sale of television station(j)........... -- 5,368
----------- -----------
$ 18,821 $ 3,967
=========== ===========
</TABLE>
- --------
(a) Beginning in fiscal 1997, the Company entered into certain forward
exchange contracts to reduce its exposure to changes in exchange rates.
Other income for fiscal 1997 includes gains of $2.8 million from such
transactions. The income for fiscal 1997 resulted primarily from forward
exchange contracts selling forward the Belgian franc. The Company
estimates that the reduction in operating income from the year-to-year
strengthening of the U.S. dollar versus the Belgian franc was $2.9 million
in fiscal 1997.
(b) Rental income in fiscal 1997 and 1996 represents rents received from
properties retained by the Company which were used in previous operations.
As discussed elsewhere herein, such properties are expected to be disposed
of in fiscal 1999 and rental income will decline accordingly.
(c) Equity in loss of unconsolidated affiliate represents the Company's 50%
equity interest in the loss of its affiliate, Chia Tai Samsonite (H.K.)
Ltd., a 50% owned joint venture formed in fiscal 1997 to manufacture and
distribute luggage in China.
(d) Foreign currency transaction losses represent net realized losses on
transactions denominated in currencies other than those used for financial
reporting. Foreign currency transaction losses decreased from $1.7 million
in fiscal 1996 to $0.2 million in fiscal 1997.
(e) Loss on disposition of fixed assets, net represents losses incurred from
the disposition of fixed assets retired or sold in the ordinary course of
business.
(f) Other, net represents miscellaneous expenses and increased from $0.7
million in fiscal 1996 to $1.1 million in fiscal 1997.
(g) Other Income in fiscal 1997 included $3.8 million from the favorable
settlement for $0.2 million of a claim against the Company by a related
party. The Company had previously accrued $4.0 million for such claim.
This claim is part of the Contingent Liability with Respect to the Old
Notes described in Note 14 to the consolidated financial statements
included elsewhere herein and relates to the claim for interest on overdue
installments of interest accruing prior to the commencement of the
bankruptcy of the Company's predecessor in 1993. The contingent liability
was recorded as part of the reorganization. The holders of this claim were
Apollo Investment Fund, L.P. ("Apollo") and an affiliate of Apollo. Apollo
and its affiliates owned 36.08% of the outstanding shares of the Company's
common stock as of March 31, 1997.
(h) Fiscal 1997 included $0.5 million of income from the reversal of excess
reserves relating to previous operations that were determined to be
unnecessary.
(i) Other income in fiscal 1997 included $11.1 million from the adjustment of
a previously recorded liability for contingent pension liabilities. See
Note 14 to the consolidated financial statements included elsewhere herein
for a discussion of this item.
(j) Other income in fiscal 1996 included a $5.4 million gain from the sale of
a television station investment related to previous operations.
49
<PAGE>
Interest expense and amortization of debt issue costs and premium. Interest
expense and amortization of debt issue costs and premium decreased from $40.0
million in fiscal 1996 to $35.7 million in fiscal 1997 due to lower levels of
outstanding indebtedness in fiscal 1997 and lower average interest rates. The
U.S. senior credit facility allowed for lower rates in fiscal 1997 based on
improved performance and lower debt levels.
Income taxes. Income taxes increased from $9.1 million in fiscal 1996 to
$10.4 million in fiscal 1997. The increase in tax expense is due to higher
consolidated pretax earnings in fiscal 1997, partially offset by amortization
of reorganization value in excess of identifiable assets, which is not
deductible for tax purposes, in fiscal 1997 as compared to fiscal 1996. The
relationship between the expected income tax expense or benefit, computed by
applying the U.S. statutory rate to income or loss from continuing operations
and income tax expense recognized, resulted primarily because of (i) the
nondeductibility for tax purposes of amortization of reorganization value in
excess of identifiable assets, (ii) foreign income tax expense provided on
foreign earnings and (iii) state and local income taxes. See Note 11 to the
consolidated financial statements included elsewhere herein for further
analysis of income tax expense.
Operations discontinued and sold. The loss from discontinued operations in
fiscal 1996 includes an adjustment to reduce previously accrued losses on
disposal of $2.6 million, net of income taxes of $1.1 million, and a provision
for federal income taxes of $3.8 million on the distribution of Culligan stock
to certain foreign stockholders.
Extraordinary item. The extraordinary loss in fiscal 1996 resulted from the
payment of an $18.0 million redemption premium upon the early retirement of
senior secured notes. The extraordinary loss is presented in the consolidated
financial statements net of the unamortized premium on such notes of $4.4
million and the associated income tax benefit of $5.6 million.
Net loss. The net loss decreased from $61.5 million in fiscal 1996 to $11.3
million in fiscal 1997, a decrease of $50.2 million. The decrease in the net
loss was caused by the effect of the increases in operating and other income
and the decreases in interest expense, extraordinary loss and loss on
discontinued operations, offset by the decrease in interest income and the
increase in income tax expense.
LIQUIDITY AND CAPITAL RESOURCES
Although the Company is, as a result of the Recapitalization, more highly
leveraged than has recently been the case, the Company believes that cash flow
from operating activities and available borrowings under the New Credit
Facility and existing lines of credit will be adequate to meet operating cash
flow requirements during the next 12 months and to execute its business
strategy.
THREE MONTHS ENDED APRIL 30, 1998
For the three months ended April 30, 1998, cash used in operations as
reflected on the Consolidated Statements of Cash Flows included elsewhere
herein was $17.4 million; primarily as a result of the loss from operations
for the first quarter, increases in inventory, and decreases in accrued
liabilities and accounts payable, net of the decrease in accounts receivable,
since January 31, 1998. At April 30, 1998, the Company had working capital of
$216.2 million compared to $187.2 million at January 31, 1998, an increase of
$29.0 million. Current assets increased by $11.7 million primarily due to an
increase in inventory of $13.7 million, an increase in cash of $3.8 million,
increases in other current assets of $0.8 million, net of the decrease in
receivables of $6.6 million. Inventories increased primarily because of sales
forecasting issues which caused excess production in the U.S. wholesale
division and depressed U.S. wholesale sales as discussed elsewhere herein (see
"--Recent Events and Recapitalization"). Current liabilities decreased from
$147.2 million at January 31, 1998 to $138.0 million at April 30, 1998, a
decrease of $9.2 million. A decrease in accrued liabilities of $9.2 million
primarily caused the decrease in total current liabilities and was due to
decreases in co-op advertising accruals, returned goods allowances, and
current income tax liabilities.
Long-term obligations increased from $172.2 million at January 31, 1998 to
$203.6 million at April 30, 1998, an increase of $31.4 million. Approximately
$8.5 million of additional borrowings were used to fund
50
<PAGE>
redemption premiums and expenses of the tender offer for the Notes (as
discussed elsewhere herein) and the remainder was used to fund operational and
investing requirements. At April 30, 1998, the Company had available
borrowings under the Old Credit Facility of approximately $48.9 million.
The Company's cash flow from operations together with amounts available
under its credit facilities were sufficient to fund first quarter fiscal 1999
operations, scheduled payments of principal and interest on indebtedness and
capital expenditures. Management of the Company believes that cash flow from
operations and available borrowings under its credit facilities and new credit
facilities in emerging markets will be adequate to fund operating requirements
and expansion plans during the next 12 months. In addition, management
currently believes the Company will be able to meet long-term cash flow
obligations from cash provided by operations and other existing resources.
YEAR ENDED JANUARY 31, 1998
As reflected in the consolidated statements of cash flows included elsewhere
herein, cash flows provided by continuing operating activities decreased by
$7.1 million in fiscal 1998 from fiscal 1997. Cash flows from net income,
adjusted for nonoperating and noncash charges, increased by $22.4 million,
primarily as a result of the increases in operating income described above,
while cash flow used for increases in working capital and other operating
assets increased by $29.5 million.
At January 31, 1998, the Company had working capital of $187.2 million
compared to $105.4 million at January 31, 1997, an increase of $81.8 million.
Current assets increased by $39.3 million primarily due to an increase in
receivables of $9.3 million and an increase in inventories of $37.6 million,
both of which were partially offset by net decreases in cash and other current
assets of $7.6 million. Receivables increased due to a high volume of sales in
the second half of the fiscal year and extended terms on certain sales. The
increase in inventories of $37.6 million occurred primarily in domestic U.S.
operations and resulted from (i) an increase in retail stores' inventories of
approximately $15.1 million due to an increase in the number of stores and
sales volume and (ii) an increase in wholesale inventories of $15.0 million
due to an oversupply of certain new product introductions which were not
accepted in the marketplace, an increase in discontinued and obsolete products
due to the volume of new product introductions in fiscal 1998, and
overproduction in the last half of the fiscal year due to over optimistic
sales forecasts. The Company is addressing these problems and intends to
reduce inventories through better forecasting and selling discontinued
products through its retail store outlets located primarily in factory outlet
malls. Subsequent to January 31, 1998, the Company sold two of the four assets
held for sale realizing approximately $3.0 million in proceeds, and has a
contract to sell another asset for approximately $12.2 million.
Cash flows used in investing activities increased from $17.0 million in
fiscal 1997 to $37.9 million in fiscal 1998, an increase of $20.9 million.
Capital expenditures were $36.3 million in fiscal 1998 compared to $31.1
million in fiscal 1997. Capital expenditures in fiscal 1998 consist primarily
of tooling for new products, warehouse expansion in Europe, and capital
expenditures in India for factory construction. Capital expenditures of $6.1
million in fiscal 1998 were incurred in the less than 100% owned subsidiaries,
and were therefore financed in part by the other shareholders in the ventures.
The Company has currently budgeted $28.6 million for capital expenditures in
fiscal 1999. In fiscal 1997, cash was provided by liquidating assets used in
previous operations of $10.4 million, while in fiscal 1998, cash of $4.0
million was used to fund obligations related to these previous operations. The
Company expects it will continue to use cash to fund these obligations,
totaling approximately $6.3 million through calendar 2000. During fiscal 1998,
the Company formed subsidiaries in Korea and Hong Kong to acquire the
distributorships from the former distributors in those countries and made
initial investments of approximately $2.5 million for inventory, fixed assets,
other assets and goodwill.
Cash flows provided by (used in) financing activities increased from cash
used in financing activities in fiscal 1997 of $11.7 million to cash provided
by financing activities in fiscal 1998 of $21.1 million, an increase in cash
of $32.8 million. The Company completed a public stock offering in February
1997, receiving net cash proceeds from the offering of $130.2 million and $6.6
million from the exercise of stock options by a former
51
<PAGE>
chief executive officer in connection with the offering. The Company also
received $0.4 million from the exercise of other employee stock options
throughout the fiscal year. The Company used the net proceeds of the stock
offering approximately as follows: (i) $89.5 million to redeem and purchase in
the market $80.8 million principal amount of its 11 1/8% Series B Subordinated
Notes (the "Series B Notes"), including $8.7 million for early redemption and
market premiums, (ii) $45.0 million to pay down a term loan outstanding under
the Old Credit Facility and (iii) the remainder for accrued interest and
revolving credit loans under the Old Credit Facility. The Company also amended
and refinanced the Old Credit Facility, which permitted it to purchase a
limited liquidation amount of the Series B Notes by open market purchases. As
a result of the public stock offering and the amended and refinanced Old
Credit Facility, a total of $137.2 million principal amount of the Series B
Notes were retired from the previously outstanding amount of $190.0 million
and a total of $17.6 million of redemption and market premiums were paid.
Also, see note 19 to the consolidated financial statements included elsewhere
herein which discusses the repurchase of the Series B Notes subsequent to
January 31, 1998.
At January 31, 1998, long-term obligations (including current installments)
were $179.2 million compared to $290.6 million at January 31, 1997, a decrease
of $111.4 million. At January 31, 1998, the Company had $133.0 million
available under its Old Credit Facility. In addition, the Company's foreign
subsidiaries have approximately $56 million available borrowings under other
short-term lines of credit.
The Company's cash flow from operations together with amounts available
under its credit facilities were sufficient to fund fiscal 1998 operations,
scheduled payments of principal and interest on indebtedness, and capital
expenditures. As further discussed in Note 14 to the consolidated financial
statements under Contingent Pension Liabilities and Contingent Liability with
Respect to the Old Notes (included elsewhere herein), the Company has merged
two pension plans into one of its pension plans and has reached an agreement-
in-principle to settle certain claims arising from the reorganization in 1993
for $9.4 million. The Company does not expect the merger of the pension plans
to have a material effect on funding requirements for the merged plans and
plans to fund the proposed $9.4 million settlement of the other claims out of
available capital resources from operations and/or credit facilities.
The Company's principal foreign operations are located in Western Europe,
the economies of which are not considered to be highly inflationary. The
economy in Mexico is considered highly inflationary beginning February 1,
1997. The Company enters into foreign exchange contracts in order to reduce
its exposure on certain foreign operations through the use of forward delivery
commitments. During the past several years, the Company's most effective hedge
against foreign currency changes has been the foreign currency denominated
debt balances maintained in respect to its foreign operations. Geographic
concentrations of credit risk with respect to trade receivables are not
significant as a result of the diverse geographic areas covered by the
Company's operations.
The Company's foreign operations in Asia consist primarily of
distributorships organized as joint venture subsidiaries. Economies and local
currencies throughout much of Asia have entered a tumultuous period beginning
in fiscal 1998 as a result of political turmoil and general economic problems
with principal industries. During fiscal 1998, the Company had approximately
$25 million of revenues from Asian sales and royalties and, as of January 31,
1998, approximately $17.2 million in investments and receivables from Asian
subsidiaries, not including investments in the India joint venture subsidiary.
Part of the Company's hedging strategy is to protect against further currency
devaluation by hedging its expected operating earnings and investments related
to these countries through forward exchange contracts and local borrowings.
There can be no assurance given that such strategies will be effective.
Additionally, such hedging strategies do not mitigate the effect on sales and
operating earnings of the slumping local economies in these countries.
Because of the relatively small part of the Company's revenues and assets
related to Asia, the Company does not believe the Asian economic problems will
have a material impact on the overall Company operations. However, if such
conditions continue, the Company's expected growth in this area of the world
could be adversely affected.
The Company believes that disclosure of its Earnings Before Interest, Taxes,
Depreciation, and Amortization (EBITDA) provides useful information regarding
the Company's ability to incur and service debt,
52
<PAGE>
but that it should not be considered a substitute for operating income or cash
flow from operations determined in accordance with generally accepted
accounting principles. Other companies may calculate EBITDA in a different
manner than the Company. EBITDA does not take into consideration substantial
costs and cash flows of doing business, such as interest expense, income
taxes, depreciation and amortization, and should not be considered in
isolation to or as a substitute for other measures of performance. EBITDA does
not represent funds available for discretionary use by the Company because
those funds are required for debt service, capital expenditures to replaces
fixed assets, working capital, and other commitments and contingencies.
EBITDA, as calculated by the Company, also excludes extraordinary items,
discontinued operations, and minority interest in earnings of subsidiaries.
The Company's EBITDA for the years ended January 31, 1998, 1997 and 1996 was
$126.2 million, $88.2 million and $78.7 million, respectively. However, this
amount includes net income of $17.9 million, $3.4 million and $0.4 million for
the years ended January 31, 1998, 1997 and 1996, respectively, from
(i) restructuring provisions, (ii) other income primarily related to various
items from previous operations and (iii) foreign currency transaction losses,
net; loss on disposition of fixed assets, net; and other net (see Note 15 to
the consolidated financial statement included elsewhere herein), which
management believes should be deducted from the calculation of EBITDA. EBITDA
as set forth above reflects the impact of $4.1 million of negative production
variances incurred during the last half of fiscal 1998.
As of January 31, 1998, the Company had net operating loss carryforwards
("NOLs") of approximately $135 million for United States federal income tax
purposes. These carryforwards, if not utilized to offset taxable income in
future periods, will expire at various dates through fiscal 2012. The
Recapitalization, together with certain other changes in the ownership of the
Company's stock which have occurred or may occur in the future, could cause
the Company to experience an "ownership change" within the meaning of Section
382 of the Internal Revenue Code of 1986, as amended (the "Code"). Following
such an ownership change, the ability of the Company and its subsidiaries to
utilize for U.S. federal income tax purposes its NOLs arising in periods
before the ownership change would be subject to an annual limitation, which
would generally be equal to the product of the value of all of the outstanding
stock of the Company immediately prior to the ownership change, or if the
Recapitalization resulted in an ownership change, immediately after the
Recapitalization (less certain capital contributions made within the preceding
two years), and the "long-term tax-exempt rate" (determined monthly and, for
ownership changes occurring in the month of August 1998, 5.15%). Although the
Company cannot currently predict the effect of any limitation on its ability
to utilize its net operating loss carryforwards, such limitation could result
in additional income tax expense being recorded for financial reporting
purposes if the Company determines in the future that it is likely that the
limitation will affect its ability to realize net deferred tax assets related
to the net operating loss carryforwards.
RECENT EVENTS AND RECAPITALIZATION
On January 7, 1998, the Company announced it had engaged Goldman, Sachs &
Co. as financial advisor to assist in the process of exploring various
strategic alternatives designed to enhance shareholder value. On March 20,
1998, the Board of Directors approved a recapitalization plan, pursuant to
which the Company planned to pay a special cash dividend to stockholders of
$12.50 per share. Consummation of this recapitalization plan and payment of
the $12.50 dividend per share was subject to a number of conditions, including
the closing of a new bank credit facility, the successful retirement of the
Company's outstanding Series B Notes (which were substantially retired in
April, 1998 as discussed below) and declaration of the dividend by the
Company's Board of Directors. The Company also previously announced that it
was engaged in discussions with third parties concerning a possible
transaction whereby approximately 50% of the Company's equity would be
acquired by a third party and shareholders would receive cash payments in the
range of $30.00 per share and retain a significant equity interest in the
Company. The Company expects to record charges in the second quarter of fiscal
1999 for financial, legal and other expenses associated with the process of
exploring these alternative plans which were not ultimately consummated.
The Company completed a tender offer on April 23, 1998 for $52.3 million out
of the $52.8 million outstanding principal amount of its Series B Notes at a
price of $115.35 per $100 of principal. The Old Credit Facility was amended to
allow for financing the retirement of the Series B Notes from borrowings
thereunder. The Company incurred a pre-tax charge to earnings of approximately
$10 million during the first quarter of fiscal 1999 for the premium paid to
repurchase the Series B Notes and other charges related to the transaction.
53
<PAGE>
On March 23, 1998, the Company announced a restructuring of its Torhout,
Belgium manufacturing operations. The Company recorded a pre-tax charge of
approximately $2.6 million during the first quarter of fiscal 1999 in
connection with the restructuring. The restructuring provision is primarily
related to termination and severance costs for the elimination of
approximately 111 positions.
As discussed elsewhere herein, the Company expects U.S. wholesale sales to
be depressed through at least the first half of fiscal 1999 because of various
factors which affected U.S. wholesale sales in fiscal 1998, including the
adverse impact of price increases and pricing strategies, market disruptions
and retailer discounting issues associated with various forms of cross
distribution channel sales, and forecasting and production scheduling errors.
Commencing in February 1998, management began a detailed study and evaluation
of the Company's U.S. hardside production operations in light of declining
U.S. hardside sales and various marketing issues that the Company is
encountering in the United States. These issues, as well as the decision to
source international hardside products from other production facilities
located closer to the Company's international customers, instead of from its
Denver plant, have resulted in an inventory build-up and reduced hardside
production requirements in the United States. Based on management's
evaluation, on May 14, 1998, the Company approved a plan to further
restructure its U.S. production operations to bring the unit volume and
workforce in the Denver plant into line with expected sales and to achieve a
better balance between fixed and variable costs with respect to this facility.
The restructuring plan calls for a substantial reduction in workforce, as well
as the disposal of molding and other equipment that represents excess
capacity. As a result, during the second quarter of fiscal 1999, the Company
has recorded a restructuring charge of approximately $5.5 million (of which
approximately $2.2 million is non-cash). The Company also expects to incur
additional cash costs of approximately $0.3 million in connection with the
restructuring plan that will be expensed as they are incurred. The Company
expects that the restructuring will be substantially completed by July 31,
1998, and that the annualized cost savings, from the restructuring will be
approximately $5.9 million. The foregoing estimate of annual cost savings
constitutes forward looking information and involves known and unknown risks,
uncertainties and other factors that may cause actual cost savings to be
materially different from the foregoing estimate. In addition to the general
factors discussed under "Risk Factors--Implementation of Business Strategy;
Forward Looking Statements" such estimate of annual cost savings is based on a
variety of other factors and was derived utilizing numerous important
assumptions, including (i) achieving estimated reductions in headcount at
currently projected severance cost levels, while maintaining work flow, (ii)
achieving a sufficient level of sales necessary to yield planned production
efficiencies and absorption of fixed costs, (iii) eliminating certain
components of fixed overhead without affecting the Company's ability to manage
the downsized production facility efficiently, (iv) the willingness of the
affected employees to accept more flexible work rules and (v) no disruption to
planned production schedules. The failure of one or more of these assumptions
to be realized may cause the actual annual cost savings to differ materially
from the foregoing estimate.
In connection with the Recapitalization, certain adjustments and
modifications were made to outstanding employee stock options as a result of
the consummation of the Tender Offer. Such adjustments will result in
increased compensation expense of approximately $3.9 million in the second
quarter of fiscal 1999, $0.4 million during the remainder of fiscal 1999 and
$0.8 million in fiscal 2000.
EFFECT OF YEAR 2000 ISSUES ON COMPANY OPERATIONS
The Company has conducted a review of its computer systems to identify the
systems that could be affected by the Year 2000 issue which results from
computer programs being written using two digits rather than four to define
the applicable year. Any computer programs that have time-sensitive software
may recognize a date using "00" as the year 1900 rather than the year 2000,
resulting in a major system failure or miscalculations. In the U.S., the
Company is installing new financial, manufacturing and distribution software
which is Year 2000 compliant. These new systems are being installed in
response to other business needs as well as Year 2000 issues. The Company's
European division is updating its systems to be Year 2000 compliant and
expects this to be completed during fiscal 1999. Other operations throughout
the world are generally using recently purchased software which is Year 2000
compliant. The Company estimates it will spend approximately $8 million in the
U.S. for new systems by the end of fiscal 1999; costs incurred in Europe and
the remainder of the world for Year 2000 compliance are not expected to be
material. Although the Company believes it has identified internal
54
<PAGE>
Year 2000 issues which might have a significant impact on operations, no
assurance can be given that all such issues have been identified or will be
corrected. Additionally, no assurances can be given that the Company's
customers, vendors, banks or other third parties will not experience Year 2000
issues which may have a significant impact on the Company's operations.
EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, Earnings Per Share. This statement
establishes standards for computing and presenting earnings per share ("EPS")
and applies to all entities with publicly held common stock or potential
common stock. This statement replaces the presentation of primary EPS and
fully diluted EPS with a presentation of basic EPS and diluted EPS,
respectively. Basic EPS excludes dilution and is computed by dividing earnings
available to common stockholders by the weighted-average number of common
shares outstanding for the period. Similar to fully diluted EPS, diluted EPS
reflects the potential dilution of securities that could share in the
earnings. This statement is effective for the Company's consolidated financial
statements for the year ended January 31, 1998, and has been adopted,
resulting in the restatement of earnings per share for all prior periods.
Details regarding earnings per share are disclosed at Note 1(k) to the
consolidated financial statements.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive Income
(Statement 130), which requires comprehensive income to be displayed
prominently within the consolidated financial statements. Comprehensive income
is defined as all recognized changes in equity during a period from
transactions and other events and circumstances except those resulting from
investments by owners and distributions to owners. Net income and items that
previously have been recorded directly in equity are included in comprehensive
income. Statement 130 affects only the reporting, and disclosure of
comprehensive income; it does not affect recognition or measurement of income.
Statement 130 is effective for fiscal years beginning after December 15, 1997,
with earlier application permitted. The Company plans to adopt Statement 130
in the first quarter of fiscal 1999.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, Disclosures about Segments of an
Enterprise and Related Information (Statement 131). Statement 131 provides
guidance for reporting information about operating segments in annual
financial statements and requires reporting of selected information about
operating segments in interim financial reports of public companies. An
operating segment is defined as a component of a business that engages in
business activities from which it may earn revenue and incur expenses, a
component whose operating results are regularly reviewed by the company's
chief operating decision maker, and a component for which discrete financial
information is available. Statement 131 establishes quantitative thresholds
for determining operating segments of a company. Statement 131 is effective
for fiscal years beginning after December 15, 1997, with earlier application
permitted. The Company plans to adopt Statement 131 in the first quarter of
fiscal 1999 by reporting operating segment information on Form 10-Q.
In February 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 132, Employers' Disclosures about
Pensions and Other Postretirement Benefits (Statement 132). This statement
revised employers' disclosures about pension and other postretirement benefit
plans and standardizes the disclosure requirements to the extent practicable.
This statement is effective for the Company's consolidated financial
statements for the year ending January 31, 1999. The Company does not expect
the adoption of Statement 132 to materially impact the financial statement
presentation.
55
<PAGE>
THE EXCHANGE OFFER
TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING OLD SENIOR PREFERRED STOCK
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal (which together constitute the
"Exchange Offer"), the Company will accept for exchange shares of Old Senior
Preferred Stock which are properly tendered on or prior to the Expiration Date
and not withdrawn as permitted below. As used herein, the term "Expiration
Date" means 5:00 p.m. New York City time, on , 1998; provided, however,
that if the Company, in its sole discretion, has extended the period of time
for which the Exchange Offer is open, the term "Expiration Date" means the
latest time and date to which the Exchange Offer is extended.
As of the date of this Prospectus, 175,000 shares of Old Senior Preferred
Stock are outstanding. This Prospectus, together with the Letter of
Transmittal, is first being sent on or about , 1998, to all holders known
to the Company. The Company's obligation to accept Senior Preferred Stock for
exchange pursuant to the Exchange Offer is subject to certain conditions as
set forth under "--Certain Conditions to the Exchange Offer" below.
The Company expressly reserves the right, at any time or from time to time,
to extend the period of time during which the Exchange Offer is open, and
thereby delay acceptance for exchange of any Old Senior Preferred Stock, by
giving oral or written notice of such extension to the holders thereof in the
manner described below. During any such extension, all Old Senior Preferred
Stock previously tendered will remain subject to the Exchange Offer and may be
accepted for exchange by the Company. Any Old Senior Preferred Stock not
accepted for exchange for any reason will be returned without expense to the
tendering holder thereof as promptly as practicable after the expiration or
termination of the Exchange Offer.
Shares of Old Senior Preferred Stock tendered in the Exchange Offer must be
in denominations of $1,000 liquidation preference per share and any integral
multiple thereof.
The Company expressly reserves the right to amend or terminate the Exchange
Offer, and not to accept for exchange any Old Senior Preferred Stock not
theretofore accepted for exchange, upon the occurrence of any of the
conditions of the Exchange Offer specified below under "--Certain Conditions
to the Exchange Offer." The Company will give oral or written notice of any
extension, amendment, non-acceptance or termination to the holders of the Old
Senior Preferred Stock as promptly as practicable, such notice in the case of
any extension to be issued by means of a press release or other public
announcement no later than 9:00 a.m., New York City time, on the next business
day after the previously scheduled Expiration Date.
PROCEDURES FOR TENDERING OLD SENIOR PREFERRED STOCK
The tender to the Company of shares of Old Senior Preferred Stock by a
holder thereof as set forth below and acceptance thereof by the Company will
constitute a binding agreement between the tendering holder and the Company
upon terms and subject to the conditions set forth in this Prospectus and in
the accompanying Letter of Transmittal. Except as set forth below, a holder
who wishes to tender Old Senior Preferred Stock for exchange pursuant to the
Exchange Offer must transmit a properly completed and duly executed Letter of
Transmittal, including all other documents required by such Letter of
Transmittal, to United States Trust Company of New York (the "Exchange Agent")
at the address set forth below under "Exchange Agent" on or prior to the
Expiration Date. In addition, either (i) certificates for such Old Senior
Preferred Stock must be received by the Exchange Agent along with the Letter
of Transmittal or (ii) a timely confirmation of book-entry transfer (a "Book-
Entry Confirmation") of such Old Senior Preferred Stock, if such procedure is
available, into the Exchange Agent's account at The Depository Trust Company
(the "Book-Entry Transfer Facility") pursuant to the procedure for book-entry
transfer described below, must be received by the Exchange Agent prior to the
Expiration Date or (iii) the holder must comply with the guaranteed delivery
procedures described below. THE METHOD OF DELIVERY OF OLD SENIOR PREFERRED
STOCK, LETTERS OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE
ELECTION AND RISK OF THE HOLDERS. IF SUCH DELIVERY IS BY MAIL, IT IS
RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT
REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE
TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR OLD SENIOR PREFERRED STOCK
SHOULD BE SENT TO THE COMPANY.
56
<PAGE>
Any beneficial owner whose Old Senior Preferred Stock is registered in the
name of a broker, dealer, commercial bank, trust company or other nominee and
who wishes to tender should contact the registered holder promptly and
instruct such registered holder to tender on such beneficial owner's behalf.
If such beneficial owner wishes to tender on such owner's own behalf, such
owner must, prior to completing and executing the Letter of Transmittal and
delivering such owner's Old Senior Preferred Stock, either make appropriate
arrangements to register ownership of the Old Senior Preferred Stock in such
owner's name or obtain a properly completed bond power from the registered
holder. The transfer of registered ownership may take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed unless the Old Senior Preferred Stock surrendered
for exchange pursuant thereto is tendered (i) by a registered holder of the
Old Senior Preferred Stock who has not completed the box entitled "Special
Issuance Instructions" or "Special Delivery Instructions" on the Letter of
Transmittal or (ii) for the account of an Eligible Institution (as defined
below). In the event that signatures on a Letter of Transmittal or a notice of
a withdrawal, as the case may be, are required to be guaranteed, such
guarantees must be by a firm which is a financial institution (including most
banks, savings and loan associations and brokerage houses) that is a
participant in the Securities Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Program or the Stock Exchanges Medallion
Program (collectively, "Eligible Institutions"). If Old Senior Preferred Stock
is registered in the name of a person other than a signer of the Letter of
Transmittal, the Old Senior Preferred Stock surrendered for exchange must be
endorsed by, or be accompanied by a written instrument or instruments of
transfer or exchange, in satisfactory form as determined by the Company in its
sole discretion, duly executed by the registered holder with the signature
thereon guaranteed by an Eligible Institution.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Old Senior Preferred Stock tendered for exchange
will be determined by the Company in its sole discretion, which determination
shall be final and binding. The Company reserves the absolute right to reject
any and all tenders of any particular shares of Old Senior Preferred Stock not
properly tendered or to not accept any particular shares of Old Senior
Preferred Stock which acceptance might, in the judgment of the Company or its
counsel, be unlawful. The Company also reserves the absolute right to waive
any defects or irregularities or conditions of the Exchange Offer as to any
particular shares of Old Senior Preferred Stock either before or after the
Expiration Date (including the right to waive the ineligibility of any holder
who seeks to tender Old Senior Preferred Stock in the Exchange Offer). The
interpretation of the terms and conditions of the Exchange Offer as to any
particular shares of Old Senior Preferred Stock either before or after the
Expiration Date (including the Letter of Transmittal and the instructions
thereto) by the Company shall be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of shares of
Old Senior Preferred Stock for exchange must be cured within such reasonable
period of time as the Company shall determine. Neither the Company, the
Exchange Agent nor any other person shall be under any duty to give
notification of any defect or irregularity with respect to any tender of
shares of Old Senior Preferred Stock for exchange, nor shall any of them incur
any liability for failure to give such notification.
If the Letter of Transmittal is signed by a person or persons other than the
registered holder or holders of Old Senior Preferred Stock, such Old Senior
Preferred Stock must be endorsed or accompanied by appropriate powers of
attorney, in either case signed exactly as the name or names of the registered
holder or holders appear on the Old Senior Preferred Stock.
If the Letter of Transmittal or any Old Senior Preferred Stock or powers of
attorney are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and,
unless waived by the Company, proper evidence satisfactory to the Company of
their authority to so act must be submitted.
By tendering, each holder will represent to the Company that, among other
things, the New Senior Preferred Stock acquired pursuant to the Exchange Offer
is being obtained in the ordinary course of business of the person receiving
such New Senior Preferred Stock, whether or not such person is the holder, and
that neither the holder
57
<PAGE>
nor such other person has any arrangement or understanding with any person to
participate in the distribution of the New Senior Preferred Stock. In the case
of a holder that is not a broker-dealer, each such holder, by tendering, will
also represent to the Company that such holder is not engaged in and does not
intend to engage in a distribution of the New Senior Preferred Stock. If any
holder or any such other person is an "affiliate," as defined under Rule 405
of the Securities Act, of the Company, or is engaged in or intends to engage
in or has an arrangement or understanding with any person to participate in a
distribution of such New Senior Preferred Stock to be acquired pursuant to
Exchange Offer, such holder or any such other person (i) could not rely on the
applicable interpretations of the staff of the Commission and (ii) must comply
with the registration and prospectus delivery requirements of the Securities
Act in connection with any resale transaction. Each broker-dealer that
receives New Senior Preferred Stock for its own account in exchange for Old
Senior Preferred Stock, where such Old Senior Preferred Stock was acquired by
such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such New
Senior Preferred Stock. See "Plan of Distribution." The Letter of Transmittal
states that by so acknowledging and by delivering such a prospectus, a broker-
dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
ACCEPTANCE OF OLD SENIOR PREFERRED STOCK FOR EXCHANGE; DELIVERY OF NEW SENIOR
PREFERRED STOCK
Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
the Company will accept, promptly after the Expiration Date, all Old Senior
Preferred Stock properly tendered and will issue the New Senior Preferred
Stock promptly after acceptance of the Old Senior Preferred Stock. See "--
Certain Conditions to the Exchange Offer" below. For purposes of the Exchange
Offer, the Company shall be deemed to have accepted properly tendered Old
Senior Preferred Stock for exchange when, as and if the Company has given oral
or written notice thereof to the Exchange Agent, with written confirmation of
any oral notice to be given promptly thereafter.
For each share of Old Senior Preferred Stock accepted for exchange, the
holder of such Old Senior Preferred Stock will receive a share of New Senior
Preferred Stock having a liquidation preference equal to that of the
surrendered Old Senior Preferred Stock. Holders are entitled to receive, when,
as and if declared by the Board of Directors of the Company out of funds
legally available therefor, dividends on the New Senior Preferred Stock at a
rate per annum of 13 7/8% of the liquidation preference per share of Senior
Preferred Stock. The New Senior Preferred Stock will accrue dividends from the
most recent date to which dividends have been paid on the Old Senior Preferred
Stock or, if no dividends have been paid on the Old Senior Preferred Stock,
from June 24, 1998. Old Senior Preferred Stock accepted for exchange will
cease to accrue dividends from and after the date of consummation of the
Exchange Offer. Holders of Old Senior Preferred Stock whose Old Senior
Preferred Stock is accepted for exchange will not receive any payment in
respect of accrued dividends on such Old Senior Preferred Stock otherwise
payable on any Dividend Payment Date the record date for which occurs on or
after consummation of the Exchange Offer.
In all cases, issuance of New Senior Preferred Stock for Old Senior
Preferred Stock that is accepted for exchange pursuant to the Exchange Offer
will be made only after timely receipt by the Exchange Agent of certificates
for such Old Senior Preferred Stock, or a timely Book-Entry Confirmation of
such Old Senior Preferred Stock in to the Exchange Agent's account at the
Book-Entry Transfer Facility, a properly completed and duly executed Letter of
Transmittal and all other required documents. If any tendered Old Senior
Preferred Stock is not accepted for any reason set forth in the terms and
conditions of the Exchange Offer or if Old Senior Preferred Stock is submitted
for a greater liquidation preference than the holder desires to exchange, such
unaccepted or non-exchanged Old Senior Preferred Stock will be returned
without expense to the tendering holder thereof (or, in the case of Old Senior
Preferred Stock tendered by book-entry transfer to the Exchange Agent's
account at the Book-Entry Transfer Facility pursuant to the book-entry
procedures described below, such non-exchanged Old Senior Preferred Stock will
be credited to an account maintained with such Book-Entry Transfer Facility)
as promptly as practicable after the expiration or termination of the Exchange
Offer.
58
<PAGE>
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Old Senior Preferred Stock at the Book-Entry Transfer Facility for
purposes of the Exchange Offer within two business days after the date of this
Prospectus, and any financial institution that is a participant in the Book-
Entry Transfer Facility's systems may make book-entry delivery of Old Senior
Preferred Stock by causing the Book-Entry Transfer Facility to transfer such
Old Senior Preferred Stock into the Exchange Agent's account at the Book-Entry
Transfer Facility in accordance with such Book-Entry Transfer Facility's
procedures for transfer. However, although delivery of Old Senior Preferred
Stock may be effected through book-entry transfer at the Book-Entry Transfer
Facility, the Letter of Transmittal or facsimile thereof, with any required
signature guarantees and any other required documents, must, in any case, be
transmitted to and received by the Exchange Agent at the address set forth
below under "--Exchange Agent" on or prior to the Expiration Date or the
guaranteed delivery procedures described below must be complied with.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of the Old Senior Preferred Stock desires to tender
such Old Senior Preferred Stock and the Old Senior Preferred Stock is not
immediately available, or time will not permit such holder's Old Senior
Preferred Stock or other required documents to reach the Exchange Agent before
the Expiration Date, or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected if (i) the tender is
made through an Eligible Institution, (ii) prior to the Expiration Date, the
Exchange Agent received from such Eligible Institution a properly completed
and duly executed Letter of Transmittal (or a facsimile thereof) and Notice of
Guaranteed Delivery, substantially in the form provided by the Company (by
facsimile transmission, mail or hand delivery), setting forth the name and
address of the holder of Old Senior Preferred Stock and the amount of Old
Senior Preferred Stock tendered, stating that the tender is being made thereby
and guaranteeing that within three New York Stock Exchange trading days after
the Expiration Date the certificates for all physically tendered Old Senior
Preferred Stock, in proper form for transfer, or a Book-Entry Confirmation, as
the case may be, and any other documents required by the Letter of Transmittal
will be deposited by the Eligible Institution with the Exchange Agent and
(iii) the certificates for all physically tendered Old Senior Preferred Stock,
in proper form for transfer, or a Book-Entry Confirmation, as the case may be,
and all other documents required by the Letter of Transmittal, are received by
the Exchange Agent within three New York Stock Exchange trading days after the
Expiration Date.
WITHDRAWAL RIGHTS
Tenders of Old Senior Preferred Stock may be withdrawn at any time prior to
the Expiration Date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent at the address or, in the case of Eligible
Institutions, at the facsimile number, set forth below under "--Exchange
Agent" prior to the Expiration Date. Any such notice of withdrawal must (i)
specify the name of the person having tendered the Old Senior Preferred Stock
to be withdrawn (the "Depositor"), (ii) identify the Old Senior Preferred
Stock to be withdrawn (including the certificate number or numbers and
liquidation preference of such Old Senior Preferred Stock), (iii) contain a
statement that such holder is withdrawing his election to have such Old Senior
Preferred Stock exchanged, (iv) be signed by the holder in the same manner as
the original signature on the Letter of Transmittal by which such Old Senior
Preferred Stock was tendered (including any required signature guarantees) and
(v) specify the name in which such Old Senior Preferred Stock is registered,
if different from that of the Depositor. If Old Senior Preferred Stock has
been tendered pursuant to the procedure for book-entry transfer described
above, any notice of withdrawal must specify the name and number of the
account at the Book-Entry Transfer Facility to be credited with the withdrawn
Old Senior Preferred Stock and otherwise comply with the procedures of such
facility. All questions as to the validity, form and eligibility (including
time of receipt) of such notices will be determined by the Company, whose
determination shall be final and binding on all parties. Any Old Senior
Preferred Stock so withdrawn will be deemed not to have been validly tendered
for exchange for purposes of the Exchange Offer and no New Senior Preferred
Stock will be issued with respect thereto unless the Old Senior Preferred
Stock so withdrawn is validly retendered. Any Old Senior Preferred Stock
59
<PAGE>
that has been tendered for exchange but which is not exchanged for any reason
will be returned to the holder thereof without cost to such holder (or, in the
case of Old Senior Preferred Stock tendered by book-entry transfer into the
Exchange Agent's account at the Book-Entry Transfer Facility pursuant to the
book-entry transfer procedures described above, such Old Senior Preferred
Stock will be credited to an account maintained with the Book-Entry Transfer
Facility for the Old Senior Preferred Stock) as soon as practicable after
withdrawal, rejection of tender or termination of the Exchange Offer. Properly
withdrawn Old Senior Preferred Stock may be retendered by following the
procedures described under "--Procedures for Tendering Old Senior Preferred
Stock" above at any time prior to the Expiration Date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, the Company shall
not be required to accept for exchange, or to issue New Senior Preferred Stock
in exchange for, any Old Senior Preferred Stock and may terminate or amend the
Exchange Offer, if at any time before the acceptance of such Old Senior
Preferred Stock for exchange or the exchange of the New Senior Preferred Stock
for such Old Senior Preferred Stock, any of the following events shall occur:
(a) there shall be threatened, instituted or pending any action or
proceeding before, or any injunction, order or decree shall have been
issued by, any court or governmental agency or other governmental
regulatory or administrative agency or commission (i) seeking to restrain
or prohibit the making or consummation of the Exchange Offer or any other
transaction contemplated by the Exchange Offer, or assessing or seeking any
damages as a result thereof or (ii) resulting in a material delay in the
ability of the Company to accept for exchange or exchange some or all of
the Old Senior Preferred Stock pursuant to the Exchange Offer, or any
statute, rule, regulation, order or injunction shall be sought, proposed,
introduced, enacted, promulgated or deemed applicable to the Exchange Offer
or any of the transactions contemplated by the Exchange Offer by any
government or governmental authority, domestic or foreign, or any action
shall have been taken, proposed or threatened, by any government,
governmental authority, agency or court, domestic or foreign, that in the
sole judgment of the Company might directly or indirectly result in any of
the consequences referred to in clauses (i) or (ii) above or, in the sole
judgment of the Company, might result in the holders of New Senior
Preferred Stock having obligations with respect to resales and transfers of
New Senior Preferred Stock which are greater than those described in the
interpretation of the Commission referred to below under "--Consequences of
Exchanging Old Senior Preferred Stock," or would otherwise make it
inadvisable to proceed with the Exchange Offer; or
(b) there shall have occurred (i) any general suspension of or general
limitation on prices for, or trading in, securities on any national
securities exchange or in the over-the-counter market, (ii) any limitation
by a governmental agency or authority which may adversely affect the
ability of the Company to complete the transactions contemplated by the
Exchange Offer, (iii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States or any
limitation by any governmental agency or authority which adversely affects
the extension of credit or (iv) a commencement of a war, armed hostilities
or other similar international calamity directly or indirectly involving
the United States, or, in the case of any of the foregoing existing at the
time of the commencement of the Exchange Offer, a material acceleration or
worsening thereof; or
(c) any change (or any development involving a prospective change) shall
have occurred or be threatened in the business, properties, assets,
liabilities, financial condition, operations, results of operations or
prospects of the Company and its subsidiaries taken as a whole that, in the
sole judgment of the Company, is or may be adverse to the Company, or the
Company shall have become aware of facts that, in the sole judgment of the
Company, have or may have adverse significance with respect to the value of
the Old Senior Preferred Stock or the New Senior Preferred Stock; which in
the sole judgment of the Company in any case, and regardless of the
circumstances (including any action by the Company) giving rise to any such
condition, makes it inadvisable to proceed with the Exchange Offer and/or
with such acceptance for exchange or with such exchange.
60
<PAGE>
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any
such condition or may be waived by the Company in whole or in part at any time
and from time to time in its sole discretion. The failure by the Company at
any time to exercise any of the foregoing rights shall not be deemed a waiver
of any such right and each such right shall be deemed an ongoing right which
may be asserted at any time and from time to time.
In addition, the Company will not accept for exchange any Old Senior
Preferred Stock tendered, and no New Senior Preferred Stock will be issued in
exchange for any such Old Senior Preferred Stock, if at such time any stop
order shall be threatened or in effect with respect to the registration
statement of which this Prospectus is a part or the qualification of the
Exchange Indenture under the Trust Indenture Act of 1939.
EXCHANGE AGENT
United States Trust Company of New York has been appointed as the Exchange
Agent for the Exchange Offer. All executed Letters of Transmittal should be
directed to the Exchange Agent at the address set forth below. Questions and
requests for assistance, requests for additional copies of this Prospectus or
of the Letter of Transmittal and requests for Notices of Guaranteed Delivery
should be directed to the Exchange Agent addressed as follows:
<TABLE>
<CAPTION>
United States Trust Company of New York, Exchange Agent
<S> <C>
By Mail: By Overnight Courier and By Hand after 4:30 p.m.
New York City Time on the Expiration Da
United States Trust Company of New York
P.O. Box 843 - Cooper Station United States Trust Company of New York
New York, New York 10276 770 Broadway, 13th Floor
Attention: Corporate Trust Services New York, New York 10003
Attention: Corporate Trust Services
By Hand (before 4:30 p.m. New York City Time):
For Information Call:
(800) 548-6565
United States Trust Company of New York
111 Broadway By Facsimile Transmission
(for Eligible Institutions only):
Attention: Corporate Trust Window (212) 780-0592
Lower Level Attention: Corporate Trust Services
New York, New York 10006
Confirm by Telephone:
(800) 548-6565
</TABLE>
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY OF SUCH LETTER OF TRANSMITTAL.
FEES AND EXPENSES
The Company will not make any payment to brokers, dealers, or others
soliciting acceptance of the Exchange Offer. The estimated cash expenses to be
incurred in connection with the Exchange Offer will be paid by the Company and
are estimated in the aggregate to be approximately $150,000.
TRANSFER TAXES
Holders who tender their Old Senior Preferred Stock for exchange will not be
obliged to pay any transfer taxes in connection therewith, except that holders
who instruct the Company to register New Senior Preferred Stock in the name
of, or request that Old Senior Preferred Stock not tendered or not accepted in
the Exchange Offer be returned to, a person other than the registered
tendering holder will be responsible for the payment of any applicable
transfer tax thereon.
61
<PAGE>
CONSEQUENCES OF EXCHANGING OLD SENIOR PREFERRED STOCK
Holders of Old Senior Preferred Stock who do not exchange their Old Senior
Preferred Stock for New Senior Preferred Stock pursuant to the Exchange Offer
will continue to be subject to the provisions in the Certificate of
Designation regarding transfer and exchange of the Old Senior Preferred Stock
and the restrictions on transfer of such Old Senior Preferred Stock as set
forth in the legend thereon as a consequence of the issuance of the Old Senior
Preferred Stock pursuant to exemptions from, or in transactions not subject
to, the registration requirements of the Securities Act and applicable state
securities laws. In general, the Old Senior Preferred Stock may not be offered
or sold, unless registered under the Securities Act, except pursuant to an
exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. The Company does not currently anticipate
that it will register Old Senior Preferred Stock under the Securities Act.
Based on interpretations by the staff of the Commission, as set forth in no-
action letters issued to third parties, the Company believes that New Senior
Preferred Stock issued pursuant to the Exchange Offer in exchange for Old
Senior Preferred Stock may be offered for resale, resold or otherwise
transferred by holders thereof (other than any such holder which is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such New Senior Preferred
Stock is acquired in the ordinary course of such holders' business and such
holders have no arrangement or understanding with any person to participate in
the distribution of such New Senior Preferred Stock. However, the Commission
has not considered the Exchange Offer in the context of a no-action letter and
there can be no assurance that the staff of the Commission would make a
similar determination with respect to the Exchange Offer as in such other
circumstances. Each holder, other than a broker-dealer, must acknowledge that
it is not engaged in, and does not intend to engage in, a distribution of New
Senior Preferred Stock and has no arrangement or understanding to participate
in a distribution of New Senior Preferred Stock. If any holder is an
"affiliate" of the Company (within the meaning of Rule 405 under the
Securities Act), is engaged in or intends to engage in or has any arrangement
or understanding with respect to the distribution of the New Senior Preferred
Stock to be acquired pursuant to the Exchange Offer, such holder (i) could not
rely on the applicable interpretations of the staff of the Commission and (ii)
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction. Each broker-dealer
that receives New Senior Preferred Stock for its own account in exchange for
Old Senior Preferred Stock must acknowledge that such Old Senior Preferred
Stock was acquired by such broker-dealer as a result of market-making
activities or other trading activities and that it will deliver a prospectus
in connection with any resale of such New Senior Preferred Stock. The Letter
of Transmittal states that by so acknowledging and by delivering a prospectus,
a broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of New Senior Preferred Stock received in exchange for Old Senior
Preferred Stock where such Old Senior Preferred Stock was acquired as a result
of market-making activities or other trading activities. For a period of 180
days after the Expiration Date, the Company will make this Prospectus, as
amended or supplemented from time to time, available to any broker-dealer for
use in connection with any such resale. See "Plan of Distribution." In
addition, to comply with the securities laws of certain jurisdictions, if
applicable, the New Senior Preferred Stock may not be offered or sold unless
it has been registered or qualified for sale in such jurisdiction or an
exemption from registration or qualification is available and is complied
with.
62
<PAGE>
BUSINESS
GENERAL
Samsonite is one of the world's largest manufacturers and distributors of
luggage. The Company markets its products primarily under the Samsonite(R),
American Tourister(R) and Lark(R) brand names. The Samsonite brand enjoys
worldwide recognition and is the leading brand of luggage products in the
United States and Europe. American Tourister is the second most recognized
brand of luggage in the United States. American Tourister products are also
sold in Europe. The Lark brand is well-recognized in the United States and
competes in the premium segment of the luggage market. Samsonite and American
Tourister luggage products have been manufactured and sold continuously since
the 1930s.
The Company is a major factor in the worldwide luggage market, with net
sales of $736.9 million for fiscal 1998. Competition in the luggage market is
highly fragmented with the vast majority of individual competitors having less
than 10% of the Company's annual luggage sales. Samsonite offers the broadest
range of products in the luggage industry, including hardside suitcases,
softside suitcases, garment bags, casual bags, hardside and softside business
cases and other travel bags. Many of today's most successful luggage products
and features--such as suitcases on wheels, suitcases with a built-in luggage
cart, full-featured structured garment bags, ultra-light softside suitcases
and innovative new wheel systems--were introduced or popularized by Samsonite.
The Company benefits from its large size through sale driven purchasing and
manufacturing economies. The Company's products are sourced through a global
network consisting of 14 Company-operated manufacturing facilities and various
third-party suppliers throughout the world. By operating its own facilities
to produce hardside luggage and more complex softside products, the Company is
better able to control manufacturing quality and to achieve shorter product
introduction lead times and lower delivery costs. In addition, the Company
takes advantage of its global sourcing capabilities by buying less complex
products from various countries when their product costs or currency exchange
rates are favorable.
The Company's marketing and distribution strategy focuses on the broad
middle segment of the luggage market as opposed to the more commodity driven
low end of the market or the premium priced high end. In the United States,
the Samsonite brand has historically been positioned as high quality,
innovative luggage, targeted at frequent business travelers. The American
Tourister brand has been positioned as quality luggage at an affordable price,
and the Lark brand has been positioned as premium luggage targeted at first
and business class travelers. In Europe, the Samsonite brand enjoys more of a
premium image than in the United States, and is targeted at first class and
frequent business travelers. The Company's marketing theme centers around the
Samsonite "WorldproofTM" brand image which represents strength, durability,
quality, and style.
The Company's products are sold throughout the world in more than 100
countries through approximately 23,000 retail outlets, including department
and specialty stores, catalog showrooms, mass merchant retailers, warehouse
clubs and Company-owned retail stores located primarily in factory outlet
malls. In addition, Samsonite licenses its trademarks for use on non-luggage
products, such as travel accessories, personal leather goods, handbags and
furniture. These products are made and sold primarily by independent licensees
which pay royalties to Samsonite.
COMPETITIVE STRENGTHS AND NEW GROWTH INITIATIVES
Management believes that the Company's leading position in the global
luggage industry is due to its widely recognized brand names, broad range of
innovative luggage products and global manufacturing and distribution network.
Brand Names. The Company markets its products primarily under the Samsonite,
American Tourister and Lark brand names. The Company commits substantial
resources to aggressive brand advertising programs that
63
<PAGE>
promote the features, durability and quality of the Company's products and
target particular segments of the luggage market based on consumer
demographics. For each of the last five fiscal years, the Company has
invested, either directly or through co-op advertising programs, approximately
$50 million in television and print advertising and related promotional
activities. A 1994 market survey, the most recent Company sponsored survey
conducted by an independent surveying organization, indicated that
approximately 93% and 79% of travelers surveyed in the United States
recognized the Samsonite and American Tourister brand names, respectively,
compared to less than 15% for the next most recognized luggage brand. Similar
surveys show that recognition of the Samsonite brand name in most major
Western European countries ranges from 60% to 80%.
Innovative Products. The Company is the industry leader in offering
innovative products that meet travelers' needs. The Company has spent over $40
million on product design and development during the last five fiscal years.
Many of today's most successful luggage products and features--such as
suitcases on wheels, suitcases with a built-in luggage cart, full-featured,
structured garment bags, ultra-lightweight, softside suitcases, and innovative
new wheel systems--were introduced or popularized by Samsonite. Sales of
products that were introduced or substantially redesigned by the Company in
the last three years accounted for approximately 60% of the Company's fiscal
1998 sales. The Company currently holds approximately 730 patents worldwide
and has over 300 patent applications pending worldwide.
Global Manufacturing and Distribution Network. The Company's global sourcing
network consists of 14 Company-operated manufacturing facilities and various
third-party suppliers located principally in the Far East, Eastern Europe and
the Dominican Republic. By operating its own facilities to produce hardside
luggage and more complex softside products, the Company is better able to
control manufacturing quality and reduce lead times and delivery costs. The
Company's global sourcing network also enables it to opportunistically source
less complex products from countries with low product costs and favorable
currency exchange rates. The Company has one of the largest and most
technologically advanced luggage distribution networks in both the United
States and Europe. Its pan-European distribution network is capable of billing
customers in their local currency and delivering products within five days
after an order is placed. The Company also has significant distribution
relationships in Asia, Australia, Latin America and the Middle East.
In May 1996, the Company appointed Richard R. Nicolosi as Chief Executive
Officer and shortly thereafter announced a strategic plan intended to further
strengthen the Company's leadership position in the worldwide luggage market
and to improve its financial performance. The plan included a series of
initiatives designed to broaden the product and pricing architecture in the
U.S. and position products and brands on a consistent basis in the U.S. and
Europe; to streamline the organizational structure by adopting a structure
based on channel management instead of brand management which relied upon
separate organizations to manage each of the Company's three principal brands;
and to improve the Company's cost structure by reducing SKUs, standardizing
components and instituting global sourcing.
As a result of the plan initiatives, net sales, EBITDA and Adjusted EBITDA
increased from $675.2 million, $78.7 million, and $78.3 million, respectively,
in fiscal 1996 to $736.9 million, $126.2 million and $112.4 million,
respectively, in fiscal 1998. During this period, the Company's European
operations posted increases in local currency sales and operating income of
23.9% and 58.6%, respectively. Samsonite's U.S. retail business also recorded
significant sales and operating income growth during this period; however, the
Company's U.S. wholesale business experienced difficulty implementing certain
of the plan initiatives, and began to perform below expectations commencing in
the third quarter of fiscal 1998. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
In February 1998, Mr. Luc Van Nevel, a 23-year Samsonite veteran, who
previously had responsibility for Samsonite's successful European and
International operations, was promoted to President of Samsonite. In May 1998,
Mr. Van Nevel was appointed to succeed Mr. Nicolosi as Chief Executive Officer
and was elected to the Company's Board of Directors. Mr. Nicolosi currently
serves as Chairman of the Board of Directors.
64
<PAGE>
Since the beginning of fiscal 1999, Mr. Van Nevel has continued to refine
the successful strategies initiated in 1996 and has taken aggressive action to
address the issues facing the Company's U.S. wholesale business, as described
below.
. Emphasize Growth Oriented Product Offerings and Channels of
Distribution. The Company plans to introduce more entries in casual bags
and business cases in the U.S. in order to expand the Company's sales in
these two growth categories. This strategy has already proven to be
successful for Samsonite in Europe and Japan. The Company also plans to
increase its presence in channels of distribution where it believes it
is under-represented by using targeted marketing and sales efforts
tailored to each channel. In addition, the Company intends to exploit
its manufacturing and sourcing leverage by aggressively pursuing
opportunities to sell American Tourister and retailer-labeled products
to mass merchant retailers and in other high volume-potential channels
throughout the world.
. Strengthen Marketing and Product Innovation. Samsonite plans to continue
to expand its presence in the worldwide luggage market from both a
consumer and trade standpoint. The Company's marketing program is
expected to include more consumer-preferred products, styles and
features, more effective advertising at higher investment levels,
strengthened point-of-sale support and better customer service. Recent
successful product introductions include the updated ultralite product
line in the U.S., the second generation Oyster(TM) product line in
Europe, and products incorporating the innovative Big Wheel(R) system
worldwide. In addition, other product launches are scheduled for fiscal
1999. For example, the Company's best selling U.S. line, Silhouette(TM)
with sales of approximately $64 million in each of the last two fiscal
years, will be reintroduced as Silhouette 6 in the second half of fiscal
1999. The Company believes Silhouette 6 will have improved aesthetics
and performance and an improved price to value relationship at
competitive price points. Silhouette 6 will include separate designs
targeted at business travelers, women, and "road warriors"--the ultimate
business travelers.
. Continue Worldwide Expansion. The Company plans to continue expansion
worldwide in countries where growing economies and reduced political and
trade barriers provide opportunities for long-term growth. Samsonite
currently has operations in a number of emerging foreign markets,
including China, India, South America and the Pacific Rim. Since the
beginning of fiscal 1997, the Company has: (i) acquired luggage
distribution companies in Hong Kong, Singapore and South Korea;
(ii) established manufacturing and distribution joint ventures in India
and China; and (iii) established a new venture partnership with a former
Samsonite distributor to distribute Samsonite products in Brazil and
other major South American markets. During fiscal 1999, the Company
intends to take over distribution operations in Taiwan from the
Company's current distributor whose contract has expired and also to
form a joint venture with the Company's current Argentinian distributor.
The Company is currently considering the possible disposal or
liquidation of its investment in its manufacturing facilities in China,
although the Company intends to maintain its sales and distribution
presence in China. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Recent Events and
Recapitalization."
. Resolve U.S. Wholesale Issues. In fiscal 1998, the Company's U.S.
wholesale operation (which accounted for 37.2% of the Company's fiscal
1998 consolidated sales) produced significant increases in
operating income of 89.4% as compared to fiscal 1997. However,
commencing with the end of the third quarter of fiscal 1998, this
operation began to perform below expectations causing U.S. wholesale
sales for fiscal 1998 to be 7.4% below fiscal 1997. This decline was due
to various factors including the adverse impact of price increases and
other pricing strategies adopted by the Company, market disruptions and
retailer discounting taken in connection with various forms of cross
distribution-channel selling. In addition, forecasting and production
scheduling errors, along with the reduced level of sales, resulted in
product availability constraints, significant negative production
variances and excess inventory both at the Company and in certain of the
Company's distribution channels.
Since the beginning of fiscal 1999, the Company has taken aggressive
action to resolve these issues. These actions have included: (i)
replacing the management team responsible for U.S. wholesale
65
<PAGE>
operations with experienced luggage industry veterans; (ii) improving
customer relationships by eliminating cross distribution-channel selling
and by modifying the Company's strategy for its retail operations; (iii)
modifying the Company's pricing and co-op advertising strategy by
reducing prices from 4% to 6% on certain products with corresponding
reductions in co-op advertising allowances and sale promotion costs;
(iv) reducing production levels, particularly in the Denver hardside
plant, to bring volume into line with expected sales, and working in
conjunction with the Company's trade customers and Company-owned stores
to reduce excess working capital by approximately $45 million over the
next 18 months; and (v) rightsizing the cost structure of the Company's
U.S. wholesale operations, including implementation of a plan to further
restructure its U.S. manufacturing operations. The restructuring plan,
which is intended to bring the unit volume and workforce in the Denver
plant into line with expected sales and to achieve a better balance
between fixed and variable costs with respect to this facility, calls
for a substantial reduction in workforce, as well as the disposal of
molding and other equipment that represents excess capacity. As a
result, during the second quarter of fiscal 1999, the Company has
recorded a restructuring charge of approximately $5.5 million (of which
approximately $2.2 million is non-cash). The Company also expects to
incur additional cash costs of approximately $0.3 million in connection
with the restructuring plan that will be expensed as they are incurred.
The Company expects that the restructuring will be substantially
completed by July 31, 1998, and that the annualized cost savings from
the restructuring will be approximately $5.9 million. The foregoing
estimate of annual cost savings constitutes forward looking information
and involves known and unknown risks, uncertainties and other factors
that may cause actual cost savings to be materially different from the
foregoing estimate. See "Risk Factors--Implementation of Business
Strategy; Forward-Looking Statements" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Recent Events
and Recapitalization."
Notwithstanding these corrective actions, the Company expects sales and
operating results in U.S. wholesale operations through at least the
first two quarters of fiscal 1999 to continue to be adversely affected
by the factors which adversely affected U.S. wholesale operations in
fiscal 1998.
THE LUGGAGE MARKET
The worldwide luggage market covers a wide range of products, values and
price points. At the highest end of the market are luxury products (such as
Louis Vuitton and Gucci) that have prestige identities, high prices, and
tightly confined distribution. Beneath the luxury segment is the broad middle
band of the luggage market in which products are differentiated by features,
brand name and price. Within this band, unit sales volumes are largest at the
middle and lower prices. Product differentiation decreases and breadth of
distribution increases with decreasing price levels.
At the low end of the luggage market, unbranded products with few, if any,
differentiating features are sold in significant volumes and at low margins,
competing primarily on the basis of price.
In the United States, luggage is sold to consumers through (i) traditional
retail distribution channels, including department and specialty luggage
stores and national retail chains, (ii) catalog showrooms and (iii) discount
retail distribution channels, including mass merchants, warehouse clubs and
Company-owned retail stores.
In Europe, luggage is sold to consumers primarily through traditional
distribution channels, primarily department and specialty luggage stores. In
the European discount channels, the Company is distributing several new
product lines, including its American Tourister brand. Samsonite operates one
Company-owned store in Northern Europe, one in Italy and one in Spain. The
Company also has two factory outlet stores, one in Italy and one in Spain. In
addition, Samsonite products are sold through a group of ten exclusive
franchise stores in Italy.
PRODUCTS
The Company offers the broadest range of products in the luggage industry,
including hardside suitcases, softside suitcases, garment bags, casual bags,
hardside and softside (including leather) business cases and laptop
66
<PAGE>
computer bags. Hardside suitcases and business cases typically consist of two
plastic shells held together by a hinge and secured closed by locking latches.
The plastic shells are made by injection molding or vacuum forming, some of
which use Samsonite's know-how, proprietary technology and unique designs.
Softside products are normally made of textile and closed by a zipper. They
are often supported by a frame and/or a pull handle and wheel assembly,
including proprietary Samsonite designs. Garment bags are designed to hold
garments on coat hangers, and can be opened while hanging up. Casual bags
include duffle bags and other bags that do not have a frame. Business and
attache cases are constructed of both softside and hardside materials. The
following table sets forth an estimate of the percentage of the Company's
fiscal 1998 revenues from sales of luggage and travel-related products by
product type:
<TABLE>
<S> <C>
Softside suitcases.................................................... 39%
Hardside suitcases.................................................... 29
Casual bags (softside)................................................ 12
Garment bags (softside)............................................... 6
Business cases (hardside and softside)................................ 4
Other products (primarily non-luggage)................................ 10
---
100%
===
</TABLE>
The Company sells a full range of luggage products under each of its
Samsonite, American Tourister and Lark brand names. Although the positioning
of the Company's brands and its target consumers vary somewhat from market to
market, product lines within each brand are designed to appeal to targeted
consumer groups. The following table sets forth, for each of the Company's
principal luggage brands, its market position and targeted consumer.
<TABLE>
<CAPTION>
BRAND NAME MARKET POSITION TARGET CONSUMER
- ---------- --------------- ---------------
<S> <C> <C>
Samsonite(R)............ Top quality luggage with leading edge Business/frequent traveler
features
American Tourister(R)... High quality luggage offering value, Value-conscious traveler
versatility and durability
Lark(R)................. Premium luggage for upscale consumers with First and business class traveler
luxurious styling
</TABLE>
Hardside Luggage. The Company manufactures virtually all of its requirements
for hardside luggage in its own factories. Hardside luggage is sold under the
Samsonite brand globally. In the United States and Europe, hardside luggage is
also sold under the American Tourister brand. Hardside products provide
greater protection and security than softside, as well as "wrinkle free"
packing for suits and dresses. Both in Europe and in the United States,
hardside products are offered in several lines, each including a variety of
sizes and styles to suit different consumer needs.
In Europe, popular Samsonite-branded hardside lines include the Samsonite
System 4 Deluxe and System 4 Art lines, priced at the higher end of the market
with large cases commanding up to US$550 at retail, the Samsonite Epsilon(R)
lines priced in the upper-middle range and Samsonite Oyster II and Oyster
products priced at the lower end.
In the United States, Samsonite-branded hardside products include the Road
Warrior(R) 900 Series and the Silhouette(R) 700 Series in the upper range,
Ultralite 3(TM) 550 Series in the upper-middle range, as well as Epsilon(R) 2
400 Series and Oyster(TM) 200 Series products in the middle and lower range
which are comparable to such products in Europe.
Globally, Samsonite distributes and sells hardside suitcases which include
features to facilitate transport. These include the patented Piggyback(R)
product, which incorporates a luggage cart, an extendable handle and a strap
allowing additional bags to be attached and transported. As a result of
proprietary improvements in molding technology and design, Samsonite is
introducing new lighter weight hardside luggage.
67
<PAGE>
Softside Luggage. The Company sources approximately two-thirds of its
requirements for softside luggage and other bags from numerous independent
suppliers located worldwide, and produces the balance of its requirements in
its own facilities located in several countries. The Company has introduced
many innovative features in its softside products in response to consumer
needs for better interior organization, ease of use, mobility and portability.
The softside products are sold under all of the Company's major brands,
Samsonite, American Tourister and Lark. Globally, softside products are
grouped into product lines with a variety of matching or complementary
suitcases, garment bags and other bags.
Samsonite has introduced over the years numerous softside products with
proprietary features. Examples include the Ultravalet(R) Garment Bag, with a
unique wrinkle-free folding system, also available on wheels; the EZ Big
Wheel(R) rolling system, which allows effortless passage over carpet and rough
surfaces; and the EZ CART(TM) system, whose 4 wheels support all the weight of
the case, combined with a push-handle that provides optimum stability and
mobility. Virtually all wheeled upright cases are provided with hook-on
features that allow transport of accessory pieces such as casual bags, attache
cases or handbags.
Other Luggage. Samsonite utilizes its global manufacturing and product
sourcing leverage to compete in the high-volume, discount channels of retail
distribution by marketing luggage products under a number of secondary brands
and retailer labels. These hardside and softside luggage products are
generally lower priced than the Company's Samsonite, American Tourister and
Lark products, and usually provide fewer features. Samsonite's secondary
brands include Magnum(R) and Royal Traveler(R) in Europe, Tauro(R) in Spain,
Azzura(R) and Bogey(R) in Italy, and Legacy(R) in the U.S.
Licensed Products. The Company licenses Samsonite brand names and
McGregor(R) apparel brand names to third parties primarily for the sale of
non-luggage products. Licensees most frequently have outstanding competency in
their product categories, and sell parallel lines of products under their own
or other brands. Currently, licensed products distributed by the Company or by
third party licensees include furniture, travel accessories, photo and audio
storage gear, personal leather goods, ladies handbags, tool organizers,
umbrellas, binoculars, pet carriers, auto accessories, cellular phone cases,
back-to-school bags and other childrens' products. Revenue from royalties for
licensing the use of Company-owned brand names (including apparel brands)
totaled approximately $19.9 million in fiscal 1998.
New Product Design and Development. The Company devotes significant
resources to new product design and development. Most of the Company's
products have either been introduced or substantially redesigned since 1990.
The Company uses market research to identify consumers' luggage needs and
develops product features that address these needs. The Company employs full-
time designers and development engineers, and also has sustained long-term
outside design relations, ensuring a continuous flow of ideas based on
material developments and trends from outside the luggage industry. The
Company believes that its intensive product development and emphasis on
innovation are fundamental to its continued growth and profitability.
DISTRIBUTION
The Company's products are sold in more than 100 countries throughout the
world through approximately 23,000 retail outlets.
North America. The Company sells its Samsonite brand products in North
America primarily through department stores and luggage specialist stores, and
through catalog showrooms and national retailers such as JCPenney and Sears.
The acquisition of American Tourister in 1993 increased the Company's presence
in discount channels such as mass merchants, warehouse clubs and factory
outlets, which are becoming increasingly important in the distribution of
luggage. As a result of the strength of its brand names and its targeted
marketing strategy, the Company is able to distribute one or more full lines
of luggage under each of its principal brand names across different channels
of distribution without selling the same product line in more than one
channel. In addition, the Company sells luggage products (known as "exclusive
label" products) designed exclusively for each of a number of department store
and specialty retailing customers and bearing special labels coupled with the
Samsonite brand name.
68
<PAGE>
The following table sets forth an estimate of the percentage of the
Company's United States wholesale revenues by distribution channel for fiscal
1998:
<TABLE>
<S> <C>
Department/specialty stores........................................... 55%
Exclusive label....................................................... 15
Catalog showrooms..................................................... 11
Mass merchants........................................................ 11
Other................................................................. 8
---
100%
===
</TABLE>
The Company has a direct sales force of approximately 75 persons that serves
approximately 10,000 stores in the United States. In coordination with its key
customers, the Company develops exclusive label product lines, coordinates
promotional strategies and establishes merchandise resupply objectives. The
Company employs electronic order gathering and fulfillment systems that
enhance the Company's level of customer service. Combined with automatic
electronic order entry, these systems increase sales by minimizing stockouts
at the retail level, help the retailer reduce inventory holding and purchasing
costs, and increase inventory turnover. Over 60% of Samsonite luggage sales in
the United States are derived from orders received through this electronic
system.
As of January 31, 1998, the Company operated 189 retail stores in the United
States. Operating its own retail outlets allows the Company to more
efficiently reduce discontinued and obsolete inventory positions.
Europe. The Company distributes its Samsonite brand products in Europe
through specialty luggage stores and department stores. Samsonite brand
products are generally not distributed through the discount retailers in
Europe in order to preserve the premium image of the Samsonite brand. The
Company's American Tourister brand has been introduced in Europe to help
balance the Company's retail distribution in each of the primary retail
channels and is being used to establish a single pan-European brand name in
the discount channel.
The Company services over 11,000 stores in Europe through a direct sales
force and product demonstrators of approximately 120 persons who transmit
orders by computer to a central distribution facility in Belgium. The Company
delivers its products to its European retailing customers through a
proprietary distribution network developed at the Company's European
headquarters. Orders received electronically from the Company's sales force
are processed centrally in Belgium using specialized software created by the
Company which deals in the national currency of each of the Company's
customers. The Company's systems are also capable of handling the anticipated
introduction of a common European currency. Its integration with a centralized
shipping facility, electronic order entry, and preparation of all paperwork
necessary for multiple cross-border deliveries permits delivery of products
within five days after an order is placed to virtually any location in Europe.
To complement its business in countries with a direct sales force, the Company
also sells to other European markets through distributors and agents located
in over 20 countries. Such distributors and agents, as well as those mentioned
under "International" below, handle various non-luggage products in addition
to the Company's products. Distribution agreements generally provide for
mutual exclusivity, whereby distributors do not handle competitors' luggage
products, and the Company does not deal with other distributors or agents in
their territory.
International. In markets outside the United States and Western Europe, the
Company primarily sells its products directly, through agents and
distributors, and under license. The Company entered the Japanese market in
1964 through a licensing arrangement with Ace Luggage Company ("Ace"), Japan's
principal luggage manufacturing company. Samsonite brand products made by Ace
are sold primarily in department stores throughout Japan. Products sold in
international markets are shipped from the United States, Western Europe or
Asia depending upon product type, availability and exchange rate. In some
instances, the Company has entered new markets through third party
distributors and has acquired these third party distributors as markets have
matured. The Company currently has joint ventures in Singapore, South Korea,
India, Brazil and China, as well as a wholly-owned distribution organization
in Hong Kong. In India and China, the ventures operate newly completed
manufacturing facilities to support local sales, and commenced distribution of
locally produced
69
<PAGE>
Samsonite luggage in mid fiscal 1998. During fiscal 1998, the Company formed a
joint venture with Samsonite's current distributor in Argentina to distribute
Samsonite products in Brazil and other major South American markets beginning
fiscal 1999.
ADVERTISING
The Company commits substantial resources to aggressive brand advertising
programs that promote the features, durability and quality of the Company's
luggage and travel products under the marketing theme "Samsonite--Worldproof."
The Company is the only luggage maker which regularly advertises on national
television in the United States or in Europe. For each of the last five fiscal
years, the Company has invested, either directly or through co-op advertising
programs, approximately $50 million in television and print advertising and
related promotional activities. A 1994 market survey, the most recent Company
sponsored survey conducted by an independent survey organization, indicated
that over 93% and 79% of travelers surveyed in the United States recognized
the Samsonite and American Tourister brand names, respectively, compared to
less than 15% for the next most recognized luggage brand. This market survey
was conducted by asking adults who made at least one overnight trip during the
previous six months to recognize a brand of luggage when presented with a list
of luggage brands. Similar surveys show that recognition of the Samsonite
brand name in most major Western European countries ranges from 60% to 80%.
Reinforcing the Company's marketing strategy, Samsonite brand advertising
highlights innovative features and benefits of products that meet the needs of
business and frequent travelers. Samsonite advertisements run on television,
in news weeklies and in inflight and business publications during key consumer
purchase periods throughout the year. The Company also helps its retailing
customers coordinate their advertising with the Company's national advertising
campaigns. The Company was the first luggage company both in the U.S. and in
Europe to use television to build brand awareness, and believes its
advertising program is the largest of any luggage maker.
MANUFACTURING AND SOURCING PRODUCTS
The Company's global sourcing network consists of 14 Company-operated
manufacturing facilities and various third-party suppliers located principally
in the Far East, Eastern Europe and the Dominican Republic. By operating its
own facilities to produce hardside luggage and more complex softside products,
the Company is better able to control manufacturing quality and reduce lead
times and delivery costs. The Company's global sourcing network also enables
it to source less complex products from countries with low product costs and
favorable currency exchange rates. Company-operated manufacturing facilities
are located in Belgium, France, Hungary, Italy, the Slovak Republic, Mexico,
Spain, India, China and the United States. In fiscal 1998, approximately 50%
of the Company's sales revenues were from products manufactured at its own
facilities.
The Company currently employs approximately 5,000 people in the manufacture
of hardside and softside luggage.
The Company manufactures virtually all of the hardside luggage products that
it distributes. Major hardside production facilities are located in Denver,
Colorado; Oudenaarde, Belgium; and Nashik, India; with additional hardside
production facilities located in Henin-Beaumont, France; and Ningbo, China.
In fiscal 1998, approximately one-third of the Company's revenues from
softside luggage products were from products manufactured at the Company's own
facilities. The Company sources the remainder of its softside luggage products
primarily from third party vendors in the Far East, Eastern Europe and the
Dominican Republic. The Company believes that the significant volume of its
softside luggage purchases has enabled it to obtain a reliable supply of high
quality, low cost products and prompt order fulfillment. The Company is able
to select different third-party suppliers to take advantage of changes in
manufacturing, payment terms and shipping costs. The Company does not rely on
any single third-party supplier, the loss of which would be material to the
Company.
In September 1996, Samsonite implemented centralized direction and
coordination of all sourcing of finished products components. The Company's
strategy is to achieve maximum advantage from its purchasing leverage by
aggregating orders from the Company's different locations and by better
planning and timing its
70
<PAGE>
requirements and purchases. Manufacturing processes and materials and
component supply arrangements are factored into new product design or existing
product improvements. As a result, products are designed to be manufactured
more efficiently.
The Company maintains a rigorous quality control program for goods
manufactured at its own plants and at third party vendor facilities. Products
are designed to assure durability and strength, and a prototype of each new
product is put through a series of simulation and stress tests. In the
Company's manufacturing facilities and its Asian sourcing office, it uses
quality control inspectors, engineers and lab technicians to perform
inspection and laboratory testing on raw materials, parts and finished goods.
COMPETITION
Competition in the luggage market is highly fragmented with the vast
majority of individual competitors having less than 10% of the Company's
annual luggage sales. In the United States, the Company competes based on
brand name, consumer advertising, product innovation, quality,
differentiation, customer service and price. Price is more important at the
lower end of the luggage market where fewer differentiating features are
offered. Management of the Company believes that no luggage manufacturer,
other than Samsonite, has more than 10% of the United States luggage market.
In Europe, the Company competes based on its premium image, brand name,
product quality, access to established distribution channels and new product
offerings. The Company's principal competition in softside luggage in both
Europe and the United States markets is private label luggage manufactured in
low labor cost countries, primarily in Asia. The manufacture of softside
luggage is labor intensive but not capital intensive, so that the barriers to
entry by additional competitors are relatively low. At the very low end of the
market is luggage characterized by non-differentiation of features and low
margins.
CUSTOMERS
Customers include most major department stores in the United States and
Europe which carry luggage, most specialty stores featuring luggage products,
and many other retailers (mass merchants, discounters and other retailers).
Samsonite also sells directly to consumers through its retail stores in the
United States and Europe. The Company is not dependent on any single customer,
and no single customer accounts for more than 5% of the Company's revenues in
fiscal 1997 or fiscal 1998.
TRADEMARKS AND PATENTS
Trademarks and patents are important to the Company. The Company is the
registered owner of its Samsonite, American Tourister, Lark and other
trademarks and, as of January 31, 1998, has approximately 2,140 trademark
registrations in the United States and abroad. The Company also owns
approximately 193 United States patents and approximately 538 patents (patents
of inventions, industrial design registrations, and utility models) in
selected foreign countries. In addition, the Company has approximately 298
patent applications pending worldwide. The Company pursues a policy of seeking
patent protection where appropriate for inventions embodied in its products.
The Company's patents include EZ CART(TM), Smart Sleeve(TM), Easy Turn(R),
Piggyback(R), Ultravalet(R) and Oyster(TM) luggage. The Company has also
patented its CPX technology for making luggage shells. Although some companies
have sought to imitate some of the Company's patented products, Samsonite has
generally been successful in enforcing its worldwide intellectual property
rights.
EMPLOYEES AND LABOR RELATIONS
At January 31, 1998, the Company had approximately 7,800 employees
worldwide, with approximately 2,400 employees in the United States and
approximately 5,400 employees in other countries. In the United States,
approximately 770 employees are unionized under a contract which is renewed
every three years and which is due for renewal on April 9, 1999. The Company
employs approximately 2,100 workers in its 5 European manufacturing plants
located in Belgium, France, Spain, Italy and Hungary. Union membership varies
from country to country and is not officially known to the Company; however,
it is probable that most of the workers are affiliated with a union. Most
European union contracts have a one-year duration. The Company believes its
employee relations are good.
71
<PAGE>
PROPERTIES
The following table sets forth certain information relating to the Company's
principal properties and facilities. All of the Company's manufacturing
plants, in the opinion of the Company's management, have been adequately
maintained and are in good operating condition. The Company believes that its
existing facilities have sufficient capacity, together with sourcing capacity
from third parties, to handle sales volumes for the foreseeable future. The
Company's headquarters in Denver shares the same location as a manufacturing
facility.
<TABLE>
<CAPTION>
APPROXIMATE
OWNED OR FACILITY SIZE
LOCATION LEASED (THOUSANDS OF SQ. FT.)
- -------- ------------ ----------------------
<S> <C> <C>
Denver, CO.................................. Owned/Leased 1,290
Tucson, AZ.................................. Owned/Leased 63
Jacksonville, FL............................ Leased 510
Warren, RI.................................. Leased 94
Stratford, Canada........................... Owned 212
Nogales, Mexico............................. Leased 313
Mexico City, Mexico......................... Owned 164
Oudenaarde, Belgium......................... Owned 649
Ningbo, China............................... Owned 100
Nashik, India............................... Owned 150
Torhout, Belgium............................ Owned 79
Henin-Beaumont, France...................... Owned 98
Szekszard, Hungary.......................... Owned 81
Tres Cantos, Spain.......................... Owned 37
Saltrio, Italy.............................. Leased 74
Singapore................................... Leased 14
Hong Kong................................... Leased 27
Seoul, South Korea.......................... Leased 24
Sao Paulo, Brazil........................... Leased 15
Samorin, Slovak Republic.................... Owned 43
</TABLE>
The Company also maintains numerous sales offices, retail outlets and
distribution centers in the United States and abroad.
LEGAL PROCEEDINGS AND CONTINGENT OBLIGATIONS
Litigation
On March 13, 1998, a complaint was filed in Colorado State District Court,
County of Denver, against the Company, certain current and former directors of
the Company, Apollo Investment Fund, L.P. and Apollo Advisors, L.P. The
purported class action brought on behalf of an alleged class of purchasers of
Samsonite Common Stock during the period from September 10, 1996 to December
1, 1997, alleges, among other things, that certain statements and earnings
forecasts made in the last 18 months were misleading and/or misrepresented
material facts and that the Company is also liable for certain allegedly
misleading statements contained in various analysts' reports. The Company
believes that the complaint is without merit and intends to contest it
vigorously. The class action seeks, among other things, unspecified
compensatory and recissory damages, as well as pre-judgment and post-judgment
interest, attorney's fees, expert witness fees and other costs.
On July 1, 1998, a complaint was filed in the Delaware Court of Chancery
against the Company and certain members of its Board of Directors. The
purported class action brought on behalf of holders of Common Stock challenges
the Tender Offer. The purported class action initially sought an order
temporarily restraining consummation of the Tender Offer but that application
was subsequently withdrawn. The Company believes that the complaint is without
merit and intends to contest it vigorously. The complaint, which seeks
compensatory and/or rescissory damages as well as other relief, alleges
disclosure violations with respect to the Offer and that the Offer was
coercive, the product of unfair dealing and violated the directors' duties.
In addition, the Company is a party to various other legal proceedings and
claims in the ordinary course of business. The Company does not believe that
the outcome of any pending matters will have a material adverse affect on its
consolidated financial position, results of operations or liquidity.
72
<PAGE>
Obligations to Settlement Trust
In connection with the Company's restructuring in 1993, a settlement trust
(the "Trust") was established for the benefit of the holders of certain
classes of pre-bankruptcy claims to resolve certain claims between the Company
and other parties affiliated with the previous owner of the Company. The
creation of the Trust enabled the Company to emerge from bankruptcy without
first resolving these claims. The terms of the Trust require the Company to
make loans to the Trust of up to $37 million, if necessary, to provide funds
for Trust operations, to pay resolved claims and to distribute to the Trust
beneficiaries any remaining balance after settling all liabilities. In prior
fiscal years, the Company made loans to the Trust aggregating $4,850,000 and
provided an allowance for the full amount of the loans. During the current
fiscal year, the Trust repaid the loans together with accrued interest of
$1,400,000. As a result, the Company recorded the collection of the loans as
other income (see note 15 to the Company's consolidated financial statements
included elsewhere in this Prospectus) and recorded the interest income. The
Company believes it is very unlikely to be required to make any additional
loans to the Trust.
Contingent Pension Liabilities
In connection with the Company's restructuring in 1993, the Company accrued
a liability of $37.7 million for claims of the Pension Benefit Guaranty
Corporation ("PBGC") related to pension liabilities for unpaid contributions
and insurance premiums of certain pension plans (the "Plans") which were
sponsored by certain companies which were, along with the Company, part of a
"controlled group" of companies, as defined by the Employee Retirement Income
Security Act of 1974. The amount accrued was based on a PBGC calculated
termination liability. As a result of agreements executed in fiscal 1997
giving the Company the right to assume sponsorship of the Plans in the event
of certain defaults by the primary plan sponsors, the liability was adjusted
to $26.6 million based on the pension benefit obligation of the Plans
discounted at 7.25%, reduced by the market value of the Plans' assets. The
corresponding reduction in the liability of $11.1 million was recorded in
other nonoperating income in fiscal 1997. See note 15 to the Company's
consolidated financial statements included elsewhere in this Prospectus.
As a result of the failure of the Plan sponsors' to meet their obligations
to the Plans in fiscal 1998, the Company assumed sponsorship of the Plans and
merged them with an existing Company pension plan on October 14, 1997. The
accrued liability for this matter was reclassified and is included in the
determination of the Company's pension benefit liability at January 31, 1998.
Contingent Liability with Respect to the E-II Notes
The 1993 reorganization plan provides for payment in full of 100% of the
allowed claim of the holders of certain old notes of E-II Holdings, Inc.
(predecessor to Astrum), including approximately $16.4 million of interest on
overdue installments of interest accruing prior to the commencement of
Astrum's bankruptcy case. Various parties have challenged the allowability of
the claim on the basis that interest on overdue installments of interest is
not permitted under applicable non-bankruptcy law. The Company provided for
this contingent liability in its consolidated financial statements when it
emerged from bankruptcy in the amount of $16.4 million.
During fiscal 1997, $4.0 million of such claims were settled for $0.2
million, resulting in the recording of $3.8 million of other nonoperating
income from the favorable settlement of this claim. The holders of the claim
were Apollo Investment Fund, L.P. ("Apollo Investments") and an affiliate of
Apollo Investments. See "Security Ownership of Certain Beneficial Owners and
Management." During fiscal 1998, the Company recorded other income of
$2,060,000 from the favorable settlement of $2,139,000 of such claims.
As a result of a change in New York law in fiscal 1998, which adversely
affected the Company's ability to favorably settle the remaining claims, the
Company has entered into a non-binding agreement-in-principle to settle the
remaining amount of these claims for approximately $9.4 million. At January
31, 1998, other accrued expenses included $10.3 million provided for these
remaining claims. The Company expects final settlement to occur in fiscal
1999.
73
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The Company's directors and executive officers and their ages (as of July
31, 1998) are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Richard R. Nicolosi...... 50 Chairman of the Board
Luc Van Nevel............ 51 President and Chief Executive Officer and Director
Thomas R. Sandler........ 51 President, Samsonite, the Americas
Richard H. Wiley......... 41 Chief Financial Officer
Karlheinz Tretter........ 55 President, Samsonite Europe and Asia
Carlo Zezza.............. 62 Senior Vice President
D. Michael Clayton....... 49 Vice President, Legal and Assistant Secretary
R. Theodore Ammon........ 48 Director
Bernard Attal............ 34 Director
Leon D. Black............ 47 Director
Robert H. Falk........... 60 Director
Mark H. Rachesky......... 39 Director
Robert L. Rosen.......... 51 Director
Marc J. Rowan............ 35 Director
Stephen J. Solarz........ 57 Director
</TABLE>
Richard R. Nicolosi. Mr. Nicolosi has been Chairman of the Board of
Directors of the Company since May 15, 1996. He served as President and Chief
Executive Officer of the Company from May 15, 1996 to May 15, 1998. From 1994
to 1996, Mr. Nicolosi was Senior Vice President of Scott Paper Company. From
1992 to 1994, Mr. Nicolosi was President of Nicolosi & Associates, a privately
owned business consulting firm. From 1969 to 1992, Mr. Nicolosi was employed
by Procter & Gamble in various positions, the latest being President, Pulp and
Paper Sector, Corporate Group Vice President, as well as a member of the
Executive Committee. He is a member of the Advisory Board of Directors of
Domino's Pizza, Inc.
Luc Van Nevel. Mr. Van Nevel was elected as President of the Company in
February 1998 and became Chief Executive Officer and a Director in May 1998.
Prior to that time, Mr. Van Nevel held various positions including Chief
Operating Officer (since September 1997) and President of Samsonite Europe
N.V. (since 1989). Since 1984, he has held the additional position of Managing
Director of Samsonite Europe N.V. He joined Samsonite Europe N.V. in 1975 as
Manager, Financial Planning and progressed to the position of Controller
before being promoted to President of Samsonite Europe in 1989. Mr. Van Nevel
worked in audit positions with Touche Ross & Co. in Europe for five years
before joining Samsonite.
Thomas R. Sandler. Mr. Sandler was appointed President of the Americas
division of Samsonite effective March 1998. Prior to that Mr. Sandler was the
Chief Financial Officer and Treasurer of Samsonite since May 1, 1995. Mr.
Sandler also serves as the Secretary. Prior to joining Samsonite, Mr. Sandler
was the managing partner of the Denver office of BDO Seidman, an international
public accounting firm, since July 1994. Prior to joining BDO Seidman, Mr.
Sandler was an audit and consulting partner in the international public
accounting firm of KPMG Peat Marwick LLP, specializing in corporate
restructurings.
Mr. Richard H. Wiley. Mr. Wiley has been Chief Financial Officer and
Treasurer of Samsonite since March, 1998. Prior to that Mr. Wiley was Chief
Financial Officer of the Americas division of Samsonite since May, 1995. Prior
to joining Samsonite, Mr. Wiley was an audit and consulting senior manager
with BDO Seidman, an international public accounting firm, since July 1994.
Prior to that, Mr. Wiley was with KPMG Peat Marwick LLP since 1982, working in
the audit and consulting area.
74
<PAGE>
Karlheinz Tretter. Mr. Tretter was appointed President of Samsonite Europe
on October 16, 1997 and additionally as President of Samsonite Asia on
February 15, 1998. Prior to that Mr. Tretter was Vice President and Managing
Director of Samsonite Europe since May 1994. From 1990 until 1994, Mr. Tretter
had served as Vice President of Marketing and/or Sales for Samsonite Europe.
Carlo Zezza. Mr. Zezza has been Senior Vice President of Samsonite since
1990, with responsibility for new products and licensing. Mr. Zezza joined the
Company in 1971 from the J. Walter Thompson advertising agency, where he was
Vice President serving Samsonite and other accounts. From 1976 to 1983, Mr.
Zezza was President, Samsonite Europe, and in 1984 was responsible for
Samsonite USA marketing and operations. From 1985 to 1990, Mr. Zezza was
President, Delsey USA, a competitor luggage business in the United States.
D. Michael Clayton. Mr. Clayton has been General Counsel of Samsonite since
1985 and Vice President--Legal since 1989. Mr. Clayton joined Samsonite in
1974.
R. Theodore Ammon. Mr. Ammon has been Chairman of the Board of Big Flower
Holdings, Inc. since 1993. Mr. Ammon was a General Partner of Kohlberg Kravis
Roberts & Co. (a New York and San Francisco-based investment firm) from 1990
to 1992, and an executive of such firm prior to 1990. Mr. Ammon is also a
member of the Board of Directors of Host Marriott Corporation. In addition,
Mr. Ammon serves on the Board of Directors of the New York YMCA, Jazz at
Lincoln Center, the Institute of International Education, and on the Board of
Trustees of Bucknell University.
Bernard Attal. Mr. Attal has been a director of the Company since March 28,
1996, when the Board of Directors elected him to the Board. Mr. Attal is a
Director of Heights Advisors, which acts as a financial advisor and a
representative for certain European institutional investors with respect to
their investments in the United States. From 1992 to 1995, Mr. Attal was a
Vice President at Credit Lyonnais Securities. Prior to 1992, Mr. Attal was
Chief Financial Officer of Altus Patrimoine & Gestion, a money management
firm. Mr. Attal is a director of New California Life Holdings, Inc. and the
Florsheim Group, Inc.
Leon D. Black. Mr. Black has been a director of the Company since 1993. Mr.
Black is one of the founding principals of Apollo Advisors, L.P., which,
together with its affiliates, acts as managing general partner of Apollo
Investment Fund, L.P., AIF II, L.P. and Apollo Investment Fund III, L.P.,
private securities investment funds, and Lion Advisors, L.P., which acts as
financial advisor to and representative for certain institutional investors
with respect to securities investments, and of Apollo Real Estate Advisors,
L.P., which serves as managing general partner of the Apollo Real Estate
Investment Funds, private real estate oriented investment funds. Mr. Black is
a director of Converse, Inc., Vail Resorts, Inc., Telemundo Group, Inc. and
Sequa Industries, Inc.
Robert H. Falk. Mr. Falk has been an officer since April 1992 of Apollo
Capital Management, Inc. and Lion Capital Management, Inc., which respectively
act as general partners of Apollo Advisors, L.P. and Lion Advisors, L.P. Mr.
Falk is a limited partner of Apollo Advisors, L.P., which, together with its
affiliates, acts as managing general partner of Apollo Investment Fund, L.P.,
AIF II, L.P. and Apollo Investment Fund III, L.P., private securities
investment funds, and a limited partner of Lion Advisors, L.P., which acts as
financial advisor to and representative for certain institutional investors
with respect to securities investments. Prior to 1992, Mr. Falk was a partner
in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP. Mr. Falk is a
director of Converse, Inc., the Florsheim Group, Inc. and Salant Corporation.
Mark H. Rachesky, M.D. Dr. Rachesky has been a director of the Company since
1993. Dr. Rachesky is the founder of MHR Capital Partners LP and MHR
Institutional Partners, LP, investment funds which invest in distressed
securities. Dr. Rachesky is the principal owner and investment manager of the
general partner and investment manager of these limited partnerships. Dr.
Rachesky has served as a director of Cadus Pharmaceutical Corporation since
September 1993.
Robert L. Rosen. Mr. Rosen is Chief Executive Officer of RLR Partners, LLC,
a private investment partnership founded in April 1987. Mr. Rosen is a
director of the Municipal Advantage Fund, Inc., Municipal
75
<PAGE>
Partners Fund, Inc., Municipal Partners Fund II, Inc., the Spring Mountain
Group, Dialysis Centers of America, Jewish Television Network, AFP Imaging
Corp., Paragon Health Networks and WMC Finance Co.
Marc J. Rowan. Mr. Rowan is one of the founding principals of Apollo
Advisors, L.P., which, together with its affiliates, acts as managing general
partner of Apollo Investment Fund, L.P., AIF II, L.P., Apollo Investment Fund
III, L.P. and Apollo Investment Fund IV, L.P., private securities investment
funds, and of Lion Advisors, L.P., which acts as financial advisor to and
representative for certain institutional investors with respect to securities
investments. Mr. Rowan is a director of Vail Resorts, Inc., the owner and
operator of the Vail, Beaver Creek, Keystone and Breckenridge ski areas; MTL,
Inc., a national tank truck/carrier company; and NRT Incorporated, a leading
national real estate brokerage company. Mr. Rowan is also a founding member
and serves on the executive committee of the Youth Renewal Fund and is a
member of the board of directors of National Jewish Outreach Program and the
Undergraduate Executive Board of The Wharton School.
Stephen J. Solarz. Mr. Solarz was elected, in 1974, to the House of
Representatives from Brooklyn's 13th Congressional District and was re-elected
eight times. In the House he served on four committees: Foreign Affairs,
Merchant Marine and Fisheries, Intelligence and the Joint Economic Committee.
Mr. Solarz ranked second in seniority on the House Foreign Affairs Committee,
where he chaired the Subcommittee on Asian and Pacific Affairs. Since his
departure from the House, Mr. Solarz has been: Senior Counselor at APCO
Associates, an international public affairs firm; President of Solarz and
Associates, a global consulting firm; Chairman of the Central Asian American
Enterprise Fund; Vice Chairman of the International Crisis Group; a
Distinguished Fellow at the Carnegie Endowment for International Peace;
Professor of International Affairs at George Washington University; a Member
of the Board of Directors of the Brandeis University Board of Trustees as well
as the National Endowment for Democracy and National Democratic Institute; and
a member of the Council on Foreign Relations and the International Rescue
Committee. Mr. Solarz is a director of First Philippine Fund and IRI
International.
76
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information about persons known to
the Company to be the beneficial owner of more than 5% of the Common Stock,
and as to the beneficial ownership of the Common Stock by each of the
Company's directors and executive officers and all of the Company's directors
and executive officers as a group, as of July 16, 1998. Except as otherwise
indicated, to the knowledge of the Company, the persons identified below have
sole voting and sole investment power with respect to shares they own of
record.
<TABLE>
<CAPTION>
NAE AND ADDRESS OFM NUMBER OF SHARES
ENEFICIAL OWNERB BENEFICIALLY OWNED PERCENT
- ------------------- ------------------ -------
<S> <C> <C>
Apollo Investment Fund, L.P.
c/o Apollo Advisors, L.P.
2 Manhattan Road
Purchase, New York 10577
and
Lion Advisors, L.P.
1301 Avenue of the Americas, 38th Floor
New York, NY 10019................................ 3,557,757(a) 34.10%
CIBC Oppenheimer Corp.
425 Lexington Avenue
3rd Floor
New York, New York 10017.......................... 724,830(b) 6.50%
Richard R. Nicolosi
c/o Samsonite Corporation
11200 East 45th Avenue
Denver, Colorado 80239............................ 577,493(c) 5.32%
Mark H. Rachesky
Mark Capital Partners
335 Madison Avenue, 26th Floor
New York, New York 10017.......................... 36,960 *
Luc Van Nevel
c/o Samsonite Europe N.V.
Westerring 17
B-9700 Oudenaarde, Belgium........................ 71,141(d) *
Thomas R. Sandler
c/o Samsonite Corporation
11200 East 45th Avenue
Denver, Colorado 80239............................ 74,814(e) *
Karlheinz Tretter
c/o Samsonite Europe N.V.
Westerring 17
B-9700 Oudenaarde, Belgium........................ 49,299(f) *
Richard H. Wiley
c/o Samsonite Corporation
11200 East 45th Avenue
Denver, Colorado 80239............................ 12,094(g) *
D. Michael Clayton
c/o Samsonite Corporation
11200 East 45th Avenue
Denver, Colorado 80239............................ 8,527(h) *
</TABLE>
77
<PAGE>
<TABLE>
<CAPTION>
NAE AND ADDRESS OFM NUMBER OF SHARES
ENEFICIAL OWNERB BENEFICIALLY OWNED PERCENT
- ------------------- ------------------ -------
<S> <C> <C>
Carlo Zezza
c/o Samsonite Corporation
11200 East 45th Avenue
Denver, Colorado 80239............................. 16,800(i) *
Bernard Attal
1301 Avenue of the Americas, 38th Floor
New York, New York 10019........................... 457 *
R. Theodore Ammon
Big Flower Press Holdings, Inc.
3 E. 54th Street, 19th Floor
New York, New York 10022........................... 402 *
Leon D. Black
1301 Avenue of the Americas, 38th Floor
New York, NY 10019................................. 402(j) *
Robert H. Falk
1301 Avenue of the Americas, 38th Floor
New York, NY 10019................................. 402(j) *
Robert L. Rosen
RLR Partners, L.P.
825 Third Avenue, 40th Floor
New York, New York 10022........................... 402 *
Marc J. Rowan
1301 Avenue of the Americas, 38th Floor
New York, NY 10019................................. 402(j) *
Stephen J. Solarz
APCO Associates, Inc.
1615 L Street, N. W., Suite 900
Washington, DC 20036............................... 65 *
All Directors and Executive Officers as a group..... 849,660(k) 7.68%
</TABLE>
- --------
* Less than 1.0%
(a) Includes 1,779,234 shares held by Apollo Investment Fund, L.P. ("Apollo")
and 1,778,523 shares beneficially held by Lion Advisors, L.P. ("Lion") on
behalf of an investment account under management over which Lion has
exclusive investment, voting and dispositive power. Lion is affiliated
with Apollo Advisors, L.P., the general partner of Apollo Investments.
(b) Represents warrants to acquire Common Stock issued in connection with the
offering of Old Senior Preferred Stock on June 24, 1998.
(c) Includes options to purchase 425,532 shares of Common Stock exercisable as
of July 16, 1998.
(d) Includes options to purchase 67,171 shares of Common Stock exercisable as
of July 16, 1998.
(e) Includes options to purchase 64,814 shares of Common Stock exercisable as
of July 16, 1998.
(f) Includes options to purchase 37,334 shares of Common Stock exercisable as
of July 16, 1998.
(g) Represents options to purchase 12,094 shares of Common Stock exercisable
as of July 16, 1998.
(h) Includes options to purchase 8,430 shares of Common Stock exercisable as
of July 16, 1998.
(i) Includes options to purchase 16,000 shares of Common Stock exercisable as
of July 16, 1998.
(j) Includes shares issued under the Directors Stock Plan. Does not include
shares held by Apollo or Lion. Each of Messrs. Falk and Rowan, directors
of the Company, together with Mr. Black, a director of the Company, who is
also a director of Apollo Capital Management, Inc., the general partner of
Apollo Advisers, L.P., and of Lion Capital Management, Inc., the general
partner of Lion, disclaims beneficial ownership of the securities held by
Apollo and Lion.
(k) Excludes shares listed above for Apollo and Lion. If such shares were
included, the aggregate number of shares beneficially owned by all
directors and executive officers as a group would be 4,407,417,
representing 39.83%.
78
<PAGE>
DESCRIPTION OF SENIOR PREFERRED STOCK AND EXCHANGE DEBENTURES
THE SENIOR PREFERRED STOCK
The summary contained herein of certain provisions of the Senior Preferred
Stock issued by the Company on June 24, 1998 does not purport to be complete
and is qualified in its entirety by reference to the provisions of the
Certificate of Designation relating thereto. The definitions of certain
capitalized terms used in the following summary are set forth under "--Certain
Definitions" below. Other capitalized terms used herein and not otherwise
defined under "--Certain Definitions" below are defined in the Certificate of
Designation. As used in this Description of Senior Preferred Stock and
Exchange Debentures, the term "Company" means Samsonite Corporation, a
Delaware company, excluding its Subsidiaries.
GENERAL
The Executive Committee of the Board of Directors of the Company adopted
resolutions creating a maximum of 350,000 shares of Senior Preferred Stock and
the Company filed a Certificate of Designation with respect thereto with the
Secretary of State of the State of Delaware as required by Delaware law. Of
the 350,000 authorized shares of Senior Preferred Stock, 175,000 shares were
issued on June 24, 1998, and the balance are reserved for issuance as
dividends in the event the Company elects to pay dividends on the Senior
Preferred Stock by issuing additional shares of Senior Preferred Stock. See
"--Dividends" below. Subject to certain conditions, the Senior Preferred Stock
is exchangeable for Exchange Debentures at the option of the Company on any
Dividend Payment Date. See "--Exchange" below. The Senior Preferred Stock is
fully paid and nonassessable, and the holders thereof do not have any
subscription or preemptive rights.
RANKING
The Senior Preferred Stock, with respect to dividend distributions and
distributions upon the liquidation, winding-up or dissolution of the Company,
ranks (i) senior to the extent described below to all classes of Common Stock
of the Company, and to each other class of capital stock or series of
Preferred Stock established after June 24, 1998 by the Board of Directors of
the Company the terms of which do not expressly provide that it ranks senior
to or on a parity with the Senior Preferred Stock as to dividend distributions
and distributions upon the liquidation, winding-up or dissolution of the
Company (collectively referred to with the Common Stock of the Company as
"Junior Securities"); (ii) subject to certain conditions, on a parity with any
class of capital stock or series of Preferred Stock issued by the Company
established after June 24, 1998 by the Board of Directors of the Company the
terms of which expressly provide that such class will rank on a parity with
the Senior Preferred Stock as to dividend distributions and distributions upon
the liquidation, winding-up or dissolution of the Company (collectively
referred to as "Parity Securities"); and (iii) subject to certain conditions,
junior to each other class of capital stock or series of Preferred Stock
issued by the Company established after June 24, 1998 by the Board of
Directors of the Company the terms of which expressly provide that such class
or series will rank senior to the Senior Preferred Stock as to dividend
distributions and distributions upon the liquidation, winding-up or
dissolution of the Company (collectively, referred to as "Senior Securities").
The Senior Preferred Stock is subject to the issuance of series of Junior
Securities, Parity Securities and Senior Securities; provided that the Company
may not issue any new class of Parity Securities (other than the issuance of
additional shares of Senior Preferred Stock to satisfy dividend payments on
outstanding shares of Senior Preferred Stock) or Senior Securities (or amend
the provisions of any existing class of capital stock to make such class of
capital stock Parity Securities or Senior Securities) without the approval of
the holders of at least two-thirds of the shares of Senior Preferred Stock
then outstanding, voting or consenting, as the case may be, together as one
class.
No full dividends may be declared or paid on any Parity Securities for any
period unless full cumulative dividends shall have been or contemporaneously
are declared and paid (or are deemed declared and paid) in full or declared
and, if payable in cash, a sum in cash sufficient for such payment set apart
for such payment on the
79
<PAGE>
Senior Preferred Stock. If full dividends are not paid, the Senior Preferred
Stock will share dividends pro rata with the Parity Securities. No dividends
may be paid on any Junior Securities (except dividends on Junior Securities
payable in additional shares of Junior Securities) and no Junior Securities
may be repurchased, redeemed or otherwise retired (except in exchange for
Junior Securities) if full cumulative dividends have not been paid in full (or
deemed paid) on the Senior Preferred Stock for all full quarterly dividend
periods ended prior to the date of such payment in respect of Junior
Securities.
DIVIDENDS
Holders of the Senior Preferred Stock are entitled to receive, when, as and
if declared by the Board of Directors of the Company, out of funds legally
available therefor, dividends on the Senior Preferred Stock at a rate per
annum equal to 13 7/8% of the liquidation preference per share of Senior
Preferred Stock, payable quarterly. All dividends will accumulate on a daily
basis whether or not earned or declared from June 24, 1998 and will be payable
quarterly in arrears on March 15, June 15, September 15, and December 15 of
each year (each, a "Dividend Payment Date"), commencing on September 15, 1998,
to holders of record on March 1, June 1, September 1, and December 1
immediately preceding the relevant Dividend Payment Date. All unpaid dividends
will compound on a quarterly basis. Dividends may be paid, at the Company's
option, on any Dividend Payment Date occurring on or prior to September 15,
2003 either in cash or by the issuance of additional shares of Senior
Preferred Stock (including fractional shares) having an aggregate liquidation
preference equal to the amount of such dividends. If any dividend payable on
any Dividend Payment Date subsequent to June 15, 2003 is not paid in full in
cash, or if, at any time, any of the events described in clauses (ii) through
(vi) of the definition of the "Voting Rights Triggering Event" shall have
occurred, the per annum dividend rate will be increased by 2% from such
Dividend Payment Date or during the continuance of any such Voting Rights
Triggering Event, as the case may be. After the date on which such dividend is
paid in cash or such default ceases to exist, the dividend rate will revert to
the rate originally borne by the Senior Preferred Stock. The Original Credit
Agreement contains certain limitations on the ability of the Company to pay
dividends on the Senior Preferred Stock in cash. In addition, the Notes
Indenture contains certain limitations on the Company's ability to pay cash
dividends on the Senior Preferred Stock. See "Concurrent Offering" and
"Description of New Credit Facility."
Unpaid dividends accumulating after June 15, 2003 on the Senior Preferred
Stock for any past dividend period and dividends in connection with any
optional redemption may be declared and paid at any time, without reference to
any regular dividend payment date, to holders of record on such date, not more
than 45 days prior to the payment thereof, as may be fixed by the Board of
Directors of the Company.
The dividend rate on the Senior Preferred Stock is subject to increase, and
such Additional Dividends will be payable on the Dividend Payment Dates set
forth above, in certain circumstances, if the Senior Preferred Stock (or other
securities substantially similar to the Senior Preferred Stock) is not
registered with the Commission within the prescribed time periods.
80
<PAGE>
OPTIONAL REDEMPTION
The Senior Preferred Stock will be redeemable (subject to contractual and
other restrictions with respect thereto and to the legal availability of funds
therefor) at any time on or after June 15, 2001, in whole or in part, at the
option of the Company, at the redemption prices (expressed as a percentage of
liquidation preference, plus, without duplication, an amount in cash equal to
all accumulated and unpaid dividends, other than dividends which have
accumulated since the last Dividend Payment Date) set forth below (including
an amount in cash equal to a prorated dividend for the period from the
Dividend Payment Date immediately prior to the redemption date to the
redemption date) if redeemed during the 12-month period beginning June 15 of
each of the years set forth below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2001.......................................... 110%
2002.......................................... 108%
2003.......................................... 106%
2004.......................................... 104%
2005.......................................... 102%
2006.......................................... 101%
2007 and thereafter........................... 100%
</TABLE>
In addition, on or prior to June 15, 2001, the Company may, at its option,
use the Net Proceeds of one or more Equity Offerings to redeem for cash up to
an aggregate of 35% of the shares of Senior Preferred Stock (whether initially
issued or issued as a dividend payment) at a redemption price equal to
113.875% of the liquidation preference thereof, plus, without duplication, an
amount in cash equal to all accumulated and unpaid dividends (including an
amount in cash equal to a prorated dividend for the period from the Dividend
Payment Date immediately prior to the redemption date to the redemption date);
provided, however, that after any such redemption, there is at least $113.75
million aggregate in liquidation preference of the Senior Preferred Stock
outstanding. Any such redemption will be required to occur on or prior to 90
days after the receipt by the Company of the proceeds of such Equity Offering.
In the event of partial redemptions of Senior Preferred Stock, the shares to
be redeemed will be determined pro rata, except that the Company may redeem
all shares held by any holders of fewer than ten shares (or shares held by
holders who would hold less than ten shares as a result of such redemption),
as may be determined by the Company. No optional redemption may be made unless
prior thereto or simultaneously therewith all accumulated and unpaid dividends
on the Senior Preferred Stock shall have been paid in cash or a sum set apart
for such payment.
The Notes Indenture and the Original Credit Agreement restrict the ability
of the Company to redeem the Senior Preferred Stock. See "Concurrent Offering"
and "Description of New Credit Facility."
MANDATORY REDEMPTION
The Senior Preferred Stock is subject to mandatory redemption (subject to
contractual and other restrictions with respect thereto and to the legal
availability of funds therefor) in whole on June 15, 2010 at a price equal to
the liquidation preference thereof, plus, without duplication, all accumulated
and unpaid dividends to the date of redemption. The Notes Indenture and the
Original Credit Agreement restrict the ability of the Company to redeem the
Senior Preferred Stock and will prohibit any such redemption in certain
instances and other future agreements or certificates of designation with
respect to Senior Securities or Parity Securities may contain similar
restrictions and/or prohibitions. See "Description of New Credit Facility."
PROCEDURE FOR REDEMPTION
On and after a redemption date, unless the Company defaults in the payment
of the applicable redemption price, dividends will cease to accrue on shares
of Senior Preferred Stock called for redemption and all rights of
81
<PAGE>
holders of such shares will terminate except for the right to receive the
redemption price, without interest. If a notice of redemption shall have been
given as provided in the succeeding sentence and the funds necessary for
redemption (including an amount in respect of all dividends that will accrue
to the redemption date) shall have been segregated and irrevocably set apart
by the Company, in trust for the benefit of the holders of the shares called
for redemption, then dividends shall cease to accumulate on the redemption
date on the shares to be redeemed and, at the close of business on the day
when such funds are segregated and set apart, the holders of the shares to be
redeemed shall cease to be holders of the Company and shall be entitled only
to receive the redemption price for such shares. The Company will send a
written notice of redemption by first class mail to each holder of record of
shares of Senior Preferred Stock, not less than 30 days nor more than 60 days
prior to the date fixed for such redemption. Shares of Senior Preferred Stock
issued and reacquired will, upon compliance with the applicable requirements
of Delaware law, have the status of authorized but unissued shares of
Preferred Stock of the Company undesignated as to series and may with any and
all other authorized but unissued shares of Preferred Stock of the Company be
designated or redesignated and issued or reissued, as the case may be, as part
of any series of Preferred Stock of the Company.
EXCHANGE
The Company may at its option on any Dividend Payment Date either (i) from
time to time exchange, in whole or in part, on a pro rata basis, the then
outstanding shares of Senior Preferred Stock for Company Exchange Debentures;
provided that immediately after giving effect to any partial exchange, there
shall be outstanding shares of Senior Preferred Stock with an aggregate
liquidation preference of not less than $75 million and not less than $75
million aggregate principal amount of Company Exchange Debentures or (ii)
exchange all of the outstanding Senior Preferred Stock for Holdings Exchange
Debentures; provided, however, that, in either case, (a) on the date of such
exchange there are no accumulated and unpaid dividends on the Senior Preferred
Stock (including the dividend payable on such date) or other contractual
impediments to such exchange; (b) there shall be sufficient surplus under
Delaware law to permit such exchange; (c) immediately after giving effect to
such exchange, no Default or Event of Default (each as defined in the Exchange
Indenture) would exist under the Exchange Indenture, no default or event of
default would exist under the Notes Indenture and no default or event of
default under any other material instrument governing Indebtedness outstanding
at the time would be caused thereby; and (d) the Exchange Indenture has been
qualified under the Trust Indenture Act of 1939, as amended (the "TIA"), if
such qualification is required at the time of exchange. The Company intends to
comply with the provisions of Rule 13e-4 promulgated pursuant to the Exchange
Act in connection with the exchange, to the extent applicable. The Notes
Indenture and the Original Credit Agreement restrict the exchange of the
Senior Preferred Stock for Company Exchange Debentures. See "Description of
New Credit Facility."
Upon any Exchange referred to in the preceding paragraph, the holders of
outstanding shares of Senior Preferred Stock will be entitled to receive,
subject to the second succeeding sentence, $1.00 principal amount of Exchange
Debentures for each $1.00 liquidation preference of Senior Preferred Stock
held by them. The Exchange Debentures will be issued in registered form,
without coupons. Exchange Debentures issued in exchange for Senior Preferred
Stock will be issued in principal amounts of $1,000 and integral multiples
thereof to the extent possible, and will also be issued in principal amounts
less than $1,000 so that each holder of Senior Preferred Stock will receive
certificates representing the entire amount of Exchange Debentures to which
such holder's shares of Senior Preferred Stock entitle such holder; provided
that the Company may pay cash in lieu of issuing an Exchange Debenture in a
principal amount less than $1,000. The Company will send a written notice of
exchange by mail to each holder of record of shares of Senior Preferred Stock
not less than 30 nor more than 60 days before the date fixed for such
exchange. On and after the exchange date, dividends will cease to accrue on
the outstanding shares of Senior Preferred Stock that are to be exchanged, and
all rights of the holders of Senior Preferred Stock that is to be exchanged
(except the right to receive the Exchange Debentures and, if the Company so
elects, cash in lieu of any Exchange Debenture which is in an amount that is
not an integral multiple of $1,000) will terminate. See "--The Exchange
Debentures."
82
<PAGE>
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding-up of
the Company, holders of the Senior Preferred Stock will be entitled to
receive, out of the assets of the Company available for distribution, $1,000
per share, plus an amount in cash equal to accumulated and unpaid dividends
thereon to the date fixed for liquidation, dissolution or winding-up
(including an amount equal to a prorated dividend for the period from the last
Dividend Payment Date to the date fixed for liquidation, dissolution or
winding-up), and no more, before any distribution is made on any Junior
Securities, including, without limitation, Common Stock of the Company. If
upon any voluntary or involuntary liquidation, dissolution or winding-up of
the Company, the amounts payable with respect to the Senior Preferred Stock
and all other Parity Securities are not paid in full, the holders of the
Senior Preferred Stock and the Parity Securities will share equally and
ratably in any distribution of assets of the Company first in proportion to
the full liquidation preference to which each is entitled until such
preferences are paid in full, and then in proportion to their respective
amounts of accumulated but unpaid dividends. After payment of the full amount
of the liquidation preferences and accumulated and unpaid dividends to which
they are entitled, the holders of shares of Senior Preferred Stock will not be
entitled to any further participation in any distribution of assets of the
Company. However, neither the sale, conveyance, exchange or transfer (for
cash, shares of stock, securities or other consideration) of all or
substantially all of the property or assets of the
Company nor the consolidation or merger of the Company with one or more
entities shall be deemed to be a liquidation, dissolution or winding-up of the
Company.
The Certificate of Designation for the Senior Preferred Stock does not
contain any provision requiring funds to be set aside to protect the
liquidation preference of the Senior Preferred Stock, although such
liquidation preference will be substantially in excess of the par value of
such shares of Senior Preferred Stock. In addition, the Company is not aware
of any provision of Delaware law or any controlling decision of the courts of
the State of Delaware (the state of incorporation of the Company) that
requires a restriction upon the surplus of the Company solely because the
liquidation preference of the Senior Preferred Stock will exceed its par
value. Consequently, there will be no restriction upon the surplus of the
Company solely because the liquidation preference of the Senior Preferred
Stock will exceed the par value and there will be no remedies available to
holders of the Senior Preferred Stock before or after the payment of any
dividend, other than in connection with the liquidation of the Company, solely
by reason of the fact that such dividend would reduce the surplus of the
Company to an amount less than the difference between the liquidation
preference of the Senior Preferred Stock and its par value.
VOTING RIGHTS
Holders of the Senior Preferred Stock will have no voting rights with
respect to general corporate matters except as provided by Delaware law or as
set forth in the Certificate of Designation. The Certificate of Designation
provides that if (i) after June 15, 2003 dividends on the Senior Preferred
Stock required to be paid in cash are in arrears and unpaid for two or more
quarterly dividend periods (whether or not consecutive) or (ii) the Company
fails to redeem the Senior Preferred Stock on or before June 15, 2010 or (iii)
the Company fails to make a Change of Control Offer if such an offer is
required by the provisions set forth under "--Change of Control" below or
fails to purchase shares of Senior Preferred Stock from holders who elect to
have such shares purchased pursuant to the Change of Control Offer or (iv) a
breach or violation of any of the provisions described under the caption "--
Certain Covenants" below occurs and the breach or violation continues for a
period of 60 days or more after the Company receives notice thereof specifying
the default from the holders of at least 25% of the shares of Senior Preferred
Stock then outstanding or (v) the Company fails to pay at the final stated
maturity (giving effect to any extensions thereof) the principal amount of any
Indebtedness, or the final stated maturity of any such Indebtedness is
accelerated, if the aggregate principal amount of such Indebtedness, together
with the aggregate principal amount of any other such Indebtedness in default
for failure to pay principal at the final stated maturity (giving effect to
any extensions thereof) or which has been accelerated, aggregates $50 million
or more at any time, in each case, after a 30-day period during which such
default shall not have been cured or such acceleration rescinded or (vi) the
Company fails to make any scheduled payment of principal or interest on any
Indebtedness the outstanding principal amount of which aggregate $50 million
or more, after a
83
<PAGE>
180-day period during which such default shall not have been cured, then the
holders of a majority of the then outstanding shares of Senior Preferred
Stock, voting separately and as a class, will have the right to elect the
lesser of two directors and that number of directors constituting 25% of the
members of the Board of Directors of the Company. Such voting rights will
continue until such time as, in the case of a dividend default, all
accumulated and unpaid dividends on the Senior Preferred Stock are paid in
full in cash and, in all other cases, any failure, breach or default giving
rise to such voting rights is remedied, cured (including, but not limited to,
in the case of clause (v), through the issuance of Indebtedness permitted to
be incurred by the Certificate of Designation or the waiver of any breach or
default by the holders of such Indebtedness) or waived by the holders of at
least a majority of the shares of Senior Preferred Stock then outstanding, at
which time the term of any directors elected pursuant to the provisions of
this paragraph shall terminate. Each such event described in clauses (i)
through (vi) above is referred to herein as a "Voting Rights Triggering
Event." The voting rights provided herein shall be the holder's exclusive
remedy at law or in equity.
In addition, the Certificate of Designation provides that the Company will
not authorize any additional shares of Senior Preferred Stock or any class of
Senior Securities or Parity Securities without the affirmative vote or consent
of holders of at least two-thirds of the shares of Senior Preferred Stock of
the Company then outstanding which are entitled to vote thereon, voting or
consenting, as the case may be, as one class. The Certificate of Designation
also provides that the Company may not amend the Certificate of Designation so
as to affect materially and adversely the specified rights, preferences,
privileges or voting rights of the holders of shares of Senior Preferred
Stock, or authorize the issuance of any shares of Senior Preferred Stock in
addition to the 350,000 authorized, without the affirmative vote or consent of
the holders of at least a majority of the then outstanding shares of Senior
Preferred Stock which are entitled to vote thereon, voting or consenting, as
the case may be, as one class. The Certificate of Designation also provides
that, except as set forth above, (a) the creation, authorization or issuance
of any shares of Junior Securities, Parity Securities or Senior Securities or
(b) the increase or decrease in the amount of authorized capital stock of any
class, including any Preferred Stock, shall not require the consent of the
holders of Senior Preferred Stock and shall not be deemed to affect adversely
the rights, preferences, privileges or voting rights of holders of shares of
Senior Preferred Stock.
Under Delaware law, holders of Senior Preferred Stock are entitled to vote
as a class upon a proposed amendment to the certificate of incorporation of
the Company, whether or not entitled to vote thereon by the certificate of
incorporation, if the amendment would increase or decrease the par value of
the shares of such class, or alter or change the powers, preferences, or
special rights of the shares of such class so as to affect them adversely.
CHANGE OF CONTROL
Within 15 business days after the Company knows, or reasonably should know,
of the occurrence of each Change of Control, the Company will make an offer to
purchase (the "Change of Control Offer") the outstanding Senior Preferred
Stock at a purchase price equal to 101% of the liquidation preference thereof
plus, without duplication, an amount in cash equal to all accumulated and
unpaid dividends thereon (including an amount in cash equal to a prorated
dividend for the period from the immediately preceding Dividend Payment Date
to the Change of Control Payment Date (such applicable purchase price being
hereinafter referred to as the "Change of Control Purchase Price") in
accordance with the procedures set forth in this covenant.
The Company will within 15 days after it knows, or reasonably should know,
of the Change of Control (i) cause a notice of the Change of Control Offer to
be sent at least once to the Dow Jones News Service or similar business news
service in the United States and (ii) send by first-class mail, postage
prepaid, to each holder of Senior Preferred Stock, at the address appearing in
the register maintained by the Transfer Agent, a notice stating:
(i) that the Change of Control Offer is being made pursuant to this
covenant and that all Senior Preferred Stock tendered will be accepted for
payment, and otherwise subject to the terms and conditions set forth
herein;
(ii) the Change of Control Purchase Price and the purchase date (which
shall be a business day no earlier than 20 business days nor more than 60
business days from the date such notice is mailed (the "Change of Control
Payment Date"));
84
<PAGE>
(iii) that any Senior Preferred Stock not tendered will continue to
accrue dividends;
(iv) that, unless the Company defaults in the payment of the Change of
Control Purchase Price, any Senior Preferred Stock accepted for payment
pursuant to the Change of Control Offer shall cease to accumulate dividends
after the Change of Control Payment Date;
(v) that holders accepting the offer to have their Senior Preferred Stock
purchased pursuant to a Change of Control Offer will be required to
surrender their certificates representing the Senior Preferred Stock to the
Company at the address specified in the notice prior to the close of
business on the business day preceding the Change of Control Payment Date;
(vi) that holders will be entitled to withdraw their acceptance if the
Company receives, not later than the close of business on the third
business day preceding the Change of Control Payment Date, a telegram,
telex, facsimile transmission or letter setting forth the name of the
holder, the number of shares delivered for purchase, and a statement that
such holder is withdrawing his election to have such Senior Preferred Stock
purchased;
(vii) that holders whose Senior Preferred Stock is being purchased only
in part will be issued new Senior Preferred Stock equal to the unpurchased
portion of the Senior Preferred Stock surrendered, provided that each share
purchased and each such new certificate for Senior Preferred Stock issued
shall be in an original liquidation preference in denominations of $1,000
and integral multiples thereof; and
(viii) a summary of any other procedures that a holder must follow to
accept a Change of Control Offer or effect withdrawal of such acceptance.
On the Change of Control Payment Date, the Company shall, to the extent
lawful, accept for payment Senior Preferred Stock or portions thereof tendered
pursuant to the Change of Control Offer and promptly mail to each holder of
Senior Preferred Stock so accepted payment in an amount equal to the purchase
price for such Senior Preferred Stock, and the Company shall execute and issue
a new certificate representing Senior Preferred Stock equal to any unpurchased
shares represented by a certificate surrendered.
The Certificate of Designation provides that, prior to the mailing of the
notice referred to above, but in any event within 30 days following the date
on which the Company has actual knowledge of a Change of Control, the Company
covenants that if the purchase of the Senior Preferred Stock would violate or
constitute a default under any then outstanding Indebtedness, then the Company
will, to the extent needed to permit such purchase of Senior Preferred Stock,
either (i) repay in full all Indebtedness on the basis required to permit such
purchase of Senior Preferred Stock or (ii) obtain the requisite consents under
the instrument(s) governing such Indebtedness to permit the repurchase of the
Senior Preferred Stock as provided above. The Company will first be required
to comply with the covenant in the preceding sentence before it will be
required to repurchase Senior Preferred Stock pursuant to the provisions
described above; the failure to comply with such covenant will constitute a
Voting Rights Triggering Event, and the voting rights provided for above shall
be the holder's exclusive remedy at law or in equity for such failure to
comply with such covenant.
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
redemption of the Senior Preferred Stock pursuant to a Change of Control
Offer.
This "Change of Control" covenant will not apply in the event of (a) changes
in a majority of the Board of Directors of the Company in certain instances as
contemplated by clause (iv) of the definition of "Change of Control" and (b)
certain transactions with Permitted Holders. In addition, this covenant is not
intended to afford holders of shares of Senior Preferred Stock protection in
the event of certain highly leveraged transactions, reorganizations,
restructurings, mergers and other similar transactions that might adversely
affect the holders of shares of Senior Preferred Stock but would not
constitute a Change of Control. The Company could, in the future,
85
<PAGE>
enter into certain transactions, including certain recapitalizations of the
Company, that would not constitute a Change of Control, but would increase the
amount of Indebtedness outstanding at such time. If a Change of Control were
to occur, there can be no assurance that the Company would have sufficient
funds to pay the redemption price for all the Senior Preferred Stock that the
Company might be required to redeem. Moreover, as of June 24, 1998, after
giving effect to the Recapitalization, the Company would not have had
sufficient funds available to redeem all the Senior Preferred Stock pursuant
to a Change of Control Offer. In the event that the Company is required to
redeem the Senior Preferred Stock pursuant to a Change of Control Offer, the
Company expects that it would need to seek third-party financing to the extent
it does not have available funds to meet its redemption obligations. However,
there can be no assurance that the Company would be able to obtain such
financing on favorable terms, if at all. In addition, the Notes Indenture and
the Original Credit Agreement restrict the Company's ability to redeem the
Senior Preferred Stock, including pursuant to a Change of Control Offer. See
"Concurrent Offering" and "Description of New Credit Facility."
None of the provisions in the Certificate of Designation relating to a
repurchase upon a Change of Control may be waived by the Board of Directors of
the Company.
CERTAIN COVENANTS
The Certificate of Designation contains the following covenants:
Limitation on Incurrence of Additional Indebtedness. The Company will not,
and will not permit any Restricted Subsidiary of the Company to, directly or
indirectly incur any Indebtedness (including Acquired Indebtedness) other than
Permitted Indebtedness. Notwithstanding the foregoing limitations, the Company
and its Restricted Subsidiaries may incur Indebtedness if (a) after giving
effect to the incurrence of such Indebtedness and the receipt and application
of the proceeds thereof, the Company's Consolidated Fixed Charge Coverage
Ratio (determined on a pro forma basis for the last four full fiscal quarters
of the Company for which financial information is available at the date of
determination) is at least equal to 1.75:1; but no Restricted Subsidiary may
incur Indebtedness which is not Permitted Indebtedness unless its Consolidated
Fixed Charge Coverage Ratio is at least equal to 2.75:1; provided, however,
that if the Indebtedness which is the subject of a determination under this
provision is Acquired Indebtedness, or Indebtedness incurred in connection
with the simultaneous acquisition of any Person, business, property or assets,
then such ratio shall be determined by giving effect (on a pro forma basis, as
if the transaction had occurred at the beginning of the four quarter period)
to both the incurrence or assumption of such Acquired Indebtedness or such
other Indebtedness by the Company or such Restricted Subsidiary and the
inclusion in the Company's or such Restricted Subsidiary's Consolidated EBITDA
of the Consolidated EBITDA of the acquired Person, business, property or
assets; and provided, further, that in the event that the Consolidated EBITDA
of the acquired Person, business, property or assets reflects an operating
loss, no amounts shall be deducted from the Company's or such Restricted
Subsidiary's Consolidated EBITDA in making the determinations described above
and (b) no Voting Rights Triggering Event shall have occurred and be
continuing at the time or as a consequence of the incurrence of such
Indebtedness.
Limitation on Restricted Payments. (a) The Company will not, and will not
permit any of its Restricted Subsidiaries to, directly or indirectly, make any
Restricted Payment if at the time of such Restricted Payment and immediately
after giving effect thereto:
(i) any Voting Rights Triggering Event shall have occurred and be
continuing; or
(ii) the Company could not incur $1.00 of additional Indebtedness (other
than Permitted Indebtedness) in compliance with the "Limitation on
Incurrence of Additional Indebtedness" covenant; or
(iii) the aggregate amount of Restricted Payments declared or made after
June 24, 1998 (the amount expended for such purposes, if other than in
cash, being the fair market value of such property as determined by the
Board of Directors of the Company in good faith) exceeds the sum of (A) 50%
of the Company's Consolidated Net Income for the period (taken as one
accounting period) commencing with the first full
86
<PAGE>
fiscal quarter of the Company which commenced after June 24, 1998 to and
including the fiscal quarter of the Company ended immediately prior to the
date of each calculation (or in the event Consolidated Net Income is a
deficit minus 100% of such deficit), plus (B) 100% of the aggregate Net
Proceeds and the fair market value of securities or other property received
by the Company from the issue or sale, after June 24, 1998, of Qualified
Capital Stock (other than Capital Stock of the Company issued to any
Restricted Subsidiary of the Company) of the Company or any Indebtedness or
other securities of the Company convertible into or exercisable or
exchangeable for Qualified Capital Stock of the Company which have been so
converted or exercised or exchanged, as the case may be, plus (C) $10
million provided, that the amount of Restricted Payments permitted by this
clause (C) shall not be reduced by any negative amounts that occur under
clause (A) above.
(b) Notwithstanding the foregoing, the provisions set forth in the
immediately preceding paragraph will not prohibit (A) payments with respect to
the purchase or redemption of Capital Stock of the Company made by exchange
for, or out of the proceeds of the substantially concurrent sale (other than
to a Subsidiary of the Company or an Emerging Market Subsidiary) of, Qualified
Capital Stock; (B) payments in respect of any redemption, repurchase,
acquisitions, cancellation or other retirement for value of shares of Capital
Stock of the Company or options, stock appreciation or similar rights, in each
case held by officers, directors or employees of the Company or any of its
Subsidiaries (or former officers, directors or employees) (or their estates or
beneficiaries under their estates) or by an employee benefit plan, upon death,
disability, retirement or termination of employment of any such Person
pursuant to the terms of any employee benefit plan or any other agreement
under which shares of Capital Stock or stock appreciation or similar rights
were issued or acquired, and the purchase of shares of Capital Stock by the
Company or any Restricted Subsidiary for the purpose of contributing such
shares to any employee benefit plan (provided, that all such payments and
purchases referred to in this clause (B) may not exceed $2 million in any 12
month period after June 24, 1998); (C) the payment of any dividend within 60
days after the date of its declaration if such dividend could have been paid
on the date of its declaration in compliance with the foregoing provisions;
(D) the consummation of a cash tender offer by the Company for shares of
Capital Stock of the Company in an aggregate amount not exceeding $430 million
in connection with the Recapitalization; or (E) cash payments (and/or the
issuance or delivery of any note, instrument, agreement or other obligation
providing for future cash payments) resulting from antidilution or other
adjustments made in connection with the Recapitalization to options to
purchase Capital Stock or restricted or unvested Capital Stock held by
employees, directors or former employees or directors of the Company or any of
its Subsidiaries, to the extent that such adjustments and cash payments are
approved by the Board of Directors of the Company. Each Restricted Payment
made or paid in accordance with this paragraph, except those made pursuant to
clause (D) or clause (E), shall be counted (without duplication) for purposes
of computing amounts utilized for Restricted Payments pursuant to clause
(a)(iii) of the immediately preceding paragraph. No payments made or paid
pursuant to clause (C) of this paragraph shall be counted for purposes of
computing amounts utilized for Restricted Payments pursuant to clause (a)(iii)
of the immediately preceding paragraph to the extent such amount was already
counted for such purposes.
Limitations on Transactions with Affiliates. The Company will not, and will
not cause or permit any of its Restricted Subsidiaries to, directly or
indirectly, enter into any transaction or series of related transactions
(including, without limitation, the sale, purchase, exchange or lease of
assets, property or services) with any Affiliate of the Company (an "Affiliate
Transaction") or extend, renew, waive or otherwise modify the terms of any
Affiliate Transaction entered into prior to June 24, 1998 unless (i) such
Affiliate Transaction is between or among the Company and its Restricted
Subsidiaries; or (ii) such Affiliate Transaction is entered into in good faith
and the terms of such Affiliate Transaction are fair and reasonable to the
Company or such Restricted Subsidiary, as the case may be. In any Affiliate
Transaction involving an amount or having a value in excess of $5 million
which is not permitted under clause (i) above, the Company must obtain a
resolution of the Board of Directors determining that such Affiliate
Transaction complies with clause (ii) above. In transactions with a value in
excess of $10 million which are not permitted under clause (i) above, the
Company must obtain a written opinion as to the fairness of such a
transaction, from a financial point of view to the Company or such Restricted
Subsidiary, as the case may be, from an independent investment banking firm.
87
<PAGE>
Notwithstanding the foregoing, the provisions set forth in the immediately
preceding paragraph will not apply to: (i) Restricted Payments that are not
prohibited by the covenant described under "--Limitation on Restricted
Payments"; (ii) transactions permitted by, and complying with, the provisions
of the covenant described under "--Merger, Consolidation and Sale of Assets";
(iii) transactions in the ordinary course of business (including expense
advances) between the Company or any of its Restricted Subsidiaries or
Unrestricted Subsidiaries, on the one hand, and any employee thereof, on the
other hand; (iv) employment contracts existing on June 24, 1998 and employment
contracts approved by the Board of Directors of the Company the terms of which
are consistent with past practice; (v) the granting and performance of
registration rights for shares of Capital Stock of the Company under a written
registration rights agreement approved by a majority of directors of the
Company that are disinterested with respect to such transaction; (vi)
transactions with Affiliates solely in their capacity as holders of
Indebtedness or Capital Stock of the Company or any of its Restricted
Subsidiaries or Unrestricted Subsidiaries, where such Affiliates are treated
no more favorably than holders of such Indebtedness or such Capital Stock
generally; (vii) any Permitted Investments; (viii) reasonable fees and
compensation paid to, and indemnity provided on behalf of, officers,
directors, employees or consultants of the Company or any Subsidiary of the
Company as determined in good faith by the Company's Board of Directors; (ix)
transactions exclusively between or among the Company and any of its
Subsidiaries, provided such transactions are not otherwise prohibited by the
Certificate of Designation; (x) any agreement as in effect as of June 24, 1998
or any amendment thereto or any transaction contemplated thereby (including
pursuant to any amendment thereto) in any replacement agreement thereto so
long as any such amendment or replacement agreement is not more
disadvantageous to the holders in any material respect than the original
agreement as in effect on June 24, 1998; (xi) any payment, issuance of
securities or other payments, awards or grants, in cash or otherwise, pursuant
to, or the funding of, employment arrangements and Plans approved by the Board
of Directors of the Company; (xii) the grant of stock options or similar
rights to employees and directors of the Company and its Subsidiaries (or any
amendment or adjustment thereto) pursuant to Plans and employment contracts
and stock option, stock bonus, restricted stock and similar agreements
approved by the Board of Directors of the Company; (xiii) loans or advances to
officers, directors or employees of the Company or its Restricted Subsidiaries
not in excess of $5 million at any one time outstanding; and (xiv)
transactions, including, without limitation, the repurchase of the Company's
Common Stock, entered into in connection with the Recapitalization and the
financing therefor.
Merger, Consolidation and Sale of Assets. Without the affirmative vote of
the holders of a majority of the issued and outstanding shares of Senior
Preferred Stock, voting or consenting, as the case may be, as a separate
class, the Company will not, in a single transaction or series of related
transactions, consolidate with or merge with or into, or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of
its assets to, another Person unless: (i) either (1) the Company is the
survivor of such merger, consolidation, sale, assignment, transfer, lease,
conveyance or other disposition or (2) the surviving or transferee Person is a
corporation, partnership or trust organized and existing under the laws of the
United States, any state thereof or the District of Columbia and such
surviving or transferee Person expressly assumes all the obligations of the
Company under the Senior Preferred Stock and the Certificate of Designation;
(ii) the Senior Preferred Stock shall be converted into or exchanged for and
shall become shares of such successor, transferee or resulting Person, having
in respect of such successor, transferee or resulting Person the same powers,
preferences and relative participating, optional or other special rights and
the qualifications, limitations or restrictions thereon that the Senior
Preferred Stock had immediately prior to such transaction; (iii) immediately
after giving effect to such transaction and the use of proceeds therefrom (on
a pro forma basis, including any Indebtedness incurred or anticipated to be
incurred in connection with such transaction), the Company or the surviving or
transferee Person is able to incur $1.00 of additional Indebtedness (other
than Permitted Indebtedness) in compliance with the "Limitation on Incurrence
of Additional Indebtedness" covenant; and (iv) immediately after giving effect
to such transaction (including any Indebtedness incurred or anticipated to be
incurred in connection with the transaction), no Voting Rights Triggering
Event has occurred and is continuing. For purposes of the foregoing, the
transfer (by lease, assignment, sale or otherwise, in a single transaction or
series of related transactions) of all or substantially all of the properties
and assets of one or more Restricted Subsidiaries the Capital Stock of which
constitutes all or substantially all of the properties and assets of the
Company will be deemed to be the transfer of all or
88
<PAGE>
substantially all of the properties and assets of the Company. Notwithstanding
the foregoing clauses (iii) and (iv) of the preceding sentence but subject to
clauses (i) and (ii) thereof (a) the Company may consolidate with, merge into
or transfer all or part of its properties and assets to any Restricted
Subsidiary of the Company so long as all assets of the Company immediately
prior to such transaction are owned by such Restricted Subsidiary immediately
after the consummation thereof and (b) the Company may merge with an Affiliate
that is a corporation that has no material assets or liabilities and which was
incorporated solely for the purpose of (A) reincorporating the Company in the
same or another jurisdiction of the United States, any state thereof or the
District of Columbia or (B) the creation of a holding company of the Company.
Transfer Agent and Registrar. Boston EquiServe is the transfer agent (the
"Transfer Agent") and registrar for the Senior Preferred Stock.
Reports. So long as the Company is subject to the periodic reporting
requirements of the Exchange Act, it will continue to file the information
required thereby with the Commission and will furnish such information to
holders of Senior Preferred Stock within 15 days of filing thereof with the
Commission. The Certificate of Designation provides that if the Company is not
required to file such information with the Commission, it will nonetheless
continue to furnish such information to holders of Senior Preferred Stock
within 15 days of the date on which filing with the Commission would have been
required.
THE EXCHANGE DEBENTURES
The Exchange Debentures, if issued, will be issued under an Exchange
Indenture (the "Exchange Indenture"), dated as of June 24, 1998 between the
Company, or, to be dated as of the Exchange Date between Holdings, as the case
may be, and, in each case, United States Trust Company of New York, as Trustee
(the "Trustee"). The following summary of certain provisions of the Exchange
Indenture does not purport to be complete and is subject to, and is qualified
in its entirety by reference to, the TIA, and to all of the provisions of the
Exchange Indenture, including the definitions of certain terms therein and
those terms made a part of the Exchange Indenture by reference to the TIA as
in effect on the date of the Exchange Indenture. The definitions of certain
capitalized terms used in the following summary are set forth under "--Certain
Definitions" below. The Notes Indenture and the Original Credit Agreement
restrict the Company's ability to issue the Exchange Debentures. See
"Concurrent Offering" and "Description of New Credit Facility."
The Exchange Debentures will be general unsecured obligations of the Company
or Holdings, as the case may be, and will be limited in aggregate principal
amount to the liquidation preference of the Senior Preferred Stock, plus,
without duplication, all accumulated and unpaid dividends on the Senior
Preferred Stock, on the date or dates on which it is exchanged for Exchange
Debentures (plus any additional Exchange Debentures issued in lieu of cash
interest as described herein). The Exchange Debentures will be issued in fully
registered form only, in denominations of $1,000 and integral multiples
thereof (other than as described in "--The Senior Preferred Stock--Exchange"
or with respect to additional Exchange Debentures issued in lieu of cash
interest as described herein). If issued, the Holdings Exchange Debentures
will be general unsecured obligations of Holdings or, if issued, the Company
Exchange Debentures will be subordinated to all existing and future Senior
Debt (including the Notes and amounts outstanding under any Credit Agreement).
Principal of, premium, if any, and interest on the Exchange Debentures will
be payable, and the Exchange Debentures may be presented for registration of
transfer or exchange at the office of the Paying Agent and Registrar. At the
Issuer's option, interest, to the extent paid in cash, may be paid by check
mailed to the registered address of holders of the Exchange Debentures as
shown on the register for the Exchange Debentures. The Trustee will initially
act as Paying Agent and Registrar. The Issuer may change any Paying Agent and
Registrar without prior notice to holders of the Exchange Debentures. Holders
of the Exchange Debentures must surrender Exchange Debentures to the Paying
Agent to collect principal payments.
The Exchange Debentures will mature on June 15, 2010. Each Exchange
Debenture will bear interest at the rate of 13 7/8% per annum from the
Exchange Date or from the most recent interest payment date to which interest
89
<PAGE>
has been paid or provided for or, if no interest has been paid or provided
for, from the Exchange Date. Interest will be payable quarterly in cash (or,
in the case of interest payable on interest payment dates that occur on or
prior to June 15, 2003, in additional Exchange Debentures, at the option of
the Issuer) in arrears on each March 15, June 15, September 15 and December
15, commencing with the first such date after the Exchange Date. Interest on
the Exchange Debentures will be computed on the basis of a 360-day year
comprised of twelve 30-day months and, for periods not involving a full
calendar month, the actual number of days elapsed (but not to exceed 30 days).
OPTIONAL REDEMPTION
The Exchange Debentures will be redeemable, at the Issuer's option, in whole
at any time or in part from time to time, on and after June 15, 2001 at the
following redemption prices (expressed as percentages of the principal amount)
if redeemed during the twelve-month period commencing on June 15 of the year
set forth below, plus, in each case, accrued interest thereon to the date of
redemption:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2001.......................................... 110%
2002.......................................... 108%
2003.......................................... 106%
2004.......................................... 104%
2005.......................................... 102%
2006.......................................... 101%
2007 and thereafter........................... 100%
</TABLE>
In addition, on or prior to June 15, 2001, the Issuer may, at its option,
use the Net Proceeds of one or more Equity Offerings to redeem for cash up to
an aggregate of 35% of the aggregate principal amount of the Exchange
Debentures whether initially issued or issued in payment of interest
obligations thereon at a redemption price equal to 112% of the aggregate
principal amount so redeemed, plus accrued and unpaid interest thereon to the
redemption date; provided, however, that after any such redemption, the
aggregate principal amount of Exchange Debentures outstanding must equal at
least $75 million. Any such redemption will be required to occur on or prior
to 90 days after the receipt by the Issuer of the proceeds of each such Equity
Offering.
The Notes Indenture and the Original Credit Agreement restrict the Company's
ability to optionally redeem the Company Exchange Debentures. See "Concurrent
Offering" and "Description of New Credit Facility."
CHANGE OF CONTROL
The Issuer shall notify the Trustee within five business days after the
Issuer knows, or reasonably should know, of the occurrence of a Change of
Control. Within 15 business days after the Issuer knows, or reasonably should
know, of the occurrence of each Change of Control, the Issuer will make an
offer to purchase (the "Change of Control Offer") the outstanding Exchange
Debentures at a purchase price equal to 101% of the principal amount thereof
plus any accrued and unpaid interest thereon to the Change of Control Payment
Date (such applicable purchase price being hereinafter referred to as the
"Change of Control Purchase Price") in accordance with the procedures set
forth in this covenant.
The Issuer will within 15 days after it knows, or reasonably should know, of
the Change of Control (i) cause a notice of the Change of Control Offer to be
sent at least once to the Dow Jones News Service or similar business news
service in the United States and (ii) send by first-class mail, postage
prepaid, to the Trustee and to each holder of the Exchange Debentures, at the
address appearing in the register maintained by the Registrar of the Exchange
Debentures, a notice stating:
(i) that the Change of Control Offer is being made pursuant to this
covenant and that all Exchange Debentures tendered will be accepted for
payment, and otherwise subject to the terms and conditions set forth
herein;
90
<PAGE>
(ii) the Change of Control Purchase Price and the purchase date (which
shall be a business day no earlier than 20 business days nor more than 60
business days from the date such notice is mailed (the "Change of Control
Payment Date"));
(iii) that any Exchange Debentures not tendered will continue to accrue
interest;
(iv) that, unless the Issuer defaults in the payment of the Change of
Control Purchase Price, any Exchange Debentures accepted for payment
pursuant to the Change of Control Offer shall cease to accrue interest
after the Change of Control Payment Date;
(v) that holders accepting the offer to have their Exchange Debentures
purchased pursuant to a Change of Control Offer will be required to
surrender the Exchange Debentures to the Paying Agent at the address
specified in the notice prior to the close of business on the business day
preceding the Change of Control Payment Date;
(vi) that holders will be entitled to withdraw their acceptance if the
Paying Agent receives, not later than the close of business on the third
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 the Exchange Debentures delivered for
purchase, and a statement that such holder is withdrawing his election to
have such Exchange Debentures purchased;
(vii) that holders whose Exchange Debentures are being purchased only in
part will be issued new Exchange Debentures equal in principal amount to
the unpurchased portion of the Exchange Debentures surrendered, provided
that each Exchange Debenture purchased and each such new Exchange Debenture
issued shall be in an original principal amount in denominations of $1,000
and integral multiples thereof;
(viii) a summary of any other procedures that a holder must follow to
accept a Change of Control Offer or effect withdrawal of such acceptance;
and
(ix) the name and address of the Paying Agent.
On the Change of Control Payment Date, the Issuer shall, to the extent
lawful, (i) accept for payment Exchange Debentures or portions thereof
tendered pursuant to the Change of Control Offer, (ii) deposit with the Paying
Agent money sufficient to pay the purchase price of all Exchange Debentures or
portions thereof so tendered and (iii) deliver or cause to be delivered to the
Trustee Exchange Debentures so accepted together with an officers' certificate
stating the Exchange Debentures or portions thereof tendered to the Issuer.
The Paying Agent shall promptly mail to each holder of Exchange Debentures so
accepted payment in an amount equal to the purchase price for such Exchange
Debentures, and the Issuer shall execute and issue, and the Trustee shall
promptly authenticate and mail to such holder, a new Exchange Debenture equal
in principal amount to any unpurchased portion of the Exchange Debentures
surrendered; provided that each such new Exchange Debenture shall be issued in
an original principal amount in denominations of $1,000 and integral multiples
thereof.
In the case of Company Exchange Debentures, the Exchange Indenture provides
that, prior to the mailing of the notice referred to above, but in any event
within 30 days following the date on which the Company has actual knowledge of
a Change of Control, the Company covenants that if the purchase of the Company
Exchange Debentures would violate or constitute a default under the Notes
Indenture or any other then outstanding Senior Debt, then the Company will, to
the extent needed to permit such purchase of Company Exchange Debentures,
either (i) repay in full all Indebtedness on the basis required by the Notes
Indenture and such Senior Debt or (ii) obtain the requisite consents under the
Notes Indenture and the instrument(s) governing such other Senior Debt to
permit the repurchase of the Company Exchange Debentures as provided above.
The Company will first be required to comply with the covenant in the
preceding sentence before it will be required to repurchase Company Exchange
Debentures pursuant to the provisions described above; provided that the
Company's failure to comply with the covenant described in the preceding
sentence will constitute an Event of Default described in clause (iii) under
"Events of Default" below (after the passage of time referred to therein).
91
<PAGE>
The Issuer 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
purchase of Exchange Debentures pursuant to a Change of Control Offer.
This "Change of Control" covenant will not apply in the event of (a) changes
in a majority of the Board of Directors of the Issuer in certain instances as
contemplated by the definition of "Change of Control" and (b) certain
transactions with Permitted Holders. In addition, this covenant is not
intended to afford holders of Exchange Debentures protection in the event of
certain highly leveraged transactions, reorganizations, restructurings,
mergers and other similar transactions that might adversely affect the holders
of Exchange Debentures, but would not constitute a Change of Control. The
Issuer could, in the future, enter into certain transactions, including
certain recapitalizations of the Issuer, that would not constitute a Change of
Control, but would increase the amount of Indebtedness outstanding at such
time. If a Change of Control were to occur, there can be no assurance that the
Issuer would have sufficient funds to pay the purchase price for all Exchange
Debentures that the Company might be required to purchase. Moreover, as of
June 24, 1998, after giving effect to the Recapitalization, the Issuer would
not have had sufficient funds available to purchase all the Exchange
Debentures, assuming they had been issued, pursuant to a Change of Control
Offer. In the event that the Issuer was required to purchase Exchange
Debentures pursuant to a Change of Control Offer, the Company expects that it
would need to seek third-party financing to the extent it does not have
available funds to meet its purchase obligations. However, there can no
assurance that the Issuer would be able to obtain such financing on favorable
terms, if at all. In addition, the Notes Indenture and the Original Credit
Agreement restrict the Company's ability to repurchase the Company Exchange
Debentures, including pursuant to a Change of Control Offer. See "Concurrent
Offering" and "Description of New Credit Facility."
None of the provisions in the Exchange Indenture relating to a repurchase
upon a Change of Control is waivable by the Board of Directors of the Issuer.
In addition, the Trustee may not waive the right of any holder of the Exchange
Debentures to redeem its Exchange Debentures upon a Change of Control, except
to the extent the Trustee is acting at the direction of the holders of the
Exchange Debentures then outstanding.
SUBORDINATION
If issued, the Obligations represented by the Company Exchange Debentures
will be, to the extent and in the manner provided in the Exchange Indenture,
subordinated in right of payment to the prior indefeasible payment and
satisfaction in full in cash of all existing and future Senior Debt of the
Company, including the Notes offered in the Concurrent Offering.
In the event of any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, arrangement, reorganization or other similar case
or proceeding in connection therewith, relative to the Company or to its
creditors, as such, or to its assets, whether voluntary or involuntary, or any
liquidation, dissolution or other winding-up of the Company, whether voluntary
or involuntary and whether or not involving insolvency or bankruptcy, or any
general assignment for the benefit of creditors or other marshaling of assets
or liabilities of the Company (except in connection with the merger or
consolidation of the Company or its liquidation or dissolution following the
transfer of substantially all of its assets, upon the terms and conditions
permitted under the circumstances described under "--Certain Covenants--
Merger, Consolidation and Sale of Assets") (all of the foregoing referred to
herein individually as a "Bankruptcy Proceeding" and collectively as
"Bankruptcy Proceedings"), the holders of Senior Debt will be entitled to
receive indefeasible payment and satisfaction in full in cash of all amounts
due on or in respect of all Senior Debt before the holders of the Company
Exchange Debentures are entitled to receive or retain any payment or
distribution of any kind on account of the Company Exchange Debentures or any
Obligations under the Company Exchange Debentures, the Registration Rights
Agreement or the Exchange Indenture. In the event that, notwithstanding the
foregoing, the Trustee or any holder of Company Exchange Debentures receives
any payment or distribution of assets or securities of the Company of any kind
or any other distribution on account of the Company Exchange Debentures or any
Obligations under the Company Exchange Debentures, the Registration Rights
Agreement or the Exchange Indenture, whether in cash, property or securities,
including, without limitation, by way of set-off or otherwise, in respect of
the
92
<PAGE>
Company Exchange Debentures or any Obligations under the Company Exchange
Debentures the Registration Rights Agreement or the Exchange Indenture before
all Senior Debt is indefeasibly paid and satisfied in full in cash, then such
payment or distribution will be held by the recipient in trust for the benefit
of holders of Senior Debt and will be immediately paid over or delivered to
the holders of Senior Debt or their representative or representatives to the
extent necessary to make payment in full in cash of all Senior Debt remaining
unpaid,
after giving effect to any concurrent payment or distribution, or provision
therefor, to or for the holders of Senior Debt. By reason of such
subordination, in the event of liquidation or insolvency, creditors of the
Company who are holders of Senior Debt may recover more, ratably, than other
creditors of the Company, and creditors of the Company who are not holders of
Senior Debt or of the Company Exchange Debentures may recover more, ratably,
than the holders of the Company Exchange Debentures.
No payment or distribution of any assets or securities of the Company or any
Subsidiary of any kind or character (including, without limitation, cash,
property and any 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 Company Exchange Debentures by the Company,
other than Qualified Capital Stock of the Company or subordinated debt
securities of the Company that require no payment of principal prior to the
stated maturity of the Company Exchange Debentures and that are subordinated
and junior in right of payment to Senior Debt at least to the same extent as
the Company Exchange Debentures, with terms no less favorable to the Company
and the holders of the Designated Senior Debt than the terms of the Company
Exchange Debentures and the Exchange Indenture) may be made by or on behalf of
the Company or any Subsidiary, including, without limitation, by way of set-
off or otherwise, for or on account of the Company Exchange Debentures or any
Obligations under the Company Exchange Debentures, the Registration Rights
Agreement or the Exchange Indenture, or for or on account of the purchase,
redemption or other acquisition of the Exchange Debentures or any Obligations
under the Company Exchange Debentures, the Registration Rights Agreement or
the Exchange Indenture, and neither the Trustee nor any holder or owner of any
Company Exchange Debentures shall take or receive from the Company or any
Subsidiary, directly or indirectly in any manner, payment in respect of all or
any portion of Company Exchange Debentures or for or on account of the
purchase, redemption or other acquisition of the Company Exchange Debentures
or in respect of any other Obligations under the Company Exchange Debentures,
the Registration Rights Agreement or the Exchange Indenture upon the
occurrence and during the continuation of a Payment Default and such
prohibition shall continue until such Payment Default is cured, waived in
writing or ceases to exist. At such time as the prohibition set forth in the
preceding sentence shall no longer be in effect, subject to the provisions of
the following paragraph, the Company shall resume making any and all required
payments in respect of the Company Exchange Debentures, including any missed
payments.
Upon the occurrence and during the continuance of a Non-Payment Event of
Default, no payment or distribution of any assets or securities of the Company
of any kind or character (including, without limitation, cash, property and
any 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 Company Exchange Debentures by the Company other than Qualified
Capital Stock of the Company or subordinated debt securities of the Company
that require no payment of principal prior to the stated maturity of the
Company Exchange Debentures and that are subordinated and junior in right of
payment to Senior Debt at least to the same extent as the Company Exchange
Debentures, with terms no less favorable to the Company and the holders of the
Designated Senior Debt than the terms of the Company Exchange Debentures and
the Exchange Indenture) may be made by the Company, including, without
limitation, by way of set-off or otherwise, for or on account of the Company
Exchange Debentures or any Obligations under the Company Exchange Debentures,
the Registration Rights Agreement or the Exchange Indenture, or for or on
account of the purchase or redemption or other acquisition of Exchange
Debentures or any other Obligations under the Company Exchange Debentures, the
Registration Rights Agreement or the Exchange Indenture, and neither the
Trustee nor any holder or owner of any Company Exchange Debentures shall take
or receive from the Company or any Subsidiary, directly or indirectly in any
manner, payment in respect of all or any portion of Company Exchange
Debentures or any such other Obligations under the Company Exchange
Debentures, the Registration Rights Agreement or the
93
<PAGE>
Exchange Indenture for a period (a "Payment Blockage Period") commencing on
the date of receipt by the Trustee of written notice from the Representative
of such Non-Payment Event of Default unless and until (subject to any blockage
of payments that may then be in effect under the preceding paragraph) the
earliest of (w) more than 179 days shall have elapsed since the date of
receipt of such written notice by the Trustee, (x) such Non-Payment Event of
Default shall have been cured or waived in writing or shall have ceased to
exist, (y) such Designated Senior Debt shall have been paid in full in cash or
(z) such Payment Blockage Period shall have
been terminated by written notice to the Company or the Trustee from such
Representative, after which, in the case of clause (w), (x), (y) or (z), the
Company shall resume making any and all required payments in respect of the
Company Exchange Debentures, including any missed payments. Notwithstanding
any other provision of the Exchange Indenture, in no event shall any Payment
Blockage Period commenced in accordance with the provisions of the Exchange
Indenture described in this paragraph extend beyond 179 days after the date of
the receipt by the Trustee of the notice referred to above (such 179 day
period, an "Initial Blockage Period"). Any number of additional Payment
Blockage Periods may be commenced during the Initial Blockage Period or any
other Payment Blockage Period; provided, however, that no such additional
Payment Blockage Period commenced during an existing Payment Blockage Period
shall extend beyond 179 days after the date of receipt by the Trustee of the
notice which commences such Initial Blockage Period. After the expiration of
any Payment Blockage Period, no Payment Blockage Period may be commenced until
at least 180 consecutive days have elapsed from the last day of the such
Payment Blockage Period. Notwithstanding any other provision of the Exchange
Indenture, no Non-Payment Event of Default with respect to Designated Senior
Debt which existed or was continuing on the date of the commencement of any
Payment Blockage Period initiated by the Representative shall be, or be made,
the basis for the commencement of a second Payment Blockage Period initiated
by the Representative, whether or not within the Initial Blockage Period,
unless such Non-Payment Event of Default shall have been waived or cured for a
period of not less than 90 consecutive days.
If the Company fails to make any payment on the Company Exchange Debentures
when due or within any applicable grace period, whether or not on account of
such payment blockage provisions, such failure would constitute an Event of
Default under the Exchange Indenture and would enable the holders of the
Company Exchange Debentures to accelerate the maturity thereof. See "--Events
of Default."
A holder of Company Exchange Debentures by his acceptance of Exchange
Debentures agrees to be bound by such provisions and authorizes and expressly
directs the Trustee, on his behalf, to take such action as may be necessary or
appropriate to effectuate the subordination provided for in the Exchange
Indenture and appoints the Trustee his attorney-in-fact for such purpose.
CERTAIN COVENANTS
The Exchange Indenture contains, among others, the following covenants:
Limitation on Incurrence of Additional Indebtedness. The Issuer will not,
and will not permit any Restricted Subsidiary of the Issuer to, directly or
indirectly incur any Indebtedness (including Acquired Indebtedness) other than
Permitted Indebtedness. Notwithstanding the foregoing limitations, the Issuer
and its Restricted Subsidiaries may incur Indebtedness if (a) after giving
effect to the incurrence of such Indebtedness and the receipt and application
of the proceeds thereof, the Issuer's Consolidated Fixed Charge Coverage Ratio
(determined on a pro forma basis for the last four full fiscal quarters of the
Issuer for which financial information is available at the date of
determination) is at least equal to 1.75:1; but no Restricted Subsidiary of
the Company may incur Indebtedness which is not Permitted Indebtedness unless
its Consolidated Fixed Charge Coverage Ratio is at least equal to 2.75:1;
provided, however, that if the Indebtedness which is the subject of a
determination under this provision is Acquired Indebtedness, or Indebtedness
incurred in connection with the simultaneous acquisition of any Person,
business, property or assets, then such ratio shall be determined by giving
effect (on a pro forma basis, as if the transaction had occurred at the
beginning of the four quarter period) to both the incurrence or assumption of
such Acquired Indebtedness or such other Indebtedness by the Issuer or such
Restricted Subsidiary and the inclusion in the Issuer's or such Restricted
Subsidiary's Consolidated EBITDA of the Consolidated EBITDA of the acquired
Person, business, property or assets; and provided, further, that in the event
that the
94
<PAGE>
Consolidated EBITDA of the acquired Person, business, property or assets
reflects an operating loss, no amounts shall be deducted from the Issuer's or
such Restricted Subsidiary's Consolidated EBITDA in making the determinations
described above and (b) no Default or Event of Default shall have occurred and
be continuing at the time or as a consequence of the incurrence of such
Indebtedness.
Notwithstanding the foregoing, if the Holdings Exchange Debentures are
issued, Holdings will not (i) issue any Pari Passu Debt or (ii) incur any
Indebtedness which by is terms (or by the terms of any agreement governing
such Indebtedness) is subordinate in right of payment to any of the
Indebtedness of Holdings unless such Indebtedness is also by its terms (or by
the terms of any agreement governing such Indebtedness) made expressly
subordinate in right of payment to the Holdings Exchange Debentures pursuant
to subordination provisions that are substantively identical to the
subordination provisions of such Indebtedness (or such agreement) that are
most favorable to the holders of any other Indebtedness of Holdings.
Limitation on Restricted Payments. (a) The Issuer will not, and will not
permit any of its Restricted Subsidiaries to, directly or indirectly, make any
Restricted Payment if at the time of such Restricted Payment and immediately
after giving effect thereto:
(i) any Default or Event of Default shall have occurred and be
continuing; or
(ii) the Company could not incur $1.00 of additional Indebtedness (other
than Permitted Indebtedness) in compliance with the "Limitation on
Incurrence of Additional Indebtedness" covenant; or
(iii) the aggregate amount of Restricted Payments declared or made after
June 24, 1998 (the amount expended for such purposes, if other than in
cash, being the fair market value of such property as determined by the
Board of Directors of the Company in good faith) exceeds the sum of (A) 50%
of the Issuer's Consolidated Net Income for the period (taken as one
accounting period) commencing with the first full fiscal quarter of the
Company which commenced after June 24, 1998 to and including the fiscal
quarter of the Issuer ended immediately prior to the date of each
calculation (or in the event Consolidated Net Income is a deficit minus
100% of such deficit), plus (B) 100% of the aggregate Net Proceeds and the
fair market value of securities or other property received by the Company
from the issue or sale, after June 24, 1998 but prior to the Exchange Date,
and by the Issuer from the issue or sale thereafter, of Qualified Capital
Stock (other than Capital Stock of the Issuer issued to any Restricted
Subsidiary of the Issuer) of the Company, if prior to the Exchange Date,
and of the Issuer thereafter, or any Indebtedness or other securities of
the Company, if prior to the Exchange Date, and of the Issuer thereafter,
convertible into or exercisable or exchangeable for Qualified Capital Stock
of the same Issuer as the underlying security which have been so converted
or exercised or exchanged, as the case may be, plus (C) $10 million,
provided that the amount of Restricted Payments permitted by this clause
(C) shall not be reduced by any negative amounts that occur under clause
(A) above.
(b) Notwithstanding the foregoing, if no other Default or Event of Default
shall have occurred and be continuing or shall occur as a consequence thereof,
the provisions set forth in the immediately preceding paragraph will not
prohibit (A) payments with respect to the purchase or redemption of Capital
Stock, or Subordinated Debt of the Issuer made by exchange for, or out of the
proceeds of the substantially concurrent sale (other than to a Subsidiary of
the Issuer or an Emerging Market Subsidiary) of, Qualified Capital Stock; (B)
payments in respect of any redemption, repurchase, acquisitions, cancellation
or other retirement for value of shares of Capital Stock of the Issuer or
options, stock appreciation or similar rights, in each case held by officers,
directors or employees of the Issuer, or any of its Subsidiaries (or former
officers, directors or employees) (or their estates or beneficiaries under
their estates) or by an employee benefit plan, upon death, disability,
retirement or termination of employment of any such Person pursuant to the
terms of any employee benefit plan or any other agreement under which shares
of Capital Stock or stock appreciation or similar rights were issued or
acquired, and the purchase of shares of Capital Stock by the Issuer or any
Subsidiary for the purpose of contributing such shares to any employee benefit
plan (provided, that all such payments and purchases referred to in this
clause (B) may not exceed $2 million in any 12 month period after June 24,
1998); (C) the payment of
95
<PAGE>
dividends (whether in cash or otherwise) on the Senior Preferred Stock or the
payment of any other dividend within 60 days after the date of its declaration
if such dividend could have been paid on the date of its declaration in
compliance with the foregoing provisions; (D) any purchase or defeasance of
Subordinated Debt upon a Change of Control or an Asset Sale to the extent
required by the indenture or other agreement or instrument pursuant to which
such Subordinated Debt was issued, but only if the Issuer in the case of a
Change of Control, has complied with its obligations under the provisions
described under the covenant entitled "Change of Control"; (E) the
consummation of a cash tender offer by the Company for shares of Capital Stock
of the Company in an aggregate amount not exceeding $430 million in connection
with the Recapitalization; (F) the exchange of Senior Preferred Stock for
Exchange Debentures or the retirement of the Senior Preferred Stock in
accordance with the optional and mandatory redemption provisions thereof, in
each case as provided in the Certificate of Designation as in effect on June
24, 1998; or (G) cash payments (and/or the issuance or delivery of any note,
instrument, agreement or other obligation providing for future cash payments)
resulting from antidilution or other adjustments made in connection with the
Recapitalization to options to purchase Capital Stock or restricted or
unvested Capital Stock held by employees, directors or former employees or
directors of the Company or any of its Subsidiaries, to the extent that such
adjustments and cash payments are approved by the Board of Directors of the
Company. Each Restricted Payment made or paid in accordance with this
paragraph, except those made pursuant to clause (E), clause (F) or clause (G),
shall be counted (without duplication) for purposes of computing amounts
utilized for Restricted Payments pursuant to clause (a)(iii) of the
immediately preceding paragraph. No payments made or paid pursuant to clause
(C) of this paragraph shall be counted for purposes of computing amounts
utilized for Restricted Payments pursuant to clause (a)(iii) of the
immediately preceding paragraph to the extent such amount was already counted
for such purposes.
Limitations on Transactions with Affiliates. The Issuer will not, and will
not cause or permit any of its Restricted Subsidiaries to, directly or
indirectly, enter into any transaction or series of related transactions
(including, without limitation, the sale, purchase, exchange or lease of
assets, property or services) with any Affiliate of the Company (an "Affiliate
Transaction") or extend, renew, waive or otherwise modify the terms of any
Affiliate Transaction entered into prior to June 24, 1998 unless (i) such
Affiliate Transaction is between or among the Issuer and its Restricted
Subsidiaries; or (ii) such Affiliate Transaction is entered into in good faith
and the terms of such Affiliate Transaction are fair and reasonable to the
Issuer or such Restricted Subsidiary, as the case may be. In any Affiliate
Transaction involving an amount or having a value in excess of $5 million
which is not permitted under clause (i) above, the Issuer must obtain a
resolution of the board of directors certifying that such Affiliate
Transaction complies with clause (ii) above. In transactions with a value in
excess of $10 million which are not permitted under clause (i) above, the
Issuer must obtain a written opinion as to the fairness of such a transaction
from an independent investment banking firm.
Notwithstanding the foregoing, the provisions set forth in the immediately
preceding paragraph will not apply to: (i) Restricted Payments that are not
prohibited by the covenant described under "--Limitation on Restricted
Payments"; (ii) transactions permitted by, and complying with, the provisions
of the covenant described under "--Merger, Consolidation and Sale of Assets";
(iii) transactions in the ordinary course of business (including expense
advances) between the Issuer or any of its Restricted Subsidiaries or
Unrestricted Subsidiaries, on the one hand, and any employee thereof, on the
other hand; (iv) employment contracts existing on June 24, 1998 and employment
contracts approved by the Board of Directors of the Issuer the terms of which
are consistent with past practice; (v) the granting and performance of
registration rights for shares of Capital Stock of the Issuer under a written
registration rights agreement approved by a majority of directors of the
Company that are disinterested with respect to such transaction; (vi)
transactions with Affiliates solely in their capacity as holders of
Indebtedness or Capital Stock of the Issuer or any of its Restricted
Subsidiaries or Unrestricted Subsidiaries, where such Affiliates are treated
no more favorably than holders of such Indebtedness or such Capital Stock
generally; (vii) any Permitted Investments; (viii) reasonable fees and
compensation paid to, and indemnity provided on behalf of, officers,
directors, employees or consultants of the Issuer or any Subsidiary of the
Issuer as determined in good faith by the Issuer's Board of Directors; (ix)
transactions exclusively between or among the Issuer and any of its
Subsidiaries, provided such transactions are not otherwise prohibited by the
Exchange Indenture; (x) any agreement as in effect as of June 24, 1998 or any
amendment
96
<PAGE>
thereto or any transaction contemplated thereby (including pursuant to any
amendment thereto) in any replacement agreement thereto so long as any such
amendment or replacement agreement is not more disadvantageous to the holders
in any material respect than the original agreement as in effect on June 24,
1998; (xi) any payment of the Notes, issuance of securities or other payments,
awards or grants, in cash or otherwise, pursuant to, or the funding of,
employment arrangements and Plans approved by the Board of Directors of the
Issuer; (xii) the grant of stock options or similar rights to employees and
directors of the Issuer and its Subsidiaries (or any amendment or adjustment
thereto) pursuant to Plans and employment contracts and stock option, stock
bonus, restricted stock and similar agreements approved by the Board of
Directors of the Issuer; (xiii) loans or advances to officers, directors or
employees of the Company or its Restricted Subsidiaries not in excess of $5
million at any one time outstanding; (xiv) transactions, including the
repurchase of Company Common Stock, entered into in connection with the
Recapitalization and the financing therefor.
Merger, Consolidation and Sale of Assets. The Issuer will not, in a single
transaction or series of related transactions, consolidate with or merge with
or into, or sell, assign, transfer, lease, convey or otherwise dispose of all
or substantially all of its assets to, another Person unless: (i) (1) the
Issuer is the survivor of such merger, consolidation, sale, assignment, sale,
assignment, transfer, lease, conveyance or other disposition or (2) the
surviving or transferee Person is a corporation, partnership or trust
organized and existing under the laws of the United States, any state thereof
or the District of Columbia and such surviving or transferee Person expressly
assumes by supplemental indenture all the obligations of the Issuer under the
Exchange Debentures and the Exchange Indenture; (ii) immediately after giving
effect to such transaction and the use of proceeds therefrom (on a pro forma
basis, including any Indebtedness incurred or anticipated to be incurred in
connection with such transaction), the Issuer or the surviving or transferee
Person is able to incur $1.00 of additional Indebtedness (other than Permitted
Indebtedness) in compliance with the "Limitation on Incurrence of Additional
Indebtedness" covenant; (iii) immediately after giving effect to such
transaction (including any Indebtedness incurred or anticipated to be incurred
in connection with the transaction) no Default or Event of Default has
occurred and is continuing; and (iv) the Issuer has delivered to the Trustee
an officers' certificate and opinion of counsel, each stating that such
consolidation, merger, sale, assignment, transfer, lease, conveyance or other
disposition complies with the Exchange Indenture, that the surviving Person
agrees by supplemental indenture to be bound thereby, and that all conditions
precedent in the Exchange Indenture relating to such transaction have been
satisfied. For purposes of the foregoing, the transfer (by lease, assignment,
sale or otherwise, in a single transaction or series of related transactions)
of all or substantially all of the properties and assets of one or more
Restricted Subsidiaries the Capital Stock of which constitutes all or
substantially all of the properties and assets of the Issuer will be deemed to
be the transfer of all or substantially all of the properties and assets of
the Issuer. Notwithstanding the foregoing clauses (ii) and (iii) of the
preceding sentence but subject to clauses (i) and (iv) thereof (a) the Issuer
may consolidate with, merge into or transfer all or part of its properties and
assets to any Restricted Subsidiary of the Issuer so long as all assets of the
Issuer immediately prior to such transaction are owned by such Restricted
Subsidiary immediately after the consummation thereof and (b) the Company may
merge with an Affiliate that is a corporation that has no material assets or
liabilities and which was incorporated solely for the purpose of (A)
reincorporating the Company in the same or another jurisdiction of the United
States, any state thereof or the District of Columbia or (B) the creation of a
holding company of the Company.
EVENTS OF DEFAULT
The following events are defined in the Exchange Indenture as "Events of
Default": (i) the failure to pay interest on any Exchange Debentures when the
same becomes due and payable and the Default continues for a period of 30 days
(whether or not, in the case of the Company Exchange Debentures, such payment
is prohibited by the subordination provisions of the Exchange Indenture); (ii)
the failure to pay the principal, or premium, if any, on any Exchange
Debentures, when such principal becomes due and payable, at maturity, upon
redemption or otherwise (whether or not such payment is prohibited by the
subordination provisions of the Exchange Indenture); (iii) the Issuer fails to
make a Change of Control Offer if such offer is required by the provisions set
forth under "--Change of Control" above or fails to purchase Exchange
Debentures from holders who elect to
97
<PAGE>
have such Exchange Debentures purchased pursuant to the Change of Control
Offer; (iv) a breach or violation of any of the provisions described under the
caption "--Certain Covenants" above occurs and the breach or violation
continues for a period of 60 days after the Issuer receives written notice
thereof specifying the default from the Trustee or holders of at least 25% in
aggregate principal amount of outstanding Exchange Debentures; (v) the Company
fails to pay at the final stated maturity (after giving effect to any
extension thereof) the principal amount of any Indebtedness, or the final
stated maturity of any Indebtedness is accelerated, if the aggregate principal
amount of such Indebtedness, together with the aggregate principal amount of
any other Indebtedness in default for failure to pay principal at the final
stated maturity (after giving effect to any extensions thereof) or which has
been accelerated, aggregates $50 million or more at any time, in each case,
after a 30-day period during which such default shall not have been cured or
such acceleration rescinded; (vi) the Company fails to make any scheduled
payment of principal or interest on any Indebtedness the outstanding principal
amount of which aggregate $50 million or more, after a 180-day period during
which such default shall not have been cured; and (vii) certain events of
bankruptcy, insolvency or reorganization affecting the Issuer or any of its
Significant Restricted Subsidiaries.
Upon the happening of any Event of Default specified in the Exchange
Indenture, the Trustee may, and the Trustee upon the request of 25% in
principal amount of the Exchange Debentures shall or the holders of at least
25% in aggregate principal amount of outstanding Exchange Debentures may,
declare the principal of and accrued but unpaid interest, if any, on all the
Exchange Debentures to be due and payable by notice in writing to the Issuer
and the Trustee specifying the respective Event of Default and that it is a
"notice of acceleration" (the "Acceleration Notice"), and the same (i) shall
become immediately due and payable or (ii) in the case of Company Exchange
Debentures, if there are any amounts outstanding under any of the instruments
constituting Designated Senior Debt, will become due and payable upon the
first to occur of an acceleration under any of the instruments constituting
Designated Senior Debt or five business days after receipt by the Company and
the Representative of such Acceleration Notice (unless all Events of Default
specified in such Acceleration Notice have been cured or waived). If an Event
of Default with respect to bankruptcy proceedings with respect to the Issuer
occurs and is continuing, then such amount will ipso facto become and be
immediately due and payable without any declaration or other act on the part
of the Trustee or any holder of Exchange Debentures.
The Exchange Indenture provides that, at any time after a declaration of
acceleration with respect to the Exchange Debentures as described in the
preceding paragraph, the holders of a majority in principal amount of the
Exchange Debentures then outstanding (by notice to the Trustee) may rescind
and cancel such declaration and its consequences if (i) the rescission would
not conflict with any judgment or decree of a court of competent jurisdiction,
(ii) all existing Events of Default have been cured or waived except
nonpayment of principal or interest on the Exchange Debentures that has become
due solely by such declaration of acceleration, (iii) to the extent the
payment of such interest is lawful, interest (at the same rate specified in
the Exchange Debentures) on overdue installments of interest and overdue
principal which has become due otherwise than by such declaration of
acceleration, has been paid, (iv) the Issuer has paid the Trustee its
reasonable compensation and reimbursed the Trustee for its expenses,
disbursements and advances and (v) in the event of the cure or waiver of a
Default or Event of Default (with respect to the Issuer) of the type described
in clause (vi) of the description above of Events of Default, the Trustee has
received an officers' certificate and an opinion of counsel that such Default
or Event of Default has been cured or waived. The holders of a majority in
principal amount of the Exchange Debentures may waive any existing Default or
Event of Default under the Exchange Indenture, and its consequences, except a
default in the payment of the principal of or interest on any Exchange
Debentures.
The Issuer will deliver to the Trustee, on or before 120 days after the end
of the Issuer's fiscal year a certificate indicating whether the signing
officers know of any Default or Event of Default that occurred during the
previous year and whether the Issuer has complied with its obligations under
the Exchange Indenture. In addition, the Issuer will be required to notify the
Trustee of the occurrence and continuation of any Default or Event of Default
within five business days after the Issuer becomes aware of the same.
Subject to the provisions of the Exchange Indenture relating to the duties
of the Trustee in case an Event of Default thereunder should occur and be
continuing, the Trustee will be under no obligation to exercise any of the
rights or powers under the Exchange Indenture at the request or direction of
any of the holders of the
98
<PAGE>
Exchange Debentures unless such holders have offered to the Trustee reasonable
indemnity or security against any loss, liability or expense. Subject to such
provision for security or indemnification and certain limitations contained in
the Exchange Indenture, the holders of a majority in principal amount of the
outstanding Exchange Debentures have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee.
SATISFACTION AND DISCHARGE OF EXCHANGE INDENTURE; DEFEASANCE
The Exchange Indenture provides the Issuer may elect either (a) to defease
and be discharged from any and all obligations with respect to the Exchange
Debentures (except for the obligations to register the transfer or exchange of
such Exchange Debentures, to replace temporary or mutilated, destroyed, lost
or stolen Exchange Debentures, to maintain an office or agency in respect of
the Exchange Debentures and to hold monies for payment in trust)
("defeasance") or (b) to be released from their obligations with respect to
the Exchange Debentures under certain covenants contained in the Exchange
Indenture and described above under "--Certain
Covenants" ("covenant defeasance"), upon the deposit with the Trustee (or
other qualifying trustee), in trust for such purpose, of money and/or U.S.
government obligations which through the payment of principal and interest in
accordance with their terms will provide money, in an amount sufficient to pay
the principal of, premium, if any, and interest on the Exchange Debentures on
the scheduled due dates therefor or on a selected date of redemption in
accordance with the terms of the Exchange Indenture. Such a trust may only be
established if, among other things, the Issuer had delivered to the Trustee an
opinion of counsel (as specified in the Exchange Indenture) (i) to the effect
that neither the trust nor the Trustee will be required to register as an
investment company under the Investment Company Act of 1940, as amended, and
(ii) to the effect that holders of the Exchange Debentures or persons in their
positions will not recognize income, gain or loss for United States federal
income tax purposes as a result of such deposit, defeasance and discharge and
will be subject to United States federal income tax on the same amount and in
the same amount and in the same manner and at the same times, as would have
been the case if such deposit, defeasance and discharge had not occurred
which, in the case of a defeasance only, must be based upon a private ruling
concerning the Exchange Debentures, a published ruling of the Internal Revenue
Service (the "IRS") or a change in applicable federal income tax law.
REPORTS TO HOLDERS
So long as the Issuer is subject to the periodic reporting requirements of
the Exchange Act, it will continue to file the information required thereby
with the Commission and will furnish such information to holders of the
Exchange Debentures within 15 days of filing thereof with the Commission. The
Exchange Indenture provides that even if the Issuer is not required to file
such information with the Commission, it will nonetheless continue to furnish
such information to holders of the Exchange Debentures within 15 days of the
date on which filing with the Commission would have been required.
MODIFICATION OF THE EXCHANGE INDENTURE
From time to time, the Issuer and the Trustee may, without the consent of
the holders of the Exchange Debentures, amend the Exchange Indenture or the
Exchange Debentures or supplement the Exchange Indenture for certain specified
purposes, including curing any ambiguity, defect or inconsistency or making
any change that does not materially and adversely affect the rights of any of
the holders of Exchange Debentures. The Exchange Indenture contains provisions
permitting the Issuer and the Trustee, with the consent of the holders of a
majority in principal amount of the outstanding Exchange Debentures, to modify
or supplement the Exchange Indenture and the Exchange Debentures except that,
without the consent of each holder of the Exchange Debentures affected
thereby, no such modification shall: (i) reduce the amount of Exchange
Debentures whose holders must consent to an amendment, supplement or waiver to
the Exchange Indenture or the Exchange Debentures; (ii) reduce the rate of or
change the time for payment of, interest on any Exchange Debentures; (iii)
reduce the principal of or premium on or change the stated maturity of any
Exchange Debenture; (iv) make any Exchange Debentures payable in money other
than that stated in the Exchange Debentures or change the place of payment
from New York, New York; (v) change the amount or time of any payment required
by the Exchange
99
<PAGE>
Debentures or reduce the premium payable upon any redemption of Exchange
Debentures or change the time before which no redemption may be made; (vi)
waive a default in the payment of principal or interest on, or redemption
payment with respect to any Exchange Debentures; or (vii) take any other
action otherwise prohibited by the Exchange Indenture to be taken without the
consent of each holder affected thereby. In addition, as long as any shares of
Senior Preferred Stock remain outstanding, the holders of Senior Preferred
Stock will have the right to vote together with holders of Exchange Debentures
with respect to amendments and modifications to the Exchange Indenture.
The consent of holders of Exchange Debentures is not necessary to approve
the particular form of any proposed amendment. It is sufficient if such
consent approves the substance of the proposed amendment.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Certificate of Designation and the Exchange Indenture. Reference is made to
the Certificate of Designation and the Exchange Indenture for the full
definition of all such terms, as well as any other terms used herein for which
no definition is provided.
"Acquired Indebtedness" means Indebtedness of a Person (including an
Unrestricted Subsidiary) existing at the time such Person becomes a Restricted
Subsidiary or assumed in connection with the acquisition of assets from such
Person.
"Affiliate" means, of any Person, a Person who, directly or indirectly,
through one or more intermediaries controls, or is controlled by, or is under
common control with, such other Person. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise; provided, however,
that the ownership of at least 10% of the voting power of the Common Stock of
a Person, either directly or indirectly, shall be deemed control.
"Asset Sale" means the sale, transfer or other disposition (other than to
the Issuer or any of its Restricted Subsidiaries) in any single transaction or
series of related transactions involving assets with a fair market value in
excess of $1 million of (a) any Capital Stock of or other equity interest in
any Restricted Subsidiary of the Issuer other than in a transaction where the
Issuer or such Restricted Subsidiary receives therefor one or more properties
with a fair market value equal to the fair market value of the Capital Stock
issued, transferred or disposed of by the Issuer or the Restricted Subsidiary
(with such fair market values being determined by the Board of Directors of
the Issuer), (b) all or substantially all of the assets of the Issuer or of
any Restricted Subsidiary thereof, (c) real property or (d) all or
substantially all of the assets of any division, line of business or
comparable business segment of the Issuer or any Restricted Subsidiary
thereof; provided that Asset Sales shall not include (x) sales, leases,
conveyances, transfers or other dispositions to the Issuer or to a Restricted
Subsidiary or to any other Person if after giving effect to such sale, lease,
conveyance, transfer or other disposition such other Person becomes a
Restricted Subsidiary, or (y) the sale of all or substantially all of the
assets of the Issuer or a Restricted Subsidiary in a transaction complying
with the "Merger, Consolidation and Sale of Assets" covenant, in which case
only the assets not so sold shall be deemed an Asset Sale, or (z) any sale,
issuance or other disposition of Capital Stock of any Joint Venture
Subsidiary.
"Board of Directors", "Board of Directors of the Company" or "Board of
Directors of the Issuer" means the Board of Directors of the Company or of the
Issuer, as the context requires, or any duly authorized committee thereof (a
"Board Committee"); provided that the term "Board of Directors" as used in the
definition of "Change of Control" and as used under "--The Senior Preferred
Stock--Voting Rights" shall not include any Board Committee.
"Capital Stock" means (i) with respect to any Person that is a corporation,
any and all shares, interests, participations or other equivalents (however
designated) of capital stock, including each class of Common Stock and
Preferred Stock of such Person and warrants or options to purchase any of the
foregoing and (ii) with respect to any Person that is not a corporation, any
and all partnership or other equity interests of such Person.
100
<PAGE>
"Capitalized Lease Obligation" means, as to any Person, the obligation of
such Person to pay rent or other amounts under a lease to which such Person is
a party that is required to be classified and accounted for as capital lease
obligations under GAAP and, for purposes of this definition, the amount of
such obligations at any date shall be the capitalized amount of such
obligations at such date, determined in accordance with GAAP.
"Cash Equivalents" means (i) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States,
in each case maturing within one year from the date of acquisition thereof;
(ii) marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either Standard & Poor's Corporation ("S&P") or Moody's
Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no more
than one year from the date of creation thereof and, at the time of
acquisition, having a rating of at least A-1 from S&P or at least P-1 from
Moody's; (iv) certificates of deposit or bankers' acceptances maturing within
one year from the date of acquisition thereof issued by any commercial bank
organized under the laws of the United States of America or any state thereof
or the District of Columbia or any U.S. branch of a foreign bank having at the
date of acquisition thereof combined capital and surplus of not less than $250
million; (v) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clause (i) above entered
into with any bank meeting the qualifications specified in clause (iv) above;
and (vi) investments in money market funds which invest substantially all
their assets in securities of the types described in clauses (i) through (v)
above.
A "Change of Control" of the Issuer will be deemed to have occurred at such
time as (i) any Person (including a Person's Affiliates), other than a
Permitted Holder, becomes the beneficial owner (as defined under Rule 13d-3 or
any successor rule or regulation promulgated under the Exchange Act) of 50% or
more of the total voting power of the Issuer's Common Stock unless, as a
result of such transaction, the ultimate direct or indirect ownership of the
Issuer is substantially the same immediately after such transaction as it was
immediately prior to such transaction, (ii) any Person (including a Person's
Affiliates), other than a Permitted Holder, becomes the beneficial owner of
more than 35% of the total voting power of the Issuer's Common Stock, and the
Permitted Holders beneficially own, in the aggregate, a lesser percentage of
the total voting power of the Common Stock of the Issuer than such other
Person and do not have the right or ability by voting power, contract or
otherwise to elect or designate for election a majority of the Board of
Directors of the Issuer, (iii) there shall be consummated any consolidation or
merger of the Issuer in which the Issuer is not the continuing or surviving
corporation or pursuant to which the Common Stock of the Issuer would be
converted into cash, securities or other property, other than a merger or
consolidation of the Issuer in which the holders of the Common Stock of the
Issuer outstanding immediately prior to the consolidation or merger hold,
directly or indirectly, at least a majority of the voting power of the Common
Stock of the surviving corporation immediately after such consolidation or
merger or (iv) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors of the Issuer
(together with any new directors whose election by such Board of Directors or
whose nomination for election by the shareholders of the Issuer has been
approved by a majority of the directors then still in office who either were
directors at the beginning of such period or whose election or recommendation
for election was previously so approved) cease to constitute a majority of the
Board of Directors of the Issuer.
"Common Stock" of any Person means any and all shares, interests or other
participations in, and other equivalents (however designated and whether
voting or non-voting) of, such Person's Common Stock, whether outstanding on
the Issue Date or issued after the Issue Date, and includes, without
limitation, all series and classes of such Common Stock.
"Company Exchange Debentures" means the 13 7/8% Junior Subordinated
Debentures due 2010 issuable by the Company in exchange for the Senior
Preferred Stock in accordance with the Certificate of Designation with respect
to the Senior Preferred Stock and pursuant to the Exchange Indenture,
including additional Company Exchange Debentures issued as interest on
outstanding Company Exchange Debentures pursuant to the Exchange Indenture.
101
<PAGE>
"Consolidated EBITDA" means, for any Person and its Restricted Subsidiaries,
for any period, an amount equal to (a) the sum of Consolidated Net Income for
such period, plus, to the extent deducted from the revenues of such Person and
its Restricted Subsidiaries in determining Consolidated Net Income, (i) the
provision for taxes for such period based on income or profits and any
provision for taxes utilized in computing a loss in Consolidated Net Income
above, plus (ii) Consolidated Interest Expense (including, for this purpose,
dividends on the Senior Preferred Stock and any Redeemable Dividends in each
case only to the extent that such dividends were deducted in determining
Consolidated Net Income), plus (iii) Consolidated Non-Cash Charges, plus
(iv) without duplication, charges attributable to the exercise or adjustment
of employee options and fees and expenses, in each case, incurred in
connection with the Recapitalization or the transactions described under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Recent Events and Proposed Recapitalization" plus (v) without
duplication, for any four quarter period that includes one or more fiscal
quarters of fiscal 1998 or the first two fiscal quarters of fiscal 1999,
restructuring charges, in an aggregate amount not to exceed $12 million, but
only to the extent actually incurred during each such applicable quarter and
minus (vi) without duplication, the amount of all cash payments made by such
Person or any of its Restricted Subsidiaries during such period to the extent
such payments relate to Consolidated Non-Cash Charges that were added back in
determining Consolidated EBITDA for such period or any prior period, all as
determined on a consolidated basis for such Person and its Restricted
Subsidiaries in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" on any date of determination (the
"Transaction Date") means, with respect to any Person, the ratio of (i) the
aggregate amount of Consolidated EBITDA of such Person for the Reference
Period to (ii) the aggregate amount of Consolidated Fixed Charges of such
Person during the Reference Period; provided, that for purposes of such
computation, in calculating Consolidated EBITDA and Consolidated Fixed
Charges, (a) the transaction giving rise to the need to calculate the
Consolidated Fixed Charge Coverage Ratio will be assumed to have occurred (on
a pro forma basis) on the first day of the Reference Period; (b) the
incurrence of any Indebtedness (other than Indebtedness incurred under any
revolving credit or similar facility to the extent that the proceeds were used
to finance working capital requirements in the ordinary course of business) or
the issuance of any Disqualified Capital Stock or Preferred Stock during the
Reference Period or subsequent thereto and on or prior to the Transaction Date
(and the application of the proceeds therefrom (other than a repayment of
Indebtedness outstanding under a revolving credit or similar facility to the
extent that the proceeds were used to finance working capital requirements in
the ordinary course of business) to the extent used to retire Indebtedness or
Preferred Stock) will be assumed to have occurred (on a pro forma basis) on
the first day of such Reference Period; (c) Consolidated Interest Expense
attributable to any Indebtedness (whether existing or being incurred) bearing
a floating interest rate shall be computed as if the rate in effect on the
Transaction Date had been the applicable rate for the entire period, unless
such Person or any of its Subsidiaries is a party to an Interest Rate
Agreement (which shall remain in effect for the 12-month period after the
Transaction Date) that has the effect of fixing the interest rate on the date
of computation, in which case such rate (whether higher or lower) shall be
used; (d) the repayment of any Indebtedness (other than under a revolving
credit or similar facility to the extent that the proceeds were used to
finance working capital requirements in the ordinary course of business),
Disqualified Capital Stock or Preferred Stock during the Reference Period or
subsequent thereto and on or prior to the Transaction Date with the proceeds
of any sale or other disposition of assets or properties referred to in clause
(f) below will be assumed to have occurred (on a pro forma basis) on the first
day of the Reference Period; (e) the acquisition during the Reference Period
or subsequent thereto and on or prior to the Transaction Date of any other
Person which, as a result of such acquisition, becomes a Subsidiary, will be
assumed to have occurred (on a pro forma basis) on the first day of the
Reference Period; and (f) any sale or other disposition of assets or
properties constituting an existing business (whether existing as a separate
entity, subsidiary, division, unit or otherwise) outside the ordinary course
of business occurring during the Reference Period or subsequent thereto and on
or prior to the Transaction Date will be assumed to have occurred (on a pro
forma basis) on the first day of the Reference Period.
"Consolidated Fixed Charges" of any Person for any period means (without
duplication) the sum of (i) Consolidated Interest Expense of such Person for
such period (excluding amortization or write-off of deferred financing fees
and expenses) and (ii) without duplication, Redeemable Dividends of such
Person and its
102
<PAGE>
Restricted Subsidiaries (whether in cash or otherwise (except dividends
payable solely in shares of Qualified Capital Stock)) with respect to
Disqualified Capital Stock and Preferred Stock accrued during such period in
accordance with GAAP (but in the case of such Preferred Stock, only to the
extent that the aggregate amount of dividends paid or accrued from and after
the Issue Date exceeds the aggregate net cash proceeds to such Person from the
issuance and sale of such Preferred Stock), in each case excluding items
eliminated in consolidation of such Person and its Restricted Subsidiaries;
provided, that dividends accrued or paid on the Senior Preferred Stock shall
not be included in the calculation of Consolidated Fixed Charges.
"Consolidated Interest Expense" means, with respect to any Person, for any
period, the aggregate amount of interest which, in conformity with GAAP, would
be set forth opposite the caption "interest expense" or any like caption on an
income statement for such Person and its Restricted Subsidiaries on a
consolidated basis, including, but not limited to, Redeemable Dividends,
whether paid or accrued, on Restricted Subsidiary Preferred Stock, imputed
interest included in Capitalized Lease Obligations, all commissions, discounts
and other fees and charges owed with respect to letters of credit and bankers'
acceptance financing, the net costs associated with
hedging obligations, amortization of other financing fees and expenses, the
interest portion of any deferred payment obligation, amortization of discount
or premium, if any, and all other non-cash interest expense (other than
interest amortized to cost of sales) plus, without duplication, all net
capitalized interest for such period and all interest incurred or paid under
any guarantee of Indebtedness (including a guarantee of principal, interest or
any combination thereof) of any Person, plus the amount of all dividends or
distributions paid on Disqualified Capital Stock (other than dividends paid or
payable in shares of Capital Stock of the Issuer), minus interest income for
such period.
"Consolidated Net Income" means, with respect to any Person, for any period,
the aggregate of the net income (or loss) of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP; provided, however, that (a) the net income of any Person
including of any Emerging Market Subsidiary or Unrestricted Subsidiary (each,
an "Other Person") in which the Person in question or any of its Restricted
Subsidiaries has less than a 100% interest (which interest does not cause the
net income of such Other Person to be consolidated into the net income of the
Person in question in accordance with GAAP) shall be included only to the
extent of the amount of dividends or distributions paid to the Person in
question or to any of its Restricted Subsidiaries, (b) the net income of any
Restricted Subsidiary of the Person in question that is subject to any
restriction or limitation on the payment of dividends or the making of other
distributions (other than pursuant to the Exchange Debentures) shall be
excluded to the extent of such restriction or limitation, (c) (i) 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 (ii) any
net gain or net loss resulting from an Asset Sale by the Person in question or
any of its Restricted Subsidiaries other than in the ordinary course of
business shall be excluded, (d) extraordinary, unusual or non-recurring gains
and losses shall be excluded and (e) gains and losses associated with
discontinued and terminated operations shall be excluded.
"Consolidated Non-Cash Charges" means, with respect to any Person for any
period, the aggregate depreciation, amortization and other non-cash items
(which do not reflect an accrual of a cash expense which may be incurred in
the future) of such Person and its Restricted Subsidiaries reducing
Consolidated Net Income of such Person and its Restricted Subsidiaries less
any such non-cash items increasing Consolidated Net Income of such Person and
its Restricted Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP.
"Credit Agreement" means (i) one or more credit agreements, loan agreements
or similar agreements providing for working capital advances, term loans,
letter of credit facilities or similar advances, loans or facilities to the
Company, any Subsidiaries, domestic or foreign, or any or all of such Persons,
including the Credit Agreement, dated on or as in effect on or about the Issue
Date, among the Company and Samsonite Europe N.V., as borrowers, Bank of
America National Trust and Savings Association and BankBoston, N.A., and
certain other lenders party thereto from time to time, as the same may be
amended, modified, restated or supplemented from time to time and (ii) any one
or more agreements governing advances, loans or facilities provided to refund,
refinance, replace or renew (including subsequent or successive refunding,
refinancing,
103
<PAGE>
replacements and renewals) Indebtedness under the agreement or agreements
referred to in the foregoing clause (i), as the same may be amended, modified,
restated or supplemented from time to time.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement designed to address fluctuations in
currency values.
"Default" means an event or condition the occurrence of which is, or with
the lapse of time or the giving of notice or both would be, an Event of
Default.
"Designated Senior Debt" means (i) Indebtedness under the Original Credit
Agreement (and any guarantees thereof), and (ii) any other Indebtedness
constituting Senior Debt which, at the time of determination, has an aggregate
principal amount of at least $25 million (or accreted value of at least such
amount in the case of Indebtedness issued at a discount) and is specifically
designated as "Designated Senior Debt" by the Company and, so long as the
Original Credit Agreement is in effect, by the representative under the
Original Credit Agreement, and certified as such in an officers' certificate
delivered to the Trustee.
"Disqualified Capital 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 (excluding any
maturity as the result of an optional redemption by the issuer thereof) or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the sole option of the holder thereof, in whole or in part,
on or prior to (i) the mandatory redemption date of the Senior Preferred
Stock, in the case of the Senior Preferred Stock or (ii) the final maturity
date of the Exchange Debentures, in the case of the Exchange Debentures.
Without limitation of the foregoing, Disqualified Capital Stock shall be
deemed to include (i) any Preferred Stock of a Restricted Subsidiary of the
Issuer, (ii) any Preferred Stock of the Issuer, with respect to either of
which, under the terms of such Preferred Stock, by agreement or otherwise,
such Restricted Subsidiary of the Issuer is obligated to pay current dividends
or distributions in cash during the period prior to the redemption date of the
Senior Preferred Stock or the maturity date of the Exchange Debentures, as the
case may be, and (iii) as long as the Senior Preferred Stock remains
outstanding, Senior Securities and Parity Securities; provided, however, that
Preferred Stock of the Issuer or any Restricted Subsidiary thereof that is
issued with the benefit of provisions requiring a change of control offer to
be made for such Preferred Stock in the event of a change of control of the
Issuer or Restricted Subsidiary, which provisions have substantially the same
effect as the provisions of the Certificate of Designation and Exchange
Indenture, as the case may be, described under "--Change of Control," shall
not be deemed to be Disqualified Capital Stock solely by virtue of such
provisions; and provided, further, that the Senior Preferred Stock shall not
be considered Disqualified Capital Stock.
"Emerging Market Subsidiary" means (i) any Initial Emerging Market
Subsidiary, (ii) any majority-owned Subsidiary of the Company the principal
operations of which are not located in the United States, Canada, Western
Europe or Japan that, at the time of determination, shall be an Emerging
Market Subsidiary (as designated by the Board of Directors of the Company, as
provided below) and (iii) any majority-owned Subsidiary of an Emerging Market
Subsidiary. The Board of Directors of the Company may designate (1) any
Unrestricted Subsidiary of the Company to be an Emerging Market Subsidiary,
and (2) any Restricted Subsidiary of the Company (including any newly acquired
or newly formed Subsidiary at or prior to the time it is so formed or
acquired) to be an Emerging Market Subsidiary if it meets the geographic test
set forth above and (a) no Voting Rights Triggering Event in the case of the
Senior Preferred Stock and Default or Event of Default in the case of the
Exchange Debentures is existing or will occur as a consequence thereof, (b)
with respect to previously existing Restricted Subsidiaries, immediately after
giving effect to such designation, on a pro forma basis, the Issuer could
incur at least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) pursuant to the covenant described under "--Certain Covenants--
Limitation on Incurrence of Additional Indebtedness" and (c) such Restricted
Subsidiary does not own any Capital Stock of, or own or hold any Lien on any
property of, the Issuer or any Restricted Subsidiary that is not a Subsidiary
of the Restricted Subsidiary to be so designated. At the time that a
previously existing Restricted Subsidiary of the Company is designated an
Emerging Market Subsidiary, the Company shall be deemed to make an
"Investment" in such Emerging Market Subsidiary in an
104
<PAGE>
amount equal to its Pro Rata Interest in the fair market value of the net
assets of such Restricted Subsidiary. A Restricted Subsidiary of the Company
shall not be considered to be a "previously existing Restricted Subsidiary"
for purposes of this definition if such Restricted Subsidiary is designated to
be an Emerging Market Subsidiary at or prior to the time of the formation of
such Restricted Subsidiary or at or prior to the time such Restricted
Subsidiary is acquired by the Company. The Board of Directors of the Company
may designate any Emerging Market Subsidiary to be a Restricted Subsidiary,
provided that (i) no Voting Rights Triggering Event in the case of the Senior
Preferred Stock and Default or Event of Default in the case of the Exchange
Debentures is existing or will occur as a consequence thereof and (ii) either
(x) immediately after giving effect to such designation, on a pro forma basis,
the Issuer could incur at least $1.00 of additional Indebtedness (other than
Permitted Indebtedness) pursuant to the covenant described under "--Certain
Covenants--Limitation on Incurrence of Additional Indebtedness" or (y) the
Consolidated Fixed Charge Coverage Ratio of the Issuer immediately after
giving effect to such designation, on a pro forma basis, exceeds the
Consolidated Fixed Charge Coverage Ratio of the Company immediately prior (and
without giving effect) to such designation. In the case
of the Exchange Debentures, each such designation shall be evidenced by the
filing with the Trustee of a certified copy of the resolution giving effect to
such designation and an officers' certificate certifying that such designation
complied with the foregoing conditions.
"Equity Offering" means a sale by the Issuer of shares of its Qualified
Capital Stock.
"Exchange Date" means the date of original issuance of the Exchange
Debentures.
"Exchange Debentures" means either the Company Exchange Debentures or the
Holdings Exchange Debentures, as applicable.
"Exchange Indenture" means the Indenture dated as of June 24 , 1998 between
the Company, in the case of Exchange Debentures issued by the Company, or
Holdings, and, in either case, United States Trust Company of New York, as
trustee, governing the Exchange Debentures.
"Foreign Credit Agreement" means one or more Credit Agreements among one or
more Foreign Restricted Subsidiaries and the lenders party thereto.
"Foreign Restricted Subsidiary" means a Restricted Subsidiary of the Company
that is incorporated or otherwise organized in a jurisdiction other than the
United States, any state thereof or the District of Columbia.
"GAAP" means generally accepted accounting principles consistently applied
as in effect in the United States from time to time.
"Holdings" means a corporation organized and existing under the laws of the
United States, any state thereof or the District of Columbia, which is
organized after June 24, 1998, and of which the capital stock of the Company
is its sole material asset and which immediately prior to and at the time of
the Exchange Date has no material liabilities other than the Holdings Exchange
Debentures.
"Holdings Exchange Debentures" mean the 13 7/8% Senior Debentures due 2010
issuable by Holdings in exchange for the Senior Preferred Stock in accordance
with the Certificate of Designation with respect to the Senior Preferred Stock
and pursuant to the Exchange Indenture, including additional Holdings Exchange
Debentures issued as interest on outstanding Holdings Exchange Debentures
pursuant to the Exchange Indenture.
"incur" means, with respect to any Indebtedness or other obligation of any
Person, to create, issue, incur (by conversion, exchange or otherwise),
assume, guarantee or otherwise become liable in respect of such Indebtedness
or other obligation or the recording, as required pursuant to GAAP or
otherwise, of any such Indebtedness or other obligation on the balance sheet
of such Person (and "incurrence," "incurred," "incurrable" and "incurring"
shall 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 shall not be deemed an incurrence of such Indebtedness;
provided, further, that the amortization of original issue discount on
105
<PAGE>
Indebtedness issued with original issue discount or the accumulation of
distributions on Disqualified Capital Stock shall not be deemed an incurrence
of Indebtedness.
"Indebtedness" means (without duplication), with respect to any Person, any
indebtedness at any time outstanding, secured or unsecured, contingent or
otherwise, which is for borrowed money (whether or not the recourse of the
lender is to the whole of the assets of such Person or only to a portion
thereof) or evidenced by bonds, notes, debentures or similar instruments or
representing the balance deferred and unpaid of the purchase price of any
property (excluding, without limitation, any balances that constitute accounts
payable or trade payables and other accrued liabilities or accrued expenses
arising in the ordinary course of business) if and to the extent any of the
foregoing indebtedness would appear as a liability upon a balance sheet of
such Person prepared in accordance with GAAP, and shall also include, to the
extent not otherwise included, (i) any Capitalized Lease Obligations, (ii)
obligations secured by a Lien to which the property or assets owned or held by
such Person are subject, whether or not the obligation or obligations secured
thereby shall have been assumed (provided, however, that if such obligation or
obligations shall not have been assumed, the amount of such Indebtedness shall
be deemed to be the lesser of the principal amount of the obligation or the
fair market value of the pledged property or assets) other than a Lien
securing an obligation which is not Indebtedness, (iii) guarantees of items of
other Persons which would be included within this definition for such other
Persons (whether or not such items would appear upon the balance sheet of the
guarantor), (iv) all obligations for the reimbursement of any obligor on any
letter of credit, banker's acceptance or similar credit transaction, (v)
Disqualified Capital Stock of the Company or any Restricted Subsidiary thereof
and, in the case of Holdings,
any Preferred Stock of the Company and (vi) obligations of any such Person
under any Interest Rate Agreement or Currency Agreement applicable to any of
the foregoing (if and to the extent such Interest Rate Agreement or Currency
Agreement obligations would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP). The amount of Indebtedness of any
Person at any date shall be the outstanding balance at such date of all
unconditional obligations as described above and, with respect to contingent
obligations, the maximum liability upon the occurrence of the contingency
giving rise to the obligation, provided that (i) the amount outstanding at any
time of any Indebtedness issued with original issue discount is the principal
amount of such Indebtedness less the remaining unamortized portion of the
original issue discount of such Indebtedness at such time as determined in
conformity with GAAP and (ii) Indebtedness shall not include any liability for
federal, state, local or other taxes. Notwithstanding any other provision of
the foregoing definition, any trade payable arising from the purchase of goods
or materials or for services obtained in the ordinary course of business or
contingent obligations arising out of customary indemnification agreements
with respect to the sale of assets or securities shall not be deemed to be
"Indebtedness" of the Issuer or any Restricted Subsidiaries for purposes of
this definition. Furthermore, guarantees of (or obligations with respect to
letters of credit supporting) Indebtedness otherwise included in the
determination of such amount shall not also be included.
"Initial Emerging Market Subsidiary" means each of (i) Chia Tai Samsonite
(H.K.) Limited, (ii) Ningbo Chia Tai Samsonite Luggage Co. Ltd., (iii)
Samsonite Argentina S.A., (iv) Samsonite Brasil Ltda., (v) Samsonite India
Limited, (vi) Samsonite Korea Limited, (vii) Samsonite Mercosur Limited,
(viii) Samsonite Mauritius Limited, and (ix) Samsonite Singapore Limited.
"Interest Rate Agreement" means, for any Person, any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or
other similar agreement.
"Investment" by any Person in any other Person means, directly or
indirectly, any advance, account receivable (other than an account receivable
arising in the ordinary course of business), loan or capital contribution to
(by means of transfers of property to others, payments for property or
services for the account or use of others or otherwise), the purchase of any
stocks, bonds, notes, debentures, partnership or joint venture interests or
other securities of, the acquisition, by purchase or otherwise, of all or
substantially all of the business or assets or stock or other evidence of
beneficial ownership of, such other Person or the making of any investment by
such Person in any other Person. Investments shall exclude extensions of trade
credit on commercially reasonable terms in accordance with normal trade
practices and repurchases or redemptions of the
106
<PAGE>
Notes, the Company Exchange Debentures or the Senior Preferred Stock by the
Company or the Holdings Exchange Debentures by Holdings or any other security
or evidence of Indebtedness issued by the Company or Holdings, respectively.
Notwithstanding the foregoing, the following shall not be considered
Investments by a Person in any other Person: (i) trade receivables and prepaid
expenses, in each case arising in the ordinary course of business; provided,
that such receivables and prepaid expenses would be recorded as assets of such
Person in accordance with GAAP, (ii) Investments received in connection with
the bankruptcy or reorganization of suppliers and customers or in good faith
bona fide settlement of delinquent ordinary course of business trade
receivables of customers, (iii) endorsements for collection or deposit in the
ordinary course of business by such Person of bank drafts and similar
negotiable instruments of such other Person received as payment for ordinary
course of business trade receivables, (iv) an Interest Rate Agreement or
Currency Agreement with an unaffiliated Person provided that such agreements
comply with the requirements of clause (iv) of the definition of Permitted
Indebtedness, (v) Investments received as consideration for, or customary
indemnities given in connection with, an Asset Sale, and (vi) Investments for
which the sole consideration provided is Qualified Capital Stock. The Issuer
shall be deemed to make an "Investment" in an amount equal to its Pro Rata
Interest in the fair market value of the net assets of any previously existing
Restricted Subsidiary, at the time that such Restricted Subsidiary is
designated an Unrestricted Subsidiary or an Emerging Market Subsidiary, as the
case may be; and any property transferred, directly or indirectly (whether by
merger or otherwise) to an Unrestricted Subsidiary or an Emerging Market
Subsidiary, as the case may be, from the Company or a Restricted Subsidiary
after the time of such designation shall be deemed an Investment valued at its
fair market value at the time of such transfer. A Restricted Subsidiary of the
Company shall not be considered to be a "previously existing Restricted
Subsidiary" for purposes of this definition if such Restricted Subsidiary is
designated to be an Emerging Market Subsidiary or an Unrestricted Subsidiary,
as the case may be, at or prior to the time of the formation of such
Restricted Subsidiary or at or prior to the time such Restricted Subsidiary is
acquired by the Company.
"Issuer" means (i) the Company in the case of Senior Preferred Stock or the
Company Exchange Debentures and (ii) Holdings, in the case of the Holdings
Exchange Debentures.
"Joint Venture Subsidiary" means a Restricted Subsidiary of the Company in
which one or more Persons who have provided or are providing operating assets
or services to such Restricted Subsidiary beneficially own not less than 50%
of the Capital Stock of such Restricted Subsidiary not owned by the Company or
a Restricted Subsidiary of the Company.
"Lien" means any consensual lien, mortgage, deed of trust, pledge, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof and any
agreement to give any security interest).
"Net Proceeds" means (a) in the case of any sale of Capital Stock by the
Issuer, the aggregate net proceeds received by the Issuer, after payment of
expenses, commissions and the like incurred in connection therewith, whether
such proceeds are in cash or in property (valued at the fair market value
thereof, as determined in good faith by the Board of Directors, at the time of
receipt) and (b) in the case of any exchange, exercise, conversion or
surrender of outstanding securities of any kind for or into shares of
Qualified Capital Stock of the Issuer, the net book value of such outstanding
securities on the date of such exchange, exercise, conversion or surrender
(plus any additional amount required to be paid by the holder to the Issuer
upon such exchange, exercise, conversion or surrender, less any and all
payments made to the holders, e.g., on account of fractional shares and less
all expenses incurred by the Issuer in connection therewith).
"Non-Payment Event of Default" means any event (other than a Payment
Default) the occurrence of which entitles one or more Persons to accelerate
the maturity of any Designated Senior Debt.
"Notes" means the 10 3/4% Senior Subordinated Notes due 2008 offered
concurrently with the Senior Preferred Stock pursuant to an indenture dated as
of June 24, 1998 between the Company and United States Trust Company of New
York, as trustee.
107
<PAGE>
"Notes Indenture" means the indenture governing the Notes.
"Obligations" means all obligations for principal, premium, interest
(including post-petition interest and, in the case of Exchange Debentures, any
additional interest or liquidated damages from time to time payable pursuant
to the Registration Rights Agreement), penalties, fees, costs,
indemnifications, reimbursements, repurchase, redemption, retirement or
defeasance obligations, damages and other liabilities and obligations payable
under the documentation governing, or otherwise relating to, any Indebtedness.
"Original Credit Agreement" means the referenced Credit Agreement described
in clause (i) of the definition of Credit Agreement dated on or as in effect
on or about the Issue Date, as the same may be amended, modified, restated or
supplemented from time to time, and any one replacement agreement or facility
existing at any time provided to refund, refinance, replace or renew
(including subsequent or successive refundings, refinancings, replacements and
renewals) the Original Credit Agreement; such replacement agreement or
facility to be designated by the Company and certified in an officers'
certificate delivered to the Trustee.
"Pari Passu Debt" means any Indebtedness (secured or unsecured) of the
Issuer that ranks pari passu in right of payment with the Exchange Debentures.
"Payment Default" means any default, whether or not any requirement for the
giving of notice, the lapse of time or both, or any other condition to such
default becoming an event of default has occurred, in the payment of principal
of (or premium, if any) or interest on or any other amount payable in
connection with Designated Senior Debt.
"Permitted Holders" mean Apollo Advisors, L.P. and any Affiliate thereof.
"Permitted Indebtedness" means, without duplication, each of the following:
(i) Indebtedness under the Exchange Debentures and the Exchange
Indenture, including any Exchange Debentures issued in accordance with the
Exchange Indenture as payment of interest on the Exchange Debentures;
(ii) Indebtedness incurred pursuant to any Credit Agreement (and the
guarantees thereof) in an aggregate principal amount at any time
outstanding not to exceed $260 million;
(iii) all other Indebtedness of the Issuer and its Restricted
Subsidiaries outstanding on the Issue Date, including under the Notes and
the Notes Indenture;
(iv) (a) Obligations under Interest Rate Agreements of the Company
covering Indebtedness of the Company or any of its Restricted Subsidiaries;
provided, however, that such Interest Rate Agreements are entered into to
protect the Company and its Restricted Subsidiaries from fluctuations in
interest rates on Indebtedness incurred in accordance with the Certificate
of Designation or the Exchange Indenture and not for speculative purposes
to the extent the notional principal amount of such Interest Rate Agreement
does not exceed the principal amount of the Indebtedness to which such
Interest Rate Agreement relates and (b) Indebtedness under Currency
Agreements incurred by the Company in the ordinary course of business to
the extent that such obligations have been entered into to protect against
fluctuations in currency exchange rates and not for speculative purposes;
provided, that in the case of Currency Agreements which relate to
Indebtedness, such Currency Agreements do not increase the Indebtedness of
the Company and the Restricted Subsidiaries outstanding other than as a
result of fluctuations in foreign currency exchange rates or by reason of
fees, indemnities and compensation payable thereunder;
(v) Indebtedness of a Restricted Subsidiary of the Issuer to the Issuer
or to a Restricted Subsidiary of the Issuer for so long as such
Indebtedness is held by the Issuer or a Restricted Subsidiary of the
Issuer, in each case with no Lien securing such Indebtedness held by a
Person other than the Issuer or a Restricted Subsidiary of the Issuer;
provided that if as of any date any Person other than the Issuer or a
Restricted
108
<PAGE>
Subsidiary of the Issuer owns or holds any such Indebtedness or holds a
Lien securing any such Indebtedness, such date shall be deemed the
incurrence of Indebtedness not constituting Permitted Indebtedness under
this clause (v);
(vi) Indebtedness of the Issuer to a Restricted Subsidiary of the Issuer
for so long as such Indebtedness is held by a Restricted Subsidiary of the
Issuer, in each case with no Lien securing such Indebtedness; provided that
(a) any Indebtedness of the Issuer to any Restricted Subsidiary of the
Issuer is subordinated, pursuant to a written agreement, to the Issuer's
Obligations under the Exchange Indenture and the Exchange Debentures and
(b) if as of any date any Person other than a Restricted Subsidiary of the
Issuer owns or holds any such Indebtedness or any Person holds a Lien
securing any such Indebtedness, such date shall be deemed the incurrence of
Indebtedness not constituting Permitted Indebtedness under this clause
(vi);
(vii) Purchase Money Indebtedness and Capitalized Lease Obligations
incurred to acquire property in the ordinary course of business which
Indebtedness and Capitalized Lease Obligations do not in the aggregate
exceed $15 million;
(viii) Acquired Indebtedness of any Restricted Subsidiaries, provided
that such Indebtedness was not incurred by a Person in connection with, or
in anticipation or contemplation of, such Person becoming a Restricted
Subsidiary of the Issuer and provided further that after giving effect to
such incurrence or assumption of such Acquired Indebtedness the
Consolidated Fixed Charge Ratio of the Issuer and its Restricted
Subsidiaries, taken as whole, and the Restricted Subsidiary making such
acquisition independently, are at least equal to 1.75:1 as calculated in
accordance with the covenant described under "--Certain Covenants--
Limitation on Incurrence of Additional Indebtedness";
(ix) Refinancing Indebtedness;
(x) Indebtedness solely in respect of performance bonds, surety
agreements, documentary letters of credit used for payment of goods
consistent with past practice, or other guarantees of performance (in each
case other than an obligation for the payment of borrowed money) incurred
in the ordinary course of business;
(xi) additional Indebtedness of the Issuer or any Restricted Subsidiary
in an aggregate principal amount not to exceed $100 million at any one time
outstanding; and
(xii) Indebtedness incurred pursuant to any Foreign Credit Agreement in
an aggregate principal amount at any time not to exceed $35 million (and
any guarantees thereof).
"Permitted Investments" means, for any Person, Investments made on or after
the Issue Date consisting of:
(i) Investments by the Issuer, or by a Restricted Subsidiary thereof, in
the Issuer or a Restricted Subsidiary thereof;
(ii) Cash Equivalents;
(iii) Investments by the Issuer, or by a Restricted Subsidiary thereof,
in a Person (or in all or substantially all of the business or assets of a
Person) if as a result of such Investment (a) such Person becomes a
Restricted Subsidiary of the Issuer, (b) 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 Issuer or a
Restricted Subsidiary thereof or (c) such business or assets are owned by
the Issuer or a Restricted Subsidiary;
(iv) Investments by the Company or any of its Restricted Subsidiaries in
Emerging Market Subsidiaries in the aggregate amount after the Issue Date
not to exceed $50 million;
109
<PAGE>
(v) reasonable and customary loans made to employees not to exceed
$500,000 to any employee, and not to exceed $5 million in the aggregate at
any one time outstanding;
(vi) an Investment that is made by the Issuer or a Restricted Subsidiary
thereof in the form of any stock, bonds, notes, debentures, partnership or
joint venture interests or other securities that are issued by a third
party to the Issuer or a Restricted Subsidiary solely as partial
consideration for the consummation of an Asset Sale;
(vii) accounts receivable of the Issuer and its Restricted Subsidiaries
generated in the ordinary course of business;
(viii) investments deemed to have been made as a result of the
acquisition of a Person that at the time of such acquisition held
instruments constituting Investments that were not acquired in
contemplation of the acquisition of such Person; and
(ix) additional Investments of the Issuer and its Restricted Subsidiaries
from time to time of an amount not to exceed $10 million.
Notwithstanding the foregoing, amounts available for Investments under
clauses (iv) and (ix) shall be increased by the aggregate amount of Returned
Investments received by the Issuer on or before the date of such Investment.
"Person" means an individual, partnership, corporation, unincorporated
organization, joint stock company, limited liability company, trust or joint
venture, or a governmental agency or political subdivision thereof.
"Plan" means any employee benefit plan, retirement plan, deferred
compensation plan, restricted stock plan, health, life, disability or other
insurance plan or program, employee stock purchase plan, employee stock
ownership plan, pension plan, stock option plan or similar plan or arrangement
of the Issuer or any Restricted Subsidiary of the Issuer, or any successor
plan thereof, and "Plans" shall have a correlative meaning.
"Preferred Stock" of any Person means any Capital Stock of such Person that
has preferential rights to any other Capital Stock of such Person with respect
to dividends or redemption or upon liquidation.
"Pro Rata Interest" of any Person in any other Person means a fraction, the
numerator of which is the amount of the equity or other ownership interest in
such other Person that are beneficially owned by such Person and its
Restricted Subsidiaries, and the denominator of which is the aggregate amount
of all equity or other ownership interests in such other Person that are
outstanding (for this purpose, equity or other ownership interests subject to
presently exercisable options, warrants or other rights to acquire such
interests shall be deemed to be outstanding and shall be included in both the
numerator and denominator). The Pro Rata Interest of any Person in any item of
income or expense or in the fair market value of the assets or liabilities of
any other Person means the amount obtained by multiplying (i) the amount of
such income or expense or the fair market value of the relevant asset or
liability, as the case may be, of such other Person by (ii) the Pro Rata
Interest of such Person in such other Person.
"Purchase Money Indebtedness" of any Person means any Indebtedness incurred
or assumed by a Person to finance the cost (including the cost of
construction) of an item of real or personal property, the principal amount of
which Indebtedness does not exceed the sum of (i) 100% of such cost and (ii)
reasonable fees and expenses of such Person incurred in connection therewith
and provided that such Indebtedness is incurred or assumed within 90 days of
the acquisition of, or improvement to, such property; and provided that any
lien securing such Indebtedness does not extend to any property or assets
other than the real or personal property financed with such Indebtedness.
"Qualified Capital Stock" means any Capital Stock that is not Disqualified
Capital Stock.
110
<PAGE>
"Recapitalization" means the transactions described as such in this Offering
Memorandum.
"Redeemable Dividend" means, for any dividend or distribution with regard to
Disqualified Capital Stock or Preferred Stock, the quotient of the dividend or
distribution divided by the difference between one and the maximum statutory
United States federal income tax rate (expressed as a decimal number between 1
and 0) then applicable to the issuer of such Disqualified Capital Stock or
Preferred Stock, as the case may be.
"Reference Period" with regard to any Person means the four full fiscal
quarters of such Person ended on or immediately preceding any date upon which
any determination is to be made pursuant to the terms of the Senior Preferred
Stock or the Exchange Debentures; provided, that if the Transaction Date in
question is more than 90 days after the end of such Person's most recently
completed fiscal year or more than 45 days after the end of such Person's most
recently completed fiscal quarter (other than the fourth fiscal quarter), then
"Reference Period" shall mean the four full fiscal quarters ended on the last
day of such fiscal year or fiscal quarter, as the case may be, unless
financial information for a later period of four full fiscal quarters is
available.
"Refinancing Indebtedness" means an extension, renewal, replacement,
refinancing or refunding of any Indebtedness which is Permitted Indebtedness
or is otherwise incurred in accordance with the "Limitation on Incurrence of
Additional Indebtedness" covenant (such Indebtedness is collectively referred
to as "Refinancing Indebtedness"); provided, that (1) the maximum principal
amount of the relevant Refinancing Indebtedness (or, if such Refinancing
Indebtedness (if not a revolving credit or similar arrangement) does not
require cash payments prior to maturity or is otherwise issued at a discount,
the original issue price of such Refinancing Indebtedness) may not exceed (x)
the maximum principal amount of the relevant Indebtedness or Disqualified
Capital Stock being extended, renewed, replaced, refinanced or refunded, plus
unpaid interest, prepayment penalties, redemption premiums, fees, expenses and
other amounts owing with respect thereto, plus reasonable financing fees and
other reasonable out-of-pocket expenses incurred in connection therewith
(collectively, "Refinancing Costs"), or (y) if such Indebtedness or
Disqualified Capital Stock being extended, renewed, replaced, refinanced or
refunded was issued at an original issue discount, the original issue price,
plus amortization of the original issue discount at the time of the incurrence
of the Refinancing Indebtedness plus Refinancing Costs, (2) if Pari Passu
Debt, in the case of the Company Exchange Debentures, or Disqualified Capital
Stock, such Refinancing Indebtedness has a Weighted Average Life to Maturity
and a final maturity that is equal to or greater than the Pari Passu Debt or
Disqualified Capital Stock being extended, renewed, replaced, refinanced or
refunded at the time of such extension, renewal, replacement, refinancing or
refunding, (3) with respect to Indebtedness or Disqualified Capital Stock of
the Issuer or any Restricted Subsidiaries, the relevant Refinancing
Indebtedness shall rank in right of payment with respect to the Senior
Preferred Stock and the Exchange Debentures, as the case may be, to an extent
no less favorable in respect thereof to the holders of Senior Preferred Stock
and the Exchange Debentures, as the case may be, than the Indebtedness or
Disqualified Capital Stock being refinanced, extended, renewed, replaced or
refunded and (4) Refinancing Indebtedness incurred by a Restricted Subsidiary
of the Issuer shall only be used to refinance outstanding Indebtedness or
Disqualified Capital Stock of such Restricted Subsidiary or any other
Restricted Subsidiary of the Issuer.
"Representative" means the representative appointed by the holders of
Designated Senior Debt.
"Restricted Payment" means the following:
(A) For purposes of the Exchange Indenture, (i) the declaration or
payment of any dividend or the making of any other distribution (other than
dividends or distributions payable in Qualified Capital Stock) on shares of
the Issuer's Capital Stock, other than the Senior Preferred Stock pursuant
to the Certificate of
Designation as in effect on the Issue Date, (ii) the purchase, redemption,
retirement or other acquisition for value of any Capital Stock of the
Issuer or any warrants, rights or options to acquire shares of Capital
Stock
111
<PAGE>
of the Issuer, other than the exchange of shares of Senior Preferred Stock
for the Exchange Debentures or other than through the exchange of such
Capital Stock or any warrants, rights or options to acquire shares of any
class of such Capital Stock for Qualified Capital Stock or warrants, rights
or options to acquire Qualified Capital Stock, (iii) the making of any
principal payment on, or the purchase, defeasance, redemption, prepayment,
decrease or other acquisition or retirement for value, prior to any
scheduled final maturity, scheduled repayment or scheduled sinking fund
payment, of, any Subordinated Debt, (iv) the making of any Investment
(other than a Permitted Investment) (provided that the amount of any
Investment for purposes of this clause (iv) shall be calculated by
subtracting the amount of any applicable Returned Investments, if any, on
any such Investment), (v) any designation of a Restricted Subsidiary as an
Unrestricted Subsidiary on the basis of the fair market value of such
Subsidiary utilizing standard valuation methodologies and approved by the
Board of Directors or (vi) forgiveness of any Indebtedness of an Affiliate
of the Issuer to the Issuer or a Restricted Subsidiary; provided, however,
that the term "Restricted Payment" does not include (a) any defeasance,
redemption, repurchase or retirement for value, in whole or in part, of
Indebtedness of the Issuer or the Senior Preferred Stock payable solely in
shares of Qualified Capital Stock or Subordinated Debt or (b) the repayment
or retirement of Subordinated Debt with the proceeds of Refinancing
Indebtedness incurred in accordance with clause (ix) of the definition of
Permitted Indebtedness. For purposes of determining the amount available to
make Restricted Payments pursuant to clause (a)(iii) of the covenant
described under "--Certain Covenants--Limitation on Restricted Payments",
the amount of any Restricted Payments made pursuant to clauses (iv) or (v)
above shall be calculated after giving effect to any Returned Investments.
(B) For purposes of the Certificate of Designation, (i) the declaration
or payment of any dividend or the making of any other distribution (other
than dividends or distributions payable in Qualified Capital Stock and
other than dividends or distributions (in cash or otherwise) on the Senior
Preferred Stock) on shares of the Company's Junior Securities, (ii) the
purchase, redemption, retirement or other acquisition for value of any
Junior Securities of the Company, or any warrants, rights or options to
acquire shares of Junior Securities of the Company, other than through the
exchange of such Junior Securities or any warrants, rights or options to
acquire shares of any class of such Junior Securities for Qualified Capital
Stock or warrants, rights or options to acquire Qualified Capital Stock,
(iii) the making of any Investment (other than a Permitted Investment)
(provided that the amount of any Investment for purposes of to this clause
(iii) shall be calculated by subtracting the amount of any applicable
Returned Investments, if any, on any such Investment), (iv) any designation
of a Restricted Subsidiary as an Unrestricted Subsidiary on the basis of
the fair market value of such Subsidiary utilizing standard valuation
methodologies and approved by the Board of Directors and (v) forgiveness of
any Indebtedness of an Affiliate of the Company to the Company or a
Restricted Subsidiary. For purposes of determining the amount available to
make Restricted Payments pursuant to clause (a)(iii) of the covenant
described under "--Certain Covenants--Limitation on Restricted Payments",
the amount of any Restricted Payments made pursuant to clauses (iii) or
(iv) above shall be calculated after giving effect to any Returned
Investments.
"Restricted Subsidiary" means a Subsidiary of the Issuer other than an
Unrestricted Subsidiary and includes all of the Subsidiaries of the Company
(other than the Initial Emerging Market Subsidiaries) existing as of the Issue
Date. The Board of Directors of the Issuer may designate any Unrestricted
Subsidiary or any Person that is to become a Subsidiary as a Restricted
Subsidiary if immediately after giving effect to such action (and treating any
Acquired Indebtedness as having been incurred at the time of such action), the
Company could have incurred at least $1.00 of additional Indebtedness (other
than Permitted Indebtedness) pursuant to the "Limitation on Incurrence of
Additional Indebtedness" covenant; provided that the Company may not designate
any Emerging Market Subsidiary to become a Restricted Subsidiary unless such
designation complies with the requirements set forth in the definition of
"Emerging Market Subsidiary" relating thereto.
"Returned Investments" mean, with respect to all Investments made in
Emerging Market Subsidiaries or Unrestricted Subsidiaries pursuant to clause
(iv) or (ix), respectively, of the definition of "Permitted Investments" or
pursuant to clauses (A)(iv) or (v) of the definition of "Restricted Payment"
for purposes of the
112
<PAGE>
Exchange Indenture or clauses (B)(iii) or (iv) for purposes of the Certificate
of Designation, the aggregate amount of (i) all payments made in respect of
such Investments, other than interest, dividends or other distributions not in
the nature of a return or repurchase of capital or a repayment of principal,
that have been paid or returned, without restriction, in cash to the Issuer
and its Restricted Subsidiaries and (ii) the Pro Rata Interest of the Issuer
and its Restricted Subsidiaries in the fair market value of the net assets of
all Emerging Market Subsidiaries or Unrestricted Subsidiaries, as the case may
be, that have been designated a Restricted Subsidiary of the Issuer after the
Issue Date, such fair market value to be determined as of the date of such
designation; provided, that amounts under the foregoing clause (ii) with
respect to each such Emerging Market Subsidiary or Unrestricted Subsidiary, as
the case may be, shall not constitute Returned Investments to the extent that
such amount exceeds the total amount of Investments by the Company and its
Restricted Subsidiaries in such Emerging Market Subsidiary or Unrestricted
Subsidiary, as the case may be. Notwithstanding the foregoing, Returned
Investments shall be credited to the amounts available for Investments
pursuant to clauses (iv) or (ix) of the definition of "Permitted Investments"
or Investments made pursuant to the provisions of clauses (A)(iv) or (v) for
purposes of the Exchange Indenture or (B)(iii) or (iv) for purposes of the
Certificate of Designation, as the case may be, only to the extent that such
Returned Investments are in respect of Investments made pursuant to each such
clause or provision.
"Senior Debt" means, the principal of, premium, if any, and interest
(including, without limitation, interest accruing or that would have accrued
but for the filing of a bankruptcy, reorganization or other insolvency
proceeding whether or not such interest constitutes an allowed claim in such
proceeding) on, and any and all other fees, expense reimbursement obligations,
obligations in respect of letters of credit, bankers acceptances and similar
transactions, indemnities and other amounts owing pursuant to the terms of all
agreements, documents and instruments providing for, creating, securing or
evidencing or otherwise entered into in connection with (a) all Indebtedness
and Obligations of the Company and its Subsidiaries owed under each Credit
Agreement (and any guarantees thereof) and the Notes and the Notes Indenture,
(b) all obligations of the Company with respect to any Interest Rate Agreement
or Currency Agreement to the extent incurred pursuant to (iv) of the
definition of Permitted Indebtedness, (c) all obligations of the Company to
reimburse any bank or other person in respect of amounts paid under letters of
credit, acceptances or other similar instruments, (d) all other Indebtedness
of the Company which does not provide that it is to rank pari passu with or
subordinate to the Exchange Debentures and (e) all deferrals, renewals,
extensions, replacements, refinancings and refundings of, and amendments,
modifications and supplements to, any of the Senior Debt described above.
Notwithstanding anything to the contrary in the foregoing, Senior Debt will
not include (i) Indebtedness of the Issuer to any of its Subsidiaries, (ii)
Indebtedness represented by the Exchange Debentures, (iii) any Indebtedness
which by the express terms of the agreement or instrument creating, evidencing
or governing the same is junior or subordinate in right of payment to any item
of Senior Debt, (iv) any trade payable arising from the purchase of goods or
materials or for services obtained in the ordinary course of business or (v)
Indebtedness incurred in violation of the Exchange Indenture.
"Senior Preferred Stock" means the 13 7/8% Senior Redeemable Exchangeable
Preferred Stock, liquidation preference $1,000 per share of the Company.
"Significant Restricted Subsidiary" of the Company means any Restricted
Subsidiary of the Company which satisfies the requirements for being a
"significant subsidiary" as defined in Regulation S-X under the Securities Act
and the Exchange Act.
"Subordinated Debt" means Indebtedness of the Issuer or any Subsidiary that
is subordinated in right of payment by its express terms or by the express
terms of any related document to the Exchange Debentures.
"Subsidiary", with respect to any Person, means (i) any corporation of which
the outstanding Capital Stock having at least a majority of the votes entitled
to be cast in the election of directors under ordinary circumstances shall at
the time be owned, directly or indirectly, by such Person or (ii) any other
Person of which at least a
majority of the voting interest under ordinary circumstances is at the time,
directly or indirectly, owned by such Person.
113
<PAGE>
"Unrestricted Subsidiary" means (a) any Emerging Market Subsidiary, (b) any
Subsidiary of an Unrestricted Subsidiary or an Emerging Market Subsidiary and
(c) any Subsidiary of the Issuer which is classified after the Issue Date as
an Unrestricted Subsidiary or an Emerging Market Subsidiary by a resolution
adopted by the Board of Directors of the Issuer; provided that a Subsidiary
organized or acquired after the Issue Date may be so classified as an
Unrestricted Subsidiary only if such classification is in compliance with the
covenant set forth under "--Certain Covenants--Limitation on Restricted
Payments"; provided, further, that a Subsidiary may not be classified as an
Emerging Market Subsidiary unless such classification would be in compliance
with the provisions of the definition of "Emerging Market Subsidiary." The
Trustee shall be given prompt notice by the Issuer of each resolution adopted
by the Board of Directors of the Issuer under this provision, together with a
copy of each such resolution adopted.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (a) the then outstanding
aggregate principal amount of such Indebtedness into (b) the total of the
product obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
114
<PAGE>
BOOK-ENTRY; DELIVERY AND FORM
The certificates representing the New Senior Preferred Stock will be issued
in fully registered form. Except as described below, the New Senior Preferred
Stock initially will be represented by a single, global certificate, in
definitive, fully registered form (the "Global Certificate") and will be
deposited with BankBoston, N.A. c/o Boston EquiServe, L.P. (the "Registrar")
for the New Senior Preferred Stock, as custodian for The Depository Trust
Company ("DTC") and registered in the name of Cede & Co. or such other nominee
as DTC may designate.
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a "banking
organization" within the meaning of the New York Banking Law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "Clearing Agency" registered pursuant to the
provision of Section 17A of the Exchange Act. DTC was created to hold
securities for its participants and facilitate the clearance and settlement of
securities transactions between participants through electronic book-entry
changes in accounts of its participants, thereby eliminating the need for
physical movement of certificates. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations and certain other
organizations. Indirect access to the DTC system is available to others such
as banks, brokers, dealers and trust companies that clear through or maintain
a custodial relationship with a participant, either directly or indirectly
("indirect participants").
Upon the issuance of the Global Certificate, DTC or its custodian will
credit, on its internal system, the respective liquidation preference of the
New Senior Preferred Stock represented by such Global Certificate to the
accounts of persons who have accounts with DTC. Ownership of beneficial
interests in the Global Certificate will be limited to persons who have
accounts with DTC ("participants") or persons who hold interests through
participants. Ownership of beneficial interests in the Global Certificate will
be shown on, and the transfer of that ownership will be effected only through,
records maintained by DTC or its nominee (with respect to interests of
participants) and the records of participants (with respect to interests of
persons other than participants).
So long as DTC or its nominee is the registered owner or holder of the
Global Certificate, DTC or such nominee, as the case may be, will be
considered the sole record owner or holder of the New Senior Preferred Stock
represented by such Global Certificate for all purposes under the Certificate
of Designation and the New Senior Preferred Stock. No beneficial owners of an
interest in the Global Certificate will be able to transfer that interest
except in accordance with DTC's applicable procedures in addition to those
provided for under the Certificate of Designation. Owners of beneficial
interests in the Global Certificate will not be entitled to have the New
Senior Preferred Stock represented by such Global Certificate registered in
their names, will not receive or be entitled to receive physical delivery of
certificated Senior Preferred Stock in definitive form and will not be
considered to be the owners or holders of any New Senior Preferred Stock under
the Global Certificate. Accordingly, each person owning a beneficial interest
in the Global Certificate must rely on the procedures of DTC and, if such
person is not a participant, on the procedures of the participant through
which such person owns its interests, to exercise any right of a holder of New
Senior Preferred Stock under the Global Certificate. The Company understands
that under existing industry practice, in the event an owner of a beneficial
interest in the Global Certificate desires to take any action that DTC, as the
holder of the Global Certificate, is entitled to take, DTC would authorize the
participants to take such action, and that the participants would authorize
beneficial owners owning through such participants to take such action or
would otherwise act upon the instructions of beneficial owners owning through
them.
Payments of the liquidation preference of, and dividends on the New Senior
Preferred Stock represented by the Global Certificate will be made to DTC or
its nominee, as the case may be, as the registered owner thereof. Neither the
Company, the Registrar, nor any paying agent will have any responsibility or
liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests in the Global Certificate or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
115
<PAGE>
The Company expects that DTC or its nominee, upon receipt of any payment of
liquidation preference of, or dividends on the New Senior Preferred Stock, in
respect of the Global Certificate, will credit participants' accounts with
payments in amounts proportionate to their respective beneficial ownership
interests in the liquidation preference of such Global Certificate, as shown
on the records of DTC or its nominee. The Company also expects that payments
by participants to owners of beneficial interests in such Global Certificate
held through such participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts
of customers registered in the names of nominees for such customers. Such
payments will be the responsibility of such participants.
Transfer between participants in DTC will be effected in the ordinary way in
accordance with DTC rules. If a holder requires physical delivery of New
Senior Preferred Stock in certificated form ("Certificated New Senior
Preferred Stock") for any reason, including to sell New Senior Preferred Stock
to persons in states which require such delivery of such New Senior Preferred
Stock or to pledge such New Senior Preferred Stock, such holder must transfer
its interest in the Global Certificate, in accordance with the normal
procedures of DTC and the procedures set forth in the Certificate of
Designation.
Unless and until it is exchanged in whole or in part for Certificated New
Senior Preferred Stock in definitive form, the Global Certificate may not be
transferred except as a whole by DTC to a nominee of DTC or by a nominee of
DTC to DTC or another nominee of DTC.
Beneficial owners of New Senior Preferred Stock registered in the name of
DTC or its nominee will be entitled to be issued, upon request, New Senior
Preferred Stock in definitive certificated form.
DTC has advised the Company that DTC will take any action permitted to be
taken by a holder of New Senior Preferred Stock (including the presentation of
New Senior Preferred Stock for exchange as described below) only at the
direction of one or more participants to whose account the DTC interests in
the Global Certificate are credited and only in respect of such portion of the
aggregate liquidation preference of New Senior Preferred Stock as to which
such participant or participants has or have given such direction.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfer of interests in the Global Certificate among participants of DTC, it
is under no obligation to perform such procedures, and such procedures may be
discontinued at any time. Neither the Company nor the Registrar will have any
responsibility for the performance by DTC or its participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.
Subject to certain conditions, any person having a beneficial interest in
the Global Certificate may, upon request to the Registrar, exchange such
beneficial interest for New Senior Preferred Stock in the form of Certificated
New Senior Preferred Stock. Upon any such issuance, the Trustee is required to
register such Certificated New Senior Preferred Stock in the name of, and
cause the same to be delivered to such person or persons (or the nominee of
any thereof). In addition, if DTC is at any time unwilling or unable to
continue as a depositary for the Global Certificate and a successor depositary
is not appointed by the Company within 90 days, the Company will issue
Certificated New Senior Preferred Stock in exchange for the Global
Certificate.
Each holder of Old Senior Preferred Stock who wishes to exchange Old Senior
Preferred Stock for New Senior Preferred Stock in the Exchange Offer will be
required to make certain representations, including that (i) it is neither an
affiliate of the Company nor a broker-dealer tendering Old Senior Preferred
Stock acquired directly from the Company for its own account, (ii) any New
Senior Preferred Stock to be received by it was acquired in the ordinary
course of its business and (iii) at the time of commencement of the Exchange
Offer, it has no arrangement with any person to participate in the
distribution (within the meaning of the Securities Act) of the New Senior
Preferred Stock. In addition, in connection with any resales of New Senior
Preferred Stock, any broker-dealer (a "Participating Broker-Dealer") who
acquired the New Senior Preferred Stock for its own account as a result of
market-making activities or other trading activities must deliver a prospectus
meeting the requirements of the Securities Act. The Commission has taken the
position that Participating Broker-Dealers may
116
<PAGE>
fulfill their prospectus delivery requirements with respect to the New Senior
Preferred Stock (other than a resale of an unsold allotment from the original
sale of the Old Senior Preferred Stock) with this Prospectus. Under the
Registration Rights Agreement, the Company is required to allow Participating
Broker-Dealers and other persons, if any, subject to similar prospectus
delivery requirements, to use this Prospectus in connection with the resale of
such New Senior Preferred Stock.
In the event that any changes in law or the applicable interpretations of
the staff of the Commission do not permit the Company to effect the Exchange
Offer, or if for any other reason the Exchange Offer Registration Statement is
not declared effective on or prior to November 21, 1998 or the Exchange Offer
is not consummated on or prior to , 1998, upon the request of the Initial
Purchaser or if the Initial Purchaser is not permitted by applicable law or
interpretations of the staff of the Commission to participate in the Exchange
Offer and thereby receive freely tradeable New Senior Preferred Stock, or if a
holder of the Old Notes is not permitted by applicable law to participate in
the Exchange Offer or elects to participate in the Exchange Offer but does not
receive fully tradeable New Senior Preferred Stock pursuant to the Exchange
Offer, the Company will, in lieu of effecting the registration of the New
Senior Preferred Stock pursuant to the registration statement of which this
Prospectus is a part and at the Company's cost, (a) on or prior to August 23,
1998 file with the Commission the Shelf Registration Statement (the "Shelf
Registration Statement") covering resales of the Transfer Restricted Senior
Preferred Stock (as defined herein) (or within 60 days of the delivery of the
Shelf Notice (as defined in the Registration Rights Agreement), as the case
may be (b) use its best efforts to cause the Shelf Registration Statement to
be declared effective under the Securities Act on or prior to November 21,
1998 (or within 90 days of the delivery of the Shelf Notice to holders of
Transfer Restricted Senior Preferred Stock), as the case may be, and (c) use
its best efforts to keep effective the Shelf Registration Statement for a
period of two years after its effective date (or for such shorter period that
will terminate when all of the Transfer Restricted Senior Preferred Stock
covered by the Shelf Registration Statement has been sold pursuant thereto or
cease to be outstanding). The Company will, in the event of the filing of the
Shelf Registration Statement, provide to each holder of the Transfer
Restricted Senior Preferred Stock copies of the prospectus which is a part of
the Shelf Registration Statement, notify each such holder when the Shelf
Registration Statement for the Transfer Restricted Senior Preferred Stock has
become effective and take certain other actions as are required to permit
unrestricted resales of the Transfer Restricted Senior Preferred Stock. A
holder of Transfer Restricted Senior Preferred Stock who sells such Senior
Preferred Stock pursuant to the Shelf Registration Statement generally will be
required to be named as a selling securityholder in the related prospectus and
to deliver the prospectus to purchasers, will be subject to certain of the
civil liability provisions under the Securities Act in connection with such
sales and will be bound by the provisions of the Registration Rights Agreement
which are applicable to such a holder (including certain indemnification
obligations).
For purposes of the foregoing, "Transfer Restricted Senior Preferred Stock"
means each share of Old Senior Preferred Stock until (i) the date on which
such share of Old Senior Preferred Stock has been exchanged for a freely
transferable share of New Senior Preferred Stock in the Exchange Offer, (ii)
the date on which such share of Old Senior Preferred Stock has been
effectively registered under the Securities Act and disposed of in accordance
with the Shelf Registration Statement, (iii) the date on which such share of
Old Senior Preferred Stock is sold to the public pursuant to Rule 144 under
the Securities Act or (iv) until such share of Old Senior Preferred Stock
ceases to be outstanding for purposes of the Certificate of Designation.
In the event that: (i) the registration statement of which this Prospectus
is a part is not filed on or prior to August 23, 1998 or, if required to be
filed on behalf of the holders of Transfer Restricted Senior Preferred Stock,
the Shelf Registration Statement is not filed on or prior to August 23, 1998
(or within 60 days following delivery of the Shelf Notice to holders of
Transfer Restricted Senior Preferred Stock), as the case may be; (ii) the
registration statement of which this Prospectus is a part or Shelf
Registration Statement is not declared effective on or prior to November 21,
1998 (or within 90 days following delivery of the Shelf Notice to holders of
Transfer Restricted Senior Preferred Stock), as the case may be; or
(iii) either (A) the Company has not exchanged the New Senior Preferred Stock
for all Old Senior Preferred Stock validly tendered in accordance with the
terms of
117
<PAGE>
the Exchange Offer on or prior to December 21, 1998 or (B) the registration
statement of which this Prospectus is a part ceases to be effective at any
time prior to the time that the Exchange Offer is consummated or (C) if
applicable, the Shelf Registration Statement has been declared effective and
such Shelf Registration Statement ceases to be effective at any time prior to
the second anniversary of its effective date; (each such event referred to in
clauses (i) through (iii) above is a "Registration Default"), the sole remedy
available to holders of the Transfer Restricted Senior Preferred Stock will be
the immediate assessment of additional dividends ("Additional Dividends") as
follows: the per annum dividend rate on the Transfer Restricted Senior
Preferred Stock will increase by 50 basis points; and the per annum dividend
rate will increase by an additional 25 basis points for each subsequent 90 day
period during which the Registration Default remains uncured, up to a maximum
additional dividend rate of 100 basis points per annum in excess of the
dividend rate originally borne by the Senior Preferred Stock (as shown on the
front cover page of this Prospectus). All Additional Dividends will be payable
to holders of the Transfer Restricted Senior Preferred Stock in cash on each
March 15, June 15, September 15 and December 15, commencing with the first
such date occurring after any such Additional Dividend commences to accrue,
until such Registration Default is cured. After the date on which such
Registration Default is cured, the dividend rate on the Senior Preferred Stock
will revert to the dividend rate originally borne by the Senior Preferred
Stock (as shown on the front cover page of this Prospectus).
Dividends on each share of New Senior Preferred Stock will accrue from June
24, 1998 or from the most recent Dividend Payment Date to which dividends were
paid on the Old Senior Preferred Stock surrendered in exchange therefor or on
the New Senior Preferred Stock, as the case may be. Holders of New Senior
Preferred Stock are entitled to receive, when, as and if declared by the Board
of Directors of the Company out of funds legally available therefor, dividends
on the New Senior Preferred Stock at a rate per annum of 13 7/8% of the
liquidation preference per share of New Senior Preferred Stock, except that,
if any dividends accrue on the New Senior Preferred Stock in respect of any
period prior to its issuance, such dividends will accrue at the rate or rates
borne by the Old Senior Preferred Stock from time to time during such period.
118
<PAGE>
DESCRIPTION OF NEW CREDIT FACILITY
The following summary of the principal terms of the New Credit Facility does
not purport to be complete and is qualified in its entirety by reference to
the provisions of the credit agreement and other related documents.
On June 24, 1998, the Company entered into the New Credit Facility with Bank
of America National Trust and Savings Association, as Administrative Agent ("B
of A"), and BankBoston, N.A., as Syndication Agent (together, the "Credit
Facility Banks"). Pursuant to the New Credit Facility, the Credit Facility
Banks have agreed to provide the Company with a $100 million revolving credit
facility (the "Revolving Credit Facility"), a term loan facility in the amount
of $60 million (the "U.S. Term Loan Facility") to be borrowed by the Company
and a $50 million term loan facility (the "European Term Loan Facility") to be
borrowed by Samsonite Europe N.V. (the Revolving Credit Facility, the U.S.
Term Loan Facility and the European Term Loan Facility are collectively
referred to herein as the "New Credit Facility"). The Company has the option
in certain circumstances to add additional lenders as parties to the New
Credit Facility and in connection therewith to increase the Revolving Credit
Facility by up to an additional $50 million. The Revolving Credit Facility and
the European Term Loan Facility mature on June 24, 2003. The U.S. Term Loan
Facility requires principal repayments in each of the first five years of 1.0%
of the original principal balance and principal repayments in each of the
sixth and seventh years of 47.5% of the original principal balance.
All loans made to the Company under the Revolving Credit Facility will bear
interest either at the higher of .50% per annum above the latest Federal Funds
Rate and the B of A reference rate (the "Base Rate") or the Eurodollar rate
(as defined in the definitive documentation relating thereto), plus, in each
case, the "Applicable Margin," which initially is 2.75% per annum with respect
to any portion of the U.S. Term Loan Facility that is a Eurodollar rate loan,
2.5% per annum with respect to any other loan that is a Eurodollar rate loan,
1.75% per annum with respect to any portion of the U.S. Term Loan Facility
that is a Base Rate loan and 1.5% per annum with respect to any other Base
Rate loans. The Applicable Margin on documentary letters of credit is
initially 1.9375% per annum. All loans made to Samsonite Europe N.V. under the
Revolving Credit Facility (including foreign standby letters of credit) and
the European Term Loan Facility will bear interest at the Eurodollar rate plus
the "Applicable Margin." The Applicable Margin will rise or fall depending
upon the financial performance of the Company. The Company will pay a
commitment fee which initially will be 0.5% per annum on the unused portion of
the Revolving Credit Facility. The fees paid in respect of domestic and
foreign standby and documentary letters of credit will rise and fall depending
on the financial performance of the Company, but in any event will not exceed
1.9375% per annum of the aggregate undrawn face amount of a foreign or
domestic documentary letter of credit.
The obligations under the U.S. Term Loan Facility and the Revolving Credit
Facility are secured by inventory, accounts receivable, personal property and
other intangibles of the Company and will be secured by intellectual property
by the 60th day following the closing of the New Credit Facility, and the
Company has already pledged 100% of the capital stock of its major domestic
subsidiaries and 66% of the capital stock of Samsonite Europe N.V. and other
major non-domestic subsidiaries.
The New Credit Facility contains customary financial and other covenants
that, among other things, limit the ability of the Company (subject to
customary and negotiated exceptions) to (i) incur additional liens, (ii) incur
additional indebtedness, (iii) make certain kinds of investments, (iv) prepay
subordinate indebtedness, (v) make distributions and dividend payments to its
stockholders, (vi) engage in affiliate transactions, (vii) make certain asset
dispositions, (viii) make acquisitions and (ix) participate in certain
mergers.
119
<PAGE>
DESCRIPTION OF CAPITAL STOCK
AUTHORIZED CAPITAL STOCK
The authorized capital stock of the Company consists of 60,000,000 shares of
Common Stock, par value $.01 per share, and 2,000,000 shares of preferred
stock par value $.01 per share (the "Preferred Stock"). As of August 4, 1998,
there were 10,433,756 shares of Common Stock issued and outstanding. The
following description of the capital stock of the Company and of certain
provisions of the Company's Amended and Restated Certificate of Incorporation
(the "Charter") and the Company's By-Laws (the "By-Laws") is a summary of the
principal terms thereof. Reference is hereby made to the full text of the
Charter and By-Laws, copies of which are filed as exhibits to the Company's
Annual Report on Form 10-K for the fiscal year ended January 31, 1998,
incorporated by reference herein.
COMMON STOCK
The holders of the Common Stock are entitled to one vote for each share held
of record on all matters submitted to a vote of stockholders. Subject to
preferences that may be applicable to any outstanding Preferred Stock, holders
of Common Stock are entitled to receive ratably such dividends as may from
time to time be declared by the Board of Directors of the Company out of funds
legally available therefor. In the event of a liquidation, dissolution or
winding up of the Company, holders of Common Stock would be entitled to share
ratably in all assets of the Company available for distribution to holders of
Common Stock remaining after payment of liabilities and the liquidation
preference of any outstanding Preferred Stock. Holders of Common Stock have no
preemptive rights and have no rights to convert their Common Stock into any
other securities, and there are no redemption provisions with respect to such
shares. All of the outstanding shares of Common Stock are fully paid and
nonassessable.
PREFERRED STOCK
The Board of Directors of the Company has the authority to issue the
Preferred Stock in one or more classes or series and to fix the designations,
powers, preferences and rights of the shares of each such class or series,
including dividend rates, conversion rights, voting rights, terms of
redemption and liquidation preference and the number of shares constituting
each such class or series, without any further vote or action by the
stockholders. The Company has not issued, and has no present plans to issue,
any shares of the Preferred Stock, other than the Senior Preferred Stock
issued on June 24, 1998.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock is BankBoston, N.A.
c/o Boston EquiServe, L.P.
CERTAIN CHARTER AND BY-LAWS PROVISIONS
The Charter and the By-Laws contain certain provisions that could make more
difficult the acquisition of the Company by means of a tender offer, a proxy
contest or otherwise.
Classified Board of Directors and Related Provisions. The Charter provides
that the Board of Directors shall be divided into three classes, designated
Class I, Class II and Class III, which shall be as nearly equal in number as
possible. Class I directors, who will serve for a term ending with the annual
meeting of stockholders to be held in 1999, currently consist of three
directors, Class II directors, who will serve for a term ending with the
annual meeting of stockholders to be held in 2000, currently consist of three
directors and Class III directors, who will serve for a term ending with the
annual meeting of stockholders to be held in 1998, currently consist of three
directors. A director may be removed by the stockholders, but only for cause,
and only by the affirmative vote of the holders, voting as a single class of a
majority of the total number of votes entitled to be cast by all holders
voting stock (which shall include the Common Stock and any class or series of
Preferred Stock which by its terms may be voted on all matters submitted to
stockholders of the Company generally).
120
<PAGE>
The purpose of a classified board is to promote conditions of continuity and
stability in the composition of the Board of Directors and in the policies
formulated by the Board of Directors, by guaranteeing that in the ordinary
course at least two-thirds of the directors will at all times have had at
least one year's experience as directors of the Company. However, for similar
reasons, a classified board may deter certain mergers, tender offers or other
takeover attempts which some or a majority of the holders of the Company's
stock may deem to be in their best interest, since it would take two annual
meetings of stockholders to elect a majority of the Board of Directors.
Similarly, a classified board structure would delay stockholders who do not
like the policies of the Board of Directors from removing a majority of the
Board of Directors at a single annual meeting.
Advance Notice Provisions for Stockholder Nominations and Stockholder
Proposals. The By-Laws establish an advance notice procedure for stockholders
to make nominations of candidates for election as directors, or bring other
business before an annual meeting of stockholders of the Company (the
"Stockholder Notice Procedure").
The Stockholder Notice Procedure provides that only persons who are
nominated by, or at the direction of the Company's Board, or by a stockholder
who has given timely written notice to the Secretary of the Company prior to
the meeting at which directors are to be elected, will be eligible for
election as directors of the Company. The Stockholder Notice Procedure
provides that at an annual meeting, only such business may be conducted as has
been specified in the notice of the meeting given by or at the direction of
the Board of Directors (or any duly authorized committee thereof) or brought
before the meeting by, or at the direction of, the Board of Directors (or any
duly authorized committee thereof) or by a stockholder who has given timely
written notice to be Secretary of the Company of such stockholder's intention
to bring such business before such meeting.
Under the Stockholder Notice Procedure, for notice of stockholder
nominations to be made or business to be conducted at an annual meeting to be
timely, such notice must be received by the Company not less than 60 days nor
more than 90 days prior to the first anniversary of the preceding year's
annual meeting, in the event that the date of the annual meeting is advanced
by more than thirty days or delayed by more than sixty days from such
anniversary date, notice must be delivered by the stockholder to the Company
not earlier than the ninetieth day prior to such annual meeting and not later
than the close of business on the later of the sixtieth day prior to such
annual meeting or the tenth day following the day on which public announcement
of the date of such meeting is first made. Under the Stockholder Notice
Procedure, for notice of a stockholder nomination to be made at a special
meeting at which directors are to be elected to be timely, such notice must be
received by the Company not earlier than the ninetieth day prior to such
meeting and not later than the close of business on the later of the sixtieth
day prior to such special meeting or the tenth day following the day on which
public announcement is first made of the date of the special meeting.
In addition, under the Stockholder Notice Procedure, a stockholder's notice
to the Company proposing to nominate a person for election as a director or
conduct certain business at an annual meeting must contain certain specified
information. If the Board of Directors determines that a person was not
nominated, or other business was not brought before the meeting, in accordance
with the Stockholder Notice Procedure, such person will not be eligible for
election as a director, or such business will not be conducted at such
meeting, as the case may be.
STOCKHOLDER RIGHTS PLAN
On May 12, 1998, the Company declared a dividend distribution of one right
(a "Right") for each outstanding share of Common Stock to stockholders of
record at the close of business on May 20, 1998 (the "Record Date"). Each
Right entitles the registered holder to purchase from the Company one one-
thousandth of a share of Series B Junior Participating Preferred Stock, par
value $0.01 per share (the "Series B Preferred Stock"), at a purchase price of
$70, subject to adjustment. The description and terms of the Rights are set
forth in a Rights Agreement (the "Rights Agreement") between the Company and
BankBoston, N.A. as Rights Agent.
Initially, the Rights will be attached to all Common Stock certificates
representing shares then outstanding, and no separate Rights Certificates will
be distributed. The Rights will separate from the Common Stock and a
121
<PAGE>
distribution date (the "Distribution Date"), will occur upon the earlier of
(i) ten business days following a public announcement that a person has become
an Acquiring Person (the "Stock Acquisition Date"), or (ii) ten business days
(or such later date as the Board of Directors shall determine) following the
commencement of a tender offer or exchange offer that would result in a person
or group becoming an Acquiring Person. "Acquiring Person" means any person who
or which, together with all affiliates and associates of such person, shall be
the beneficial owner of 15% or more of the Shares then outstanding, but shall
exclude (i) the Company, (ii) any subsidiary of the Company, (iii) any
employee benefit plan of the Company or of any subsidiary of the Company, (iv)
any person or entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan, (v) any Exempted Person (i.e., certain
persons whose 15% ownership prior to the execution of the Rights Plan was
"grandfathered"), (vi) any person, together with such person's affiliates and
associates, whose percentage beneficial ownership is increased to more than
15% of the outstanding Shares by reason of any repurchase of Common Stock by
the Company, provided that, in the case of clause (vi), such person, together
with such person's affiliates and associates, (a) does not acquire any Common
Stock after the public announcement of the repurchase of Common Stock by the
Company in connection with the Offer, as the same may be amended or modified
and (b) does not acquire any shares of Common Stock following any repurchase
of Common Stock by the Company if such repurchase would result in such person,
together with such person's affiliates and associates, owning in excess of 15%
of the outstanding Common Stock.
Until the Distribution Date, (i) the Rights will be evidenced by the Common
Stock certificates and will be transferred with and only with such Common
Stock certificates, (ii) new Common Stock certificates issued after the Record
Date will contain a notation incorporating the Rights Agreement by reference
and (iii) the surrender for transfer of any certificates for Common Stock
outstanding will also constitute the transfer of the Rights associated with
the Common Stock represented by such certificate. Pursuant to the Rights
Agreement, the Company reserves the right to require prior to the occurrence
of a Triggering Event (as defined herein) that, upon any exercise of Rights, a
number of Rights be exercised so that only whole shares of Series B Preferred
Stock will be issued.
The Rights are not exercisable until the Distribution Date and will expire
at the 5:00 p.m. (New York City time) on May 31, 2000, unless earlier redeemed
or extended by the Board of Directors of the Company as described below.
As soon as practicable after the Distribution Date, Rights Certificates will
be mailed to holders of record of the Common Stock as of the close of business
on the Distribution Date and, thereafter, the separate Rights Certificates
alone will represent the Rights. Except as otherwise determined by the Board
of Directors, only shares of Common Stock issued prior to the Distribution
Date will be issued with Rights.
In the event that a person becomes an Acquiring Person, each holder of a
Right will thereafter have the right to receive, upon exercise, Common Stock
(or, in certain circumstances, cash, property or other securities of the
Company) having a value equal to two times the exercise price of the Right.
Notwithstanding any of the foregoing, following the occurrence of the event
set forth in this paragraph, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by
any Acquiring Person will be null and void. However, Rights are not
exercisable following the occurrence of the event set forth above until such
time as the Rights are no longer redeemable by the Company as set forth below.
For example, at an exercise price of $70 per Right, each Right not owned by
an Acquiring Person (or by certain related parties) following an event set
forth in the preceding paragraph would entitle its holder to purchase $140
worth of Common Stock (or other consideration, as noted above) for $70.
Assuming that the Common Stock had a per share value of $35 at such time, the
holder of each valid Right would be entitled to purchase four shares of Common
Stock for $70.
In the event that, at any time following the Stock Acquisition Date, (i) the
Company is acquired in a merger or other business combination transaction
(other than a merger which follows an offer described in the second paragraph)
or (ii) 50% or more of the Company's assets, cash flow or earning power is
sold or transferred, each
122
<PAGE>
holder of a Right (except Rights which previously have been voided as set
forth above) shall thereafter have the right to receive, upon exercise, common
stock of the acquiring company having a value equal to two times the exercise
price of the Right. The events set forth in this paragraph and in the second
paragraph are referred to as the "Triggering Events."
At any time until 10 business days following the Stock Acquisition Date, the
Company may redeem the Rights in whole, but not in part, at a price of $.005
per Right (payable in cash, Common Stock or other consideration deemed
appropriate by the Board of Directors). Immediately upon the action of the
Board of Directors ordering redemption of the Rights, the Rights will
terminate and the only right of the holders of Rights will be to receive the
$.005 redemption price.
Until a Right is exercised, the holder thereof, as such, will have no rights
as a stockholder of the Company, including, without limitation, the right to
vote or to receive dividends. While the distribution of the Rights will not be
taxable to stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights
become exercisable for Common Stock (or other consideration) of the Company or
for Common Stock of the Acquiring Company as set forth below.
Any of the provisions of the Rights Agreement may be amended by the Board of
Directors prior to the Distribution Date. After the Distribution Date, the
provisions of the Rights Agreement may be amended by the Board of Directors in
order to cure any ambiguity, to make changes which do not adversely affect the
interests of holders of Rights, or to shorten or lengthen any time period
under the Rights Agreement; provided, however, that no amendment to lengthen a
time period relating to when the Rights may be redeemed may be made at such
time as the Rights are not redeemable.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Board of Directors. The Rights should not
interfere with any merger or other business combination approved by the Board
of Directors since the Rights may be redeemed by the Company at any time until
10 business days following the Stock Acquisition Date.
STATUTORY PROVISIONS
Section 203 of the Delaware General Corporation Law (the "DCL") prohibits
certain transactions between a Delaware corporation and an "interested
stockholder," which is defined as a person who, together with any affiliates
and/or associates of such person, beneficially owns, directly or indirectly,
15% or more of the outstanding voting shares of a Delaware corporation. This
provision prohibits certain business combinations (defined broadly to include
mergers, consolidations, sales or other dispositions of assets having an
aggregate value in excess of 10% of the consolidated assets of the
corporation, and certain transactions that would increase the interested
stockholder's proportionate share ownership in the corporation) between an
interested stockholder and a corporation for a period of three years after the
date the interested stockholder acquired its stock, unless (i) the business
combination is approved by the corporation's board of directors prior to the
date the interested stockholder acquired shares, (ii) the interested
stockholder acquired at least 85% of the voting stock of the corporation in
the transaction in which it became an interested stockholder or (iii) the
business combination is approved by a majority of the board of directors and
by the affirmative vote of two-thirds of the votes entitled to be cast by
disinterested stockholders at an annual or special meeting. A Delaware
corporation, pursuant to a provision in its certificate of incorporation or
by-laws, may elect not to be governed by Section 203 of the DCL in which case
such election becomes effective one year after its adoption. In the Charter,
the Company has elected not to be governed by Section 203 of the DCL.
123
<PAGE>
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of certain U.S. federal income tax
consequences associated with the exchange of the Old Senior Preferred Stock
for the New Senior Preferred Stock pursuant to the Exchange Offer and the
ownership and disposition of New Senior Preferred Stock and Company Exchange
Debentures to a U.S. person (as defined below) who acquired the Old Senior
Preferred Stock at the initial offering from the Initial Purchaser for the
original offering price thereof and who acquires the New Senior Preferred
Stock pursuant to the Exchange Offer. This discussion is based on provisions
of the Code, Treasury regulations promulgated thereunder, and administrative
and judicial interpretations thereof, all as in effect on the date hereof and
all of which are subject to change, possibly with retroactive effect. This
discussion does not address the tax consequences to subsequent purchasers of
the Senior Preferred Stock or Company Exchange Debentures and is limited to
investors who hold Senior Preferred Stock and Company Exchange Debentures as
capital assets. Furthermore, this discussion does not address U.S. federal
alternative minimum tax consequences and does not address all aspects of U.S.
federal income taxation that may be applicable to investors in light of their
particular circumstances, or to investors subject to special treatment under
U.S. federal income tax law (including, without limitation, certain financial
institutions, insurance companies, tax-exempt entities, dealers in securities
or persons who have acquired Senior Preferred Stock and Company Exchange
Debentures as part of a straddle, hedge, conversion transaction or other
integrated investment).
As used herein, the term "U.S. person" means a holder of Senior Preferred
Stock or Company Exchange Debentures that is, for U.S. federal income tax
purposes, (i) a citizen or resident of the U.S., (ii) a corporation or
partnership created or organized in or under the laws of the U.S. or of any
political subdivision thereof, (iii) an estate the income of which is subject
to U.S. federal income taxation regardless of its source or (iv) a trust if a
U.S. court is able to exercise primary supervision over the administration of
such trust and one or more U.S. persons have the authority to control all
substantial decisions of such trust.
EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS TAX ADVISOR AS TO THE
PARTICULAR TAX CONSEQUENCES TO SUCH INVESTOR OF THE ACQUISITION, OWNERSHIP AND
DISPOSITION OF SENIOR PREFERRED STOCK AND COMPANY EXCHANGE DEBENTURES,
INCLUDING THE APPLICABILITY OF ANY FEDERAL ESTATE OR GIFT TAX LAWS OR ANY
STATE, LOCAL OR FOREIGN TAX LAWS, ANY CHANGES IN APPLICABLE TAX LAWS AND ANY
PENDING OR PROPOSED LEGISLATION OR REGULATIONS.
EXCHANGE OFFER
There should be no U.S. federal income tax consequences to a holder who
exchanges Old Senior Preferred Stock for New Senior Preferred Stock pursuant
to the Exchange Offer and the New Senior Preferred Stock received should be
treated as a continuation of the Old Senior Preferred Stock in the hands of
such holder. Accordingly, any such holder should have the same adjusted tax
basis and holding period in the New Senior Preferred Stock as it had in the
Old Senior Preferred Stock immediately before the exchange.
Because the Company sold the Old Senior Preferred Stock together with
certain stock warrants as a unit, the two instruments will likely be treated
as an investment unit for U.S. federal income tax purposes. In such case, the
purchase price of a unit should be allocated between the Old Senior Preferred
Stock and the warrants based on their relative fair market values at the time
of purchase. The Company intends to allocate $966.74 and $33.26 of the
purchase price of a unit to the Old Senior Preferred Stock and the warrant,
respectively, and such allocation should establish the issue price and initial
tax basis in the Old Senior Preferred Stock. No assurance can be given,
however, that the IRS will not challenge the Company's allocation of the
purchase price and, if successful, such challenge could result in a different
issue price and initial tax basis for the Old Senior Preferred Stock.
124
<PAGE>
DISTRIBUTIONS ON NEW SENIOR PREFERRED STOCK
Distributions on the New Senior Preferred Stock, whether paid in cash, in
additional shares of Senior Preferred Stock or as constructive distributions
(as discussed below under "Redemption Premium"), will be taxable as ordinary
income to the extent that the amount of cash or the fair market value of any
Senior Preferred Stock distributed does not exceed the portion of the
Company's current and accumulated earnings and profits attributable to such
distribution (as determined for U.S. federal income tax purposes). To the
extent that the amount of distributions paid on the New Senior Preferred Stock
exceeds such earnings and profits, such distributions will be treated first as
a return of capital, reducing the holder's adjusted tax basis in the New
Senior Preferred Stock, with any excess taxable as gain from the sale or
exchange of a capital asset. Any such capital gain will be long-term capital
gain if the holder has held the New Senior Preferred Stock for more than one
year immediately prior to such distribution. Under recently adopted amendments
to the Code, capital gain recognized by an individual investor upon a
disposition of a capital asset that has been held for more than one year
immediately prior to such disposition will generally be subject to a maximum
income tax rate of 20% or, in the case of a capital asset that has been held
for one year or less, will be subject to tax at ordinary income tax rates.
Corporate holders will generally be taxed on capital gains (short-term and
long-term) at a rate of 35%. It is unclear whether the Company will have
sufficient earnings and profits to cause distributions on the New Senior
Preferred Stock to be taxable as dividends for U.S. federal income tax
purposes. For purposes of the remainder of this discussion, unless the context
indicates otherwise, the term "dividend" refers to a distribution taxed as
ordinary income as described above.
A holder's initial tax basis in any additional shares of New Senior
Preferred Stock distributed by the Company will be equal to their fair market
value on the date of distribution. A holder's holding period for such
additional shares will commence with their distribution and will not include
its holding period for the New Senior Preferred Stock with respect to which
the additional shares were distributed.
Subject to various limitations, including certain holding period
requirements, the "debt financed portfolio stock" rules and limitations based
on a holder's taxable income, dividends received by a corporate holder which
owns less than 20% of the Company's stock (by vote or value) generally will be
eligible for the 70% dividends-received deduction. In addition, the rules of
Section 1059 of the Code may apply, requiring certain corporate holders to
reduce their adjusted tax basis (but not below zero) in the New Senior
Preferred Stock by the amount of the dividends-received deduction resulting
from any "extraordinary dividend" on the New Senior Preferred Stock. Moreover,
such holders would immediately recognize capital gain to the extent such
adjusted tax basis would have been reduced below zero as a result of the above
described rule. "Extraordinary dividend" is broadly defined and may include a
redemption of New Senior Preferred Stock that is treated as a dividend,
without regard to the size of such redemption or the length of time a holder
has held the stock. Corporate holders should consult their tax advisors
regarding the availability of the dividends-received deduction and the
possible application of Section 1059 of the Code.
As part of President Clinton's Fiscal Year 1999 Budget Proposal, which was
submitted to Congress on February 2, 1998, the Administration proposed
adoption of a provision that would, except in limited circumstances, eliminate
the dividends-received deduction for certain preferred stock (such as the New
Senior Preferred Stock). The proposal would be effective for stock issued
after the date of enactment. There can be no assurance that any legislation,
including the Administration's proposal, enacted after the date hereof would
not apply to the New Senior Preferred Stock. Corporate holders of New Senior
Preferred Stock should consult their tax advisors regarding the possible
effects of the Administration's proposal.
REDEMPTION PREMIUM
If the redemption price of redeemable preferred stock (such as the New
Senior Preferred Stock) exceeds its issue price by more than a de minimis
amount, such excess may be treated as a constructive distribution of
additional stock on such preferred stock, over the term of the preferred
stock, using a constant yield method.
125
<PAGE>
Based on the purchase price allocation discussed in "Exchange Offer" above,
the Senior Preferred Stock will be deemed to have been issued with more than a
de minimis amount of redemption premium. The Company's determination as to
whether there is a constructive distribution is binding on all holders of the
Senior Preferred Stock, other than a holder that explicitly discloses that its
determination as to whether there is a constructive distribution differs from
that of the Company. Such disclosure must be made on a statement attached to
the holder's timely filed U.S. federal income tax return for the taxable year
that includes the date the holder acquired the Senior Preferred Stock. A
constructive distribution of additional Senior Preferred Stock will generally
be subject to the same rules as described above in "Distributions on Senior
Preferred Stock."
In addition, Senior Preferred Stock distributed in lieu of cash dividends on
the New Senior Preferred Stock may also be subject to the foregoing rules,
depending on the issue price of such additional Senior Preferred Stock.
Constructive distributions on the Senior Preferred Stock may arise due to
its optional redemption provisions only if, based on all of the facts and
circumstances as of the issuance date, an optional redemption was more likely
than not to occur. Even if redemption were more likely than not to occur,
however, constructive distribution treatment would not result if the
redemption premium were solely in the nature of a penalty for premature
redemption (i.e., a premium paid as a result of changes in economic or market
conditions over which neither the issuer nor the holder has control, such as
changes in prevailing dividend rates). Applicable Treasury regulations provide
a safe harbor pursuant to which constructive distribution treatment will not
result from an issuer call right if the issuer and the holder are unrelated,
there are not arrangements that effectively require the issuer to redeem the
stock and exercise of the option to redeem would not reduce the yield of the
stock. Although no assurances can be given, the Company believes that the
optional redemption provisions will not give rise to a constructive
distribution, based on one or more of the following positions: (i) that such
provisions would not be treated as more likely than not to be exercised under
these rules, (ii) that the redemption premium is in the nature of a penalty
for premature redemption or (iii) that the safe harbor would apply. Moreover,
a holder's right to require a redemption of the Senior Preferred Stock upon
the occurrence of a contingency (such as a change of control of the Company)
could under certain circumstances result in constructive distributions,
although the Company does not believe that such result should apply to the
Senior Preferred Stock.
REDEMPTION, SALE OR EXCHANGE OF THE NEW SENIOR PREFERRED STOCK
A holder generally will recognize taxable gain or loss upon the sale or
disposition (other than a redemption or an exchange of New Senior Preferred
Stock for Company Exchange Debentures, as discussed below) of New Senior
Preferred Stock equal to the difference between the amount of cash or the fair
market value of property received and the holder's adjusted tax basis in the
shares. Such capital gain will be long-term gain or loss if the holder's
holding period for the New Senior Preferred Stock exceeds one year immediately
prior to such disposition. Such capital gain or loss will be subject to the
capital gains rates discussed above under "Distributions on New Senior
Preferred Stock."
A redemption by the Company of the New Senior Preferred Stock for cash or an
exchange of the New Senior Preferred Stock for Company Exchange Debentures
should be treated as a dividend to the extent that the amount of cash or the
fair market value of the Company Exchange Debentures exchanged therefor does
not exceed the Company's current and accumulated earnings and profits (as
determined for U.S. federal income tax purposes) attributable thereto unless
such redemption or exchange (i) results in a "complete termination" of the
holder's stock interest in the Company under Section 302(b)(3) of the Code,
(ii) is "substantially disproportionate" with respect to the holder under
Section 302(b)(2) of the Code or (iii) is "not essentially equivalent to a
dividend" with respect to the holder under Section 302(b)(1) of the Code. In
determining whether any of these tests have been met, the holder must take
into account not only stock which such holder actually owns, but also stock
which such holder constructively owns under the attribution rules of Section
318 of the Code. If a holder is treated as having received a dividend upon a
redemption of New Senior Preferred Stock for
126
<PAGE>
cash or an exchange of New Senior Preferred Stock for Company Exchange
Debentures, a holder's tax basis in (x) such Company Exchange Debentures
should equal their fair market value on the date of exchange and (y) its New
Senior Preferred Stock so redeemed or exchanged should be transferred to any
remaining stockholdings of the holder in the Company. If the holder does not
retain any stock ownership in the Company, such holder may lose such tax basis
entirely. If any of the three tests described above are met, except as
described below, such redemption or exchange generally should be treated in
the same manner as a sale or exchange of such shares described in the
preceding paragraph.
If a redemption of New Senior Preferred Stock in exchange for Company
Exchange Debentures is treated as a sale or exchange, each exchanging holder
of the New Senior Preferred Stock should recognize capital gain or loss equal
to the difference between the "issue price" of the Company Exchange Debentures
(as defined below) and such holder's adjusted tax basis in the New Senior
Preferred Stock surrendered in exchange therefor, and a holder's tax basis in
the Company Exchange Debentures should equal their "issue price." Assuming the
Company Exchange Debentures are traded on an established market at any time
during the 60-day period ending 30 days after their issue date, the issue
price of the Company Exchange Debentures should be their fair market value on
the issue date. If the New Senior Preferred Stock, but not the Company
Exchange Debentures issued in exchange therefor, is traded on an established
market at any time during the 60-day period ending 30 days after the issue
date of the Company Exchange Debentures, the issue price of the Company
Exchange Debentures should be the fair market value of the New Senior
Preferred Stock exchanged therefor at the time of exchange. If neither the New
Senior Preferred Stock nor the Company Exchange Debentures are so traded, the
issue price of the Company Exchange Debentures should be their stated
liquidation amount or, in the event the Company Exchange Debentures do not
bear "adequate stated interest" within the meaning of Section 1274 of the
Code, their "imputed liquidation amount" (generally, the present value of all
payments due under the Company Exchange Debentures, discounted at the
appropriate "applicable federal rate").
THE COMPANY EXCHANGE DEBENTURES
INTEREST AND ORIGINAL ISSUE DISCOUNT ("OID")
If the terms of the Company Exchange Debentures permit the Company to issue
additional Company Exchange Debentures in lieu of paying cash interest (which
generally should be the case only if the Company Exchange Debentures are
issued prior to June 15, 2003), the Company Exchange Debentures will be deemed
to have been issued with OID for U.S. federal income tax purposes.
Consequently, holders will be required to include OID in ordinary income over
the period that they hold the Company Exchange Debentures in advance of the
receipt of cash attributable thereto under a constant yield method. If the
issuance of additional Company Exchange Debentures would not reduce the yield
to maturity on the Company Exchange Debentures (which generally should be the
case if the issue price of the Company Exchange Debentures is at least equal
to their stated principal amount) and the Company does not elect to issue
additional Company Exchange Debentures, the amount of OID includible in
ordinary income over the remaining term of the Company Exchange Debentures
will be equal to the excess of (i) the sum of the stated principal amount of
the Company Exchange Debentures plus all remaining cash payments of stated
interest over (ii) the issue price of the Company Exchange Debentures. The
amount of OID includible in a holder's income during a calendar year should
generally equal the amount of scheduled interest payments during such year.
If the issuance of additional Company Exchange Debentures would not reduce
the yield to maturity on the Company Exchange Debentures, and the Company
elects to issue additional Company Exchange Debentures, the issuance of
additional Company Exchange Debentures would not be treated as a payment of
interest and the Company Exchange Debentures would be deemed to be "reissued"
on each date that additional Company Exchange Debentures are issued solely for
purposes of computing the amount of OID includible in income during the then
remaining term of the Company Exchange Debentures. Under these rules, the
Company
127
<PAGE>
Exchange Debentures would be deemed to be reissued at their then adjusted
issue price (i.e., their original issue price plus accrued OID less previous
payments of interest in cash) and any additional Company Exchange Debentures
would be treated as part of the original Company Exchange Debentures to which
such additional Company Exchange Debentures relate. The amount of OID
includible in a holder's income over the remaining term of a Company Exchange
Debenture, determined under the constant yield method described above, would
be equal to (i) the stated principal amount due at maturity (including the
stated principal amount of any additional Company Exchange Debentures treated
as part of such Company Exchange Debenture) plus all remaining cash payments
of stated interest over (ii) the adjusted issue price of the Company Exchange
Debentures.
If the issuance of additional Company Exchange Debentures would reduce the
yield to maturity on the Company Exchange Debentures (which generally should
be the case if the issue price of the Company Exchange Debentures is less than
their stated principal amount) and the Company elects to issue additional
Company Exchange Debentures in lieu of paying cash interest, the amount of OID
includible in income in respect of a Company Exchange Debenture should
generally be equal to (i) the stated principal amount due at maturity
(including the stated principal amount of the additional Company Exchange
Debentures, assuming the Company issued Company Exchange Debentures in lieu of
paying cash interest on all interest payment dates prior to June 15, 2003)
plus all remaining cash payments of stated interest on such Company Exchange
Debenture over (ii) the issue price of the Company Exchange Debenture. If the
issuance of additional Company Exchange Debentures would reduce the yield to
maturity on the Company Exchange Debentures and the Company pays cash interest
prior to June 15, 2003 rather than issuing additional Company Exchange
Debentures in lieu thereof, a portion of such cash payment would be treated as
a partial prepayment of the Company Exchange Debentures, which could result in
the recognition of capital gain and generally would reduce the amount of OID
inclusions for subsequent periods.
In the event the Company Exchange Debentures are not issued with OID, which
may be the case if the terms thereof do not permit the Company to issue
additional Company Exchange Debentures in lieu of paying cash interest and the
Company Exchange Debentures' stated redemption price at maturity is less than
or equal to their issue price or does not exceed their issue price by more
than a de minimis amount, stated interest should be included in income by a
holder in accordance with its method of tax accounting.
BOND PREMIUM
If the issue price of a Company Exchange Debenture exceeds its stated
principal amount, the Company Exchange Debenture may be treated as having been
issued with amortizable bond premium, in which case a holder may be entitled
to amortize the bond premium over the life of the Company Exchange Debenture.
SALE, EXCHANGE OR REDEMPTION OF COMPANY EXCHANGE DEBENTURES
A holder generally will recognize taxable gain or loss upon the sale,
exchange or redemption of Company Exchange Debentures equal to the difference
between the amount of cash or the fair market value of property received
(except to the extent that such cash or property is attributable to accrued,
but previously untaxed, interest) and the holder's adjusted tax basis in the
Company Exchange Debentures. A holder which receives Company Exchange
Debentures in exchange for New Senior Preferred Stock generally should have an
adjusted tax basis in the Company Exchange Debentures equal to the "issue
price" of the Company Exchange Debentures, increased by any accrued OID
thereon included in the holder's income prior to such sale, exchange or
redemption, and reduced by (i) any cash payments of interest other than
qualified stated interest and (ii) the amount of any previously amortized bond
premium, as discussed above. Such gain or loss will be long-term capital gain
or loss if the holder's holding period for the Company Exchange Debentures
exceeds one year immediately prior to such sale, exchange or redemption and
will be subject to the capital gains rates discussed above under
"Distributions on New Senior Preferred Stock."
128
<PAGE>
APPLICATION OF AHYDO RULES
The applicable high yield discount obligation ("AHYDO") rules may affect the
Company's ability to deduct interest payments made on the Company Exchange
Debentures. Under those rules, the Company would not be entitled to deduct a
portion of the OID accruing on the Company Exchange Debentures and would be
allowed to deduct the remainder of the OID only when paid. The AHYDO rules
apply to debt instruments that have a term of more than five years, have a
yield to maturity that equals or exceeds five percentage points over the
"applicable federal rate" and that have "significant OID". Because the amount
of OID, if any, will be determined at the time that a Company Exchange
Debenture is issued, it is not possible to determine if the AHYDO rules will
apply. If the AHYDO rules applied to a Company Exchange Debenture, a corporate
holder may be treated as receiving dividend income (to the extent of the
Company's current and accumulated earnings and profits) solely for purposes of
the dividends received deduction, with respect to that portion of the OID for
which the Company is denied a deduction.
BACKUP WITHHOLDING
"Backup withholding" at a rate of 31% may apply to payments of dividends on
New Senior Preferred Stock, payments of principal and interest made on a
Company Exchange Debenture, and to payments of the proceeds of a sale or
exchange of New Senior Preferred Stock or Company Exchange Debentures (before
maturity) that are made to a non-corporate holder if such holder fails to
provide a correct taxpayer identification number or otherwise comply with
applicable requirements of the backup withholding rules. The backup
withholding tax is not an additional tax and may be credited against a
holder's U.S. federal income tax liability provided that correct information
is provided to the IRS.
129
<PAGE>
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Senior Preferred Stock for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Senior Preferred Stock.
This Prospectus, as it may be amended or supplemented from time to time, may
be used by a broker-dealer in connection with resales of New Senior Preferred
Stock received in exchange for Old Senior Preferred Stock where such Old
Senior Preferred Stock was acquired as a result of market-making activities or
other trading activities. For a period of 180 days after the Expiration Date,
the Company will make this Prospectus, as amended or supplemented, available
to any broker-dealer for use in connection with any such resale. In addition,
until , 1998 (90 days from the date of this Prospectus), all dealers
effecting transactions in the New Senior Preferred Stock may be required to
deliver a prospectus.
The Company will not receive any proceeds from any sale of New Senior
Preferred Stock by broker-dealers. New Senior Preferred Stock received by
broker-dealers for their own account pursuant to the Exchange Offer may be
sold from time to time in one or more transactions in the over-the-counter
market, in negotiated transactions, through the writing of options on the New
Senior Preferred Stock or a combination of such methods of resale, at market
prices prevailing at the time of resale, at prices related to such prevailing
market prices or negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer or the
purchaser of any such New Senior Preferred Stock. Any broker-dealer that
resells New Senior Preferred Stock that was received by it for its own account
pursuant to the Exchange Offer and any broker-dealer that participates in a
distribution of such New Senior Preferred Stock may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of New Senior Preferred Stock and any commission or concession
received by any such persons may be deemed to be underwriting compensation
under the Securities Act. The Letter of Transmittal states that, by
acknowledging that it will deliver and by delivering a prospectus, a broker-
dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
For a period of 180 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such
documents in the Letter of Transmittal. The Company has agreed to pay all
expenses incident to the Exchange Offer (including the expenses of one counsel
for the holders of the Senior Preferred Stock) other than commissions or
concessions of any broker-dealers and will indemnify the holders of the Senior
Preferred Stock (including any broker-dealers) against certain liabilities,
including liabilities under the Securities Act.
LEGAL MATTERS
Certain legal matters in connection with the New Senior Preferred Stock,
Company Exchange Debentures and Holdings Exchange Debentures offered hereby
will be passed upon for the Company by Skadden, Arps, Slate, Meagher & Flom
LLP, New York, New York.
EXPERTS
The consolidated financial statements of the Company as of January 31, 1998
and 1997, and for each of the years in the three-year period ended January 31,
1998, and the related financial statement schedule and the balance sheet of
Samsonite Holdings Inc. as of August 5, 1998 have been included or
incorporated by reference herein and in the registration statement of which
this Prospectus is a part, in reliance upon the reports of KPMG Peat Marwick
LLP, independent certified public accountants, included or incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
130
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
SAMSONITE CORPORATION
<TABLE>
<CAPTION>
PAGE
NUMBER
------
AS OF AND FOR THE THREE MONTHS ENDED APRIL 30, 1998 AND 1997
<S> <C>
Unaudited Consolidated Balance Sheet as of April 30, 1998.............. F-2
Unaudited Consolidated Statements of Operations for the three months
ended April 30, 1998 and 1997......................................... F-3
Unaudited Consolidated Statement of Stockholders' Equity for the three
months ended
April 30, 1998........................................................ F-4
Unaudited Consolidated Statements of Cash Flows for the three months
ended
April 30, 1998 and 1997............................................... F-5
Unaudited Notes to Consolidated Financial Statements................... F-6
AS OF AND FOR THE YEARS ENDED JANUARY 31, 1998 AND 1997
Independent Auditors' Report........................................... F-14
Consolidated Balance Sheets as of January 31, 1998 and 1997............ F-15
Consolidated Statements of Operations for each of the years in the
three-year period
ended January 31, 1998................................................ F-16
Consolidated Statements of Stockholders' Equity for each of the years
in the three-year period
ended January 31, 1998................................................ F-17
Consolidated Statements of Cash Flows for each of the years in the
three-year period
ended January 31, 1998................................................ F-18
Notes to Consolidated Financial Statements............................. F-19
SAMSONITE HOLDINGS INC.
Independent Auditors' Report........................................... F-43
Balance Sheet as of August 5, 1998..................................... F-44
Note to Balance Sheet.................................................. F-45
</TABLE>
F-1
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEET
AS OF APRIL 30, 1998
<TABLE>
<CAPTION>
APRIL 30,
1998
----------
(IN
THOUSANDS)
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents......................................... $ 6,911
Trade receivables, net of allowances for doubtful accounts of
$8,891........................................................... 91,839
Notes and other receivables....................................... 11,299
Inventories (Note 2).............................................. 186,347
Deferred income tax assets........................................ 33,437
Prepaid expenses and other current assets......................... 15,899
Assets held for sale.............................................. 8,471
---------
Total current assets............................................ 354,203
Investments in affiliates........................................... 2,204
Property, plant and equipment, net (Note 3)......................... 140,964
Intangible assets, less accumulated amortization of $207,756 (Note
4)................................................................. 115,506
Other assets and long-term receivables, net of allowance for doubt-
ful accounts of $706............................................... 4,881
---------
$ 617,758
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt (Note 5).......................................... $ 9,084
Current installments of long-term obligations (Note 5)............ 4,662
Accounts payable.................................................. 48,096
Accrued liabilities............................................... 76,168
---------
Total current liabilities....................................... 138,010
Long-term obligations, less current installments (Note 5)........... 203,629
Deferred income tax liabilities..................................... 13,252
Other noncurrent liabilities........................................ 59,164
---------
Total liabilities............................................... 414,055
---------
Minority interests in consolidated subsidiaries..................... 6,194
Stockholders' equity (Note 7):
Preferred stock ($.01 par value; 2,000,000 shares authorized; no
shares issued)................................................... --
Common stock ($.01 par value; 60,000,000 shares authorized;
20,420,902 shares issued and outstanding)........................ 204
Additional paid-in capital........................................ 419,283
Accumulated deficit............................................... (206,098)
Foreign currency translation adjustment........................... (15,857)
Unearned compensation--restricted shares.......................... (23)
---------
Total Stockholders' equity...................................... 197,509
---------
$ 617,758
=========
Commitments and contingencies (Notes 1B and 1D)
</TABLE>
See accompanying notes to consolidated financial statements.
F-2
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED APRIL 30, 1998 AND 1997
<TABLE>
<CAPTION>
THREE MONTHS
ENDED APRIL 30,
-----------------
1998 1997
-------- -------
(IN THOUSANDS,
EXCEPT PER SHARE
DATA)
<S> <C> <C>
Net sales (Note 1G)......................................... $156,676 169,562
Cost of goods sold.......................................... 97,273 99,293
-------- -------
Gross profit.............................................. 59,403 70,269
Selling, general and administrative expenses................ 59,621 54,656
Provision for restructuring operations (Note 1B)............ 2,608 (600)
Amortization of intangible assets........................... 1,526 1,824
-------- -------
Operating income (loss)................................... (4,352) 14,389
Other income (expense):
Interest income........................................... 791 465
Interest expense and amortization of debt issue costs..... (4,808) (6,207)
Other--net (Note 6)....................................... 998 6,899
-------- -------
Income (loss) before income taxes, minority interest, and
extraordinary item....................................... (7,371) 15,546
Income tax benefit (expense)................................ 2,924 (6,829)
Minority interest in earnings of subsidiaries............... (256) (218)
-------- -------
Income (loss) before extraordinary item................... (4,703) 8,499
Extraordinary item--loss on extinguishment of debt, net of
income tax benefit of $3,815 and $4,609 (Note 5)........... (6,224) (6,633)
-------- -------
Net income (loss)......................................... $(10,927) 1,866
======== =======
Income (loss) per share--basic:
Continuing operations before extraordinary item........... $ (0.23) 0.43
Extraordinary loss........................................ (0.31) (0.34)
-------- -------
Net income (loss) per share............................. $ (0.54) 0.09
======== =======
Income (loss) per share--assuming dilution:
Continuing operations before extraordinary item........... $ (0.23) 0.41
Extraordinary loss........................................ (0.31) (0.32)
-------- -------
Net income (loss) per share............................. $ (0.54) 0.09
======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED APRIL 30, 1998
<TABLE>
<CAPTION>
FOREIGN UNEARNED
ADDITIONAL CURRENCY COMPENSATION-
PREFERRED COMMON PAID-IN ACCUMULATED TRANSLATION RESTRICTED
STOCK STOCK CAPITAL DEFICIT ADJUSTMENT SHARES
--------- ------ ---------- ----------- ----------- -------------
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE, FEBRUARY 1,
1998................... $-- 204 418,462 (195,171) (14,449) (160)
Issuance of 1,372 shares
to directors for
services............... -- -- 44 -- -- --
Amortization of
restricted stock award
to compensation
expense................ -- -- -- -- -- 137
Compensation expense
accrued for stock bonus
awards................. -- -- 118 -- -- --
Exercise of employee
stock options, issuance
of stock award shares,
and related income tax
benefits............... -- -- 659 -- -- --
Foreign currency
translation
adjustment............. -- -- -- -- (1,408) --
Net income (loss)....... -- -- -- (10,927) -- --
---- --- ------- -------- ------- ----
BALANCE, APRIL 30,
1998................... $-- 204 419,283 (206,098) (15,857) (23)
==== === ======= ======== ======= ====
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED APRIL 30, 1998 AND 1997
<TABLE>
<CAPTION>
THREE MONTHS ENDED APRIL 30,
----------------------------
1998 1997
-------------- --------------
(IN THOUSANDS)
<S> <C> <C>
Cash flows provided by (used in) operating
activities:
Net income (loss).............................. $ (10,927) 1,866
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities:
Loss on extinguishment of debt................ 6,224 6,633
Loss (gain) on disposition of fixed assets.... (737) 8
Depreciation and amortization of property,
plant and equipment.......................... 5,417 5,384
Amortization of intangible assets............. 1,526 1,824
Amortization of debt issue costs.............. 76 468
Provision for doubtful accounts............... 459 1,052
Amortization of stock awards and stock issued
for services................................. 299 358
Adjustment of reserve for discontinued
operations................................... -- (1,458)
Provision (adjustment) to restructuring
reserve...................................... 2,608 (600)
Changes in operating assets and liabilities:
Trade and other receivables.................. 6,231 (8,618)
Inventories.................................. (13,682) 773
Prepaid expenses and other current assets.... (2,026) (2,593)
Accounts payable............................. (1,125) 5,531
Accrued liabilities.......................... (8,364) (4,196)
Other adjustments--net........................ (3,378) (2,352)
-------------- -------------
Net cash provided by (used in) operating
activities................................. (17,399) 4,080
-------------- -------------
Cash flows provided by (used in) investing
activities:
Purchases of property, plant and equipment.... (7,433) (8,002)
Net cash received from (used in) operations
discontinued and sold........................ (894) (1,350)
Proceeds from sale of assets held for sale and
property and equipment....................... 5,250 305
-------------- -------------
Net cash provided by (used in) investing
activities................................. (3,077) (9,047)
-------------- -------------
Cash flows provided by (used in) financing
activities:
Proceeds from public stock offering, net of
offering costs............................... -- 130,297
Proceeds from exercise of employee stock
options...................................... 133 7,258
Retirement of subordinated notes.............. (52,269) (80,800)
Redemption premium and expenses on retirement
of subordinated notes........................ (8,512) (8,684)
Net borrowings (payments) of short-term
obligations.................................. 3,344 (580)
Net borrowings (payments) on long-term
obligations.................................. 82,520 (44,611)
Other, net.................................... 106 1,101
-------------- -------------
Net cash provided by (used in) financing
activities................................. 25,322 3,981
-------------- -------------
Effect of exchange rate changes on cash and cash
equivalents.................................... (1,069) (5,247)
-------------- -------------
Net decrease in cash and cash equivalents... 3,777 (6,233)
Cash and cash equivalents, beginning of period.. 3,134 9,343
-------------- -------------
Cash and cash equivalents, end of period........ $ 6,911 3,110
============== =============
Supplemental disclosures of cash flow
information:
Cash paid during the period for interest...... $ 5,000 2,851
============== =============
Cash paid during the period for income taxes.. $ 479 1,132
============== =============
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
A. Business
Samsonite Corporation and subsidiaries (the "Company") was formerly known as
Astrum International Corp. ("Astrum"). On July 14, 1995, Astrum merged with
its wholly-owned subsidiary, Samsonite Corporation, and changed its name to
Samsonite Corporation. The Company is engaged in the manufacture and sale of
luggage and related products throughout the world, primarily under the
Samsonite, American Tourister, and Lark brand names. The principal customers
of the Company are department/specialty retail stores, mass merchants, catalog
showrooms and warehouse clubs. The Company also sells its luggage and other
travel related products through its Company-owned stores.
B. Recent Events and Recapitalization
The Company recently announced a planned recapitalization of the Company
(the "Recapitalization") involving the repurchase pursuant to a tender offer
(the "Tender Offer") of up to 10.5 million shares of the Company's common
stock at a purchase price of $40.00 per share (up to $420 million in the
aggregate) and the refinancing of certain existing indebtedness. The Company
intends to finance the Recapitalization through the sale of $350,000,000 of
senior subordinated notes, $175 million of senior redeemable exchangeable
preferred stock, and a new senior credit facility. The Recapitalization is
conditioned on the Company's having obtained sufficient financing to purchase
the shares of Company common stock pursuant to the Tender Offer, to refinance
existing indebtedness and to pay related fees and expenses. Certain pro forma
financial information giving effect to the Recapitalization is included in the
Form 8-K filed by the Company on May 20, 1998. See Note 9--Subsequent Events.
On January 7, 1998, the Company announced it had engaged Goldman, Sachs &
Co. as financial advisor to assist in the process of exploring various
strategic alternatives designed to enhance shareholder value. This process
ultimately resulted in the Recapitalization plan. In addition to the charges
discussed below, the Company expects to record charges in the second quarter
of fiscal 1999 for financial, legal and other expenses associated with the
process of exploring these alternative plans which were not ultimately
consummated.
During the three months ended April 30, 1998, the Company completed a tender
offer for the Series B Notes (the "Series B Notes") and retired $52,269,000
principal amount of the Series B Notes and paid redemption premium and other
expenses of the tender offer totaling approximately $8,512,000. These costs,
along with $1,527,000 of deferred financing costs, were charged to expense and
classified as an extraordinary item, net of tax effects, in the accompanying
statement of operations for the three months ended April 30, 1998. The
Company's previous senior credit facility was amended to allow for financing
the retirement of the Series B Notes from borrowings thereunder.
On March 23, 1998, the Company announced a restructuring of its Torhout,
Belgium manufacturing operations. The Company recorded a pre-tax charge of
approximately $2.6 million during the three months ended April 30, 1998 in
connection with the restructuring. The restructuring provision is primarily
related to termination and severance costs for the elimination of
approximately 111 positions.
On May 14, 1998, the Company approved a plan to further restructure its U.S.
production operations to bring the unit volume and workforce in the Denver
plant into line with expected sales and to achieve a better balance between
fixed and variable costs with respect to this facility. The restructuring plan
calls for a substantial reduction in workforce, as well as the disposal of
certain molding and other equipment that represents excess capacity. As a
result, during the second quarter of fiscal 1999, the Company will record a
restructuring charge of
F-6
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
approximately $5.5 million (of which approximately $2.2 million is non-cash).
The Company also expects to incur additional cash costs of approximately $0.3
million in connection with the restructuring plan that will be expensed as
they are incurred. The Company expects that the restructuring will be
completed by approximately July 1, 1998.
The Company is evaluating its investment in Chia Tai Samsonite (H.K.) Ltd.,
a 50% owned joint venture formed to manufacture and distribute luggage in
China which is encountering difficulties in achieving an adequate level of
sales and distribution to support operational expenses and finding qualified
personnel to manage the joint venture. As a result of this evaluation, the
Company may incur a charge in fiscal 1999 related to the disposal or
liquidation of this investment. At April 30, 1998, the Company had a net
investment of approximately $2.2 million in this joint venture.
C. Basis of Presentation
On May 25, 1993, the United States Bankruptcy Court for the Southern
District of New York confirmed the Amended Plan of Reorganization (the "Plan")
for Astrum. Pursuant to the terms of the Plan, which became effective on June
8, 1993, Astrum completed a comprehensive financial reorganization which
reduced debt and annual interest expense (the "Restructuring").
The Restructuring has been accounted for pursuant to the American Institute
of Certified Public Accountants Statement of Position 90-7, entitled
"Financial Reporting by Entities in Reorganization Under the Bankruptcy Code"
("SOP 90-7"). SOP 90-7 requires that assets and liabilities be adjusted to
their fair values ("fresh-start" values) and that a new reporting entity be
created. On June 30, 1993, for accounting purposes, the Plan was consummated
and SOP 90-7 was adopted. The consolidated financial statements include the
ongoing impact of fresh-start reporting. The most significant fresh start
adjustment relates to recording Reorganization Value in Excess of Identifiable
Assets. In addition, the Company recorded fresh start adjustments to reflect
tradenames, licenses, patents and other intangibles at their fair values.
D. Interim Financial Statements
The accompanying unaudited consolidated financial statements reflect all
adjustments, which are normal and recurring in nature, and which, in the
opinion of management, are necessary to a fair statement of the financial
position as of April 30, 1998 and results of operations for the three months
ended April 30, 1998 and 1997. These consolidated financial statements and
related notes should be read in conjunction with the consolidated financial
statements and related notes included in the Company's Annual Report on Form
10-K for the fiscal year ended January 31, 1998.
See Note 14 to the aforementioned consolidated financial statements included
in the 1998 Form 10-K for a description of litigation, commitments and
contingencies. A discussion of the effect of Year 2000 issues on the Company's
operations is included in the 1998 Form 10-K under Item 7. Management's
Discussion and Analysis of Financial Conditions and Results of Operations.
E. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amount of revenues and expenses during the
reporting period. Actual results could differ significantly from those
estimates.
F-7
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
F. Per Share Data
The Company has adopted and retroactively applied the requirements of
Statement of Financial Accounting Standards No. 128, Earnings Per Share ("SFAS
128") to all periods presented. This change does not have a material impact on
the computation of the earnings per share data. SFAS 128 requires the
disclosure of "basic" earnings per share and "diluted" earnings per share.
Basic earnings per share is computed by dividing income available to common
stockholders by the weighted average number of common shares outstanding.
Diluted earnings per share is computed by dividing income available to common
stockholders by the weighted average number of common shares outstanding
increased for potentially dilutive common shares outstanding during the
period. The dilutive effect of stock options, warrants, and their equivalents
is calculated using the treasury stock method.
Loss from continuing operations before extraordinary item per share and net
loss per share for the three months ended April 30, 1998 is computed based on
a weighted average number of shares of common stock outstanding during the
period of 20,413,536. Basic earnings per share and earnings per share--
assuming dilution are the same for the three months ended April 30, 1998
because of the antidilutive effect of stock options and awards when there is a
loss from continuing operations.
The following table presents a reconciliation of the numerators and
denominators of basic earnings per share and the earnings per share--assuming
dilution for the three months ended April 30, 1997:
<TABLE>
<CAPTION>
INCOME FROM
CONTINUING PER-SHARE
OPERATIONS SHARES AMOUNT
----------- ---------- ---------
<S> <C> <C> <C>
Basic Earnings per Share:
Income before extraordinary item............ $8,499,000 19,848,865 $ .43
=======
Added dilutive effect of stock options and
awards..................................... -- 841,445
---------- ----------
Earnings per Share-Assuming Dilution:
Income before extraordinary item available
to
common stockholders and shares
including assumed conversions.............. $8,499,000 20,690,310 $ .41
========== ========== =======
</TABLE>
G. Royalty Revenues
The Company licenses its brand names to certain unrelated third parties as
well as certain foreign subsidiaries and joint ventures. Net sales include
royalties earned of $3,777,000 and $4,763,000 for the three months ended April
30, 1998 and 1997, respectively.
H. Reclassifications
Certain items previously reported in specific financial statement captions
have been reclassified to conform with the fiscal 1999 presentation.
F-8
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
2. INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
APRIL 30,
1998
--------------
(IN THOUSANDS)
<S> <C>
Raw Materials................................................. $ 53,909
Work in Process............................................... 9,624
Finished Goods................................................ 122,814
--------
$186,347
========
</TABLE>
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following:
<TABLE>
<CAPTION>
APRIL 30,
1998
--------------
(IN THOUSANDS)
<S> <C>
Land.......................................................... $ 11,996
Buildings..................................................... 64,438
Machinery, equipment and other................................ 130,259
---------
206,693
Less accumulated amortization and depreciation................ (65,729)
---------
$ 140,964
=========
</TABLE>
Depreciation included in cost of goods sold and selling, general and
administrative expenses related to adjustments of assets and liabilities to
fair value in connection with the adoption of SOP 90-7 consisted of the
following (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
APRIL 30,
---------------
1998 1997
------- -------
(IN THOUSANDS)
<S> <C> <C>
"Fresh Start" Depreciation in Cost of Goods Sold............ $ 411 685
"Fresh Start" Depreciation in Selling, General and
Administrative Expenses.................................... 90 151
------- ------
Total "Fresh Start" Depreciation.......................... $ 501 836
======= ======
</TABLE>
Property and equipment revalued in connection with the adoption of SOP 90-7
are being depreciated over their respective estimated useful lives, primarily
ranging from two to six years.
4. INTANGIBLE ASSETS
Intangible assets, net of accumulated amortization, consisted of the
following:
<TABLE>
<CAPTION>
APRIL 30,
1998
--------------
(IN THOUSANDS)
<S> <C>
Trademarks.................................................... $107,682
Licenses, Patents and Other................................... 7,824
--------
$115,506
========
</TABLE>
F-9
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Amortization of intangible assets, including amortization related to the
adjustments of assets and liabilities to fair value in connection with the
adoption of SOP 90-7, consisted of the following (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
APRIL 30,
-------------------
1998 1997
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
"Fresh Start" Amortization of Tradenames, Licenses,
Patents and Other..................................... $ 1,432 1,607
Other.................................................. 94 217
--------- --------
$ 1,526 1,824
========= ========
</TABLE>
"Fresh Start" amortization represents the expense arising from the adoption
of "fresh start" accounting in accordance with SOP 90-7. The reorganization
value in excess of identifiable assets was amortized over a three-year period
ending June 1996; licenses, patents and other are amortized over a period
ranging from one to twenty-three years, and tradenames are amortized primarily
over a period of forty years.
5. DEBT
Debt consisted of the following:
<TABLE>
<CAPTION>
APRIL 30,
1998
--------------
(IN THOUSANDS)
<S> <C>
Senior Credit Facility(a)................................... $186,699
Other(b).................................................... 23,668
Capital lease obligations................................... 6,476
Series B Senior Subordinated Notes(c)....................... 532
--------
Total debt................................................ 217,375
Less short-term debt and current installments of long-term
obligations................................................ (13,746)
--------
$203,629
========
</TABLE>
- --------
(a) The Senior Credit Facility provides for a $200 million revolving credit
facility due June 12, 2002 ("Revolving Credit Facility A") and a $50
million revolving credit facility ("Revolving Credit Facility B") due June
10, 1999. The Revolving Credit Facility A is a multicurrency facility
which allows for loans of $160 million U.S. dollars and $40 million in
various European currencies.
The following amounts were outstanding at April 30, 1998 under the Senior
Credit Facility:
<TABLE>
<S> <C>
Revolving Credit Facility A:
Borrowings................................................. $135.5 million
Letters of Credit.......................................... $15.6 million
Revolving Credit Facility B.................................. $50.0 million
</TABLE>
Available borrowings were $48.9 million at April 30, 1998.
The Senior Credit Facility is secured by 100% of the stock of significant
domestic subsidiaries and 66% of the stock of the Company's principal
foreign subsidiaries. The agreement contains financial covenants requiring
the Company to maintain certain financial ratios and minimum stockholders'
equity. The agreement
F-10
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
also contains covenants which limits the incurrance of additional
indebtedness, the payment of dividends, the disposition of assets, and
other restrictions. The agreement generally allows the Company to pay
dividends not to exceed 30% of its net income.
(b) Other obligations consist of various notes payable to banks by foreign
subsidiaries aggregating $19.6 million and $5.1 million of secured
financing arrangements with foreign banks.
(c) The Series B Senior Subordinated Notes (the "Notes") bear interest at 11
1/8% and have a maturity date of July 15, 2005. During the three months
ended April 30, 1998, the Company completed a tender offer for the Series
B Notes and retired $52,269,000 principal amount of the Notes and paid
redemption premium and other expenses of the tender offer totaling
approximately $8,512,000. These costs, along with $1,527,000 of deferred
financing costs, were charged to expense and classified as an
extraordinary item, net of tax effects, in the accompanying statement of
operations for the three months ended April 30, 1998.
6. OTHER INCOME (EXPENSE)--NET
Other income (expense)--net consisted of the following:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
APRIL 30,
----------------
1998 1997
------- -------
(IN THOUSANDS)
<S> <C> <C>
Net gains from foreign currency forward delivery
contracts(a)............................................ $ 1,428 3,647
Rental income............................................ 252 522
Equity in loss of unconsolidated affiliate............... (235) (61)
Pension expense related to merged plans.................. -- --
Foreign currency transaction losses, net................. (77) (370)
Gain (loss) on disposition of fixed assets, net.......... 737 (7)
Other, net............................................... (1,107) (418)
Favorable settlement of claims(b)........................ -- 2,128
Adjustment of allowances relating to previous
operations(c)........................................... -- 1,458
------- ------
$ 998 6,899
======= ======
</TABLE>
- --------
(a) Net gains from foreign currency forward delivery contracts for the three
months ended April 30, 1998 and 1997 includes $753,000 and $2,729,000,
respectively, of unrealized exchange gains related to open forward
exchange contracts entered into to reduce foreign currency exposure on
certain foreign operations.
(b) Other income of $2,128,000 for the three months ended April 30, 1997
resulted from the favorable settlement for approximately $11,000,
including legal expenses, of claims against the Company. The Company had
previously accrued $2,139,000 for such claims as part of its
reorganization in bankruptcy. The claims are part of the Contingent
Liability with Respect to the Old Notes described in Note 14 to the
consolidated financial statements in the 1998 Form 10-K and relate to
interest on overdue installments of interest occurring prior to the
bankruptcy of the Company's predecessor in 1993.
(c) During the three months ended April 30, 1997, the Company recorded other
income of $1,458,000 for the reversal of allowances for factored
receivables from previous operations which were no longer necessary upon
the favorable settlement of receivables for which such allowances were
established.
7. EMPLOYEE STOCK OPTIONS
The Company has authorized 2,550,000 shares for the granting of options
under the 1995 Stock Option and Award Plan. See Note 10 to the consolidated
financial statements included in the 1998 Form 10-K for a description of such
plan. In addition, the Company has outstanding options and stock bonus awards
to current executives in connection with employment agreements.
F-11
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)
At April 30, 1998, the Company had outstanding options for a total of
2,494,319 shares at options prices ranging from $10.875 to $47.875 per share.
Options for 1,042,357 shares were exercisable at April 30, 1998 at a weighted
average exercise price of $21.93 per share. Options for 9,573 shares under the
1995 Stock Option and Award Plan were exercised at an average exercise price
of $13.875 per share during the three months ended April 30, 1998.
In May 1996, the Company granted stock bonuses for a total of 116,667 shares
to certain officers payable if the officer remains continually employed by the
Company through the earlier of May 15, 1999 or one year after a change of
control event or in the event of certain types of termination. The Company is
recognizing compensation expense equal to the fair market value at the date of
the grant ($18.25 per share) over the vesting period. Upon the termination of
one of the executive's employment with the Company, 38,889 of such shares
vested and were issued to the executive during the three months ended April
30, 1998.
8. SEGMENT INFORMATION
The Company has one line of business: the manufacture and distribution of
luggage and other travel-related products. Management of the business and
evaluation of operating results is organized along geographic lines dividing
responsibility for the Company's operations as follows: The Americas, which
include the United States, Canada, Mexico, and South America; Europe; Asia,
which includes India, China, Singapore, South Korea, and Hong Kong; and Other
which primarily includes licensing revenues from non-luggage brand names owned
by the Company and royalties from the Japanese luggage licensee, and corporate
overhead. Net outside sales and operating income by segment for the three
months ended April 30, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
APRIL 30,
---------------------
1998 1997
---------- ---------
(IN THOUSANDS)
<S> <C> <C>
Net outside sales:
Europe(a)........................................... $ 71,949 65,700
Americas............................................ 77,470 95,296
Asia................................................ 4,889 5,035
Other............................................... 2,368 3,531
---------- ---------
$ 156,676 169,562
========== =========
Operating income (loss):
Europe(a)........................................... $ 5,872 8,564
Americas............................................ (8,130) 7,493
Asia................................................ (81) 87
Other............................................... (1,253) (218)
Eliminations........................................ (760) (1,537)
---------- ---------
$ (4,352) 14,389
========== =========
</TABLE>
- --------
(a) Without the effect of the provision for restructuring operations, Europe's
operating income would have been approximately $8.5 million for the three
months ended April 30, 1998. Additionally, the depressing effects of the
strengthened U.S. dollar versus the Belgian franc causes reported sales
and operating income for the three months ended April 30, 1998 to be
reduced by approximately $8.0 million and $0.7 million, respectively.
F-12
<PAGE>
9. SUBSEQUENT EVENTS
On June 23, 1998, the Company completed the Tender Offer, repurchasing 10.5
million shares of the Company's common stock at a purchase price of $40.00 per
share. On June 24, 1998, the Company completed the financing of the
Recapitalization through the private placement of $350,000,000 of senior
subordinated notes, $175 million of senior redeemable exchangeable preferred
stock and a new senior credit facility.
On July 1, 1998, a complaint was filed in the Delaware Court of Chancery
against the Company and certain members of its Board of Directors. The
purported class action brought on behalf of holders of Common Stock challenges
the Company's offer to purchase shares of Common Stock for a purchase price of
$40.00 per share, which offer was upon the terms and subject to the conditions
set forth in the Offer to Purchase, dated May 20, 1998, as supplemented by the
Supplement dated June 9, 1998, and in the related Letter of Transmittal (which
together constitute the "Offer"). The purported class action initially sought
an order temporarily restraining consummation of the Offer but that
application was subsequently withdrawn. The Company believes that the
complaint is without merit and intends to contest it vigorously. The
complaint, which seeks compensatory and/or rescissory damages as well as other
relief, alleges disclosure violations with respect to the Offer and that the
Offer was coercive, the product of unfair dealing and violated the directors'
duties.
F-13
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Samsonite Corporation:
We have audited the accompanying consolidated financial statements of
Samsonite Corporation and subsidiaries as listed in the accompanying index.
These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement schedule based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Samsonite
Corporation and subsidiaries as of January 31, 1998 and 1997, and the results
of their operations and their cash flows for each of the years in the three-
year period ended January 31, 1998, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Denver, Colorado
March 17, 1998, except as to
Note 19, which is as of April 24, 1998.
F-14
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JANUARY 31, 1998 AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
JANUARY 31,
-------------------
1998 1997
--------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................ $ 3,134 9,343
Trade receivables, net of allowances for doubtful ac-
counts of $8,766 and $7,431............................. 91,523 83,276
Notes and other receivables.............................. 10,129 9,045
Inventories (note 5)..................................... 172,665 135,071
Deferred income tax assets (note 11)..................... 31,623 36,365
Prepaid expenses and other current assets................ 13,873 13,012
Assets held for sale..................................... 11,471 9,002
--------- --------
Total current assets.................................... 334,418 295,114
Investments in affiliates................................. 2,425 2,989
Property, plant and equipment, net (note 6)............... 142,351 143,959
Intangible assets, less accumulated amortization of
$206,260 and $203,039
(notes 2 and 7).......................................... 116,908 127,655
Other assets and long-term receivables, net of allowances
for doubtful accounts of
$706 and $5,556 (note 12)................................ 13,947 22,941
--------- --------
$ 610,049 592,658
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt (note 8)................................. $ 5,640 2,095
Current installments of long-term obligations (note 9)... 6,977 22,862
Accounts payable......................................... 49,221 46,777
Accrued interest expense................................. 1,223 2,183
Accrued compensation and employee benefits............... 17,228 21,540
Other accrued expenses (note 14)......................... 66,917 94,262
--------- --------
Total current liabilities............................... 147,206 189,719
Long-term obligations, less current installments (notes 9
and 19).................................................. 172,246 267,755
Deferred income tax liabilities (note 11)................. 15,730 30,921
Other noncurrent liabilities (notes 12 and 14)............ 59,838 75,125
--------- --------
Total liabilities....................................... 395,020 563,520
--------- --------
Minority interests in consolidated subsidiaries........... 6,143 4,140
--------- --------
Stockholders' equity (notes 9, 10 and 18):
Preferred stock.......................................... -- --
Common stock............................................. 204 160
Additional paid-in capital............................... 418,462 266,752
Accumulated deficit...................................... (195,171) (235,870)
Foreign currency translation adjustment.................. (14,449) (5,337)
Unearned compensation--restricted shares................. (160) (707)
--------- --------
Total stockholders' equity.............................. 208,886 24,998
--------- --------
Commitments and contingencies (notes 9, 10, 12, 14 and 19)
$ 610,049 592,658
========= ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-15
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
--------------------------
1998 1997 1996
-------- ------- -------
<S> <C> <C> <C>
Net sales.......................................... $736,875 741,138 675,209
Cost of goods sold................................. 424,349 449,333 414,691
-------- ------- -------
Gross profit...................................... 312,526 291,805 260,518
Selling, general and administrative expenses....... 234,257 233,761 203,701
Amortization of intangible assets.................. 7,101 31,837 63,824
Provision for restructuring operations (note 4).... 1,866 10,670 2,369
-------- ------- -------
Operating income (loss)........................... 69,302 15,537 (9,376)
Other income (expense):
Interest income................................... 2,574 1,419 4,709
Interest expense and amortization of debt issue
costs and premium................................ (19,918) (35,670) (39,974)
Other income--net (notes 14 and 15)............... 28,294 18,821 3,967
-------- ------- -------
Income (loss) from continuing operations before
income taxes, minority interest, and
extraordinary item.............................. 80,252 107 (40,674)
Income tax expense (note 11)....................... (23,088) (10,389) (9,095)
Minority interest in earnings of subsidiaries...... (287) (1,041) (1,385)
-------- ------- -------
Income (loss) from continuing operations before
extraordinary item.............................. 56,877 (11,323) (51,154)
Operations discontinued and sold (note 3):
Loss on discontinuance--net, after income tax
expense of $1,062................................ -- -- (2,251)
-------- ------- -------
Income (loss) before extraordinary item.......... 56,877 (11,323) (53,405)
Extraordinary item--loss on extinguishment of debt,
net of income tax benefit of $9,930 and $5,589
(note 9).......................................... (16,178) -- (8,042)
-------- ------- -------
Net income (loss)................................ $ 40,699 (11,323) (61,447)
======== ======= =======
Income (loss) per common share--basic:
Continuing operations before extraordinary
item........................................... $ 2.81 (.71) (3.24)
Operations discontinued and sold................ -- -- (.14)
Extraordinary item.............................. (.80) -- (.51)
-------- ------- -------
Net income (loss) per share..................... $ 2.01 (.71) (3.89)
======== ======= =======
Income (loss) per common share--assuming
dilution:
Continuing operations before extraordinary
item........................................... $ 2.70 (.71) (3.24)
Operations discontinued and sold................ -- -- (.14)
Extraordinary item.............................. (.77) -- (.51)
-------- ------- -------
Net income (loss) per share..................... $ 1.93 (.71) (3.89)
======== ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-16
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOREIGN UNEARNED NOTE
ADDITIONAL ACCUMU- CURRENCY COMPENSATION- RECEIVABLE
PREFERRED COMMON PAID-IN LATED TRANSLATION RESTRICTED FROM
STOCK(1) STOCK(2) CAPITAL DEFICIT ADJUSTMENT SHARES OFFICER
--------- -------- ---------- -------- ----------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, February 1,
1995................... $-- 155 312,989 (163,100) (1,572) -- --
Net loss............... -- -- -- (61,447) -- -- --
Issuance of 425,532
shares to officer in
exchange for note
receivable (note 10).. -- 4 9,996 -- -- -- (10,000)
Spinoff of water
treatment business
(note 3).............. -- -- (61,143) -- -- -- --
Foreign currency
translation
adjustment............ -- -- -- -- (766) -- --
---- --- ------- -------- ------- ------ -------
Balance, January 31,
1996................... -- 159 261,842 (224,547) (2,338) -- (10,000)
Net loss............... -- -- -- (11,323) -- -- --
Issuance of 55,000
shares of common stock
to an officer for cash
(note 10)............. -- -- 1,004 -- -- -- --
Stock award of 60,000
shares of restricted
common stock to an
officer (note 10)..... -- 1 1,094 -- -- (1,095) --
Issuance of 513 shares
to directors for
services (note 10).... -- -- 19 -- -- -- --
Amortization of
restricted stock award
to compensation
expense (note 10)..... -- -- -- -- -- 388 --
Compensation expense
accrued for stock
bonus awards (note
10)................... -- -- 503 -- -- -- --
Exercise of employee
stock options and
related income tax
benefits (note 10).... -- -- 591 -- -- -- --
Reclassification of
accrued compensation
for stock options
exercised............. -- -- 1,699 -- -- -- --
Foreign currency
translation
adjustment............ -- -- -- -- (2,999) -- --
Payment of note
receivable (note 10).. -- -- -- -- -- -- 10,000
---- --- ------- -------- ------- ------ -------
Balance, January 31,
1997................... -- 160 266,752 (235,870) (5,337) (707) --
Net income............. -- -- -- 40,699 -- -- --
Issuance of 3,300,000
shares of common stock
in public offering,
net of offering costs
and underwriting
discount of $8,303
(note 18)............. -- 33 130,209 -- -- -- --
Issuance of 4,032
shares to directors
for services (note
10)................... -- -- 174 -- -- -- --
Issuance of 1,033,203
shares for exercise of
employee stock options
and related income tax
benefits, net of
889,450 shares
exchanged (notes 10
and 18)............... -- 11 20,617 -- -- -- --
Amortization of
restricted stock award
to compensation
expense (note 10)..... -- -- -- -- -- 547 --
Compensation expense
accrued for stock
bonus awards (note
10)................... -- -- 710 -- -- -- --
Foreign currency
translation
adjustment............ -- -- -- -- (9,112) -- --
---- --- ------- -------- ------- ------ -------
Balance, January 31,
1998................... $-- 204 418,462 (195,171) (14,449) (160) --
==== === ======= ======== ======= ====== =======
</TABLE>
- --------
(1) $.01 par value; 2,000,000 shares authorized; no shares issued and
outstanding at January 31, 1998 or 1997.
(2) $.01 par value; 60,000,000 shares authorized; 20,371,068 and 16,033,833
shares issued and outstanding at January 31, 1998 and 1997, respectively.
See accompanying notes to consolidated financial statements.
F-17
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
----------------------------
1998 1997 1996
--------- ------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).............................. $ 40,699 (11,323) (61,447)
Adjustments to reconcile net income (loss) to
net cash provided by continuing operating
activities:
Nonoperating loss (gain) items:
Loss on extinguishment of debt............... 16,178 -- 8,042
Loss on discontinuance of operations......... -- -- 2,251
Loss on disposition of fixed assets, net..... 377 62 245
Gain on sale of other asset.................. -- -- (5,368)
Depreciation and amortization of property,
plant and equipment.......................... 21,493 22,052 20,277
Amortization of debt issue costs and
premium...................................... 888 1,932 803
Amortization of intangible assets............. 7,101 31,837 63,824
Amortization of stock awards and stock issued
for services................................. 1,431 910 --
Deferred income tax expense (benefit)......... (4,750) 1,365 2,809
Adjustment of liability for PBGC claims....... -- (11,100) --
Adjustment of allowances for contingencies
from previous operations..................... (5,299) -- --
Adjustment of liability for contingent
accruals..................................... (12,700) -- --
Net provision for doubtful accounts........... 4,341 2,815 2,627
Net provision for restructuring operations.... 1,866 10,670 2,369
Changes in operating assets and liabilities:
Trade and other receivables.................. (13,177) (17,850) 3,544
Inventories.................................. (35,686) (19,335) (6,404)
Other current assets......................... (440) 3,431 (620)
Accounts payable and accrued liabilities..... 1,234 9,027 (11,114)
Other adjustments--net........................ (5,345) 853 (2,170)
--------- ------- --------
Net cash provided by continuing operating
activities.................................. 18,211 25,346 19,668
--------- ------- --------
CASH FLOWS PROVIDED BY (USED IN) INVESTING
ACTIVITIES:
Proceeds from sales of fixed assets and other
asset......................................... $ 1,625 2,323 15,086
Purchases of property, plant and equipment:
By Company and wholly-owned subsidiaries...... (30,189) (25,465) (19,668)
By less than 100% owned subsidiaries.......... (6,124) (5,628) (2,000)
Cash received from spinoff of operations....... -- -- 112,000
Net cash received from (used in) previous
operations.................................... (3,999) 10,446 10,483
Acquisition of foreign distributorships........ (2,547) -- --
Acquisition of Mexico subsidiary, net of cash
acquired of $1,469............................ -- -- 1,275
Other.......................................... 3,292 1,307 (280)
--------- ------- --------
Net cash provided by (used in) investing
activities.................................. (37,942) (17,017) 116,896
--------- ------- --------
CASH FLOWS PROVIDED BY (USED IN) FINANCING
ACTIVITIES:
Net borrowings (payments) of senior credit
facility...................................... $ 53,628 (8,000) 58,000
Proceeds from issuance of senior notes......... -- -- 190,000
Issuance costs for senior notes and credit
facility...................................... (467) -- (13,472)
Retirement of senior notes..................... (137,199) -- (375,217)
Redemption premium on retirement of long-term
obligations................................... (17,556) -- (18,000)
Proceeds from long-term obligations--other..... 4,657 26,206 19,910
Payments of long-term obligations--other....... (25,980) (35,901) (15,201)
Proceeds from (payments of) short-term debt--
net........................................... 4,096 (7,231) (14,022)
Proceeds from public stock offering, net of
offering costs................................ 130,242 -- --
Proceeds from sale of common stock and
exercise of stock options..................... 7,012 1,327 --
Payment of note receivable from officer........ -- 10,000 --
Other, net..................................... 2,621 1,907 (1,384)
--------- ------- --------
Net cash provided by (used in) financing
activities.................................. 21,054 (11,692) (169,386)
--------- ------- --------
Effect of exchange rate changes on cash and
cash equivalents.............................. (7,532) (2,473) (1,813)
--------- ------- --------
Net decrease in cash and cash equivalents.... (6,209) (5,836) (34,635)
Cash and cash equivalents, beginning of year... 9,343 15,179 49,814
--------- ------- --------
Cash and cash equivalents, end of year......... $ 3,134 9,343 15,179
========= ======= ========
Supplemental disclosures of cash flow
information:
Cash paid during the year for interest......... $ 20,451 33,194 46,755
========= ======= ========
Cash paid during the year for income taxes,
net........................................... $ 8,733 3,210 5,315
========= ======= ========
Noncash transactions:
During the years ended January 31, 1998, 1997,
and 1996, property and equipment was acquired
under capital lease financing transactions
aggregating $924, $1,281 and $2,307,
respectively. Other noncash transactions are
described in notes 3, 10, 14, and 15.
</TABLE>
See accompanying notes to consolidated financial statements.
F-18
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 1998 AND 1997
(1)SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a)General Business
Samsonite Corporation and subsidiaries (the "Company") was formerly known
as Astrum International Corp. ("Astrum"). On July 14, 1995, Astrum merged
with its wholly-owned subsidiary, Samsonite Corporation, and changed its
name to Samsonite Corporation. The Company is engaged in the manufacture
and sale of luggage and related products throughout the world, primarily
under the Samsonite, American Tourister, and Lark brand names. The
principal customers of the Company are department/specialty retail stores,
mass merchants, catalog showrooms, and warehouse clubs. The Company also
sells its luggage and other travel-related products through its Company-
owned stores.
Previously, Astrum was a holding company with subsidiaries involved in
the water treatment business and apparel manufacturing business in addition
to the luggage business. As more fully explained in note 3, the Company
spun off the water treatment and discontinued the apparel manufacturing
business segments.
(b)Basis of Presentation
On May 25, 1993, the United States Bankruptcy Court for the Southern
District of New York confirmed the Amended Plan of Reorganization (the
"Plan") for Astrum. Pursuant to the terms of the Plan, which became
effective on June 8, 1993 (the "Effective Date"), Astrum completed a
comprehensive financial reorganization which reduced debt and annual
interest expense (the "Restructuring").
The Restructuring has been accounted for pursuant to the American
Institute of Certified Public Accountants Statement of Position 90-7,
entitled "Financial Reporting by Entities in Reorganization Under the
Bankruptcy Code" ("SOP 90-7"). SOP 90-7 requires that assets and
liabilities be adjusted to their fair values ("fresh-start" values) and
that a new reporting entity be created. On June 30, 1993, for accounting
purposes, the Plan was consummated and SOP 90-7 was adopted. The
accompanying consolidated financial statements include the ongoing impact
of the fresh-start reporting, the most significant of which included the
recording of Reorganization Value in Excess of Identifiable Assets.
Reorganization Value in Excess of Identifiable Assets was amortized over a
three-year period which ended in June 1996.
(c)Principles of Consolidation
The consolidated financial statements include the financial statements of
Samsonite Corporation and its wholly-owned and majority-owned subsidiaries.
All significant intercompany balances and transactions have been eliminated
in consolidation. The Company's foreign subsidiaries generally have
December 31 year ends.
Minority interests consist of other stockholders' ownership interests in
majority-owned subsidiaries of the Company.
(d)Use of Estimates
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the consolidated financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ significantly from those estimates.
F-19
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(e)Cash Equivalents
The Company considers all highly liquid debt instruments with original
maturities of three months or less to be cash equivalents.
(f)Inventories
The Company values inventories at the lower of cost, using the first-in,
first-out ("FIFO") method, or market.
(g)Investments in Affiliates
Investments in affiliates for which the Company owns 20% to 50% are
accounted for under the equity method.
At January 31, 1998, investments in affiliates primarily represent the
Company's investment in Chia Tai Samsonite (H.K.) Ltd., a 50% owned joint
venture formed to manufacture and distribute luggage in China.
(h)Property, Plant and Equipment
Property, plant and equipment acquired subsequent to the adoption of
fresh-start reporting are stated at cost. In connection with the adoption
of fresh-start reporting at June 30, 1993, the Company was required to
adjust property, plant and equipment to fair value. Assets under capital
leases are stated at the present value of the future minimum lease
payments. Improvements which extend the life of an asset are capitalized.
Maintenance and repair costs are expensed as incurred.
Assets held for sale are assets not used in the Company's luggage
manufacturing or distribution operations; the majority of such assets were
sold, or were under contract for sale, subsequent to January 31, 1998.
These assets are recorded at the lower of cost or net realizable value
(fair value less costs to sell).
Depreciation and amortization are provided on the straight-line method
over the estimated useful lives of the assets as follows:
<TABLE>
<S> <C>
Buildings................................................... 20 to 65 years
Machinery, equipment and other.............................. 2 to 20 years
</TABLE>
(i)Intangible Assets
As a result of adopting fresh-start reporting in 1993, the Company
recorded Reorganization Value in Excess of Identifiable Assets which became
fully amortized in June of 1996. Tradenames, licenses, patents and other
intangibles were recorded at fair value based upon independent appraisals.
These assets are amortized on a straight-line basis over their estimated
useful lives which are primarily as follows:
<TABLE>
<S> <C>
Tradenames................................................... 40 years
Licenses, patents and other.................................. 1 to 23 years
</TABLE>
The Company accounts for these intangible assets at the lower of
amortized cost or fair value. On an ongoing basis, the Company reviews the
valuation and amortization of intangible assets, taking into consideration
any events or circumstances which may have diminished the recorded value.
F-20
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(j)Debt Issuance Costs
Costs incurred in connection with the issuance of new debt instruments
are deferred and included in other assets. Such costs are amortized over
the term of the related debt obligation.
(k)Per Share Data
The Company has adopted and retroactively applied the requirements of
Statement of Financial Account Standards No. 128, Earnings Per Share ("SFAS
128") to all periods presented. This change does not have a material impact
on the computation of the earnings per share data. SFAS 128 requires the
disclosure of "basic" earnings per share and "diluted" earnings per share.
Basic earnings per share is computed by dividing income available to common
stockholders by the weighted average number of common shares outstanding.
Diluted earnings per share is computed by dividing income available to
common stockholders by the weighted average number of common shares
outstanding increased for potentially dilutive common shares outstanding
during the period. The dilutive effect of stock options, warrants, and
their equivalents is calculated using the treasury stock method. The
following table presents a reconciliation of the numerators and
denominators of basic earnings per share and earnings per share--assuming
dilution for the year ended January 31, 1998:
<TABLE>
<CAPTION>
PER SHARE
INCOME SHARES AMOUNT
----------- ---------- ---------
<S> <C> <C> <C>
Basic earnings per share:
Income from continuing operations before
extraordinary item available to common
stockholders........................... $56,877,000 20,235,802 $2.81
=====
Add dilutive effect of stock options and
awards................................. -- 850,783
----------- ----------
Earnings per share--assuming dilution:
Income from continuing operations before
extraordinary item available to common
stockholders plus assumed conversions.. $56,877,000 21,086,585 $2.70
=========== ========== =====
</TABLE>
Loss from continuing operations before extraordinary item per share and
net loss per share for the years ended January 31, 1997 and 1996 is
computed based on a weighted average number of shares of common stock
outstanding during the period of 15,971,157 and 15,806,675, respectively.
Basic earnings per share and earnings per share--assuming dilution are the
same for the years ended January 31, 1997 and 1996 because of the
antidilutive effect of stock options and awards when there is a loss from
continuing operations.
(l)Income Taxes
The Company accounts for income taxes in accordance with the provisions
of Statement of Financial Accounting Standards No. 109, Accounting for
Income Taxes ("SFAS 109"). SFAS 109 requires recognition of deferred tax
assets and liabilities for operating loss and tax credit carryforwards and
the estimated future tax consequences attributable to temporary differences
between the financial statement carrying amount of existing assets and
liabilities and their respective tax bases. Measurement of deferred tax
assets and liabilities is based upon enacted tax rates expected to apply to
taxable income in the years in which carryforwards and temporary
differences are expected to be recovered or settled. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in income
in the period that includes the enactment date.
F-21
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Deferred tax assets are reduced by a valuation allowance for the portion
of such assets for which it is more likely than not the amount will not be
realized. Deferred tax assets and liabilities are classified as current or
noncurrent based on the classification of the underlying asset or liability
giving rise to the temporary difference or the expected date of utilization
of carryforwards.
(m)Insurance
The Company maintains self-insurance programs for certain workers'
compensation risks up to $300,000 per individual claim. The Company
purchases excess workers' compensation coverage for individual claims in
excess of $300,000.
(n)Foreign Exchange Risk and Financial Instruments
The accounts of the Company's foreign subsidiaries and affiliates are
generally measured using the local currency as the functional currency. For
those operations, assets and liabilities are translated into U.S. dollars
at period-end exchange rates. Income and expense accounts are translated at
average monthly exchange rates. Net exchange gains or losses resulting from
such translation are excluded from results of operations and accumulated as
a separate component of stockholders' equity. Gains and losses from foreign
currency transactions are included in other income (expense). See note 15.
The Company enters into foreign exchange contracts in order to reduce its
economic exposure to fluctuations in currency exchange rates on certain
foreign operations and royalty agreements through the use of forward
delivery commitments. Generally, open forward delivery commitments are
marked to market at the end of each accounting period and corresponding
gains and losses are recognized in other income (expense). See note 15.
With respect to trade receivables, concentration of credit risk is
limited due to the diversity in the Company's customer base and geographic
areas covered by the Company's operations. In certain European countries,
the Company receives negotiable trade acceptances as payment for goods with
maturities from 60 to 90 days from the date of issuance. These instruments
are generally discounted to banks with recourse. At January 31, 1998,
approximately $13,586,000 of such instruments had been discounted and, by
the terms of their maturity dates, were uncollected by the holders. Any
probable bad debt losses for trade receivables or acceptances have been
reserved for in the allowance for doubtful accounts.
(o)Accounting for Long-lived Assets
The Company accounts for long-lived assets in accordance with the
provisions of Statement of Financial Accounting Standards No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of ("SFAS 121"). SFAS 121 requires impairment losses
to be recorded on long-lived assets, and certain identifiable intangible
assets, used in operations when indicators of impairment are present and
the undiscounted future cash flows (without interest charges) estimated to
be generated by such assets are less than the assets' carrying amount.
Impairment is measured by the excess of the assets' carrying amount over
fair value. SFAS 121 also requires that long-lived assets and certain
identifiable intangibles that are expected to be disposed of be reported at
the lower of the carrying amount or fair value less costs to sell.
(p)Revenue Recognition
Revenues from wholesale product sales are recognized at the time of
shipment, and provisions are made for markdown allowances, returns and
discounts. Revenues from retail sales are recognized at the point-of-sale.
F-22
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The Company licenses its brand names to certain unrelated third parties
as well as certain foreign subsidiaries and joint ventures. Net sales
include royalties earned of $19,925,000, $20,548,000, and $17,056,000 for
the years ended January 31, 1998, 1997, and 1996, respectively. Royalty
revenues in fiscal 1998 and 1997 include approximately $2,200,000 and
$3,900,000, respectively, from the sale of apparel trademarks in certain
foreign countries.
(2)PURCHASE OF SOUTH KOREA AND HONG KONG DISTRIBUTORSHIPS
During the year ended January 31, 1998, the Company formed a subsidiary,
Samsonite Korea Limited ("SKL"), which is owned 71% by the Company and 29% by
the Company's former distributor in South Korea. The Company contributed
$832,000 to SKL for its equity interest. SKL acquired the inventory, fixed
assets, and other assets of the distributorship and recorded approximately
$200,000 of goodwill. By agreement with its joint venture partner, the Company
will acquire an additional 9% interest in SKL on October 1, 1998.
During the year ended January 31, 1998, the Company formed a 100% owned
subsidiary, Samsonite Hong Kong Limited ("HKL"), which purchased the assets of
the Company's former Hong Kong distributor. The Company made investments or
advances to HKL of $1,715,000 for the purchase of inventory, fixed assets, and
other assets from the former Hong Kong distributor. Approximately $439,000 of
goodwill was recorded as a result of the purchase.
(3)OPERATIONS DISCONTINUED AND SOLD
During fiscal 1995, the Company's Board of Directors adopted a plan to (i)
separate the water treatment business from its other operations through a
spinoff in the form of a one-for-one stock dividend to the Company's holders
and (ii) to sell or otherwise discontinue its apparel manufacturing and pet
food businesses. During fiscal 1996, the Company distributed its stock in the
water treatment business to the Company's stockholders and charged the amount
of the net assets of the water treatment business of $61.1 million at the date
of distribution to additional paid-in capital. As part of the spinoff, the
water treatment business repaid $112 million of intercompany indebtedness.
Additionally, the Company closed its apparel manufacturing operations and sold
all related inventories and equipment to unrelated third parties. The pet food
segment was sold in fiscal 1995. The loss on discontinuance during fiscal 1996
includes an adjustment to reduce previously accrued losses on disposal of $2.6
million, net of income taxes of $1.1 million, and a provision for federal
income taxes on the distribution of the common stock of the water treatment
business to certain foreign stockholders of $3.8 million.
(4)PROVISION FOR RESTRUCTURING OPERATIONS
Fiscal 1998
The Company recorded a pretax restructuring provision in fiscal 1998 of
$3,589,000 and adjusted for excess fiscal 1997 restructuring accruals by
$1,723,000, resulting in a net expense for restructuring operations in fiscal
1998 of $1,866,000. The fiscal 1998 restructuring provision was provided
primarily for costs associated with the involuntary termination of 180
manufacturing positions in Mexico and twenty management positions in the U.S.
and is comprised of estimated cash expenditures estimated of $3,283,000 and
non-cash charges of $306,000. Through January 31, 1998, $1,945,000 of
severance costs had been charged against the accrual.
Fiscal 1997
The Company recorded a restructuring provision of $10,670,000 in fiscal 1997
as a result of a restructuring program to consolidate functions and operations
in North America, Europe, and the Far East, and to reduce or eliminate certain
other operations.
F-23
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The restructuring plan included further consolidation of hardside luggage
production to Samsonite's largest U.S. facility located in Denver, Colorado
from other locations in the Americas, as well as consolidation of many
administrative and control functions to Denver. The plan included the
elimination of as many as 450 positions worldwide, including approximately 150
manufacturing positions and approximately 300 managerial, office and clerical
positions. The restructuring provision consisted primarily of costs associated
with involuntary employee terminations and was comprised of cash expenses of
$9,670,000 and non-cash expenses of $1,000,000, both on a pretax basis.
Through January 31, 1998, approximately $8,183,000 had been charged against
the accrual for restructuring expenses, approximately $1,723,000 was
determined to be overaccrued and was credited to expense, and approximately
$764,000 remains accrued at January 31, 1998 for certain pension settlement
costs yet to be incurred.
Fiscal 1996
In the fourth quarter of fiscal 1996, management initiated a plan to
restructure the manufacturing and various administrative functions of its
American Tourister division. The restructuring plan included relocation of
manufacturing operations from Jacksonville, Florida to the Company's Denver,
Colorado manufacturing facility. Certain administrative functions were also
consolidated in Denver. A provision for restructuring and corresponding
liability of $2,369,000 was recorded in fiscal 1996 primarily for costs
associated with involuntary employee terminations and the disposal of assets.
The restructuring plan included the termination of 137 employees by August
1996. This restructuring was completed during fiscal 1997 with actual costs
incurred and the number of employees terminated approximating plan.
(5)INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
JANUARY 31,
-----------------
1998 1997
-------- -------
(IN THOUSANDS)
<S> <C> <C>
Raw materials and supplies.............................. $ 47,814 38,532
Work in process......................................... 10,476 10,842
Finished goods.......................................... 114,375 85,697
-------- -------
$172,665 135,071
======== =======
(6)PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following:
<CAPTION>
JANUARY 31,
-----------------
1998 1997
-------- -------
(IN THOUSANDS)
<S> <C> <C>
Land.................................................... $ 12,266 13,324
Buildings............................................... 60,524 62,561
Machinery, equipment and other.......................... 133,778 121,875
-------- -------
206,568 197,760
Less accumulated depreciation and amortization.......... (64,217) (53,801)
-------- -------
$142,351 143,959
======== =======
</TABLE>
F-24
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Property, plant and equipment includes property and equipment under capital
leases as follows:
<TABLE>
<CAPTION>
JANUARY 31,
---------------
1998 1997
------- ------
(IN THOUSANDS)
<S> <C> <C>
Buildings................................................. $ 4,178 4,856
Machinery, equipment and other............................ 2,707 2,323
------- ------
6,885 7,179
Less accumulated amortization............................. (1,388) (1,090)
------- ------
$ 5,497 6,089
======= ======
</TABLE>
(7)INTANGIBLE ASSETS
The following is a summary of intangible assets, net of accumulated
amortization:
<TABLE>
<CAPTION>
JANUARY 31,
----------------
1998 1997
-------- -------
(IN THOUSANDS)
<S> <C> <C>
Tradenames................................................ $108,556 115,838
Licenses, patents and other............................... 8,352 11,817
-------- -------
$116,908 127,655
======== =======
</TABLE>
(8)SHORT-TERM DEBT
As of January 31, 1998 and 1997, the Company had $5,640,000 and $2,095,000
of short-term debt outstanding under foreign lines of credit, respectively.
During the year ended January 31, 1998, the weighted average interest rate on
foreign short-term borrowings was 6.26% and the average interest rate at
January 31, 1998 was 7.50%. The European subsidiaries had unused available
borrowings on foreign lines of credit and other foreign borrowing arrangements
totaling approximately $47 million as of January 31, 1998, which are generally
restricted for working capital purposes.
Other foreign subsidiaries had approximately $8.6 million available under
bank credit lines at January 31, 1998.
(9)LONG-TERM OBLIGATIONS
Long-term obligations represent long-term debt and capital lease obligations
as follows:
<TABLE>
<CAPTION>
JANUARY 31,
-----------------
1998 1997
-------- -------
(IN THOUSANDS)
<S> <C> <C>
Senior Credit Facility (a).............................. $102,533 50,000
Other obligations (b)................................... 19,587 45,526
Capital lease obligations (c)........................... 4,302 5,091
11 1/8% Series B Senior Subordinated Notes (d).......... 52,801 190,000
-------- -------
179,223 290,617
Less current installments............................... (6,977) (22,862)
-------- -------
$172,246 267,755
======== =======
</TABLE>
F-25
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(a) Senior Credit Facility
Effective June 12, 1997, the Company entered into an amended and restated
Senior Credit Facility agreement. The new agreement provides for a $200
million revolving credit facility ("Revolving Credit Facility A") due June
12, 2002 and a $50 million revolving credit facility ("Revolving Credit
Facility B") due June 11, 1998. The Revolving Credit Facility A is a
multicurrency facility which allows for loans of $140 million in U.S.
dollars and $60 million in various European currencies.
The following amounts were outstanding at January 31, 1998 under the Senior
Credit Facility:
<TABLE>
<S> <C>
Revolving Credit Facility A:
Borrowings................................................ $102.5 million
Letters of Credit......................................... $ 14.5 million
Revolving Credit Facility B................................ $ --
</TABLE>
Borrowings under the agreement accrue interest at rates adjusted
periodically depending on the Company's financial performance as measured
by certain financial ratios each quarter. At January 31, 1998, U.S. loans
outstanding under the Senior Credit Facility bear interest at approximately
6% and foreign currency loans outstanding bear interest at approximately
5%. Additionally, a facility fee of .125% to .350% of the total commitment
depending on financial performance, whether used or unused, is payable
quarterly. At January 31, 1998, the facility fee was .150%.
The Senior Credit Facility is secured by 100% of the stock of significant
domestic subsidiaries and 66% of the stock of the Company's principal
foreign subsidiaries. The agreement contains financial covenants requiring
the Company to maintain certain financial ratios and minimum stockholders'
equity. The agreement also contains covenants which limit the incurrance of
additional indebtedness, the payment of dividends, the disposition of
assets, and other restrictions. The agreement generally allows the Company
to pay dividends not to exceed 30% of its net income.
As a result of entering into the amended and restated Senior Credit
Facility, which has significantly different terms and conditions than the
previous facility, the Company charged to expense the balance of deferred
financing costs relating to the previous facility totaling $3,989,000 and
paid prepayment penalties of $279,000. These charges are recorded as part
of the extraordinary item from loss on extinguishment of debt, net of tax
effects, in the accompanying consolidated statement of operations for the
year ended January 31, 1998.
(b) Other Obligations
As of January 31, 1998, other obligations consist of various notes
payable to banks by foreign subsidiaries aggregating $16.0 million and a
$3.6 million secured financing arrangement with a European leasing
corporation. The obligations bear interest at varying rates and mature
through 2002.
F-26
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(c) Leases
Future minimum payments under noncancelable capital leases, which relate
primarily to property and equipment, and noncancelable operating leases,
which relate primarily to retail floor space rental, at January 31, 1998
were as follows:
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
------- ---------
(IN THOUSANDS)
<S> <C> <C>
Year ending January 31:
1999................................................. $ 1,473 11,811
2000................................................. 1,421 8,607
2001................................................. 721 6,723
2002................................................. 593 5,073
2003................................................. 479 2,437
Thereafter........................................... 986 1,782
------- ------
Total minimum lease payments........................ 5,673 36,433
======
Less amount representing interest..................... (1,371)
-------
Present value of net minimum capital lease payments.. 4,302
Less current installments of minimum capital lease
payments............................................. (1,055)
-------
Long-term obligations under capital leases, excluding
current installments................................. $ 3,247
=======
</TABLE>
Rental expense under cancelable and noncancelable operating leases
pertaining to continuing operations consisted of the following:
<TABLE>
<CAPTION>
YEAR ENDED JANUARY
31,
--------------------
1998 1997 1996
------- ------ -----
(IN THOUSANDS)
<S> <C> <C> <C>
Minimum rentals....................................... $10,421 10,723 8,650
Contingent rentals.................................... 1,358 714 523
------- ------ -----
$11,779 11,437 9,173
======= ====== =====
</TABLE>
Aggregate maturities of long-term obligations at January 31, 1998 were as
follows (in thousands):
<TABLE>
<S> <C>
Year ending January 31:
1999............................................................. $ 5,922
2000............................................................. 4,840
2001............................................................. 4,224
2002............................................................. 1,734
2003............................................................. 103,662
Thereafter....................................................... 54,539
--------
174,921
Obligations under capital leases................................ 4,302
--------
Total.......................................................... $179,223
========
</TABLE>
F-27
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(d)Series B Senior Subordinated Notes
Interest on the 11 1/8% Series B Senior Subordinated Notes ("Series B
Notes") is payable semiannually with principal due July 15, 2005. The
Series B Notes may be redeemed after July 15, 2000 with the payment of
certain redemption premiums; however, up to one-third of the outstanding
Series B Notes were allowed to be redeemed (at a premium) before July 15,
1998, from the proceeds of the first two public equity offerings the
Company may have completed after the issuance of the Series B Notes. As
described in note 18, the Company completed a public equity offering on
February 11, 1997 and used a portion of the offering proceeds to redeem
Series B Notes and repurchase Series B Notes in the market. Additional
Series B Notes were purchased using bank borrowings under the Senior Credit
Facility. A total of $137,199,000 principal amount of Series B Notes were
retired during the year ended January 31, 1998. Redemption premiums of
$17,277,000 paid in connection with the retirement of the notes and
deferred financing costs of $4,563,000 were charged to expense and
classified as part of the extraordinary item from loss on extinguishment of
debt, net of tax effects, in the accompanying consolidated statement of
operations for the year ended January 31, 1998. The terms of the Series B
Notes include financial covenants to maintain certain financial ratios and
covenants which restrict payment of any dividends, amounts of additional
debt issuances, asset sales, and amounts of investments in emerging market
subsidiaries. See note 19.
(10)EMPLOYEE STOCK OPTIONS AND AWARDS
At January 31, 1998, the Company has outstanding options under its 1995
Stock Option and Incentive Award Plan and under an employment agreement with
its chief executive officer. The Company applies Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to Employees, and related
interpretations, in accounting for stock options and awards. Accordingly, no
compensation cost has been recognized for stock options granted at exercise
prices at or above fair market value at the date of grant. Additionally, no
performance based options were issued during the three years ended January 31,
1998.
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 123, Accounting for Stock Based Compensation ("SFAS
123") which provides for an alternative method of recognizing compensation
expense for stock options based upon a fair value determination. The Company
has elected not to adopt the recognition and measurement provisions of SFAS
123. Had the Company determined compensation cost for the stock options based
on the fair value at the grant dates consistent with the provisions of SFAS
123, pro forma net income (loss) per share would have been as follows:
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
------------------------
1998 1997 1996
------- ------- -------
(IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
<S> <C> <C> <C>
Net income (loss):
As reported...................................... $40,699 (11,323) (61,447)
======= ======= =======
Pro forma........................................ $38,343 (12,922) (61,781)
======= ======= =======
Net income (loss) per share--basic:
As reported...................................... $ 2.01 (0.71) (3.89)
======= ======= =======
Pro forma........................................ $ 1.89 (0.81) (3.91)
======= ======= =======
Net income (loss) per share--assuming dilution:
As reported...................................... $ 1.93 (0.71) (3.89)
======= ======= =======
Pro forma........................................ $ 1.82 (0.81) (3.91)
======= ======= =======
</TABLE>
F-28
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the following assumptions used for
grants in the three years ended January 31, 1998: no dividend yield for any
year; expected volatility of 29% for fiscal 1998 and 28% for fiscal 1997 and
1996; weighted-average risk-free interest rate of 5.5% for fiscal 1998 and
6.2% for fiscal 1997 and 1996; and weighted average expected lives of 4.3
years for fiscal 1998, 3.5 years for fiscal 1997, and 1.8 years for fiscal
1996. Options granted during the year ended January 31, 1996 were granted at
exercise prices which significantly exceeded the market value of the stock at
the grant date.
Pro forma net income (loss) reflects only options granted in the three years
ended January 31, 1998. Therefore, the full impact of calculating compensation
cost for stock options under SFAS 123 is not reflected in the pro forma net
income (loss) amounts presented because compensation cost is reflected over
option vesting periods (ranging from 2 to 5 years) and compensation cost for
options granted prior to February 1, 1995 is not considered.
Directors' Stock Plan
In fiscal 1996, the Company adopted the Samsonite Corporation 1996
Directors' Stock Plan (the "Plan") and reserved 200,000 shares of its common
stock for issuance under the Plan. Under the Plan, each non-employee director
may elect to receive common stock for directors' fees valued at fair market
value in lieu of cash. At January 31, 1998, 4,545 shares of common stock had
been issued under the Plan.
1995 Stock Option and Incentive Award Plan
The 1995 Stock Option and Incentive Award Plan (as Amended in 1996) ("the
1995 Plan") reserves 2,550,000 shares for the issuance of options as
determined by the compensation committee of the Board of Directors. The 1995
Plan provides for the issuance of a variety of awards, including tax qualified
incentive stock options, nonqualified stock options, stock appreciation
rights, restricted stock awards or other forms of awards consistent with the
purposes of the 1995 Plan. Incentive stock options must be issued at exercise
prices no less than the market value of the common stock at the date of the
grant. Nonqualified stock options may be granted at option prices at or below
the market value, but not at less than 50% of the market value of the common
stock at the date of the grant. Options granted under the 1995 Plan may vest
over a period of not more than ten years as determined by the compensation
committee. At January 31, 1998, all awards under the 1995 Plan were
nonqualified stock options issued at option prices equal to, or in excess of,
the market value at the date of grant.
Chief Executive Officer Employment Agreement
On May 15, 1996, the Company retained a new Chief Executive Officer, Richard
R. Nicolosi. Pursuant to his employment contract, the Company has granted Mr.
Nicolosi options to purchase 425,532 shares of common stock at an exercise
price of $18.25 per share (subject to customary antidilution adjustments).
Options to purchase 186,170 shares of common stock (the "Series A Options")
are time-vesting options and options to purchase 239,362 shares of common
stock (the "Series B Options") are subject to certain performance requirements
with respect to accelerating vesting. The options have a five-year term. Fifty
percent (50%) of the Series A Options vested on May 15, 1997 and the remaining
fifty percent (50%) will vest on May 15, 1998, so long as Mr. Nicolosi remains
continually employed by the Company through such date. All of the Series B
Options shall vest on April 15, 2001, so long as he remains continually
employed by the Company through April 15, 2001, subject to accelerated,
performance-based vesting as follows. The Series B Options will vest on May
15, 1998 if Mr. Nicolosi remains continually employed by the Company through
such date and the average market value of the common stock equals or exceeds
$30.00 per share in any period of 30 consecutive days prior to May 15, 1998.
Notwithstanding the foregoing, if a change of control event occurs prior to
May 15, 1998,
F-29
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(i) all of the Series A Options will automatically vest and (ii) all of the
Series B Options will vest if Mr. Nicolosi remains continually employed by the
Company through the date of such event and either the average market value of
the common stock in any period of 30 consecutive days prior to such event or
the market value of the common stock as of the date of such event, equals or
exceeds $30.00 per share. During the term of the Series B Options, the
Company's common stock has reached an average market value of $30.00 per share
for 30 consecutive days.
Also in connection with the performance by Mr. Nicolosi of services pursuant
to his employment, the Company issued to Mr. Nicolosi 60,000 shares of
restricted common stock (the "Restricted Shares"). So long as Mr. Nicolosi
remains continually employed with the Company, the shares will vest on May 15,
1998; provided that if a change of control event occurs and Mr. Nicolosi
remains continually employed by the Company through the date of such event,
then all Restricted Shares that have not vested will become vested as of the
date of such event. The Company is recognizing compensation expense for the
market value ($18.25 per share) of the shares at the date of grant over the
two-year vesting period.
Additionally, on June 6, 1996, the Company sold and issued to Mr. Nicolosi
55,000 shares of common stock at the market value of $18.25 per share, or an
aggregate purchase price of $1,003,750.
Former Chief Executive Officer
Pursuant to an employment agreement with the former Chief Executive Officer
(CEO) dated April 13, 1995, certain options previously granted were canceled
and options to purchase 653,668 shares of common stock (granted June 8, 1993
at market value) became fully vested and exercisable at $11.87 per share, as
adjusted by the terms of the option agreement for the spinoff of the water
treatment business. Under the employment agreement, the former CEO was also
granted options for 500,000 shares of common stock at $24.85 per share and
1,000,000 shares of common stock at $32.85 per share, as adjusted by the terms
of the option agreement for the spinoff of the water treatment business.
Options for 300,000 of such shares lapsed. The remaining options for 1,200,000
shares of common stock became fully exercisable upon the cessation of the
former CEO's employment as of May 15, 1996. On February 11, 1997, the former
CEO exercised all outstanding options for a total of 1,853,668 shares. The
exercise price was paid by the return of 889,450 shares of common stock owned
by the former CEO to the Company and cash of $6,622,139. See note 18.
Also under the employment agreement, the Company sold 425,532 shares of
common stock to the former CEO for a $10 million promissory note which was
presented in the accompanying consolidated financial statements as a reduction
of stockholders' equity until it was repaid in full on October 11, 1996. The
note bore interest at 8 1/8% per annum and the Company agreed to pay the
former CEO additional compensation equal to the interest due on the note.
Other Options and Stock Awards
In October 1996, a former officer exercised options to purchase 17,500
shares granted under an individual stock option agreement at an exercise price
of $11.14 per share.
Effective May 15, 1996, the Company entered into agreements with three
executive officers to provide stock bonuses to each of them of 38,889 shares
of common stock, payable if the executive remains continually employed by the
Company through the earlier of May 15, 1999 or one year after a change of
control event. The shares are also issuable in the event of certain types of
terminations. The Company is recognizing compensation expense equal to the
market value of the shares at May 15, 1996 ($18.25 per share) over the vesting
period.
F-30
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Stock Option Summary
A summary of stock option transactions follows:
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
--------------------------------------------------------------
1998 1997 1996
--------------------- -------------------- -------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
---------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning
of year................ 4,579,072 $24.79 2,171,168 $24.51 671,168 $11.85
Granted................. 213,953 $40.16 2,754,142 $25.52 1,500,000 $30.18
Exercised:
By former Chief
Executive Officer..... (1,853,668) $23.73 -- -- -- --
By others.............. (68,985) $12.82 (28,870) $11.18 -- --
Forfeited............... (305,322) $32.27 (317,368) $30.47 -- --
---------- --------- ---------
Outstanding at end of
year................... 2,565,050 $26.27 4,579,072 $24.79 2,171,168 $24.51
========== ========= =========
Options exercisable at
end of year............ 897,192 $21.82 2,176,945 $22.67 671,168 $11.85
========== ========= =========
Weighted-average fair
value of options
granted during the
year................... $ 13.17 $ 7.59 $ 1.04
========== ========= =========
</TABLE>
The following table summarizes information about stock options outstanding at
January 31,1998:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
--------------------------------------------- ----------------------------
WEIGHTED-AVERAGE
RANGE OF NUMBER REMAINING WEIGHTED-AVERAGE NUMBER WEIGHTED-AVERAGE
EXERCISE PRICES OUTSTANDING CONTRACTUAL LIFE EXERCISE PRICE EXERCISABLE EXERCISE PRICE
--------------- ----------- ---------------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
$10.875 to $20.75....... 1,324,419 4.6 years $16.34 633,202 $15.82
$28.50 to $47.875....... 1,240,631 8.4 years $36.79 263,990 $36.22
--------- -------
2,565,050 897,192
========= =======
</TABLE>
F-31
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(11)INCOME TAXES
Income tax expense (benefit) attributable to income (loss) from continuing
operations consists of:
<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
------- -------- ------
(IN THOUSANDS)
<S> <C> <C> <C>
Year ended January 31, 1998:
U.S. federal...................................... $ 9,068 4,246 13,314
Foreign........................................... 7,841 (1,108) 6,733
U.S. state and local.............................. 1,429 1,612 3,041
------- ------ ------
$18,338 4,750 23,088
======= ====== ======
Year ended January 31, 1997:
U.S. federal...................................... $ 923 1,408 2,331
Foreign........................................... 7,443 (249) 7,194
U.S. state and local.............................. 658 206 864
------- ------ ------
$ 9,024 1,365 10,389
======= ====== ======
Year ended January 31, 1996:
U.S. federal...................................... $ (426) 1,944 1,518
Foreign........................................... 5,699 257 5,956
U.S. state and local.............................. 1,013 608 1,621
------- ------ ------
$ 6,286 2,809 9,095
======= ====== ======
</TABLE>
Components of income (loss) from continuing operations before income taxes,
minority interest, and extraordinary item are as follows:
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
------------------------
1998 1997 1996
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
United States...................................... $63,633 (10,408) (59,634)
Other nations...................................... 16,619 10,515 18,960
------- ------- -------
Total............................................ $80,252 107 (40,674)
======= ======= =======
</TABLE>
F-32
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Income tax expense (benefit) attributable to income (loss) from continuing
operations differed from the amounts computed by applying the U.S. federal
income tax rate of 35% for fiscal 1998 and 34% for fiscal 1997 and 1996 as a
result of the following:
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
------------------------
1998 1997 1996
------- ------ -------
(IN THOUSANDS)
<S> <C> <C> <C>
Computed "expected" tax expense (benefit)........ $28,088 36 (13,829)
Increase (decrease) in taxes resulting from:
Adjustment of contingent tax accruals (see note
15)............................................ (4,445) -- --
Foreign tax credits, net of valuation
allowance...................................... (3,337) -- --
Reduction in valuation allowance................ (1,950) -- --
Tax rate differential on foreign earnings....... 3,923 3,320 3,609
Amortization of intangibles..................... -- 7,746 18,668
State income taxes, net of federal benefit...... 1,977 570 1,070
Other, net...................................... (1,168) (1,283) (423)
------- ------ -------
Income tax expense............................... $23,088 10,389 9,095
======= ====== =======
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the net deferred tax asset are presented below:
<TABLE>
<CAPTION>
JANUARY 31,
-----------------
1998 1997
-------- -------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Accounts receivable valuation allowances............... $ 5,550 7,513
Inventory costs capitalized for tax purposes........... 931 1,194
Other accruals and reserves accrued for financial
reporting purposes.................................... 38,088 40,364
Postretirement benefits accrued for financial reporting
purposes.............................................. 6,338 6,636
Foreign tax credit carryforwards....................... 8,820 --
Net operating loss and minimum tax carryforwards....... 53,111 54,197
-------- -------
Total gross deferred tax assets....................... 112,838 109,904
Less:
Valuation allowance................................... (34,888) (33,961)
-------- -------
Deferred tax assets, net of valuation allowance...... 77,950 75,943
-------- -------
Deferred tax liabilities:
Plant, equipment and intangibles, due to differences as
a result of fresh start............................... 45,484 54,340
Plant and equipment, due to differences in depreciation
methods............................................... 10,037 9,738
Other accruals and reserves............................ 6,536 6,421
-------- -------
Total gross deferred tax liabilities.................. 62,057 70,499
-------- -------
Net deferred tax asset............................... $ 15,893 5,444
======== =======
</TABLE>
F-33
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The components of the net current deferred tax asset and net noncurrent
deferred tax liability were as follows:
<TABLE>
<CAPTION>
JANUARY 31,
--------------
1998 1997
------- ------
(IN THOUSANDS)
<S> <C> <C>
Net current deferred tax asset:
U.S. federal................................................ $27,341 28,361
Foreign..................................................... 2,222 2,115
U.S. state and local........................................ 2,060 5,889
------- ------
31,623 36,365
------- ------
Net noncurrent deferred tax liability:
U.S. federal................................................ 1,045 10,172
Foreign..................................................... 13,886 16,958
U.S. state and local........................................ 799 3,791
------- ------
15,730 30,921
------- ------
Net deferred tax asset..................................... $15,893 5,444
======= ======
</TABLE>
The valuation allowance for deferred tax assets was increased from
$33,961,000 at January 31, 1997 to $34,888,000 at January 31, 1998 primarily
to allow for potential unused foreign tax credit carryforwards, net of
decreases to the valuation allowance for certain fully reserved loss
carryforwards utilized in certain foreign jurisdictions during the current
year. Management of the Company believes that it is more likely than not that
the results of future operations will generate sufficient taxable income to
realize the net deferred tax asset of $15,893,000 at January 31, 1998. If the
Company should recognize a tax benefit for pre-reorganization net operating
losses, for which a valuation allowance had been established, it would be
applied to reduce intangible assets until exhausted and then to increase
additional paid-in capital.
At January 31, 1998, the Company has net operating loss carryforwards of
approximately $135 million for federal income tax purposes, expiring at
various dates through 2012. As a result of the reorganization, the Company had
a change in ownership as defined by Section 382 of the Internal Revenue Code.
Consequently, utilization of the net operating loss carryforwards is subject
to an annual limitation of $17,200,000 per year, as adjusted for unused yearly
limitations.
Deferred income taxes have been provided on undistributed earnings of
foreign subsidiaries to the extent that management plans to remit these
earnings in the future. Undistributed earnings of foreign subsidiaries and
affiliates that are permanently invested, and for which no deferred taxes have
been provided, amounted to approximately $81,660,000 and $73,000,000 as of
January 31, 1998 and 1997, respectively.
F-34
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(12)PENSION AND OTHER EMPLOYEE BENEFITS
Certain subsidiaries of the Company have pension plans which provide
retirement benefits for eligible employees, generally measured by length of
service, compensation and other factors.
Net pension cost of continuing operations included the following components:
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
---------------------------
1998 1997 1996
-------- -------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost.................................... $ 2,332 2,576 2,466
Interest cost................................... 6,460 6,435 6,521
Actual return (income) loss on plan assets...... (27,741) (14,472) (21,990)
Net amortization and deferral................... 18,492 6,711 14,792
-------- -------- -------
Net pension expense (income).................. $ (457) 1,250 1,789
======== ======== =======
</TABLE>
The funded status of the plans at January 31, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
PLANS WITH
PLANS WITH ACCUMULATED
ASSETS EXCEEDING BENEFITS
ACCUMULATED EXCEEDING
BENEFITS ASSETS
------------------ --------------
1998 1997 1998 1997
-------- -------- ------ ------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Projected benefit obligation for
service rendered to date.............. $160,428 59,617 31,289 30,464
Plan assets at fair value.............. 178,640 89,017 28,712 24,501
-------- -------- ------ ------
Plan assets in excess (deficiency) of
projected benefit obligation.......... 18,212 29,400 (2,577) (5,963)
Unrecognized prior service cost........ (270) (80) 1,203 1,357
Unrecognized net gain.................. (35,569) (21,341) (7,442) (4,355)
-------- -------- ------ ------
Prepaid (accrued) pension cost
included in other assets
(liabilities)........................ $(17,627) 7,979 (8,816) (8,961)
======== ======== ====== ======
Accumulated benefit obligation:
Vested................................ $153,209 45,420 30,000 28,864
======== ======== ====== ======
Nonvested............................. $ 987 1,063 1,035 1,160
======== ======== ====== ======
</TABLE>
Net periodic pension cost during the years ended January 31, 1998, 1997 and
1996 assumed an expected long-term rate of return on plan assets of 7.5% to
8.5% for domestic plans and 7.5% to 15% for foreign plans. The valuations of
the projected benefit obligation assumed weighted-average discount rates of
7.0% to 7.25% for domestic plans and 7.5% to 13% for foreign plans at January
31, 1998, and 7.0% to 7.25% for domestic plans and 7.5% to 13% for foreign
plans at January 31, 1997. The rate of increase in future compensation levels
ranged from 3.50% to 5% for domestic plans and 5.5% to 10% for foreign plans
at January 31, 1998 and 1997. As a result of the employee terminations
associated with restructurings described in note 4, a plan curtailment
occurred resulting in the acceleration of the amortization of prior service
cost and unrecognized net gains. The effect of the curtailment was a reduction
in fiscal 1998 pension expense of $1.1 million.
Plan assets are primarily invested in cash equivalents, equity securities
and fixed income instruments. The plans do not have significant liabilities
other than benefit obligations. The Company's funding policy is to contribute
amounts equal to the minimum funding requirements of ERISA. During fiscal
1998, the McCrory and Schenley Plans (see note 14--Contingent Pension
Liabilities) were merged with a Company pension plan.
F-35
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The Company sponsors defined contribution plans, qualified under Sections
401(a) and 401(k) of the Internal Revenue Code, which are offered to certain
groups of employees of substantially all U.S. operations. Expense related to
continuing operations for these plans was $792,000, $1,237,000, and $1,052,000
for the years ended January 31, 1998, 1997, and 1996, respectively.
The Company provides postretirement health care benefits primarily for
certain groups of employees of substantially all U.S. operations. Qualifying
employees become eligible for these benefits upon reaching normal or early
retirement age, and if they have accumulated the specified number of years of
service. The Company recognizes the cost of providing postretirement health
care benefits over the employee's service period.
Postretirement benefit costs were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
------------------------
1998 1997 1996
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost--benefits earned during period........ $ 465 486 699
Interest cost on projected benefit obligation...... 715 684 907
Other.............................................. (386) (314) (169)
------- ------ -------
Total postretirement benefit costs............... $ 794 856 1,437
======= ====== =======
</TABLE>
The health care cost trend rates used to measure the expected cost in each
of the years in the three-year period ended January 31, 1998 were between 9.5%
and 15%, graded down to an ultimate trend rate of between 5.5% and 6.0% to be
achieved over the next 10 years. The effect of a one-percentage-point increase
in the health care cost trend rate for future periods would increase the
annual postretirement benefit cost by $166,000. The accumulated postretirement
benefit obligation would increase by $1,410,000.
The weighted-average discount rate used in determining the actuarial present
value of the projected benefit obligation was 7.25% at January 31, 1998 and
1997.
The funded status of the postretirement plans were as follows:
<TABLE>
<CAPTION>
JANUARY 31,
-----------------
1998 1997
-------- -------
(IN THOUSANDS)
<S> <C> <C>
Plan assets at fair value................................ $ -- --
Accumulated postretirement benefit obligation............ (10,620) (10,468)
Unrecognized cumulative net gain......................... (6,196) (6,092)
-------- -------
Postretirement benefit liability included in other
liabilities............................................ $(16,816) (16,560)
======== =======
</TABLE>
(13)DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value:
Cash and Cash Equivalents, Trade Receivables, Accounts Payable, Short-term
Debt, and Accrued Expenses
The carrying amount approximates fair value because of the short maturity or
duration of these instruments.
F-36
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Series B Senior Subordinated Notes
There is no established public trading market for the Company's Series B
Senior Subordinated Notes. The Company estimates that the fair value of the
Series B Senior Subordinated Notes at January 31, 1998 approximates
$60,193,000 based on recent interdealer transactions which were priced at
approximately 114.
Senior Credit Facility and Other Long-term Obligations
The carrying value approximates the fair value of these instruments, which
primarily have floating interest rates that are fixed for periods not
exceeding six months.
Foreign Currency Forward Delivery Contracts
The fair value of foreign currency forward delivery contracts (see note 1n)
is estimated by reference to market quotations received from banks. At January
31, 1998 and 1997, the contract value of foreign currency forward delivery
agreements outstanding was approximately $26,357,000 and $50,644,000,
respectively. The settlement value of these instruments was approximately
$24,963,000 and $50,025,000, respectively.
Limitations
Fair value estimates are made at a specific point in time, based on relevant
market information and information about the financial instrument. These
estimates are subjective in nature and involve uncertainties and matters of
significant judgment and therefore cannot be determined with precision.
Changes in assumptions could significantly affect the estimates.
(14)LITIGATION, COMMITMENTS AND CONTINGENCIES
Litigation
On March 13, 1998, a complaint was filed in Colorado State District Court,
County of Denver against the Company, certain current and former directors of
the Company, Apollo Investment Fund, L.P., and Apollo Advisors, L.P. The
purported class action brought on behalf of an alleged class of purchasers of
Samsonite common stock during the period from September 10, 1996 to December
1, 1997 alleges, among other things, that certain statements and earnings
forecasts made in the last 18 months were misleading and/or misrepresented
material facts and that the Company is also liable for certain allegedly
misleading statements contained in various analysts' reports. The Company
believes that the complaint is without merit and intends to contest it
vigorously. The class action seeks, among other things, compensatory and
rescissory damages, as well as pre-judgment and post-judgment interest, and
attorneys fees, expert witness fees and other costs.
In addition, the Company is a party to various other legal proceedings and
claims in the ordinary course of business. The Company does not believe that
the outcome of any pending matters will have a material adverse affect on its
consolidated financial position, results of operations or liquidity.
Obligations to Settlement Trust
In connection with the Restructuring in 1993, a settlement trust (the
"Trust") was established for the benefit of the holders of certain classes of
pre-bankruptcy claims to resolve certain claims between the Company and other
parties affiliated with the previous owner of the Company. The creation of the
Trust enabled the Company to emerge from bankruptcy without first resolving
these claims. The terms of the Trust require the Company to make loans to the
Trust of up to $37 million, if necessary, to provide funds for Trust
operations, to pay resolved
F-37
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
claims, and to distribute to the Trust beneficiaries any remaining balance
after settling all liabilities. In prior fiscal years, the Company made loans
to the Trust aggregating $4,850,000, and provided an allowance for the full
amount of the loans. During the current fiscal year, the Trust repaid the
loans together with accrued interest of $1,400,000. As a result, the Company
recorded the collection of the loans as other income (see note 15) and
recorded the interest income. The Company believes it is very unlikely to be
required to make any additional loans to the Trust, which by its terms must
settle with its beneficiaries and dissolve by June 8, 1998.
Contingent Pension Liabilities
In connection with the Restructuring in 1993, a liability of $37.7 million
for claims of the Pension Benefit Guaranty Corporation ("PBGC") related to
pension liabilities for unpaid contributions and insurance premiums of certain
pension plans (the "Plans") which were sponsored by certain companies which
were, along with the Company, part of a "controlled group" of companies as
defined by the Employee Retirement Income Security Act of 1974. The amount
accrued was based on a PBGC calculated termination liability. As a result of
agreements executed in fiscal 1997 giving the Company the right to assume
sponsorship of the Plans in the event of certain defaults by the primary plan
sponsors, the liability was adjusted to $26.6 million based on the pension
benefit obligation of the Plans discounted at 7.25%, reduced by the market
value of the Plans' assets. The corresponding reduction in the liability of
$11.1 million was recorded in other nonoperating income in fiscal 1997 (see
note 15).
As a result of the failure of the Plan sponsors' to meet their obligations
to the Plans in fiscal 1998, the Company assumed sponsorship of the Plans and
merged them with an existing Company pension plan on October 14, 1997. The
accrued liability for this matter was reclassified and is included in the
determination of the Company's pension benefit liability at January 31, 1998.
Contingent Liability with Respect to the Old Notes
The reorganization plan provides for payment in full of 100% of the allowed
claim of the holders of certain old notes ("Old Notes") of E-II Holdings, Inc.
(predecessor to Astrum), including approximately $16.4 million of interest on
overdue installments of interest accruing prior to the commencement of
Astrum's bankruptcy case. Various parties have challenged the allowability of
the claim on the basis that interest on overdue installments of interest is
not permitted under applicable non-bankruptcy law. The Company provided for
this contingent liability in its consolidated financial statements when it
emerged from bankruptcy in the amount of $16.4 million.
During fiscal 1997, $4.0 million of such claims were settled for $0.2
million, resulting in the recording of $3.8 million of other nonoperating
income from the favorable settlement of this claim. The holders of the claim
were Apollo Investment Fund, L.P. ("Apollo") and an affiliate of Apollo. At
January 31, 1997, Apollo and its affiliates owned 45.75% of the Company's
issued and outstanding common stock. During fiscal 1998, the Company recorded
other income of $2,060,000 from the favorable settlement of $2,139,000 of such
claims. Also, see note 15.
As a result of a change in New York law in fiscal 1998, which adversely
affected the Company's ability to favorably settle the remaining claims, the
Company has entered into a non-binding agreement-in-principle to settle the
remaining amount of these claims for approximately $9.4 million. At January
31, 1998, other accrued expenses include $10.3 million provided for these
remaining claims. The Company expects final settlement to occur in fiscal
1999.
Union Agreements
Union membership in the Company's European manufacturing plants varies from
country to country and is not officially known; however, it is probable that
most of the workers are affiliated with a union. Most European
F-38
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
union contracts have a one-year term. In the United States, 770 production
employees are unionized under a contract which next expires on April 9, 1999.
(15)OTHER INCOME (EXPENSE)--NET
Other income (expense)--net from continuing operations consisted of the
following:
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
------------------------
1998 1997 1996
------- ------- ------
(IN THOUSANDS)
<S> <C> <C> <C>
Net gains from foreign currency forward delivery
contracts....................................... $ 6,463 $ 2,829 (494)
Rental income.................................... 1,633 1,987 1,735
Equity in loss of unconsolidated affiliate....... (547) (33) --
Foreign currency transaction losses, net......... (1,834) (211) (1,660)
Favorable settlement of claims (note 14)......... 2,060 3,802 --
Adjustment of allowances relating to previous
operations (a).................................. 5,299 529 --
Adjustment of contingent tax accruals (b)........ 12,700 -- --
Collection of loan to settlement trust (note
14)............................................. 4,850 -- --
Adjustment of liability for PBGC claims (note
14)............................................. -- 11,100 --
Loss on disposition of fixed assets, net......... (377) (62) (245)
Gain on sale of television station............... -- -- 5,368
Other, net....................................... (1,953) (1,120) (737)
------- ------- ------
$28,294 $18,821 3,967
======= ======= ======
</TABLE>
- --------
(a) During fiscal 1998, the Company recorded other income resulting from the
adjustment of accruals and allowances of $5,299,000 for potential
environmental liability on real estate and factored receivables related to
previous operations. The adjustments were made upon the termination of the
claim period for the environmental matter and upon collection of the
factored receivables.
(b) During fiscal 1998, certain contingencies related to tax matters arising
prior to and accrued in conjunction with the Restructuring referred to in
Note 1(b) have been resolved. As a result, the Company reduced the related
accruals by $12,700,000. The resolution of such matters did not result in
any cash payment or additional liability for taxes.
F-39
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(16)QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
The following is a summary of the unaudited quarterly financial information:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------------------
APRIL 30, JULY 31, OCTOBER 31, JANUARY 31,
1997 1997 1997 1998
--------- -------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Net sales..................... $169,562 179,545 211,104 176,664
======== ======= ======= =======
Gross profit.................. $ 70,269 78,228 89,859 74,170
======== ======= ======= =======
Income from continuing
operations before
extraordinary item........... $ 8,499 20,291 23,519 4,568
======== ======= ======= =======
Net income.................... $ 1,866 17,301 16,955 4,577
======== ======= ======= =======
Income per share--basic:
Continuing operations before
extraordinary item.......... $ .43 1.00 1.15 .22
======== ======= ======= =======
Net income................... $ .09 .85 .83 .22
======== ======= ======= =======
Income per share--assuming
dilution:
Continuing operations before
extraordinary item.......... $ .41 .96 1.11 .22
======== ======= ======= =======
Net income................... $ .09 .82 .80 .22
======== ======= ======= =======
<CAPTION>
THREE MONTHS ENDED
--------------------------------------------
APRIL 30, JULY 31, OCTOBER 31, JANUARY 31,
1996 1996 1996 1997
--------- -------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Net sales..................... $169,867 179,440 203,817 188,014
======== ======= ======= =======
Gross profit.................. $ 68,665 68,692 80,404 74,044
======== ======= ======= =======
Income (loss) from continuing
operations before
extraordinary item........... $(10,802) (6,183) 3,372 2,290
======== ======= ======= =======
Net income (loss)............. $(10,802) (6,183) 3,372 2,290
======== ======= ======= =======
Income (loss) per share--
basic:
Continuing operations before
extraordinary item.......... $ (0.68) (0.39) 0.21 0.14
======== ======= ======= =======
Net income (loss)............ $ (0.68) (0.39) 0.21 0.14
======== ======= ======= =======
Income (loss) per share--
assuming dilution:
Continuing operations before
extraordinary item.......... $ (0.68) (0.39) 0.20 0.13
======== ======= ======= =======
Net income (loss)............ $ (0.68) (0.39) 0.20 0.13
======== ======= ======= =======
</TABLE>
F-40
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(17)INDUSTRY AND GEOGRAPHICAL AREA INFORMATION
The Company operates primarily in one industry consisting of the
manufacture, marketing, and distribution of luggage, including softside and
hardside suitcases, garment bags, casual bags, business cases and other travel
bags. The Company's operations in non-luggage products and licensing of non-
luggage products are not significant.
Certain geographical data was as follows:
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
--------------------------
1998 1997 1996
-------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Net sales:
United States................................... $426,191 428,450 378,723
Europe.......................................... 284,641 285,841 276,219
Other........................................... 52,275 43,551 27,881
Eliminations.................................... (26,232) (16,704) (7,614)
-------- ------- -------
$736,875 741,138 675,209
======== ======= =======
Operating income (loss):
United States................................... $ 31,215 20,023 22,323
Europe.......................................... 36,722 28,492 27,569
Other........................................... 4,106 (1,640) (1,265)
-------- ------- -------
72,043 46,875 48,627
Unallocated costs--net.......................... (2,741) (31,338) (58,003)
-------- ------- -------
Operating income (loss) (a).................... $ 69,302 15,537 (9,376)
======== ======= =======
</TABLE>
<TABLE>
<CAPTION>
JANUARY 31,
----------------
1998 1997
-------- -------
(IN THOUSANDS)
<S> <C> <C>
Identifiable assets:
United States.............................................. $371,965 342,148
Europe..................................................... 162,286 169,696
Other...................................................... 59,327 39,035
Corporate.................................................. 16,471 41,779
-------- -------
Total..................................................... $610,049 592,658
======== =======
</TABLE>
- --------
(a) The Company enters into foreign exchange contracts in order to reduce its
exposure to fluctuations in currency exchange rates (primarily the Belgian
franc) on certain foreign operations and royalty agreements through the
use of forward delivery commitments. For the years ended January 31, 1998,
1997 and 1996, the Company had net gains (losses) from such transactions
of $6,463,000, $2,829,000 and $(494,000), respectively, which are included
in nonoperating income (see note 15).
Net sales and operating income in the United States includes export sales
and the resulting operating income for products produced within the United
States.
Operating income (loss) represents net sales less operating expenses. In
computing operating income (loss) none of the following items have been added
or deducted: interest income, interest expense, other-- net, income taxes,
minority interest, operations discontinued and sold and extraordinary items.
General corporate expenses and amortization of reorganization value in excess
of identifiable assets are included in unallocated costs-net.
F-41
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Identifiable assets by geographic area are those assets that are used in the
Company's operations in each geographic area. Corporate assets consist of
inactive corporations which hold cash, fixed assets, other receivables,
investments and reorganization value in excess of identifiable assets.
For its foreign subsidiaries, the Company translates net assets at exchange
rates prevailing at the period ending date. Income and expenses are translated
at the average exchange rate during the period.
Net assets of the foreign subsidiaries were $135,347,000 and $124,047,000 at
January 31, 1998 and 1997, respectively. Included as a reduction to
stockholders' equity is the cumulative foreign currency translation adjustment
amounting to $14,449,000 and $5,337,000 at January 31, 1998 and 1997,
respectively.
(18)PUBLIC STOCK OFFERING
On February 11, 1997, the Company completed the sale of 3,300,000 shares of
its common stock in a public offering and received net cash proceeds therefrom
of approximately $130,200,000. In addition, the former CEO (see note 10)
exercised options for 1,853,668 common shares and sold these shares in the
public offering. The Company received approximately $6,600,000 in cash from
the exercise of these options.
(19)SUBSEQUENT EVENT--REPURCHASE OF SUBSTANTIALLY ALL OF THE 11 1/8% SERIES B
SUBORDINATED NOTES.
Subsequent to year end, the Company announced an offer to purchase and
consent solicitation of the holders of the 11 1/8% Series B Subordinated Notes
(the "Series B Notes"). The amount payable by the Company to purchase all of
the Series B Notes and obtain consents of the holders thereof, as determined
pursuant to the offer and consent solicitation, was 115.35% of the principal
amount plus accrued interest. The amount payable consisted of 112.35% of the
principal amount representing the purchase price of the Series B Notes
tendered and 3% of the principal amount for the consent to certain amendments
to the subordinated note indenture.
The offer expired on April 23, 1998 with the Company repurchasing
$52,269,000 principal amount of the Series B Notes on April 24, 1998 for an
aggregate purchase price of $60,290,000. The Company also paid accrued
interest of $1,599,000. The Company will record an extraordinary loss of
approximately $6,300,000 in the first quarter of fiscal 1999 representing the
purchase premium of $8,021,000, the write-off of the deferred financing costs
of $1,527,000, and other expenses of the transaction, net of tax benefit.
F-42
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Samsonite Holdings Inc.
We have audited the accompanying balance sheet of Samsonite Holdings Inc. as
of August 5, 1998. This balance sheet is the responsibility of the Company's
management. Our responsibility is to express an opinion on this balance sheet
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the balance sheet is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the balance sheet. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall balance sheet
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Samsonite Holdings Inc. as of
August 5, 1998 in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Denver, Colorado
August 6, 1998
F-43
<PAGE>
SAMSONITE HOLDINGS INC.
(A WHOLLY OWNED SUBSIDIARY OF SAMSONITE CORPORATION)
BALANCE SHEET
AS OF AUGUST 5, 1998
<TABLE>
<S> <C>
Current asset - cash...................................................... $100
====
Stockholder's equity:
Common stock ($.01 par value; 1,000 shares authorized;
10 shares issued and outstanding)....................................... $ --
Additional paid-in capital............................................... 100
----
Total stockholder's equity.............................................. $100
====
</TABLE>
See accompanying note to balance sheet.
F-44
<PAGE>
SAMSONITE HOLDINGS INC.
(A WHOLLY OWNED SUBSIDIARY OF SAMSONITE CORPORATION)
NOTE TO BALANCE SHEET
AUGUST 5, 1998
(1) GENERAL
Samsonite Holdings Inc. ("Holdings") was incorporated on August 3, 1998
under Delaware law and is a wholly owned subsidiary of Samsonite Corporation
("Samsonite"). Holdings has no operations.
Holdings was formed in the event that Samsonite elects to exchange its
outstanding senior preferred stock for debt securities of Holdings. If such
election were made, it is currently contemplated that Holdings would become a
holding company of Samsonite through a merger transaction pursuant to Section
251(g) of the Delaware General Corporation Law. Subsequent to the merger, the
sole material asset of Holdings would be the capital stock of Samsonite and
Holdings would have no material liabilities other than in respect of the debt
securities issued by Holdings in exchange for the outstanding senior preferred
stock of Samsonite.
F-45
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY, HOLDINGS OR THE INITIAL PURCHASER. THIS PRO-
SPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY SECURITY OTHER THAN THOSE TO WHICH IT RELATES NOR DOES IT CONSTITUTE
AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES OFFERED
HEREBY, IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS NOT BEEN A CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR
IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Forward-Looking Statements............................................... iii
Available Information.................................................... iii
Incorporation of Certain Documents by Reference.......................... iii
Prospectus Summary....................................................... 1
Risk Factors............................................................. 19
The Recapitalization..................................................... 27
Concurrent Offering...................................................... 28
Use of Proceeds.......................................................... 28
Capitalization........................................................... 29
Selected Historical and Pro Forma Consolidated Financial Information..... 30
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 38
The Exchange Offer....................................................... 56
Business................................................................. 63
Management............................................................... 74
Security Ownership of Certain Beneficial Owners and Management........... 77
Description of Senior Preferred Stock and Exchange Debentures............ 79
Book-Entry; Delivery and Form............................................ 115
Description of New Credit Facility....................................... 119
Description of Capital Stock............................................. 120
Certain U.S. Federal Income Tax
Considerations.......................................................... 124
Plan of Distribution..................................................... 130
Legal Matters............................................................ 130
Experts.................................................................. 130
Index to Consolidated Financial Statements............................... F-1
</TABLE>
UNTIL , 1998 (90 DAYS FOLLOWING THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE NEW SENIOR PREFERRED STOCK WHETHER OR
NOT PARTICIPATING IN THE EXCHANGE OFFER MAY BE REQUIRED TO DELIVER A
PROSPECTUS.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SAMSONITE CORPORATION
175,000 SHARES OF 13 7/8% SENIOR REDEEMABLE EXCHANGEABLE PREFERRED STOCK
$175,000,000 13 7/8% JUNIOR SUBORDINATED DEBENTURES DUE 2010
SAMSONITE HOLDINGS INC.
$175,000,000 13 7/8% SENIOR DEBENTURES DUE 2010
----------------------
PROSPECTUS
----------------------
, 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION AND BY-LAWS
Samsonite Corporation's (the "Company") Amended and Restated
Certificate of Incorporation provides that each person who is or was or
had agreed to become a director or officer of the Company, or each such
person who is or was serving or who had agreed to serve at the request
of the Board of Directors of the Company as an employee or agent of the
Company or as director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise
(including the heirs, executors, administrators or estate of such
person), shall be indemnified by the Company, in accordance with the
By-Laws of the Company, to the full extent permitted from time to time
by the General Corporation Law of the State of Delaware (the "DGCL"),
as the same exists or may hereafter be amended or any other applicable
laws as presently or hereafter in effect. The Company's Amended and
Restated Certificate of Incorporation also specifically authorizes the
Company to enter into one or more agreements with any person which
provide for indemnification greater or different than that provided by
the Company's Amended and Restated Certificate of Incorporation.
The Company's By-Laws provide that each person who was or is made a
party or is threatened to be made a party to or is involved in any
action, suit, or proceeding, whether civil, criminal, administrative or
investigative (a "Proceeding"), by reason of the fact that he or she or
a person of whom he or she is the legal representative is or was a
director, officer or employee of the Company or is or was serving at
the request of the Company as a director, officer, employee or agent of
another corporation or of a partnership, joint venture, trust or other
enterprise including service with respect to employee benefit plans,
whether the basis of such Proceeding is alleged action in an official
capacity as a director, officer, employee or agent or in any other
capacity while serving as a director, officer, employee or agent, shall
be indemnified and held harmless by the Company to the fullest extent
authorized by the DGCL as the same exists or may hereafter be amended
(but, in the case of any such amendment, only to the extent that such
amendment permits the Company to provide broader indemnification rights
than said law permitted the Company to provide prior to such
amendment), against all expense, liability and loss (including, without
limitation, attorneys' fees, judgments, fines, ERISA, excise taxes or
penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of
his or her heirs, executors and administrators; provided, however, that
except as provided in the next paragraph with respect to Proceedings
seeking to enforce rights to indemnification, the Company shall
indemnify any such person seeking indemnification in connection with a
Proceeding (or part thereof) initiated by such person only if such
Proceeding (or part thereof) was authorized by the Board of Directors
of the Company.
Pursuant to the Company's By-Laws, if a claim described in the
preceding paragraph is not paid in full by the Company within thirty
days after a written claim has been received by the Company, the
claimant may at any time thereafter bring suit against the Company to
recover the unpaid amount of the claim and, if successful in whole or
in part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. The Company's By-Laws provide that it shall be
a defense to any such action (other than an action brought to enforce a
claim for expenses incurred in defending any Proceeding in advance of
its final disposition where the required undertaking, if any is
required, has been tendered to the Company) that the claimant has not
met the standards of conduct which make it permissible under the DGCL
for the Company to indemnify the claimant for the amount claimed, but
the burden of proving such defense will be on the Company. Neither the
failure of the Company (including its Board of Directors, independent
legal counsel or stockholders) to have made a determination prior to
the commencement of such action that indemnification of the claimant is
proper in the circumstances because he or she has met the applicable
standard of conduct set forth in the DGCL, nor an actual determination
by the Company (including its Board of Directors, independent legal
counsel or stockholders) that the claimant has not met such applicable
standard of conduct, shall
II-1
<PAGE>
be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct. The Company's By-Laws
provide that following any "change in control" of the Company of the
type required to be reported under Item 1 of Form 8-K promulgated under
the Securities Exchange Act of 1934, as amended, any determination as to
entitlement to indemnification shall be made by independent legal
counsel selected by the claimant, which independent legal counsel shall
be retained by the Board of Directors on behalf of the Company.
The Company's By-Laws provide that the right to indemnification and
the payment of expenses incurred in defending a Proceeding in advance of
its final disposition conferred in the Company's By-Laws shall not be
exclusive of any other right which any person may have or hereafter
acquire under any statute, provision of the Company's Amended and
Restated Certificate of Incorporation, the Company's By-Laws, agreement,
vote of stockholders or disinterested directors or otherwise. The
Company's By-Laws permit the Company to maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent
of the Company or another corporation, partnership, joint venture, trust
or other enterprise against any expense, liability or loss, whether or
not the Company would have the power to indemnify such person against
such expense, liability or loss under the DGCL. In addition, the
Company's By-Laws authorize the Company, to the extent authorized from
time to time by the Company's Board of Directors, to grant rights to
indemnification, and rights to be paid by the Company the expenses
incurred in defending any Proceeding in advance of its final
disposition, to any agent of the Company to the fullest extent of the
provisions of the Company's By-Laws with respect to the indemnification
and advancement of expenses of directors, officers and employees of the
Company.
The Company's By-Laws provide that the right to indemnification
conferred therein shall be a contract right and shall include the right
to be paid by the Company the expenses incurred in defending any such
Proceeding in advance of its final disposition; provided, however, that
if the DGCL requires, the payment of such expenses incurred by a
director or officer in his or her capacity as a director or officer (and
not in any other capacity in which service was or is rendered by such
person while a director or officer, including, without limitation,
service to an employee benefit plan) in advance of the final disposition
of a Proceeding, shall be made only upon delivery to the Company of an
undertaking by or on behalf of such director or officer, to repay all
amounts so advanced if it is ultimately determined that such director or
officer is not entitled to be indemnified under the Company's By-Laws or
otherwise.
If the Company elects to have Samsonite Holdings Inc. ("Holdings")
issue the 13 7/8% Senior Debentures due 2010 of Holdings registered
hereby, it is currently contemplated that Holdings would become a
holding company of the Company through a merger transaction pursuant to
Section 251(g) of the Delaware General Corporation Law and, accordingly,
the Certificate of Incorporation and By-Laws of Holdings immediately
following the effective time of the merger would contain provisions
identical to the Certificate of Incorporation and By-Laws of the Company
immediately prior to the effective time of the merger.
INDEMNIFICATION AGREEMENTS
The Company has entered into indemnification agreements with certain
of the Company's directors and officers. The indemnification agreements
require, among other things, the Company to indemnify the directors and
officers to the fullest extent permitted by law, and to advance to such
directors and officers all related expenses, subject to reimbursement if
it is subsequently determined that indemnification is not permitted. The
Company will also indemnify and advance all expenses incurred by such
directors and officers seeking to enforce their rights under the
indemnification agreements, and cover directors and officers under the
Company's directors' and officers' liability insurance. Although such
indemnification agreements will offer substantially the same scope of
coverage afforded by provisions in the Company's Amended and Restated
Certificate of Incorporation and the Company's By-Laws, they provide
greater assurance to directors and officers that indemnification will be
available because, as a contract, it cannot be modified unilaterally in
the future by the Board of Directors of the Company or by the
stockholders to eliminate the rights provided therein. Indemnification
for officers of the Company is or will be provided for in their
respective employment agreements.
II-2
<PAGE>
ITEM 21. EXHIBITS.
The following is a list of Exhibits, which are filed herewith or incorporated
herein by reference:
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
2.1 Distribution Agreement, dated as of July 14, 1995, between the Company
and Culligan Water Technologies, Inc.(1)
2.2 Tax Sharing Agreement, dated as of July 14, 1995, between the Company
and Culligan Water Technologies, Inc.(1)
2.3 Company's Second Amended Plan of Reorganization Under Chapter 11 of
the Bankruptcy Code, dated February 17, 1993 (the "Plan").(2)
2.4 Modification of the Plan, dated May 21, 1993.(3)
2.5 Notice to holders of Notes regarding the Stock Elections described in
the Plan.(3)
2.6 Order of the United States Bankruptcy Court for the Southern District
of New York, dated May 25, 1993, confirming the Plan and authorizing
and directing certain actions in connection therewith.(3)
3.1 Amended and Restated Certificate of Incorporation of the Company.(4)
3.2 Certificate of Ownership and Merger dated July 14, 1995.(1)
3.3 By-Laws of the Company.(4)
3.4 Certificate of Incorporation of Samsonite Holdings Inc.
3.5 By-Laws of Samsonite Holdings Inc.
4.1 Certificate of Designation of the Powers, Preferences and Relative,
Participating, Optional and other Special Rights of 13 7/8% Senior
Redeemable Exchangeable Preferred Stock and Qualifications,
Limitations and Restrictions thereof.
4.2 Certificate of Correction to the Certificate of Designation of the
Powers, Preferences and Relative, Participating, Optional and other
Special Rights of 13 7/8% Senior Redeemable Exchangeable Preferred
Stock and Qualifications, Limitations and Restrictions thereof.
4.3 Indenture, in respect of the 13 7/8% Junior Subordinated Debentures
due 2010 of the Company, dated as of June 24, 1998, between the
Company and United States Trust Company of New York.
4.4 Form of Indenture, in respect of the 13 7/8% Senior Debentures due
2010 of Holdings, to be dated as of the Exchange Date, between
Samsonite Holdings Inc. and United States Trust Company of New York.
4.5 Registration Rights Agreement, in respect of the 13 7/8% Senior
Redeemable Exchangeable Preferred Stock, dated as of June 24, 1998,
between the Company and CIBC Oppenheimer Corp.
4.6 Indenture, in respect of the 10 3/4% Senior Subordinated Notes due
2008, dated as of June 24, 1998, between the Company and United States
Trust Company of New York.
4.7 Registration Rights Agreement, in respect of the 10 3/4% Senior
Subordinated Notes due 2008, dated as of June 24, 1998, by and among
the Company, CIBC Oppenheimer Corp., BancAmerica Robertson Stephens,
BancBoston Securities Inc. and Goldman, Sachs & Co.
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP.
10.1 Second Amended and Restated Multicurrency Revolving Credit and Term
Loan Agreement, dated as of June 24, 1998, between the Company,
Samsonite Europe N.V. and Bank of America National Trust and Savings
Association, BankBoston N.A. and various other lending institutions,
Bank of America National Trust and Savings Association, as
Administrative Agent, BankBoston, N.A., as Syndication Agent, Canadian
Imperial Bank of Commerce, as Documentation Agent and BancAmerica
Robertson Stephens and BancBoston Securities Inc., as Arrangers.
10.2 Rights Agreement, dated as of May 12, 1998, between the Company and
BankBoston, N.A. as Rights Agent, including the form of Certificate of
Designation, Preferences and Rights setting forth the terms of the
Series B Junior Participating Preferred Stock, par value $0.01 per
share, as Exhibit A, the form of Rights Certificate as Exhibit B and
the Summary of Rights to Purchase Series B Junior Participating
Preferred Stock as Exhibit C.(14)
10.3 Stock Option Agreement, dated as of May 15, 1996, between the Company
and Richard R. Nicolosi.(8)
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
10.4 Form of Indemnification Agreement entered into or to be entered into
by the Company with each of R. Theodore Ammon, Leon D. Black, Robert
H. Falk, Thomas J. Leonard, Marc J. Rowan, Stephen J. Solarz, Gregory
Wm. Hunt, Carl C. Ichan, Mark H. Rachesky and Robert L. Rosen.(3)
10.5 Employment Agreement, dated as of February 1, 1998, between the
Company and Thomas R. Sandler.(13)
10.6 Consulting Agreement, dated as of February 1, 1998, between Samsonite
Europe N.V. and Luc Van Nevel.(13)
10.7 Executive Management Agreement, dated February 1, 1998, between the
Company and Luc Van Nevel.(13)
10.8 Employment Agreement, dated as of February 1, 1998, between Samsonite
GmbH and Karlheinz Tretter.(13)
10.9 Overall Agreement, dated as of February 1, 1998, between the Company
and Karlheinz Tretter.(13)
10.10 Samsonite Corporation 1995 Stock Option and Incentive Award Plan (as
amended in 1996).(10)
10.11 Samsonite Corporation 1995 Stock Option and Incentive Award Plan,
Second Amendment.(9)
10.12 Stock Option Agreement, dated as of February 20, 1996, between the
Company and Thomas J. Leonard.(4)
10.13 Stock Option Agreement, dated as of February 20, 1996, between the
Company and Thomas R. Sandler.(4)
10.14 Stock Option Agreement, dated as of February 20, 1996, between the
Company and Luc Van Nevel.(4)
10.15 Stock Option Agreement, dated as of February 20, 1996, between the
Company and Karlheinz Tretter.(4)
10.16 Registration Rights Agreement, dated as of May 15, 1996, between the
Company and Richard R. Nicolosi.(5)
10.17 Stock Sale Agreement, dated as of May 16, 1996, between the Company
and Richard R. Nicolosi.(5)
10.18 Agreement, made as of June 11, 1998, between the Company and Luc Van
Nevel.
10.19 Agreement, made as of June 11, 1998, between the Company and Thomas R.
Sandler.
10.20 Form of Stock Option Agreement for Awards under the 1995 Stock Option
and Incentive Award Plan (as amended in 1996).(8)
10.21 Samsonite Corporation 1996 Directors' Stock Plan.(10)
10.22 Final Settlement Agreement, made as of June 20, 1996, among the
Company, the Pension Benefit Guaranty Corporation and others named
therein (including exhibits thereto), with respect to the Schenley
Pension Plan.(6)
10.23 Final Settlement Agreement, made as of June 20, 1996, among the
Company, the Pension Benefit Guaranty Corporation and others named
therein (including exhibits thereto), with respect to the McCrory
Pension Plan.(6)
10.24 Purchase Agreement, dated as of June 13, 1996, between the Company and
Artemis America Partnership and Apollo Investment Fund, L.P.(6)
10.25 Employment Agreement, effective as of August 1, 1996, between the
Company and John P. Murtagh.(7)
10.26 Amended and Restated Employment Agreement, dated as of October 1,
1997, between the Company and John P. Murtagh.(11)
10.27 Employment Agreement, effective as of September 16, 1996, between the
Company and Robert P. Baird, Jr.(7)
10.28 Employment Agreement, effective as of August 4, 1996, between the
Company and James E. Barch.(7)
10.29 Employment Agreement, effective as of September 10, 1996, between the
Company and Gary D. Ervick.(7)
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
10.30 Amended and Restated Option Agreement, dated as of October 1, 1997,
between the Company and John P. Murtagh.(11)
10.31 Stock Option Agreement, dated as of September 16, 1996, between the
Company and Robert P. Baird, Jr.(7)
10.32 Stock Option Agreement, dated as of August 5, 1996, between the
Company and James E. Barch.(7)
10.33 Stock Option Agreement, dated as of August 21, 1996, between the
Company and Gary D. Ervick.(7)
10.34 Stock Option Agreement, dated as of October 29, 1996, between the
Company and Thomas R. Sandler.(12)
10.35 Stock Option Agreement, dated as of October 29, 1996, between the
Company and Karlheinz Tretter.(12)
10.36 Stock Option Agreement, dated as of January 16, 1997, between the
Company and Gary D. Ervick.(12)
10.37 Employment Agreement, effective as of February 1, 1998, between the
Company and Richard H. Wiley.(13)
10.38 Employment Agreement, effective as of February 1, 1998, between the
Company and Carlo Zezza.(13)
10.39 Trademark Purchase and Assignment Agreement, dated as of October 31,
1997, between the Company's subsidiary, McGregor L.L.C. and McGregor
International Licensing N.V.(11)
10.40 Trademark Option Agreement, dated as of October 31, 1997, between the
Company's subsidiary, McGregor L.L.C. and McGregor International
Licensing N.V.(11)
12.1 Statements re: Computation of Ratios.
21.1 Subsidiaries of the Company.(12)
23.1 Consent of KPMG Peat Marwick LLP in respect of the Company.
23.2 Consent of KPMG Peat Marwick LLP in respect of Holdings.
23.3 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in
Exhibit 5.1).
24.1 Powers of Attorney (included in the signature pages to this
registration statement).
25.1 Form T-1 Statement of Eligibility of Trustee with respect to the
Indenture for the 13 7/8% Junior Subordinated Debentures due 2010 of
the Company.
25.2 Form T-1 Statement of Eligibility of Trustee with respect to the Form
of Indenture for the 13 7/8% Senior Debentures due 2010 of Holdings.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Letter to Clients.
99.4 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees.
</TABLE>
- --------
(1) Incorporated by reference from the Registration Statement on Form S-4
(Registration No. 33-95642).
(2) Incorporated by reference from the Application for Qualification of
Indenture on Form T-3 (File No. 22-24448).
(3) Incorporated by reference from the Registration Statement on Form S-1
(Registration No. 33-71224).
(4) Incorporated by reference from the Company's Annual Report on Form 10-K
for the fiscal year ended January 31, 1996 (File No. 0-23214).
(5) Incorporated by reference from the Company's Quarterly Report on Form 10-
Q for the three months ended April 30, 1996 (File No. 0-23214).
(6) Incorporated by reference from the Company's Quarterly Report on Form 10-
Q for the three months ended July 31, 1996 (File No. 0-23214).
(7) Incorporated by reference from the Company's Quarterly Report on Form 10-
Q for the three months ended October 31, 1996 (File No. 0-23214).
(8) Incorporated by reference from the Registration Statement on Form S-8
filed June 7, 1996 (File No. 333-05467).
II-5
<PAGE>
(9) Incorporated by reference from the Registration Statement on Form S-8
filed January 30, 1997 (File No. 333-20775).
(10) Incorporated by reference from the Proxy Statement filed May 24, 1996.
(11) Incorporated by reference from the Company's Quarterly Report on Form 10-
Q for the three months ended October 31, 1997 (File No. 0-23214).
(12) Incorporated by reference from the Company's Annual Report on Form 10-K
for the fiscal year ended January 31, 1997 (File No. 0-23214).
(13) Incorporated by reference from the Company's Annual Report on Form 10-K
for the fiscal year ended January 31, 1998 (File No. 0-23214).
(14) Incorporated by reference from the Company's Report on Form 8-K filed May
13, 1998 (File No. 0-23214).
ITEM 22. UNDERTAKINGS.
The undersigned registrants hereby undertake as follows:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended (the "Securities Act"), each such post-
effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at the time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) For purposes of determining any liability under the Securities Act,
each filing of the registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(5) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in
II-6
<PAGE>
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
(6) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this
Form, within one business day of receipt of such request, and to send the
incorporated documents by first-class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding
to the request.
(7) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when
it became effective.
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Denver,
State of Colorado on the 14th day of August, 1998.
SAMSONITE CORPORATION
/s/ D. Michael Clayton
By: _________________________________
Name: D. Michael Clayton
Title: General Counsel and Vice
President--Legal
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Thomas R.
Sandler, Richard H. Wiley and D. Michael Clayton, and each of them
individually without the others, as his lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments to
this registration statement, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing requisite and
necessary fully to all intents and purposes as he might or could do in person
thereby ratifying and confirming all that said attorney-in-fact and agent, or
his substitute, may lawfully do or cause to be done by the virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED ON ITS BEHALF BY THE FOLLOWING PERSONS
IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
/s/ Richard R. Nicolosi Chairman of the August 14, 1998
--------------------------- Board
Richard R. Nicolosi
/s/ Luc Van Nevel President and Chief August 14, 1998
--------------------------- Executive Officer
Luc Van Nevel and Director
(principal
executive officer)
/s/ R. Theodore Ammon Director August 14, 1998
---------------------------
R. Theodore Ammon
/s/ Bernard Attal Director August 14, 1998
---------------------------
Bernard Attal
II-8
<PAGE>
SIGNATURE TITLE DATE
/s/ Leon D. Black Director August 14, 1998
--------------------------
Leon D. Black
/s/ Robert H. Falk Director August 14, 1998
--------------------------
Robert H. Falk
/s/ Mark H. Rachesky Director August 14, 1998
--------------------------
Mark H. Rachesky
/s/ Robert L. Rosen Director August 14, 1998
--------------------------
Robert L. Rosen
/s/ Marc J. Rowan Director August 14, 1998
--------------------------
Marc J. Rowan
/s/ Stephen J. Solarz Director August 14, 1998
--------------------------
Stephen J. Solarz
/s/ Richard H. Wiley Chief Financial August 14, 1998
-------------------------- Officer (principal
Richard H. Wiley financial and
accounting officer)
II-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Denver,
State of Colorado on the 14th day of August, 1998.
SAMSONITE HOLDINGS INC.
/s/ Thomas R. Sandler
By: __________________________________
Name: Thomas R. Sandler
Title: Senior Vice President and
Secretary
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Thomas R.
Sandler and Richard H. Wiley, and each of them individually without the other,
as his lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments to this registration statement, and
to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary fully to all intents and purposes
as he might or could do in person thereby ratifying and confirming all that
said attorney-in-fact and agent, or his substitute, may lawfully do or cause to
be done by the virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED ON ITS BEHALF BY THE FOLLOWING PERSONS
IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
/s/ Luc Van Nevel President and August 14, 1998
--------------------------- Director
Luc Van Nevel (principal
executive officer)
/s/ Thomas R. Sandler Senior Vice August 14, 1998
--------------------------- President and
Thomas R. Sandler Secretary
/s/ Richard H. Wiley Chief Financial August 14, 1998
--------------------------- Officer and
Richard H. Wiley Treasurer
(principal
financial and
accounting
officer)
II-10
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
2.1 Distribution Agreement, dated as of July 14, 1995, between the Company
and Culligan Water Technologies, Inc.(1)
2.2 Tax Sharing Agreement, dated as of July 14, 1995, between the Company
and Culligan Water Technologies, Inc.(1)
2.3 Company's Second Amended Plan of Reorganization Under Chapter 11 of
the Bankruptcy Code, dated February 17, 1993 (the "Plan").(2)
2.4 Modification of the Plan, dated May 21, 1993.(3)
2.5 Notice to holders of Notes regarding the Stock Elections described in
the Plan.(3)
2.6 Order of the United States Bankruptcy Court for the Southern District
of New York, dated May 25, 1993, confirming the Plan and authorizing
and directing certain actions in connection therewith.(3)
3.1 Amended and Restated Certificate of Incorporation of the Company.(4)
3.2 Certificate of Ownership and Merger dated July 14, 1995.(1)
3.3 By-Laws of the Company.(4)
3.4 Certificate of Incorporation of Samsonite Holdings Inc.
3.5 By-Laws of Samsonite Holdings Inc.
4.1 Certificate of Designation of the Powers, Preferences and Relative,
Participating, Optional and other Special Rights of 13 7/8% Senior
Redeemable Exchangeable Preferred Stock and Qualifications,
Limitations and Restrictions thereof.
4.2 Certificate of Correction to the Certificate of Designation of the
Powers, Preferences and Relative, Participating, Optional and other
Special Rights of 13 7/8% Senior Redeemable Exchangeable Preferred
Stock and Qualifications, Limitations and Restrictions thereof.
4.3 Indenture, in respect of the 13 7/8% Junior Subordinated Debentures
due 2010 of the Company, dated as of June 24, 1998, between the
Company and United States Trust Company of New York.
4.4 Form of Indenture, in respect of the 13 7/8% Senior Debentures due
2010 of Holdings, to be dated as of the Exchange Date, between
Samsonite Holdings Inc. and United States Trust Company of New York.
4.5 Registration Rights Agreement, in respect of the 13 7/8% Senior
Redeemable Exchangeable Preferred Stock, dated as of June 24, 1998,
between the Company and CIBC Oppenheimer Corp.
4.6 Indenture, in respect of the 10 3/4% Senior Subordinated Notes due
2008, dated as of June 24, 1998, between the Company and United States
Trust Company of New York.
4.7 Registration Rights Agreement, in respect of the 10 3/4% Senior
Subordinated Notes due 2008, dated as of June 24, 1998, by and among
the Company, CIBC Oppenheimer Corp., BancAmerica Robertson Stephens,
BancBoston Securities Inc. and Goldman, Sachs & Co.
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP.
10.1 Second Amended and Restated Multicurrency Revolving Credit and Term
Loan Agreement, dated as of June 24, 1998, between the Company,
Samsonite Europe N.V. and Bank of America National Trust and Savings
Association, BankBoston N.A. and various other lending institutions,
Bank of America National Trust and Savings Association, as
Administrative Agent, BankBoston, N.A., as Syndication Agent, Canadian
Imperial Bank of Commerce, as Documentation Agent and BancAmerica
Robertson Stephens and BancBoston Securities Inc., as Arrangers.
10.2 Rights Agreement, dated as of May 12, 1998, between the Company and
BankBoston, N.A. as Rights Agent, including the form of Certificate of
Designation, Preferences and Rights setting forth the terms of the
Series B Junior Participating Preferred Stock, par value $0.01 per
share, as Exhibit A, the form of Rights Certificate as Exhibit B and
the Summary of Rights to Purchase Series B Junior Participating
Preferred Stock as Exhibit C.(14)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
10.3 Stock Option Agreement, dated as of May 15, 1996, between the Company
and Richard R. Nicolosi.(8)
10.4 Form of Indemnification Agreement entered into or to be entered into
by the Company with each of R. Theodore Ammon, Leon D. Black, Robert
H. Falk, Thomas J. Leonard, Marc J. Rowan, Stephen J. Solarz, Gregory
Wm. Hunt, Carl C. Ichan, Mark H. Rachesky and Robert L. Rosen.(3)
10.5 Employment Agreement, dated as of February 1, 1998, between the
Company and Thomas R. Sandler.(13)
10.6 Consulting Agreement, dated as of February 1, 1998, between Samsonite
Europe N.V. and Luc Van Nevel.(13)
10.7 Executive Management Agreement, dated February 1, 1998, between the
Company and Luc Van Nevel.(13)
10.8 Employment Agreement, dated as of February 1, 1998, between Samsonite
GmbH and Karlheinz Tretter.(13)
10.9 Overall Agreement, dated as of February 1, 1998, between the Company
and Karlheinz Tretter.(13)
10.10 Samsonite Corporation 1995 Stock Option and Incentive Award Plan (as
amended in 1996).(10)
10.11 Samsonite Corporation 1995 Stock Option and Incentive Award Plan,
Second Amendment.(9)
10.12 Stock Option Agreement, dated as of February 20, 1996, between the
Company and Thomas J. Leonard.(4)
10.13 Stock Option Agreement, dated as of February 20, 1996, between the
Company and Thomas R. Sandler.(4)
10.14 Stock Option Agreement, dated as of February 20, 1996, between the
Company and Luc Van Nevel.(4)
10.15 Stock Option Agreement, dated as of February 20, 1996, between the
Company and Karlheinz Tretter.(4)
10.16 Registration Rights Agreement, dated as of May 15, 1996, between the
Company and Richard R. Nicolosi.(5)
10.17 Stock Sale Agreement, dated as of May 16, 1996, between the Company
and Richard R. Nicolosi.(5)
10.18 Agreement, made as of June 11, 1998, between the Company and Luc Van
Nevel.
10.19 Agreement, made as of June 11, 1998, between the Company and Thomas R.
Sandler.
10.20 Form of Stock Option Agreement for Awards under the 1995 Stock Option
and Incentive Award Plan (as amended in 1996).(8)
10.21 Samsonite Corporation 1996 Directors' Stock Plan.(10)
10.22 Final Settlement Agreement, made as of June 20, 1996, among the
Company, the Pension Benefit Guaranty Corporation and others named
therein (including exhibits thereto), with respect to the Schenley
Pension Plan.(6)
10.23 Final Settlement Agreement, made as of June 20, 1996, among the
Company, the Pension Benefit Guaranty Corporation and others named
therein (including exhibits thereto), with respect to the McCrory
Pension Plan.(6)
10.24 Purchase Agreement, dated as of June 13, 1996, between the Company and
Artemis America Partnership and Apollo Investment Fund, L.P.(6)
10.25 Employment Agreement, effective as of August 1, 1996, between the
Company and John P. Murtagh.(7)
10.26 Amended and Restated Employment Agreement, dated as of October 1,
1997, between the Company and John P. Murtagh.(11)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
10.27 Employment Agreement, effective as of September 16, 1996, between the
Company and Robert P. Baird, Jr.(7)
10.28 Employment Agreement, effective as of August 4, 1996, between the
Company and James E. Barch.(7)
10.29 Employment Agreement, effective as of September 10, 1996, between the
Company and Gary D. Ervick.(7)
10.30 Amended and Restated Option Agreement, dated as of October 1, 1997,
between the Company and John P. Murtagh.(11)
10.31 Stock Option Agreement, dated as of September 16, 1996, between the
Company and Robert P. Baird, Jr.(7)
10.32 Stock Option Agreement, dated as of August 5, 1996, between the
Company and James E. Barch.(7)
10.33 Stock Option Agreement, dated as of August 21, 1996, between the
Company and Gary D. Ervick.(7)
10.34 Stock Option Agreement, dated as of October 29, 1996, between the
Company and Thomas R. Sandler.(12)
10.35 Stock Option Agreement, dated as of October 29, 1996, between the
Company and Karlheinz Tretter.(12)
10.36 Stock Option Agreement, dated as of January 16, 1997, between the
Company and Gary D. Ervick.(12)
10.37 Employment Agreement, effective as of February 1, 1998, between the
Company and Richard H. Wiley.(13)
10.38 Employment Agreement, effective as of February 1, 1998, between the
Company and Carlo Zezza.(13)
10.39 Trademark Purchase and Assignment Agreement, dated as of October 31,
1997, between the Company's subsidiary, McGregor L.L.C. and McGregor
International Licensing N.V.(11)
10.40 Trademark Option Agreement, dated as of October 31, 1997, between the
Company's subsidiary, McGregor L.L.C. and McGregor International
Licensing N.V.(11)
12.1 Statements re: Computation of Ratios.
21.1 Subsidiaries of the Company.(12)
23.1 Consent of KPMG Peat Marwick LLP in respect of the Company.
23.2 Consent of KPMG Peat Marwick LLP in respect of Holdings.
23.3 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in
Exhibit 5.1).
24.1 Powers of Attorney (included in the signature pages to this
registration statement).
25.1 Form T-1 Statement of Eligibility of Trustee with respect to the
Indenture for the 13 7/8% Junior Subordinated Debentures due 2010 of
the Company.
25.2 Form T-1 Statement of Eligibility of Trustee with respect to the Form
of Indenture for the 13 7/8% Senior Debentures due 2010 of Holdings.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Letter to Clients.
99.4 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees.
</TABLE>
- --------
(1) Incorporated by reference from the Registration Statement on Form S-4
(Registration No. 33-95642).
(2) Incorporated by reference from the Application for Qualification of
Indenture on Form T-3 (File No. 22-24448).
<PAGE>
(3) Incorporated by reference from the Registration Statement on Form S-1
(Registration No. 33-71224).
(4) Incorporated by reference from the Company's Annual Report on Form 10-K
for the fiscal year ended January 31, 1996 (File No. 0-23214).
(5) Incorporated by reference from the Company's Quarterly Report on Form 10-
Q for the three months ended April 30, 1996 (File No. 0-23214).
(6) Incorporated by reference from the Company's Quarterly Report on Form 10-
Q for the three months ended July 31, 1996 (File No. 0-23214).
(7) Incorporated by reference from the Company's Quarterly Report on Form 10-
Q for the three months ended October 31, 1996 (File No. 0-23214).
(8) Incorporated by reference from the Registration Statement on Form S-8
filed June 7, 1996 (File No. 333-05467).
(9) Incorporated by reference from the Registration Statement on Form S-8
filed January 30, 1997 (File No. 333-20775).
(10) Incorporated by reference from the Proxy Statement filed May 24, 1996.
(11) Incorporated by reference from the Company's Quarterly Report on Form 10-
Q for the three months ended October 31, 1997 (File No. 0-23214).
(12) Incorporated by reference from the Company's Annual Report on Form 10-K
for the fiscal year ended January 31, 1997 (File No. 0-23214).
(13) Incorporated by reference from the Company's Annual Report on Form 10-K
for the fiscal year ended January 31, 1998 (File No. 0-23214).
(14) Incorporated by reference from the Company's Report on Form 8-K filed May
13, 1998 (File No. 0-23214).
<PAGE>
EXHIBIT 3.4
CERTIFICATE OF INCORPORATION
OF
SAMSONITE HOLDINGS INC.
FIRST: The name of the Corporation is Samsonite Holdings Inc.
-----
(hereinafter the "Corporation").
SECOND: The address of the registered office of the Corporation in
------
the State of Delaware is 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at that address is The
Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act
-----
or activity for which a corporation may be organized under the General
Corporation Law of the State of Delaware as set forth in Title 8 of the Delaware
Code (the "GCL").
FOURTH: The total number of shares of stock which the Corporation
------
shall have authority to issue is 1000 shares of Common Stock, each having a par
value of one penny ($.01).
FIFTH: The name and mailing address of the Sole Incorporator is as
-----
follows:
Name Address
---- -------
Deborah M. Reusch P.O. Box 636
Wilmington, DE 19899
SIXTH: The following provisions are inserted for the management of
-----
the business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:
(1) The business and affairs of the Corporation shall be managed by
or under the direction of the Board of Directors.
<PAGE>
(2) The directors shall have concurrent power with the stockholders
to make, alter, amend, change, add to or repeal the By-Laws of the
Corporation.
(3) The number of directors of the Corporation shall be as from time
to time fixed by, or in the manner provided in, the By-Laws of the
Corporation. Election of directors need not be by written ballot unless the
By-Laws so provide.
(4) No director shall be personally liable to the Corporation or any
of its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) pursuant to Section 174 of the GCL or (iv) for any
transaction from which the director derived an improper personal benefit.
Any repeal or modification of this Article SIXTH by the stockholders of the
Corporation shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or
modification with respect to acts or omissions occurring prior to such
repeal or modification.
(5) In addition to the powers and authority hereinbefore or by
statute expressly conferred upon them, the directors are hereby empowered
to exercise all such powers and do all such acts and things as may be
exercised or done by the Corporation, subject, nevertheless, to the
provisions of the GCL, this Certificate of Incorporation, and any By-Laws
adopted by the stockholders; provided, however, that no By-Laws hereafter
adopted by the stockholders shall invalidate any prior act of the directors
which would have been valid if such By-Laws had not been adopted.
SEVENTH: Meetings of stockholders may be held within or without the
-------
State of Delaware, as the By-Laws
2
<PAGE>
may provide. The books of the Corporation may be kept (subject to any provision
contained in the GCL) outside the State of Delaware at such place or places as
may be designated from time to time by the Board of Directors or in the By-Laws
of the Corporation.
EIGHTH: The Corporation reserves the right to amend, alter, change or
------
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
I, THE UNDERSIGNED, being the Sole Incorporator hereinbefore named,
for the purpose of forming a corporation pursuant to the GCL, do make this
Certificate, hereby declaring and certifying that this is my act and deed and
the facts herein stated are true, and accordingly have hereunto set my hand this
3rd day of August, 1998.
________________________________
Deborah M. Reusch
Sole Incorporator
3
<PAGE>
EXHIBIT 3.5
BY-LAWS
OF
SAMSONITE HOLDINGS INC.
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
-------
Section 1. Registered Office. The registered office of the
--------- -----------------
Corporation shall be in the City of Wilmington, County of New Castle, State of
Delaware.
Section 2. Other Offices. The Corporation may also have offices at
--------- -------------
such other places both within and without the State of Delaware as the Board of
Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
------------------------
Section 1. Place of Meetings. Meetings of the stockholders for the
--------- -----------------
election of directors or for any other purpose shall be held at such time and
place, either within or without the State of Delaware as shall be designated
from time to time by the Board of Directors.
<PAGE>
Section 2. Annual Meetings. The Annual Meetings of Stockholders for
--------- ---------------
the election of directors shall be held on such date and at such time as shall
be designated from time to time by the Board of Directors. Any other proper
business may be transacted at the Annual Meeting of Stockholders.
Section 3. Special Meetings. Unless otherwise required by law or by
--------- ----------------
the certificate of incorporation of the Corporation, as amended and restated
from time to time (the "Certificate of Incorporation"), Special Meetings of
Stockholders, for any purpose or purposes, may be called by either (i) the
Chairman, if there be one, or (ii) the President, (iii) any Vice President, if
there be one, (iv) the Secretary or (v) any Assistant Secretary, if there be
one, and shall be called by any such officer at the request in writing of (i)
the Board of Directors, (ii) a committee of the Board of Directors that has been
duly designated by the Board of Directors and whose powers and authority include
the power to call such meetings or (iii) stockholders owning a majority of the
capital stock of the Corporation issued and outstanding and entitled to vote.
Such request shall state the purpose or purposes of the proposed meeting. At a
Special Meeting of Stockholders, only such business shall be conducted as shall
be specified in the notice of meeting (or any supplement thereto).
Section 4. Notice. Whenever stockholders are required or permitted
--------- ------
to take any action at a meeting, a written notice of the meeting shall be given
which shall state the place, date and hour of the meeting, and, in the case of a
special
2
<PAGE>
meeting, the purpose or purposes for which the meeting is called. Unless
otherwise required by law, the written notice of any meeting shall be given not
less than ten nor more than sixty days before the date of the meeting to each
stockholder entitled to vote at such meeting.
Section 5. Adjournments. Any meeting of the stockholders may be
--------- ------------
adjourned from time to time to reconvene at the same or some other place, and
notice need not be given of any such adjourned meeting if the time and place
thereof are announced at the meeting at which the adjournment is taken. At the
adjourned meeting, the Corporation may transact any business which might have
been transacted at the original meeting. If the adjournment is for more than
thirty days, or if after the adjournment a new record date is fixed for the
adjourned meeting, notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
Section 6. Quorum. Unless otherwise required by law or the
--------- ------
Certificate of Incorporation, the holders of a majority of the capital stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business. A quorum, once established, shall
not be broken by the withdrawal of enough votes to leave less than a quorum. If,
however, such quorum shall not be present or represented at any meeting of the
stockholders, the stockholders entitled to
3
<PAGE>
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, in the manner provided in Section 5,
until a quorum shall be present or represented.
Section 7. Voting. Unless otherwise required by law, the Certificate
--------- ------
of Incorporation or these By-laws, any question brought before any meeting of
stockholders, other than the election of directors, shall be decided by the
vote of the holders of a majority of the total number of votes of the capital
stock represented and entitled to vote thereat, voting as a single class. Unless
otherwise provided in the Certificate of Incorporation, and subject to Section 5
of Article V hereof, each stockholder represented at a meeting of stockholders
shall be entitled to cast one vote for each share of the capital stock entitled
to vote thereat held by such stockholder. Such votes may be cast in person or by
proxy but no proxy shall be voted on or after three years from its date, unless
such proxy provides for a longer period. The Board of Directors, in its
discretion, or the officer of the Corporation presiding at a meeting of
stockholders, in such officer's discretion, may require that any votes cast at
such meeting shall be cast by written ballot.
Section 8. Consent of Stockholders in Lieu of Meeting. Unless
--------- ------------------------------------------
otherwise provided in the Certificate of Incorporation, any action required or
permitted to be taken at any Annual or Special Meeting of Stockholders of the
Corporation, may be taken without a meeting, without prior notice and without a
4
<PAGE>
vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and voted
and shall be delivered to the Corporation by delivery to its registered office
in the State of Delaware, its principal place of business, or an officer or
agent of the corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Delivery made to the Corporation's
registered office shall be by hand or by certified or registered mail, return
receipt requested. Every written consent shall bear the date of signature of
each stockholder who signs the consent and no written consent shall be effective
to take the corporate action referred to therein unless, within sixty days of
the earliest dated consent delivered in the manner required by this Section 8 to
the Corporation, written consents signed by a sufficient number of holders to
take action are delivered to the Corporation by delivery to its registered
office in the state of Delaware, its principal place of business, or an officer
or agent of the Corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent shall
be given to those stockholders who have not consented in writing and who, if the
action had been taken at a meeting, would have been entitled to notice of the
meeting if the record date for such meeting had
5
<PAGE>
been the date that written consents signed by a sufficient number of holders to
take the action were delivered to the Corporation as provided above in this
section.
Section 9. List of Stockholders Entitled to Vote. The officer of the
--------- -------------------------------------
Corporation who has charge of the stock ledger of the Corporation shall prepare
and make, at least ten days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting either at a place within the city where the meeting is to be held, which
place shall be specified in the notice of the meeting, or, if not so specified,
at the place where the meeting is to be held. The list shall also be produced
and kept at the time and place of the meeting during the whole time thereof, and
may be inspected by any stockholder of the Corporation who is present.
Section 10. Stock Ledger. The stock ledger of the Corporation shall
---------- ------------
be the only evidence as to who are the stockholders entitled to examine the
stock ledger, the list required by Section 9 of this Article II or the books of
the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
Section 11. Conduct of Meetings. The Board of Directors of the
---------- -------------------
Corporation may adopt by resolution such rules and regulations for the conduct
of
6
<PAGE>
the meeting of the stockholders as it shall deem appropriate. Except to the
extent inconsistent with such rules and regulations as adopted by the Board of
Directors, the chairman of any meeting of the stockholders shall have the right
and authority to prescribe such rules, regulations and procedures and to do all
such acts as, in the judgment of such chairman, are appropriate for the proper
conduct of the meeting. Such rules, regulations or procedures, whether adopted
by the Board of Directors or prescribed by the chairman of the meeting, may
include, without limitation, the following: (i) the establishment of an agenda
or order of business for the meeting; (ii) the determination of when the polls
shall open and close for any given matter to be voted on at the meeting; (iii)
rules and procedures for maintaining order at the meeting and the safety of
those present; (iv) limitations on attendance at or participation in the
meeting to stockholders of record of the corporation, their duly authorized and
constituted proxies or such other persons as the chairman of the meeting shall
determine; (v) restrictions on entry to the meeting after the time fixed for the
commencement thereof; and (vi) limitations on the time allotted to questions or
comments by participants.
ARTICLE III
DIRECTORS
---------
Section 1. Number and Election of Directors. The Board of Directors
--------- --------------------------------
shall consist of not less than one nor more than fifteen members, the exact
number of
7
<PAGE>
which shall initially be fixed by the Incorporator and thereafter from time to
time by the Board of Directors. Except as provided in Section 2 of this Article
III, directors shall be elected by a plurality of the votes cast at the Annual
Meetings of Stockholders and each director so elected shall hold office until
the next Annual Meeting of Stockholders and until such director's successor is
duly elected and qualified, or until such director's earlier death, resignation
or removal. Any director may resign at any time upon written notice to the
Corporation. Directors need not be stockholders.
Section 2. Vacancies. Unless otherwise required by law or the
--------- ---------
Certificate of Incorporation, vacancies arising through death, resignation,
removal, an increase in the number of directors or otherwise may be filled only
by a majority of the directors then in office, though less than a quorum, or by
a sole remaining director, and the directors so chosen shall hold office until
the next annual election and until their successors are duly elected and
qualified, or until their earlier death, resignation or removal.
Section 3. Duties and Powers. The business and affairs of the
--------- -----------------
Corporation shall be managed by or under the direction of the Board of Directors
which may exercise all such powers of the Corporation and do all such lawful
acts and things as are not by statute or by the Certificate of Incorporation or
by these By-Laws required to be exercised or done by the stockholders.
8
<PAGE>
Section 4. Meetings. The Board of Directors may hold meetings, both
--------- --------
regular and special, either within or without the State of Delaware. Regular
meetings of the Board of Directors may be held without notice at such time and
at such place as may from time to time be determined by the Board of Directors.
Special meetings of the Board of Directors may be called by the Chairman, if
there be one, the President, or by any director. Notice thereof stating the
place, date and hour of the meeting shall be given to each director either by
mail not less than forty-eight (48) hours before the date of the meeting, by
telephone or telegram on twenty-four (24) hours' notice, or on such shorter
notice as the person or persons calling such meeting may deem necessary or
appropriate in the circumstances.
Section 5. Quorum. Except as otherwise required by law or the
--------- ------
Certificate of Incorporation, at all meetings of the Board of Directors, a
majority of the entire Board of Directors shall constitute a quorum for the
transaction of business and the act of a majority of the directors present at
any meeting at which there is a quorum shall be the act of the Board of
Directors. If a quorum shall not be present at any meeting of the Board of
Directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting of the time and
place of the adjourned meeting, until a quorum shall be present.
Section 6. Actions by Written Consent. Unless otherwise provided in
--------- --------------------------
the Certificate of Incorporation, or these By-Laws, any action required or
permitted
9
<PAGE>
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all the members of the Board of Directors or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee.
Section 7. Meetings by Means of Conference Telephone. Unless
--------- -----------------------------------------
otherwise provided in the Certificate of Incorporation, members of the Board of
Directors of the Corporation, or any committee thereof, may participate in a
meeting of the Board of Directors or such committee by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
pursuant to this Section 7 shall constitute presence in person at such meeting.
Section 8. Committees. The Board of Directors may designate one or
--------- ----------
more committees, each committee to consist of one or more of the directors of
the Corporation. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of any such committee. In the absence or disqualification
of a member of a committee, and in the absence of a designation by the Board of
Directors of an alternate member to replace the absent or disqualified member,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not such member or members constitute a quorum, may
unanimously ap-
10
<PAGE>
point another member of the Board of Directors to act at the meeting in the
place of any absent or disqualified member. Any committee, to the extent
permitted by law and provided in the resolution establishing such committee,
shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the Corporation, and
may authorize the seal of the Corporation to be affixed to all papers which may
require it. Each committee shall keep regular minutes and report to the Board of
Directors when required.
Section 9. Compensation. The directors may be paid their expenses,
--------- ------------
if any, of attendance at each meeting of the Board of Directors and may be paid
a fixed sum for attendance at each meeting of the Board of Directors or a stated
salary as director, payable in cash or securities. No such payment shall
preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor. Members of special or standing committees may
be allowed like compensation for attending committee meetings.
Section 10. Interested Directors. No contract or transaction between
---------- --------------------
the Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers or have a financial interest, shall be void or voidable solely for this
reason, or solely because the director or officer is present at or participates
in the meeting of the Board of
11
<PAGE>
Directors or committee thereof which authorizes the contract or transaction, or
solely because the director or officer's vote is counted for such purpose if (i)
the material facts as to the director or officer's relationship or interest and
as to the contract or transaction are disclosed or are known to the Board of
Directors or the committee, and the Board of Directors or committee in good
faith authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested directors
be less than a quorum; or (ii) the material facts as to the director or
officer's relationship or interest and as to the contract or transaction are
disclosed or are known to the stockholders entitled to vote thereon, and the con
tract or transaction is specifically approved in good faith by vote of the
stockholders; or (iii) the contract or transaction is fair as to the Corporation
as of the time it is authorized, approved or ratified by the Board of Directors,
a committee thereof or the stockholders. Common or interested directors may be
counted in determining the presence of a quorum at a meeting of the Board of
Directors or of a committee which authorizes the contract or transaction.
ARTICLE IV
OFFICERS
--------
Section 1. General. The officers of the Corporation shall be chosen
--------- -------
by the Board of Directors and shall be a President, a Secretary and a Treasurer.
The
12
<PAGE>
Board of Directors, in its discretion, also may choose a Chairman of the Board
of Directors (who must be a director) and one or more Vice Presidents, Assistant
Secretaries, Assistant Treasurers and other officers. Any number of offices may
be held by the same person, unless otherwise prohibited by law or the
Certificate of Incorporation. The officers of the Corporation need not be
stockholders of the Corporation nor, except in the case of the Chairman of the
Board of Directors, need such officers be directors of the Corporation.
Section 2. Election. The Board of Directors, at its first meeting
--------- --------
held after each Annual Meeting of Stockholders (or action by written consent of
stockholders in lieu of the Annual Meeting of Stockholders), shall elect the
officers of the Corporation who shall hold their offices for such terms and
shall exercise such powers and perform such duties as shall be determined from
time to time by the Board of Directors; and all officers of the Corporation
shall hold office until their successors are chosen and qualified, or until
their earlier death, resignation or removal. Any officer elected by the Board
of Directors may be removed at any time by the affirmative vote of the Board of
Directors. Any vacancy occurring in any office of the Corporation shall be
filled by the Board of Directors. The salaries of all officers of the
Corporation shall be fixed by the Board of Directors.
Section 3. Voting Securities Owned by the Corporation. Powers of
--------- ------------------------------------------
attorney, proxies, waivers of notice of meeting, consents and other instruments
relat-
13
<PAGE>
ing to securities owned by the Corporation may be executed in the name of and on
behalf of the Corporation by the President or any Vice President or any other
officer authorized to do so by the Board of Directors and any such officer may,
in the name of and on behalf of the Corporation, take all such action as any
such officer may deem advisable to vote in person or by proxy at any meeting of
security holders of any corporation in which the Corporation may own securities
and at any such meeting shall possess and may exercise any and all rights and
power incident to the ownership of such securities and which, as the owner
thereof, the Corporation might have exercised and possessed if present. The
Board of Directors may, by resolution, from time to time confer like powers upon
any other person or persons.
Section 4. Chairman of the Board of Directors. The Chairman of the
--------- ----------------------------------
Board of Directors, if there be one, shall preside at all meetings of the
stockholders and of the Board of Directors. The Chairman of the Board of
Directors shall be the Chief Executive Officer of the Corporation, unless the
Board of Directors designates the President as the Chief Executive Officer, and,
except where by law the signature of the President is required, the Chairman of
the Board of Directors shall possess the same power as the President to sign all
contracts, certificates and other instruments of the Corporation which may be
authorized by the Board of Directors. During the absence or disability of the
President, the Chairman of the Board of Directors shall exercise all the powers
and discharge all the duties of the President. The Chairman
14
<PAGE>
of the Board of Directors shall also perform such other duties and may exercise
such other powers as may from time to time be assigned by these By-Laws or by
the Board of Directors.
Section 5. President. The President shall, subject to the control of
--------- ---------
the Board of Directors and, if there be one, the Chairman of the Board of
Directors, have general supervision of the business of the Corporation and shall
see that all orders and resolutions of the Board of Directors are carried into
effect. The President shall execute all bonds, mortgages, contracts and other
instruments of the Corporation requiring a seal, under the seal of the
Corporation, except where required or permitted by law to be otherwise signed
and executed and except that the other officers of the Corporation may sign and
execute documents when so authorized by these By-Laws, the Board of Directors or
the President. In the absence or disability of the Chairman of the Board of
Directors, or if there be none, the President shall preside at all meetings of
the stockholders and the Board of Directors. If there be no Chairman of the
Board of Directors, or if the Board of Directors shall otherwise designate, the
President shall be the Chief Executive Officer of the Corporation. The President
shall also perform such other duties and may exercise such other powers as may
from time to time be assigned to such officer by these By-Laws or by the Board
of Directors.
15
<PAGE>
Section 6. Vice Presidents. At the request of the President or in
--------- ---------------
the President's absence or in the event of the President's inability or refusal
to act (and if there be no Chairman of the Board of Directors), the Vice
President, or the Vice Presidents if there is more than one (in the order
designated by the Board of Directors), shall perform the duties of the
President, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the President. Each Vice President shall perform such
other duties and have such other powers as the Board of Directors from time to
time may prescribe. If there be no Chairman of the Board of Directors and no
Vice President, the Board of Directors shall designate the officer of the
Corporation who, in the absence of the President or in the event of the
inability or refusal of the President to act, shall perform the duties of the
President, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the President.
Section 7. Secretary. The Secretary shall attend all meetings of the
--------- ---------
Board of Directors and all meetings of stockholders and record all the
proceedings thereat in a book or books to be kept for that purpose; the
Secretary shall also perform like duties for committees of the Board of
Directors when required. The Secretary shall give, or cause to be given, notice
of all meetings of the stockholders and special meetings of the Board of
Directors, and shall perform such other duties as may be prescribed by the Board
of Directors, the Chairman of the Board of Direc-
16
<PAGE>
tors or the President, under whose supervision the Secretary shall be. If the
Secretary shall be unable or shall refuse to cause to be given notice of all
meetings of the stockholders and special meetings of the Board of Directors,
and if there be no Assistant Secretary, then either the Board of Directors or
the President may choose another officer to cause such notice to be given. The
Secretary shall have custody of the seal of the Corporation and the Secretary or
any Assistant Secretary, if there be one, shall have authority to affix the same
to any instrument requiring it and when so affixed, it may be attested by the
signature of the Secretary or by the signature of any such Assistant Secretary.
The Board of Directors may give general authority to any other officer to affix
the seal of the Corporation and to attest to the affixing by such officer's
signature. The Secretary shall see that all books, reports, statements,
certificates and other documents and records required by law to be kept or filed
are properly kept or filed, as the case may be.
Section 8. Treasurer. The Treasurer shall have the custody of the
--------- ---------
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the
17
<PAGE>
President and the Board of Directors, at its regular meetings, or when the Board
of Directors so requires, an account of all transactions as Treasurer and of the
financial condition of the Corporation. If required by the Board of Directors,
the Treasurer shall give the Corporation a bond in such sum and with such surety
or sureties as shall be satisfactory to the Board of Directors for the faithful
performance of the duties of the office of the Treasurer and for the restoration
to the Corporation, in case of the Treasurer's death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other property of
whatever kind in the Treasurer's possession or under the Treasurer's control
belonging to the Corporation.
Section 9. Assistant Secretaries. Assistant Secretaries, if there be
--------- ---------------------
any, shall perform such duties and have such powers as from time to time may be
assigned to them by the Board of Directors, the President, any Vice President,
if there be one, or the Secretary, and in the absence of the Secretary or in the
event of the Secretary's disability or refusal to act, shall perform the duties
of the Secretary, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the Secretary.
Section 10. Assistant Treasurers. Assistant Treasurers, if there be
---------- --------------------
any, shall perform such duties and have such powers as from time to time may be
assigned to them by the Board of Directors, the President, any Vice President,
if there be one, or the Treasurer, and in the absence of the Treasurer or in the
event of
18
<PAGE>
the Treasurer's disability or refusal to act, shall perform the duties of the
Treasurer, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the Treasurer. If required by the Board of Directors,
an Assistant Treasurer shall give the Corporation a bond in such sum and with
such surety or sureties as shall be satisfactory to the Board of Directors for
the faithful performance of the duties of the office of Assistant Treasurer and
for the restoration to the Corporation, in case of the Assistant Treasurer's
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in the Assistant Treasurer's
possession or under the Assistant Treasurer's control belonging to the
Corporation.
Section 11. Other Officers. Such other officers as the Board of
---------- --------------
Directors may choose shall perform such duties and have such powers as from time
to time may be assigned to them by the Board of Directors. The Board of
Directors may delegate to any other officer of the Corporation the power to
choose such other officers and to prescribe their respective duties and powers.
ARTICLE V
STOCK
-----
Section 1. Form of Certificates. Every holder of stock in the
--------- --------------------
Corporation shall be entitled to have a certificate signed, in the name of the
Corporation (i)
19
<PAGE>
by the Chairman of the Board of Directors, the President or a Vice President and
(ii) by the Treasurer or an Assistant Treasurer, or the Secretary or an
Assistant Secretary of the Corporation, certifying the number of shares owned by
such stockholder in the Corporation.
Section 2. Signatures. Any or all of the signatures on a certificate
--------- ----------
may be a facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if such person were such officer, transfer agent or registrar at the date of
issue.
Section 3. Lost Certificates. The Board of Directors may direct a
--------- -----------------
new certificate to be issued in place of any certificate theretofore issued by
the Corporation alleged to have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the person claiming the certificate of stock to
be lost, stolen or destroyed. When authorizing such issue of a new certificate,
the Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or destroyed
certificate, or the owner's legal representative, to advertise the same in such
manner as the Board of Directors shall require and/or to give the Corporation a
bond in such sum as it may direct as indemnity against any claim that may be
made against the Corporation with respect to the
20
<PAGE>
certificate alleged to have been lost, stolen or destroyed or the issuance of
such new certificate.
Section 4. Transfers. Stock of the Corporation shall be transferable
--------- ---------
in the manner prescribed by law and in these By-Laws. Transfers of stock shall
be made on the books of the Corporation only by the person named in the
certificate or by such person's attorney lawfully constituted in writing and
upon the surrender of the certificate therefor, which shall be cancelled before
a new certificate shall be issued. No transfer of stock shall be valid as
against the Corporation for any purpose until it shall have been entered in the
stock records of the Corporation by an entry showing from and to whom
transferred.
Section 5. Record Date.
--------- -----------
(a) In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the board of directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted by the Board of Directors, and which record date shall not be more
than sixty nor less than ten days before the date of such meeting. If no record
date is fixed by the Board of Directors, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the day next preceding the day on which notice
is given, or, if notice is waived, at the close of business
21
<PAGE>
on the day next preceding the day on which the meeting is held. A determination
of stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; providing, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
(b) In order that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the Board
of Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which record date shall not be more than ten days after the date
upon which the resolution fixing the record date is adopted by the Board of
Directors. If no record date has been fixed by the Board of Directors, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting, when no prior action by the Board of Directors is
required by law, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
Corporation by delivery to its registered office in this State, its principal
place of business, or an officer or agent of the Corporation having custody of
the book in which proceedings of meetings of stockholders are recorded. Delivery
made to a corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. If no record date has been fixed by
the Board of Directors and prior action by the Board of Directors is required by
law, the
22
<PAGE>
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting shall be at the close of business on the day on
which the Board of Directors adopts the resolutions taking such prior action.
(c) In order that the Corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty days prior to such
action. If no record date is fixed, the record date for determining
stockholders for any such purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto.
Section 6. Record Owners. The Corporation shall be entitled to
--------- -------------
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise required by
law.
23
<PAGE>
ARTICLE VI
NOTICES
-------
Section 1. Notices. Whenever written notice is required by law, the
--------- -------
Certificate of Incorporation or these By-Laws, to be given to any director,
member of a committee or stockholder, such notice may be given by mail,
addressed to such director, member of a committee or stockholder, at such
person's address as it appears on the records of the Corporation, with postage
thereon prepaid, and such notice shall be deemed to be given at the time when
the same shall be deposited in the United States mail. Written notice may also
be given personally or by telegram, telex or cable.
Section 2. Waivers of Notice. Whenever any notice is required by
--------- -----------------
law, the Certificate of Incorporation or these By-Laws, to be given to any
director, member of a committee or stockholder, a waiver thereof in writing,
signed, by the person or persons entitled to said notice, whether before or
after the time stated therein, shall be deemed equivalent thereto. Attendance
of a person at a meeting, present in person or represented by proxy, shall
constitute a waiver of notice of such meeting, except where the person attends
the meeting for the express purpose of objecting at the beginning of the meeting
to the transaction of any business because the meeting is not lawfully called or
convened.
24
<PAGE>
ARTICLE VII
GENERAL PROVISIONS
------------------
Section 1. Dividends. Dividends upon the capital stock of the
--------- ---------
Corporation, subject to the requirements of the DGCL and the provisions of the
Certificate of Incorporation, if any, may be declared by the Board of Directors
at any regular or special meeting of the Board of Directors (or any action by
written consent in lieu thereof in accordance with Section 6 of Article III
hereof), and may be paid in cash, in property, or in shares of the Corporation's
capital stock. Before payment of any dividend, there may be set aside out of any
funds of the Corporation available for dividends such sum or sums as the Board
of Directors from time to time, in its absolute discretion, deems proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for any proper
purpose, and the Board of Directors may modify or abolish any such reserve.
Section 2. Disbursements. All checks or demands for money and notes
--------- -------------
of the Corporation shall be signed by such officer or officers or such other
person or persons as the Board of Directors may from time to time designate.
Section 3. Fiscal Year. The fiscal year of the Corporation shall be
--------- -----------
fixed by resolution of the Board of Directors.
25
<PAGE>
Section 4. Corporate Seal. The corporate seal shall have inscribed
--------- --------------
thereon the name of the Corporation, the year of its organization and the words
"Corporate Seal, Delaware". The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE VIII
INDEMNIFICATION
---------------
Section 1. Power to Indemnify in Actions, Suits or Proceedings other
--------- ---------------------------------------------------------
than Those by or in the Right of the Corporation. Subject to Section 3 of this
- ------------------------------------------------
Article VIII, the Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that such person is or was a director or officer of the
Corporation, or is or was a director or officer of the Corporation serving at
the request of the Corporation as a director or officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise, against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding if such person acted
in good faith and in a manner such person reasonably believed to be in or not
opposed
26
<PAGE>
to the best interests of the Corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe such person's conduct
was unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which such person reasonably believed to be in
or not opposed to the best interests of the Corporation, and, with respect to
any criminal action or proceeding, had reasonable cause to believe that such
person's conduct was unlawful.
Section 2. Power to Indemnify in Actions, Suits or Proceedings by or
--------- ---------------------------------------------------------
in the Right of the Corporation. Subject to Section 3 of this Article VIII, the
- -------------------------------
Corporation shall indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action or suit by or
in the right of the Corporation to procure a judgment in its favor by reason of
the fact that such person is or was a director or officer of the Corporation, or
is or was a director or officer of the Corporation serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
such person in connection with the defense or settlement of such action or suit
if such person acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interests of the
27
<PAGE>
Corporation; except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
Section 3. Authorization of Indemnification. Any indemnification
--------- --------------------------------
under this Article VIII (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the director or officer is proper in the circumstances
because such person has met the applicable standard of conduct set forth in
Section 1 or Section 2 of this Article VIII, as the case may be. Such
determination shall be made, with respect to a person who is a director or
officer at the time of such determination, (i) by a majority vote of the
directors who are not parties to such action, suit or proceeding, even though
less than a quorum, or (ii) by a committee of such directors designated by a
majority vote of such directors, even though less than a quorum, or (iii) if
there are no such directors, or if such directors so direct, by independent
legal counsel in a written opinion or (iv) by the stockholders. Such
determination shall be made, with respect to former directors and officers, by
any person or persons having the authority to act on the
28
<PAGE>
matter on behalf of the Corporation. To the extent, however, that a present or
former director or officer of the Corporation has been successful on the merits
or otherwise in defense of any action, suit or proceeding described above, or in
defense of any claim, issue or matter therein, such person shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
such person in connection therewith, without the necessity of authorization in
the specific case.
Section 4. Good Faith Defined. For purposes of any determination
--------- ------------------
under Section 3 of this Article VIII, a person shall be deemed to have acted in
good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the Corporation, or, with respect to any
criminal action or proceeding, to have had no reasonable cause to believe such
person's conduct was unlawful, if such person's action is based on the records
or books of account of the Corporation or another enterprise, or on information
supplied to such person by the officers of the Corporation or another enterprise
in the course of their duties, or on the advice of legal counsel for the
Corporation or another enterprise or on information or records given or reports
made to the Corporation or another enterprise by an independent certified public
accountant or by an appraiser or other expert selected with reasonable care by
the Corporation or another enterprise. The term "another enterprise" as used in
this Section 4 shall mean any other corporation or any partnership, joint
venture, trust, employee benefit plan or other enterprise of which such person
is or was
29
<PAGE>
serving at the request of the Corporation as a director, officer, employee or
agent. The provisions of this Section 4 shall not be deemed to be exclusive or
to limit in any way the circumstances in which a person may be deemed to have
met the applicable standard of conduct set forth in Section 1 or 2 of this
Article VIII, as the case may be.
Section 5. Indemnification by a Court. Notwithstanding any contrary
--------- --------------------------
determination in the specific case under Section 3 of this Article VIII, and
notwithstanding the absence of any determination thereunder, any director or
officer may apply to the Court of Chancery in the State of Delaware for
indemnification to the extent otherwise permissible under Sections 1 and 2 of
this Article VIII. The basis of such indemnification by a court shall be a
determination by such court that indemnification of the director or officer is
proper in the circumstances because such person has met the applicable standards
of conduct set forth in Section 1 or 2 of this Article VIII, as the case may be.
Neither a contrary determination in the specific case under Section 3 of this
Article VIII nor the absence of any determination thereunder shall be a defense
to such application or create a presumption that the director or officer seeking
indemnification has not met any applicable standard of conduct. Notice of any
application for indemnification pursuant to this Section 5 shall be given to the
Corporation promptly upon the filing of such application. If
30
<PAGE>
successful, in whole or in part, the director or officer seeking indemnification
shall also be entitled to be paid the expense of prosecuting such application.
Section 6. Expenses Payable in Advance. Expenses incurred by a
--------- ---------------------------
director or officer in defending any civil, criminal, administrative or
investigative action, suit or proceeding shall be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that such person is not entitled to
be indemnified by the Corporation as authorized in this Article VIII.
Section 7. Nonexclusivity of Indemnification and Advancement of
--------- ----------------------------------------------------
Expenses. The indemnification and advancement of expenses provided by or
- --------
granted pursuant to this Article VIII shall not be deemed exclusive of any other
rights to which those seeking indemnification or advancement of expenses may be
entitled under the Certificate of Incorporation, any By-Law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in such
person's official capacity and as to action in another capacity while holding
such office, it being the policy of the Corporation that indemnification of the
persons specified in Sections 1 and 2 of this Article VIII shall be made to the
fullest extent permitted by law. The provisions of this Article VIII shall not
be deemed to preclude the indemnification of any person who is not specified in
Section 1 or 2 of this Article VIII but whom the
31
<PAGE>
Corporation has the power or obligation to indemnify under the provisions of the
General Corporation Law of the State of Delaware, or otherwise.
Section 8. Insurance. The Corporation may purchase and maintain
--------- ---------
insurance on behalf of any person who is or was a director or officer of the
Corporation, or is or was a director or officer of the Corporation serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise against any liability asserted against such person and
incurred by such person in any such capacity, or arising out of such person's
status as such, whether or not the Corporation would have the power or the
obligation to indemnify such person against such liability under the provisions
of this Article VIII.
Section 9. Certain Definitions. For purposes of this Article VIII,
--------- -------------------
references to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors or officers, so that any person who is or was a director or officer of
such constituent corporation, or is or was a director or officer of such
constituent corporation serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise, shall stand in
the
32
<PAGE>
same position under the provisions of this Article VIII with respect to the
resulting or surviving corporation as such person would have with respect to
such constituent corporation if its separate existence had continued. For
purposes of this Article VIII, references to "fines" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the Corporation" shall include any
service as a director, officer, employee or agent of the Corporation which
imposes duties on, or involves services by, such director or officer with
respect to an employee benefit plan, its participants or beneficiaries; and a
person who acted in good faith and in a manner such person reasonably believed
to be in the interest of the participants and beneficiaries of an employee
benefit plan shall be deemed to have acted in a manner "not opposed to the best
interests of the Corporation" as referred to in this Article VIII.
Section 10. Survival of Indemnification and Advancement of Expenses.
---------- --------------------------------------------------------
The indemnification and advancement of expenses provided by, or granted pursuant
to, this Article VIII shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director or officer and
shall inure to the benefit of the heirs, executors and administrators of such a
person.
Section 11. Limitation on Indemnification. Notwithstanding anything
---------- -----------------------------
contained in this Article VIII to the contrary, except for proceedings to
enforce
33
<PAGE>
rights to indemnification (which shall be governed by Section 5 hereof), the
Corporation shall not be obligated to indemnify any director or officer in
connection with a proceeding (or part thereof) initiated by such person unless
such proceeding (or part thereof) was authorized or consented to by the Board of
Directors of the Corporation.
Section 12. Indemnification of Employees and Agents. The Corporation
---------- ---------------------------------------
may, to the extent authorized from time to time by the Board of Directors,
provide rights to indemnification and to the advancement of expenses to
employees and agents of the Corporation similar to those conferred in this
Article VIII to directors and officers of the Corporation.
ARTICLE IX
AMENDMENTS
----------
Section 1. Amendments. These By-Laws may be altered, amended or
--------- ----------
repealed, in whole or in part, or new By-Laws may be adopted by the stockholders
or by the Board of Directors, provided, however, that notice of such alteration,
amendment, repeal or adoption of new By-Laws be contained in the notice of such
meeting of stockholders or Board of Directors as the case may be. All such
amendments must be approved by either the holders of a majority of the
outstanding capital stock entitled to vote thereon or by a majority of the
entire Board of Directors then in office.
34
<PAGE>
Section 2. Entire Board of Directors. As used in this Article IX and
--------- -------------------------
in these By-Laws generally, the term "entire Board of Directors" means the total
number of directors which the Corporation would have if there were no vacancies.
* * *
Adopted as of: August 4, 1998
Last Amended as of:
35
<PAGE>
EXHIBIT 4.1
CERTIFICATE OF DESIGNATION OF THE POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL AND OTHER SPECIAL RIGHTS OF 13-7/8%
SENIOR REDEEMABLE EXCHANGEABLE PREFERRED STOCK AND
QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS THEREOF
- --------------------------------------------------------------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
- --------------------------------------------------------------------------------
Samsonite Corporation (the "Corporation"), a corporation organized and
-----------
existing under the General Corporation Law of the State of Delaware, does hereby
certify that, pursuant to authority conferred upon the board of directors of the
Corporation by its Certificate of Incorporation, as amended and restated
(hereinafter referred to as the "Certificate of Incorporation"), and pursuant to
----------------------------
the provisions of Section 151 of the General Corporation Law of the State of
Delaware, the Executive Committee of said Board of Directors, by unanimous
written consent dated as of June 18, 1998, duly approved and adopted the
following resolution (the "Resolution"):
----------
RESOLVED, that, pursuant to the authority vested in the Board of
Directors of the Corporation by its Certificate of Incorporation, and
pursuant to authority delegated to the Executive Committee of the Board of
Directors of the Corporation, the Board of Directors does hereby create,
authorize and provide for the issuance of 13-7/8% Senior Redeemable
Exchangeable Preferred Stock, par value $.01 per share, with a stated value
of $1,000.00 per share, consisting of 350,000 shares, having the
designations, preferences, relative, participating, optional and other
special rights and the qualifications, limitations and restrictions thereof
that are set forth in the Certificate of Incorporation and in this
Resolution as follows:
(a) Designation. There is hereby created out of the authorized and
-----------
unissued shares of Preferred Stock of the Corporation a class of Preferred
Stock designated as the "13-7/8% Senior Redeemable Exchangeable Preferred
Stock." The number of shares constituting such class shall be 350,000 and
are referred to herein as the "Senior Preferred Stock." 175,000 shares of
----------------------
Senior Preferred Stock, designated as the "13-7/8% Senior Redeemable
Exchangeable Preferred Stock, Series A," shall be initially issued with an
additional 175,000 shares of
<PAGE>
-2-
Senior Preferred Stock reserved for issuance in accordance with paragraph
(c)(i) hereof. The Corporation may issue up to one additional series of the
Senior Preferred Stock (designated as the "13-7/8% Senior Redeemable
Exchangeable Preferred Stock, Series B") pursuant to this Certificate of
Designation to holders of the 13-7/8% Senior Redeemable Exchangeable
Preferred Stock, Series A, in exchange for shares of the 13-7/8% Senior
Redeemable Exchangeable Preferred Stock, Series A, as is necessary to
comply with the registration and exchange provisions of the Registration
Rights Agreement and for issuance in accordance with paragraph (c)(i)
hereof following such exchange. The liquidation preference of the Senior
Preferred Stock shall be $1,000.00 per share.
(b) Rank. The Senior Preferred Stock shall, with respect to dividend
----
distributions and distributions upon liquidation, winding-up and
dissolution of the Corporation, rank (i) senior (to the extent set forth
herein) to all classes of Common Stock of the Corporation and to each other
class of Capital Stock of the Corporation or series of Preferred Stock of
the Corporation hereafter created the terms of which do not expressly
provide that it ranks senior to, or on a parity with, the Senior Preferred
Stock as to dividend distributions and distributions upon liquidation,
winding-up and dissolution of the Corporation (collectively referred to,
together with all classes of Common Stock of the Corporation, as "Junior
------
Securities"); (ii) on a parity with any class of Capital Stock of the
----------
Corporation or series of Preferred Stock of the Corporation hereafter
created the terms of which expressly provide that such class or series will
rank on a parity with the Senior Preferred Stock as to dividend
distributions and distributions upon liquidation, winding-up and
dissolution (collectively referred to as "Parity Securities"); provided
----------------- --------
that any such Parity Securities that were not approved by the Holders in
accordance with paragraph (f)(ii)(A) hereof shall be deemed to be Junior
Securities and not Parity Securities; and (iii) junior to each other class
of Capital Stock of the Corporation or series of Preferred Stock of the
Corporation hereafter created that has been approved by the Holders in
accordance with paragraph (f)(ii)(B) hereof and the terms of which
expressly provide that such class or series will rank senior to the Senior
Preferred Stock as to dividend distributions and distributions upon
liquidation, winding-up and dissolution of the Corporation (collectively
referred to as "Senior Securities"); provided that any such Senior
----------------- --------
Securities that were not approved by the Holders in accordance with
paragraph (f)(ii)(B) hereof (to the extent such approval is required) shall
be deemed to be Junior Securities and not Senior Securities.
<PAGE>
-3-
(c) Dividends.
---------
(i) From the Issue Date, the Holders of the outstanding shares of
Senior Preferred Stock shall be entitled to receive, when, as and if
declared by the Board of Directors, out of funds legally available
therefor, dividends on each share of Senior Preferred Stock at a rate per
---
annum equal to 13.875% of the liquidation preference per share of the
-----
Senior Preferred Stock, payable quarterly. All dividends shall be
cumulative, whether or not earned or declared, on a daily basis from the
Issue Date and shall be payable quarterly in arrears on each Dividend
Payment Date, commencing on the first Dividend Payment Date after the Issue
Date. All unpaid dividends will compound on a quarterly basis at a rate per
---
annum equal to the then applicable dividend rate. Dividends (including
-----
Additional Dividends, if any) accumulating on or prior to June 15, 2003 may
be paid, at the Corporation's option, either in cash or by the issuance of
additional shares of Senior Preferred Stock (including fractional shares)
having an aggregate liquidation preference equal to the amount of such
dividends (but not less than $1.00). In the event that on or prior to June
15, 2003 dividends are declared and paid through the issuance of additional
shares of Senior Preferred Stock, as provided in the previous sentence,
such dividends shall be deemed paid in full and shall not accumulate.
Dividends accumulating after June 15, 2003 must be paid in cash (when, as
and if declared by the Board of Directors out of funds legally available
therefor). If (A) any dividend payable on any Dividend Payment Date
subsequent to June 15, 2003 is not paid in full in cash, or (B) at any
time, any of the types of Voting Rights Triggering Events described in
clauses (2) through (6) of paragraph (f)(iv)(A) shall have occurred, the
per annum dividend rate will be increased by 2% per annum from such
--------- ---------
Dividend Payment Date until such dividend is paid in full in cash or during
the continuance of any such Voting Rights Triggering Event, as the case may
be. After the date on which such dividend is paid in cash or such default
ceases to exist, the dividend rate will revert to the rate originally borne
by the Senior Preferred Stock. Each dividend shall be payable to the
Holders of record as they appear on the stock books of the Corporation on
the Dividend Record Date immediately preceding the related Dividend Payment
Date. Dividends shall cease to accumulate in respect of the Senior
Preferred Stock exchanged for Exchange Debentures on the applicable
Exchange Date or on the date of their earlier redemption
<PAGE>
-4-
unless the Corporation shall have failed to issue the appropriate aggregate
principal amount of Exchange Debentures in respect of the Senior Preferred
Stock to be exchanged on such Exchange Date or shall have failed to pay the
relevant redemption price on Senior Preferred Stock to be redeemed on the
date fixed for redemption.
(ii) All dividends paid with respect to shares of the Senior
Preferred Stock pursuant to paragraph (c)(i) shall be paid pro rata to the
--- ----
Holders entitled thereto.
(iii) Dividends accruing after June 15, 2003 on the Senior Preferred
Stock for any past Dividend Period and dividends in connection with any
optional redemption pursuant to paragraph (e)(i) may be declared and paid
at any time, without reference to any Dividend Payment Date, to Holders of
record on such date, not more than forty-five (45) days prior to the
payment thereof, as may be fixed by the Board of Directors.
(iv) (A) No full dividends shall be declared by the Board of
Directors or paid or set apart for payment by the Corporation on any Parity
Securities for any period unless full cumulative dividends have been or
contemporaneously are declared and paid (or are deemed declared and paid)
in full, or declared and, if payable in cash, a sum in cash set apart
sufficient for such payment, on the Senior Preferred Stock for all Dividend
Periods terminating on or prior to the date of payment of such full
dividends on such Parity Securities. If any dividends are not so paid, all
dividends declared upon shares of the Senior Preferred Stock and any other
Parity Securities shall be declared pro rata so that the amount of
--- ----
dividends declared per share on the Senior Preferred Stock and such Parity
Securities shall in all cases bear to each other the same ratio that
accrued dividends per share on the Senior Preferred Stock and such Parity
Securities bear to each other.
(B) So long as any share of the Senior Preferred Stock is
outstanding, the Corporation shall not declare, pay or set apart for
payment any dividend on any of the Junior Securities (other than dividends
in Junior Securities to the holders of Junior Securities), or make any
payment on account of, or set apart for payment money for a sinking or
other similar fund for, the purchase, redemption or other retirement of,
any of the Junior Securities or any warrants, rights, calls or options
exercisable for
<PAGE>
-5-
or convertible into any of the Junior Securities whether in cash,
obligations or shares of the Corporation or other property (other than in
exchange for Junior Securities), and shall not permit any corporation or
other entity directly or indirectly controlled by the Corporation to
purchase or redeem any of the Junior Securities or any such warrants,
rights, calls or options (other than in exchange for Junior Securities)
unless full cumulative dividends determined in accordance herewith on the
Senior Preferred Stock have been paid (or are deemed paid) in full for all
full quarterly dividend periods ended prior to the date of such payment in
respect of Junior Securities.
(C) So long as any share of the Senior Preferred Stock is
outstanding, the Corporation shall not (except with respect to dividends as
permitted by paragraph (c)(iv)(A)) make any payment on account of, or set
apart for payment money for a sinking or other similar fund for, the
purchase, redemption or other retirement of, any of the Parity Securities
or any warrants, rights, calls or options exercisable for or convertible
into any of the Parity Securities, and shall not permit any corporation or
other entity directly or indirectly controlled by the Corporation to
purchase or redeem any of the Parity Securities or any such warrants,
rights, calls or options unless full cumulative dividends determined in
accordance herewith on the Senior Preferred Stock have been or
contemporaneously are paid (or are deemed paid) in full.
(v) Dividends payable on the Senior Preferred Stock for any period
less than a year shall be computed on the basis of a 360-day year of twelve
30-day months and, for periods not involving a full calendar month, the
actual number of days elapsed (but not to exceed 30 days).
(vi) Additional Dividends shall become due and payable as set forth
in the Registration Rights Agreement with respect to the Senior Preferred
Stock, it being understood that no Additional Dividend shall be due or
payable in respect of any Exchange Preferred Stock in respect of which the
Corporation shall have complied with its registration obligations under the
Registration Rights Agreement.
(vii) A reference in this Certificate of Designation to dividends
"deemed to have been paid" or words of similar meaning shall mean that, in
respect of a particular dividend, such dividend has been declared and funds
suffi-
<PAGE>
-6-
cient for the payment thereof have been segregated and irrevocably set
apart and that there exists no legal or contractual impediment to the
payment of such dividends.
(d) Liquidation Preference.
----------------------
(i) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, the Holders of
shares of Senior Preferred Stock then outstanding shall be entitled to be
paid out of the assets of the Corporation available for distribution to its
stockholders an amount in cash equal to the liquidation preference for each
share outstanding, plus, without duplication, an amount in cash equal to
accumulated and unpaid dividends thereon to the date fixed for liquidation,
dissolution or winding up (including an amount equal to a prorated dividend
for the period from the last Dividend Payment Date to the date fixed for
liquidation, dissolution or winding up), and no more, before any
distribution shall be made or any assets distributed in respect of Junior
Securities to the holders of any Junior Securities including, without
limitation, Common Stock of the Corporation. If upon any voluntary or
involuntary liquidation, dissolution or winding-up of the Corporation, the
amounts payable with respect to the Senior Preferred Stock and all other
Parity Securities are not paid in full, the holders of the Senior Preferred
Stock and the Parity Securities will share equally and ratably in any
distribution of assets of the Corporation first in proportion to the full
liquidation preference to which each is entitled until such preferences are
paid in full, and then in proportion to their respective amounts of
accumulated but unpaid dividends. After payment of the full amount of the
liquidation preferences and accumulated and unpaid dividends to which they
are entitled, the holders of shares of Senior Preferred Stock will not be
entitled to any further participation in any distribution of assets of the
Corporation.
(ii) For the purposes of this paragraph (d), neither the sale,
conveyance, exchange or transfer (for cash, shares of stock, securities or
other consideration) of all or substantially all of the property or assets
of the Corporation nor the consolidation or merger of the Corporation with
or into one or more entities shall be deemed to be a liquidation,
dissolution or winding up of the affairs of the Corporation.
<PAGE>
-7-
(e) Redemption.
----------
(i) Optional Redemption. (A) The Corporation may, at its option,
-------------------
redeem at any time or from time to time on or after June 15, 2001, from any
source of funds legally available therefor, in whole or in part, in the
manner provided for in paragraph (e)(iii) hereof, any or all of the shares
of the Senior Preferred Stock, at the redemption prices in cash (expressed
as a percentage of the liquidation preference) set forth below, plus,
without duplication, an amount in cash equal to all accumulated and unpaid
dividends (including an amount in cash equal to a prorated dividend for the
period from the Dividend Payment Date immediately prior to the Redemption
Date to the Redemption Date) if redeemed during the 12-month period
beginning June 15 of each of the years set forth below:
2001.............................................. 110.00%
2002.............................................. 108.00%
2003.............................................. 106.00%
2004.............................................. 104.00%
2005.............................................. 102.00%
2006.............................................. 101.00%
2007 and thereafter............................... 100.00%
; provided that no redemption pursuant to this paragraph (e)(i)(A) shall be
--------
made unless prior thereto or contemporaneously therewith full accumulated
and unpaid regular dividends (including Additional Dividends, if any) are
declared and paid in full, or are deemed paid, on the Senior Preferred
Stock for all Dividend Periods terminating on or prior to the Redemption
Date.
(B) In addition to the foregoing paragraph (e)(i)(A) the Corporation
may, at its option, use the Net Proceeds of one or more Equity Offerings to
redeem for cash, in the manner provided in paragraph (e)(iii) hereof, up to
35% of the shares of Senior Preferred Stock, at a redemption price equal to
113.875% of the liquidation preference thereof, plus, without duplication,
an amount in cash equal to all accumulated and unpaid dividends (including
an amount in cash equal to a prorated dividend for the period from the
Dividend Payment Date immediately prior to the redemption date to the
redemption date), provided that no redemption pursuant to this paragraph
--------
(e)(i)(B) shall be made unless prior thereto or contemporaneously therewith
full accumulated and unpaid dividends (including Additional Dividends, if
any) are declared and paid in full,
<PAGE>
-8-
or declared and a sum in cash is set apart sufficient for such payment, on
the Senior Preferred Stock for all Dividend Periods terminating on or prior
to the Redemption Date; provided, however, that after any such redemption,
-------- -------
there is at least $113.75 million aggregate in liquidation preference of
the Senior Preferred Stock outstanding. Any such redemption will be
required to occur on or prior to 90 days after the receipt by the
Corporation of the proceeds of such Equity Offering.
(C) In the event of a redemption pursuant to paragraph (e)(i)(A) or
(B) hereof of only a portion of the then outstanding shares of the Senior
Preferred Stock, the Corporation shall effect such redemption on a pro rata
--- ----
basis according to the number of shares held by each Holder of the Senior
Preferred Stock, except that the Corporation may redeem such shares held by
Holders of fewer than ten shares (or shares held by Holders who would hold
less than ten shares as a result of such redemption), as may be determined
by the Corporation.
(ii) Mandatory Redemption. On June 15, 2010, the Corporation shall
--------------------
redeem, to the extent of funds legally available therefor all of the shares
of the Senior Preferred Stock then outstanding at a redemption price equal
to 100% of the liquidation preference per share, plus, without duplication,
an amount in cash equal to all accumulated and unpaid dividends (including
Additional Dividends, if any) per share (including an amount equal to a
prorated dividend for the period from the Dividend Payment Date immediately
prior to the Redemption Date to the Redemption Date) (the "Mandatory
---------
Redemption Price").
----------------
(iii) Procedures for Redemption. (A) At least 30 days and not more
-------------------------
than 60 days prior to the date fixed for any redemption of the Senior
Preferred Stock pursuant to paragraph (e)(i) hereof, written notice (the
"Redemption Notice") shall be given by first class mail, postage prepaid,
-----------------
to each Holder of record on the record date fixed for such redemption of
the Senior Preferred Stock at such Holder's address as it appears on the
stock books of the Corporation, provided that no failure to give such
--------
notice nor any deficiency therein shall affect the validity of the
procedure for the redemption of any shares of the Senior Preferred Stock to
be redeemed except as to the Holder or Holders to whom the Corporation has
failed to give said notice or except as to the Holder or Holders whose
notice was defective. The Redemption Notice shall state:
<PAGE>
-9-
(1) whether the redemption is pursuant to paragraph (e)(i)(A)
or (B);
(2) the redemption price;
(3) whether all or less than all the outstanding shares of
Senior Preferred Stock are to be redeemed and the total number of shares of
Senior Preferred Stock being redeemed;
(4) the date fixed for redemption;
(5) that the Holder is to surrender to the Corporation, in the
manner, at the place or places and at the price designated, his certificate
or certificates representing the shares of Senior Preferred Stock to be
redeemed; and
(6) that dividends on the shares of the Senior Preferred Stock
to be redeemed shall cease to accumulate on such Redemption Date unless the
Corporation defaults in the payment of the redemption price.
(B) Each Holder of Senior Preferred Stock shall surrender the
certificate or certificates representing such shares of Senior Preferred
Stock to the Corporation, duly endorsed (or otherwise in proper form for
transfer, as determined by the Corporation), in the manner and at the place
designated in the Redemption Notice, and on the Redemption Date the full
redemption price for such shares shall be payable in cash to the Person
whose name appears on such certificate or certificates as the owner
thereof, and each surrendered certificate shall be canceled and retired. In
the event that less than all of the shares represented by any such
certificate are redeemed, a new certificate shall be issued representing
the unredeemed shares.
(C) On and after the Redemption Date, unless the Corporation
defaults in the payment in full of the applicable redemption price,
dividends on the Senior Preferred Stock called for redemption shall cease
to accumulate on the Redemption Date, and all rights of the Holders of
redeemed shares shall terminate with respect thereto on the Redemption
Date, other than the right to receive the redemption price; provided,
--------
however, that if a notice of redemption shall have been given as provided
-------
in paragraph
<PAGE>
-10-
(iii)(A) above and the funds necessary for redemption (including an amount
in cash in respect of all dividends that will accumulate to the Redemption
Date) shall have been segregated and set aside for the equal and ratable
benefit for the Holders of the shares to be redeemed, then, at the close of
business on the day on which such funds are segregated and set aside, the
Holders of the shares to be redeemed shall cease to be stockholders of the
Corporation and shall be entitled only to receive the redemption price.
(f) Voting Rights.
-------------
(i) The Holders of the Senior Preferred Stock, except as otherwise
required under Delaware law or as set forth in paragraphs (ii), (iii) and
(iv) below, shall not be entitled or permitted to vote on any matter
required or permitted to be voted upon by the stockholders of the
Corporation.
(ii) (A) So long as any shares of the Senior Preferred Stock are
outstanding, the Corporation shall not authorize or issue any class of
Parity Securities without the affirmative vote or consent of Holders of at
least two-thirds of the then outstanding shares of the Senior Preferred
Stock, voting or consenting, as the case may be, as one class, given in
person or by proxy, either in writing or by resolution adopted at an annual
or special meeting; provided, however, that no such vote or consent shall
-------- -------
be necessary in connection with the issuance of additional shares of Senior
Preferred Stock pursuant to the provisions of paragraph (c) of this
Certificate of Designation.
(B) So long as any shares of the Senior Preferred Stock are
outstanding, the Corporation shall not authorize or issue any class of
Senior Securities without the affirmative vote or consent of Holders of at
least two-thirds of the outstanding shares of the Senior Preferred Stock,
voting or consenting, as the case may be, as one class, given in person or
by proxy, either in writing or by resolution adopted at an annual or
special meeting.
(C) So long as any shares of the Senior Preferred Stock are
outstanding, the Corporation shall not amend this Resolution or Certificate
of Designation so as to affect adversely the specified rights, preferences,
privileges or voting rights of holders of shares of the Senior Preferred
Stock without the affirmative vote or
<PAGE>
-11-
consent of Holders of at least a majority of the issued and outstanding
shares of Senior Preferred Stock (other than in any amendment which affects
the rights of Holders provided in paragraphs (f)(ii)(A) and (B) which shall
require the affirmative vote or consent of holders of at least two-thirds
of the issued and outstanding shares of Senior Preferred Stock) voting or
consenting, in each case, as the case may be, as one class, given in person
or by proxy, either in writing or by resolution adopted at an annual or
special meeting.
(D) While any shares of the Senior Preferred Stock are
outstanding, the Corporation shall not amend or modify the Indenture for
the Exchange Debentures in the form as executed on the Issue Date (the
"Exchange Indenture") (except as expressly provided therein in respect of
------------------
amendments without the consent of Holders of Exchange Debentures) without
the affirmative vote or consent of holders of at least a majority of the
aggregate liquidation preference of the Senior Preferred Stock then
outstanding or, in the case of amendments or modification which pursuant to
the terms of the Exchange Indenture would require the unanimous vote or
consent of holders of Exchange Debentures, by holders of not less than the
entire aggregate liquidation preference of the Senior Preferred Stock then
outstanding, voting or consenting, as the case may be, together as one
class, given in person or by proxy, either in writing or by resolution
adopted at an annual or special meeting.
(E) Except as set forth in this paragraph (ii), (A) the
creation, authorization or issuance of any shares of Junior Securities,
Parity Securities or Senior Securities, or (B) the increase or decrease in
the amount of authorized capital stock of any class, including any
Preferred Stock, shall not require the consent of the holders of Senior
Preferred Stock and shall not be deemed to affect adversely the rights,
preferences, privileges or voting rights of holders of shares of Senior
Preferred Stock.
(iii) Without the affirmative vote or consent of Holders of a
majority of the issued and outstanding shares of the Senior Preferred
Stock, voting or consenting, as the case may be, as a separate class, given
in person or by proxy, either in writing or by resolution adopted at an
annual or special meeting, the Corporation shall not, in a single
transaction or series of related transactions, consolidate with or merge
with or into, or sell, assign,
<PAGE>
-12-
transfer, lease, convey or otherwise dispose of all or substantially all of
its assets to, another Person unless: (A) either (1) the Corporation is the
survivor of such merger, consolidation, sale, assignment, transfer, lease,
conveyance or other disposition or (2) the surviving or transferee Person
is a corporation, partnership or trust organized and existing under the
laws of the United States, any state thereof or the District of Columbia
and such surviving or transferee Person expressly assumes all the
obligations of the Corporation under the Senior Preferred Stock and this
Certificate of Designation; (B) if the Company is not the surviving,
transferee or resulting entity, the Senior Preferred Stock shall be
converted into or exchanged for and shall become shares of such successor,
transferee or resulting Person, having in respect of such successor,
transferee or resulting Person the same powers, preferences and relative
participating, optional or other special rights and the qualifications,
limitations or restrictions thereon that the Senior Preferred Stock had
immediately prior to such transaction; (C) immediately after giving effect
to such transaction and the use of proceeds therefrom (on a pro forma
basis, including any Indebtedness incurred or anticipated to be incurred in
connection with such transaction), the Corporation or the surviving or
transferee Person is able to incur $1.00 of additional Indebtedness (other
than Permitted Indebtedness) in compliance with paragraph (l)(i); and (D)
immediately after giving effect to such transaction (including any
Indebtedness incurred or anticipated to be incurred in connection with the
transaction), no Voting Rights Triggering Event has occurred and is
continuing.
For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise, in a single transaction or series of related
transactions) of all or substantially all of the properties or assets of
one or more Restricted Subsidiaries of the Corporation, the Capital Stock
of which constitutes all or substantially all of the properties and assets
of the Corporation shall be deemed to be the transfer of all or
substantially all of the properties and assets of the Corporation.
Notwithstanding the foregoing clauses (C) and (D) of the preceding
paragraph but subject to clauses (A) and (B) thereof (a) the Corporation
may consolidate with, merge into or transfer all or part of its properties
and assets to any Restricted Subsidiary of the Corporation so long as all
assets of the Corporation immediately prior to such transaction are owned
by such Restricted Subsidiary immediately after the
<PAGE>
-13-
consummation thereof and (b) the Corporation may merge with an Affiliate
that is a corporation that has no material assets or liabilities and which
was incorporated solely for the purpose of (A) reincorporating the
Corporation in the same or another jurisdiction of the United States, any
state thereof or the District of Columbia or (B) the creation of a holding
company of the Corporation.
(iv) (A) If (1) after June 15, 2003 cash dividends on the Senior
Preferred Stock are in arrears and unpaid for two or more quarterly
Dividend Periods (whether or not consecutive) (a "Dividend Default"); (2)
----------------
the Corporation fails to redeem all of the then outstanding shares of the
Senior Preferred Stock on or before June 15, 2010; (3) the Corporation
fails to make a Change of Control Offer following a Change of Control if
such Change of Control Offer is required by paragraph (h) hereof or fails
to purchase shares of the Senior Preferred Stock from Holders who elect to
have such shares purchased pursuant to the Change of Control Offer; (4) the
Corporation breaches or violates one of the provisions set forth in
paragraph (l) hereof and the breach or violation continues for a period of
60 days or more after the Corporation receives notice thereof specifying
the default from the Holders of at least 25% of the shares of Senior
Preferred Stock then outstanding; (5) the Corporation fails to pay at the
final stated maturity (giving effect to any extensions thereof) the
principal amount of any Indebtedness of the Corporation, or the final
stated maturity of any such Indebtedness is accelerated, if the aggregate
principal amount of such Indebtedness, together with the aggregate
principal amount of any other such Indebtedness in default for failure to
pay principal at the final stated maturity (giving effect to any extensions
thereof) or which has been accelerated, aggregates $50.0 million or more at
any time, in each case, after a 30-day period during which such default
shall not have been cured or such acceleration rescinded, or (6) the
Corporation fails to make any scheduled payment of principal or interest on
any Indebtedness the outstanding principal amount of which aggregates $50.0
million or more, after a 180-day period during which such default shall not
have been cured, then in the case of any of clauses (1)-(6) (each of such
clauses (1)-(6), a "Voting Rights Triggering Event"), the number of
------------------------------
directors constituting the Board of Directors shall be adjusted by the
number, if any, necessary to permit the Holders of the Senior Preferred
Stock, voting separately and as one class, to elect the lesser of two
directors or that number
<PAGE>
-14-
of directors constituting at least 25% of the entire Board of Directors;
provided, that, in the event more than one of the above defaults occurs, at
--------
the same or at different times, the maximum number of directors that such
Holders shall be entitled to elect is the lesser of two directors and that
number of directors constituting 25% of the entire Board of Directors.
Holders of a majority of the issued and outstanding shares of the Senior
Preferred Stock, voting separately and as one class, shall have the
exclusive right to elect the lesser of two directors or 25% of the members
of the entire Board of Directors at a meeting therefor called upon
occurrence of such Voting Rights Triggering Event, and at every subsequent
meeting at which the terms of office of the directors so elected by the
Holders of the Senior Preferred Stock expire (other than as described in
(f)(iv)(B) below). The voting rights provided herein shall be the exclusive
remedy at law or in equity of the holders of the Senior Preferred Stock for
any Dividend Default or Voting Rights Triggering Event or any breach or
violation referred to in clause (4) above regardless of whether (or not)
the notice referred to therein is given or the grace period referred to
therein has passed at the relevant time of determination of such breach or
violation.
(B) The right of the Holders of the Senior Preferred Stock voting
together as a separate class to elect members of the Board of Directors as
set forth in subparagraph (f)(iv)(A) above shall continue until such time
as (x) in the event such right arises due to a Dividend Default, all
accumulated dividends in respect of all previously completed full Dividend
Periods that are in arrears on the Senior Preferred Stock are paid in full
in cash; and (y) in all other cases, the failure, breach or default giving
rise to such Voting Rights Triggering Event is remedied, cured (including,
but not limited to, in the case of clause (6) above, through the issuance
of Indebtedness permitted to be incurred by this Certificate of Designation
or the waiver of any breach or default by the holders of such Indebtedness)
or waived by the Holders of at least a majority of the shares of Senior
Preferred Stock then outstanding and entitled to vote thereon, at which
time (1) the special right of the Holders of the Senior Preferred Stock so
to vote as a class for the election of directors and (2) the term of office
of the directors elected by the Holders of the Senior Preferred Stock shall
each terminate and the directors elected by the holders of Common Stock or
Capital Stock (other than the Senior Pre-
<PAGE>
-15-
ferred Stock) shall constitute the entire Board of Directors. At any time
after voting power to elect directors shall have become vested and be
continuing in the Holders of the Senior Preferred Stock pursuant to
paragraph (f)(iv) hereof, if vacancies shall exist in the offices of
directors elected by the Holders of the Senior Preferred Stock, a proper
officer of the Corporation may, and upon the written request of the Holders
of record of at least twenty-five percent (25%) of the shares of Senior
Preferred Stock then outstanding addressed to the secretary of the
Corporation shall, call a special meeting of the Holders of Senior
Preferred Stock, for the purpose of electing the directors which such
Holders are entitled to elect. If such meeting shall not be called by a
proper officer of the Corporation within twenty (20) days after personal
service of said written request upon the secretary of the Corporation, or
within twenty (20) days after mailing the same within the United States by
certified mail, addressed to the secretary of the Corporation at its
principal executive offices, then the Holders of record of at least twenty-
five percent (25%) of the outstanding shares of Senior Preferred Stock may
designate in writing one holder to call such meeting at the expense of the
Corporation, and such meeting may be called by the Person so designated,
upon the notice required for the annual meetings of stockholders of the
Corporation, and shall be held at the place for holding the annual meetings
of stockholders. Any Holder of Senior Preferred Stock so designated shall
have, and the Corporation shall provide, access to the lists of
stockholders to be called pursuant to the provisions hereof.
(C) At any meeting held for the purpose of electing directors at
which the Holders of Senior Preferred Stock shall have the right, voting
together as a separate class, to elect directors as aforesaid, the presence
in person or by proxy of the Holders of at least a majority of the
outstanding shares of Senior Preferred Stock entitled to vote thereat shall
be required to constitute a quorum of the Senior Preferred Stock.
(D) Any vacancy occurring in the office of a director elected by
the Holders of Senior Preferred Stock may be filled by the remaining
director elected by the Holders of Senior Preferred Stock unless and until
such vacancy shall be filled by the Holders of Senior Preferred Stock.
<PAGE>
-16-
(v) In any case in which the Holders of Senior Preferred Stock
shall be entitled to vote pursuant to this paragraph (f) or pursuant to
Delaware law, each Holder of Senior Preferred Stock entitled to vote with
respect to such matter shall be entitled to one vote for each share of
Senior Preferred Stock.
(g) Exchange.
--------
(i) Requirements. The outstanding shares of Senior Preferred Stock
------------
are exchangeable either (A) in whole or in part, at the option of the
Corporation, at any time or from time to time on any Dividend Payment Date
for the Corporation's 13-7/8% Subordinated Exchange Debentures due 2010
(the "Corporation Exchange Debentures") to be substantially in the form of
-------------------------------
Exhibit A to the Exchange Indenture, a copy of which is on file with the
secretary of the Corporation; provided, however, that immediately after
-------- -------
giving effect to any exchange in part, there shall be outstanding (x)
Senior Preferred Stock with an aggregate liquidation preference of at least
$75,000,000 and (y) at least $75,000,000 aggregate principal amount of
Exchange Debentures or (B) in whole, but not in part, at the option of the
Corporation, on any Dividend Payment Date for Holdings 13-7/8% Exchange
Debentures due 2010 (the "Holdings Exchange Debentures") to be
----------------------------
substantially in the form of Exhibit A to the Exchange Indenture, a copy of
which is on file with the Secretary of the Corporation; and provided,
--------
further, that, in either case, any such exchange may only be made if on or
-------
prior to the date of such exchange (i) the Corporation has paid (or is
deemed to have paid) all accumulated dividends (including Additional
Dividends, if any) on the Senior Preferred Stock (including the dividends
payable on the date of exchange) and there shall be no contractual
impediment to such exchange; (ii) there shall be sufficient surplus under
Delaware law to permit such exchange; (iii) immediately after giving effect
to such exchange, no Default or Event of Default (each as defined in the
Exchange Indenture) would exist under the Exchange Indenture and no default
or event of default would exist under the Notes Indenture or under any
other material instrument governing Indebtedness outstanding at the time
would be caused thereby; and (iv) the Exchange Indenture has been qualified
under the Trust Indenture Act of 1939, as amended (the "TIA"), if such
---
qualification is required at the time of exchange. The exchange rate shall
be $1.00 principal amount of Exchange Debentures for each $1.00 of
liquidation preference of Senior Preferred Stock,
<PAGE>
-17-
including, to the extent necessary, Exchange Debentures in principal
amounts less than $1,000, provided that the Corporation shall have the
right, at its option, to pay cash in an amount equal to the principal
amount of that portion of any Exchange Debenture that is not an integral
multiple of $1,000 instead of delivering an Exchange Debenture in a
denomination of less than $1,000.
(ii) Procedure for Exchange. (A) At least 30 days and not more than
----------------------
60 days prior to any date fixed for exchange, written notice (the "Exchange
--------
Notice") shall be given by first-class mail, postage prepaid, to each
------
Holder of record on the record date fixed for such exchange of the Senior
Preferred Stock at such Holder's address as the same appears on the stock
books of the Corporation, provided that no failure to give such notice nor
--------
any deficiency therein shall affect the validity of the procedure for the
exchange of any shares of Senior Preferred Stock to be exchanged except as
to the Holder or Holders to whom the Corporation has failed to give said
notice or except as to the Holder or Holders whose notice was defective.
The Exchange Notice shall state:
(1) the date fixed for exchange;
(2) that the Holder is to surrender to the Corporation, in the
manner and at the place or places designated, his certificate or
certificates representing the shares of Senior Preferred Stock to be
exchanged;
(3) that dividends on the shares of Senior Preferred Stock to
be exchanged shall cease to accumulate on such Exchange Date whether or not
certificates for shares of Senior Preferred Stock are surrendered for
exchange on such Exchange Date unless the Corporation shall default in the
delivery of Exchange Debentures; and
(4) that interest on the Exchange Debentures shall accrue from
the Exchange Date whether or not certificates for shares of Senior
Preferred Stock are surrendered for exchange on such Exchange Date.
(B) On or before the Exchange Date, each Holder of shares of Senior
Preferred Stock to be exchanged shall surrender certificates representing such
shares of Senior Preferred Stock in the manner and at the place designated
<PAGE>
-18-
in the Exchange Notice. The Corporation shall cause the Exchange Debentures
to be executed on the Exchange Date and, upon surrender in accordance with
the Exchange Notice of the certificates for any shares of Senior Preferred
Stock so exchanged, duly endorsed (or otherwise in proper form for
transfer, as determined by the Corporation), such shares shall be exchanged
by the Corporation for Exchange Debentures. In the event that any
certificate surrendered pursuant to this paragraph (g) represents shares in
excess of those being surrendered pursuant to the Exchange Notice, the
Corporation shall issue an new certificate representing the unexchanged
portion of shares of the Senior Preferred Stock. The Corporation shall pay
interest on the Exchange Debentures at the rate and on the dates specified
therein from the Exchange Date.
(C) If notice has been mailed as aforesaid, and if before the
Exchange Date specified in such notice (1) the Exchange Indenture shall
have been duly executed and delivered by the Corporation and the trustee
thereunder and (2) all Exchange Debentures necessary for such exchange
shall have been duly executed by the Corporation and delivered to the
trustee under the Exchange Indenture with irrevocable instructions to
authenticate the Exchange Debentures necessary for such exchange, then the
rights of the Holders of Senior Preferred Stock so exchanged as
stockholders of the Corporation shall cease (except the right to receive
Exchange Debentures, an amount in cash equal to the amount of accrued and
unpaid dividends to the Exchange Date and, if the Corporation so elects,
cash in lieu of issuing any Exchange Debenture with a principal amount that
is not an integral multiple of $1,000), and the Person or Persons entitled
to receive the Exchange Debentures issuable upon exchange shall be treated
for all purposes as the registered Holder or Holders of such Exchange
Debentures as of the Exchange Date.
(iii) No Exchange in Certain Cases. Notwithstanding the foregoing
----------------------------
provisions of this paragraph (g), the Corporation shall not be entitled or
required to exchange the Senior Preferred Stock for Exchange Debentures if
such exchange, or any term or provision of the Exchange Indenture or the
Exchange Debentures, or the performance of the Corporation's obligations
under the Exchange Indenture or the Exchange Debentures, shall materially
violate or conflict with any applicable law or agreement or instrument then
binding on the Corporation or if, at the time of such ex-
<PAGE>
-19-
change, the Corporation is insolvent or if it would be rendered insolvent
by such exchange.
(h) Change of Control.
-----------------
(i) Within 15 Business Days after the Corporation knows, or
reasonably should know, of the occurrence of each Change of Control (the
date of such occurrence being the "Change of Control Date"), the
----------------------
Corporation shall make an offer to purchase (the "Change of Control Offer")
-----------------------
the outstanding Senior Preferred Stock at a purchase price equal to 101% of
the liquidation preference thereof plus, without duplication, an amount in
cash equal to all accumulated and unpaid dividends (including Additional
Dividends, if any) thereon (including an amount in cash equal to a prorated
dividend for the period from the immediately preceding Dividend Payment
Date to the Change of Control Payment Date) (such applicable purchase price
being hereinafter referred to as the "Change of Control Purchase Price").
--------------------------------
(ii) The Corporation will within 15 days after it knows, or
reasonably should know, of the Change of Control (i) cause a notice of the
Change of Control to be sent at least once to the Dow Jones News Service or
similar business news service in the United States and (ii) send by first-
class mail, postage prepaid, to each holder of Senior Preferred Stock, at
the address appearing in the register maintained by the transfer agent for
the Senior Preferred Stock, a notice stating:
(1) that the Change of Control Offer is being made pursuant to
this paragraph (h) and that all of the Senior Preferred Stock tendered will
be accepted for payment, and otherwise subject to the terms and conditions
set forth herein;
(2) the Change of Control Purchase Price and the purchase date
(which shall be a Business Day no earlier than 20 days nor later than 60
days from the date such notice is mailed (the "Change of Control Payment
-------------------------
Date"));
----
(3) that any Senior Preferred Stock not tendered will continue
to accrue dividends;
(4) that, unless the Corporation defaults in the payment of
the Change of Control Purchase Price,
<PAGE>
-20-
any Senior Preferred Stock accepted for payment pursuant to the Change of
Control Offer shall cease to accumulate dividends after the Change of
Control Payment Date;
(5) that holders accepting the offer to have their Senior Preferred
Stock purchased pursuant to a Change of Control Offer will be required to
surrender their certificates representing the Senior Preferred Stock to the
Corporation, properly endorsed for transfer together with such customary
documents as the Corporation and the transfer agent may reasonably require,
in the manner and at the address specified in the notice prior to the close
of business on the Business Day preceding the Change of Control Payment
Date;
(6) that holders will be entitled to withdraw their acceptance if
the Corporation receives, not later than the close of business on the third
Business Day preceding the Change of Control Payment Date, a telegram,
telex, facsimile transmission or letter setting forth the name of the
holder, the number of shares of Senior Preferred Stock delivered for
purchase, and a statement that such holder is withdrawing his election to
have such Senior Preferred Stock purchased;
(7) that holders whose Senior Preferred Stock are being purchased
only in part will be issued new certificates representing the number of
shares of Senior Preferred Stock equal to the unpurchased portion of the
certificates surrendered; and
(8) a summary of any other procedures that a holder must follow to
accept a Change of Control Offer or effect withdrawal of such acceptance.
(iii) The Corporation will comply with any securities laws and
regulations, to the extent such laws and regulations are applicable to the
redemption of the Senior Preferred Stock in connection with a Change of
Control Offer.
(iv) On the Change of Control Payment Date, the Corporation shall (A)
accept for payment the shares of Senior Preferred Stock validly tendered
pursuant to the Change of Control Offer, (B) promptly mail to the Holders of
shares so accepted the Change of Control Purchase Price therefor
<PAGE>
-21-
in cash and (C) cancel and retire each surrendered certificate and execute a
new certificate representing that number of shares of Senior Preferred Stock
equal to any unpurchased shares represented by a certificate surrendered.
Unless the Corporation defaults in the payment for the shares of Senior
Preferred Stock tendered pursuant to the Change of Control Offer, dividends
shall cease to accrue with respect to the shares of Senior Preferred Stock
tendered and all rights of Holders of such tendered shares shall terminate,
except for the right to receive payment therefor, on the Change of Control
Payment Date.
(v) If the repurchase of Senior Preferred Stock would violate or
constitute a default or be otherwise prohibited under any Indebtedness of the
Corporation then outstanding, then, notwithstanding anything to the contrary
contained above, prior to complying with the foregoing provisions, but in any
event within 30 days following the date on which the Corporation has actual
knowledge of a Change of Control, the Corporation covenants that if the
purchase of the Senior Preferred Stock would violate or constitute a default
under any then outstanding Indebtedness, then the Corporation will, to the
extent required to permit the repurchase of the Senior Preferred Stock
required by this paragraph (h), either (A) repay in full all such Indebtedness
on the basis required to permit such purchase of Senior Preferred Stock or (B)
obtain the requisite consents, if any, under the agreements, documents and
instruments governing such Indebtedness required to permit the repurchase of
Senior Preferred Stock required by this paragraph (h). Until the requirements
of the immediately preceding sentence are satisfied, the Corporation shall not
and shall not be obligated to purchase any Senior Preferred Stock pursuant to
any Change of Control Offer; provided that the Corporation's failure to comply
--------
with the provisions of this paragraph (h)(v) shall constitute a Voting Rights
Triggering Event.
(i) Conversion or Exchange. The Holders of shares of Senior Preferred
----------------------
Stock shall not have any rights hereunder to convert such shares into or
exchange such shares for shares of any other class or classes or of any other
series of any class or classes of Capital Stock of the Corporation other than as
provided in the Registration Rights Agreement.
(j) Reissuance of Senior Preferred Stock. Shares of Senior Preferred
------------------------------------
Stock that have been issued and reacquired in any manner, including shares
purchased or redeemed or ex-
<PAGE>
-22-
changed, shall (upon compliance with any applicable provisions of the laws of
Delaware) have the status of authorized and unissued shares of Preferred Stock
undesignated as to series and may be redesignated and reissued as part of any
series of Preferred Stock, provided that shares of Senior Preferred Stock
--------
reacquired pursuant to the exchange offer(s) contemplated by the Registration
Rights Agreement shall be reissued as Exchange Preferred Stock with the series
designation referred to in paragraph (a) hereof, and provided further that any
----------------
issuance of such shares of Preferred Stock must be in compliance
with the terms hereof.
(k) Business Day. If any payment, redemption or exchange shall be
------------
required by the terms hereof to be made on a day that is not a Business Day,
such payment, redemption or exchange shall be made on the immediately succeeding
Business Day.
(l) Certain Covenants.
-----------------
(i) Limitation on Incurrence of Additional Indebtedness. The Corporation
---------------------------------------------------
will not, and will not permit any Restricted Subsidiary of the Corporation to,
directly or indirectly incur any Indebtedness (including Acquired Indebtedness)
other than Permitted Indebtedness. Notwithstanding the foregoing limitations,
the Corporation and its Restricted Subsidiaries may incur Indebtedness if (a)
after giving effect to the incurrence of such Indebtedness and the receipt and
application of the proceeds thereof, the Corporation's Consolidated Fixed Charge
Coverage Ratio (determined on a pro forma basis for the last four full fiscal
quarters of the Corporation for which financial information is available at the
date of determination) is at least equal to 1.75:1; but no Restricted Subsidiary
may incur Indebtedness which is not Permitted Indebtedness unless its
Consolidated Fixed Charge Coverage Ratio is at least equal to 2.75:1;
provided, however, that if the Indebtedness which is the subject of a
- -------- -------
determination under this provision is Acquired Indebtedness, or Indebtedness
incurred in connection with the simultaneous acquisition of any Person,
business, property or assets, then such ratio shall be determined by giving
effect (on a pro forma basis, as if the transaction had occurred at the
beginning of the four quarter period) to both the incurrence or assumption of
such Acquired Indebtedness or such other Indebtedness by the Corporation or such
Restricted Subsidiary and the inclusion in the Corporation's or such Restricted
Subsidiary's Consolidated EBITDA of the Consolidated EBITDA of the acquired
Person, business, property or assets; and provided, further, that in the event
-------- -------
that the Consolidated EBITDA of the
<PAGE>
-23-
acquired Person, business, property or assets reflects an operating loss, no
amounts shall be deducted from the Corporation's or such Restricted Subsidiary's
Consolidated EBITDA in making the determinations described above and (b) no
Voting Rights Triggering Event shall have occurred and be continuing at the time
or as a consequence of the incurrence of such Indebtedness.
(ii) Limitation on Restricted Payments. (a) The Corporation will not,
---------------------------------
and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, make any Restricted Payment if at the time of such Restricted
Payment and immediately after giving effect thereto:
(i) any Voting Rights Triggering Event shall have occurred and be
continuing; or
(ii) the Corporation could not incur $1.00 of additional Indebtedness
(other than Permitted Indebtedness) in compliance with paragraph (l)(i); or
(iii) the aggregate amount of Restricted Payments declared or made
after the Issue Date (the amount expended for such purposes, if other than
in cash, being the fair market value of such property as determined by the
Board of Directors in good faith) exceeds the sum of (A) 50% of the
Corporation's Consolidated Net Income for the period (taken as one
accounting period) commencing with the first full fiscal quarter of the
Corporation which commenced after the Issue Date to and including the
fiscal quarter of the Corporation ended immediately prior to the date of
each calculation (or in the event Consolidated Net Income is a deficit
minus 100% of such deficit), plus (B) 100% of the aggregate Net Proceeds
and the fair market value of securities or other property received by the
Corporation from the issue or sale, after the Issue Date, of Qualified
Capital Stock (other than Capital Stock of the Corporation issued to any
Restricted Subsidiary of the Corporation) of the Corporation or any
Indebtedness or other securities of the Corporation convertible into or
exercisable or exchangeable for Qualified Capital Stock of the Corporation
which have been so converted or exercised or exchanged, as the case may be,
plus (C) $10.0 million provided, that the amount of Restricted Payments
--------
permitted by this clause (C) shall not be reduced by any negative amounts
that occur under clause (A) above.
<PAGE>
-24-
(b) Notwithstanding the foregoing, the provisions set forth in the
immediately preceding paragraph will not prohibit (A) payments with respect to
the purchase or redemption of Capital Stock of the Corporation made by exchange
for, or out of the proceeds of the substantially concurrent sale (other than to
a Subsidiary of the Corporation or an Emerging Market Subsidiary) of, Qualified
Capital Stock; (B) payments in respect of any redemption, repurchase,
acquisitions, cancellation or other retirement for value of shares of Capital
Stock of the Corporation or options, stock appreciation or similar rights, in
each case held by officers, directors or employees of the Corporation or any of
its Subsidiaries (or former officers, directors or employees) (or their estates
or beneficiaries under their estates) or by an employee benefit plan, upon
death, disability, retirement or termination of employment of any such Person
pursuant to the terms of any employee benefit plan or any other agreement under
which shares of Capital Stock or stock appreciation or similar rights were
issued or acquired, and the purchase of shares of Capital Stock by the
Corporation or any Restricted Subsidiary for the purpose of contributing such
shares to any employee benefit plan (provided, that all such payments and
--------
purchases referred to in this clause (B) may not exceed $2.0 million in any 12
month period after the Issue Date); (C) the payment of any dividend within 60
days after the date of its declaration if such dividend could have been paid on
the date of its declaration in compliance with the foregoing provisions; (D) the
consummation of a cash tender offer by the Corporation for shares of Capital
Stock of the Corporation in an aggregate amount not exceeding $430.0 million in
connection with the Recapitalization; or (E) cash payments (and/or the issuance
or delivery of any note, instrument, agreement or other obligation providing for
future cash payments) resulting from antidilution or other adjustments made in
connection with the Recapitalization to options to purchase Capital Stock or
restricted or unvested Capital Stock held by employees, directors or former
employees or directors of the Corporation or any of its Subsidiaries, to the
extent that such adjustments and cash payments are approved by the Board of
Directors. Each Restricted Payment made or paid in accordance with this
paragraph, except those made pursuant to clause (D) or clause (E), shall be
counted (without duplication) for purposes of computing amounts utilized for
Restricted Payments pursuant to clause (a)(iii) of the immediately preceding
paragraph. No payments made or paid pursuant to clause (C) of this paragraph
shall be counted for purposes of computing amounts utilized for Restricted
Payments pursuant to clause (a)(iii) of the immediately preceding paragraph to
the extent such amount was already counted for such purposes.
<PAGE>
-25-
(iii) Limitations on Transactions with Affiliates. The Corporation will
-------------------------------------------
not, and will not cause or permit any of its Restricted Subsidiaries to,
directly or indirectly, enter into any transaction or series of related
transactions (including, without limitation, the sale, purchase, exchange or
lease of assets, property or services) with any Affiliate of the Corporation (an
"Affiliate Transaction") or extend, renew, waive or otherwise modify the terms
---------------------
of any Affiliate Transaction entered into prior to the Issue Date unless (i)
such Affiliate Transaction is between or among the Corporation and its
Restricted Subsidiaries; or (ii) such Affiliate Transaction is entered into in
good faith and the terms of such Affiliate Transaction are fair and reasonable
to the Corporation or such Restricted Subsidiary, as the case may be. In any
Affiliate Transaction involving an amount or having a value in excess of $5.0
million which is not permitted under clause (i) above, the Corporation must
obtain a resolution of the Board of Directors determining that such Affiliate
Transaction complies with clause (ii) above. In transactions with a value in
excess of $10.0 million which are not permitted under clause (i) above, the
Corporation must obtain a written opinion as to the fairness of such a
transaction, from a financial point of view to the Corporation or such
Restricted Subsidiary, as the case may be, from an independent investment
banking firm.
Notwithstanding the foregoing, the provisions set forth in the
immediately preceding paragraph will not apply to: (i) Restricted Payments that
are not prohibited by paragraph (l)(ii); (ii) transactions permitted by, and
complying with, the provisions of paragraph (f)(iii); (iii) transactions in the
ordinary course of business (including expense advances) between the Corporation
or any of its Restricted Subsidiaries or Unrestricted Subsidiaries, on the one
hand, and any employee thereof, on the other hand; (iv) employment contracts
existing on the Issue Date and employment contracts approved by the Board of
Directors the terms of which are consistent with past practice; (v) the granting
and performance of registration rights for shares of Capital Stock of the
Corporation under a written registration rights agreement approved by a majority
of directors of the Corporation that are disinterested with respect to such
transaction; (vi) transactions with Affiliates solely in their capacity as
holders of Indebtedness or Capital Stock of the Corporation or any of its
Restricted Subsidiaries or Unrestricted Subsidiaries, where such Affiliates are
treated no more favorably than holders of such Indebtedness or such Capital
Stock generally; (vii) any Permitted Investments; (viii) reasonable fees and
compensation paid to, and indemnity provided on behalf of, officers, directors,
employees or con-
<PAGE>
-26-
sultants of the Corporation or any Subsidiary of the Corporation as determined
in good faith by the Board of Directors; (ix) transactions exclusively between
or among the Corporation and any of its Subsidiaries, provided such transactions
are not otherwise prohibited by this Certificate of Designation; (x) any
agreement as in effect as of the Issue Date or any amendment thereto or any
transaction contemplated thereby (including pursuant to any amendment thereto)
or in any replacement agreement thereto so long as any such amendment or
replacement agreement is not more disadvantageous to the holders in any material
respect than the original agreement as in effect on the Issue Date; (xi) any
payment, issuance of securities or other payments, awards or grants, in cash or
otherwise, pursuant to, or the funding of, employment arrangements and Plans
approved by the Board of Directors; (xii) the grant of stock options or similar
rights to employees and directors of the Corporation and its Subsidiaries (or
any amendment or adjustment thereto) pursuant to Plans and employment contracts
and stock option, stock bonus, restricted stock and similar agreements approved
by the Board of Directors; (xiii) loans or advances to officers, directors or
employees of the Corporation or its Restricted Subsidiaries not in excess of
$5.0 million at any one time outstanding; and (xiv) transactions, including,
without limitation, the repurchase of the Corporation's Common Stock, entered
into in connection with the Recapitalization and the financing therefor as
described in the Offering Memorandum.
(iv) Reports. So long as the Corporation is subject to the periodic
-------
reporting requirements of the Exchange Act, it will continue to file the
information required thereby with the Commission and will furnish such
information to Holders of Senior Preferred Stock within 15 days of filing
thereof with the Commission. If the Corporation is not required to file such
information with the Commission, it will nonetheless continue to furnish such
information to holders of Senior Preferred Stock within 15 days of the date on
which filing with the Commission would have been required.
(m) Definitions. As used in this Certificate of Designation, the
-----------
following terms shall have the following meanings (with terms defined in the
singular having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:
"Acquired Indebtedness" means Indebtedness of a Person (including an
---------------------
Unrestricted Subsidiary) existing at the time such Person becomes a Restricted
Subsidiary or as-
<PAGE>
-27-
sumed in connection with the acquisition of assets from such Person.
"Additional Dividends" has the meaning provided in the Registration
--------------------
Rights Agreement.
"Affiliate" means, of any Person, a Person who, directly or
---------
indirectly, through one or more intermediaries controls, or is controlled
by, or is under common control with, such other Person. The term "control"
means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise;
provided, however, that the ownership of at least 10% of the voting power
-------- -------
of the Common Stock of a Person, either directly or indirectly, shall be
deemed control.
"Affiliate Transaction" shall have the meaning provided in paragraph
---------------------
1(iii) above.
"Asset Sale" means the sale, transfer or other disposition (other than
----------
to the Corporation or any of its Restricted Subsidiaries) in any single
transaction or series of related transactions involving assets with a fair
market value in excess of $1.0 million of (a) any Capital Stock of or other
equity interest in any Restricted Subsidiary of the Corporation other than
in a transaction where the Corporation or such Restricted Subsidiary
receives therefor one or more properties with a fair market value equal to
the fair market value of the Capital Stock issued, transferred or disposed
of by the Corporation or the Restricted Subsidiary (with such fair market
values being determined by the Board of Directors), (b) all or
substantially all of the assets of the Corporation or of any Restricted
Subsidiary thereof, (c) real property or (d) all or substantially all of
the assets of any division, line of business or comparable business segment
of the Corporation or any Restricted Subsidiary thereof; provided that
--------
Asset Sales shall not include (x) sales, leases, conveyances, transfers or
other dispositions to the Corporation or to a Restricted Subsidiary or to
any other Person if after giving effect to such sale, lease, conveyance,
transfer or other disposition such other Person becomes a Restricted
Subsidiary, or (y) the sale of all or substantially all of the assets of
the Corporation or a Restricted Subsidiary in a transaction complying with
paragraph (f)(iii) above, in which case only the assets
<PAGE>
-28-
not so sold shall be deemed an Asset Sale, or (z) any sale, issuance or
other disposition of Capital Stock of any Joint Venture Subsidiary.
"Board of Directors" means the Board of Directors of the Corporation
------------------
or a duly authorized committee thereof (a "Board Committee"); provided that
--------------- --------
the term "Board of Directors" as used in the definition of "Change of
Control" or paragraph (f)(iv) hereof shall not include any Board Committee.
"Business Day" means any day except a Saturday, a Sunday, or any day
------------
on which banking institutions in New York, New York are required or
authorized by law or other governmental action to be closed.
"Capital Stock" means (i) with respect to any Person that is a
-------------
corporation, any and all shares, interests, participations or other
equivalents (however designated) of capital stock, including each class of
Common Stock and Preferred Stock of such Person and warrants or options to
purchase any of the foregoing and (ii) with respect to any Person that is
not a corporation, any and all partnership or other equity interests of
such Person.
"Capitalized Lease Obligation" means, as to any Person, the obligation
----------------------------
of such Person to pay rent or other amounts under a lease to which such
Person is a party that is required to be classified and accounted for as
capital lease obligations under GAAP and, for purposes of this definition,
the amount of such obligations at any date shall be the capitalized amount
of such obligations at such date, determined in accordance with GAAP.
"Cash Equivalents" means (i) marketable direct obligations issued by,
----------------
or unconditionally guaranteed by, the United States Government or issued by
any agency thereof and backed by the full faith and credit of the United
States, in each case maturing within one year from the date of acquisition
thereof; (ii) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or
any public instrumentality thereof maturing within one year from the date
of acquisition thereof and, at the time of acquisition, having one of the
two highest ratings obtainable from either Standard & Poor's Corporation
("S&P") or Moody's Investors Service, Inc. ("Moody's"); (iii) commercial
--- -------
paper maturing no more than one year from the date of
<PAGE>
-29-
creation thereof and, at the time of acquisition, having a rating of at
least A-1 from S&P or at least P-1 from Moody's; (iv) certificates of
deposit or bankers' acceptances maturing within one year from the date of
acquisition thereof issued by any commercial bank organized under the laws
of the United States of America or any state thereof or the District of
Columbia or any U.S. branch of a foreign bank having at the date of
acquisition thereof combined capital and surplus of not less than $250
million; (v) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clause (i) above
entered into with any bank meeting the qualifications specified in clause
(iv) above; and (vi) investments in money market funds which invest
substantially all their assets in securities of the types described in
clauses (i) through (v) above.
"Certificate of Designation" means this Certificate of Designation, as
--------------------------
amended from time to time, creating the Senior Preferred Stock.
A "Change of Control" of the Corporation will be deemed to have
-----------------
occurred at such time as (i) any Person (including a Person's Affiliates),
other than a Permitted Holder, becomes the beneficial owner (as defined
under Rule 13d-3 or any successor rule or regulation promulgated under the
Exchange Act) of 50% or more of the total voting power of the Corporation's
Common Stock unless, as a result of such transaction, the ultimate direct
or indirect ownership of the Corporation is substantially the same
immediately after such transaction as it was immediately prior to such
transaction, (ii) any Person (including a Person's Affiliates), other than
a Permitted Holder, becomes the beneficial owner of more than 35% of the
total voting power of the Corporation's Common Stock, and the Permitted
Holders beneficially own, in the aggregate, a lesser percentage of the
total voting power of the Common Stock of the Corporation than such other
Person and do not have the right or ability by voting power, contract or
otherwise to elect or designate for election a majority of the Board of
Directors, (iii) there shall be consummated any consolidation or merger of
the Corporation in which the Corporation is not the continuing or surviving
corporation or pursuant to which the Common Stock of the Corporation would
be converted into cash, securities or other property, other than a merger
or consolidation of the Corporation in which the holders of the Common
Stock of the Corporation outstanding immediately prior to the consoli-
<PAGE>
-30-
dation or merger hold, directly or indirectly, at least a majority of the
voting power of the Common Stock of the surviving corporation immediately
after such consolidation or merger or (iv) during any period of two
consecutive years, individuals who at the beginning of such period
constituted the Board of Directors (together with any new directors whose
election by such Board of Directors or whose nomination for election by the
shareholders of the Corporation has been approved by a majority of the
directors then still in office who either were directors at the beginning
of such period or whose election or recommendation for election was
previously so approved) cease to constitute a majority of the Board of
Directors.
"Change of Control Date" shall have the meaning provided in paragraph
----------------------
(h)(i).
"Change of Control Offer" shall have the meaning provided in paragraph
-----------------------
(h)(i).
"Change of Control Payment Date" shall have the meaning provided in
------------------------------
paragraph (h)(ii).
"Change of Control Purchase Price" shall have the meaning provided in
--------------------------------
paragraph (h).
"Commission" means the Securities and Exchange Commission.
----------
"Common Stock" of any Person means any and all shares, interests or
------------
other participations in, and other equivalents (however designated and
whether voting or non-voting) of, such Person's Common Stock, whether
outstanding on the Issue Date or issued after the Issue Date, and includes,
without limitation, all series and classes of such Common Stock.
"Consolidated EBITDA" means, for any Person and its Restricted
-------------------
Subsidiaries, for any period, an amount equal to (a) the sum of
Consolidated Net Income for such period, plus, to the extent deducted from
the revenues of such Person and its Restricted Subsidiaries in determining
Consolidated Net Income, (i) the provision for taxes for such period based
on income or profits and any provision for taxes utilized in computing a
loss in Consolidated Net Income above, plus (ii) Consolidated Interest
Expense (including, for this purpose, dividends on the Senior Preferred
Stock and any Redeemable Dividends in each case
<PAGE>
-31-
only to the extent that such dividends were deducted in determining
Consolidated Net Income), plus (iii) Consolidated Non-Cash Charges, plus
(iv) without duplication, charges attributable to the exercise or
adjustment of employee options and fees and expenses, in each case,
incurred in connection with the Recapitalization or the transactions
described under "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Recent Events and Proposed
Recapitalization" in the Offering Memorandum, plus (v) without duplication,
for any four quarter period that includes one or more fiscal quarters of
fiscal 1998 or the first two quarters of fiscal 1999, restructuring
charges, in an aggregate amount not to exceed $12.0 million, but only to
the extent actually incurred during each such applicable quarter and minus
(vi) without duplication, the amount of all cash payments made by such
Person or any of its Restricted Subsidiaries during such period to the
extent such payments relate to Consolidated Non-Cash Charges that were
added back in determining Consolidated EBITDA for such period or any prior
period, all as determined on a consolidated basis for such Person and its
Restricted Subsidiaries in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" on any date of
----------------------------------------
determination (the "Transaction Date") means, with respect to any Person,
----------------
the ratio of (i) the aggregate amount of Consolidated EBITDA of such Person
for the Reference Period to (ii) the aggregate amount of Consolidated Fixed
Charges of such Person during the Reference Period; provided that for
--------
purposes of such computation, in calculating Consolidated EBITDA and
Consolidated Fixed Charges, (a) the transaction giving rise to the need to
calculate the Consolidated Fixed Charge Coverage Ratio will be assumed to
have occurred (on a pro forma basis) on the first day of the Reference
--- -----
Period; (b) the incurrence of any Indebtedness (other than Indebtedness
incurred under any revolving credit or similar facility to the extent that
the proceeds were used to finance working capital requirements in the
ordinary course of business) or the issuance of any Disqualified Capital
Stock or Preferred Stock during the Reference Period or subsequent thereto
and on or prior to the Transaction Date (and the application of the
proceeds therefrom (other than a repayment of Indebtedness outstanding
under a revolving credit or similar facility to the extent that the
proceeds were used to finance working capital requirements in the ordinary
course of business) to the extent used to retire Indebtedness or Preferred
<PAGE>
-32-
Stock) will be assumed to have occurred (on a pro forma basis) on the first
--- -----
day of such Reference Period; (c) Consolidated Interest Expense
attributable to any Indebtedness (whether existing or being incurred)
bearing a floating interest rate shall be computed as if the rate in effect
on the Transaction Date had been the applicable rate for the entire period,
unless such Person or any of its Subsidiaries is a party to an Interest
Rate Agreement (which shall remain in effect for the 12-month period after
the Transaction Date) that has the effect of fixing the interest rate on
the date of computation, in which case such rate (whether higher or lower)
shall be used; (d) the repayment of any Indebtedness (other than under a
revolving credit or similar facility to the extent that the proceeds were
used to finance working capital requirements in the ordinary course of
business), Disqualified Capital Stock or Preferred Stock during the
Reference Period or subsequent thereto and on or prior to the Transaction
Date with the proceeds of any sale or other disposition of assets or
properties referred to in clause (f) below will be assumed to have occurred
(on a pro forma basis) on the first day of the Reference Period; (e) the
--- -----
acquisition during the Reference Period or subsequent thereto and on or
prior to the Transaction Date of any other Person which, as a result of
such acquisition, becomes a Subsidiary, will be assumed to have occurred
(on a pro forma basis) on the first day of the Reference Period; and (f)
--- -----
any sale or other disposition of assets or properties constituting an
existing business (whether existing as a separate entity, subsidiary,
division, unit or otherwise) outside the ordinary course of business
occurring during the Reference Period or subsequent thereto and on or prior
to the Transaction Date will be assumed to have occurred (on a pro forma
--- -----
basis) on the first day of the Reference Period.
"Consolidated Fixed Charges" of any Person for any period means
--------------------------
(without duplication) the sum of (i) Consolidated Interest Expense of such
Person for such period (excluding amortization or write-off of deferred
financing fees and expenses) and (ii) without duplication, Redeemable
Dividends of such Person and its Restricted Subsidiaries (whether in cash
or otherwise (except dividends payable solely in shares of Qualified
Capital Stock)) with respect to Disqualified Capital Stock and Preferred
Stock accrued during such period in accordance with GAAP (but in the case
of such Preferred Stock, only to the extent that the aggregate amount of
dividends paid
<PAGE>
-33-
or accrued from and after the Issue Date exceeds the aggregate net cash
proceeds to such Person from the issuance and sale of such Preferred
Stock), in each case excluding items eliminated in consolidation of such
Person and its Restricted Subsidiaries; provided that dividends accrued or
--------
paid on the Senior Preferred Stock shall not be included in the calculation
of Consolidated Fixed Charges.
"Consolidated Interest Expense" means, with respect to any Person, for
-----------------------------
any period, the aggregate amount of interest which, in conformity with
GAAP, would be set forth opposite the caption "interest expense" or any
like caption on an income statement for such Person and its Restricted
Subsidiaries on a consolidated basis, including, but not limited to,
Redeemable Dividends, whether paid or accrued, on Restricted Subsidiary
Preferred Stock, imputed interest included in Capitalized Lease
Obligations, all commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing, the
net costs associated with hedging obligations, amortization of other
financing fees and expenses, the interest portion of any deferred payment
obligation, amortization of discount or premium, if any, and all other non-
cash interest expense (other than interest amortized to cost of sales)
plus, without duplication, all net capitalized interest for such period and
all interest incurred or paid under any guarantee of Indebtedness
(including a guarantee of principal, interest or any combination thereof)
of any Person, plus the amount of all dividends or distributions paid on
Disqualified Capital Stock (other than dividends paid or payable in shares
of Capital Stock of the Corporation), minus interest income for such
period.
"Consolidated Net Income" means, with respect to any Person, for any
-----------------------
period, the aggregate of the net income (or loss) of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis,
determined in accordance with GAAP; provided, however, that (a) the net
-------- -------
income of any Person including of any Emerging Market Subsidiary or
Unrestricted Subsidiary (each, an "Other Person") in which the Person in
question or any of its Re-
<PAGE>
-34-
stricted Subsidiaries has less than a 100% interest (which interest does
not cause the net income of such Other Person to be consolidated into the
net income of the Person in question in accordance with GAAP) shall be
included only to the extent of the amount of dividends or distributions
paid to the Person in question or to any of its Restricted Subsidiaries,
(b) the net income of any Restricted Subsidiary of the Person in question
that is subject to any restriction or limitation on the payment of
dividends or the making of other distributions (other than pursuant to the
Exchange Debentures) shall be excluded to the extent of such restriction or
limitation, (c) (i) 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 (ii) any net gain or net loss resulting from an Asset
Sale by the Person in question or any of its Restricted Subsidiaries other
than in the ordinary course of business shall be excluded, (d)
extraordinary, unusual or non-recurring gains and losses shall be excluded
and (e) gains and losses associated with discontinued and terminated
operations shall be excluded.
"Consolidated Non-Cash Charges" means, with respect to any Person for
-----------------------------
any period, the aggregate depreciation, amortization and other non-cash
items (which do not reflect an accrual of a cash expense which may be
incurred in the future) of such Person and its Restricted Subsidiaries
reducing Consolidated Net Income of such Person and its Restricted
Subsidiaries less any such non-cash items increasing Consolidated Net
Income of such Person and its Restricted Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP.
"Corporation" shall have the meaning provided in the first paragraph.
-----------
"Corporation Exchange Debentures" means the 13-7/8% Junior
-------------------------------
Subordinated Debentures due 2010 issuable by the Corporation in exchange
for the Senior Preferred Stock in accordance with this Certificate of
Designation with respect to the Senior Preferred Stock and pursuant to the
Exchange Indenture, including additional Corporation Exchange Debentures
issued as interest on outstanding Corporation Exchange Debentures pursuant
to the Exchange Indenture.
"Credit Agreement" means (i) one or more credit agreements, loan
----------------
agreements or similar agreements providing for working capital advances,
term loans, letter of credit facilities or similar advances, loans or
facilities to the Corporation, any Subsidiaries, domestic or foreign, or
any or all of such Persons, including the Credit Agreement, dated on or as
in effect on or about the Issue Date, among the Corporation and Samsonite
Europe N.V., as bor-
<PAGE>
-35-
rowers, and Bank of America National Trust and Savings Association and
BankBoston, N.A., and certain other lenders party thereto from time to
time, as the same may be amended, modified, restated or supplemented from
time to time and (ii) any one or more agreements governing advances, loans
or facilities provided to refund, refinance, replace or renew (including
subsequent or successive refundings, refinancings, replacements and
renewals) Indebtedness under the agreement or agreements referred to in the
foregoing clause (i), as the same may be amended, modified, restated or
supplemented from time to time.
"Currency Agreement" means any foreign exchange contract, currency
------------------
swap agreement or other similar agreement designed to address fluctuations
in currency values.
"Default" means an event or condition the occurrence of which is, or
-------
with the lapse of time or the giving of notice or both would be, an Event
of Default.
"Disqualified Capital 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
(excluding any maturity as the result of an optional redemption by the
issuer thereof) or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the sole option of the holder
thereof, in whole or in part, on or prior to the mandatory redemption date
of the Senior Preferred Stock. Without limitation of the foregoing,
Disqualified Capital Stock shall be deemed to include (i) any Preferred
Stock of a Restricted Subsidiary of the Corporation, (ii) any Preferred
Stock of the Corporation, with respect to either of which, under the terms
of such Preferred Stock, by agreement or otherwise, such Restricted
Subsidiary of the Corporation is obligated to pay current dividends or
distributions in cash during the period prior to the redemption date of the
Senior Preferred Stock, and (iii) as long as the Senior Preferred Stock
remains outstanding, Senior Securities and Parity Securities; provided,
--------
however, that Preferred Stock of the Corporation or any Restricted
-------
Subsidiary thereof that is issued with the benefit of provisions requiring
a change of control offer to be made for such Preferred Stock in the event
of a change of control of the Corporation or Restricted Subsidiary, which
provisions have substantially the same effect as paragraph (h) hereof shall
not be deemed to be Disqualified Capital Stock solely by virtue
<PAGE>
-36-
of such provisions; and provided, further, that the Senior Preferred Stock
-------- -------
shall not be considered Disqualified Capital Stock.
"Dividend" shall have the meaning provided in paragraph (c).
--------
"Dividend Default" shall have the meaning provided in paragraph
----------------
(f)(iv).
"Dividend Payment Date" means March 15, June 15, September 15 and
---------------------
December 15 of each year.
"Dividend Period" means the Initial Dividend Period and, thereafter,
---------------
each quarterly period from a Dividend Payment Date to the next following
Dividend Payment Date (but without including such Dividend Payment Date).
"Dividend Record Date" means March 1, June 1, September 1 and December
--------------------
1 of each year.
"Emerging Market Subsidiary" means (i) any Initial Emerging Market
--------------------------
Subsidiary, (ii) any majority-owned Subsidiary of the Corporation the
principal operations of which are not located in the United States, Canada,
Western Europe or Japan that, at the time of determination, shall be an
Emerging Market Subsidiary (as designated by the Board of Directors, as
provided below) and (iii) any majority-owned Subsidiary of an Emerging
Market Subsidiary. The Board of Directors may designate (1) any
Unrestricted Subsidiary of the Corporation to be an Emerging Market
Subsidiary, and (2) any Restricted Subsidiary of the Corporation (including
any newly acquired or newly formed Subsidiary at or prior to the time it is
so formed or acquired) to be an Emerging Market Subsidiary if it meets the
geographic test set forth above and (a) no Voting Rights Triggering Event
is existing or will occur as a consequence thereof, (b) with respect to
previously existing Restricted Subsidiaries, immediately after giving
effect to such designation, on a pro forma basis, the Corporation could
incur at least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) pursuant to paragraph (l)(i) and (c) such Restricted
Subsidiary does not own any Capital Stock of, or own or hold any Lien on
any property of, the Corporation or any Restricted Subsidiary that is not a
Subsidiary of the Restricted Subsidiary to be so designated. At the time
that a previously existing Restricted Subsidiary of the Corporation is
designated
<PAGE>
-37-
an Emerging Market Subsidiary, the Corporation shall be deemed to make an
"Investment" in such Emerging Market Subsidiary in an amount equal to its
Pro Rata Interest in the fair market value of the net assets of such
Restricted Subsidiary. A Restricted Subsidiary of the Corporation shall not
be considered to be a "previously existing Restricted Subsidiary" for
purposes of this definition if such Restricted Subsidiary is designated to
be an Emerging Market Subsidiary at or prior to the time of the formation
of such Restricted Subsidiary or at or prior to the time such Restricted
Subsidiary is acquired by the Corporation. The Board of Directors may
designate any Emerging Market Subsidiary to be a Restricted Subsidiary,
provided that (i) no Voting Rights Triggering Event is existing or will
--------
occur as a consequence thereof and (ii) either (x) immediately after giving
effect to such designation, on a pro forma basis, the Corporation could
incur at least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) pursuant to paragraph (l)(i) or (y) the Consolidated Fixed
Charge Coverage Ratio of the Corporation immediately after giving effect to
such designation, on a pro forma basis, exceeds the Consolidated Fixed
Charge Coverage Ratio of the Corporation immediately prior (and without
giving effect) to such designation.
"Equity Offering" means a sale by the Corporation of shares of its
---------------
Qualified Capital Stock.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
and the rules and regulations promulgated thereunder.
"Exchange Date" means a date of original issuance of the Exchange
-------------
Debentures.
"Exchange Debentures" means either the Corporation Exchange Debentures
-------------------
or the Holdings Exchange Debentures, as applicable.
"Exchange Indenture" means (i) in the case of the Corporation Exchange
------------------
Debentures, the Indenture in the form of Exhibit A hereto and (ii) in the
case of the Holdings Exchange Debentures, the Indenture in the form of
Exhibit B hereto.
"Exchange Notice" shall have the provided in paragraph (g).
---------------
<PAGE>
-38-
"Exchange Preferred Stock" means, the series of Senior Preferred Stock
------------------------
publicly and/or privately offered in exchange for the Senior Preferred
Stock initially issued hereunder, as contemplated by the Registration
Rights Agreement.
"Foreign Credit Agreement" means one or more Credit Agreements among
------------------------
one or more Foreign Restricted Subsidiaries and the lenders party thereto.
"Foreign Restricted Subsidiary" means a Restricted Subsidiary of the
-----------------------------
Corporation that is incorporated or otherwise organized in a jurisdiction
other than the United States, any state thereof or the District of
Columbia.
"GAAP" means generally accepted accounting principles consistently
----
applied as in effect in the United States from time to time.
"Holder" means a holder of shares of Senior Preferred Stock as
------
reflected in the stock books of the Corporation.
"Holdings" means a corporation organized and existing under the laws
--------
of the United States, any state thereof or the District of Columbia, which
is organized after the Issue Date and of which the capital stock of the
Corporation is its sole material asset and which immediately prior to and
at the time of the Exchange Date has no material liabilities other than the
Holdings Exchange Debentures.
"Holdings Exchange Debentures" means the 13-7/8% Senior Debentures due
----------------------------
2010 issuable by Holdings in exchange for the Senior Preferred Stock in
accordance with this Certificate of Designation with respect to the Senior
Preferred Stock and pursuant to the Exchange Indenture, including
additional Holdings Exchange Debentures issued as interest on outstanding
Holdings Exchange Debentures pursuant to the Exchange Indenture.
"incur" means, with respect to any Indebtedness or other obligation of
-----
any Person, to create, issue, incur (by conversion, exchange or otherwise),
assume, guarantee or otherwise become liable in respect of such
Indebtedness or other obligation or the recording, as required pursuant to
GAAP or otherwise, of any such Indebtedness or other obligation on the
balance sheet of such Person (and "incurrence," "incurred," "incurrable"
and "incurring" shall have meanings correlative to the foregoing); provided
--------
that
<PAGE>
-39-
a change in GAAP that results in an obligation of such Person that exists
at such time becoming Indebtedness shall not be deemed an incurrence of
such Indebtedness; provided, further, that the amortization of original
-------- -------
issue discount on Indebtedness issued with original issue discount or the
accumulation of distributions on Disqualified Capital Stock shall not be
deemed an incurrence of Indebtedness.
"Indebtedness" means (without duplication), with respect to any
------------
Person, any indebtedness at any time outstanding, secured or unsecured,
contingent or otherwise, which is for borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such Person or only
to a portion thereof) or evidenced by bonds, notes, debentures or similar
instruments or representing the balance deferred and unpaid of the purchase
price of any property (excluding, without limitation, any balances that
constitute accounts payable or trade payables and other accrued liabilities
or accrued expenses arising in the ordinary course of business) if and to
the extent any of the foregoing indebtedness would appear as a liability
upon a balance sheet of such Person prepared in accordance with GAAP, and
shall also include, to the extent not otherwise included, (i) any
Capitalized Lease Obligations, (ii) obligations secured by a Lien to which
the property or assets owned or held by such Person are subject, whether or
not the obligation or obligations secured thereby shall have been assumed
(provided, however, that if such obligation or obligations shall not have
--------- -------
been assumed, the amount of such Indebtedness shall be deemed to be the
lesser of the principal amount of the obligation or the fair market value
of the pledged property or assets) other than a Lien securing an obligation
which is not Indebtedness, (iii) guarantees of items of other Persons which
would be included within this definition for such other Persons (whether or
not such items would appear upon the balance sheet of the guarantor), (iv)
all obligations for the reimbursement of any obligor on any letter of
credit, banker's acceptance or similar credit transaction, (v) Disqualified
Capital Stock of the Corporation or any Restricted Subsidiary thereof and,
in the case of Holdings, any Preferred Stock of the Corporation and (vi)
obligations of any such Person under any Interest Rate Agreement or
Currency Agreement applicable to any of the foregoing (if and to the extent
such Interest Rate Agreement or Currency Agreement obligations would appear
as a liability upon a balance sheet of such Person prepared in
<PAGE>
-40-
accordance with GAAP). The amount of Indebtedness of any Person at any date
shall be the outstanding balance at such date of all unconditional
obligations as described above and, with respect to contingent obligations,
the maximum liability upon the occurrence of the contingency giving rise to
the obligation, provided that (i) the amount outstanding at any time of any
--------
Indebtedness issued with original issue discount is the principal amount of
such Indebtedness less the remaining unamortized portion of the original
issue discount of such Indebtedness at such time as determined in
conformity with GAAP and (ii) Indebtedness shall not include any liability
for federal, state, local or other taxes. Notwithstanding any other
provision of the foregoing definition, any trade payable arising from the
purchase of goods or materials or for services obtained in the ordinary
course of business or contingent obligations arising out of customary
indemnification agreements with respect to the sale of assets or securities
shall not be deemed to be "Indebtedness" of the Corporation or any
Restricted Subsidiaries for purposes of this definition. Furthermore,
guarantees of (or obligations with respect to letters of credit supporting)
Indebtedness otherwise included in the determination of such amount shall
not also be included.
"Initial Dividend Period" means the dividend period commencing on the
-----------------------
Issue Date and ending on the first Dividend Payment Date to occur
thereafter.
"Initial Emerging Market Subsidiary" means each of (i) Chia Tai
----------------------------------
Samsonite (H.K.) Limited, (ii) Ningbo Chia Tai Samsonite Luggage Co. Ltd.,
(iii) Samsonite Argentina S.A., (iv) Samsonite Brasil Ltda., (v) Samsonite
India Limited, (vi) Samsonite Korea Limited, (vii) Samsonite Mercosur
Limited, (viii) Samsonite Mauritius Limited, and (ix) Samsonite Singapore
Limited.
"Interest Rate Agreement" means, for any Person, any interest rate
-----------------------
swap agreement, interest rate cap agreement, interest rate collar agreement
or other similar agreement.
"Investment" by any Person in any other Person means, directly or
----------
indirectly, any advance, account receivable (other than an account
receivable arising in the ordinary course of business), loan or capital
contribution to (by means of transfers of property to others, payments for
property or services for the account or use of others or otherwise), the
purchase of any stocks, bonds, notes, de-
<PAGE>
-41-
bentures, partnership or joint venture interests or other securities of,
the acquisition, by purchase or otherwise, of all or substantially all of
the business or assets or stock or other evidence of beneficial ownership
of, such other Person or the making of any investment by such Person in any
other Person. Investments shall exclude extensions of trade credit on
commercially reasonable terms in accordance with normal trade practices and
repurchases or redemptions of the Notes, the Corporation Exchange
Debentures or the Senior Preferred Stock by the Corporation or any other
security or evidence of Indebtedness issued by the Corporation.
Notwithstanding the foregoing, the following shall not be considered
Investments by a Person in any other Person: (i) trade receivables and
prepaid expenses, in each case arising in the ordinary course of business;
provided that such receivables and prepaid expenses would be recorded as
--------
assets of such Person in accordance with GAAP, (ii) Investments received in
connection with the bankruptcy or reorganization of suppliers and customers
or in good faith bona fide settlement of delinquent ordinary course of
---- ----
business trade receivables of customers, (iii) endorsements for collection
or deposit in the ordinary course of business by such Person of bank drafts
and similar negotiable instruments of such other Person received as payment
for ordinary course of business trade receivables, (iv) an Interest Rate
Agreement or Currency Agreement with an unaffiliated Person provided that
such agreements comply with the requirements of clause (iv) of the
definition of Permitted Indebtedness, (v) Investments received as
consideration for, or customary indemnities given in connection with, an
Asset Sale, and (vi) Investments for which the sole consideration provided
is Qualified Capital Stock. The Corporation shall be deemed to make an
"Investment" in an amount equal to its Pro Rata Interest in the fair market
value of the net assets of any previously existing Restricted Subsidiary,
at the time that such Restricted Subsidiary is designated an Unrestricted
Subsidiary or an Emerging Market Subsidiary, as the case may be; and any
property transferred, directly or indirectly (whether by merger or
otherwise) to an Unrestricted Subsidiary or an Emerging Market Subsidiary,
as the case may be, from the Corporation or a Restricted Subsidiary after
the time of such designation shall be deemed an Investment valued at its
fair market value at the time of such transfer. A Restricted Subsidiary of
the Corporation shall not be considered to be a "previously existing
Restricted Subsidiary" for purposes of this definition if such Restricted
Subsidiary is designated to be an Emerging
<PAGE>
-42-
Market Subsidiary or an Unrestricted Subsidiary, as the case may be, at or
prior to the time of the formation of such Restricted Subsidiary or at or
prior to the time such Restricted Subsidiary is acquired by the
Corporation.
"Issue Date" means the date of original issuance of the Senior
----------
Preferred Stock.
"Junior Securities" shall have the meaning provided in paragraph (b).
-----------------
"Joint Venture Subsidiary" means a Restricted Subsidiary of the
------------------------
Corporation in which one or more Persons who have provided or are providing
operating assets or services to such Restricted Subsidiary beneficially own
not less than 50% of the Capital Stock of such Restricted Subsidiary not
owned by the Corporation or a Restricted Subsidiary of the Corporation.
"Lien" means any consensual lien, mortgage, deed of trust, pledge,
----
security interest, charge or encumbrance of any kind (including any
conditional sale or other title retention agreement, any lease in the
nature thereof and any agreement to give any security interest).
"Mandatory Redemption Price" shall have the meaning provided in
--------------------------
paragraph (e).
"Moody's" shall have the meaning provided in the definition of "Cash
-------
Equivalents" above.
"Net Proceeds" means (a) in the case of any sale of Capital Stock by
------------
the Corporation, the aggregate net proceeds received by the Corporation,
after payment of expenses, commissions and the like incurred in connection
therewith, whether such proceeds are in cash or in property (valued at the
fair market value thereof, as determined in good faith by the Board of
Directors, at the time of receipt) and (b) in the case of any exchange,
exercise, conversion or surrender of outstanding securities of any kind for
or into shares of Qualified Capital Stock of the Corporation, the net book
value of such outstanding securities on the date of such exchange,
exercise, conversion or surrender (plus any additional amount required to
be paid by the holder to the Corporation upon such exchange, exercise,
conversion or surrender, less any and all payments made to the holders,
e.g., on account of fractional
---
<PAGE>
-43-
shares and less all expenses incurred by the Corporation in connection
therewith).
"Notes" means the 10-7/8% Senior Subordinated Notes due 2008 offered
-----
concurrently with the Senior Preferred Stock pursuant to the Notes
Indenture.
"Notes Indenture" means the indenture governing the Notes dated June
---------------
24, 1998 between the Corporation and United States Trust Company of New
York, as trustee.
"Obligations" means all obligations for principal, premium, interest
-----------
(including post-petition interest and, in the case of Exchange Debentures,
any additional interest or liquidated damages from time to time payable
pursuant to the Registration Rights Agreement), penalties, fees, costs,
indemnifications, reimbursements, repurchase, redemption, retirement or
defeasance obligations, damages and other liabilities and obligations
payable under the documentation governing, or otherwise relating to, any
Indebtedness.
"Offering Memorandum" means the Offering Memorandum dated June 18,
-------------------
1998 pursuant to which the Senior Preferred Stock was offered.
"Original Credit Agreement" means the referenced Credit Agreement
-------------------------
described in clause (i) of the definition of Credit Agreement dated on or
as in effect on or about the Issue Date, as the same may be amended,
modified, restated or supplemented from time to time, and any one
replacement agreement or facility existing at any time provided to refund,
refinance, replace or renew (including subsequent or successive refundings,
refinancings, replacements and renewals) the Original Credit Agreement;
such replacement agreement or facility to be designated by the Corporation.
"Other Person" shall have the definition provided in the definition of
------------
"Consolidated Net Income" above.
"Parity Securities" shall have the meaning provided in paragraph (b).
-----------------
"Permitted Holder" means Apollo Advisors, L.P. and any Affiliate
----------------
thereof.
<PAGE>
-44-
"Permitted Indebtedness" means, without duplication, each of the
----------------------
following:
(i) Indebtedness under the Corporation Exchange Debentures
and the Exchange Indenture, including any Corporation Exchange
Debentures issued in accordance with the Exchange Indenture as payment
of interest on the Exchange Debentures;
(ii) Indebtedness incurred pursuant to any Credit Agreements
(and any guarantees thereof) in an aggregate principal amount at any
time outstanding not to exceed $260.0 million;
(iii) all other Indebtedness of the Corporation and its
Restricted Subsidiaries outstanding on the Issue Date, including the
Notes and the Notes Indenture;
(iv) (a) Obligations under Interest Rate Agreements of the
Corporation covering Indebtedness of the Corporation or any of its
Restricted Subsidiaries; provided, however, that such Interest Rate
-------- -------
Agreements are entered into to protect the Corporation and its
Restricted Subsidiaries from fluctuations in interest rates on
Indebtedness incurred in accordance with this Certificate of
Designation or the Exchange Indenture and not for speculative purposes
to the extent the notional principal amount of such Interest Rate
Agreement does not exceed the principal amount of the Indebtedness to
which such Interest Rate Agreement relates and (b) Indebtedness under
Currency Agreements incurred by the Corporation in the ordinary course
of business to the extent that such obligations have been entered into
to protect against fluctuations in currency exchange rates and not for
speculative purposes; provided, that in the case of Currency
--------
Agreements which relate to Indebtedness, such Currency Agreements do
not increase the Indebtedness of the Corporation and the Restricted
Subsidiaries outstanding other than as a result of fluctuations in
foreign currency exchange rates or by reason of fees, indemnities and
compensation payable thereunder;
(v) Indebtedness of a Restricted Subsidiary of the
Corporation to the Corporation or to a Restricted Subsidiary of the
Corporation for so long as such In-
<PAGE>
-45-
debtedness is owned by the Corporation or a Restricted Subsidiary of
the Corporation, in each case with no Lien securing such Indebtedness
held by a Person other than the Corporation or a Restricted Subsidiary
of the Corporation; provided that if as of any date any Person other
--------
than the Corporation or a Restricted Subsidiary of the Corporation
owns any such Indebtedness or holds a Lien securing any such
Indebtedness, such date shall be deemed the incurrence of Indebtedness
not constituting Permitted Indebtedness under this clause (v);
(vi) Indebtedness of the Corporation to a Restricted
Subsidiary of the Corporation for so long as such Indebtedness is
owned by a Restricted Subsidiary of the Corporation, in each case with
no Lien securing such Indebtedness; provided that if as of any date
--------
any Person other than a Restricted Subsidiary of the Corporation owns
any such Indebtedness or any Person holds a Lien securing any such
Indebtedness, such date shall be deemed the incurrence of Indebtedness
not constituting Permitted Indebtedness under this clause (vi);
(vii) Purchase Money Indebtedness and Capitalized Lease
Obligations incurred to acquire property in the ordinary course of
business, the principal amount of which Indebtedness and Capitalized
Lease Obligations does not in the aggregate exceed at any time $15.0
million;
(viii) Acquired Indebtedness of any Restricted Subsidiaries,
provided that such Indebtedness was not incurred by a Person in
connection with, or in anticipation or contemplation of, such Person
becoming a Restricted Subsidiary of the Corporation and provided
further that after giving effect to such incurrence or assumption of
such Acquired Indebtedness the Consolidated Fixed Charge Coverage
Ratio of the Corporation and its Restricted Subsidiaries, taken as
whole, and the Restricted Subsidiary making such acquisition
independently, are at least equal to 1.75:1 as calculated in
accordance with paragraph (l)(i) above.
(ix) Refinancing Indebtedness;
<PAGE>
-46-
(x) Indebtedness solely in respect of performance bonds,
surety agreements, documentary letters of credit used for payment of
goods consistent with past practice, or other guarantees of
performance (in each case other than an obligation for the payment of
borrowed money) incurred in the ordinary course of business;
(xi) additional Indebtedness of the Corporation or any
Restricted Subsidiary in an aggregate principal amount not to exceed
$100.0 million at any one time outstanding; and
(xii) Indebtedness incurred pursuant to any Foreign Credit
Agreement in an aggregate principal amount at any time not to exceed
$35.0 million (and any guarantees thereof).
"Permitted Investments" means, for any Person, Investments made on or
---------------------
after the Issue Date consisting of:
(i) Investments by the Corporation, or by a Restricted
Subsidiary thereof, in the Corporation or a Restricted Subsidiary
thereof;
(ii) Cash Equivalents;
(iii) Investments by the Corporation, or by a Restricted
Subsidiary thereof, in a Person (or in all or substantially all of the
business or assets of a Person) if as a result of such Investment (a)
such Person becomes a Restricted Subsidiary of the Corporation, (b)
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 Corporation or a Restricted Subsidiary thereof or
(c) such business or assets are owned by the Corporation or a
Restricted Subsidiary thereof;
(iv) Investments by the Corporation or any of its Restricted
Subsidiaries in Emerging Market Subsidiaries in the aggregate amount
after the Issue Date not to exceed $50.0 million;
(v) reasonable and customary loans made to employees not to
exceed $500,000 to any employee, and not to exceed $5.0 million in the
aggregate at any one time outstanding;
<PAGE>
-47-
(vi) an Investment that is made by the Corporation or a
Restricted Subsidiary thereof in the form of any stock, bonds, notes,
debentures, partnership or joint venture interests or other securities
that are issued by a third party to the Corporation or a Restricted
Subsidiary solely as partial consideration for the consummation of an
Asset Sale;
(vii) accounts receivable of the Corporation and its
Restricted Subsidiaries generated in the ordinary course of business;
(viii) investments deemed to have been made as a result of the
acquisition of a Person that at the time of such acquisition held
instruments constituting Investments that were not acquired in
contemplation of the acquisition of such Person; and
(ix) additional Investments of the Corporation and its
Restricted Subsidiaries from time to time of an amount not to exceed
$10.0 million.
Notwithstanding the foregoing, amounts available for investments under
clauses (iv) and (ix) shall be increased by the aggregate amount of
Returned Investments received by the Corporation on or before the date
of such Investment.
"Person" means an individual, partnership, corporation, unincorporated
------
organization, joint stock company, limited liability company, trust or
joint venture, or a governmental agency or political subdivision thereof.
"Plan" means any employee benefit plan, retirement plan, deferred
----
compensation plan, restricted stock plan, health, life, disability or other
insurance plan or program, employee stock purchase plan, employee stock
ownership plan, pension plan, stock option plan or similar plan or
arrangement of the Corporation or any Restricted Subsidiary of the
Corporation, or any successor plan thereof, and "Plans" shall have a
correlative meaning.
"Preferred Stock" of any Person means any Capital Stock of such Person
---------------
that has preferential rights to any other Capital Stock of such Person with
respect to dividends or redemption or upon liquidation.
<PAGE>
-48-
"Pro Rata Interest" of any Person in any other Person means a
-----------------
fraction, the numerator of which is the amount of the equity or other
ownership interest in such other Person that are beneficially owned by such
Person and its Restricted Subsidiaries, and the denominator of which is the
aggregate amount of all equity or other ownership interests in such other
Person that are outstanding (for this purpose, equity or other ownership
interests subject to presently exercisable options, warrants or other
rights to acquire such interests shall be deemed to be outstanding and
shall be included in both the numerator and denominator). The Pro Rata
Interest of any Person in any item of income or expense or in the fair
market value of the assets or liabilities of any other Person means the
amount obtained by multiplying (i) the amount of such income or expense or
the fair market value of the relevant asset or liability, as the case may
be, of such other Person by (ii) the Pro Rata Interest of such Person in
such other Person.
"Purchase Money Indebtedness" of any Person means any Indebtedness
---------------------------
incurred or assumed by a Person to finance the cost (including the cost of
construction) of an item of real or personal property, the principal amount
of which Indebtedness does not exceed the sum of (i) 100% of such cost and
(ii) reasonable fees and expenses of such Person incurred in connection
therewith and provided that such Indebtedness is incurred or assumed within
90 days of the acquisition of, or improvement to, such property; and
provided that any lien securing such Indebtedness does not extend to any
--------
property or assets other than the real or personal property financed with
such Indebtedness.
"Qualified Capital Stock" means any Capital Stock that is not
-----------------------
Disqualified Capital Stock.
"Recapitalization" means the transactions described as such in the
----------------
Offering Memorandum.
"Redeemable Dividend" means, for any dividend or distribution with
-------------------
regard to Disqualified Capital Stock or Preferred Stock, the quotient of
the dividend or distribution divided by the difference between one and the
maximum statutory United States federal income tax rate (expressed as a
decimal number between 1 and 0) then applicable to the issuer of such
Disqualified Capital Stock or Preferred Stock, as the case may be.
<PAGE>
-49-
"Redemption Date", with respect to any shares of Senior Preferred
---------------
Stock, means the date on which such shares of Senior Preferred Stock are
redeemed by the Corporation.
"Redemption Notice" shall have the meaning provided in paragraph (e).
-----------------
"Reference Period" with regard to any Person means the four full
----------------
fiscal quarters of such Person ended on or immediately preceding any date
upon which any determination is to be made pursuant to the terms of the
Senior Preferred Stock; provided, that if the Transaction Date in question
--------
is more than 90 days after the end of such Person's most recently completed
fiscal year or more than 45 days after the end of such Person's most
recently completed fiscal quarter (other than the fourth fiscal quarter),
then "Reference Period" shall mean the four full fiscal quarters ended on
the last day of such fiscal year or fiscal quarter, as the case may be,
unless financial information for a later period of four full fiscal
quarters is available.
"Refinancing Costs" shall have the meaning provided in the definition
-----------------
of "Refinancing Indebtedness" below.
"Refinancing Indebtedness" means an extension, renewal, replacement,
------------------------
refinancing or refunding of any Indebtedness which is Permitted
Indebtedness or is otherwise incurred in accordance with paragraph (l)(i)
(such Indebtedness is collectively referred to as "Refinancing
Indebtedness"); provided, that (1) the maximum principal amount of the
--------
relevant Refinancing Indebtedness (or, if such Refinancing Indebtedness (if
not a revolving credit or similar arrangement) does not require cash
payments prior to maturity or is otherwise issued at a discount, the
original issue price of such Refinancing Indebtedness) may not exceed (x)
the maximum principal amount of the relevant Indebtedness or Disqualified
Capital Stock being extended, renewed, replaced, refinanced or refunded,
plus unpaid interest, prepayment penalties, redemption premiums, fees,
expenses and other amounts owing with respect thereto, plus reasonable
financing fees and other reasonable out-of-pocket expenses incurred in
connection therewith (collectively, "Refinancing Costs"), or (y) if such
Indebtedness or Disqualified Capital Stock being extended, renewed,
replaced, refinanced or refunded was issued at an original issue discount,
the original issue price, plus amortization of the original issue discount
at the time of
<PAGE>
-50-
the incurrence of the Refinancing Indebtedness plus Refinancing Costs, (2)
in the case of such Refinancing Indebtedness being Disqualified Capital
Stock, such Refinancing Indebtedness has a Weighted Average Life to
Maturity and a final maturity that is equal to or greater than the
Disqualified Capital Stock being extended, renewed, replaced, refinanced or
refunded at the time of such extension, renewal, replacement, refinancing
or refunding, (3) with respect to Indebtedness or Disqualified Capital
Stock of the Corporation or any Restricted Subsidiaries, the relevant
Refinancing Indebtedness shall rank in right of payment with respect to the
Senior Preferred Stock to an extent no less favorable in respect thereof to
the holders of Senior Preferred Stock than the Indebtedness or Disqualified
Capital Stock being refinanced, extended, renewed, replaced or refunded and
(4) Refinancing Indebtedness incurred by a Restricted Subsidiary of the
Corporation shall only be used to refinance outstanding Indebtedness or
Disqualified Capital Stock of such Restricted Subsidiary or any other
Restricted Subsidiary of the Corporation.
"Registration Rights Agreement" means the Registration Rights
-----------------------------
Agreement dated as of the Issue Date between the Corporation and CIBC
Oppenheimer Corp., as Initial Purchaser relating to the Senior Preferred
Stock.
"Resolution" shall have the meaning provided in the first paragraph.
----------
"Restricted Payment" means (i) the declaration or payment of any
------------------
dividend or the making of any other distribution (other than dividends or
distributions payable in Qualified Capital Stock and other than dividends
or distributions (in cash or otherwise) on the Senior Preferred Stock) on
shares of the Corporation's Junior Securities, (ii) the purchase,
redemption, retirement or other acquisition for value of any Junior
Securities of the Corporation, or any warrants, rights or options to
acquire shares of Junior Securities of the Corporation, other than through
the exchange of such Junior Securities or any warrants, rights or options
to acquire shares of any class of such Junior Securities for Qualified
Capital Stock or warrants, rights or options to acquire Qualified Capital
Stock, (iii) the making of any Investment (other than a Permitted
Investment) (provided that the amount of any Investment for purposes of
this clause (iii) shall be calculated by subtracting the amount of
applicable Returned Investments, if any, on any such Investment), (iv) any
des-
<PAGE>
-51-
ignation of a Restricted Subsidiary as an Unrestricted Subsidiary on the
basis of the fair market value of such Subsidiary utilizing standard
valuation methodologies and approved by the Board of Directors and (v)
forgiveness of any Indebtedness of an Affiliate of the Corporation to the
Corporation or a Restricted Subsidiary. For purposes of determining the
amount available to make Restricted Payments pursuant to clause (a)(iii) of
the covenant contained in paragraph (l)(ii) above, the amount of any
Restricted Payments made pursuant to clauses (iii) or (iv) above shall be
calculated after giving effect to any Returned Investments.
"Restricted Subsidiary" means a Subsidiary of the Corporation other
---------------------
than an Unrestricted Subsidiary and includes all of the Subsidiaries of the
Corporation (other than the Initial Emerging Market Subsidiaries) existing
as of the Issue Date. The Board of Directors may designate any
Unrestricted Subsidiary or any Person that is to become a Subsidiary as a
Restricted Subsidiary if immediately after giving effect to such action
(and treating any Acquired Indebtedness as having been incurred at the time
of such action), the Corporation could have incurred at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) pursuant to
Paragraph (l)(i); provided that the Corporation may not designate any
--------
Emerging Market Subsidiary to become a Restricted Subsidiary unless such
designation complies with the requirements set forth in the definition of
"Emerging Market Subsidiary" relating thereto.
"Returned Investments" mean, with respect to all Investments made in
--------------------
Emerging Market Subsidiaries or Unrestricted Subsidiaries pursuant to
clause (iv) or (ix), respectively, of the definition of "Permitted
Investments" or pursuant to clauses (iii) or (iv) of the definition of
"Restricted Payment", the aggregate amount of (i) all payments made in
respect of such Investments, other than interest, dividends or other
distributions not in the nature of a return or repurchase of capital or a
repayment of principal, that have been paid or returned, without
restriction, in cash to the Corporation and its Restricted Subsidiaries and
(ii) the Pro Rata Interest of the Corporation and its Restricted
Subsidiaries in the fair market value of the net assets of all Emerging
Market Subsidiaries or Unrestricted Subsidiaries, as the case may be, that
have been designated a Restricted Subsidiary of the Corporation after the
Issue Date, such fair market value to be
<PAGE>
-52-
determined as of the date of such designation; provided, that amounts under
--------
the foregoing clause (ii) with respect to each such Emerging Market
Subsidiary or Unrestricted Subsidiary, as the case may be, shall not
constitute Returned Investments to the extent that such amount exceeds the
total amount of Investments by the Corporation and its Restricted
Subsidiaries in such Emerging Market Subsidiary or Unrestricted Subsidiary,
as the case may be. Notwithstanding the foregoing, Returned Investments
shall be credited to the amounts available for Investments pursuant to
clauses (iv) or (ix) of the definition of "Permitted Investments" or
Investments made pursuant to the provisions of clause (iii) or (iv) of the
definition of "Restricted Payment", only to the extent that such Returned
Investments are in respect of Investments made pursuant to each such clause
or provision.
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations promulgated thereunder.
"Senior Preferred Stock" means the 13-7/8% Senior Redeemable
----------------------
Exchangeable Preferred Stock, liquidation preference $1,000 per share of
the Corporation issued pursuant to this Certificate of Designation,
including any additional series of Senior Preferred Stock issued pursuant
to the Registration Rights Agreement.
"Senior Securities" shall have the meaning provided in paragraph (b).
-----------------
"Subsidiary" with respect to any Person, means (i) any corporation of
----------
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary
circumstances shall at the time be owned, directly or indirectly, by such
Person or (ii) any other Person of which at least a majority of the voting
interest under ordinary circumstances is at the time, directly or
indirectly, owned by such Person.
"Transaction Date" shall have the meaning provided in the definition
----------------
of Consolidated Fixed Charge Coverage Ratio above.
"Unrestricted Subsidiary" means (a) any Emerging Market Subsidiary,
-----------------------
(b) any Subsidiary of an Unrestricted Subsidiary or an Emerging Market
Subsidiary and (c) any Sub-
<PAGE>
-53-
sidiary of the Corporation which is classified after the Issue Date as an
Unrestricted Subsidiary or an Emerging Market Subsidiary by a resolution
adopted by the Board of Directors; provided that a Subsidiary organized or
--------
acquired after the Issue Date may be so classified as an Unrestricted
Subsidiary only if such classification is in compliance with paragraph
(l)(ii); provided, further, that a Subsidiary may not be classified as an
-------- -------
Emerging Market Subsidiary unless such classification would be in
compliance with the provisions of the definition of "Emerging Market
Subsidiary."
"Voting Rights Triggering Event" shall have the meaning provided in
------------------------------
paragraph (f).
"Weighted Average Life to Maturity" means, when applied to any
---------------------------------
Indebtedness at any date, the number of years obtained by dividing (a) the
then outstanding aggregate principal amount of such Indebtedness into (b)
the total of the product obtained by multiplying (i) the amount of each
then remaining installment, sinking fund, serial maturity or other required
payment of principal, including payment at final maturity, in respect
thereof, by (ii) the number of years (calculated to the nearest one-
twelfth) which will elapse between such date and the making of such
payment.
<PAGE>
-54-
IN WITNESS WHEREOF, said Samsonite Corporation, has caused this
Certificate of Designation to be signed by Thomas R. Sandler, its President,
this 24th day of June, 1998.
SAMSONITE CORPORATION
By:
----------------------------------
Name: Thomas R. Sandler
Title: President
<PAGE>
EXHIBIT 4.2
CERTIFICATE OF CORRECTION
TO THE
CERTIFICATE OF DESIGNATION
OF THE
POWERS, PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL AND OTHER
SPECIAL RIGHTS OF 13 7/8% SENIOR
REDEEMABLE EXCHANGEABLE
PREFERRED STOCK AND QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS THEREOF
___________________________________________________________________________
Pursuant to Section 103(f) of the General
Corporation Law of the State of Delaware
___________________________________________________________________________
Samsonite Corporation (the "Corporation"), a corporation organized and
-----------
existing under the General Corporation Law of the State of Delaware, does hereby
certify that:
FIRST: On June 23, 1998, the Corporation filed with the Secretary of
State a Certificate of Designation of the Powers, Preferences and Relative,
Participating, Optional and the Other Special Rights of 13 7/8% Senior
Redeemable Exchangeable Preferred Stock and Qualifications, Limitations and
Restrictions thereof (the "Certificate of Designation").
SECOND: The definition of "Exchange Indenture" that appears in paragraph
(m) of the Certificate of Designation erroneously refers to forms of indentures
included as Exhibits to the Certificate of Designation although no such forms
are included as Exhibits thereto. That definition is hereby corrected to read
in its entirety as follows:
"Exchange Indenture" means (i) in the case of the Corporation Exchange
------------------
Debentures, the indenture dated as of June 24, 1998 between the
Corporation and United States Trust Company of New York, as trustee
(the "Trustee"), relating to the Corporation Exchange Debentures and
-------
(ii) in the case of the Holdings Exchange Debentures, the
<PAGE>
form of indenture relating thereto delivered to the Trustee on the
Issue Date.
THIRD: The foregoing correction was prepared in accordance with the
provisions of Section 103(f) of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said Samsonite Corporation has caused this Certificate
of Correction to be executed this 7th day of July, 1998.
SAMSONITE CORPORATION
By: ____________________________
Name:
Title:
2
<PAGE>
EXHIBIT 4.3
==============================================================================
______________________
SAMSONITE CORPORATION, as Issuer,
______________________
and
UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee
==============================================================================
INDENTURE
Dated as of June 24, 1998
$350,000,000
13 7/8% Junior Subordinated Debentures due 2010
<PAGE>
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ------- ---------
<S> <C>
310(a)(1)........................................................... 7.10
(a)(2)........................................................... 7.10
(a)(3)........................................................... N.A.
(a)(4)........................................................... N.A.
(b).............................................................. 7.08; 7.10; 11.02
(b)(1)........................................................... 7.10
(b)(9)........................................................... 7.10
(c).............................................................. N.A.
311(a).............................................................. 7.11
(b).............................................................. 7.11
(c).............................................................. N.A.
312(a).............................................................. 2.05
(b).............................................................. 11.03
(c).............................................................. 11.03
313(a).............................................................. 7.06
(b)(1)........................................................... 7.06
(b)(2)........................................................... 7.06
(c).............................................................. 7.06; 11.02
(d).............................................................. 7.06
314(a).............................................................. 4.02; 4.04; 11.02
(b).............................................................. N.A.
(c)(1)........................................................... 11.04; 11.05
(c)(2)........................................................... 11.04; 11.05
(c)(3)........................................................... N.A.
(d).............................................................. N.A.
(e).............................................................. 11.05
(f).............................................................. N.A.
315(a).............................................................. 7.01; 7.02
(b).............................................................. 7.05; 11.02
(c).............................................................. 7.01
(d).............................................................. 6.05; 7.01; 7.02
(e).............................................................. 6.11
316(a) (last sentence).............................................. 11.06
(a)(1)(A)........................................................ 6.05
(a)(1)(B)........................................................ 6.04
(a)(2)........................................................... 8.02
(b).............................................................. 6.07
(c).............................................................. 8.04
317(a)(1)........................................................... 6.08
(a)(2)........................................................... 6.09
(b).............................................................. N.A.
318(a).............................................................. 11.01
</TABLE>
____________________________
N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
a part of this Indenture
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions................................................. 1
Section 1.02. Other Definitions........................................... 28
Section 1.03. Incorporation by Reference of Trust Indenture Act........... 28
Section 1.04. Rules of Construction....................................... 29
ARTICLE 2
THE SECURITIES
Section 2.01. Dating; Incorporation of Form in Indenture.................. 30
Section 2.02. Execution and Authentication................................ 31
Section 2.03. Registrar and Paying Agent.................................. 32
Section 2.04. Paying Agent To Hold Assets in Trust........................ 32
Section 2.05. Securityholder Lists........................................ 33
Section 2.06. Transfer and Exchange....................................... 33
Section 2.07. Replacement Securities...................................... 34
Section 2.08. Outstanding Securities...................................... 34
Section 2.09. Temporary Securities........................................ 35
Section 2.10. Cancellation................................................ 35
Section 2.11. Defaulted Interest.......................................... 35
Section 2.12. Deposit of Moneys........................................... 36
Section 2.13. CUSIP Number................................................ 36
Section 2.14. Book-Entry Provisions for Global Securities................. 36
Section 2.15. Special Transfer Provisions................................. 38
ARTICLE 3
REDEMPTION
Section 3.01. Notices to Trustee.......................................... 40
Section 3.02. Selection by Trustee of Securities To Be Redeemed........... 40
Section 3.03. Notice of Redemption........................................ 41
Section 3.04. Effect of Notice of Redemption.............................. 42
Section 3.05. Deposit of Redemption Price................................. 42
Section 3.06. Securities Redeemed in Part................................. 43
Section 3.07. Optional Redemption......................................... 43
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 4
COVENANTS
Section 4.01. Payment of Securities........................................ 44
Section 4.02. SEC Reports.................................................. 44
Section 4.03. Waiver of Stay, Extension or Usury Laws...................... 45
Section 4.04. Compliance Certificate....................................... 45
Section 4.05. Taxes........................................................ 46
Section 4.06. Limitation on Incurrence of Additional Indebtedness.......... 46
Section 4.07. Limitation on Restricted Payments............................ 47
Section 4.08. Limitation on Transactions with Affiliates................... 49
Section 4.09. Payments for Consent......................................... 51
Section 4.10. Corporate Existence.......................................... 51
Section 4.11. Change of Control............................................ 51
Section 4.12. Maintenance of Office or Agency.............................. 54
ARTICLE 5
SUCCESSOR CORPORATION
Section 5.01. Limitation on Consolidation, Merger and Sale of Assets....... 54
Section 5.02. Successor Person Substituted................................. 56
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default............................................ 56
Section 6.02. Acceleration................................................. 58
Section 6.03. Other Remedies............................................... 59
Section 6.04. Waiver of Past Defaults and Events of Default................ 59
Section 6.05. Control by Majority.......................................... 60
Section 6.06. Limitation on Suits.......................................... 60
Section 6.07. Rights of Holders To Receive Payment......................... 61
Section 6.08. Collection Suit by Trustee................................... 61
Section 6.09. Trustee May File Proofs of Claim............................. 61
Section 6.10. Priorities................................................... 62
Section 6.11. Undertaking for Costs........................................ 62
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee............................................ 63
Section 7.02. Rights of Trustee............................................ 64
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 7.03. Individual Rights of Trustee................................ 65
Section 7.04. Trustee's Disclaimer........................................ 65
Section 7.05. Notice of Defaults.......................................... 66
Section 7.06. Reports by Trustee to Holders............................... 66
Section 7.07. Compensation and Indemnity.................................. 67
Section 7.08. Replacement of Trustee...................................... 68
Section 7.09. Successor Trustee by Consolidation, Merger or Conversion.... 69
Section 7.10. Eligibility; Disqualification............................... 69
Section 7.11. Preferential Collection of Claims Against Company........... 70
ARTICLE 8
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 8.01. Without Consent of Holders.................................. 70
Section 8.02. With Consent of Holders..................................... 71
Section 8.03. Compliance with Trust Indenture Act......................... 72
Section 8.04. Revocation and Effect of Consents........................... 72
Section 8.05. Notation on or Exchange of Securities....................... 73
Section 8.06. Trustee To Sign Amendments, etc............................. 73
ARTICLE 9
DISCHARGE OF INDENTURE; DEFEASANCE
Section 9.01. Discharge of Indenture...................................... 74
Section 9.02. Legal Defeasance............................................ 74
Section 9.03. Covenant Defeasance......................................... 75
Section 9.04. Conditions to Defeasance or Covenant Defeasance............. 75
Section 9.05. Deposited Money and U.S. Government Obligations To Be
Held in Trust; Other Miscellaneous Provisions............ 78
Section 9.06. Reinstatement............................................... 78
Section 9.07. Moneys Held by Paying Agent................................. 79
Section 9.08. Moneys Held by Trustee...................................... 79
ARTICLE 10
SUBORDINATION OF SECURITIES
Section 10.01. Securities Subordinate to Senior Debt....................... 80
Section 10.02. Payment Over of Proceeds upon Dissolution, etc.............. 80
Section 10.03. Suspension of Payment When Senior Debt in Default........... 82
Section 10.04. Trustee's Relation to Senior Debt........................... 85
</TABLE>
-iii-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 10.05. Subrogation to Rights of Holders of Senior Debt.............. 85
Section 10.06. Provisions Solely To Define Relative Rights.................. 86
Section 10.07. Trustee To Effectuate Subordination.......................... 87
Section 10.08. No Waiver of Subordination Provisions........................ 87
Section 10.09. Notice to Trustee............................................ 88
Section 10.10. Reliance on Judicial Order or Certificate
of Liquidating Agent...................................... 89
Section 10.11. Rights of Trustee as a Holder of Senior Debt;
Preservation of Trustee's Rights.......................... 90
Section 10.12. Article Applicable to Paying Agents.......................... 90
Section 10.13. No Suspension of Remedies.................................... 90
ARTICLE 11
MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls................................. 91
Section 11.02. Notices...................................................... 91
Section 11.03. Communications by Holders with Other Holders................. 92
Section 11.04. Certificate and Opinion as to Conditions Precedent........... 92
Section 11.05. Statements Required in Certificate and Opinion............... 93
Section 11.06. When Treasury Securities Disregarded......................... 93
Section 11.07. Rules by Trustee and Agents.................................. 94
Section 11.08. Business Days; Legal Holidays................................ 94
Section 11.09. Governing Law................................................ 94
Section 11.10. No Adverse Interpretation of Other Agreements................ 94
Section 11.11. No Recourse Against Others................................... 95
Section 11.12. Successors................................................... 95
Section 11.13. Multiple Counterparts........................................ 95
Section 11.14. Table of Contents, Headings, etc............................. 95
Section 11.15. Separability................................................. 95
EXHIBITS
- --------
Exhibit A - Form of Security............................................. A-1
Exhibit B - Form of Legend for Global Securities......................... B-1
Exhibit C - Form of Certificate to Be Delivered in Connection
with Transfers to Non-QIB Accredited Investors............... C-1
Exhibit D - Form of Certificate to Be Delivered in Connection
with Transfers Pursuant to Regulation S...................... D-1
</TABLE>
-iv-
<PAGE>
INDENTURE, dated as of June 24, 1998, between SAMSONITE CORPORATION, a
Delaware corporation, as issuer (the "Company"), and UNITED STATES TRUST COMPANY
OF NEW YORK, a bank and trust company organized under the New York Banking Law,
as Trustee (the "Trustee").
Each party agrees as follows for the benefit of the other parties and
for the equal and ratable benefit of the Holders of the Company's 13 7/8% Junior
Subordinated Debentures due 2010 (the "Securities").
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.
-----------
"Acquired Indebtedness" means Indebtedness of a Person (including an
Unrestricted Subsidiary) existing at the time such Person becomes a Restricted
Subsidiary or assumed in connection with the acquisition of assets from such
Person.
"Affiliate" means, with respect to any Person, a Person who, directly
or indirectly, through one or more intermediaries controls, or is controlled by,
or is under common control with, such other Person. The term "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise; provided, however,
-------- -------
that the ownership of at least 10% of the voting power of the Common Stock of a
Person, either directly or indirectly, shall be deemed control.
"Agent" means any Registrar, Paying Agent, co-registrar or agent for
service of notices and demands.
"Asset Sale" means the sale, transfer or other disposition (other than
to the Company or any of its Restricted Subsidiaries) in any single transaction
or series of related transactions involving assets with a fair market value in
excess of $1,000,000 of (a) any Capital Stock of or other equity interest in any
Restricted Subsidiary of the Company other than in a transaction where the
Company or such Restricted Subsidiary receives therefor one or more properties
with a fair market value equal to the fair market value of the Capital Stock
issued, transferred or disposed of by the Company or the Restricted Subsidiary
(with such fair market values being determined by the Board of Directors of the
Company), (b) all or substantially all of the assets of the Company or of any
Re-
<PAGE>
-2-
stricted Subsidiary thereof, (c) real property or (d) all or substantially all
of the assets of any division, line of business or comparable business segment
of the Company or of any Restricted Subsidiary thereof; provided that Asset
--------
Sales shall not include (x) sales, leases, conveyances, transfer or other
dispositions to the Company or to a Restricted Subsidiary to any other Person
if, after giving effect to such sale, lease, conveyance, transfer or other
disposition, such other Person becomes a Restricted Subsidiary, or (y) the sale
of all or substantially all of the assets of the Company or a Restricted
Subsidiary in a transaction complying with Section 5.01, in which case only the
assets not so sold shall be deemed an Asset Sale, or (z) any sale, issuance or
other disposition of Capital Stock or assets of any Joint Venture Subsidiary.
"Board of Directors" means the board of directors of the Company or
any authorized committee thereof (a "Board Committee"); provided that the term
--------
"Board of Directors" as used in the definition of "Change of Control" shall not
include any Board Committee.
"Board Resolution" means a copy of a resolution certified pursuant to
an Officers' Certificate to have been duly adopted by the Board of Directors of
the Company to be in full force and effect, and delivered to the Trustee.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated) of capital stock, including each class of common stock and
preferred stock of such Person and warrants or options to purchase any of the
foregoing and (ii) with respect to any Person that is not a corporation, any and
all partnership or other equity interests of such Person.
"Capitalized Lease Obligation" means, as to any Person, the obligation
of such Person to pay rent or other amounts under a lease to which such Person
is a party that is required to be classified and accounted for as capital lease
obligations under GAAP and, for purposes of this definition, the amount of such
obligations at any date shall be the capitalized amount of such obligations at
such date, determined in accordance with GAAP.
"Cash Equivalents" means (i) marketable direct obligations issued by,
or unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case
<PAGE>
-3-
maturing within one year from the date of acquisition thereof; (ii) marketable
direct obligations issued by any state of the United States of America or any
political subdivision of any such state or any public instrumentality thereof
maturing within one year from the date of acquisition thereof and, at the time
of acquisition, having one of the two highest ratings obtainable from either S&P
or Moody's; (iii) commercial paper maturing no more than one year from the date
of creation thereof and, at the time of acquisition, having a rating of at least
A-1 from S&P or at least P-1 from Moody's; (iv) certificates of deposit or
bankers' acceptances maturing within one year from the date of acquisition
thereof issued by any commercial bank organized under the laws of the United
States of America or any state thereof or the District of Columbia or any U.S.
branch of a foreign bank having at the date of acquisition thereof combined
capital and surplus of not less than $250,000,000; (v) repurchase obligations
with a term of not more than seven days for underlying securities of the types
described in clause (i) above entered into with any bank meeting the
qualifications specified in clause (iv) above; and (vi) investments in money
market funds which invest substantially all of their assets in securities of the
types described in clauses (i) through (v) above.
"Certificate of Designation" means the Certificate of Designation
under which the Senior Preferred Stock was issued, as in effect on the date of
original issuance of the Senior Preferred Stock.
A "Change of Control" of the Company will be deemed to have occurred
at such time as (i) any Person (including a Person's Affiliates), other than a
Permitted Holder, becomes the beneficial owner (as defined under Rule 13d-3 or
any successor rule or regulation promulgated under the Exchange Act) of 50% or
more of the total voting power of the Company's Common Stock unless, as a result
of such transaction, the ultimate direct or indirect ownership of the Company is
substantially the same immediately after such transaction as it was immediately
prior to such transaction, (ii) any Person (including a Person's Affiliates),
other than a Permitted Holder, becomes the beneficial owner of more than 35% of
the total voting power of the Company's Common Stock, and the Permitted Holders
beneficially own, in the aggregate, a lesser percentage of the total voting
power of the Common Stock of the Company than such other Person and do not have
the right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the Board of Directors of the Company,
(iii) there shall be consummated any consolidation or merger of
<PAGE>
-4-
the Company in which the Company is not the continuing or surviving corporation
or pursuant to which the Common Stock of the Company would be converted into
cash, securities or other property, other than a merger or consolidation of the
Company in which the holders of the Common Stock of the Company outstanding
immediately prior to the consolidation or merger hold, directly or indirectly,
at least a majority of the voting power of the Common Stock of the surviving
corporation immediately after such consolidation or merger or (iv) during any
period of two consecutive years, individuals who at the beginning of such period
constituted the Board of Directors of the Company (together with any new
directors whose election by such Board of Directors or whose nomination for
election by the shareholders of the Company has been approved by a majority of
the directors then still in office who either were directors at the beginning of
such period or whose election or recommendation for election was previously so
approved) cease to constitute a majority of the Board of the Directors of the
Company.
"Common Stock" of any Person means any and all shares, interests or
other participations in, and other equivalents (however designated and whether
voting or non-voting) of, such Person's common stock, whether outstanding on the
Issue Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common stock.
"Company" means the party named as such in the first paragraph of this
Indenture until a successor replaces such party pursuant to Article 5 of this
Indenture and thereafter means the successor obligor on the Securities.
"Company Request" means any written request signed in the name of the
Company by the Chief Executive Officer, the President, any Vice President, the
Chief Financial Officer or the Treasurer and attested to by the Secretary or any
Assistant Secretary of the Company.
"Consolidated EBITDA" means, for any Person and its Restricted
Subsidiaries, for any period, an amount equal to (a) the sum of Consolidated Net
Income for such period, plus, to the extent deducted from the revenues of such
Person and its Restricted Subsidiaries in determining Consolidated Net Income,
(i) the provision for taxes for such period based on income or profits and any
provision for taxes utilized in computing a loss in Consolidated Net Income
above, plus (ii) Consolidated Interest Expense (including, for this purpose,
dividends on the Senior Preferred Stock and any Redeemable Dividends in each
case only to the extent that such dividends were deducted in
<PAGE>
-5-
determining Consolidated Net Income), plus (iii) Consolidated Non-Cash Charges,
plus (iv) without duplication, charges attributable to the exercise or
adjustment of employee options and fees and expenses, in each case, incurred in
connection with the Recapitalization or the transactions described under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Recent Events and Proposed Recapitalization," in the Offering
Memorandum plus (v) without duplication, for any four quarter period that
includes one or more fiscal quarters of fiscal 1998 or either or both of the
first two fiscal quarters of fiscal 1999, restructuring charges, in an aggregate
amount not to exceed $12,000,000, but only to the extent actually incurred
during each such applicable quarter and minus (vi) without duplication, the
amount of all cash payments made by such Person or any of its Restricted
Subsidiaries during such period to the extent such payments relate to
Consolidated Non-Cash Charges that were added back in determining Consolidated
EBITDA for such period or any prior period, all as determined on a consolidated
basis for such Person and its Restricted Subsidiaries in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" on any date of
determination (the "Transaction Date") means, with respect to any Person, the
ratio of (i) the aggregate amount of Consolidated EBITDA of such Person for the
Reference Period to (ii) the aggregate amount of Consolidated Fixed Charges of
such Person during the Reference Period; provided, that for purposes of such
--------
computation, in calculating Consolidated EBITDA and Consolidated Fixed Charges,
(a) the transaction giving rise to the need to calculate the Consolidated Fixed
Charge Coverage Ratio will be assumed to have occurred (on a pro forma basis) on
the first day of the Reference Period; (b) the incurrence of any Indebtedness
(other than Indebtedness incurred under any revolving credit or similar facility
to the extent that the proceeds were used to finance working capital
requirements in the ordinary course of business) or the issuance of any
Disqualified Capital Stock or Preferred Stock during the Reference Period or
subsequent thereto and on or prior to the Transaction Date (and the application
of the proceeds therefrom (other than a repayment of Indebtedness outstanding
under a revolving credit or similar facility to the extent that the proceeds
were used to finance working capital requirements in the ordinary course of
business) to the extent used to retire Indebtedness or Preferred Stock) will be
assumed to have occurred (on a pro forma basis) on the first day of such
Reference Period; (c) Consolidated Interest Expense attributable to any
Indebtedness (whether existing or being incurred) bearing a floating interest
rate shall be computed as if the rate in effect on the
<PAGE>
-6-
Transaction Date had been the applicable rate for the entire period, unless such
Person or any of its Subsidiaries is a party to an Interest Rate Agreement
(which shall remain in effect for the 12-month period after the Transaction
Date) that has the effect of fixing the interest rate on the date of
computation, in which case such rate (whether higher or lower) shall be used;
(d) the repayment of any Indebtedness (other than under a revolving credit or
similar facility to the extent that the proceeds were used to finance working
capital requirements in the ordinary course of business), Disqualified Capital
Stock or Preferred Stock during the Reference Period or subsequent thereto and
on or prior to the Transaction Date with the proceeds of any sale or other
disposition of assets or properties referred to in clause (f) below will be
assumed to have occurred (on a pro forma basis) on the first day of the
Reference Period; (e) the acquisition during the Reference Period or subsequent
thereto and on or prior to the Transaction Date of any other Person which, as a
result of such acquisition, becomes a Subsidiary, will be assumed to have
occurred (on a pro forma basis) on the first day of the Reference Period; and
(f) any sale or other disposition of assets or properties constituting an
existing business (whether existing as a separate entity, subsidiary, division,
unit or otherwise) outside the ordinary course of business occurring during the
Reference Period or subsequent thereto and on or prior to the Transaction Date
will be assumed to have occurred (on a pro forma basis) on the first day of the
Reference Period.
"Consolidated Fixed Charges" of any Person for any period means
(without duplication) the sum of (i) Consolidated Interest Expense of such
Person for such period (excluding amortization or write-off of deferred
financing fees and expenses) and (ii) without duplication, Redeemable Dividends
of such Person and its Restricted Subsidiaries (whether in cash or otherwise
(except dividends payable solely in shares of Qualified Capital Stock)) with
respect to Disqualified Capital Stock and Preferred Stock accrued during such
period in accordance with GAAP (but in the case of such Preferred Stock, only to
the extent that the aggregate amount of dividends paid or accrued from and after
the Issue Date exceeds the aggregate net cash proceeds to such Person from the
issuance and sale of such Preferred Stock), in each case excluding items
eliminated in consolidation of such Person and its Restricted Subsidiaries;
provided, that dividends accrued or paid on the Senior Preferred Stock shall not
- --------
be included in the calculation of Consolidated Fixed Charges.
<PAGE>
-7-
"Consolidated Interest Expense" means, with respect to any Person, for
any period, the aggregate amount of interest which, in conformity with GAAP,
would be set forth opposite the caption "interest expense" or any like caption
on an income statement for such Person and its Restricted Subsidiaries on a
consolidated basis, including, but not limited to, Redeemable Dividends, whether
paid or accrued, on Restricted Subsidiary Preferred Stock, imputed interest
included in Capitalized Lease Obligations, all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers' acceptance
financing, the net costs associated with hedging obligations, amortization of
other financing fees and expenses, the interest portion of any deferred payment
obligation, amortization of discount or premium, if any, and all other non-cash
interest expense (other than interest amortized to cost of sales) plus, without
duplication, all net capitalized interest for such period and all interest
incurred or paid under any guarantee of Indebtedness (including a guarantee of
principal, interest or any combination thereof) of any Person, plus the amount
of all dividends or distributions paid on Disqualified Capital Stock (other than
dividends paid or payable in shares of Capital Stock of the Company), minus
interest income for such period.
"Consolidated Net Income" means, with respect to any Person, for any
period, the aggregate of the net income (or loss) of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP; provided, however, that (a) the net income of any Person
-------- -------
including of any Emerging Market Subsidiary or Unrestricted Subsidiary (each, an
"Other Person") in which the Person in question or any of its Restricted
Subsidiaries has less than a 100% interest (which interest does not cause the
net income of such Other Person to be consolidated into the net income of the
Person in question in accordance with GAAP) shall be included only to the extent
of the amount of dividends or distributions paid to the Person in question or to
any of its Restricted Subsidiaries, (b) the net income of any Restricted
Subsidiary of the Person in question that is subject to any restriction or
limitation on the payment of dividends or the making of other distributions
(other than pursuant to the Securities) shall be excluded to the extent of such
restriction or limitation, (c) (i) 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 (ii) any net gain or net loss resulting from
an Asset Sale by the Person in question or any of its Restricted Subsidiaries
other than in the ordinary course of business shall be excluded, (d)
extraordinary, un-
<PAGE>
-8-
usual or non-recurring gains and losses shall be excluded and (e) gains and
losses associated with discontinued and terminated operations shall be excluded.
"Consolidated Non-Cash Charges" means, with respect to any Person for
any period, the aggregate depreciation, amortization and other non-cash items
(which do not reflect an accrual of a cash expense which may be incurred in the
future) of such Person and its Restricted Subsidiaries reducing Consolidated Net
Income of such Person and its Restricted Subsidiaries less any such non-cash
items increasing Consolidated Net Income of such Person and its Restricted
Subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP.
"Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered, which office at the date of execution of this Indenture is
specified in Section 11.02.
"Credit Agreement" means (i) one or more credit agreements, loan
agreements or similar agreements providing for working capital advances, term
loans, letter of credit facilities or similar advances, loans, or facilities to
the Company, any Subsidiaries, domestic or foreign, or any or all of such
Persons, including the Credit Agreement, dated on or as in effect on or about
the Issue Date, among the Company and Samsonite Europe N.V., as borrowers, Bank
of America National Trust and Savings Association and BankBoston, N.A., and
certain other lenders party thereto from time to time, as the same may be
amended, modified, restated or supplemented from time to time and (ii) any one
or more agreements governing advances, loans or facilities provided to refund,
refinance, replace or renew (including subsequent or successive refundings,
refinancings, replacements and renewals) Indebtedness under the agreement or
agreements referred to in the foregoing clause (i), as the same may be amended,
modified, restated or supplemented from time to time.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement designed to address fluctuations in
currency values.
"Default" means an event or condition the occurrence of which is, or
with the lapse of time or the giving of notice or both would be, an Event of
Default.
<PAGE>
-9-
"Depository" means, with respect to the Securities issued in the form
of one or more Global Securities, The Depository Trust Company or another Person
designated as Depository by the Company, which Person must be a clearing agency
registered under the Exchange Act.
"Designated Senior Debt" means (i) Indebtedness under the Original
Credit Agreement (and any guarantees thereof), and (ii) any other Indebtedness
constituting Senior Debt which, at the time of determination, has an aggregate
principal amount of at least $25,000,000 (or accreted value of at least such
amount in the case of Indebtedness issued at a discount) and is specifically
designated as "Designated Senior Debt" by the Company and, so long as the
Original Credit Agreement is in effect, by the Representative under the Original
Credit Agreement, and certified as such in an Officers' Certificate delivered to
the Trustee.
"Disqualified Capital 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 (excluding any
maturity as the result of an optional redemption by the issuer thereof) or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the sole option of the holder thereof, in whole or in part, on
or prior to the final maturity date of the Securities. Without limitation of
the foregoing, Disqualified Capital Stock shall be deemed to include (i) any
Preferred Stock of a Restricted Subsidiary of the Company and (ii) any Preferred
Stock of the Company, with respect to either of which, under the terms of such
Preferred Stock, by agreement or otherwise, such Restricted Subsidiary or the
Company is obligated to pay current dividends or distributions in cash during
the period prior to the maturity date of the Securities; provided, however, that
-------- -------
Preferred Stock of the Company or any Restricted Subsidiary thereof that is
issued with the benefit of provisions requiring a change of control offer to be
made for such Preferred Stock in the event of a change of control of the Company
or such Restricted Subsidiary, which provisions have substantially the same
effect as the provisions of Section 4.11 shall not be deemed to be Disqualified
Capital Stock solely by virtue of such provisions; and provided, further, that
-------- -------
the Senior Preferred Stock shall not be considered Disqualified Capital Stock.
"Emerging Market Subsidiary" means (i) any Initial Emerging Market
Subsidiary, (ii) any majority-owned Subsidiary of the Company the principal
operations of which are not lo-
<PAGE>
-10-
cated in the United States, Canada, Western Europe or Japan that, at the time of
determination, shall be an Emerging Market Subsidiary (as designated by the
Board of Directors, as provided below) and (iii) any majority-owned Subsidiary
of an Emerging Market Subsidiary. The Board of Directors may designate (1) any
Unrestricted Subsidiary of the Company to be an Emerging Market Subsidiary, and
(2) any Restricted Subsidiary of the Company (including any newly acquired or
newly formed Subsidiary at or prior to the time it is so formed or acquired) to
be an Emerging Market Subsidiary if it meets the geographic test set forth above
and (a) no Default or Event of Default is existing or will occur as a
consequence thereof, (b) with respect to previously existing Restricted
Subsidiaries, immediately after giving effect to such designation, on a pro
forma basis, the Company could incur at least $1.00 of additional Indebtedness
(other than Permitted Indebtedness) pursuant to Section 4.06 and (c) such
Restricted Subsidiary does not own any Capital Stock of, or own or hold any Lien
on any property of, the Company or any Restricted Subsidiary that is not a
Subsidiary of the Restricted Subsidiary to be so designated. At the time that a
previously existing Restricted Subsidiary of the Company is designated an
Emerging Market Subsidiary, the Company shall be deemed to make an "Investment"
in such Emerging Market Subsidiary in an amount equal to its Pro Rata Interest
in the fair market value of the net assets of such Restricted Subsidiary. A
Restricted Subsidiary of the Company shall not be considered to be a "previously
existing Restricted Subsidiary" for purposes of this definition if such
Restricted Subsidiary is designated to be an Emerging Market Subsidiary at or
prior to the time of the formation of such Restricted Subsidiary or at or prior
to the time such Restricted Subsidiary is acquired by the Company. The Board of
Directors may designate any Emerging Market Subsidiary to be a Restricted
Subsidiary, provided that (i) no Default or Event of Default is existing or will
occur as a consequence thereof and (ii) either (x) immediately after giving
effect to such designation, on a pro forma basis, the Company could incur at
least $ 1.00 of additional Indebtedness (other than Permitted Indebtedness)
pursuant to Section 4.06 or (y) the Consolidated Fixed Charge Coverage Ratio of
the Company immediately after giving effect to such designation, on a pro forma
basis, exceeds the Consolidated Fixed Charge Coverage Ratio of the Company
immediately prior (and without giving effect) to such designation. Each such
designation shall be evidenced by the filing with the Trustee of a certified
copy of the Board Resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
conditions.
<PAGE>
-11-
"Equity Offering" means a sale by the Company of shares of its
Qualified Capital Stock.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Foreign Credit Agreement" means one or more Credit Agreements among
one or more Foreign Restricted Subsidiaries and the lenders party thereto.
"Foreign Restricted Subsidiary" means a Restricted Subsidiary of the
Company that is incorporated or otherwise organized in a jurisdiction other than
the United States, any state thereof or the District of Columbia.
"GAAP" means generally accepted accounting principles consistently
applied as in effect in the United States from time to time.
"Holder" or "Securityholder" means the Person in whose name a Security
is registered on the Registrar's books.
"incur" means, with respect to any Indebtedness or other obligation of
any Person, to create, issue, incur (by conversion, exchange or otherwise),
assume, guarantee or otherwise become liable in respect of such Indebtedness or
other obligation or the recording, as required pursuant to GAAP or otherwise, of
any such Indebtedness or other obligation on the balance sheet of such Person
(and "incurrence," "incurred," "incurrable" and "incurring" shall 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 shall
not be deemed an incurrence of such Indebtedness; provided, further, that the
-------- -------
amortization of original issue discount on Indebtedness issued with original
issue discount or the accumulation of distributions on Disqualified Capital
Stock shall not be deemed an incurrence of Indebtedness.
"Indebtedness" means (without duplication), with respect to any
Person, any indebtedness at any time outstanding, secured or unsecured,
contingent or otherwise, which is for borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such Person or only to a
portion thereof) or evidenced by bonds, notes, debentures or similar instruments
or representing the balance deferred and unpaid of the purchase price of any
property (excluding, without limitation, any balances that constitute accounts
payable or trade
<PAGE>
-12-
payables and other accrued liabilities or accrued expenses arising in the
ordinary course of business) if and to the extent any of the foregoing
indebtedness would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, and shall also include, to the extent not
otherwise included, (i) any Capitalized Lease Obligations, (ii) obligations
secured by a Lien to which the property or assets owned or held by such Person
are subject, whether or not the obligation or obligations secured thereby shall
have been assumed (provided, however, that if such obligation or obligations
-------- -------
shall not have been assumed, the amount of such Indebtedness shall be deemed to
be the lesser of the principal amount of the obligation or the fair market value
of the pledged property or assets), other than a Lien securing an obligation
that is not Indebtedness, (iii) guarantees of items of other Persons which would
be included within this definition for such other Persons (whether or not such
items would appear upon the balance sheet of the guarantor), (iv) all
obligations for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction, (v) Disqualified Capital
Stock of the Company or any Restricted Subsidiary thereof and (vi) obligations
of any such Person under any Interest Rate Agreement or Currency Agreement
applicable to any of the foregoing (if and to the extent such Interest Rate
Agreement or Currency Agreement obligations would appear as a liability upon a
balance sheet of such Person prepared in accordance with GAAP). The amount of
Indebtedness of any Person at any date shall be the outstanding balance at such
date of all unconditional obligations as described above and, with respect to
contingent obligations, the maximum liability upon the occurrence of the
contingency giving rise to the obligation, provided that (i) the amount
outstanding at any time of any Indebtedness issued with original issue discount
is the principal amount of such Indebtedness less the remaining unamortized
portion of the original issue discount of such Indebtedness at such time as
determined in conformity with GAAP and (ii) Indebtedness shall not include any
liability for federal, state, local or other taxes. Notwithstanding any other
provision of the foregoing definition, any trade payable arising from the
purchase of goods or materials or for services obtained in the ordinary course
of business or contingent obligations arising out of customary indemnification
agreements with respect to the sale of assets or securities shall not be deemed
to be "Indebtedness" of the Company or any Restricted Subsidiaries for purposes
of this definition. Furthermore, guarantees of (or obligations with respect to
letters of credit supporting) Indebtedness otherwise included in the
determination of such amount shall not also be included.
<PAGE>
-13-
"Indenture" means this Indenture as amended, restated or supplemented
from time to time.
"Initial Emerging Market Subsidiary" means each of (i) Chia Tai
Samsonite (H.K.) Limited, (ii) Ningbo Chia Tai Samsonite Luggage Co. Ltd., (iii)
Samsonite Argentina S.A., (iv) Samsonite Brasil Ltda., (v) Samsonite India
Limited, (vi) Samsonite Korea Limited, (vii) Samsonite Mercosur Limited, (viii)
Samsonite Mauritius Limited, and (ix) Samsonite Singapore Limited.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
promulgated under the Securities Act.
"Interest Payment Date" means the stated maturity of any scheduled
installment of interest on the Securities.
"Interest Rate Agreement" means, for any Person, any interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement or
other similar agreement.
"Investment" by any Person in any other Person means, directly or
indirectly, any advance, account receivable (other than an account receivable
arising in the ordinary course of business), loan or capital contribution to (by
means of transfers of property to others, payments for property or services for
the account or use of others or otherwise), the purchase of any stocks, bonds,
notes, debentures, partnership or joint venture interests or other securities
of, the acquisition, by purchase or otherwise, of all or substantially all of
the business or assets or stock or other evidence of beneficial ownership of,
such other Person or the making of any investment by such Person in any other
Person. Investments shall exclude extensions of trade credit on commercially
reasonable terms in accordance with normal trade practices and repurchases or
redemptions of the Securities, the Notes or the Senior Preferred Stock by the
Company or any other security or evidence of Indebtedness issued by the Company.
Notwithstanding the foregoing, the following shall not be considered Investments
by a Person in any other Person: (i) trade receivables and prepaid expenses, in
each case arising in the ordinary course of business; provided, that such
--------
receivables and prepaid expenses would be recorded as assets of such Person in
accordance with GAAP, (ii) Investments received in connection with the
bankruptcy or reorganization of suppliers and customers or in good faith bona
fide settlement of delinquent ordinary course of
<PAGE>
-14-
business trade receivables of customers, (iii) endorsements for collection or
deposit in the ordinary course of business by such Person of bank drafts and
similar negotiable instruments of such other Person received as payment for
ordinary course of business trade receivables, (iv) an Interest Rate Agreement
or Currency Agreement with an unaffiliated Person provided that such agreements
comply with the requirements of clause (iv) of the definition of Permitted
Indebtedness, (v) Investments received as consideration for, or customary
indemnities given in connection with, an Asset Sale, and (vi) Investments for
which the sole consideration provided is Qualified Capital Stock. The Company
shall be deemed to make an "Investment" in an amount equal to its Pro Rata
Interest in the fair market value of the net assets of any previously existing
Restricted Subsidiary, at the time that such Restricted Subsidiary is designated
an Unrestricted Subsidiary or an Emerging Market Subsidiary, as the case may be;
and any property transferred, directly or indirectly (whether by merger or
otherwise) to an Unrestricted Subsidiary or an Emerging Market Subsidiary, as
the case may be, from the Company or a Restricted Subsidiary after the time of
such designation shall be deemed an Investment valued at its fair market value
at the time of such transfer. A Restricted Subsidiary of the Company shall not
be considered to be a "previously existing Restricted Subsidiary" for purposes
of this definition if such Restricted Subsidiary is designated to be an Emerging
Market Subsidiary or an Unrestricted Subsidiary, as the case may be, at or prior
to the time of the formation of such Restricted Subsidiary or at or prior to the
time such Restricted Subsidiary is acquired by the Company.
"Issue Date" means the date of original issuance of the Senior
Preferred Stock.
"Joint Venture Subsidiary" means a Restricted Subsidiary of the
Company in which one or more Persons who have provided or are providing
operating assets or services to such Restricted Subsidiary beneficially own not
less than 50% of the Capital Stock of such Restricted Subsidiary not owned by
the Company or a Restricted Subsidiary of the Company.
"Lien" means any consensual lien, mortgage, deed of trust, pledge,
security interest, charge or encumbrance of any kind (including any conditional
sale or other title retention agreement, any lease in the nature thereof and any
agreement to give any security interest).
"Maturity Date" means June 15, 2010.
<PAGE>
-15-
"Net Proceeds" means (a) in the case of any sale of Capital Stock by
the Company, the aggregate net proceeds received by the Company, after payment
of expenses, commissions and the like incurred in connection therewith, whether
such proceeds are in cash or in property (valued at the fair market value
thereof, as determined in good faith by the Board of Directors, at the time of
receipt) and (b) in the case of any exchange, exercise, conversion or surrender
of outstanding securities of any kind for or into shares of Qualified Capital
Stock of the Company, the net book value of such outstanding securities on the
date of such exchange, exercise, conversion or surrender (plus any additional
amount required to be paid by the holder to the Company upon such exchange,
exercise, conversion or surrender, less any and all payments made to the
holders, e.g., on account of fractional shares and less all expenses incurred by
the Company in connection therewith).
"Non-Payment Event of Default" means any event (other than a Payment
Default) the occurrence of which entitles one or more Persons to accelerate the
maturity of any Designated Senior Debt.
"Non-U.S. Person" means a person who is not a U.S. person, as defined
in Regulation S.
"Notes" means the 10 3/4% Senior Subordinated Notes due 2008 of the
Company issued pursuant to the Notes Indenture.
"Notes Indenture" means the indenture dated as of June 24, 1998
between the Company and United States Trust Company of New York, as trustee,
relating to the Notes
"Obligations" means all obligations for principal, premium, interest
(including post-petition interest, whether or not such interest constitutes
allowed or allowable claims against the relevant obligor, in any bankruptcy,
reorganization or other proceeding), penalties, fees, costs, indemnifications,
reimbursements, repurchase, redemption, retirement or defeasance obligations,
damages and other liabilities and obligations payable under the documentation
governing, or otherwise relating to, any Indebtedness.
"Offering Memorandum" means the Offering Memorandum dated June 18,
1998 pursuant to which the Senior Preferred Stock and the Securities were
offered.
"Officer" means the Chief Executive Officer, the President, any Vice
President, the Chief Financial Officer, the
<PAGE>
Treasurer, the Controller or the Secretary of the Company, or any other officer
designated by the Board of Directors, as the case may be.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chief Executive Officer, the President or any Vice
President, the Chief Financial Officer, the Controller or any Treasurer of such
Person that shall comply with applicable provisions of this Indenture and is
reasonably acceptable to the Trustee if being delivered to the Trustee.
"Opinion of Counsel" means a written opinion from legal counsel which
counsel is reasonably acceptable to the Trustee.
"Original Credit Agreement" means the referenced Credit Agreement
described in clause (i) of the definition of Credit Agreement dated on or as in
effect on or about the Issue Date, as the same may be amended, modified,
restated or supplemented from time to time, and any one replacement agreement or
facility existing at any time provided to refund, refinance, replace or renew
(including subsequent or successive refundings, refinancings, replacements and
renewals) the Original Credit Agreement; such replacement agreement or facility
to be designated by the Company and certified in an Officers' Certificate
delivered to the Trustee.
"Pari Passu Debt" means any Indebtedness (secured or unsecured) of the
Company that ranks pari passu in right of payment with the Securities.
"Payment Default" means any default, whether or not any requirement
for the giving of notice, the lapse of time or both, or any other condition to
such default becoming an event of default has occurred, in the payment of
principal of (or premium, if any) or interest on or any other amount payable in
connection with Designated Senior Debt.
"Permitted Holders" means Apollo Advisors, L.P. and any Affiliate
thereof.
"Permitted Indebtedness" means, without duplication, each of the
following:
(i) Indebtedness under the Securities and this Indenture;
<PAGE>
-17-
(ii) Indebtedness incurred pursuant to any Credit Agreements (and
the guarantees thereof) in an aggregate principal amount at any time
outstanding not to exceed $260,000,000;
(iii) all other Indebtedness of the Company and its Restricted
Subsidiaries outstanding on the Issue Date including under the Notes and
the Notes Indenture;
(iv) (a) Obligations under Interest Rate Agreements of the Company
covering Indebtedness of the Company or any of its Restricted Subsidiaries;
provided, however, that such Interest Rate Agreements are entered into to
-------- -------
protect the Company and its Restricted Subsidiaries from fluctuations in
interest rates on Indebtedness otherwise permitted to be incurred hereunder
and not for speculative purposes to the extent the notional principal
amount of such Interest Rate Agreement does not exceed the principal amount
of the Indebtedness to which such Interest Rate Agreement relates and (b)
Indebtedness under Currency Agreements incurred by the Company in the
ordinary course of business to the extent that such obligations have been
entered into to protect against fluctuations in currency exchange rates and
not for speculative purposes; provided, that in the case of Currency
--------
Agreements which relate to Indebtedness, such Currency Agreements do not
increase the Indebtedness of the Company and the Restricted Subsidiaries
outstanding other than as a result of fluctuations in foreign currency
exchange rates or by reason of fees, indemnities and compensation payable
thereunder;
(v) Indebtedness of a Restricted Subsidiary of the Company to the
Company or to a Restricted Subsidiary of the Company for so long as such
Indebtedness is owned by the Company or a Restricted Subsidiary of the
Company, in each case with no Lien securing such Indebtedness held by a
Person other than the Company or a Restricted Subsidiary of the Company;
provided that if as of any date any Person other than the Company or a
--------
Restricted Subsidiary of the Company owns any such Indebtedness or holds a
Lien securing any such Indebtedness, such date shall be deemed the
incurrence of Indebtedness not constituting Permitted Indebtedness under
this clause (v);
(vi) Indebtedness of the Company to a Restricted Subsidiary of the
Company for so long as such Indebtedness is owned by a Restricted
Subsidiary of the Company, in each case with no Lien securing such
Indebtedness; provided
--------
<PAGE>
-18-
that (a) any Indebtedness of the Company to any Restricted Subsidiary of
the Company is subordinated, pursuant to a written agreement, to the
Company's Obligations under this Indenture and the Securities at least to
the same extent that the Securities are subordinated to Senior Debt, and
(b) if as of any date any Person other than a Restricted Subsidiary of the
Company owns any such Indebtedness or any Person holds a Lien securing any
such Indebtedness, such date shall be deemed the incurrence of Indebtedness
not constituting Permitted Indebtedness under this clause (vi);
(vii) Purchase Money Indebtedness and Capitalized Lease Obligations
incurred to acquire property in the ordinary course of business, the
principal amount of which Indebtedness and Capitalized Lease Obligations
does not in the aggregate at any time exceed $15,000,000;
(viii) Acquired Indebtedness of any Restricted Subsidiaries, provided
that such Indebtedness was not incurred by a Person in connection with, or
in anticipation or contemplation of, such Person becoming a Restricted
Subsidiary of the Company and provided further that after giving effect to
such incurrence or assumption of such Acquired Indebtedness the
Consolidated Fixed Charge Coverage Ratio of the Company and its Restricted
Subsidiaries, taken as whole, and the Restricted Subsidiary making such
acquisition independently, are at least equal to 1:75:1 as calculated in
accordance with Section 4.06;
(ix) Refinancing Indebtedness;
(x) Indebtedness solely in respect of performance bonds, surety
agreements, documentary letters of credit used for payment of goods
consistent with past practice, or other guarantees of performance (in each
case other than an obligation for the payment of borrowed money) incurred
in the ordinary course of business;
(xi) additional Indebtedness of the Company or any Restricted
Subsidiary in an aggregate principal amount not to exceed $100,000,000 at
any one time outstanding; and
(xii) Indebtedness incurred pursuant to any Foreign Credit Agreements
in an aggregate principal amount at any time outstanding not to exceed
$35,000,000 (and any guarantees thereof).
<PAGE>
-19-
"Permitted Investments" means, for any Person, Investments made on or
after the Issue Date consisting of:
(i) Investments by the Company, or by a Restricted Subsidiary
thereof, in the Company or a Restricted Subsidiary thereof;
(ii) Cash Equivalents;
(iii) Investments by the Company, or by a Restricted Subsidiary
thereof, in a Person (or in all or substantially all of the business or
assets of a Person) if as a result of such Investment (a) such Person
becomes a Restricted Subsidiary of the Company, (b) 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
Restricted Subsidiary thereof or (c) such business or assets are owned by
the Company or a Restricted Subsidiary;
(iv) Investments by the Company or any of its Restricted
Subsidiaries in Emerging Market Subsidiaries in the aggregate amount after
the Issue Date not to exceed $50,000,000;
(v) reasonable and customary loans made to employees not to exceed
$500,000 to any employee, and not to exceed $5,000,000 in the aggregate at
any one time outstanding;
(vi) an Investment that is made by the Company or a Restricted
Subsidiary thereof in the form of any stock, bonds, notes, debentures,
partnership or joint venture interests or other securities that are issued
by a third party to the Company or a Restricted Subsidiary solely as
partial consideration for the consummation of an Asset Sale;
(vii) accounts receivable of the Company and its Restricted
Subsidiaries generated in the ordinary course of business;
(viii) Investments deemed to have been made as a result of the
acquisition of a Person that at the time of such acquisition held
instruments constituting Investments that were not acquired in
contemplation of the acquisition of such Person; and
<PAGE>
-20-
(ix) additional Investments of the Company and its Restricted
Subsidiaries from time to time of an amount not to exceed $10,000,000.
Notwithstanding the foregoing, amounts available for Investments under
clauses (iv) and (ix) shall be increased by the aggregate amount of Returned
Investments received by the Company on or before the date of such Investment.
"Person" means an individual, partnership, corporation, unincorporated
organization, joint stock company, limited liability company, trust or joint
venture, or a governmental agency or political subdivision thereof.
"Plan" means any employee benefit plan, retirement plan, deferred
compensation plan, restricted stock plan, health, life, disability or other
insurance plan or program, employee stock purchase plan, employee stock
ownership plan, pension plan, stock option plan or similar plan or arrangement
of the Company or any Restricted Subsidiary of the Company, or any successor
plan thereof, and "Plans" shall have a correlative meaning.
"Preferred Stock" of any Person means any Capital Stock of such Person
that has preferential rights to any other Capital Stock of such Person with
respect to dividends or redemption or upon liquidation.
"Private Placement Legend" means the legend initially set forth on the
Securities in the form set forth on Exhibit A hereto.
---------
"Pro Rata Interest" of any Person in any other Person means a
fraction, the numerator of which is the amount of the equity or other ownership
interest in such other Person that are beneficially owned by such Person and its
Restricted Subsidiaries, and the denominator of which is the aggregate amount of
all equity or other ownership interests in such other Person that are
outstanding (for this purpose, equity or other ownership interests subject to
presently exercisable options, warrants or other rights to acquire such
interests shall be deemed to be outstanding and shall be included in both the
numerator and denominator). The Pro Rata Interest of any Person in any item of
income or expense or in the fair market value of the assets or liabilities of
any other Person means the amount obtained by multiplying (i) the amount of such
income or expense or the fair market value of the relevant asset or liability,
as
<PAGE>
-21-
the case may be, of such other Person by (ii) the Pro Rata Interest of such
Person in such other Person.
"Purchase Money Indebtedness" of any Person means any Indebtedness
incurred or assumed by a Person to finance the cost (including the cost of
construction) of an item of real or personal property or on the improvement of
such property, the principal amount of which Indebtedness does not exceed the
sum (i) 100% of such cost and (ii) reasonable fees and expenses of such Person
incurred in connection therewith and provided that such Indebtedness is incurred
or assumed within 90 days of the acquisition of, or improvement to, such
property; and provided that any Lien securing such Indebtedness does not extend
to any property or assets other than the real or personal property financed with
such Indebtedness.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock.
"Qualified Institutional Buyer" or "QIB" shall have the meaning
specified in Rule 144A promulgated under the Securities Act.
"Recapitalization" means the transactions described as such in the
Offering Memorandum.
"Redeemable Dividend" means, for any dividend or distribution with
regard to Disqualified Capital Stock or Preferred Stock, the quotient of the
dividend or distribution divided by the difference between one and the maximum
statutory United States federal income tax rate (expressed as a decimal number
between 1 and 0) then applicable to the issuer of such Disqualified Capital
Stock or Preferred Stock, as the case may be.
"Redemption Date" when used with respect to any Security to be
redeemed means the date fixed for such redemption pursuant to this Indenture.
"Reference Period" with regard to any Person means the four full
fiscal quarters of such Person ended on or immediately preceding any date upon
which any determination is to be made pursuant to the terms of the Securities or
this Indenture; provided, that if the Transaction Date in question is more than
90 days after the end of such Person's most recently completed fiscal year or
more than 45 days after the end of such Person's most recently completed fiscal
quarter (other than the fourth fiscal quarter), then "Reference Period" shall
<PAGE>
-22-
mean the four full fiscal quarters ended on the last day of such fiscal year or
fiscal quarter, as the case may be, unless financial information for a later
period of four full fiscal quarters is available.
"Refinancing Indebtedness" means an extension, renewal, replacement,
refinancing or refunding of any Indebtedness which is Permitted Indebtedness or
is otherwise incurred in accordance with Section 4.06 (such Indebtedness is
collectively referred to as "Refinancing Indebtedness"); provided, that (1) the
--------
maximum principal amount of the relevant Refinancing Indebtedness (or, if such
Refinancing Indebtedness (if not a revolving credit or similar arrangement) does
not require cash payments prior to maturity or is otherwise issued at a
discount, the original issue price of such Refinancing Indebtedness) may not
exceed (x) the maximum principal amount of the relevant Indebtedness or
Disqualified Capital Stock being extended, renewed, replaced, refinanced or
refunded, plus unpaid interest, prepayment penalties, redemption premiums, fees,
expenses and other amounts owing with respect thereto, plus reasonable financing
fees and other reasonable out-of-pocket expenses incurred in connection
therewith (collectively, "Refinancing Costs"), or (y) if such Indebtedness or
Disqualified Capital Stock being extended, renewed, replaced, refinanced or
refunded was issued at an original issue discount, the original issue price,
plus amortization of the original issue discount at the time of the incurrence
of the Refinancing Indebtedness plus Refinancing Costs, (2) if Pari Passu Debt
or Disqualified Capital Stock, such Refinancing Indebtedness has a Weighted
Average Life to Maturity and a final maturity that is equal to or greater than
the Pari Passu Debt or Disqualified Capital Stock being extended, renewed,
replaced, refinanced or refunded at the time of such extension, renewal,
replacement, refinancing or refunding, (3) with respect to Indebtedness or
Disqualified Capital Stock of the Company or any Restricted Subsidiaries, the
relevant Refinancing Indebtedness shall rank in right of payment with respect to
the Securities to an extent no less favorable in respect thereof to the holders
of Securities than the Indebtedness or Disqualified Capital Stock being
refinanced, extended, renewed, replaced or refunded and (4) Refinancing
Indebtedness incurred by a Restricted Subsidiary of the Company shall only be
used to refinance outstanding Indebtedness or Disqualified Capital Stock of such
Restricted Subsidiary or any other Restricted Subsidiary of the Company.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of June 24, 1998 between the
<PAGE>
Company and CIBC Oppenheimer Corp., as Initial Purchaser, relating to the Senior
Preferred Stock and the Securities.
"Regulation S" means Regulation S promulgated under the Securities
Act.
"Representative" means the representative appointed by the holders of
the applicable Designated Senior Debt.
"Restricted Payment" means (i) the declaration or payment of any
dividend or the making of any other distribution (other than dividends or
distributions payable in Qualified Capital Stock) on shares of the Company's
Capital Stock other than the Senior Preferred Stock pursuant to the Certificate
of Designation as in effect on the Issue Date, (ii) the purchase, redemption,
retirement or other acquisition for value of any Capital Stock of the Company,
or any warrants, rights or options to acquire shares of Capital Stock of the
Company, other than the exchange of shares of Senior Preferred Stock for
Securities or other than through the exchange of such Capital Stock or any
warrants, rights or options to acquire shares of any class of such Capital Stock
for Qualified Capital Stock or warrants, rights or options to acquire Qualified
Capital Stock, (iii) the making of any principal payment on, or the purchase,
defeasance, redemption, prepayment, decrease or other acquisition or retirement
for value, prior to any scheduled final maturity, scheduled repayment or
scheduled sinking fund payment, of, any Subordinated Debt, (iv) the making of
any Investment (other than a Permitted Investment) (provided that the amount of
any Investment for purposes of this clause (iv) shall be calculated by
subtracting the amount of any applicable Returned Investments, if any, on any
such Investment), (v) any designation of a Restricted Subsidiary as an
Unrestricted Subsidiary on the basis of the fair market value of such Subsidiary
utilizing standard valuation methodologies and approved by the Board of
Directors or (vi) forgiveness of any Indebtedness of an Affiliate of the Company
to the Company or a Restricted Subsidiary; provided, however, that the term
-------- -------
"Restricted Payment" does not include (a) any defeasance, redemption, repurchase
or other acquisition or retirement for value, in whole or in part, of
Indebtedness of the Company or the Senior Preferred Stock payable solely in
shares of Qualified Capital Stock or Subordinated Debt or (b) the repayment or
retirement of Subordinated Debt with the proceeds of Refinancing Indebtedness
incurred in accordance with clause (ix) of the definition of Permitted
Indebtedness. For purposes of determining the amount available to make
Restricted Payments pursuant to clause (a)(iii) of Section 4.07, the amount of
any Restricted Payments made pursuant
<PAGE>
-24-
to clauses (iv) or (v) above shall be calculated after giving effect to any
Returned Investments.
"Restricted Security" has the meaning set forth in Rule 144(a)(3)
promulgated under the Securities Act; provided that the Trustee shall be
--------
entitled to request and conclusively rely upon an Opinion of Counsel with
respect to whether any Note is a Restricted Security.
"Restricted Subsidiary" means a Subsidiary of the Company other than
an Unrestricted Subsidiary and includes all of the Subsidiaries of the Company
(other than the Initial Emerging Market Subsidiaries) existing as of the Issue
Date. The Board of Directors of the Company may designate any Unrestricted
Subsidiary or any Person that is to become a Subsidiary as a Restricted
Subsidiary if immediately after giving effect to such action (and treating any
Acquired Indebtedness as having been incurred at the time of such action), the
Company could have incurred at least $1.00 of additional Indebtedness (other
than Permitted Indebtedness) pursuant to Section 4.06; provided that the Company
--------
may not designate any Emerging Market Subsidiary to become a Restricted
Subsidiary unless such designation complies with the requirements set forth in
the definition of "Emerging Market Subsidiary" relating thereto.
"Returned Investments" mean, with respect to all Investments made in
Emerging Market Subsidiaries or Unrestricted Subsidiaries pursuant to clause
(iv) or (ix), respectively, of the definition of "Permitted Investments" or
pursuant to clauses (iv) or (v) of the definition of "Restricted Payment," the
aggregate amount of (i) all payments made in respect of such Investments, other
than interest, dividends or other distributions not in the nature of a return or
repurchase of capital or a repayment of principal, that have been paid or
returned, without restriction, in cash to the Company and its Restricted
Subsidiaries and (ii) the Pro Rata Interest of the Company and its Restricted
Subsidiaries in the fair market value of the net assets of all Emerging Market
Subsidiaries or Unrestricted Subsidiaries, as the case may be, that have been
designated a Restricted Subsidiary of the Company after the Issue Date, such
fair market value to be determined as of the date of such designation; provided,
--------
that amounts under the foregoing clause (ii) with respect to each such Emerging
Market Subsidiary or Unrestricted Subsidiary, as the case may be, shall not
constitute Returned Investments to the extent that such amount exceeds the total
amount of Investments by the Company and its Restricted Subsidiaries in such
Emerging Market Subsidiary or Unrestricted Subsidiary, as the case may be.
<PAGE>
-25-
Notwithstanding the foregoing, Returned Investments shall be credited to the
amounts available for Investments pursuant to clauses (iv) or (ix) of the
definition of "Permitted Investments" or Investments made pursuant to the
provisions of clauses (iv) or (v) of the definition of "Restricted Payment," as
the case may be, only to the extent that such Returned Investments are in
respect of Investments made pursuant to each such clause or provision.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"S&P" means Standard & Poor's Corporation and its successors.
"SEC" means the United States Securities and Exchange Commission as
constituted from time to time or any successor performing substantially the same
functions.
"Secondary Securities" shall have the meaning specified in each
Security.
"Securities" means the Company's 13 7/8% Junior Subordinated
Debentures due 2010, including the Secondary Securities, if any, as amended or
supplemented from time to time in accordance with the terms hereof, that are
issued pursuant to this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Debt" means, the principal of, premium, if any, and interest
(including, without limitation, interest accruing or that would have accrued but
for the filing of a bankruptcy, reorganization or other insolvency proceeding,
whether or not such interest constitutes an allowed or allowable claim in such
proceeding) on, and any and all other fees, expense reimbursement obligations,
obligations in respect of letters of credit, bankers' acceptances and similar
transactions, indemnities and other amounts owing pursuant to the terms of all
agreements, documents and instruments providing for, creating, securing or
evidencing or otherwise entered into in connection with (a) all Indebtedness and
Obligations of the Company and its Subsidiaries owed under each Credit Agreement
(and any guarantees thereof) and the Notes, (b) all obligations of the Company
with respect to any Interest Rate Agreement or Currency Agreement to the extent
incurred pursuant to clause (iv) of the definition of Permitted Indebtedness,
(c) all obligations of
<PAGE>
-26-
the Company to reimburse any bank or other person in respect of amounts paid
under letters of credit, acceptances or other similar instruments, (d) all other
Indebtedness of the Company which does not provide that it is to rank pari passu
----------
with or subordinate to the Securities and (e) all deferrals, renewals,
extensions, replacements, refinancings and refundings of, and amendments,
modifications and supplements to, any of the Senior Debt described above.
Notwithstanding anything to the contrary in the foregoing, Senior Debt will not
include (i) Indebtedness of the Company to any of its Subsidiaries, (ii)
Indebtedness represented by the Securities, (iii) any Indebtedness which by the
express terms of the agreement or instrument creating, evidencing or governing
the same is junior or subordinate in right of payment to any item of Senior
Debt, (iv) any trade payable arising from the purchase of goods or materials or
for services obtained in the ordinary course of business or (v) Indebtedness
incurred in violation of this Indenture.
"Senior Preferred Stock" means the 13 7/8% Senior Redeemable
Exchangeable Preferred Stock, liquidation preference $1,000 per share of the
Company, issued pursuant to the Certificate of Designation.
"Significant Restricted Subsidiary" of the Company means any
Restricted Subsidiary of the Company which satisfies the requirements for being
a "significant subsidiary" as defined in Regulation S-X under the Securities Act
and the Exchange Act.
"Subordinated Debt" means Indebtedness of the Company or any
Subsidiary that is subordinated in right of payment by its express terms, or by
the express terms of any related document, to the Securities.
"Subsidiary", with respect to any Person, means (i) any corporation of
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly, by such Person or (ii) any
other Person of which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code (S)(S)
77aaa-77bbbb) as in effect on the date of this Indenture (except as provided in
Section 8.03 hereof).
<PAGE>
-27-
"Trust Officer" means any officer or assistant officer of the Trustee
assigned by the Trustee to administer trust accounts.
"Trustee" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture and thereafter means the
successor.
"Unrestricted Subsidiary" means (a) any Emerging Market Subsidiary,
(b) any Subsidiary of an Unrestricted Subsidiary or an Emerging Market
Subsidiary and (c) any Subsidiary of the Company which is classified after the
Issue Date as an Unrestricted Subsidiary or an Emerging Market Subsidiary by a
resolution adopted by the Board of Directors of the Company; provided that a
--------
Subsidiary organized or acquired after the Issue Date may be so classified as an
Unrestricted Subsidiary only if such classification is in compliance with
Section 4.08 and; provided, further, that a Subsidiary may not be classified as
-------- -------
an Emerging Market Subsidiary unless such classification would be in compliance
with the provisions of the definition of "Emerging Market Subsidiary." The
Trustee shall be given prompt notice by the Company of each resolution adopted
by the Board of Directors of the Company under this provision, together with a
copy of each such resolution so adopted.
"U.S. Government Obligations" means (a) securities that are direct
obligations of the United States of America for the payment of which its full
faith and credit are pledged or (b) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America, the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act) as custodian with respect to any such U.S. Government
Obligation or a specific payment of principal of or interest on any such U.S.
Government Obligation held by such custodian for the account of the holder of
such depository receipt; provided that (except as required by law) such
--------
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian in
respect of the U.S. Government Obligation or a specific payment of principal or
interest on any such U.S. Government Obligation held by such custodian for the
account of the holder of such depository receipt.
<PAGE>
-28-
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the total
of the product obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
Section 1.02. Other Definitions.
-----------------
The definitions of the following terms may be found in the sections
indicated as follows:
<TABLE>
<CAPTION>
Term Defined in Section
---- ------------------
<S> <C>
"Acceleration Notice"....................... 6.02
"Affiliate Transaction"..................... 4.08
"Bankruptcy Law"............................ 6.01
"Bankruptcy Proceeding"..................... 10.02
"Business Day".............................. 11.08
"Change of Control Offer"................... 4.11
"Change of Control Payment Date"............ 4.11
"Change of Control Purchase Price".......... 4.11
"Covenant Defeasance"....................... 9.03
"Custodian"................................. 6.01
"Event of Default".......................... 6.01
"Exchange Securities"....................... 2.02
"Global Securities"......................... 2.01
"Initial Blockage Period"................... 10.03
"Legal Defeasance".......................... 9.02
"Legal Holiday"............................. 11.08
"Offshore Physical Securities".............. 2.01
"Paying Agent".............................. 2.03
"Payment Blockage Period"................... 10.03
"Physical Securities"....................... 2.01
"Registrar"................................. 2.03
"Required Filing Dates"..................... 4.02
"U.S. Physical Securities".................. 2.01
</TABLE>
Section 1.03. Incorporation by Reference of Trust Indenture Act.
-------------------------------------------------
Whenever this Indenture refers to a provision of the TIA, the portion
of such provision required to be incorporated
<PAGE>
-29-
herein in order for this Indenture to be qualified under the TIA is incorporated
by reference in and made a part of this Indenture. The following TIA terms used
in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture securityholder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor on the indenture securities" means the Company or any other
obligor on the Securities.
All other terms used in this Indenture that are defined by the TIA,
defined in the TIA by reference to another statute or defined by SEC rule have
the meanings therein assigned to them.
Section 1.04. Rules of Construction.
---------------------
Unless the context otherwise requires:
(1) a term has the meaning assigned to it herein, whether defined
expressly or by reference;
(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) words used herein implying any gender shall apply to every
gender.
<PAGE>
-30-
ARTICLE 2
THE SECURITIES
Section 2.01. Dating; Incorporation of Form in Indenture.
------------------------------------------
The Securities and the Trustee's certificate of authentication shall
be substantially in the form of Exhibit A which is incorporated in and made part
of this Indenture. The Securities may have notations, legends or endorsements
required by law, stock exchange rule or usage. The Company may use "CUSIP"
numbers in issuing the Securities. The Company shall approve the form of the
Securities. Each Security shall be dated the date of its authentication.
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, expressly agree to such terms and provisions and to be bound thereby;
provided that, if any provisions of any Security limits, qualifies, or conflicts
with the provisions of this Indenture, the provisions of this Indenture shall
govern.
The Securities offered and sold in reliance on Rule 144A shall be
issued initially in the form of one or more permanent Global Securities in
registered form, substantially in the form set forth in Exhibit A ("Global
Securities"), deposited with the Trustee, as custodian for the Depository, duly
executed by the Company and authenticated by the Trustee as hereinafter provided
and shall bear the legend set forth on Exhibit B. The aggregate principal amount
of any Global Security may from time to time be increased or decreased by
adjustments made on the records of the Trustee, as custodian for the Depository,
as hereinafter provided.
Securities offered and sold in offshore transactions in reliance on
Regulation S may be issued in the form of certificated Securities in registered
form set forth in Exhibit A (the "Offshore Physical Securities"). Securities
offered and sold in reliance on any other exemption from registration under the
Securities Act other than as described in the preceding paragraph shall be
issued, and Securities offered and sold in reliance on Rule 144A may be issued,
in the form of certificated Securities in registered form in substantially the
form set forth in Exhibit A (the "U.S. Physical Securities"). The Offshore
Physical Securities and the U.S. Physical Securities
<PAGE>
-31-
are sometimes collectively herein referred to as the "Physical Securities."
Section 2.02. Execution and Authentication.
----------------------------
The Securities shall be executed on behalf of the Company by two
Officers of the Company or an Officer and an Assistant Secretary of the Company.
Such signature may be either manual or facsimile.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall be
valid nevertheless.
A Security shall not be valid until the Trustee manually signs the
certificate of authentication on the Security. Such signature shall be
conclusive evidence that the Security has been authenticated under this
Indenture.
The Trustee or an authenticating agent shall authenticate Securities
from time to time and at any time for original issue in the aggregate principal
amount of up to $350,000,000 upon a Company Request. The aggregate principal
amount of Securities outstanding at any time may not exceed such amount except
as provided in Section 2.07 hereof.
Upon receipt of the Company Request, the Trustee shall authenticate an
additional series of Securities in an aggregate principal amount not to exceed
$350,000,000 for issuance in exchange for all Securities previously issued
pursuant to an exchange offer registered under the Securities Act (a "Registered
Exchange") or pursuant to an exchange not registered under the Securities Act
(collectively, "Exchange Securities"). Exchange Securities may have such
distinctive series designation and "CUSIP" numbers as and such changes in the
form thereof as are specified in the Company Request referred to in the
preceding sentence. Exchange Securities issued pursuant to a Registered
Exchange shall not bear the Private Placement Legend.
The Trustee may appoint an authenticating agent 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 right as an Agent to deal with the Company or an Affiliate.
<PAGE>
-32-
The Securities shall be issuable in fully registered form only,
without coupons, in denominations of $1,000 and any integral multiple thereof;
provided, however, that Securities may be issued in denominations of less than
- -------- -------
$1,000 (but not less than $1.00) upon the initial exchange of the Senior
Preferred Stock for the Securities such that each holder of Senior Preferred
Stock shall receive Securities in a principal amount equal to the full
liquidation preference of the Senior Preferred Stock on the date of issuance of
such Securities; provided, further, however, that Secondary Securities may be
-------- ------- -------
issued in denominations of less than $1,000 (but not less than $1.00).
Section 2.03. Registrar and Paying Agent.
--------------------------
The Company shall maintain an office or agency where Securities may be
presented for registration of transfer or for exchange ("Registrar"), an office
or agency located in the Borough of Manhattan, City of New York, State of New
York where Securities may be presented for payment ("Paying Agent") and an
office or agency where notices and demands to or upon the Company in respect of
the Securities and this Indenture may be served. The Registrar shall keep a
register of the Securities and of their transfer and exchange. The Company may
have one or more co-registrars and one or more additional paying agents. Neither
the Company nor any Affiliate may act as Paying Agent. The Company may change
any Paying Agent, Registrar or co-registrar without notice to any
Securityholder.
The Company shall enter into an appropriate agency agreement with any
Registrar or Paying Agent not a party to this Indenture. The agreement shall
implement the provisions of this Indenture that relate to such Agent. The
Company shall notify the Trustee of the name and address of any such Agent. If
the Company fails to maintain a Registrar or Paying Agent, or agent for service
of notices and demands, or fails to give the foregoing notice, the Trustee shall
act as such. The Company initially appoints the Trustee as Registrar, Paying
Agent and agent for service of notices and demands in connection with the
Securities.
Section 2.04. Paying Agent To Hold Assets in Trust.
------------------------------------
On or before each due date of the principal of and interest on any
Securities, the Company shall deposit with the Paying Agent a sum sufficient to
pay such principal and interest so becoming due. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee, and
<PAGE>
-33-
the Trustee may at any time during the continuance of any Payment Default or
Non-Payment Event of Default, upon written request to a Paying Agent, require
such Paying Agent to forthwith pay to the Trustee all sums so held in trust by
such Paying Agent together with a complete accounting of such sums. Upon doing
so, the Paying Agent shall have no further liability for such money.
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
Securityholders. If the Trustee is not the Registrar, the Company shall furnish
to the Trustee on or before each June 1 and December 1 in each year, and at such
other times as the Trustee may request in writing, a list as of the applicable
Record Date and in such form and as of such date as the Trustee may reasonably
require of the names and addresses of Securityholders.
Section 2.06. Transfer and Exchange.
---------------------
When a Security is presented to the Registrar with a request to
register the transfer thereof, the Registrar shall register the transfer as
requested if the requirements of applicable law are met and, when Securities are
presented to the Registrar with a request to exchange them for an equal
principal amount of Securities of other authorized denominations, the Registrar
shall make the exchange as requested provided that every Security presented or
surrendered for registration of transfer or exchange shall be duly endorsed, or
be accompanied by a written instrument of transfer in form satisfactory to the
Company and the Registrar duly executed by the Holder thereof or his attorney
duly authorized in writing. To permit transfers and exchanges, upon surrender of
any Security for registration of transfer at the office or agency maintained
pursuant to Section 2.03 hereof, the Company shall execute and the Trustee shall
authenticate Securities at the Registrar's request. Any exchange or transfer
shall be without charge, except that the Company may require payment by the
Holder of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation to a transfer or exchange, but this provision shall
not apply to any exchange pursuant to Sections 2.09, 3.06 or 8.05 hereof. The
Trustee shall not be required to register transfers of Securities or to exchange
Securities for a period of 15 days before selection of any Securities to be
redeemed. The Trustee shall not be required to exchange or register transfers of
any Securities called or being called for
<PAGE>
-34-
redemption in whole or in part, except the unredeemed portion of any Security
being redeemed in part.
Section 2.07. Replacement Securities.
----------------------
If a mutilated Security is surrendered to the Trustee or if the Holder
of a Security presents evidence to the satisfaction of the Company and the
Trustee that the Security has been lost, destroyed or wrongfully taken, the
Company shall issue and the Trustee shall authenticate a replacement Security if
the requirements of Section 8-405 of the New York Uniform Commercial Code as in
effect on the date of this Indenture are met. An indemnity bond shall be
required that is sufficient in the judgment of the Company and the Trustee to
protect the Company, the Trustee or any Agent from any loss which any of them
may suffer if a Security is replaced. In every case of destruction, loss or
theft, the applicant shall also furnish to the Company and to the Trustee
evidence to their satisfaction of the destruction, loss or the theft of such
Security and the ownership thereof. The Company and the Trustee may charge for
its expenses in replacing a Security. Every replacement Security is an
additional obligation of the Company.
Section 2.08. Outstanding Securities.
----------------------
Securities outstanding at any time are all Securities authenticated by
the Trustee except for those cancelled by it, those delivered to it for
cancellation, and those described in this Section 2.08 as not outstanding.
If a Security is replaced pursuant to Section 2.07, it ceases to be
outstanding until the Company and the Trustee receive proof satisfactory to each
of them that the replaced Security is held by a bona fide purchaser.
If a Paying Agent holds on a Redemption Date or Maturity Date money
sufficient to pay the principal of, premium, if any, and accrued interest on
Securities payable on that date, then on and after that date such Securities
cease to be outstanding and interest on them ceases to accrue.
Subject to Section 11.06, a Security does not cease to be outstanding
solely because the Company or an Affiliate holds the Security.
<PAGE>
-35-
Section 2.09. Temporary Securities.
--------------------
Until definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall, upon receipt of a Company Request, authenticate
temporary Securities. Temporary Securities shall be substantially in the form,
and shall carry all rights, 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 presented to it.
Section 2.10. Cancellation.
------------
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to them for transfer, exchange or payment. The
Trustee shall cancel and retain or, upon written request of the Company, may
destroy or return to the Company in accordance with its normal practice, all
Securities surrendered for transfer, exchange, payment or cancellation and if
such Securities are destroyed, deliver a certificate of destruction to the
Company unless the Company instructs the Trustee in writing to deliver the
Securities to the Company. Subject to Section 2.07 hereof, the Company may not
issue new Securities to replace Securities in respect of which it has previously
paid all principal, premium and interest accrued thereon, or delivered to the
Trustee for cancellation.
Section 2.11. Defaulted Interest.
------------------
If the Company defaults in a payment of interest on the Securities, it
shall pay the defaulted amounts, plus any interest payable on defaulted amounts
pursuant to Section 4.01 hereof, to the persons who are Securityholders on a
subsequent special record date. The Company shall fix the special record date
and payment date in a manner satisfactory to the Trustee and provide the Trustee
at least 20 days notice of the proposed amount of default interest to be paid
and the special payment date. At least 15 days before the special record date,
the Company shall mail or cause to be mailed to each Securityholder at his
address as it appears on the Securities register maintained by the Registrar a
notice that states the special record date, the payment date (which shall be not
less than five nor more than ten days after the special record date), and the
amount to be paid. In lieu of the foregoing procedures, the
<PAGE>
-36-
Company may pay defaulted interest in any other lawful manner satisfactory to
the Trustee.
Section 2.12. Deposit of Moneys.
-----------------
Prior to 10:00 a.m., New York City time, on each Interest Payment Date
and Maturity Date, the Company shall have deposited with the Paying Agent in
immediately available funds money sufficient to make cash payments, if any, due
on such Interest Payment Date or Maturity Date, as the case may be, in a timely
manner which permits the Trustee to remit payment to the Holders on such
Interest Payment Date or Maturity Date, as the case may be.
Section 2.13. CUSIP Number.
------------
The Company in issuing the Securities may use a "CUSIP" number(s), and
if so, the Trustee shall use the CUSIP number(s) in notices of redemption or
exchange as a convenience to Holders, provided that any such notice may state
--------
that no representation is made as to the correctness or accuracy of the CUSIP
number(s) printed in the notice or on the Securities, and that reliance may be
placed only on the other identification numbers printed on the Securities. The
Company shall promptly inform the Trustee of any change in the CUSIP number(s).
Section 2.14. Book-Entry Provisions for Global Securities.
-------------------------------------------
(a) The Global Securities initially shall (i) be registered in the
name of the Depository or the nominee of such Depository, (ii) be delivered to
the Trustee as custodian for such Depository and (iii) bear legends as set forth
in Exhibit B.
Members of, or participants in, the Depository ("Agent Members") shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depository, or the Trustee as its custodian, or under the
Global Security, and the Depository may be treated by the Company, the Trustee
and any agent of the Company or the Trustee as the absolute owner of the Global
Security for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depository or impair, as between the Depository
and its Agent Members, the operation of customary practices governing the
exercise of the rights of a Holder of any Security.
<PAGE>
-37-
(b) Transfers of Global Securities shall be limited to transfer in
whole, but not in part, to the Depository, its successors or their respective
nominees. Interests of beneficial owners in the Global Securities may be
transferred or exchanged for Physical Securities in accordance with the rules
and procedures of the Depository and the provisions of Section 2.15. In
addition, Physical Securities shall be transferred to all beneficial owners in
exchange for their beneficial interests in Global Securities if (i) the
Depository notifies the Company that it is unwilling or unable to continue as
Depository for any Global Security and a successor depositary is not appointed
by the Company within 90 days of such notice or (ii) an Event of Default has
occurred and is continuing and the Registrar has received a written request from
the Depository to issue Physical Securities.
(c) In connection with any transfer or exchange of a portion of the
beneficial interest in any Global Security to beneficial owners pursuant to
paragraph (b), the Registrar shall (if one or more Physical Securities are to be
issued) reflect on its books and records the date and a decrease in the
principal amount of the Global Security in an amount equal to the principal
amount of the beneficial interest in the Global Security to be transferred, and
the Company shall execute, and the Trustee shall upon receipt of a written order
from the Company authenticate and make available for delivery, one or more
Physical Securities of like tenor and amount.
(d) In connection with the transfer of Global Securities as an
entirety to beneficial owners pursuant to paragraph (b), the Global Securities
shall be deemed to be surrendered to the Trustee for cancellation, and the
Company shall execute, and the Trustee shall authenticate and deliver, to each
beneficial owner identified by the Depository in writing in exchange for its
beneficial interest in the Global Securities, an equal aggregate principal
amount of Physical Securities of authorized denominations.
(e) Any Physical Security constituting a Restricted Security
delivered in exchange for an interest in a Global Security pursuant to paragraph
(b), (c) or (d) shall, except as otherwise provided by paragraphs (a)(i)(x) and
(c) of Section 2.15, bear the Private Placement Legend.
(f) The Holder of any Global Security may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests through Agent Mem-
<PAGE>
-38-
bers, to take any action which a Holder is entitled to take under this Indenture
or the Securities.
Section 2.15. Special Transfer Provisions.
---------------------------
(a) Transfers to Non-QIB Institutional Accredited Investors and Non-
---------------------------------------------------------------
U.S. Persons. The following provisions shall apply with respect to the
- ------------
registration of any proposed transfer of a Security constituting a Restricted
Security to any Institutional Accredited Investor which is not a QIB or to any
Non-U.S. Person:
(i) the Registrar shall register the transfer of any Security
constituting a Restricted Security, whether or not such Security bears the
Private Placement Legend, if (x) the requested transfer is subsequent to a
date which is two years after the later of the Issue Date and the last date
on which the Company or any of its Affiliates was the owner of such
Security or (y) (1) in the case of a transfer to an Institutional
Accredited Investor which is not a QIB (excluding Non-U.S. Persons), the
proposed transferee has delivered to the Registrar a certificate
substantially in the form of Exhibit C hereto or (2) in the case of a
transfer to a Non-U.S. Person (including a QIB), the proposed transferor
has delivered to the Registrar a certificate substantially in the form of
Exhibit D hereto; and
(ii) if the proposed transferor is an Agent Member holding a
beneficial interest in a Global Security, upon receipt by the Registrar of
(x) the certificate, if any, required by paragraph (i) above and (y)
instructions given in accordance with the Depository's and the Registrar's
procedures,
whereupon (a) the Registrar shall reflect on its books and records the date and
(if the transfer does not involve a transfer of outstanding Physical Securities)
a decrease in the principal amount of a Global Security in an amount equal to
the principal amount of the beneficial interest in a Global Security to be
transferred, and (b) the Company shall execute and the Trustee shall
authenticate and make available for delivery one or more Physical Securities of
like tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply with
-----------------
respect to the registration of any proposed transfer of a Security constituting
a Restricted Security to a QIB (excluding transfers to Non-U.S. Persons):
<PAGE>
(i) the Registrar shall register the transfer if such transfer is
being made by a proposed transferor who has checked the box provided for on
the form of Security stating, or has otherwise advised the Company and the
Registrar in writing, that the sale has been made in compliance with the
provisions of Rule 144A to a transferee who has signed the certification
provided for on the form of Security stating, or has otherwise advised the
Company and the Registrar in writing, that it is purchasing the Security
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a QIB within the
meaning of Rule 144A, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as it has requested pursuant to Rule 144A
or has determined not to request such information and that it is aware that
the transferor is relying upon its foregoing representations in order to
claim the exemption from registration provided by Rule 144A; and
(ii) if the proposed transferee is an Agent Member, and the
Securities to be transferred consist of Physical Securities which after
transfer are to be evidenced by an interest in the Global Security, upon
receipt by the Registrar of instructions given in accordance with the
Depository's and the Registrar's procedures, the Registrar shall reflect on
its books and records the date and an increase in the principal amount of
the Global Security in an amount equal to the principal amount of the
Physical Securities to be transferred, and the Trustee shall cancel the
Physical Securities so transferred.
(c) Private Placement Legend. Upon the transfer, exchange or
------------------------
replacement of Securities not bearing the Private Placement Legend, the
Registrar shall deliver Securities that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Securities bearing the
Private Placement Legend, the Registrar shall deliver only Securities that bear
the Private Placement Legend unless (i) the circumstances contemplated by
paragraph (a)(i)(x) of this Section 2.15 exist, (ii) there is delivered to the
Registrar an Opinion of Counsel reasonably satisfactory to the Company and the
Trustee to the effect that neither such legend nor the related restrictions on
transfer are required in order to maintain compliance with the provisions of the
Securities Act or (iii) such Security has been sold pursuant to an effective
registration statement under the Securities Act.
<PAGE>
-40-
(d) General. By its acceptance of any Security bearing the Private
-------
Placement Legend, each Holder of such a Security acknowledges the restrictions
on transfer of such Security set forth in this Indenture and in the Private
Placement Legend and agrees that it will transfer such Security only as provided
in this Indenture.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.14 or this Section 2.15.
The Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable notice to the Registrar.
ARTICLE 3
REDEMPTION
Section 3.01. Notices to Trustee.
------------------
If the Company elects to redeem Securities pursuant to Section 3.07,
(i) at least 60 days prior to the Redemption Date in the case of a partial
redemption, (ii) at least 45 days prior to the Redemption Date in the case of a
total redemption or (iii) during such other period as the Trustee may agree to,
the Company shall notify the Trustee in writing of the Redemption Date, the
principal amount of Securities to be redeemed and the redemption price, and
deliver to the Trustee an Officers' Certificate stating that such redemption
will comply with the conditions contained in Section 3.07 hereof, as
appropriate.
Section 3.02. Selection by Trustee of Securities To Be Redeemed.
-------------------------------------------------
In the event that fewer than all of the Securities are to be redeemed,
the Trustee shall select the Securities to be redeemed, if the Securities are
listed on a national securities exchange, in accordance with the rules of such
exchange or, if the Securities are not so listed, on either a pro rata basis or
by lot, or such other method as it shall deem fair and equitable; provided,
--------
however, that a redemption pursuant to Section 3.07(b) shall be made by the
- -------
Trustee on a pro rata basis, unless such method is prohibited. The Trustee
--- ----
shall promptly notify the Company of the Securities selected for redemption and,
in the case of any Securities selected for par
<PAGE>
-41-
tial redemption, the principal amount thereof to be redeemed. The Trustee may
select for redemption portions of the principal of Securities that have
denominations larger than $1,000. Securities and portions thereof the Trustee
selects shall be redeemed in amounts of $1,000 or whole multiples of $1,000. For
all purposes of this Indenture unless the context otherwise requires, provisions
of this Indenture that apply to Securities called for redemption also apply to
portions of Securities called for redemption.
Section 3.03. Notice of Redemption.
--------------------
At least 30 days, and no more than 60 days, before a Redemption Date,
the Company shall mail, or cause to be mailed, a notice of redemption by first-
class mail to each Holder of Securities to be redeemed at his or her last
address as the same appears on the registry books maintained by the Registrar
pursuant to Section 2.03 hereof.
The notice shall identify the Securities to be redeemed (including the
CUSIP number(s) thereof) 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 and 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;
(6) that unless the Company defaults in making the redemption
payment, interest on Securities called for redemption ceases to accrue on
and after the Redemption Date;
(7) the paragraph of the Securities pursuant to which the
Securities are being redeemed; and
<PAGE>
-42-
(8) the aggregate principal amount of Securities that are being
redeemed.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's sole expense.
Section 3.04. Effect of Notice of Redemption.
------------------------------
Once the notice of redemption described in Section 3.03 is mailed,
Securities called for redemption become due and payable on the Redemption Date
and at the redemption price, including any premium, plus interest accrued to the
Redemption Date. Upon surrender to the Paying Agent, such Securities shall be
paid at the redemption price, including any premium, plus interest accrued to
the Redemption Date, provided that if the Redemption Date is after a regular
--------
interest payment record date and on or prior to the Interest Payment Date, the
accrued interest shall be payable to the Holder of the redeemed Securities
registered on the relevant record date, and provided, further, that if a
-------- -------
Redemption Date is a Legal Holiday, payment shall be made on the next succeeding
Business Day and no interest shall accrue for the period from such Redemption
Date to such succeeding Business Day.
Section 3.05. Deposit of Redemption Price.
---------------------------
On or prior to 10:00 A.M., New York City time, on each Redemption
Date, the Company shall deposit with the Paying Agent in immediately available
funds 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
thereof called for redemption on that date which have been delivered by the
Company to the Trustee for cancellation.
On and after any Redemption Date, if money sufficient to pay the
redemption price of and accrued interest on Securities called for redemption
shall have been made available in accordance with the preceding paragraph, the
Securities called for redemption will cease to accrue interest and the only
right of the Holders of such Securities will be to receive payment of the
redemption price of and, subject to the first proviso in Section 3.04, accrued
and unpaid interest on such Securities to the Redemption Date. If any Security
called for redemption shall not be so paid, interest will be paid, from the
Redemption Date until such redemption payment is made, on the unpaid principal
of the Security and any interest not paid on such un-
<PAGE>
-43-
paid principal, in each case, at the rate and in the manner provided in the
Securities.
Section 3.06. Securities Redeemed in Part.
---------------------------
Upon surrender of a Security that is redeemed in part, the Trustee
shall authenticate for a Holder a new Security equal in principal amount to the
unredeemed portion of the Security surrendered.
Section 3.07. Optional Redemption.
--------------------
(a) The Company may redeem the Securities, in whole or in part, at
any time on or after June 15, 2001 at the following redemption prices (expressed
as a percentage of principal amount), together, in each case, with accrued and
unpaid interest to the Redemption Date, if redeemed during the twelve-month
period beginning on June 15 of each year listed below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2001................................................... 110%
2002................................................... 108%
2003................................................... 106%
2004................................................... 104%
2005................................................... 102%
2006................................................... 101%
2007 and thereafter.................................... 100%
</TABLE>
(b) Notwithstanding the foregoing, the Company may redeem in the
aggregate up to 35% of the original principal amount of Securities at any time
and from time to time on or prior to June 15, 2001 at a redemption price equal
to 112% of the aggregate principal amount so redeemed, plus accrued and unpaid
interest to the Redemption Date with the Net Proceeds of one or more Equity
Offerings; provided that after any such redemption at least $75,000,000
--------
aggregate principal amount of Securities remain outstanding immediately after
the occurrence of any such redemption pursuant to an Equity Offering and that
any such redemption occurs on or prior to 90 days after the receipt by the
Company of the proceeds of each such Equity Offering.
<PAGE>
-44-
ARTICLE 4
COVENANTS
Section 4.01. Payment of Securities.
---------------------
The Company shall pay the principal of and interest on the Securities
on the dates and in the manner provided in the Securities and this Indenture.
An installment of principal of or interest on the Securities shall be considered
paid on the date it is due if the Trustee or Paying Agent holds on that date
money designated for and sufficient to pay the installment or, if the interest
is to be paid in Secondary Securities, if the Trustee or the Paying Agent holds
on that date duly authenticated Secondary Securities in an aggregate principal
amount equal to such installment. Interest will be computed on the basis of a
360-day year comprised of twelve 30-day months and, for periods not involving a
full calendar month, the actual number of days elapsed (but not to exceed 30
days). The Company shall deliver written notice to the Trustee of any
Additional Interest owed.
The Company shall pay interest on overdue principal (including post-
petition interest in a proceeding under any Bankruptcy Law), and overdue
interest, to the extent lawful, at the rate specified in the Securities.
Section 4.02. SEC Reports.
-----------
(a) The Company will file with the SEC all information, documents and
reports to be filed with the SEC pursuant to Section 13 or 15(d) of the Exchange
Act and will provide the Trustee and the Securityholders with copies of all such
information, documents and reports within 15 days of filing thereof with the
SEC; provided that if the Company is not required to file such information,
--------
documents or reports with the SEC, it will nonetheless continue to furnish such
information, documents and reports to the Trustee and the Securityholders within
15 days of the date on which filing with the SEC would have been required. The
Company shall also comply with the provisions of TIA (S) 314(a). Delivery of
such reports, information and documents to the Trustee is for informational
purposes only and the Trustee's receipt of such shall not constitute
constructive notice of any information contained therein or determinable from
information contained therein, including the Company's compliance with any of
its covenants hereunder (as to
<PAGE>
-45-
which the Trustee is entitled to rely exclusively on Officers' Certificates).
(b) The Company will, upon request, provide to any Holder of
Securities or any prospective transferee of any such Holder any information
concerning the Company (including financial statements) necessary in order to
permit such Holder to sell or transfer Securities in compliance with Rule 144
and Rule 144A under the Securities Act.
Section 4.03. Waiver of Stay, Extension or Usury Laws.
---------------------------------------
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead (as a defense or otherwise) or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law which would prohibit or forgive the
Company from paying all or any portion of the principal of, premium, if any,
and/or interest on the Securities as contemplated herein, wherever enacted, now
or at any time hereafter in force, or which may affect the covenants or the
performance of this Indenture; and (to the extent that it may lawfully do so)
the Company hereby expressly waives all benefit or advantage of any such law,
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
Section 4.04. Compliance Certificate.
----------------------
(a) The Company shall deliver to the Trustee, within 120 days after
the end of each fiscal year, an Officers' Certificate (one of the signers of
which shall be the principal executive officer, principal financial officer or
principal accounting officer of the Company) stating that a review of the
activities of the Company and its Subsidiaries during such fiscal year or fiscal
quarter, as the case may be, 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 or her
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 or such Defaults
or Events of Default of which he or she may have knowledge and what action each
is taking or
<PAGE>
-46-
proposes to take with respect thereto) and that to the best of his or her
knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Securities
is prohibited or if such event has occurred, a description of the event and what
action each is taking or proposes to take with respect thereto.
(b) The Company will, so long as any of the Securities are
outstanding, deliver to the Trustee, within five Business Days of any Officer
becoming aware of any Default or Event of Default, an Officers' Certificate
specifying such Default or Event of Default and what action the Company is
taking or proposes to take with respect thereto.
Section 4.05. 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.
Section 4.06. Limitation on Incurrence of Additional Indebtedness.
---------------------------------------------------
The Company will not, and will not permit any Restricted Subsidiary of
the Company to, directly or indirectly incur any Indebtedness (including
Acquired Indebtedness) other than Permitted Indebtedness. Notwithstanding the
foregoing limitations, the Company and its Restricted Subsidiaries may incur
Indebtedness if (a) after giving effect to the incurrence of such Indebtedness
and the receipt and application of the proceeds thereof, the Company's
Consolidated Fixed Charge Coverage Ratio (determined on a pro forma basis for
the last four full fiscal quarters of the Company for which financial
information is available at the date of determination) is at least equal to
1.75:1; but no Restricted Subsidiary may incur Indebtedness which is not
---
Permitted Indebtedness unless its Consolidated Fixed Charge Coverage Ratio is at
least equal to 2.75:1; provided, however, that if the Indebtedness which is the
-------- -------
subject of a determination under this provision is Acquired Indebtedness, or
Indebtedness incurred in connection with the simultaneous acquisition of any
Person, business, property or assets, then such ratio shall be determined by
giving effect (on a pro forma basis, as if the transaction had occurred at the
beginning of the four quarter period) to both the incurrence or assumption of
such Acquired Indebtedness or such other Indebtedness by the Company or such
Restricted Subsidiary and the inclusion in the Company's or such Restricted
Subsidiary's Con-
<PAGE>
-47-
solidated EBITDA of the Consolidated EBITDA of the acquired Person, business,
property or assets; and provided, further, that in the event that the
-------- -------
Consolidated EBITDA of the acquired Person, business, property or assets
reflects an operating loss, no amounts shall be deducted from the Company's or
such Restricted Subsidiary's Consolidated EBITDA in making the determinations
described above and (b) no Default or Event of Default shall have occurred and
be continuing at the time or as a consequence of the incurrence of such
Indebtedness.
Section 4.07. Limitation on Restricted Payments.
---------------------------------
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, make any Restricted Payment if at the
time of such Restricted Payment and immediately after giving effect thereto:
(i) any Default or Event of Default shall have occurred and be
continuing; or
(ii) the Company could not incur $1.00 of additional Indebtedness
(other than Permitted Indebtedness) in compliance with Section 4.06; or
(iii) the aggregate amount of Restricted Payments declared or
made after the Issue Date (the amount expended for such purposes, if other
than in cash, being the fair market value of such property as determined by
the Board of Directors of the Company in good faith) exceeds the sum of (A)
50% of the Company's Consolidated Net Income for the period (taken as one
accounting period) commencing with the first full fiscal quarter of the
Company which commenced after the Issue Date to and including the fiscal
quarter of the Company ended immediately prior to the date of each
calculation (or in the event Consolidated Net Income is a deficit minus
100% of such deficit), plus (B) 100% of the aggregate Net Proceeds and the
fair market value of securities or other property received by the Company
from the issue or sale, after the Issue Date, of Qualified Capital Stock
(other than Capital Stock of the Company issued to any Restricted
Subsidiary of the Company) of the Company or any Indebtedness or other
securities of the Company convertible into or exercisable or exchangeable
for Qualified Capital Stock of the Company which have been so converted or
exercised or exchanged, as the case may be, plus (C) $10,000,000, provided,
--------
that the amount of Restricted Payments permitted by this clause (C)
<PAGE>
-48-
shall not be reduced by any negative amounts that occur under clause (A)
above.
(b) Notwithstanding the foregoing, if no other Default or Event of
Default shall have occurred and be continuing or shall occur as a consequence
thereof, the provisions set forth in the immediately preceding paragraph will
not prohibit (A) payments with respect to the purchase or redemption of Capital
Stock or Subordinated Debt of the Company made by exchange for, or out of the
proceeds of the substantially concurrent sale (other than to a Subsidiary of the
Company or an Emerging Market Subsidiary) of, Qualified Capital Stock; (B)
payments in respect of any redemption, repurchase, acquisitions, cancellation or
other retirement for value of shares of Capital Stock of the Company or options,
stock appreciation or similar rights, in each case held by officers, directors
or employees of the Company or any of its Subsidiaries (or former officers,
directors or employees) (or their estates or beneficiaries under their estates)
or by an employee benefit plan, upon death, disability, retirement or
termination of employment of any such Person pursuant to the terms of any
employee benefit plan or any other agreement under which shares of Capital Stock
or stock appreciation or similar rights were issued or acquired, and the
purchase of shares of Capital Stock by the Company or any Restricted Subsidiary
for the purpose of contributing such shares to any employee benefit plan
(provided, that all such payments and purchases referred to in this clause (B)
- ---------
may not exceed $2,000,000 in any 12 month period after the Issue Date); (C) the
payment of dividends (whether in cash or otherwise) on the Senior Preferred
Stock or the payment of any other dividend within 60 days after the date of its
declaration if such dividend could have been paid on the date of its declaration
in compliance with the foregoing provisions; (D) any purchase or defeasance of
Subordinated Debt upon a Change of Control or an Asset Sale to the extent
required by this Indenture or other agreement or instrument pursuant to which
such Subordinated Debt was issued, but only if the Company in the case of a
Change of Control, has complied with its obligations under Section 4.11; (E) the
consummation of a cash tender offer by the Company for shares of Capital Stock
of the Company in an aggregate amount not exceeding $430,000,000 in connection
with the Recapitalization; (F) the exchange of Senior Preferred Stock for
Securities or the retirement of the Senior Preferred Stock in accordance with
the optional and mandatory redemption provisions thereof, in each case as
provided in the Certificate of Designation as in effect on the Issue Date; or
(G) cash payments (and/or issuance or delivery of any note, instrument,
agreement or other obligation providing for future cash pay
<PAGE>
-49-
ments) resulting from antidilution or other adjustments made in connection with
the Recapitalization to options to purchase Capital Stock or restricted or
unvested Capital Stock held by employees, directors or former employees or
directors of the Company or any of its Subsidiaries, to the extent that such
adjustments and cash payments are approved by the Board of Directors. Each
Restricted Payment made or paid in accordance with this paragraph (b) except
those made pursuant to clause (E), clause (F) or clause (G) shall be counted
(without duplication) for purposes of computing amounts utilized for Restricted
Payments pursuant to clause (a)(iii) of the immediately preceding paragraph. No
payments made or paid pursuant to clause (C) of this paragraph shall be counted
for purposes of computing amounts utilized for Restricted Payments pursuant to
clause (a)(iii) of the immediately preceding paragraph to the extent such amount
was already counted for such purposes.
Section 4.08. Limitation on Transactions with Affiliates.
------------------------------------------
(a) The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, enter into any transaction
or series of related transactions (including, without limitation, the sale,
purchase, exchange or lease of assets, property or services) with any Affiliate
of the Company (an "Affiliate Transaction") or extend, renew, waive or otherwise
modify the terms of any Affiliate Transaction entered into prior to the Issue
Date unless (i) such Affiliate Transaction is between or among the Company and
its Restricted Subsidiaries; or (ii) such Affiliate Transaction is entered into
in good faith and the terms of such Affiliate Transaction are fair and
reasonable to the Company or such Restricted Subsidiary, as the case may be. In
any Affiliate Transaction involving an amount or having a value in excess of
$5,000,000 which is not permitted under clause (i) above, the Company must
obtain a Board Resolution of the Board of Directors determining that such
Affiliate Transaction complies with clause (ii) above. In transactions with a
value in excess of $10,000,000 which are not permitted under clause (i) above,
the Company must obtain a written opinion as to the fairness of such a
transaction, from a financial point of view to the Company or such Restricted
Subsidiary, as the case may be, from an independent investment banking firm.
(b) Notwithstanding the foregoing, the provisions set forth in the
immediately preceding paragraph will not apply to: (i) Restricted Payments that
are not prohibited under Section 4.07; (ii) transactions permitted by, and
complying with, the provisions described under Section 5.01; (iii) transactions
<PAGE>
-50-
in the ordinary course of business (including expense advances) between the
Company or any of its Restricted Subsidiaries or Unrestricted Subsidiaries, on
the one hand, and any employee thereof, on the other hand; (iv) employment
contracts existing on the Issue Date and employment contracts approved by the
Board of Directors of the Company the terms of which are consistent with past
practice; (v) the granting and performance of registration rights for shares of
Capital Stock of the Company under a written registration rights agreement
approved by a majority of directors of the Company that are disinterested with
respect to such transaction; (vi) transactions with Affiliates solely in their
capacity as holders of Indebtedness or Capital Stock of the Company or any of
its Restricted Subsidiaries or Unrestricted Subsidiaries, where such Affiliates
are treated no more favorably than holders of such Indebtedness or such Capital
Stock generally; (vii) any Permitted Investments; (viii) reasonable fees and
compensation paid to, and indemnity provided on behalf of, officers, directors,
employees or consultants of the Company or any Subsidiary of the Company as
determined in good faith by the Company's Board of Directors; (ix) transactions
exclusively between or among the Company and any of its Subsidiaries, provided
such transactions are not otherwise prohibited by this Indenture; (x) any
agreement as in effect as of the Issue Date or any amendment thereto or any
transaction contemplated thereby (including pursuant to any amendment thereto)
or in any replacement agreement thereto so long as any such amendment or
replacement agreement is not more disadvantageous to the holders of the
Securities in any material respect than the original agreement as in effect on
the Issue Date; (xi) any payment, issuance of securities or other payments,
awards or grants, in cash or otherwise, pursuant to, or the funding of,
employment arrangements and Plans approved by the Board of Directors; (xii) the
grant of stock options or similar rights to employees and directors of the
Company and its Subsidiaries (or any adjustment or amendment thereto) or
pursuant to Plans and employment contracts and stock option, stock bonus,
restricted stock and similar agreements approved by the Board of Directors;
(xiii) loans or advances to officers, directors or employees of the Company or
its Restricted Subsidiaries not in excess of $5,000,000 at any one time
outstanding; and (xiv) transactions, including, without limitation, the
repurchase of the Company's Common Stock, entered into in connection with the
Recapitalization and the financing therefor as described in the Offering
Memorandum.
<PAGE>
-51-
Section 4.09. 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 of any Securities for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of this Indenture or the Securities unless such consideration is offered to be
paid or agreed to be paid to all Holders of the Securities which so consent,
waive or agree to amend in the time frame set forth in solicitation documents
relating to such consent, waiver or agreement.
Section 4.10. Corporate Existence.
-------------------
Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
Restricted Subsidiary, in accordance with the respective organizational
documents (as the same may be amended from time to time) of each Restricted
Subsidiary and the rights (charter and statutory), licenses and franchises of
the Company and its Restricted 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 of its Restricted Subsidiaries,
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
Restricted Subsidiaries, taken as a whole.
Section 4.11. Change of Control.
-----------------
(a) The Company shall notify the Trustee within five Business Days
after the Company knows, or reasonably should know, of the occurrence of a
Change of Control. Within 15 Business Days after the Company knows or
reasonably should know, of the occurrence of each Change of Control, the Company
will make an offer to purchase (the "Change of Control Offer") the outstanding
Securities at a purchase price equal to 101% of the principal amount thereof
plus any accrued and unpaid interest thereon to the Change of Control Payment
Date (such applicable purchase price being hereinafter referred to as the
"Change of Control Purchase Price") in accordance with the procedures set forth
in this Section 4.11.
(b) Prior to the mailing of the notice referred to above, but in any
event within 30 days following the date on
<PAGE>
-52-
which the Company has actual knowledge of a Change of Control, the Company
covenants that if the purchase of the Securities would violate or constitute a
default under any then outstanding Senior Debt, then the Company will, to the
extent needed to permit such purchase of Securities, either (i) repay in full
all Indebtedness on the basis required by such Senior Debt or (ii) obtain the
requisite consents under the agreements, documents and instrument(s) governing
such Senior Debt to permit the repurchase of the Securities as provided in
paragraph (a) above. The Company will first comply with the covenant in the
preceding sentence before it will be required to repurchase Securities pursuant
to the provisions described this Section 4.11; provided that the Company's
--------
failure to comply with the covenant described in the preceding sentence will
constitute an Event of Default to the extent provided in clause (3) under
Section 6.01.
(c) The Company will within 15 days after it knows, or reasonably
should know, of the Change of Control (i) cause a notice of the Change of
Control Offer to be sent at least once to the Dow Jones News Service or similar
business news service in the United States and (ii) send by first-class mail,
postage prepaid, to the Trustee and to each Holder of the Securities, at the
address appearing in the register maintained by the Registrar of the Securities,
a notice stating:
(i) that the Change of Control Offer is being made pursuant to
this Section 4.11 and that all Securities tendered will be accepted for
payment, and otherwise subject to the terms and conditions set forth
herein;
(ii) the Change of Control Purchase Price and the purchase date
(which shall be a Business Day no earlier than 20 Business Days nor more
than 60 Business Days from the date such notice is mailed (the "Change of
Control Payment Date"));
(iii) that any Security not tendered will continue to accrue interest;
(iv) that, unless the Company defaults in the payment of the Change
of Control Purchase Price, any Securities accepted for payment pursuant to
the Change of Control Offer shall cease to accrue interest after the Change
of Control Payment Date;
(v) that Holders accepting the offer to have their Securities
purchased pursuant to a Change of Control Offer
<PAGE>
-53-
will be required to surrender the Securities to the Paying Agent at the
address specified in the notice prior to the close of business on the
Business Day preceding the Change of Control Payment Date;
(vi) that Holders will be entitled to withdraw their acceptance if
the Paying Agent receives, not later than the close of business on the
third 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 the Securities delivered for purchase,
and a statement that such Holder is withdrawing his election to have such
Securities purchased;
(vii) 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, provided that each
--------
Security purchased and each such new Security issued shall be in an
original principal amount in denominations of $1,000 and integral multiples
thereof;
(viii) a summary of any other procedures that a holder must
follow to accept a Change of Control Offer or effect withdrawal of such
acceptance; and
(ix) the name and address of the Paying Agent.
(d) On the Change of Control Payment Date, the Company shall, to
the extent lawful, (i) accept for payment Securities or portions thereof
tendered pursuant to the Change of Control Offer, (ii) deposit with the Paying
Agent money sufficient to pay the purchase price of all Securities or portions
thereof so tendered and (iii) deliver or cause to be delivered to the Trustee
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 Holder of Securities so accepted payment in an amount
equal to the purchase price for such Securities, and the Company shall execute
and issue, and the Trustee shall promptly authenticate and mail to such Holder,
a new Security equal in principal amount to any unpurchased portion of the
Securities surrendered; provided that each such new Security shall be issued in
--------
an original principal amount in denominations of $1,000 and integral multiples
thereof.
<PAGE>
-54-
(e) 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 purchase
of Securities pursuant to a Change of Control Offer.
Section 4.12. Maintenance of Office or Agency.
-------------------------------
The Company shall maintain an office or agency where Securities may be
surrendered for registration of transfer or exchange or for presentation for
payment and where notices and demands to or upon the Company in respect of the
Securities and this Indenture may be served. The Company shall give prompt
written notice to the Trustee of the location, and any change in the location,
of such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the address of the Trustee as set forth in Section 11.02.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations. The
Company shall give prompt written notice to the Trustee of such designation or
rescission and of any change in the location of any such other office or agency.
The Company hereby initially designates the Corporate Trust Office of
the Trustee set forth in Section 11.02 as such office of the Company.
ARTICLE 5
SUCCESSOR CORPORATION
Section 5.01. Limitation on Consolidation, Merger and Sale of Assets.
------------------------------------------------------
(a) The Company will not, in a single transaction or series of
related transactions, consolidate with or merge with or into, or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
assets to, another Person unless (i) either (1) the Company is the survivor of
such merger, consolidation, sale, assignment, transfer, lease,
<PAGE>
-55-
conveyance or other disposition, or (2) the surviving or transferee Person is a
corporation, partnership or trust organized and existing under the laws of the
United States, any state thereof or the District of Columbia and such surviving
or transferee Person expressly assumes by supplemental indenture all the
obligations of the Company under the Securities (or, in the case of a merger to
which subclause (b)(2)(B) of Section 5.01(b) applies, the holding company
created therefor may, at the Company's option, execute and deliver an indenture
substantially in the form delivered to the Trustee on the date hereof, provided
that no Securities are then outstanding hereunder) and this Indenture; (ii)
immediately after giving effect to such transaction and the use of proceeds
therefrom (on a pro forma basis, including any Indebtedness incurred or
anticipated to be incurred in connection with such transaction), the Company or
the surviving or transferee Person is able to incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with Section
4.06; (iii) immediately after giving effect to such transaction (including any
Indebtedness incurred or anticipated to be incurred in connection with the
transaction) no Default or Event of Default has occurred and is continuing; and
(iv) the Company has delivered to the Trustee an Officers' Certificate and
Opinion of Counsel, each stating that such consolidation, merger, sale,
assignment, transfer, lease or other disposition complies with this Indenture,
and that all conditions precedent in this Indenture relating to such transaction
have been satisfied. For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise, in a single transaction or series of related
transactions) of all or substantially all of the properties and assets of one or
more Restricted Subsidiaries the Capital Stock of which constitutes all or
substantially all of the properties and assets of the Company will be deemed to
be the transfer of all or substantially all of the properties and assets of the
Company.
(b) Notwithstanding the foregoing clauses (a)(ii) and (a)(iii) of
this Section 5.01, but subject to clauses (a)(i) and (a)(iv) thereof, (1) the
Company may consolidate with, merge into or transfer all or part of its
properties and assets to any Restricted Subsidiary so long as all assets of the
Company immediately prior to such transaction are owned by such Restricted
Subsidiary immediately after the consummation thereof, and (2) the Company may
merge with an Affiliate that is a corporation that has no material assets or
liabilities and that was incorporated solely for the purpose of (A)
reincorporating the Company in the same or another jurisdiction of the United
States, any state thereof or the District of Columbia or (B) the creation of a
holding company of the Company.
<PAGE>
-56-
Section 5.02. Successor Person Substituted.
----------------------------
Upon any consolidation or merger, or any transfer of all or
substantially all of the assets of the Company in accordance with Section 5.01
above, the successor corporation formed by such consolidation or into which the
Company is merged or to which such transfer 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 corporation had been
named as the Company herein, and thereafter the predecessor corporation shall be
relieved of all obligations and covenants under this Indenture and the
Securities.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
-----------------
An "Event of Default" occurs if
(1) there is a failure to pay the principal or premium, if any, on
any Securities when such principal becomes due and payable, at maturity,
upon acceleration, redemption or otherwise, whether or not such payment is
prohibited by the provisions of Article 10 hereof;
(2) there is a failure to pay interest on any Security when the
same becomes due and payable and such Default continues for a period of 30
days, whether or not such payment is prohibited by the provisions of
Article 10 hereof;
(3) the Company fails to make a Change of Control Offer if such
offer is required by the provisions of Section 4.11 or fails to purchase
Securities from holders who elect to have such Securities purchased
pursuant to the Change of Control Offer;
(4) the Company defaults in the observance or performance of any
other covenant or agreement in the Securities or this Indenture which
default continues for a period of 60 days after the Company receives
written notice thereof specifying the default from the Trustee or the
<PAGE>
-57-
Holders of at least 25% in aggregate principal amount of outstanding
Securities;
(5) (A) the Company fails to pay at the final stated maturity
(after giving effect to any extension thereof) the principal amount of any
Indebtedness, or the final stated maturity of any Indebtedness is
accelerated, if the aggregate principal amount of such Indebtedness,
together with the aggregate principal amount of any other Indebtedness in
default for failure to pay principal at the final stated maturity (after
giving effect to any extensions thereof) or which has been accelerated,
aggregates $50 million or more at any time, in each case, after a 30-day
period during which such default shall not have been cured or such
acceleration rescinded or (B) the Company fails to make any scheduled
payment of principal or interest on any Indebtedness the outstanding
principal amount of which aggregate $50 million or more, after a 180-day
period during which such default shall not have been cured;
(6) the Company or any Significant Restricted Subsidiary 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) admits in writing its inability to pay its debts generally as
they become due; or
(7) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or any Significant Restricted
Subsidiary in an involuntary case,
(B) appoints a Custodian of the Company or any Significant
Restricted Subsidiary or for all or substantially all of the property of
the Company or any Significant Restricted Subsidiary, or
<PAGE>
-58-
(C) orders the liquidation of the Company or any Significant
Restricted Subsidiary,
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
Federal, state or foreign law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.
The Trustee may withhold notice to the Holders of the Securities of
any Default (except in payment of principal or premium, if any, or interest on
the Securities) if the Trustee considers it to be in the best interest of the
Holders of the Securities to do so.
Section 6.02. Acceleration.
------------
Upon the happening of any Event of Default specified in Section 6.01,
the Trustee may, and the Trustee upon the request of 25% in principal amount of
the Securities shall or the Holders of at least 25% in aggregate principal
amount of outstanding Securities may, declare the principal of and accrued but
unpaid interest, if any, on all the Securities to be due and payable by notice
in writing to the Company and the Trustee specifying the respective Event of
Default and that it is a "notice of acceleration" (the "Acceleration Notice"),
and the same (i) shall (except as provided in clause (ii) of this sentence)
become immediately due and payable or (ii) if there are any amounts outstanding
under any of the agreements, documents, and instruments constituting Designated
Senior Debt, will become due and payable upon the first to occur of an
acceleration under any of the agreements, documents, and instruments
constituting Designated Senior Debt or five Business Days after receipt by the
Company and the Representative of such Acceleration Notice (unless all Events of
Default specified in such Acceleration Notice have been cured or waived). If an
Event of Default described under clauses (6) or (7) of Section 6.01 with respect
to the Company occurs and is continuing, then such amount will ipso facto become
----------
and be immediately due and payable without any declaration or other act on the
part of the Trustee or any Holder of Securities; provided, however, that at any
-------- -------
time after a declaration of acceleration with respect to the Securities, the
Holders of a majority in principal amount of the Securities then outstanding (by
notice to the Trustee) may rescind and cancel such declaration and its
consequences if
<PAGE>
-59-
(i) the rescission would not conflict with any judgment or decree of a court of
competent jurisdiction, (ii) all existing Events of Default have been cured or
waived except nonpayment of principal or interest on the Securities that has
become due solely by such declaration of acceleration, (iii) to the extent the
payment of such interest is lawful, interest (at the same rate specified in the
Securities) on overdue installments of interest and overdue principal which has
become due otherwise than by such declaration of acceleration has been paid,
(iv) the Company has paid the Trustee its reasonable compensation and reimbursed
the Trustee for its expenses, disbursements and advances and (v) in the event of
the cure or waiver of a Default or Event of Default (with respect to the
Company) of the type described in Section 6.01(6) or (7), the Trustee has
received an Officers' Certificate and an Opinion of Counsel that such Default or
Event of Default has been cured or waived. The Holders of a majority in
principal amount of the Securities may waive any existing Default or Event of
Default under this Indenture, and its consequences, except a default in the
payment of the principal of or interest on any Securities.
Section 6.03. Other Remedies.
--------------
If an Event of Default occurs and is continuing, the Trustee may
(subject to Section 10 hereof) pursue any available remedy by proceeding at law
or in equity to collect the payment of principal of, or premium, if any, and
interest on the Securities or to enforce the performance of any provision of the
Securities or this Indenture and may take any necessary action requested of it
as Trustee to settle, compromise, adjust or otherwise conclude any proceedings
to which it is a party.
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. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
Section 6.04. Waiver of Past Defaults and Events of Default.
---------------------------------------------
Subject to Sections 6.02, 6.07 and 8.02 hereof, the Holders of a
majority in principal amount of the Securities then outstanding have the right
to waive any existing Default or Event of Default or compliance with any
provision of this
<PAGE>
-60-
Indenture or the Securities. Upon any such waiver, such Default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
cured for every purpose of this Indenture; but no such waiver shall extend to
any subsequent or other Default or Event of Default or impair any right
consequent thereto.
Section 6.05. Control by Majority.
-------------------
The Holders of a majority in principal amount of the Securities then
outstanding 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 by this Indenture. The Trustee, however, may refuse to
follow any direction that conflicts with law or this Indenture or that the
Trustee determines may be unduly prejudicial to the rights of another
Securityholder not taking part in such direction, and the Trustee shall have the
right to decline to follow any such direction if the Trustee, being advised by
counsel, determines that the action so directed may not lawfully be taken or if
the Trustee in good faith shall, by a Trust Officer, determine that the
proceedings so directed may involve it in personal liability; provided that the
--------
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction.
Section 6.06. Limitation on Suits.
-------------------
Subject to Section 6.07 below, a Securityholder may not institute any
proceeding or pursue any remedy with respect to this Indenture or the Securities
unless:
(1) the Holder gives to the Trustee written notice of a continuing
Event of Default;
(2) the Holders of at least 25% in aggregate principal amount of
the Securities then outstanding make a written request to the Trustee to
pursue the remedy;
(3) such Holder or Holders offer to the Trustee indemnity
reasonably satisfactory to the Trustee against any loss, liability or
expense;
(4) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of indemnity; and
<PAGE>
-61-
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60 day period by the Holders of a majority
in aggregate principal amount of the Securities then outstanding.
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 of, or premium, if any,
and interest of 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, is (subject to Section 10 hereof) absolute and
unconditional and shall not be impaired or affected without the consent of such
Holder.
Section 6.08. Collection Suit by Trustee.
--------------------------
If an Event of Default in payment of principal, premium or interest
specified in Section 6.01(1) or (2) hereof occurs and is continuing, the Trustee
may recover judgment in its own name and as trustee of an express trust against
the Company (or any other obligor on the Securities) for the whole amount of
unpaid principal and accrued interest remaining unpaid, together with interest
on overdue principal and, to the extent that payment of such interest is lawful,
interest on overdue installments of interest, in each case at the rate then
borne by the Securities, and such further amounts as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.
Section 6.09. Trustee May File Proofs of Claim.
--------------------------------
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
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 and receive any monies or other securities
or property payable or deliverable upon the conversion or exchange of the
Securities or
<PAGE>
-62-
upon any such claims and to distribute the same after deduction of its charges
and expenses to the extent that any such charges and expenses are not paid out
of the estate in any such proceedings 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 payments 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.
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 6, it shall
pay out the money in the following order:
FIRST: to the Trustee for amounts due under Section 7.07 hereof;
SECOND: to Securityholders for amounts due and unpaid on the
Securities for principal, premium, if any, and interest as to each,
ratably, without preference or priority of any kind, according to the
amounts due and payable on the Securities; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any payment to
Securityholders pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs.
---------------------
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including
<PAGE>
-63-
reasonable attorneys' fees and expenses, against any party litigant in the suit,
having due regard to the merits and good faith of the claims or defenses made by
the party litigant. This Section 6.11 does not apply to a suit by the Trustee, a
suit in good faith by any holder of Senior Debt to enforce its obligations under
Section 10 hereof, a suit by a Holder pursuant to Section 6.07 hereof or a suit
by Holders of more than 10% in principal amount of the Securities then
outstanding.
ARTICLE 7
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 same 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.
(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.
(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.
(2) The Trustee shall not be liable for any error of judgment made
in good faith by a Trust Officer, unless it
<PAGE>
-64-
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 Sections 6.02 and 6.05 hereof.
(d) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its rights or powers if it shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity satisfactory to
it against such risk or liability is not reasonably assured to it.
(e) Whether or not therein expressly so provided, paragraphs (a),
(b), (c) and (d) of this Section 7.01 shall govern every provision of this
Indenture that in any way relates to the Trustee.
(f) The Trustee is under no obligation and may refuse to perform any
duty or exercise any right or power under this Indenture at the request or
direction of any holders of the Securities unless such holders have offered the
Trustee reasonable indemnity or security against any loss, liability or expense.
(g) The Trustee shall not be liable for interest on any money or
assets received by it except as the Trustee may agree in writing with the
Company. Money or assets held in trust by the Trustee need not be segregated
from other funds or assets except to the extent required by the law.
Section 7.02. Rights of Trustee.
-----------------
Subject to Section 7.01 hereof:
(1) The Trustee may rely on any document reasonably 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.
(2) Before the Trustee acts or refrains from acting, it may consult
with counsel, require an Officers' Certificate or an Opinion of Counsel, or
both, which shall conform to the provisions of Section 11.05 hereof. The
Trustee shall be protected and shall not be liable for any ac-
<PAGE>
-65-
tion it takes or omits to take in good faith and in reasonable reliance on
such certificate or opinion, except if such action violates the express
provisions of this Indenture.
(3) The Trustee may act through agents and attorneys and shall not
be responsible for the misconduct or negligence of any agent or attorney
appointed by it with due care.
(4) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it reasonably believes to be authorized
or within its rights or powers.
(5) The Trustee may consult with counsel of its selection, and the
advice or opinion of such counsel as to matters of law shall be full and
complete authorization and protection from liability in respect of any
action taken, omitted or suffered by it hereunder in good faith and in
accordance with the advice or opinion of such counsel.
(6) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Securityholders pursuant to this Indenture, unless such
Securityholders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction.
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 make loans to, accept deposits from,
perform services for or otherwise deal with the Company, or any Affiliates
thereof, with the same rights it would have if it were not Trustee. Any Agent
may do the same with like rights. The Trustee, however, shall be subject to
Sections 7.10 and 7.11 hereof.
Section 7.04. Trustee's Disclaimer.
--------------------
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Securities, it shall not
be accountable for the Company's use of the proceeds from the sale of Securities
or any
<PAGE>
-66-
money paid to the Company pursuant to the terms of this Indenture and it shall
not be responsible for any statement of the Company in this Indenture or any
document issued in connection with the sale of Securities or any statement in
the Securities other than the Trustee's certificate of authentication.
Section 7.05. Notice of Defaults.
------------------
If a Default occurs and is continuing and if it is known to the
Trustee, the Trustee shall mail to each Securityholder notice of the Default
within 90 days after it occurs. Except in the case of a Default in payment of
the principal of, or premium, if any, or interest on any Security the Trustee
may withhold the notice if and so long as the board of directors of the Trustee,
the executive committee or any trust committee of such board and/or any of its
Trust Officers in good faith determine(s) that withholding the notice is in the
interests of the Securityholders.
Section 7.06. Reports by Trustee to Holders.
-----------------------------
If required by TIA (S) 313(a), within 60 days after May 15 of any
year, commencing the May 15 following the date of this Indenture, the Trustee
shall mail to each Securityholder a brief report dated as of such May 15 that
complies with TIA (S) 313(a). The Trustee also shall comply with TIA (S)
313(b)(2). The Trustee shall also transmit by mail all reports as required by
TIA (S) 313(c) and TIA (S) 313(d).
Reports pursuant to this Section 7.06 shall be transmitted by mail:
(1) to all registered Holders of Securities, as the names and
addresses of such Holders appear on the Registrar's books; and
(2) to such Holder of Securities as have, within the two years
preceding such transmission, filed their names and addresses with the
Trustee for that purpose.
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 promptly notify the Trustee when the Securities are
listed on any securities exchange.
<PAGE>
-67-
Section 7.07. Compensation and Indemnity.
--------------------------
The Company shall pay to the Trustee from time to time such
compensation as shall be agreed in writing between the Company and the Trustee
for its services hereunder (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust). The Company shall reimburse the Trustee upon request for all reasonable
disbursements, expenses and advances incurred or made by it in connection with
its duties under this Indenture, including the reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify each of the Trustee, any predecessor
Trustee for, and hold them harmless against, any and all loss, damage, claim,
liability or reasonable expense, including taxes (other than taxes based on the
income of the Trustee) incurred by it in connection with the acceptance or
performance of its duties under this Indenture including the reasonable costs
and expenses of enforcing this Indenture against the Company (including with
respect to this Section 7.07) and of defending itself against any claim (whether
asserted by any Securityholder or the Company) or liability in connection with
the exercise or performance of any of its powers or duties hereunder (including,
without limitation, settlement costs). The Trustee shall notify the Company in
writing promptly of any claim asserted against the Trustee for which it may seek
indemnity. However, the failure by the Trustee to so notify the Company shall
not relieve the Company of its obligations hereunder except to the extent the
Company is prejudiced thereby.
Notwithstanding the foregoing, the Company need not reimburse the
Trustee for any expense or indemnify it against any loss or liability incurred
by the Trustee through its negligence or bad faith. To secure the payment
obligations of the Company in this Section 7.07, the Trustee shall have a lien
prior to the Securities on all money or property held or collected by the
Trustee except such money or property held in trust to pay principal of and
interest on particular Securities. The Trustee's right to receive payment of
any amounts due under this Section 7.07 shall not be subordinate to any other
liability or indebtedness of the Company (even though the Securities may be so
subordinated) and the Securities shall be subordinate (to the extent provided in
Section 6.10) to the Trustee's right to receive such payment. The obligations
of the Company under this Section 7.07 to compensate and indemnify the Trustee
and each predecessor Trustee and to pay or reim-
<PAGE>
-68-
burse the Trustee and each predecessor Trustee for expenses, disbursements and
advances shall survive the resignation or removal of any Trustee, any rejection
or termination under any Bankruptcy Law and the satisfaction and discharge of
this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(6) or (7) hereof occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
For purposes of this Section 7.07, the term "Trustee" shall include
any trustee appointed pursuant to Article 9.
Section 7.08. Replacement of Trustee.
----------------------
The Trustee may resign by so notifying the Company in writing. The
Holders of a majority in principal amount of the outstanding Securities may
remove the Trustee by notifying the removed Trustee in writing and may appoint a
successor Trustee with the Company's written consent which consent shall not be
unreasonably withheld. The Company may remove the Trustee at its election if:
(1) the Trustee fails to comply with Section 7.10 hereof;
(2) the Trustee is adjudged a bankrupt or an insolvent under any
Bankruptcy Law;
(3) a receiver or other public officer takes charge of the Trustee
or its property;
(4) the Trustee otherwise becomes incapable of acting; or
(5) a successor corporation becomes successor Trustee pursuant to
Section 7.09 below.
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.
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 a majority in principal amount of the outstanding Securities may
petition any
<PAGE>
-69-
court of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10 hereof, 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. Immediately following
such delivery, the retiring Trustee shall, subject to its rights under Section
7.07 hereof, transfer all property held by it as Trustee to the successor
Trustee, the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have all the rights, powers and
duties of the Trustee under this Indenture. A successor Trustee shall mail
notice of its succession to each Securityholder. 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.
Section 7.09. Successor Trustee by Consolidation, Merger or Conversion.
--------------------------------------------------------
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust assets to, another
corporation, subject to Section 7.10 hereof, 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 (S) 310(a)(1) and (2) in every respect. The Trustee shall
have a combined capital and surplus of at least $50,000,000 as set forth in its
most recent published annual report of condition. The Trustee shall comply with
TIA (S) 310(b), including the provision in (S) 310(b)(1); provided, however,
-------- -------
that there shall be excluded from the operation of TIA (S) 310(b)(1) any
indenture or indentures under which other securities, or certificates of
interest or participation in other securities, of the Company are outstanding,
if the requirements for such exclusion set forth in TIA (S) 310(b)(1) are met.
<PAGE>
-70-
Section 7.11. Preferential Collection of Claims Against Company.
-------------------------------------------------
The Trustee shall comply with TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311 (b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein.
ARTICLE 8
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 8.01. Without Consent of Holders.
--------------------------
The Company, when authorized by a Board Resolution, and the Trustee
may amend or supplement this Indenture or the Securities without notice to or
consent of any Securityholder:
(1) to comply with Section 5.01 hereof;
(2) to provide for uncertificated Securities in addition to or in
place of certificated Securities;
(3) to comply with any requirements of the SEC under the TIA;
(4) to cure any ambiguity, defect or inconsistency, or to make any
other change that does not materially and adversely affect the rights of
any Securityholder; or
(5) to make any other change that does not, in the opinion of the
Trustee, materially and adversely affect the rights of any Securityholder.
The Trustee is hereby authorized to join with the Company in the
execution of any supplemental indenture authorized or permitted by the terms of
this Indenture and to make any further appropriate agreements and stipulations
which may be therein contained; provided, however, that the Company has
-------- -------
delivered to the Trustee an Officers' Certificate stating that such amendment or
supplement complies with the provisions of this Section 8.01 and; provided,
--------
further, that the Trustee shall not be obligated to enter into any such
- -------
supplemental indenture which adversely affects its own rights, duties or
immunities under this Indenture.
<PAGE>
-71-
Section 8.02. With Consent of Holders.
-----------------------
Subject to the rights of holders of Senior Preferred Stock, if any,
provided for in paragraph (f)(ii)(D) of the Certificate of Designation, the
Company and the Trustee may modify or supplement this Indenture or the
Securities with the written consent of the Holders of not less than a majority
in aggregate principal amount of the outstanding Securities without notice to
any Securityholder. The Holders of not less than a majority in aggregate
principal amount of the outstanding Securities may waive compliance in a
particular instance by the Company with any provision of this Indenture or the
Securities without notice to any Securityholder. Subject to the rights of
holders of Senior Preferred Stock, if any, provided for in paragraph (f)(ii)(D)
of the Certificate of Designation, without the consent of each Securityholder
affected, however, an amendment, supplement or waiver, including a waiver
pursuant to Section 6.04, may not:
(1) reduce the amount of Securities whose Holders must consent to
an amendment, supplement or waiver to this Indenture or the Securities;
(2) reduce the rate of or change the time for payment of interest
on any Security;
(3) reduce the principal of or premium on or change the stated
maturity of any Security;
(4) make any Security payable in money other than that stated in
the Security or change the place of payment from New York, New York;
(5) change the amount or time of any payment required by the
Securities or reduce the premium payable upon any redemption of the
Securities or change the time before which no redemption may be made;
(6) waive a default in the payment of the principal of, or interest
on, or redemption payment with respect to, any Security (including any
obligation to make a Change of Control Offer or modify any of the
provisions or definitions with respect to such offer);
(7) make any changes in Sections 6.04 or 6.07 hereof or this
sentence of Section 8.02;
<PAGE>
-72-
(8) affect the ranking of the Securities in a manner adverse to the
Holders; or
(9) take any other action otherwise prohibited by this Indenture to
be taken without the consent of each Holder affected thereby.
After an amendment, supplement or waiver under this Section 8.02
becomes effective, the Company shall mail to the Holders a notice briefly
describing the amendment, supplement or waiver.
Upon receipt of a Company Request, accompanied by a Board
Resolution authorizing the execution of any such supplemental indenture, and
upon the receipt by the Trustee of evidence reasonably satisfactory to the
Trustee of the consent of the Securityholders as aforesaid and upon receipt by
the Trustee of the documents described in Section 8.06 hereof, the Trustee shall
join with the Company in the execution of such supplemental indenture unless
such supplemental indenture affects the Trustee's own rights, duties or
immunities under this Indenture, in which case the Trustee may in its
discretion, but shall not be obligated to, enter into such supplemental
indenture.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
Section 8.03. Compliance with Trust Indenture Act.
-----------------------------------
Every amendment to or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
Section 8.04. Revocation and Effect of Consents.
---------------------------------
Until an amendment, supplement, waiver or other action becomes
effective, a consent to it by a Holder of a Security is a continuing consent
conclusive and binding upon such Holder and every subsequent Holder of the same
Security or portion thereof, and of any Security issued upon the transfer
thereof or in exchange therefor or in place thereof, even if notation of the
consent is not made on any such Security. Any such Holder or subsequent Holder,
however, may revoke the consent as to his Security or portion of a Security, if
the Trustee receives the notice of revocation before the date the
<PAGE>
-73-
amendment, supplement, waiver or other action becomes effective.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement, or waiver. If a record date is fixed, then, notwithstanding the
preceding paragraph, those Persons who were Holders at such record date (or
their duly designated proxies), and only such Persons, shall be entitled to
consent to such amendment, supplement, or waiver or to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
record date. No such consent shall be valid or effective for more than 90 days
after such record date unless the consent of the requisite number of Holders has
been obtained.
After an amendment, supplement, waiver or other action becomes
effective, it shall bind every Securityholder, unless it makes a change
described in any of clauses (1) through (9) of Section 8.02 hereof. In that
case the amendment, supplement, waiver or other action shall bind each Holder of
a Security who has consented to it and every subsequent Holder of a Security or
portion of a Security that evidences the same debt as the consenting Holder's
Security.
Section 8.05. Notation on or Exchange of Securities.
-------------------------------------
If an amendment, supplement, or waiver changes the terms of a
Security, the Trustee may request the Holder of the Security to deliver it to
the Trustee. In such case, the Trustee shall place an appropriate notation on
the Security about the changed terms and return it to the Holder.
Alternatively, if the Company or the Trustee so determines, the Company in
exchange for the Security shall issue and the Trustee shall authenticate a new
security that reflects the changed terms. Failure to make the appropriate
notation or issue a new Security shall not affect the validity and effect of
such amendment supplement or waiver.
Section 8.06. Trustee To Sign Amendments, etc.
-------------------------------
The Trustee shall sign any amendment, supplement or waiver authorized
pursuant to this Article 8 if the amendment, supplement or waiver does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may, but need not, sign it. In signing or refusing to
sign such amendment, supplement or waiver the Trustee shall be entitled to
receive and, subject to (and to the extent pro-
<PAGE>
-74-
vided in) Section 7.01 hereof, shall be fully protected in relying upon an
Officers' Certificate and an Opinion of Counsel stating that such amendment,
supplement or waiver is authorized or permitted by this Indenture and that such
amendment, supplement or waiver constitutes the legal, valid and binding
obligation of the Company, enforceable in accordance with its terms (subject to
customary enforceability exceptions). The Company may not sign an amendment or
supplement until the Board of Directors of the Company approves it. In signing
any amendment, supplement or waiver, the Trustee shall be entitled to receive an
indemnity reasonably satisfactory to it.
ARTICLE 9
DISCHARGE OF INDENTURE; DEFEASANCE
Section 9.01. Discharge of Indenture.
----------------------
The Company may terminate its obligations under the Securities and
this Indenture, except the obligations referred to in the last paragraph of this
Section 9.01, if there shall have been cancelled by the Trustee or delivered to
the Trustee for cancellation all Securities theretofore authenticated and
delivered (other than any Securities that are asserted to have been destroyed,
lost or stolen and that shall have been replaced as provided in Section 2.07
hereof) and the Company has paid all sums payable by it hereunder or deposited
all required sums with the Trustee.
After such delivery the Trustee upon request shall acknowledge in
writing the discharge of the Company's obligations under the Securities and this
Indenture except for those surviving obligations specified below.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company in Sections 7.07, 9.05 and 9.06 hereof shall survive.
Section 9.02. Legal Defeasance.
----------------
The Company may at its option, by Board Resolution, be discharged from
its obligations with respect to the Securities on the date the conditions set
forth in Section 9.04 below are satisfied (hereinafter, "Legal Defeasance").
For this purpose, such Legal Defeasance means that the Company shall be deemed
to have paid and discharged the entire indebtedness rep-
<PAGE>
-75-
resented by the Securities and to have satisfied all its other obligations under
such Securities and this Indenture insofar as such Securities are concerned (and
the Trustee, at the expense of the Company, shall, subject to Section 9.06
hereof, execute proper instruments acknowledging the same), except for the
following which shall survive until otherwise terminated or discharged
hereunder: (A) the rights of Holders of outstanding Securities to receive solely
from the trust funds described in Section 9.04 hereof and as more fully set
forth in such Section, payments in respect of the principal of, premium, if any,
and interest on such Securities when such payments are due, (B) the Company's
obligations with respect to such Securities under Sections 2.02, 2.03, 2.04,
2.05, 2.06, 2.07, 2.08 and 4.12 hereof, (C) the rights, powers, trusts, duties,
and immunities of the Trustee hereunder (including claims of, or payments to,
the Trustee under or pursuant to Section 7.07 hereof) and (D) this Article 9.
Subject to compliance with this Article 9, the Company may exercise its option
under this Section 9.02 with respect to the Securities notwithstanding the prior
exercise of its option under Section 9.03 below with respect to the Securities.
Section 9.03. Covenant Defeasance.
-------------------
At the option of the Company, pursuant to a Board Resolution, the
Company shall be released from its obligations under Section 4.02, Sections 4.05
through 4.08 and Section 4.11 hereof, inclusive, and clause (ii) of Section 5.01
hereof with respect to the outstanding Securities on and after the date the
conditions set forth in Section 9.04 hereof are satisfied (hereinafter,
"Covenant Defeasance"). For this purpose, such Covenant Defeasance means that
the Company may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such specified Section or
portion thereof, whether directly or indirectly by reason of any reference
elsewhere herein to any such specified Section or portion thereof or by reason
of any reference in any such specified Section or portion thereof to any other
provision herein or in any other document, but the remainder of this Indenture
and the Securities shall be unaffected thereby.
Section 9.04. Conditions to Defeasance or Covenant Defeasance.
-----------------------------------------------
The following shall be the conditions to application of Section 9.02
or Section 9.03 hereof to the outstanding Securities:
<PAGE>
-76-
(1) the Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements
of Section 7.10 hereof who shall agree to comply with the provisions of
this Article 9 applicable to it) as funds in trust for the purpose of
making the following payments, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of the Securities, (A)
money in an amount, or (B) U.S. Government Obligations which through the
scheduled payment of principal and interest in respect thereof in
accordance with their terms will provide, not later than the due date of
any payment, money in an amount, or (C) a combination thereof, sufficient,
in the opinion of a nationally-recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, to pay and discharge, and which shall be applied by the Trustee
(or other qualifying trustee) to pay and discharge, the principal of,
premium, if any, and accrued interest on the outstanding Securities at the
maturity date of such principal, premium, if any, or interest, or on dates
for payment and redemption of such principal, premium, if any, and interest
selected in accordance with the terms of this Indenture and of the
Securities;
(2) no Event of Default or Default with respect to the Securities
shall have occurred and be continuing on the date of such deposit, or shall
have occurred and be continuing at any time during the period ending on the
91st day after the date of such deposit or, if longer, ending on the day
following the expiration of the longest preference period under any
Bankruptcy Law applicable to the Company in respect of such deposit (it
being understood that this condition shall not be deemed satisfied until
the expiration of such period);
(3) such Legal Defeasance or Covenant Defeasance shall not cause
the Trustee to have a conflicting interest for purposes of the TIA with
respect to any securities of the Company;
(4) such Legal Defeasance or Covenant Defeasance shall not result
in a breach or violation of, or constitute default under any other
agreement or instrument to which the Company is a party or by which it is
bound;
(5) the Company shall have delivered to the Trustee an Opinion of
Counsel stating that, as a result of such
<PAGE>
-77
Legal Defeasance or Covenant Defeasance, neither the trust nor the Trustee
will be required to register as an investment company under the Investment
Company Act of 1940, as amended;
(6) in the case of an election under Section 9.02 above, the
Company shall have delivered to the Trustee an Opinion of Counsel stating
that (i) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling to the effect that or (ii) there has been
a change in any applicable Federal income tax law with the effect that, and
such opinion shall confirm that, the Holders of the outstanding Securities
or persons in their positions will not recognize income, gain or loss for
Federal income tax purposes solely as a result of such Legal Defeasance and
will be subject to Federal income tax on the same amounts, in the same
manner, including as a result of prepayment, and at the same times as would
have been the case if such Legal Defeasance had not occurred;
(7) in the case of an election under Section 9.03 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel to the
effect that the Holders of the outstanding Securities will not recognize
income, gain or loss for Federal income tax purposes as a result of such
Covenant Defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been the
case if such Covenant Defeasance had not occurred;
(8) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to either the Legal Defeasance under
Section 9.02 above or the Covenant Defeasance under Section 9.03 hereof (as
the case may be) have been complied with;
(9) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit under clause (1) was not made by the
Company with the intent of defeating, hindering, delaying or defrauding any
creditors of the Company or others; and
(10) the Company shall have paid or duly provided for payment under
terms mutually satisfactory to the Company and the Trustee all amounts then
due to the Trustee pursuant to Section 7.07 hereof.
<PAGE>
-78-
Section 9.05. Deposited Money and U.S. Government Obligations To Be Held in
-------------------------------------------------------------
Trust; Other Miscellaneous Provisions.
-------------------------------------
All money and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee pursuant to Section 9.04 hereof in respect
of the outstanding Securities shall be held in trust and applied by the Trustee,
in accordance with the provisions of such Securities and this Indenture, to the
payment, either directly or through any Paying Agent as the Trustee may
determine, to the Holders of such Securities, of all sums due and to become due
thereon in respect of principal, premium, if any, and accrued interest, but such
money need not be segregated from other funds except to the extent required by
law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 9.04 hereof or the principal, premium, if any, and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding
Securities.
Anything in this Article 9 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in
Section 9.04 hereof which, in the opinion of a nationally-recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
Section 9.06. Reinstatement.
-------------
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 9.01, 9.02 or 9.03 hereof by
reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company's obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to this Article 9 until such time as the Trustee or Paying Agent is
permitted to apply all such money or U.S. Government Obligations in accordance
with Section 9.01 hereof; provided, however, that if the Company has made any
-------- -------
payment of principal of, premium, if any, or
<PAGE>
-79-
accrued interest on any Securities because of 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 or U.S. Government
Obligations held by the Trustee or Paying Agent.
Section 9.07. Moneys Held by Paying Agent.
---------------------------
In connection with the satisfaction and discharge of this Indenture,
all moneys then held by any Paying Agent under the provisions of this Indenture
shall, upon demand of the Company, be paid to the Trustee, or if sufficient
moneys have been deposited pursuant to Section 9.01 hereof, to the Company and
thereupon such Paying Agent shall be released from all further liability with
respect to such moneys.
Section 9.08. Moneys Held by Trustee.
----------------------
Any moneys deposited with the Trustee or any Paying Agent or then held
by the Company in trust for the payment of the principal of, or premium, if any,
or interest on any Security that are not applied but remain unclaimed by the
Holder of such Security for two years after the date upon which the principal
of, or premium, if any, or interest on such Security shall have respectively
become due and payable shall be repaid to the Company upon Company Request, or
if such moneys are then held by the Company in trust, such moneys shall be
released from such trust; and the Holder of such Security entitled to receive
such payment shall thereafter, as an unsecured general creditor, look only to
the Company for the payment thereof, and all liability of the Trustee or such
Paying Agent with respect to such trust money shall thereupon cease; provided,
--------
however, that the Trustee or any such Paying Agent, before being required to
- -------
make any such repayment, may, at the expense of the Company, either mail to each
Securityholder affected, at the address shown in the register of the Securities
maintained by the Registrar pursuant to Section 2.03 hereof, or cause to be
published once a week for two successive weeks, in a newspaper published in the
English language, customarily published each Business Day and of general
circulation in the City of New York, New York, a notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less than
30 days from the date of such mailing or publication, any unclaimed balance of
such moneys then remaining will be repaid to the Company. After payment to the
Company or the release of any money held in trust by the Company,
Securityholders entitled to the money must look only to the Company for payment
as
<PAGE>
-80-
general creditors unless applicable abandoned property law designates another
person.
ARTICLE 10
SUBORDINATION OF SECURITIES
Section 10.01. Securities Subordinate to Senior Debt.
-------------------------------------
The Company covenants and agrees, and each Holder of Securities, by
its acceptance thereof, likewise covenants and agrees, that, to the extent and
in the manner hereinafter set forth in this Article 10, the Indebtedness
represented by the Securities and the payment of the principal of, premium, if
any, and interest on the Securities and all other Obligations under the
Securities, this Indenture, and the Registration Rights Agreement are hereby
expressly made subordinate and subject in right of payment as provided in this
Article 10 to the prior indefeasible payment in full in cash of all existing and
future Senior Debt.
This Article 10 shall constitute a continuing offer to all Persons
who, in reliance upon such provisions, become holders of or continue to hold
Senior Debt; and such provisions are made for the benefit of the holders of
Senior Debt; and such holders are made obligees hereunder and they or each of
them may directly enforce such provisions.
Section 10.02. Payment Over of Proceeds upon Dissolution, etc.
----------------------------------------------
In the event of (a) any insolvency or bankruptcy case or proceeding,
or any receivership, liquidation, arrangement, reorganization or other similar
case or proceeding in connection therewith, relative to the Company or to its
creditors, as such, or to its assets, whether voluntary or involuntary, or (b)
any liquidation, dissolution or other winding-up of the Company, whether
voluntary or involuntary and whether or not involving insolvency or bankruptcy,
or (c) any general assignment for the benefit of creditors or other marshaling
of assets or liabilities of the Company (except in connection with the merger or
consolidation of the Company or its liquidation or dissolution following the
transfer of substantially all of its assets, upon the terms and conditions
permitted under the circumstances described under Section 5.01) (all and each of
the foregoing being referred to herein individually as a "Bankruptcy Proceeding"
and collectively as "Bank-
<PAGE>
-81-
ruptcy Proceedings") the holders of Senior Debt will be entitled to receive
indefeasible payment and satisfaction in full in cash of all amounts due or
owing on or in respect of all Senior Debt before the holders of the Securities
are entitled to receive or retain any payment or distribution of any kind on
account of the Securities, or for or on account of the purchase or redemption or
other acquisition of Securities or on account of any Obligations under the
Securities, the Registration Rights Agreement or this Indenture.
In the event that, notwithstanding the foregoing, the Trustee or any
holder of Securities receives any payment or distribution of assets or
securities of the Company of any kind or character or any other payment or
distribution on account of the Securities, or for or on account of the purchase
or redemption or other acquisition of Securities or account of any Obligations
under the Securities, the Registration Rights Agreement or this Indenture,
whether in cash, property or securities, including, without limitation, by way
of set-off or otherwise, in respect of the Securities, or in respect of the
purchase or redemption or other acquisition of Securities, or in respect of any
Obligations under the Securities, the Registration Rights Agreement or this
Indenture before all Senior Debt is indefeasibly paid and satisfied in full in
cash, then such payment or distribution will be held by the recipient in trust
for the benefit of holders of Senior Debt and will be immediately paid over or
delivered by the Trustee or such holders of Securities to the holders of Senior
Debt or their representative or representatives to the extent necessary to make
payment in full in cash of all Senior Debt remaining unpaid, after giving effect
to any concurrent payment or distribution, or provision therefor, to or for the
holders of Senior Debt.
The consolidation of the Company with, or the merger of the Company
with or into, another Person or the liquidation or dissolution of the Company
following the conveyance, transfer or lease of its properties and assets
substantially as an entirety to another Person upon the terms and conditions set
forth in Article 5 hereof shall not be deemed a dissolution, winding-up,
liquidation, reorganization, assignment for the benefit of creditors or
marshaling of assets and liabilities of the Company for the purposes of this
Article 10 if the Person formed by such consolidation or the surviving entity of
such merger or the Person which acquires by conveyance, transfer or lease such
properties and assets substantially as an entirety, as the case may be, shall,
as a part of such consolidation,
<PAGE>
-82-
merger, conveyance, transfer or lease, comply with the conditions set forth in
such Article 5 hereof.
Section 10.03. Suspension of Payment When Senior Debt in Default.
-------------------------------------------------
(a) Unless Section 10.02 hereof shall be applicable, no payment or
distribution of any assets or securities of the Company or any Subsidiary of any
kind or character (including, without limitation, cash, property and any 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 by the Company, other than Qualified Capital Stock of the Company or
subordinated debt securities of the Company that require no payment of principal
prior to the stated maturity of the Securities and that are subordinated and
junior in right of payment to Senior Debt at least to the same extent as the
Securities, with terms no less favorable to the Company and the holders of the
Designated Senior Debt than the terms of the Securities and this Indenture) may
be made by the Company or any Subsidiary, including, without limitation, by way
of set-off or otherwise, for or on account of the Securities or any Obligations
under the Securities, the Registration Rights Agreement or this Indenture, or
for or on account of the purchase or redemption or other acquisition of
Securities or any other Obligations under the Securities, the Registration
Rights Agreement or this Indenture, and neither the Trustee nor any holder or
owner of any Securities shall take or receive from the Company or any
Subsidiary, directly or indirectly in any manner, any payment or distribution in
respect of all or any portion of Securities or for or on account of the
purchase, redemption or other acquisition of the Securities or in respect of any
other Obligations under the Securities, the Registration Rights Agreement or
this Indenture, which prohibition shall be applicable upon the occurrence and
during the continuation of a Payment Default and such prohibition shall continue
until such Payment Default is cured, waived in writing or ceases to exist. At
such time as the prohibition set forth in the preceding sentence shall no longer
be in effect, subject to the provisions of the following paragraph (b), the
Company shall resume making any and all required payments in respect of the
Securities, including any missed payments, or any such other Obligations under
the Securities, the Registration Rights Agreement or this Indenture.
(b) Unless Section 10.02 hereof shall be applicable, upon the
occurrence and during the continuance of a Non-Payment Event of Default, no
payment or distribution of any assets or
<PAGE>
-83-
securities of the Company or any Subsidiary of any kind or character (including,
without limitation, cash, property and any 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 by the Company,
other than Qualified Capital Stock of the Company or subordinated debt
securities of the Company that require no payment of principal prior to the
stated maturity of the Securities and that are subordinated and junior in right
of payment to Senior Debt at least to the same extent as the Securities, with
terms no less favorable to the Company and the holders of the Designated Senior
Debt than the terms of the Securities and this Indenture) may be made by the
Company or any Subsidiary, including, without limitation, by way of set-off or
otherwise, for or on account of the Securities or any Obligations under the
Securities, the Registration Rights Agreement or this Indenture, or for or on
account of the purchase or redemption or other acquisition of Securities or any
other Obligations under the Securities, the Registration Rights Agreement or
this Indenture, and neither the Trustee nor any holder or owner of any
Securities shall take or receive from the Company or any Subsidiary, directly or
indirectly in any manner, any payment or distribution in respect of all or any
portion of Securities, or for or on account of the purchase, redemption, or
other acquisition of the Securities, or in respect of any such other Obligations
under the Securities, the Registration Rights Agreement or this Indenture for a
period (a "Payment Blockage Period") commencing on the date of receipt by the
Trustee of written notice from the Representative of such Non-Payment Event of
Default unless and until (subject to any blockage of payments that may then be
in effect under the preceding paragraph (a) of this Section 10.03) the earliest
of (w) more than 179 days shall have elapsed since the date of receipt of such
written notice by the Trustee, (x) such Non-Payment Event of Default shall have
been cured or waived in writing or shall have ceased to exist, (y) such
Designated Senior Debt shall have been paid in full in cash or (z) such Payment
Blockage Period shall have been terminated by written notice to the Company or
the Trustee from such Representative, after which, in the case of clause (w),
(x), (y) or (z), the Company shall resume making any and all required payments
in respect of the Securities, including any missed payments. Notwithstanding any
other provision of this Indenture, in no event shall any particular Payment
Blockage Period commenced in accordance with the provisions of this Section
10.03(b) extend beyond the date 179 days after the date of the receipt by the
Trustee of the applicable written notice referred to above given by the
Representative to commence such Payment Blockage Period (each such period
commencing on such
<PAGE>
-84-
date of receipt and ending after such 179 days after such date of receipt, being
referred to as an "Initial Blockage Period"). Any number of additional Payment
Blockage Periods may be commenced during any Initial Blockage Period or any
other Payment Blockage Period; provided, however, that no such additional
-------- -------
Payment Blockage Period commenced during an existing Payment Blockage Period
shall extend beyond 179 days after the date of receipt by the Trustee of the
applicable written notice from the Representative which commences such Initial
Blockage Period. After the expiration of any Payment Blockage Period, no
Payment Blockage Period may be commenced until at least 180 consecutive days
have elapsed from the last day of such Payment Blockage Period. Notwithstanding
any other provision of this Indenture, no Non-Payment Event of Default with
respect to Designated Senior Debt which existed or was continuing on the date of
the commencement of any Payment Blockage Period initiated by the Representative
shall be, or be made, the basis for the commencement of a second Payment
Blockage Period initiated by the Representative, whether or not within the
Initial Blockage Period, unless such Non-Payment Event of Default shall have
been waived or cured for a period of not less than 90 consecutive days.
(c) In the event that, notwithstanding the foregoing, the Trustee or
any holder of Securities receives any payment or distribution of assets or
securities of the Company or any Subsidiary of any kind or character or any
other payment or distribution on account of the Securities, or for or on account
of the purchase or redemption or other acquisition of Securities, or on account
of any Obligations under the Securities, the Registration Rights Agreement or
this Indenture, whether in cash, property or securities, including, without
limitation, by way of set-off or otherwise, in respect of the Securities, or in
respect of the purchase or redemption or other acquisition of Securities, or in
respect of any Obligations under the Securities, the Registration Rights
Agreement or this Indenture at a time when such payment or distribution was
prohibited by the provisions of this Section 10.03, before all Senior Debt is
indefeasibly paid and satisfied in full in cash, then such payment or
distribution will be held by the recipient in trust for the benefit of holders
of Senior Debt and will be immediately paid over or delivered by the Trustee or
such holders of Securities to the Representative to the extent necessary to make
payment in full in cash of all Designated Senior Debt remaining unpaid, after
giving effect to any concurrent payment or distribution, or provision therefor,
to or for the holders of Designated Senior Debt.
<PAGE>
-85-
Section 10.04. Trustee's Relation to Senior Debt.
---------------------------------
The Trustee and any Paying Agent shall be entitled to all the rights
set forth in this Article with respect to any Senior Debt which may at any time
be held by it in its individual or any other capacity to the same extent as any
other holder of Senior Debt, and nothing in this Indenture shall deprive the
Trustee or any Paying Agent of any of its rights as such holder.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform or to observe only such of its covenants and obligations as are
specifically set forth in this Article 10, and no implied covenants or
obligations with respect to the holders of Senior Debt shall be read into this
Indenture against the Trustee. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Debt and the Trustee shall not be liable
to any holder of Senior Debt (other than for its willful misconduct or
negligence) if it shall in good faith mistakenly pay over or deliver to the
Holders of Securities, the Company or any other Person moneys or assets to which
any holder of Senior Debt shall be entitled by virtue of this Article 10 or
otherwise. Nothing in this Section 10.04 shall affect the obligation of any
other such Person, the Company, or the Holders to hold such money or assets for
the benefit of, and to pay such money or assets over to, the holders of the
Senior Debt or their applicable representative or representatives.
Section 10.05. Subrogation to Rights of Holders of Senior Debt.
-----------------------------------------------
Upon the payment in full in cash of all Senior Debt, the Holders of
the Securities shall be subrogated to the rights of the holders of such Senior
Debt to receive payments and distributions of cash, property and securities
applicable to the Senior Debt until the principal of, premium, if any and
interest on the Securities shall be paid in full. For purposes of such
subrogation, no payments or distributions to the holders of Senior Debt 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 10, and no
payments over pursuant to the provisions of this Article 10 to the holders of
Senior Debt by Holders of the Securities or the Trustee, shall, as among the
Company, its creditors other than holders of Senior Debt, and the Holders of the
Securities, be deemed to be a payment or distribution by the Company to or on
account of the Senior Debt.
<PAGE>
-86-
If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of this Article 10 shall have been
applied, pursuant to the provisions of this Article 10, to the payment in full
in cash of all amounts owing under or in respect of the Senior Debt of the
Company, then and in such case the Holders shall be entitled to receive from the
holders of such Senior Debt at the time outstanding any payments or
distributions received by such holders of such Senior Debt in excess of the
amount sufficient to pay all amounts owing under or in respect of such Senior
Debt in full in cash.
Section 10.06. Provisions Solely To Define Relative Rights.
-------------------------------------------
The provisions of this Article 10 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 Debt on the other hand. Nothing contained in
this Article 10 or elsewhere in this Indenture or in the Securities is intended
to or shall (a) impair, as among the Company, its creditors other than holders
of Senior Debt, and the Holders of the Securities, the obligation of the
Company, which is absolute and unconditional, to pay to the Holders of the
Securities the principal of, premium, if any, and interest on the Securities as
and when the same shall become due and payable in accordance with their terms;
or (b) affect the relative rights against the Company of the Holders of the
Securities and creditors of the Company other than the holders of Senior Debt;
or (c) prevent the Trustee or the Holder of any Security from exercising all
remedies otherwise permitted by applicable law upon a Default or an Event of
Default under this Indenture, subject to the rights of the holders of the
Designated Senior Debt under Section 6.02 hereof and subject to the rights, if
any, under this Article 10 of the holders of Senior Debt (1) in any case,
proceeding, dissolution, liquidation or other winding-up, assignment for the
benefit of creditors or other marshaling of assets and liabilities of the
Company referred to in Section 10.02 hereof, or in any other applicable
circumstances described in Section 10.02 to receive, pursuant to and in
accordance with such Section, cash, property and securities otherwise payable or
deliverable to the Trustee or such Holder, or (2) under the conditions and in
the applicable circumstances specified in Section 10.03, to prevent any payment
or distribution prohibited by such Section or enforce their rights pursuant to
Section 10.03(c) hereof.
<PAGE>
-87-
The failure to make a payment on account of principal of, premium, if
any, or interest on the Securities by reason of any provision of this Article 10
shall not be construed as preventing the occurrence of a Default or an Event of
Default hereunder.
Section 10.07. Trustee To Effectuate Subordination.
-----------------------------------
Each Holder of a Security by his acceptance thereof agrees to be bound
by such provisions and authorizes and directs the Trustee, on his behalf, to
take such action as may be necessary or appropriate to effectuate the
subordination provided in this Article and appoints the Trustee his attorney-in-
fact for any and all such purposes, including, in the event of any Bankruptcy
Proceedings or other dissolution, winding-up, liquidation or reorganization of
the Company whether in bankruptcy, insolvency, receivership proceedings, or
otherwise, the prompt and timely filing of a claim for the unpaid balance of the
indebtedness of the Company owing to such Holder in the form required in such
proceedings and the causing of such claim to be approved. If the Trustee does
not file such a claim prior to 30 days before the expiration of the time to file
such a claim, the holders of Senior Debt, or any Representative, may, and hereby
are authorized to, file such a claim on behalf of Holders of the applicable
Securities.
Section 10.08. No Waiver of Subordination Provisions.
-------------------------------------
(a) No right of any present or future holder of any Senior Debt to
enforce the subordination provisions herein provided shall at any time in any
way be prejudiced or impaired by any act or failure to act on the part of the
Company or by any act or failure to act, in good faith, by any such holder, or
by any 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.
(b) Without limiting the generality of subsection (a) of this Section
10.08, the holders of Senior Debt may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article 10
or the obligations hereunder of the Holders of the Securities to the holders of
Senior Debt, do any one or more of the following: (1) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, Senior
Debt or any instrument evidencing the same or any agree-
<PAGE>
-88-
ment under which Senior Debt is outstanding; (2) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing Senior
Debt; (3) release any Person liable in any manner for the collection or payment
of Senior Debt; and (4) exercise or refrain from exercising any rights against
the Company and any other Person; provided, however, that in no event shall any
-------- -------
such actions limit the right of the Holders of the Securities to take any action
to accelerate the maturity of the Securities pursuant to Article 6 hereof or to
pursue any rights or remedies hereunder or under applicable laws if the taking
of such action does not otherwise violate the terms of this Indenture.
Section 10.09. Notice to Trustee.
-----------------
(a) The Company shall give prompt written notice to the Trustee of any
fact known to the Company which would prohibit the making of any payment to or
by the Trustee at its Corporate Trust Office in respect of the Securities.
Notwithstanding the provisions of this Article 10 or any other provision of this
Indenture, the Trustee shall not be charged with knowledge of the existence of
any facts which would prohibit the making of any payment to or by the Trustee in
respect of the Securities, unless and until the Trustee shall have received
written notice thereof from the Company or a holder of Senior Debt or from any
trustee, fiduciary, representative, or agent therefor no later than one Business
Day prior to such payment; and, prior to the receipt of any such written notice,
the Trustee, subject to the provisions of this Section 10.09, and subject to the
provisions of Sections 7.01 and 7.02 hereof, shall be entitled in all respects
to assume that no such facts exist; provided, however, that if the Trustee shall
-------- -------
not have received the notice referred to in this Section 10.09 at least one
Business Day prior to the date upon which by the terms hereof any such payment
may become payable for any purpose under this Indenture (including, without
limitation, the payment of the principal of, premium, if any, or interest on any
Security), then, anything herein contained to the contrary notwithstanding but
without limiting the rights and remedies of the holders of Senior Debt or any
trustee, fiduciary, representative, or agent therefor as against the Holders of
the Securities or any other Person, the Trustee shall have full power and
authority to receive such money and to apply the same to the purpose for which
such money was received and shall not be affected by any notice to the contrary
which may be received by it less than one Business Day prior to such date; nor
shall the Trustee be charged with knowledge of the curing of any such applicable
default in respect of Designated Senior Debt or the
<PAGE>
-89-
elimination of the act or condition preventing any such payment unless and until
the Trustee shall have received an Officers' Certificate to such effect (subject
to the rights of the holders of the Designated Senior Debt under Section 10.03
hereof).
(b) Subject to the provisions of Section 7.01 hereof, the Trustee
shall be entitled to rely (to the extent reasonable and in good faith) on the
delivery to it of a written notice to the Trustee and the Company by a Person
representing itself to be a holder of Senior Debt (or a trustee, fiduciary,
representative, or agent therefor) for purposes of establishing that such notice
actually has been given by a holder of Senior Debt (or a trustee, fiduciary,
representative, or agent therefor); provided, however, that failure to give such
-------- -------
notice to the Company shall not affect in any way the ability of the Trustee to
rely on such notice. In the event that the Trustee determines in good faith
that further evidence is required with respect to the right of any Person as a
holder of Senior Debt to participate in any payment or distribution pursuant to
this Article 10, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Debt held by
such Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article 10, and if such evidence is not furnished, the
Trustee, acting in good faith, may defer any payment to such Person pending
judicial determination as to the right of such Person to receive such payment.
Section 10.10. Reliance on Judicial Order or Certificate of Liquidating Agent.
--------------------------------------------------------------
Upon any payment or distribution pursuant to this Article 10, the
Trustee, subject to the provisions of Section 7.01 hereof, and the Holders shall
be entitled to rely (to the extent reasonable and in good faith) upon any order
or decree entered by any court of competent jurisdiction in which any applicable
insolvency, bankruptcy, receivership, liquidation, reorganization, dissolution,
winding-up or similar case or proceeding of the type referred to in Section
10.02 is pending, or a certificate of the trustee in bankruptcy, receiver,
liquidating trustee, custodian, assignee for the benefit of creditors, agent or
other Person making such payment or distribution in connection with such case or
proceeding, delivered to the Trustee or to the Holders, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of Senior Debt and other Indebtedness of the Company,
the amount thereof or payable thereon, the amount
<PAGE>
-90-
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article 10; provided that the foregoing shall apply only if such court
--------
in which such case or proceeding is pending has been fully apprised of the
provisions of this Article 10.
Section 10.11. Rights of Trustee as a Holder of Senior Debt; Preservation of
-------------------------------------------------------------
Trustee's Rights.
----------------
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article 10 with respect to any Senior Debt which may at
any time be held by it, to the same extent as any other holder of Senior Debt,
and nothing in this Indenture shall deprive the Trustee of any of its rights as
such holder. Nothing in this Article 10 shall apply to claims of, or payments
to, the Trustee for its compensation owing pursuant to and in accordance with,
the first sentence of Section 7.07 hereof.
Section 10.12. 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 10 shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article 10 in addition to or in place of the Trustee.
Section 10.13. No Suspension of Remedies.
-------------------------
Nothing contained in this Article 10 shall limit the right of the
Trustee or the Holders of Securities to take any action to accelerate the
maturity of the Securities pursuant to Article 6 (subject to the rights of the
holders of the Designated Senior Debt under clause (ii) of the first sentence of
Section 6.02 hereof) or to pursue any rights or remedies hereunder or under
applicable law, subject to the rights, if any, under this Article 10 of the
holders, from time to time, of Senior Debt.
<PAGE>
-91-
ARTICLE 11
MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls.
----------------------------
If any provision of this Indenture limits, qualifies or conflicts with
another provision which is required to be included in this Indenture by the TIA,
the required provision shall control.
Section 11.02. Notices.
-------
Any notice or communication shall be given in writing and delivered in
person, sent by telecopier, facsimile, telex, delivered by overnight commercial
courier service or mailed by registered or certified mail, postage prepaid,
return receipt requested, addressed as follows:
If to the Company:
Samsonite Corporation
11200 East 45th Avenue
Denver, Colorado 80239
Attention: Chief Financial Officer with
a copy to General Counsel
Facsimile: (303) 373-6606
Copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022-3897
Attention: Gregory A. Fernicola, Esq.
Facsimile: (212) 735-2000
If to the Trustee:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Attention: Corporate Trust Department
Facsimile: (212) 852-1626
Such notices or communications shall be sufficiently given if so given
within the time prescribed in this Indenture.
<PAGE>
-92-
The Company or the Trustee by written notice to the others may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication to the Company or the Trustee shall be
deemed to have been given or made as of the date so delivered, if personally
delivered; when answered back, if telexed; when receipt is acknowledged, if
telecopied; and upon receipt if sent by overnight commercial courier service or
if sent by registered or certified mail, postage prepaid (except that a notice
of change of address shall not be deemed to have been given until actually
received by the addressee).
Any notice or communication mailed to a Securityholder shall be mailed
to him by first-class mail, postage prepaid, at 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 to a Securityholder is mailed in
the manner provided above, it shall be deemed duly given, whether or not the
addressee receives it.
In case by reason of the suspension of regular mail service, or by
reason of any other cause, it shall be impossible to mail any notice as required
by this Indenture, then such method of notification as shall be made with the
approval of the Trustee shall constitute a sufficient mailing of such notice.
Section 11.03. Communications by Holders with Other Holders.
--------------------------------------------
Securityholders may communicate pursuant to TIA (S) 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 (S) 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:
<PAGE>
-93-
(1) an Officers' Certificate (which shall include the statements
set forth in Section 11.05 below) 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
(2) an Opinion of Counsel (which shall include the statements set
forth in Section 11.05 below) stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
Section 11.05. Statements Required in Certificate and Opinion.
----------------------------------------------
Each certificate and 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, it or he has
made such examination or investigation as is necessary to enable it or 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 covenant or condition has been complied with.
Notwithstanding anything to the contrary contained herein, any opinion
provided hereunder in connection with the issuance or authorization of
Securities may make certain customary assumptions, including, among other
things, compliance with Section 160 of the Delaware General Corporation Law or
such successor provision thereto.
Section 11.06. When Treasury Securities Disregarded.
------------------------------------
In determining whether the Holders of the required aggregate principal
amount of Securities have concurred in any direction, waiver or consent,
Securities owned by the Company
<PAGE>
-94-
or by any Affiliate of the Company shall be disregarded, 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 actually
knows are so owned shall be so disregarded. Securities so owned which have been
pledged in good faith shall not be disregarded if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to the
Securities and that the pledgee is not the Company or any Affiliate of the
Company.
Section 11.07. Rules by Trustee and Agents.
---------------------------
The Trustee may make reasonable rules for action by or meetings of
Securityholders. The Registrar and Paying Agent may make reasonable rules for
their functions.
Section 11.08. Business Days; Legal Holidays.
-----------------------------
A "Business Day" is a day that is not a Legal Holiday. A "Legal
Holiday" is a Saturday, a Sunday, a federally-recognized holiday or a day on
which banking institutions are not required to be open in the State of New York.
If a payment date is a Legal Holiday at a place of payment, payment 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.
Section 11.09. Governing Law.
-------------
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE SECURITIES.
Section 11.10. No Adverse Interpretation of Other Agreements.
---------------------------------------------
This Indenture may not be used to interpret another indenture, loan,
security or debt agreement of the Company or any Subsidiary thereof. No such
indenture, loan, security or debt agreement may be used to interpret this
Indenture.
<PAGE>
-95-
Section 11.11. No Recourse Against Others.
--------------------------
A director, officer, employee, stockholder or incorporator, as such,
of the Company shall not have any liability for any obligations of the Company
under the Securities or this Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. Each Securityholder by
accepting a Security waives and releases all such liability. Such waiver and
release are part of the consideration for the issuance of the Securities.
Section 11.12. Successors.
----------
All agreements of the Company in this Indenture and the Securities
shall bind its successors. All agreements of the Trustee, any additional
trustee and any Paying Agents in this Indenture shall bind its successor.
Section 11.13. Multiple Counterparts.
---------------------
The parties may sign multiple counterparts of this Indenture. Each
signed counterpart shall be deemed an original, but all of them together
represent one and the same agreement.
Section 11.14. Table of Contents, Headings, etc.
--------------------------------
The table of contents, cross-reference sheet 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 11.15. Separability.
------------
Each provision of this Indenture shall be considered separable and if
for any reason any provision which is not essential to the effectuation of the
basic purpose of this Indenture or 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.
<PAGE>
-96-
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed as of the date and year first written above.
SAMSONITE CORPORATION
By: ---------------------------
Name:
Title:
By: ---------------------------
Name:
Title:
UNITED STATES TRUST COMPANY OF
NEW YORK, as Trustee
By: ___________________________
Name:
Title:
<PAGE>
EXHIBIT A
---------
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, 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 AND SUBJECT TO COMPLIANCE
WITH OTHER APPLICABLE LAWS. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE
HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO
THE DATE WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD THAT MAY HEREAFTER BE
PROVIDED UNDER RULE 144(K) (OR ANY SUCCESSOR PROVISION THEREOF) AS
PERMITTING THE RESALE BY NON-AFFILIATES OF RESTRICTED SECURITIES WITHOUT
RESTRICTION) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST
DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF
THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) (THE "RESALE
RESTRICTION TERMINATION DATE"), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON
IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO
NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
OTHERWISE IN COMPLIANCE WITH OTHER APPLICABLE LAWS, SUBJECT TO THE
COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF
THEM. THE LEGEND WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE
RESALE RESTRICTION TERMINATION DATE.
A-1
<PAGE>
NO. _____ CUSIP NO.
SAMSONITE CORPORATION
13 7/8% Junior Subordinated Debenture due 2010
$
SAMSONITE CORPORATION, a Delaware corporation (the "Company"), for
value received, promises to pay to or registered assigns the
principal sum of Dollars, on June 15, 2010.
Interest Payment Dates: March 15, June 15, September 15 and December
15
Record Dates: March 1, June 1, September 1 and December 1
Reference is made to the further provisions of this Security contained
herein, which will for all purposes have the same effect as if set forth at this
place.
IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officers.
SAMSONITE CORPORATION
By: __________________________
Name:
Title:
By: __________________________
Name:
Title:
A-2
<PAGE>
Trustee's Certificate of Authentication
This is one of the 13 7/8% Junior Subordinated Debentures due 2010
referred to in the within-mentioned Indenture.
Dated:
UNITED STATES TRUST COMPANY OF
NEW YORK,
as Trustee
By: _________________________
Authorized Signatory
A-3
<PAGE>
(REVERSE OF SECURITY)
13 7/8% Junior Subordinated Debentures due 2010
1. Interest. SAMSONITE CORPORATION, a Delaware corporation (the
--------
"Company"), promises to pay interest on the principal amount of this Security at
the rate per annum shown above. Interest on the Securities will accrue from the
most recent date on which interest has been paid or, if no interest has been
paid, from the date of original issuance of the Securities. The Company will
pay interest quarterly in arrears on each Interest Payment Date, commencing on
the first Interest Payment Date after the date of original issuance of the
Securities. Interest will be computed on the basis of a 360-day year of twelve
30-day months and, for periods not involving a full calendar month, the actual
number of days elapsed but not to exceed 30 days.
Notwithstanding anything herein to the contrary, on each Interest
Payment Date through and including June 15, 2003, the entire amount of the
interest payment on the Securities may be paid, at the option of the Company, in
additional Securities ("Secondary Securities") (valued at 100% of the principal
amount thereof). The Company may, at its option, pay cash in lieu of issuing
any Secondary Security to the extent the principal amount such Secondary
Security is not an integral multiple of $1,000. The Company shall notify the
Trustee of the Company's election to pay interest in Secondary Securities not
less than 10 days prior to the Record Date for an Interest Payment Date. On
each such Interest Payment Date, the Trustee shall authenticate Secondary
Securities for original issuance to each holder of Securities on the preceding
Record Date, as shown on the Security Register, in the amount required to pay
such interest.
The Company shall pay interest on overdue principal and on overdue
installments of interest at the rate borne by the Securities to the extent
lawful.
2. Method of Payment. The Company shall pay interest on the
-----------------
Securities (except defaulted interest) to the Persons who are the registered
Holders at the close of business on the Record Date immediately preceding the
Interest Payment Date even if the Securities are cancelled on registration of
transfer or registration of exchange after such Record Date. Holders must
surrender Securities to a Paying Agent to collect principal payments. The
Company shall pay principal and inter-
A-4
<PAGE>
est (to the extent not paid in Secondary Securities) in money of the United
States that at the time of payment is legal tender for payment of public and
private debts ("U.S. Legal Tender"). However, the Company may pay principal and
interest by its check payable in such U.S. Legal Tender. The Company may deliver
any such interest payment to the Paying Agent or to a Holder at the Holder's
registered address.
3. Paying Agent and Registrar. Initially, UNITED STATES TRUST
--------------------------
COMPANY OF NEW YORK, a bank and trust company organized under the New York
Banking Law (the "Trustee"), will act as Paying Agent and Registrar. The
Company may change any Paying Agent or Registrar without notice to the Holders
of the Securities. Neither the Company nor any of its Affiliates may act as
Paying Agent but may act as registrar or co-registrar.
4. Indenture; Restrictive Covenants. The Company issued this
--------------------------------
Security under an Indenture dated as of June 24, 1998 (the "Indenture") between
the Company and the Trustee. The terms of this Security include those stated in
the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S. Code (S)(S) 77aaa-77bbbb) as in effect on the
date of the Indenture. This Security is subject to all such terms, and the
Holder of this Security is referred to the Indenture and said Trust Indenture
Act for a statement of them. All capitalized terms in this Security, unless
otherwise defined, have the meanings assigned to them by the Indenture.
The Securities are general unsecured obligations of the Company
limited to $350,000,000 aggregate principal amount. The Indenture imposes
certain restrictions on, among other things, the incurrence of indebtedness,
mergers and sale of assets, the payments of dividends on, or the repurchase of,
capital stock of the Company and its subsidiaries, certain other restricted
payments by the Company and its subsidiaries, certain transactions with, and
investments in, its affiliates, and a provision regarding change-of-control
transactions.
5. Subordination. The Indebtedness evidenced by the Securities is,
-------------
to the extent and in the manner provided in the Indenture, subordinated and
subject in right of payment to the prior indefeasible payment in full in cash of
all Senior Debt as defined in the Indenture and this Security is issued subject
to such provisions. Each Holder of this Security, by accepting the same, (a)
agrees to and shall be bound by such provisions, (b) authorizes and directs the
Trustee, on behalf of such Holder, to take such action as may be necessary or
appropriate to effectuate the subordination as provided in the Indenture and (c)
appoints the Trustee attorney-in-fact of such Holder for such purpose.
A-5
<PAGE>
6. Optional Redemption. The Company may redeem the Securities, in
-------------------
the manner set forth in Section 3.07 of the Indenture.
7. Notice of Redemption. Notice of redemption will be mailed at
--------------------
least 30 days but not more than 60 days before the Redemption Date to each
Holder of Securities to be redeemed at such Holder's registered address. In
order to effect a redemption with the proceeds of an Equity Offering, the
Company shall send the redemption notice not later than 90 days after the
consummation of such Equity Offering. Securities in denominations larger than
$1,000 may be redeemed in part.
8. Offers to Purchase. The Company is required to make an offer to
------------------
purchase Securities upon occurrence of a Change of Control in accordance with
procedures set forth in the Indenture.
9. Denominations; Transfer; Exchange. The Securities are in
---------------------------------
registered form, without coupons, in denominations of $1,000 and integral
multiples of $1,000; provided, however, that Secondary Securities and Securities
-------- -------
issued in exchange for the Senior Preferred Stock may be issued in denominations
of less than $1,000 (but not less than $1.00). A Holder shall register the
transfer of or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay certain transfer taxes or similar
governmental charges payable in connection therewith as permitted by the
Indenture. The Registrar need not register the transfer of or exchange any
Securities during a period beginning 15 days before the mailing of a redemption
notice for any Securities or portions thereof selected for redemption.
10. Persons Deemed Owners. The registered Holder of this Security
---------------------
shall be treated as the owner of it for all purposes.
11. Unclaimed Money. If money for the payment of principal, premium
---------------
or interest on any Security remains unclaimed for two years, the Trustee and the
Paying Agent will pay the money back to the Company at its request. After that,
Holders entitled to money must look to the Company for payment as general
creditors unless an "abandoned property" law designates another Person.
12. Amendment, Supplement and Waiver. Subject to certain exceptions,
--------------------------------
the Indenture or the Securities may be modified, amended or supplemented by the
Company and the Trustee with the consent of the Holders of at least a majority
in principal amount of the Securities then outstanding and any ex-
A-6
<PAGE>
isting default or compliance with any provision may be waived in a particular
instance with the consent of the Holders of a majority in principal amount of
the Securities then outstanding. Without the consent of Holders, the Company and
the Trustee may amend the Indenture or the Securities or supplement the
Indenture for certain specified purposes including, without limitation,
providing for uncertificated Securities in addition to certificated Securities,
and curing any ambiguity, defect or inconsistency, or making any other change
that does not materially and adversely affect the rights of any Holder.
13. Successor Entity. When a successor corporation assumes all the
----------------
obligations of its predecessor under the Securities and the Indenture and
immediately before and thereafter no Default exists and certain other conditions
are satisfied, the predecessor corporation will be released from those
obligations.
14. Defaults and Remedies. Events of Default are set forth in the
---------------------
Indenture. Upon the happening of any Event of Default specified in Section
6.01, the Trustee may, and the Trustee upon the request of 25% in principal
amount of the Securities shall or the Holders of at least 25% in aggregate
principal amount of outstanding Securities may, declare the principal of and
accrued but unpaid interest, if any, on all the Securities to be due and payable
by notice in writing to the Company and the Trustee specifying the respective
Event of Default and that it is a "notice of acceleration" (the "Acceleration
Notice"), and the same (i) shall (except as provided in clause (ii) of this
sentence) become immediately due and payable or (ii) if there are any amounts
outstanding under any of the instruments constituting Designated Senior Debt,
will become due and payable upon the first to occur of an acceleration under any
of the instruments constituting Designated Senior Debt or five Business Days
after receipt by the Company and the Representative of such Acceleration Notice
(unless all Events of Default specified in such Acceleration Notice have been
cured or waived). If an Event of Default described under clauses (6) or (7) of
Section 6.01 with respect to the Company occurs and is continuing, then such
amount will ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder of Securities;
provided, however, that at any time after a declaration of acceleration with
- -------- -------
respect to the Securities, the Holders of a majority in principal amount of the
Securities then outstanding (by notice to the Trustee) may rescind and cancel
such declaration and its consequences if (i) the rescission would not conflict
with any judgment or decree of a court of competent jurisdiction, (ii) all
existing Events of Default have been cured or waived except nonpayment of
principal or interest on the Securities that has become due solely by such
declaration
A-7
<PAGE>
of acceleration, (iii) to the extent the payment of such interest is lawful,
interest (at the same rate specified in the Securities) on overdue installments
of interest and overdue principal which has become due otherwise than by such
declaration of acceleration has been paid, (iv) the Company has paid the Trustee
its reasonable compensation and reimbursed the Trustee for its expenses,
disbursements and advances and (v) in the event of the cure or waiver of a
Default or Event of Default (with respect to the Company) of the type described
in Section 6.01(6) or (7), the Trustee has received an Officers' Certificate and
an Opinion of Counsel that such Default or Event of Default has been cured or
waived. The Holders of a majority in principal amount of the Securities may
waive any existing Default or Event of Default under this Indenture, and its
consequences, except a default in the payment of the principal of or interest on
any Securities.
15. Trustee Dealings With the Company. The Trustee under the
---------------------------------
Indenture, 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.
16. No Recourse Against Others. A director, officer, employee,
--------------------------
stockholder or incorporator, 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 creations. Each Securityholder by accepting a Security
waives and releases all such liability. Such waiver and release are part of the
consideration for the issuance of the Securities.
17. Defeasance and Covenant Defeasance. The Indenture contains
----------------------------------
provisions for defeasance of the entire indebtedness on this Security (pursuant
to Section 9.02 of the Indenture) and for defeasance of certain covenants in the
Indenture (pursuant to Section 9.03 of the Indenture) upon compliance by the
Company with certain conditions set forth in the Indenture.
18. Abbreviations. Customary abbreviations may be used in the name
-------------
of a Holder of a Security 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).
19. CUSIP Numbers. Pursuant to a recommendation promulgated by the
-------------
Committee on Uniform Note Identification Procedures, the Company has caused
CUSIP Numbers to be printed on the Securities and has directed the Trustee to
use CUSIP
A-8
<PAGE>
numbers in notices of redemption as a convenience to Holders of the Securities.
No representation is made as to the accuracy of such numbers either as printed
on the Securities or as contained in any notice of redemption and reliance may
be placed only on the other identification numbers placed thereon.
20. Indenture Controls. If any provision of this Note limits,
------------------
qualifies or conflicts with the provisions of the Indenture, the provisions of
the Indenture shall control.
21. GOVERNING LAW. THE INDENTURE AND THE SECURITIES SHALL BE
-------------
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO
SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THE INDENTURE OR THE SECURITIES.
THE COMPANY WILL FURNISH TO ANY HOLDER OF A SECURITY UPON WRITTEN
REQUEST AND WITHOUT CHARGE A COPY OF THE INDENTURE, REQUESTS MAY BE MADE TO:
- -------
SAMSONITE CORPORATION, 11200 East 45th Avenue, Denver, Colorado 80239,
Attention: General Counsel.
A-9
<PAGE>
ASSIGNMENT
----------
I or we assign to PLEASE INSERT SOCIAL SECURITY OR TAX I.D. NUMBER
____________________________
_____________________________________________
(please print or type name and address)
the within Security and all rights thereunder, hereby irrevocably constituting
and appointing attorney to transfer the Security on the books
of the Company with full power of substitution in the premises.
Date: ____________________
NOTICE: The signature on this assignment must correspond with the name as it
appears upon the face of the within Security in every particular without
alteration or enlargement or any change whatsoever and be guaranteed by the
endorser's bank or broker.
Signature Guarantee: _______________________________________
A-10
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Security
purchased by the Company pursuant to Section 4.11 of the Indenture, check the
box:
- Section 4.11
If you want to have only part of the Security purchased by the Company
pursuant to Section 4.11 of the Indenture, state the amount you elect to have
purchased:
$_________________
Date: ____________
Your Signature: ____________________________________
(Sign exactly as your name appears on the face of this Security)
___________________________
Signature Guaranteed
A-11
<PAGE>
EXHIBIT B
---------
FORM OF LEGEND FOR GLOBAL SECURITIES
Any Global Security authenticated and delivered hereunder shall bear a
legend (which would be in addition to any other legends required in the case of
a Restricted Security) in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY. THIS NOTE IS NOT EXCHANGEABLE FOR SECURITIES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE
EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO
TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A
WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF
THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY
BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY (A NEW YORK CORPORATION) ("DTC") TO THE
COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND
ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
B-1
<PAGE>
EXHIBIT C
---------
Form of Certificate to Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
-----------------------------------------
___________, ____
Re: Samsonite Corporation
(the "Company") 13 7/8% Junior
Subordinated Debentures
due 2010 (the "Debentures")
--------------------------------
Dear Sirs:
In connection with our proposed purchase of $_______ aggregate
principal amount of the Debentures, we confirm that:
1. We understand that any subsequent transfer of the Debentures is
subject to certain restrictions and conditions set forth in the Indenture
dated as of June 24, 1998 relating to the Debentures and the undersigned
agrees to be bound by, and not to resell, pledge or otherwise transfer the
Debentures except in compliance with, such restrictions and conditions and
the Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the Debentures have not been registered under
the Securities Act, and that the Debentures may not be offered or sold
except as permitted in the following sentence. We agree, on our own behalf
and on behalf of any accounts for which we are acting as hereinafter
stated, that if we should sell any Debentures within two years after the
original issuance of the Debentures, we will do so only (A) to the Company
or any subsidiary thereof, (B) pursuant to a registration statement which
has been declared effective under the Securities Act, (C) for so long as
the Debentures are eligible for resale pursuant to Rule 144(A) ("Rule
144A") to a person we reasonably believe to be a "qualified institutional
buyer" as defined in Rule 144A that purchases for its own account or for
the account of a qualified institutional buyer to whom notice is given that
the transfer is being made in reliance on Rule 144A, (D) outside the United
States to non-U.S. persons in compliance with Rule 904 of Regulation S
under the Securities Act, or (E) pursuant to another available exemption
from the registration requirements of the Securities Act and otherwise in
compliance with other applicable laws, and we further agree to pro-
C-1
<PAGE>
vide to any person purchasing any of the Debentures from us a notice
advising such purchaser that resales of the Debentures are restricted as
stated herein.
3. We understand that, on any proposed resale of any Debentures, we
will be required to furnish to you and the Company such certifications,
legal opinions and other information as you and the Company may reasonably
require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Debentures purchased by us
will bear a legend to the foregoing effect.
4. We are an "accredited investor" (as defined in Rule 501(a)(1),
(2), (3) or (7) under the Securities Act) and have such knowledge and
experience in financial and business matters as to be capable of evaluating
the merits and risks of our investment in the Debentures, and we and any
accounts for which we are acting are each able to bear the economic risk of
our or its investment.
5. We are acquiring the Debentures purchased by us for our own
account or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By: ___________________________
Authorized Signature
C-2
<PAGE>
EXHIBIT D
---------
Form of Certificate to Be
Delivered in Connection with
Transfers Pursuant to Regulation S
----------------------------------
______________, ____
Re: Samsonite Corporation
(the "Company") 13 7/8% Junior
Subordinated Debentures
due 2010 (the "Debentures")
----------------------------------
Dear Sirs:
In connection with our proposed sale of $___________ aggregate
principal amount of the Debentures, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Debentures was not made to a person in the United
States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United
States, or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been pre-
arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States in
contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act;
(5) we understand that, on any proposed resale of any Debentures, we
will be required to furnish to you and the Company such certifications,
legal opinions and other information as you and the Company may reasonably
require to confirm that the proposed sale complies with the fore-
D-1
<PAGE>
going restrictions. We further understand that the Debentures purchased by
us will bear a legend to the foregoing effect; and
(6) we have advised the transferee of the transfer restrictions
applicable to the Debentures.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By: ___________________________
Authorized Signature
D-2
<PAGE>
EXHIBIT 4.4
================================================================================
______________________________________
[ ], as Issuer,
______________________________________
and
UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee
================================================================================
INDENTURE
Dated as of [ ], [ ]
$350,000,000
13 7/8% Senior Debentures due 2010
<PAGE>
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ------- -------
<S> <C>
310 (a)(1)........................................................... 7.10
(a)(2)........................................................... 7.10
(a)(3)........................................................... N.A.
(a)(4)........................................................... N.A.
(b).............................................................. 7.08; 7.
(b)(1)........................................................... 7.10
(b)(9)........................................................... 7.10
(c).............................................................. N.A.
311 (a).............................................................. 7.11
(b).............................................................. 7.11
(c).............................................................. N.A.
312 (a).............................................................. 2.05
(b).............................................................. 10.03
(c).............................................................. 10.03
313 (a).............................................................. 7.06
(b)(1)........................................................... 7.06
(b)(2)........................................................... 7.06
(c).............................................................. 7.06
(d).............................................................. 7.06
314 (a).............................................................. 4.02; 4.04; 10.02
(b).............................................................. N.A.
(c)(1)........................................................... 10.04; 10.05
(c)(2)........................................................... 10.04; 10.05
(c)(3)........................................................... N.A.
(d).............................................................. N.A.
(e).............................................................. 10.05
(f).............................................................. N.A.
315 (a).............................................................. 7.01; 7.02
(b).............................................................. 7.05; 10.02
(c).............................................................. 7.01
(d).............................................................. 6.05; 7.01; 7.02
(e).............................................................. 6.11
316 (a) (last sentence).............................................. 10.06
(a)(1)(A)........................................................ 6.05
(a)(1)(B)........................................................ 6.04
(a)(2)........................................................... 8.02
(b).............................................................. 6.07
(c).............................................................. 8.04
317 (a)(1)........................................................... 6.08
(a)(2)........................................................... 6.09
(b).............................................................. N.A.
318 (a).............................................................. 10.01
</TABLE>
__________________
N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
a part of this Indenture
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
<S> <C>
Section 1.01. Definitions............................................... 1
Section 1.02. Other Definitions......................................... 26
Section 1.03. Incorporation by Reference of Trust Indenture Act......... 27
Section 1.04. Rules of Construction..................................... 28
ARTICLE 2
THE SECURITIES
Section 2.01. Dating; Incorporation of Form in Indenture................ 28
Section 2.02. Execution and Authentication.............................. 29
Section 2.03. Registrar and Paying Agent................................ 30
Section 2.04. Paying Agent To Hold Assets in Trust...................... 31
Section 2.05. Securityholder Lists...................................... 31
Section 2.06. Transfer and Exchange..................................... 31
Section 2.07. Replacement Securities.................................... 32
Section 2.08. Outstanding Securities.................................... 32
Section 2.09. Temporary Securities...................................... 33
Section 2.10. Cancellation.............................................. 33
Section 2.11. Defaulted Interest........................................ 33
Section 2.12. Deposit of Moneys......................................... 34
Section 2.13. CUSIP Number.............................................. 34
Section 2.14. Book-Entry Provisions for Global Securities............... 34
Section 2.15. Special Transfer Provisions............................... 36
ARTICLE 3
REDEMPTION
Section 3.01. Notices to Trustee........................................ 38
Section 3.02. Selection by Trustee of Securities To Be Redeemed......... 39
Section 3.03. Notice of Redemption...................................... 39
Section 3.04. Effect of Notice of Redemption............................ 40
Section 3.05. Deposit of Redemption Price............................... 40
Section 3.06. Securities Redeemed in Part............................... 41
Section 3.07. Optional Redemption....................................... 41
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
Page
----
ARTICLE 4
COVENANTS
<S> <C>
Section 4.01. Payment of Securities.................................... 42
Section 4.02. SEC Reports.............................................. 42
Section 4.03. Waiver of Stay, Extension or Usury Laws.................. 43
Section 4.04. Compliance Certificate................................... 43
Section 4.05. Taxes.................................................... 44
Section 4.06. Limitation on Incurrence of Additional Indebtedness...... 44
Section 4.07. Limitation on Restricted Payments........................ 45
Section 4.08. Limitation on Transactions with Affiliates............... 47
Section 4.09. Payments for Consent..................................... 49
Section 4.10. Corporate Existence...................................... 49
Section 4.11. Change of Control........................................ 50
Section 4.12. Maintenance of Office or Agency.......................... 52
ARTICLE 5
SUCCESSOR CORPORATION
Section 5.01. Limitation on Consolidation, Merger and Sale of Assets... 52
Section 5.02. Successor Person Substituted............................. 53
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default........................................ 54
Section 6.02. Acceleration............................................. 56
Section 6.03. Other Remedies........................................... 57
Section 6.04. Waiver of Past Defaults and Events of Default............ 57
Section 6.05. Control by Majority...................................... 57
Section 6.06. Limitation on Suits...................................... 58
Section 6.07. Rights of Holders To Receive Payment..................... 58
Section 6.08. Collection Suit by Trustee............................... 59
Section 6.09. Trustee May File Proofs of Claim......................... 59
Section 6.10. Priorities............................................... 60
Section 6.11. Undertaking for Costs.................................... 60
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee........................................ 60
Section 7.02. Rights of Trustee........................................ 62
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 7.03. Individual Rights of Trustee................................ 63
Section 7.04. Trustee's Disclaimer........................................ 63
Section 7.05. Notice of Defaults.......................................... 63
Section 7.06. Reports by Trustee to Holders............................... 64
Section 7.07. Compensation and Indemnity.................................. 64
Section 7.08. Replacement of Trustee...................................... 65
Section 7.09. Successor Trustee by Consolidation, Merger or Conversion.... 67
Section 7.10. Eligibility; Disqualification............................... 67
Section 7.11. Preferential Collection of Claims Against Company........... 67
ARTICLE 8
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 8.01. Without Consent of Holders.................................. 67
Section 8.02. With Consent of Holders..................................... 68
Section 8.03. Compliance with Trust Indenture Act......................... 70
Section 8.04. Revocation and Effect of Consents........................... 70
Section 8.05. Notation on or Exchange of Securities....................... 71
Section 8.06. Trustee To Sign Amendments, etc............................. 71
ARTICLE 9
DISCHARGE OF INDENTURE; DEFEASANCE
Section 9.01. Discharge of Indenture...................................... 71
Section 9.02. Legal Defeasance............................................ 72
Section 9.03. Covenant Defeasance......................................... 73
Section 9.04. Conditions to Defeasance or Covenant Defeasance............. 73
Section 9.05. Deposited Money and U.S. Government Obligations To Be Held
in Trust; Other Miscellaneous Provisions.................... 75
Section 9.06. Reinstatement............................................... 76
Section 9.07. Moneys Held by Paying Agent................................. 76
Section 9.08. Moneys Held by Trustee...................................... 76
ARTICLE 10
MISCELLANEOUS
Section 10.01. Trust Indenture Act Controls................................ 77
Section 10.02. Notices..................................................... 77
Section 10.03. Communications by Holders with Other Holders................ 79
Section 10.04. Certificate and Opinion as to Conditions Precedent.......... 79
</TABLE>
-iii-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 10.05. Statements Required in Certificate and Opinion.............. 79
Section 10.06. When Treasury Securities Disregarded........................ 80
Section 10.07. Rules by Trustee and Agents................................. 80
Section 10.08. Business Days; Legal Holidays............................... 81
Section 10.09. Governing Law............................................... 81
Section 10.10. No Adverse Interpretation of Other Agreements............... 81
Section 10.11. No Recourse Against Others.................................. 81
Section 10.12. Successors.................................................. 81
Section 10.13. Multiple Counterparts....................................... 82
Section 10.14. Table of Contents, Headings, etc............................ 82
Section 10.15. Separability................................................ 82
EXHIBITS
- --------
Exhibit A - Form of Security............................................. A-1
Exhibit B - Form of Legend for Global Securities......................... B-1
Exhibit C - Form of Certificate to Be Delivered in Connection with
Transfers to Non-QIB Accredited Investors.................... C-1
Exhibit D - Form of Certificate to Be Delivered in Connection with
Transfers Pursuant to Regulation S........................... D-1
</TABLE>
-iv-
<PAGE>
INDENTURE, dated as of [ ], [ ], between [ ], a
[ ] corporation, as issuer (the "Company"), and UNITED STATES TRUST COMPANY OF
NEW YORK, a bank and trust company organized under the New York Banking Law, as
Trustee (the "Trustee").
Each party agrees as follows for the benefit of the other parties and
for the equal and ratable benefit of the Holders of the Company's 13 7/8% Senior
Debentures due 2010 (the "Securities").
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.
-----------
"Acquired Indebtedness" means Indebtedness of a Person (including an
Unrestricted Subsidiary) existing at the time such Person becomes a Restricted
Subsidiary or assumed in connection with the acquisition of assets from such
Person.
"Affiliate" means, with respect to any Person, a Person who, directly
or indirectly, through one or more intermediaries controls, or is controlled by,
or is under common control with, such other Person. The term "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise; provided, however,
-------- -------
that the ownership of at least 10% of the voting power of the Common Stock of a
Person, either directly or indirectly, shall be deemed control.
"Agent" means any Registrar, Paying Agent, co-registrar or agent for
service of notices and demands.
"Asset Sale" means the sale, transfer or other disposition (other than
to the Company or any of its Restricted Subsidiaries) in any single transaction
or series of related transactions involving assets with a fair market value in
excess of $1,000,000 of (a) any Capital Stock of or other equity interest in any
Restricted Subsidiary of the Company other than in a transaction where the
Company or such Restricted Subsidiary receives therefor one or more properties
with a fair market value equal to the fair market value of the Capital Stock
issued, transferred or disposed of by the Company or the Restricted Subsidiary
(with such fair market values being determined by the Board of Directors of the
Company), (b) all or substantially all of the assets of the Company or of any
Re-
<PAGE>
-2-
stricted Subsidiary thereof, (c) real property or (d) all or substantially all
of the assets of any division, line of business or comparable business segment
of the Company or of any Restricted Subsidiary thereof; provided that Asset
--------
Sales shall not include (x) sales, leases, conveyances, transfer or other
dispositions to the Company or to a Restricted Subsidiary to any other Person
if, after giving effect to such sale, lease, conveyance, transfer or other
disposition, such other Person becomes a Restricted Subsidiary, or (y) the sale
of all or substantially all of the assets of the Company or a Restricted
Subsidiary in a transaction complying with Section 5.01, in which case only the
assets not so sold shall be deemed an Asset Sale, or (z) any sale, issuance or
other disposition of Capital Stock or assets of any Joint Venture Subsidiary.
"Board of Directors" means the board of directors of the Company or
any authorized committee thereof (a "Board Committee"); provided that the term
--------
"Board of Directors" as used in the definition of "Change of Control" shall not
include any Board Committee.
"Board Resolution" means a copy of a resolution certified pursuant to
an Officers' Certificate to have been duly adopted by the Board of Directors of
the Company to be in full force and effect, and delivered to the Trustee.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated) of capital stock, including each class of common stock and
preferred stock of such Person and warrants or options to purchase any of the
foregoing and (ii) with respect to any Person that is not a corporation, any and
all partnership or other equity interests of such Person.
"Capitalized Lease Obligation" means, as to any Person, the obligation
of such Person to pay rent or other amounts under a lease to which such Person
is a party that is required to be classified and accounted for as capital lease
obligations under GAAP and, for purposes of this definition, the amount of such
obligations at any date shall be the capitalized amount of such obligations at
such date, determined in accordance with GAAP.
"Cash Equivalents" means (i) marketable direct obligations issued by,
or unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case
<PAGE>
-3-
maturing within one year from the date of acquisition thereof; (ii) marketable
direct obligations issued by any state of the United States of America or any
political subdivision of any such state or any public instrumentality thereof
maturing within one year from the date of acquisition thereof and, at the time
of acquisition, having one of the two highest ratings obtainable from either S&P
or Moody's; (iii) commercial paper maturing no more than one year from the date
of creation thereof and, at the time of acquisition, having a rating of at least
A-1 from S&P or at least P-1 from Moody's; (iv) certificates of deposit or
bankers' acceptances maturing within one year from the date of acquisition
thereof issued by any commercial bank organized under the laws of the United
States of America or any state thereof or the District of Columbia or any U.S.
branch of a foreign bank having at the date of acquisition thereof combined
capital and surplus of not less than $250,000,000; (v) repurchase obligations
with a term of not more than seven days for underlying securities of the types
described in clause (i) above entered into with any bank meeting the
qualifications specified in clause (iv) above; and (vi) investments in money
market funds which invest substantially all of their assets in securities of the
types described in clauses (i) through (v) above.
"Certificate of Designation" means the Certificate of Designation
under which the Senior Preferred Stock was issued, as in effect on the date of
original issuance of the Senior Preferred Stock.
A "Change of Control" of the Company will be deemed to have occurred
at such time as (i) any Person (including a Person's Affiliates), other than a
Permitted Holder, becomes the beneficial owner (as defined under Rule 13d-3 or
any successor rule or regulation promulgated under the Exchange Act) of 50% or
more of the total voting power of the Company's Common Stock unless, as a result
of such transaction, the ultimate direct or indirect ownership of the Company is
substantially the same immediately after such transaction as it was immediately
prior to such transaction, (ii) any Person (including a Person's Affiliates),
other than a Permitted Holder, becomes the beneficial owner of more than 35% of
the total voting power of the Company's Common Stock, and the Permitted Holders
beneficially own, in the aggregate, a lesser percentage of the total voting
power of the Common Stock of the Company than such other Person and do not have
the right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the Board of Directors of the Company,
(iii) there shall be consummated any consolidation or merger of
<PAGE>
-4-
the Company in which the Company is not the continuing or surviving corporation
or pursuant to which the Common Stock of the Company would be converted into
cash, securities or other property, other than a merger or consolidation of the
Company in which the holders of the Common Stock of the Company outstanding
immediately prior to the consolidation or merger hold, directly or indirectly,
at least a majority of the voting power of the Common Stock of the surviving
corporation immediately after such consolidation or merger or (iv) during any
period of two consecutive years, individuals who at the beginning of such period
constituted the Board of Directors of the Company (together with any new
directors whose election by such Board of Directors or whose nomination for
election by the shareholders of the Company has been approved by a majority of
the directors then still in office who either were directors at the beginning of
such period or whose election or recommendation for election was previously so
approved) cease to constitute a majority of the Board of the Directors of the
Company.
"Common Stock" of any Person means any and all shares, interests or
other participations in, and other equivalents (however designated and whether
voting or non-voting) of, such Person's common stock, whether outstanding on the
Issue Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common stock.
"Company" means the party named as such in the first paragraph of this
Indenture until a successor replaces such party pursuant to Article 5 of this
Indenture and thereafter means the successor obligor on the Securities.
"Company Request" means any written request signed in the name of the
Company by the Chief Executive Officer, the President, any Vice President, the
Chief Financial Officer or the Treasurer and attested to by the Secretary or any
Assistant Secretary of the Company.
"Consolidated EBITDA" means, for any Person and its Restricted
Subsidiaries, for any period, an amount equal to (a) the sum of Consolidated Net
Income for such period, plus, to the extent deducted from the revenues of such
Person and its Restricted Subsidiaries in determining Consolidated Net Income,
(i) the provision for taxes for such period based on income or profits and any
provision for taxes utilized in computing a loss in Consolidated Net Income
above, plus (ii) Consolidated Interest Expense (including, for this purpose,
dividends on the Senior Preferred Stock and any Redeemable Dividends in each
case only to the extent that such dividends were deducted in
<PAGE>
-5-
determining Consolidated Net Income), plus (iii) Consolidated Non-Cash Charges,
plus (iv) without duplication, charges attributable to the exercise or
adjustment of employee options and fees and expenses, in each case, incurred in
connection with the Recapitalization or the transactions described under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Recent Events and Proposed Recapitalization," in the Offering
Memorandum plus (v) without duplication, for any four quarter period that
includes one or more fiscal quarters of fiscal 1998 or either or both of the
first two fiscal quarters of fiscal 1999, restructuring charges, in an aggregate
amount not to exceed $12,000,000, but only to the extent actually incurred
during each such applicable quarter and minus (vi) without duplication, the
amount of all cash payments made by such Person or any of its Restricted
Subsidiaries during such period to the extent such payments relate to
Consolidated Non-Cash Charges that were added back in determining Consolidated
EBITDA for such period or any prior period, all as determined on a consolidated
basis for such Person and its Restricted Subsidiaries in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" on any date of
determination (the "Transaction Date") means, with respect to any Person, the
ratio of (i) the aggregate amount of Consolidated EBITDA of such Person for the
Reference Period to (ii) the aggregate amount of Consolidated Fixed Charges of
such Person during the Reference Period; provided, that for purposes of such
--------
computation, in calculating Consolidated EBITDA and Consolidated Fixed Charges,
(a) the transaction giving rise to the need to calculate the Consolidated Fixed
Charge Coverage Ratio will be assumed to have occurred (on a pro forma basis) on
the first day of the Reference Period; (b) the incurrence of any Indebtedness
(other than Indebtedness incurred under any revolving credit or similar facility
to the extent that the proceeds were used to finance working capital
requirements in the ordinary course of business) or the issuance of any
Disqualified Capital Stock or Preferred Stock during the Reference Period or
subsequent thereto and on or prior to the Transaction Date (and the application
of the proceeds therefrom (other than a repayment of Indebtedness outstanding
under a revolving credit or similar facility to the extent that the proceeds
were used to finance working capital requirements in the ordinary course of
business) to the extent used to retire Indebtedness or Preferred Stock) will be
assumed to have occurred (on a pro forma basis) on the first day of such
Reference Period; (c) Consolidated Interest Expense attributable to any
Indebtedness (whether existing or being incurred) bearing a floating interest
rate shall be computed as if the rate in effect on the
<PAGE>
-6-
Transaction Date had been the applicable rate for the entire period, unless such
Person or any of its Subsidiaries is a party to an Interest Rate Agreement
(which shall remain in effect for the 12-month period after the Transaction
Date) that has the effect of fixing the interest rate on the date of
computation, in which case such rate (whether higher or lower) shall be used;
(d) the repayment of any Indebtedness (other than under a revolving credit or
similar facility to the extent that the proceeds were used to finance working
capital requirements in the ordinary course of business), Disqualified Capital
Stock or Preferred Stock during the Reference Period or subsequent thereto and
on or prior to the Transaction Date with the proceeds of any sale or other
disposition of assets or properties referred to in clause (f) below will be
assumed to have occurred (on a pro forma basis) on the first day of the
Reference Period; (e) the acquisition during the Reference Period or subsequent
thereto and on or prior to the Transaction Date of any other Person which, as a
result of such acquisition, becomes a Subsidiary, will be assumed to have
occurred (on a pro forma basis) on the first day of the Reference Period; and
(f) any sale or other disposition of assets or properties constituting an
existing business (whether existing as a separate entity, subsidiary, division,
unit or otherwise) outside the ordinary course of business occurring during the
Reference Period or subsequent thereto and on or prior to the Transaction Date
will be assumed to have occurred (on a pro forma basis) on the first day of the
Reference Period.
"Consolidated Fixed Charges" of any Person for any period means
(without duplication) the sum of (i) Consolidated Interest Expense of such
Person for such period (excluding amortization or write-off of deferred
financing fees and expenses) and (ii) without duplication, Redeemable Dividends
of such Person and its Restricted Subsidiaries (whether in cash or otherwise
(except dividends payable solely in shares of Qualified Capital Stock)) with
respect to Disqualified Capital Stock and Preferred Stock accrued during such
period in accordance with GAAP (but in the case of such Preferred Stock, only to
the extent that the aggregate amount of dividends paid or accrued from and after
the Issue Date exceeds the aggregate net cash proceeds to such Person from the
issuance and sale of such Preferred Stock), in each case excluding items
eliminated in consolidation of such Person and its Restricted Subsidiaries;
provided, that dividends accrued or paid on the Senior Preferred Stock shall not
- --------
be included in the calculation of Consolidated Fixed Charges.
<PAGE>
-7-
"Consolidated Interest Expense" means, with respect to any Person, for
any period, the aggregate amount of interest which, in conformity with GAAP,
would be set forth opposite the caption "interest expense" or any like caption
on an income statement for such Person and its Restricted Subsidiaries on a
consolidated basis, including, but not limited to, Redeemable Dividends, whether
paid or accrued, on Restricted Subsidiary Preferred Stock, imputed interest
included in Capitalized Lease Obligations, all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers' acceptance
financing, the net costs associated with hedging obligations, amortization of
other financing fees and expenses, the interest portion of any deferred payment
obligation, amortization of discount or premium, if any, and all other non-cash
interest expense (other than interest amortized to cost of sales) plus, without
duplication, all net capitalized interest for such period and all interest
incurred or paid under any guarantee of Indebtedness (including a guarantee of
principal, interest or any combination thereof) of any Person, plus the amount
of all dividends or distributions paid on Disqualified Capital Stock (other than
dividends paid or payable in shares of Capital Stock of the Company), minus
interest income for such period.
"Consolidated Net Income" means, with respect to any Person, for any
period, the aggregate of the net income (or loss) of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP; provided, however, that (a) the net income of any Person
-------- -------
including of any Emerging Market Subsidiary or Unrestricted Subsidiary (each, an
"Other Person") in which the Person in question or any of its Restricted
Subsidiaries has less than a 100% interest (which interest does not cause the
net income of such Other Person to be consolidated into the net income of the
Person in question in accordance with GAAP) shall be included only to the extent
of the amount of dividends or distributions paid to the Person in question or to
any of its Restricted Subsidiaries, (b) the net income of any Restricted
Subsidiary of the Person in question that is subject to any restriction or
limitation on the payment of dividends or the making of other distributions
(other than pursuant to the Securities) shall be excluded to the extent of such
restriction or limitation, (c) (i) 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 (ii) any net gain or net loss resulting from
an Asset Sale by the Person in question or any of its Restricted Subsidiaries
other than in the ordinary course of business shall be excluded, (d)
extraordinary, un-
<PAGE>
-8-
usual or non-recurring gains and losses shall be excluded and (e) gains and
losses associated with discontinued and terminated operations shall be excluded.
"Consolidated Non-Cash Charges" means, with respect to any Person for
any period, the aggregate depreciation, amortization and other non-cash items
(which do not reflect an accrual of a cash expense which may be incurred in the
future) of such Person and its Restricted Subsidiaries reducing Consolidated Net
Income of such Person and its Restricted Subsidiaries less any such non-cash
items increasing Consolidated Net Income of such Person and its Restricted
Subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP.
"Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered, which office at the date of execution of this Indenture is
specified in Section 10.02.
"Credit Agreement" means (i) one or more credit agreements, loan
agreements or similar agreements providing for working capital advances, term
loans, letter of credit facilities or similar advances, loans, or facilities to
the Company, any Subsidiaries, domestic or foreign, or any or all of such
Persons, including the Credit Agreement, dated on or as in effect on or about
the Issue Date, among Samsonite and Samsonite Europe N.V., as borrowers, Bank of
America National Trust and Savings Association and BankBoston, N.A., and certain
other lenders party thereto from time to time, as the same may be amended,
modified, restated or supplemented from time to time and (ii) any one or more
agreements governing advances, loans or facilities provided to refund,
refinance, replace or renew (including subsequent or successive refundings,
refinancings, replacements and renewals) Indebtedness under the agreement or
agreements referred to in the foregoing clause (i), as the same may be amended,
modified, restated or supplemented from time to time.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement designed to address fluctuations in
currency values.
"Default" means an event or condition the occurrence of which is, or
with the lapse of time or the giving of notice or both would be, an Event of
Default.
<PAGE>
-9-
"Depository" means, with respect to the Securities issued in the form
of one or more Global Securities, The Depository Trust Company or another Person
designated as Depository by the Company, which Person must be a clearing agency
registered under the Exchange Act.
"Disqualified Capital 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 (excluding any
maturity as the result of an optional redemption by the issuer thereof) or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the sole option of the holder thereof, in whole or in part, on
or prior to the final maturity date of the Securities. Without limitation of
the foregoing, Disqualified Capital Stock shall be deemed to include (i) any
Preferred Stock of a Restricted Subsidiary of the Company and (ii) any Preferred
Stock of the Company, with respect to either of which, under the terms of such
Preferred Stock, by agreement or otherwise, such Restricted Subsidiary or the
Company is obligated to pay current dividends or distributions in cash during
the period prior to the maturity date of the Securities; provided, however, that
-------- -------
Preferred Stock of the Company or any Restricted Subsidiary thereof that is
issued with the benefit of provisions requiring a change of control offer to be
made for such Preferred Stock in the event of a change of control of the Company
or such Restricted Subsidiary, which provisions have substantially the same
effect as the provisions of Section 4.11 shall not be deemed to be Disqualified
Capital Stock solely by virtue of such provisions; and provided, further, that
-------- -------
the Senior Preferred Stock shall not be considered Disqualified Capital Stock.
"Emerging Market Subsidiary" means (i) any Initial Emerging Market
Subsidiary, (ii) any majority-owned Subsidiary of the Company the principal
operations of which are not located in the United States, Canada, Western Europe
or Japan that, at the time of determination, shall be an Emerging Market
Subsidiary (as designated by the Board of Directors, as provided below) and
(iii) any majority-owned Subsidiary of an Emerging Market Subsidiary. The Board
of Directors may designate (1) any Unrestricted Subsidiary of the Company to be
an Emerging Market Subsidiary, and (2) any Restricted Subsidiary of the Company
(including any newly acquired or newly formed Subsidiary at or prior to the time
it is so formed or acquired) to be an Emerging Market Subsidiary if it meets the
geographic test set forth above and (a) no Default or Event of Default is
existing or will occur as a consequence thereof, (b) with re-
<PAGE>
-10-
spect to previously existing Restricted Subsidiaries, immediately after giving
effect to such designation, on a pro forma basis, the Company could incur at
least $1.00 of additional Indebtedness (other than Permitted Indebtedness)
pursuant to Section 4.06 and (c) such Restricted Subsidiary does not own any
Capital Stock of, or own or hold any Lien on any property of, the Company or any
Restricted Subsidiary that is not a Subsidiary of the Restricted Subsidiary to
be so designated. At the time that a previously existing Restricted Subsidiary
of the Company is designated an Emerging Market Subsidiary, the Company shall be
deemed to make an "Investment" in such Emerging Market Subsidiary in an amount
equal to its Pro Rata Interest in the fair market value of the net assets of
such Restricted Subsidiary. A Restricted Subsidiary of the Company shall not be
considered to be a "previously existing Restricted Subsidiary" for purposes of
this definition if such Restricted Subsidiary is designated to be an Emerging
Market Subsidiary at or prior to the time of the formation of such Restricted
Subsidiary or at or prior to the time such Restricted Subsidiary is acquired by
the Company. The Board of Directors may designate any Emerging Market Subsidiary
to be a Restricted Subsidiary, provided that (i) no Default or Event of Default
is existing or will occur as a consequence thereof and (ii) either (x)
immediately after giving effect to such designation, on a pro forma basis, the
Company could incur at least $ 1.00 of additional Indebtedness (other than
Permitted Indebtedness) pursuant to Section 4.06 or (y) the Consolidated Fixed
Charge Coverage Ratio of the Company immediately after giving effect to such
designation, on a pro forma basis, exceeds the Consolidated Fixed Charge
Coverage Ratio of the Company immediately prior (and without giving effect) to
such designation. Each such designation shall be evidenced by the filing with
the Trustee of a certified copy of the Board Resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing conditions.
"Equity Offering" means a sale by the Company of shares of its
Qualified Capital Stock.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Foreign Credit Agreement" means one or more Credit Agreements among
one or more Foreign Restricted Subsidiaries and the lenders party thereto.
"Foreign Restricted Subsidiary" means a Restricted Subsidiary of the
Company that is incorporated or otherwise or-
<PAGE>
-11-
ganized in a jurisdiction other than the United States, any state thereof or the
District of Columbia.
"GAAP" means generally accepted accounting principles consistently
applied as in effect in the United States from time to time.
"Holder" or "Securityholder" means the Person in whose name a Security
is registered on the Registrar's books.
"incur" means, with respect to any Indebtedness or other obligation of
any Person, to create, issue, incur (by conversion, exchange or otherwise),
assume, guarantee or otherwise become liable in respect of such Indebtedness or
other obligation or the recording, as required pursuant to GAAP or otherwise, of
any such Indebtedness or other obligation on the balance sheet of such Person
(and "incurrence," "incurred," "incurrable" and "incurring" shall 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 shall
not be deemed an incurrence of such Indebtedness; provided, further, that the
-------- -------
amortization of original issue discount on Indebtedness issued with original
issue discount or the accumulation of distributions on Disqualified Capital
Stock shall not be deemed an incurrence of Indebtedness.
"Indebtedness" means (without duplication), with respect to any
Person, any indebtedness at any time outstanding, secured or unsecured,
contingent or otherwise, which is for borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such Person or only to a
portion thereof) or evidenced by bonds, notes, debentures or similar instruments
or representing the balance deferred and unpaid of the purchase price of any
property (excluding, without limitation, any balances that constitute accounts
payable or trade payables and other accrued liabilities or accrued expenses
arising in the ordinary course of business) if and to the extent any of the
foregoing indebtedness would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, and shall also include, to the extent
not otherwise included, (i) any Capitalized Lease Obligations, (ii) obligations
secured by a Lien to which the property or assets owned or held by such Person
are subject, whether or not the obligation or obligations secured thereby shall
have been assumed (provided, however, that if such obligation or obligations
-------- -------
shall not have been assumed, the amount of such Indebtedness shall be deemed to
be the lesser of the principal amount
<PAGE>
-12-
of the obligation or the fair market value of the pledged property or assets),
other than a Lien securing an obligation that is not Indebtedness, (iii)
guarantees of items of other Persons which would be included within this
definition for such other Persons (whether or not such items would appear upon
the balance sheet of the guarantor), (iv) all obligations for the reimbursement
of any obligor on any letter of credit, banker's acceptance or similar credit
transaction, (v) Disqualified Capital Stock of the Company or any Restricted
Subsidiary thereof and (vi) obligations of any such Person under any Interest
Rate Agreement or Currency Agreement applicable to any of the foregoing (if and
to the extent such Interest Rate Agreement or Currency Agreement obligations
would appear as a liability upon a balance sheet of such Person prepared in
accordance with GAAP). The amount of Indebtedness of any Person at any date
shall be the outstanding balance at such date of all unconditional obligations
as described above and, with respect to contingent obligations, the maximum
liability upon the occurrence of the contingency giving rise to the obligation,
provided that (i) the amount outstanding at any time of any Indebtedness issued
with original issue discount is the principal amount of such Indebtedness less
the remaining unamortized portion of the original issue discount of such
Indebtedness at such time as determined in conformity with GAAP and (ii)
Indebtedness shall not include any liability for federal, state, local or other
taxes. Notwithstanding any other provision of the foregoing definition, any
trade payable arising from the purchase of goods or materials or for services
obtained in the ordinary course of business or contingent obligations arising
out of customary indemnification agreements with respect to the sale of assets
or securities shall not be deemed to be "Indebtedness" of the Company or any
Restricted Subsidiaries for purposes of this definition. Furthermore, guarantees
of (or obligations with respect to letters of credit supporting) Indebtedness
otherwise included in the determination of such amount shall not also be
included.
"Indenture" means this Indenture as amended, restated or supplemented
from time to time.
"Initial Emerging Market Subsidiary" means each of (i) Chia Tai
Samsonite (H.K.) Limited, (ii) Ningbo Chia Tai Samsonite Luggage Co. Ltd., (iii)
Samsonite Argentina S.A., (iv) Samsonite Brasil Ltda., (v) Samsonite India
Limited, (vi) Samsonite Korea Limited, (vii) Samsonite Mercosur Limited, (viii)
Samsonite Mauritius Limited, and (ix) Samsonite Singapore Limited.
<PAGE>
-13-
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
promulgated under the Securities Act.
"Interest Payment Date" means the stated maturity of any scheduled
installment of interest on the Securities.
"Interest Rate Agreement" means, for any Person, any interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement or
other similar agreement.
"Investment" by any Person in any other Person means, directly or
indirectly, any advance, account receivable (other than an account receivable
arising in the ordinary course of business), loan or capital contribution to (by
means of transfers of property to others, payments for property or services for
the account or use of others or otherwise), the purchase of any stocks, bonds,
notes, debentures, partnership or joint venture interests or other securities
of, the acquisition, by purchase or otherwise, of all or substantially all of
the business or assets or stock or other evidence of beneficial ownership of,
such other Person or the making of any investment by such Person in any other
Person. Investments shall exclude extensions of trade credit on commercially
reasonable terms in accordance with normal trade practices and repurchases or
redemptions of the Securities by the Company or any other security or evidence
of Indebtedness issued by the Company. Notwithstanding the foregoing, the
following shall not be considered Investments by a Person in any other Person:
(i) trade receivables and prepaid expenses, in each case arising in the ordinary
course of business; provided, that such receivables and prepaid expenses would
--------
be recorded as assets of such Person in accordance with GAAP, (ii) Investments
received in connection with the bankruptcy or reorganization of suppliers and
customers or in good faith bona fide settlement of delinquent ordinary course of
business trade receivables of customers, (iii) endorsements for collection or
deposit in the ordinary course of business by such Person of bank drafts and
similar negotiable instruments of such other Person received as payment for
ordinary course of business trade receivables, (iv) an Interest Rate Agreement
or Currency Agreement with an unaffiliated Person provided that such agreements
comply with the requirements of clause (iv) of the definition of Permitted
Indebtedness, (v) Investments received as consideration for, or customary
indemnities given in connection with, an Asset Sale, and (vi) Investments for
which the sole consideration provided is Qualified Capital Stock. The Company
shall be deemed to make an
<PAGE>
-14-
"Investment" in an amount equal to its Pro Rata Interest in the fair market
value of the net assets of any previously existing Restricted Subsidiary, at the
time that such Restricted Subsidiary is designated an Unrestricted Subsidiary or
an Emerging Market Subsidiary, as the case may be; and any property transferred,
directly or indirectly (whether by merger or otherwise) to an Unrestricted
Subsidiary or an Emerging Market Subsidiary, as the case may be, from the
Company or a Restricted Subsidiary after the time of such designation shall be
deemed an Investment valued at its fair market value at the time of such
transfer. A Restricted Subsidiary of the Company shall not be considered to be a
"previously existing Restricted Subsidiary" for purposes of this definition if
such Restricted Subsidiary is designated to be an Emerging Market Subsidiary or
an Unrestricted Subsidiary, as the case may be, at or prior to the time of the
formation of such Restricted Subsidiary or at or prior to the time such
Restricted Subsidiary is acquired by the Company.
"Issue Date" means the date of original issuance of the Senior
Preferred Stock.
"Joint Venture Subsidiary" means a Restricted Subsidiary of the
Company in which one or more Persons who have provided or are providing
operating assets or services to such Restricted Subsidiary beneficially own not
less than 50% of the Capital Stock of such Restricted Subsidiary not owned by
the Company or a Restricted Subsidiary of the Company.
"Lien" means any consensual lien, mortgage, deed of trust, pledge,
security interest, charge or encumbrance of any kind (including any conditional
sale or other title retention agreement, any lease in the nature thereof and any
agreement to give any security interest).
"Maturity Date" means June 15, 2010.
"Net Proceeds" means (a) in the case of any sale of Capital Stock by
the Company, the aggregate net proceeds received by the Company, after payment
of expenses, commissions and the like incurred in connection therewith, whether
such proceeds are in cash or in property (valued at the fair market value
thereof, as determined in good faith by the Board of Directors, at the time of
receipt) and (b) in the case of any exchange, exercise, conversion or surrender
of outstanding securities of any kind for or into shares of Qualified Capital
Stock of the Company, the net book value of such outstanding securities on the
date of such exchange, exercise, conversion
<PAGE>
-15-
or surrender (plus any additional amount required to be paid by the holder to
the Company upon such exchange, exercise, conversion or surrender, less any and
all payments made to the holders, e.g., on account of fractional shares and less
all expenses incurred by the Company in connection therewith).
"Non-U.S. Person" means a person who is not a U.S. person, as defined
in Regulation S.
"Notes" means the 10 3/4% Senior Subordinated Notes due 2008 of
Samsonite issued pursuant to the Notes Indenture.
"Notes Indenture" means the indenture dated as of June 24, 1998
between Samsonite and United States Trust Company of New York, as trustee,
relating to the Notes.
"Obligations" means all obligations for principal, premium, interest
(including post-petition interest, whether or not such interest constitutes
allowed or allowable claims against the relevant obligor, in any bankruptcy,
reorganization or other insolvency proceeding), penalties, fees, costs,
indemnifications, reimbursements, repurchase, redemption, retirement or
defeasance obligations, damages and other liabilities and obligations payable
under the documentation governing, or otherwise relating to, any Indebtedness.
"Offering Memorandum" means the Offering Memorandum dated June 18,
1998 pursuant to which the Senior Preferred Stock and the Securities were
offered.
"Officer" means the Chief Executive Officer, the President, any Vice
President, the Chief Financial Officer, the Treasurer, the Controller or the
Secretary of the Company, or any other officer designated by the Board of
Directors, as the case may be.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chief Executive Officer, the President or any Vice
President, the Chief Financial Officer, the Controller or any Treasurer of such
Person that shall comply with applicable provisions of this Indenture and is
reasonably acceptable to the Trustee if being delivered to the Trustee.
"Opinion of Counsel" means a written opinion from legal counsel which
counsel is reasonably acceptable to the Trustee.
<PAGE>
-16-
"Original Credit Agreement" means the referenced Credit Agreement
described in clause (i) of the definition of Credit Agreement dated on or as in
effect on or about the Issue Date, as the same may be amended, modified,
restated or supplemented from time to time, and any one replacement agreement or
facility existing at any time provided to refund, refinance, replace or renew
(including subsequent or successive refundings, refinancings, replacements and
renewals) the Original Credit Agreement; such replacement agreement or facility
to be designated by the Company and certified in an Officers' Certificate
delivered to the Trustee.
"Pari Passu Debt" means any Indebtedness (secured or unsecured) of the
Company that ranks pari passu in right of payment with the Securities.
"Permitted Holders" means Apollo Advisors, L.P. and any Affiliate
thereof.
"Permitted Indebtedness" means, without duplication, each of the
following:
(i) Indebtedness under the Securities and this Indenture;
(ii) Indebtedness incurred pursuant to any Credit Agreements (and
the guarantees thereof) in an aggregate principal amount at any time
outstanding not to exceed $260,000,000;
(iii) all other Indebtedness of the Company and its Restricted
Subsidiaries outstanding on the Issue Date including under the Notes and
the Notes Indenture;
(iv) (a) Obligations under Interest Rate Agreements of the Company
covering Indebtedness of the Company or any of its Restricted Subsidiaries;
provided, however, that such Interest Rate Agreements are entered into to
-------- -------
protect the Company and its Restricted Subsidiaries from fluctuations in
interest rates on Indebtedness otherwise permitted to be incurred hereunder
and not for speculative purposes to the extent the notional principal
amount of such Interest Rate Agreement does not exceed the principal amount
of the Indebtedness to which such Interest Rate Agreement relates and (b)
Indebtedness under Currency Agreements incurred by the Company in the
ordinary course of business to the extent that such obligations have been
entered into to protect against fluctuations in currency
<PAGE>
-17-
exchange rates and not for speculative purposes; provided, that in the case
--------
of Currency Agreements which relate to Indebtedness, such Currency
Agreements do not increase the Indebtedness of the Company and the
Restricted Subsidiaries outstanding other than as a result of fluctuations
in foreign currency exchange rates or by reason of fees, indemnities and
compensation payable thereunder;
(v) Indebtedness of a Restricted Subsidiary of the Company to the
Company or to a Restricted Subsidiary of the Company for so long as such
Indebtedness is owned by the Company or a Restricted Subsidiary of the
Company, in each case with no Lien securing such Indebtedness held by a
Person other than the Company or a Restricted Subsidiary of the Company;
provided that if as of any date any Person other than the Company or a
--------
Restricted Subsidiary of the Company owns any such Indebtedness or holds a
Lien securing any such Indebtedness, such date shall be deemed the
incurrence of Indebtedness not constituting Permitted Indebtedness under
this clause (v);
(vi) Indebtedness of the Company to a Restricted Subsidiary of the
Company for so long as such Indebtedness is owned by a Restricted
Subsidiary of the Company, in each case with no Lien securing such
Indebtedness; provided that (a) any Indebtedness of the Company to any
--------
Restricted Subsidiary of the Company is subordinated, pursuant to a written
agreement, to the Company's Obligations under this Indenture and the
Securities, and (b) if as of any date any Person other than a Restricted
Subsidiary of the Company owns any such Indebtedness or any Person holds a
Lien securing any such Indebtedness, such date shall be deemed the
incurrence of Indebtedness not constituting Permitted Indebtedness under
this clause (vi);
(vii) Purchase Money Indebtedness and Capitalized Lease Obligations
incurred to acquire property in the ordinary course of business, the
principal amount of which Indebtedness and Capitalized Lease Obligations
does not in the aggregate at any time exceed $15,000,000;
(viii) Acquired Indebtedness of any Restricted Subsidiaries, provided
that such Indebtedness was not incurred by a Person in connection with, or
in anticipation or contemplation of, such Person becoming a Restricted
Subsidiary of the Company and provided further that after giving effect to
such incurrence or assumption of such Acquired Indebtedness the
Consolidated Fixed Charge Coverage Ratio of
<PAGE>
-18-
the Company and its Restricted Subsidiaries, taken as whole, and the
Restricted Subsidiary making such acquisition independently, are at least
equal to 1:75:1 as calculated in accordance with Section 4.06;
(ix) Refinancing Indebtedness;
(x) Indebtedness solely in respect of performance bonds, surety
agreements, documentary letters of credit used for payment of goods
consistent with past practice, or other guarantees of performance (in each
case other than an obligation for the payment of borrowed money) incurred
in the ordinary course of business;
(xi) additional Indebtedness of the Company or any Restricted
Subsidiary in an aggregate principal amount not to exceed $100,000,000 at
any one time outstanding; and
(xii) Indebtedness incurred pursuant to any Foreign Credit
Agreements in an aggregate principal amount at any time outstanding not to
exceed $35,000,000 (and any guarantees thereof).
"Permitted Investments" means, for any Person, Investments made on or
after the Issue Date consisting of:
(i) Investments by the Company, or by a Restricted Subsidiary
thereof, in the Company or a Restricted Subsidiary thereof;
(ii) Cash Equivalents;
(iii) Investments by the Company, or by a Restricted Subsidiary
thereof, in a Person (or in all or substantially all of the business or
assets of a Person) if as a result of such Investment (a) such Person
becomes a Restricted Subsidiary of the Company, (b) 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
Restricted Subsidiary thereof or (c) such business or assets are owned by
the Company or a Restricted Subsidiary;
(iv) Investments in Emerging Market Subsidiaries in the aggregate
amount after the Issue Date not to exceed $50,000,000;
<PAGE>
-19-
(v) reasonable and customary loans made to employees not to exceed
$500,000 to any employee, and not to exceed $5,000,000 in the aggregate at
any one time outstanding;
(vi) an Investment that is made by the Company or a Restricted
Subsidiary thereof in the form of any stock, bonds, notes, debentures,
partnership or joint venture interests or other securities that are issued
by a third party to the Company or a Restricted Subsidiary solely as
partial consideration for the consummation of an Asset Sale;
(vii) accounts receivable of the Company and its Restricted
Subsidiaries generated in the ordinary course of business;
(viii) Investments deemed to have been made as a result of the
acquisition of a Person that at the time of such acquisition held
instruments constituting Investments that were not acquired in
contemplation of the acquisition of such Person; and
(ix) additional Investments of the Company and its Restricted
Subsidiaries from time to time of an amount not to exceed $10,000,000.
Notwithstanding the foregoing, amounts available for Investments under
clauses (iv) and (ix) shall be increased by the aggregate amount of Returned
Investments received by the Company on or before the date of such Investment.
"Person" means an individual, partnership, corporation, unincorporated
organization, joint stock company, limited liability company, trust or joint
venture, or a governmental agency or political subdivision thereof.
"Plan" means any employee benefit plan, retirement plan, deferred
compensation plan, restricted stock plan, health, life, disability or other
insurance plan or program, employee stock purchase plan, employee stock
ownership plan, pension plan, stock option plan or similar plan or arrangement
of the Company or any Restricted Subsidiary of the Company, or any successor
plan thereof, and "Plans" shall have a correlative meaning.
"Preferred Stock" of any Person means any Capital Stock of such Person
that has preferential rights to any other
<PAGE>
-20-
Capital Stock of such Person with respect to dividends or redemption or upon
liquidation.
"Private Placement Legend" means the legend initially set forth on the
Securities in the form set forth on Exhibit A hereto.
---------
"Pro Rata Interest" of any Person in any other Person means a
fraction, the numerator of which is the amount of the equity or other ownership
interest in such other Person that are beneficially owned by such Person and its
Restricted Subsidiaries, and the denominator of which is the aggregate amount of
all equity or other ownership interests in such other Person that are
outstanding (for this purpose, equity or other ownership interests subject to
presently exercisable options, warrants or other rights to acquire such
interests shall be deemed to be outstanding and shall be included in both the
numerator and denominator). The Pro Rata Interest of any Person in any item of
income or expense or in the fair market value of the assets or liabilities of
any other Person means the amount obtained by multiplying (i) the amount of such
income or expense or the fair market value of the relevant asset or liability,
as the case may be, of such other Person by (ii) the Pro Rata Interest of such
Person in such other Person.
"Purchase Money Indebtedness" of any Person means any Indebtedness
incurred or assumed by a Person to finance the cost (including the cost of
construction) of an item of real or personal property or on the improvement of
such property, the principal amount of which Indebtedness does not exceed the
sum (i) 100% of such cost and (ii) reasonable fees and expenses of such Person
incurred in connection therewith and provided that such Indebtedness is incurred
or assumed within 90 days of the acquisition of, or improvement to, such
property; and provided that any Lien securing such Indebtedness does not extend
to any property or assets other than the real or personal property financed with
such Indebtedness.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock.
"Qualified Institutional Buyer" or "QIB" shall have the meaning
specified in Rule 144A promulgated under the Securities Act.
"Recapitalization" means the transactions described as such in the
Offering Memorandum.
<PAGE>
-21-
"Redeemable Dividend" means, for any dividend or distribution with
regard to Disqualified Capital Stock or Preferred Stock, the quotient of the
dividend or distribution divided by the difference between one and the maximum
statutory United States federal income tax rate (expressed as a decimal number
between 1 and 0) then applicable to the issuer of such Disqualified Capital
Stock or Preferred Stock, as the case may be.
"Redemption Date" when used with respect to any Security to be
redeemed means the date fixed for such redemption pursuant to this Indenture.
"Reference Period" with regard to any Person means the four full
fiscal quarters of such Person ended on or immediately preceding any date upon
which any determination is to be made pursuant to the terms of the Securities or
this Indenture; provided, that if the Transaction Date in question is more than
90 days after the end of such Person's most recently completed fiscal year or
more than 45 days after the end of such Person's most recently completed fiscal
quarter (other than the fourth fiscal quarter), then "Reference Period" shall
mean the four full fiscal quarters ended on the last day of such fiscal year or
fiscal quarter, as the case may be, unless financial information for a later
period of four full fiscal quarters is available.
"Refinancing Indebtedness" means an extension, renewal, replacement,
refinancing or refunding of any Indebtedness which is Permitted Indebtedness or
is otherwise incurred in accordance with Section 4.06 (such Indebtedness is
collectively referred to as "Refinancing Indebtedness"); provided, that (1) the
--------
maximum principal amount of the relevant Refinancing Indebtedness (or, if such
Refinancing Indebtedness (if not a revolving credit or similar arrangement) does
not require cash payments prior to maturity or is otherwise issued at a
discount, the original issue price of such Refinancing Indebtedness) may not
exceed (x) the maximum principal amount of the relevant Indebtedness or
Disqualified Capital Stock being extended, renewed, replaced, refinanced or
refunded, plus unpaid interest, prepayment penalties, redemption premiums, fees,
expenses and other amounts owing with respect thereto, plus reasonable financing
fees and other reasonable out-of-pocket expenses incurred in connection
therewith (collectively, "Refinancing Costs"), or (y) if such Indebtedness or
Disqualified Capital Stock being extended, renewed, replaced, refinanced or
refunded was issued at an original issue discount, the original issue price,
plus amortization of the original issue discount
<PAGE>
-22-
at the time of the incurrence of the Refinancing Indebtedness plus Refinancing
Costs, (2) if Pari Passu Debt or Disqualified Capital Stock, such Refinancing
Indebtedness has a Weighted Average Life to Maturity and a final maturity that
is equal to or greater than the Pari Passu Debt or Disqualified Capital Stock
being extended, renewed, replaced, refinanced or refunded at the time of such
extension, renewal, replacement, refinancing or refunding, (3) with respect to
Indebtedness or Disqualified Capital Stock of the Company or any Restricted
Subsidiaries, the relevant Refinancing Indebtedness shall rank in right of
payment with respect to the Securities to an extent no less favorable in respect
thereof to the holders of Securities than the Indebtedness or Disqualified
Capital Stock being refinanced, extended, renewed, replaced or refunded and (4)
Refinancing Indebtedness incurred by a Restricted Subsidiary of the Company
shall only be used to refinance outstanding Indebtedness or Disqualified Capital
Stock of such Restricted Subsidiary or any other Restricted Subsidiary of the
Company.
"Regulation S" means Regulation S promulgated under the Securities
Act.
"Restricted Payment" means (i) the declaration or payment of any
dividend or the making of any other distribution (other than dividends or
distributions payable in Qualified Capital Stock) on shares of the Company's
Capital Stock other than the Senior Preferred Stock pursuant to the Certificate
of Designation as in effect on the Issue Date, (ii) the purchase, redemption,
retirement or other acquisition for value of any Capital Stock of the Company,
or any warrants, rights or options to acquire shares of Capital Stock of the
Company, other than the exchange of shares of Senior Preferred Stock for
Securities or other than through the exchange of such Capital Stock or any
warrants, rights or options to acquire shares of any class of such Capital Stock
for Qualified Capital Stock or warrants, rights or options to acquire Qualified
Capital Stock, (iii) the making of any principal payment on, or the purchase,
defeasance, redemption, prepayment, decrease or other acquisition or retirement
for value, prior to any scheduled final maturity, scheduled repayment or
scheduled sinking fund payment, of, any Subordinated Debt, (iv) the making of
any Investment (other than a Permitted Investment) (provided that the amount of
any Investment for purposes of this clause (iv) shall be calculated by
subtracting the amount of any applicable Returned Investments, if any, on any
such Investment), (v) any designation of a Restricted Subsidiary as an
Unrestricted Subsidiary on the basis of the fair market value of such Subsidiary
utilizing standard valuation methodologies and approved by the
<PAGE>
-23-
Board of Directors or (vi) forgiveness of any Indebtedness of an Affiliate of
the Company to the Company or a Restricted Subsidiary; provided, however, that
-------- -------
the term "Restricted Payment" does not include (a) any defeasance, redemption,
repurchase or other acquisition or retirement for value, in whole or in part, of
Indebtedness of the Company or the Senior Preferred Stock payable solely in
shares of Qualified Capital Stock or Subordinated Debt or (b) the repayment or
retirement of Subordinated Debt with the proceeds of Refinancing Indebtedness
incurred in accordance with clause (ix) of the definition of Permitted
Indebtedness. For purposes of determining the amount available to make
Restricted Payments pursuant to clause (a)(iii) of Section 4.07, the amount of
any Restricted Payments made pursuant to clauses (iv) or (v) above shall be
calculated after giving effect to any Returned Investments.
"Restricted Security" has the meaning set forth in Rule 144(a)(3)
promulgated under the Securities Act; provided that the Trustee shall be
--------
entitled to request and conclusively rely upon an Opinion of Counsel with
respect to whether any Note is a Restricted Security.
"Restricted Subsidiary" means a Subsidiary of the Company other than
an Unrestricted Subsidiary and includes all of the Subsidiaries of the Company
(other than the Initial Emerging Market Subsidiaries) existing as of the Issue
Date. The Board of Directors of the Company may designate any Unrestricted
Subsidiary or any Person that is to become a Subsidiary as a Restricted
Subsidiary if immediately after giving effect to such action (and treating any
Acquired Indebtedness as having been incurred at the time of such action), the
Company could have incurred at least $1.00 of additional Indebtedness (other
than Permitted Indebtedness) pursuant to Section 4.06; provided that the Company
--------
may not designate any Emerging Market Subsidiary to become a Restricted
Subsidiary unless such designation complies with the requirements set forth in
the definition of "Emerging Market Subsidiary" relating thereto.
"Returned Investments" mean, with respect to all Investments made in
Emerging Market Subsidiaries or Unrestricted Subsidiaries pursuant to clause
(iv) or (ix), respectively, of the definition of "Permitted Investments" or
pursuant to clauses (iv) or (v) of the definition of "Restricted Payment," the
aggregate amount of (i) all payments made in respect of such Investments, other
than interest, dividends or other distributions not in the nature of a return or
repurchase of capital or a repayment of principal, that have been paid or
returned, without restriction, in cash to the Company and its Re-
<PAGE>
-24-
stricted Subsidiaries and (ii) the Pro Rata Interest of the Company and its
Restricted Subsidiaries in the fair market value of the net assets of all
Emerging Market Subsidiaries or Unrestricted Subsidiaries, as the case may be,
that have been designated a Restricted Subsidiary of the Company after the Issue
Date, such fair market value to be determined as of the date of such
designation; provided, that amounts under the foregoing clause (ii) with respect
--------
to each such Emerging Market Subsidiary or Unrestricted Subsidiary, as the case
may be, shall not constitute Returned Investments to the extent that such amount
exceeds the total amount of Investments by the Company and its Restricted
Subsidiaries in such Emerging Market Subsidiary or Unrestricted Subsidiary, as
the case may be. Notwithstanding the foregoing, Returned Investments shall be
credited to the amounts available for Investments pursuant to clauses (iv) or
(ix) of the definition of "Permitted Investments" or Investments made pursuant
to the provisions of clauses (iv) or (v) of the definition of "Restricted
Payment," as the case may be, only to the extent that such Returned Investments
are in respect of Investments made pursuant to each such clause or provision.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Samsonite" means Samsonite Corporation, a Delaware corporation and
its successors.
"S&P" means Standard & Poor's Corporation and its successors.
"SEC" means the United States Securities and Exchange Commission as
constituted from time to time or any successor performing substantially the same
functions.
"Secondary Securities" shall have the meaning specified in each
Security.
"Securities" means the Company's 13 7/8% Senior Debentures due 2010,
including the Secondary Securities, if any, as amended or supplemented from time
to time in accordance with the terms hereof, that are issued pursuant to this
Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Preferred Stock" means the 13 7/8% Senior Redeemable
Exchangeable Preferred Stock, liquidation preference
<PAGE>
-25-
$1,000 per share of Samsonite, issued pursuant to the Certificate of
Designation.
"Significant Restricted Subsidiary" of the Company means any
Restricted Subsidiary of the Company which satisfies the requirements for being
a "significant subsidiary" as defined in Regulation S-X under the Securities Act
and the Exchange Act.
"Subordinated Debt" means Indebtedness of the Company or any
Subsidiary that is subordinated in right of payment by its express terms, or by
the express terms of any related document, to the Securities.
"Subsidiary", with respect to any Person, means (i) any corporation of
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly, by such Person or (ii) any
other Person of which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code (S)(S)
77aaa-77bbbb) as in effect on the date of this Indenture (except as provided in
Section 8.03 hereof).
"Trust Officer" means any officer or assistant officer of the Trustee
assigned by the Trustee to administer trust accounts.
"Trustee" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture and thereafter means the
successor.
"Unrestricted Subsidiary" means (a) any Emerging Market Subsidiary,
(b) any Subsidiary of an Unrestricted Subsidiary or an Emerging Market
Subsidiary and (c) any Subsidiary of the Company which is classified after the
Issue Date as an Unrestricted Subsidiary or an Emerging Market Subsidiary by a
resolution adopted by the Board of Directors of the Company; provided that a
--------
Subsidiary organized or acquired after the Issue Date may be so classified as an
Unrestricted Subsidiary only if such classification is in compliance with
Section 4.08 and; provided, further, that a Subsidiary may not be classified as
-------- -------
an Emerging Market Subsidiary unless such classification would be in compliance
with the provisions of the definition of "Emerging Market Subsidiary." The
Trustee shall be given
<PAGE>
-26-
prompt notice by the Company of each resolution adopted by the Board of
Directors of the Company under this provision, together with a copy of each such
resolution so adopted.
"U.S. Government Obligations" means (a) securities that are direct
obligations of the United States of America for the payment of which its full
faith and credit are pledged or (b) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America, the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act) as custodian with respect to any such U.S. Government
Obligation or a specific payment of principal of or interest on any such U.S.
Government Obligation held by such custodian for the account of the holder of
such depository receipt; provided that (except as required by law) such
--------
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian in
respect of the U.S. Government Obligation or a specific payment of principal or
interest on any such U.S. Government Obligation held by such custodian for the
account of the holder of such depository receipt.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the total
of the product obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
Section 1.02. Other Definitions.
------------------
The definitions of the following terms may be found in the sections
indicated as follows:
<TABLE>
<CAPTION>
Term Defined in Section
---- ------------------
<S> <C>
"Acceleration Notice".............................. 6.02
"Affiliate Transaction"............................ 4.08
"Bankruptcy Law"................................... 6.01
</TABLE>
<PAGE>
-27-
<TABLE>
<S> <C>
"Business Day"..................................... 10.08
"Change of Control Offer".......................... 4.11
"Change of Control Payment Date"................... 4.11
"Change of Control Purchase Price"................. 4.11
"Covenant Defeasance".............................. 9.03
"Custodian"........................................ 6.01
"Event of Default"................................. 6.01
"Exchange Securities".............................. 2.02
"Global Securities"................................ 2.01
"Legal Defeasance"................................. 9.02
"Legal Holiday".................................... 10.08
"Offshore Physical Securities"..................... 2.01
"Paying Agent"..................................... 2.03
"Physical Securities".............................. 2.01
"Registrar"........................................ 2.03
"Required Filing Dates"............................ 4.02
"U.S. Physical Securities"......................... 2.01
</TABLE>
Section 1.03. Incorporation by Reference of Trust Indenture Act.
-------------------------------------------------
Whenever this Indenture refers to a provision of the TIA, the portion
of such provision required to be incorporated herein in order for this Indenture
to be qualified under the TIA is incorporated by reference in and made a part of
this Indenture. The following TIA terms used in this Indenture have the
following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture securityholder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor on the indenture securities" means the Company or any other
obligor on the Securities.
All other terms used in this Indenture that are defined by the TIA,
defined in the TIA by reference to another statute or defined by SEC rule have
the meanings therein assigned to them.
<PAGE>
-28-
Section 1.04. Rules of Construction.
---------------------
Unless the context otherwise requires:
(1) a term has the meaning assigned to it herein, whether defined
expressly or by reference;
(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) words used herein implying any gender shall apply to every
gender.
ARTICLE 2
THE SECURITIES
Section 2.01. Dating; Incorporation of Form in Indenture.
------------------------------------------
The Securities and the Trustee's certificate of authentication shall
be substantially in the form of Exhibit A which is incorporated in and made part
of this Indenture. The Securities may have notations, legends or endorsements
required by law, stock exchange rule or usage. The Company may use "CUSIP"
numbers in issuing the Securities. The Company shall approve the form of the
Securities. Each Security shall be dated the date of its authentication.
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, expressly agree to such terms and provisions and to be bound thereby;
provided that, if any provision of any Security limits, qualifies, or conflicts
with the provisions of this Indenture, the provisions of this Indenture shall
govern.
The Securities offered and sold in reliance on Rule 144A shall be
issued initially in the form of one or more permanent Global Securities in
registered form, substantially in the form set forth in Exhibit A ("Global
Securities"), de-
<PAGE>
-29-
posited with the Trustee, as custodian for the Depository, duly executed by the
Company and authenticated by the Trustee as hereinafter provided and shall bear
the legend set forth on Exhibit B. The aggregate principal amount of any Global
Security may from time to time be increased or decreased by adjustments made on
the records of the Trustee, as custodian for the Depository, as hereinafter
provided.
Securities offered and sold in offshore transactions in reliance on
Regulation S may be issued in the form of certificated Securities in registered
form set forth in Exhibit A (the "Offshore Physical Securities"). Securities
offered and sold in reliance on any other exemption from registration under the
Securities Act other than as described in the preceding paragraph shall be
issued, and Securities offered and sold in reliance on Rule 144A may be issued,
in the form of certificated Securities in registered form in substantially the
form set forth in Exhibit A (the "U.S. Physical Securities"). The Offshore
Physical Securities and the U.S. Physical Securities are sometimes collectively
herein referred to as the "Physical Securities."
Section 2.02. Execution and Authentication.
----------------------------
The Securities shall be executed on behalf of the Company by two
Officers of the Company or an Officer and an Assistant Secretary of the Company.
Such signature may be either manual or facsimile.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall be
valid nevertheless.
A Security shall not be valid until the Trustee manually signs the
certificate of authentication on the Security. Such signature shall be
conclusive evidence that the Security has been authenticated under this
Indenture.
The Trustee or an authenticating agent shall authenticate Securities
from time to time and at any time for original issue in the aggregate principal
amount of up to $350,000,000 upon a Company Request. The aggregate principal
amount of Securities outstanding at any time may not exceed such amount except
as provided in Section 2.07 hereof.
Upon receipt of the Company Request, the Trustee shall authenticate an
additional series of Securities in an aggregate principal amount not to exceed
$350,000,000 for issu-
<PAGE>
-30-
ance in exchange for all Securities previously issued pursuant to an exchange
offer registered under the Securities Act (a "Registered Exchange") or pursuant
to an exchange not registered under the Securities Act (collectively, "Exchange
Securities"). Exchange Securities may have such distinctive series designation
and "CUSIP" numbers as and such changes in the form thereof as are specified in
the Company Request referred to in the preceding sentence. Exchange Securities
issued pursuant to a Registered Exchange shall not bear the Private Placement
Legend.
The Trustee may appoint an authenticating agent 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 right as an Agent to deal with the Company or an Affiliate.
The Securities shall be issuable in fully registered form only,
without coupons, in denominations of $1,000 and any integral multiple thereof;
provided, however, that Securities may be issued in denominations of less than
- -------- -------
$1,000 (but not less than $1.00) upon the initial exchange of the Senior
Preferred Stock for the Securities such that each holder of Senior Preferred
Stock shall receive Securities in a principal amount equal to the full
liquidation preference of the Senior Preferred Stock on the date of issuance of
such Securities; provided, further, however, that Secondary Securities may be
-------- ------- -------
issued in denominations of less than $1,000 (but not less than $1.00).
Section 2.03. Registrar and Paying Agent.
--------------------------
The Company shall maintain an office or agency where Securities may be
presented for registration of transfer or for exchange ("Registrar"), an office
or agency located in the Borough of Manhattan, City of New York, State of New
York where Securities may be presented for payment ("Paying Agent") and an
office or agency where notices and demands to or upon the Company in respect of
the Securities and this Indenture may be served. The Registrar shall keep a
register of the Securities and of their transfer and exchange. The Company may
have one or more co-registrars and one or more additional paying agents.
Neither the Company nor any Affiliate may act as Paying Agent. The Company may
change any Paying Agent, Registrar or co-registrar without notice to any
Securityholder.
<PAGE>
-31-
The Company shall enter into an appropriate agency agreement with any
Registrar or Paying Agent not a party to this Indenture. The agreement shall
implement the provisions of this Indenture that relate to such Agent. The
Company shall notify the Trustee of the name and address of any such Agent. If
the Company fails to maintain a Registrar or Paying Agent, or agent for service
of notices and demands, or fails to give the foregoing notice, the Trustee shall
act as such. The Company initially appoints the Trustee as Registrar, Paying
Agent and agent for service of notices and demands in connection with the
Securities.
Section 2.04. Paying Agent To Hold Assets in Trust.
------------------------------------
On or before each due date of the principal of and interest on any
Securities, the Company shall deposit with the Paying Agent a sum sufficient to
pay such principal and interest so becoming due. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee together with
a complete accounting of such sums. Upon doing so, the Paying Agent shall have
no further liability for such money.
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
Securityholders. If the Trustee is not the Registrar, the Company shall furnish
to the Trustee on or before each June 1 and December 1 in each year, and at such
other times as the Trustee may request in writing, a list as of the applicable
Record Date and in such form and as of such date as the Trustee may reasonably
require of the names and addresses of Securityholders.
Section 2.06. Transfer and Exchange.
---------------------
When a Security is presented to the Registrar with a request to
register the transfer thereof, the Registrar shall register the transfer as
requested if the requirements of applicable law are met and, when Securities are
presented to the Registrar with a request to exchange them for an equal
principal amount of Securities of other authorized denominations, the Registrar
shall make the exchange as requested provided that every Security presented or
surrendered for registration of transfer or exchange shall be duly endorsed, or
be accompanied by a written instrument of transfer in form satisfactory to the
Company and the Registrar duly executed by the Holder thereof
<PAGE>
-32-
or his attorney duly authorized in writing. To permit transfers and exchanges,
upon surrender of any Security for registration of transfer at the office or
agency maintained pursuant to Section 2.03 hereof, the Company shall execute and
the Trustee shall authenticate Securities at the Registrar's request. Any
exchange or transfer shall be without charge, except that the Company may
require payment by the Holder of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation to a transfer or exchange,
but this provision shall not apply to any exchange pursuant to Sections 2.09,
3.06 or 8.05 hereof. The Trustee shall not be required to register transfers of
Securities or to exchange Securities for a period of 15 days before selection of
any Securities to be redeemed. The Trustee shall not be required to exchange or
register transfers of any Securities called or being called for redemption in
whole or in part, except the unredeemed portion of any Security being redeemed
in part.
Section 2.07. Replacement Securities.
----------------------
If a mutilated Security is surrendered to the Trustee or if the Holder
of a Security presents evidence to the satisfaction of the Company and the
Trustee that the Security has been lost, destroyed or wrongfully taken, the
Company shall issue and the Trustee shall authenticate a replacement Security if
the requirements of Section 8-405 of the New York Uniform Commercial Code as in
effect on the date of this Indenture are met. An indemnity bond shall be
required that is sufficient in the judgment of the Company and the Trustee to
protect the Company, the Trustee or any Agent from any loss which any of them
may suffer if a Security is replaced. In every case of destruction, loss or
theft, the applicant shall also furnish to the Company and to the Trustee
evidence to their satisfaction of the destruction, loss or the theft of such
Security and the ownership thereof. The Company and the Trustee may charge for
its expenses in replacing a Security. Every replacement Security is an
additional obligation of the Company.
Section 2.08. Outstanding Securities.
----------------------
Securities outstanding at any time are all Securities authenticated by
the Trustee except for those cancelled by it, those delivered to it for
cancellation, and those described in this Section 2.08 as not outstanding.
If a Security is replaced pursuant to Section 2.07, it ceases to be
outstanding until the Company and the Trustee
<PAGE>
-33-
receive proof satisfactory to each of them that the replaced Security is held by
a bona fide purchaser.
If a Paying Agent holds on a Redemption Date or Maturity Date money
sufficient to pay the principal of, premium, if any, and accrued interest on
Securities payable on that date, then on and after that date such Securities
cease to be outstanding and interest on them ceases to accrue.
Subject to Section 10.06, a Security does not cease to be outstanding
solely because the Company or an Affiliate holds the Security.
Section 2.09. Temporary Securities.
--------------------
Until definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall, upon receipt of a Company Request, authenticate
temporary Securities. Temporary Securities shall be substantially in the form,
and shall carry all rights, 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 presented to it.
Section 2.10. Cancellation.
------------
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to them for transfer, exchange or payment. The
Trustee shall cancel and retain or, upon written request of the Company, may
destroy or return to the Company in accordance with its normal practice, all
Securities surrendered for transfer, exchange, payment or cancellation and if
such Securities are destroyed, deliver a certificate of destruction to the
Company unless the Company instructs the Trustee in writing to deliver the
Securities to the Company. Subject to Section 2.07 hereof, the Company may not
issue new Securities to replace Securities in respect of which it has previously
paid all principal, premium and interest accrued thereon, or delivered to the
Trustee for cancellation.
Section 2.11. Defaulted Interest.
------------------
If the Company defaults in a payment of interest on the Securities, it
shall pay the defaulted amounts, plus any interest payable on defaulted amounts
pursuant to Section 4.01
<PAGE>
-34-
hereof, to the persons who are Securityholders on a subsequent special record
date. The Company shall fix the special record date and payment date in a manner
satisfactory to the Trustee and provide the Trustee at least 20 days notice of
the proposed amount of default interest to be paid and the special payment date.
At least 15 days before the special record date, the Company shall mail or cause
to be mailed to each Securityholder at his address as it appears on the
Securities register maintained by the Registrar a notice that states the special
record date, the payment date (which shall be not less than five nor more than
ten days after the special record date), and the amount to be paid. In lieu of
the foregoing procedures, the Company may pay defaulted interest in any other
lawful manner satisfactory to the Trustee.
Section 2.12. Deposit of Moneys.
-----------------
Prior to 10:00 a.m., New York City time, on each Interest Payment Date
and Maturity Date, the Company shall have deposited with the Paying Agent in
immediately available funds money sufficient to make cash payments, if any, due
on such Interest Payment Date or Maturity Date, as the case may be, in a timely
manner which permits the Trustee to remit payment to the Holders on such
Interest Payment Date or Maturity Date, as the case may be.
Section 2.13. CUSIP Number.
------------
The Company in issuing the Securities may use a "CUSIP" number(s), and
if so, the Trustee shall use the CUSIP number(s) in notices of redemption or
exchange as a convenience to Holders, provided that any such notice may state
--------
that no representation is made as to the correctness or accuracy of the CUSIP
number(s) printed in the notice or on the Securities, and that reliance may be
placed only on the other identification numbers printed on the Securities. The
Company shall promptly inform the Trustee of any change in the CUSIP number(s).
Section 2.14. Book-Entry Provisions for Global Securities.
-------------------------------------------
(a) The Global Securities initially shall (i) be registered in the
name of the Depository or the nominee of such Depository, (ii) be delivered to
the Trustee as custodian for such Depository and (iii) bear legends as set forth
in Exhibit B.
Members of, or participants in, the Depository ("Agent Members") shall
have no rights under this Indenture
<PAGE>
-35-
with respect to any Global Security held on their behalf by the Depository, or
the Trustee as its custodian, or under the Global Security, and the Depository
may be treated by the Company, the Trustee and any agent of the Company or the
Trustee as the absolute owner of the Global Security for all purposes
whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the
Company, the Trustee or any agent of the Company or the Trustee from giving
effect to any written certification, proxy or other authorization furnished by
the Depository or impair, as between the Depository and its Agent Members, the
operation of customary practices governing the exercise of the rights of a
Holder of any Security.
(b) Transfers of Global Securities shall be limited to transfer in
whole, but not in part, to the Depository, its successors or their respective
nominees. Interests of beneficial owners in the Global Securities may be
transferred or exchanged for Physical Securities in accordance with the rules
and procedures of the Depository and the provisions of Section 2.15. In
addition, Physical Securities shall be transferred to all beneficial owners in
exchange for their beneficial interests in Global Securities if (i) the
Depository notifies the Company that it is unwilling or unable to continue as
Depository for any Global Security and a successor depositary is not appointed
by the Company within 90 days of such notice or (ii) an Event of Default has
occurred and is continuing and the Registrar has received a written request from
the Depository to issue Physical Securities.
(c) In connection with any transfer or exchange of a portion of the
beneficial interest in any Global Security to beneficial owners pursuant to
paragraph (b), the Registrar shall (if one or more Physical Securities are to be
issued) reflect on its books and records the date and a decrease in the
principal amount of the Global Security in an amount equal to the principal
amount of the beneficial interest in the Global Security to be transferred, and
the Company shall execute, and the Trustee shall upon receipt of a written order
from the Company authenticate and make available for delivery, one or more
Physical Securities of like tenor and amount.
(d) In connection with the transfer of Global Securities as an
entirety to beneficial owners pursuant to paragraph (b), the Global Securities
shall be deemed to be surrendered to the Trustee for cancellation, and the
Company shall execute, and the Trustee shall authenticate and deliver, to each
beneficial owner identified by the Depository in writing in exchange for its
beneficial interest in the Global Securi-
<PAGE>
-36-
ties, an equal aggregate principal amount of Physical Securities of authorized
denominations.
(e) Any Physical Security constituting a Restricted Security
delivered in exchange for an interest in a Global Security pursuant to paragraph
(b), (c) or (d) shall, except as otherwise provided by paragraphs (a)(i)(x) and
(c) of Section 2.15, bear the Private Placement Legend.
(f) The Holder of any Global Security may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Securities.
Section 2.15. Special Transfer Provisions.
---------------------------
(a) Transfers to Non-QIB Institutional Accredited Investors and Non-
---------------------------------------------------------------
U.S. Persons. The following provisions shall apply with respect to the
- ------------
registration of any proposed transfer of a Security constituting a Restricted
Security to any Institutional Accredited Investor which is not a QIB or to any
Non-U.S. Person:
(i) the Registrar shall register the transfer of any Security
constituting a Restricted Security, whether or not such Security bears the
Private Placement Legend, if (x) the requested transfer is subsequent to a
date which is two years after the later of the date of issuance of such
Security and the last date on which the Company or any of its Affiliates
was the owner of such Security or (y) (1) in the case of a transfer to an
Institutional Accredited Investor which is not a QIB (excluding Non-U.S.
Persons), the proposed transferee has delivered to the Registrar a
certificate substantially in the form of Exhibit C hereto or (2) in the
case of a transfer to a Non-U.S. Person (including a QIB), the proposed
transferor has delivered to the Registrar a certificate substantially in
the form of Exhibit D hereto; and
(ii) if the proposed transferor is an Agent Member holding a
beneficial interest in a Global Security, upon receipt by the Registrar of
(x) the certificate, if any, required by paragraph (i) above and (y)
instructions given in accordance with the Depository's and the Registrar's
procedures,
<PAGE>
-37-
whereupon (a) the Registrar shall reflect on its books and records the date and
(if the transfer does not involve a transfer of outstanding Physical Securities)
a decrease in the principal amount of a Global Security in an amount equal to
the principal amount of the beneficial interest in a Global Security to be
transferred, and (b) the Company shall execute and the Trustee shall
authenticate and make available for delivery one or more Physical Securities of
like tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply with
-----------------
respect to the registration of any proposed transfer of a Security constituting
a Restricted Security to a QIB (excluding transfers to Non-U.S. Persons):
(i) the Registrar shall register the transfer if such transfer is
being made by a proposed transferor who has checked the box provided for on
the form of Security stating, or has otherwise advised the Company and the
Registrar in writing, that the sale has been made in compliance with the
provisions of Rule 144A to a transferee who has signed the certification
provided for on the form of Security stating, or has otherwise advised the
Company and the Registrar in writing, that it is purchasing the Security
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a QIB within the
meaning of Rule 144A, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as it has requested pursuant to Rule 144A
or has determined not to request such information and that it is aware that
the transferor is relying upon its foregoing representations in order to
claim the exemption from registration provided by Rule 144A; and
(ii) if the proposed transferee is an Agent Member, and the Securities
to be transferred consist of Physical Securities which after transfer are
to be evidenced by an interest in the Global Security, upon receipt by the
Registrar of instructions given in accordance with the Depository's and the
Registrar's procedures, the Registrar shall reflect on its books and
records the date and an increase in the principal amount of the Global
Security in an amount equal to the principal amount of the Physical
Securities to be transferred, and the Trustee shall cancel the Physical
Securities so transferred.
<PAGE>
-38-
(c) Private Placement Legend. Upon the transfer, exchange or
------------------------
replacement of Securities not bearing the Private Placement Legend, the
Registrar shall deliver Securities that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Securities bearing the
Private Placement Legend, the Registrar shall deliver only Securities that bear
the Private Placement Legend unless (i) the circumstances contemplated by
paragraph (a)(i)(x) of this Section 2.15 exist, (ii) there is delivered to the
Registrar an Opinion of Counsel reasonably satisfactory to the Company and the
Trustee to the effect that neither such legend nor the related restrictions on
transfer are required in order to maintain compliance with the provisions of the
Securities Act or (iii) such Security has been sold pursuant to an effective
registration statement under the Securities Act.
(d) General. By its acceptance of any Security bearing the Private
-------
Placement Legend, each Holder of such a Security acknowledges the restrictions
on transfer of such Security set forth in this Indenture and in the Private
Placement Legend and agrees that it will transfer such Security only as provided
in this Indenture.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.14 or this Section 2.15.
The Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable notice to the Registrar.
ARTICLE 3
REDEMPTION
Section 3.01. Notices to Trustee.
------------------
If the Company elects to redeem Securities pursuant to Section 3.07,
(i) at least 60 days prior to the Redemption Date in the case of a partial
redemption, (ii) at least 45 days prior to the Redemption Date in the case of a
total redemption or (iii) during such other period as the Trustee may agree to,
the Company shall notify the Trustee in writing of the Redemption Date, the
principal amount of Securities to be redeemed and the redemption price, and
deliver to the Trustee an Officers' Certificate stating that such redemption
will comply with
<PAGE>
-39-
the conditions contained in Section 3.07 hereof, as appropriate.
Section 3.02. Selection by Trustee of Securities To Be Redeemed.
-------------------------------------------------
In the event that fewer than all of the Securities are to be redeemed,
the Trustee shall select the Securities to be redeemed, if the Securities are
listed on a national securities exchange, in accordance with the rules of such
exchange or, if the Securities are not so listed, on either a pro rata basis or
by lot, or such other method as it shall deem fair and equitable; provided,
--------
however, that a redemption pursuant to Section 3.07(b) shall be made by the
- -------
Trustee on a pro rata basis, unless such method is prohibited. The Trustee
--- ----
shall promptly notify the Company of the Securities selected for redemption and,
in the case of any Securities selected for partial redemption, the principal
amount thereof to be redeemed. The Trustee may select for redemption portions
of the principal of Securities that have denominations larger than $1,000.
Securities and portions thereof the Trustee selects shall be redeemed in amounts
of $1,000 or whole multiples of $1,000. For all purposes of this Indenture
unless the context otherwise requires, provisions of this Indenture that apply
to Securities called for redemption also apply to portions of Securities called
for redemption.
Section 3.03. Notice of Redemption.
--------------------
At least 30 days, and no more than 60 days, before a Redemption Date,
the Company shall mail, or cause to be mailed, a notice of redemption by first-
class mail to each Holder of Securities to be redeemed at his or her last
address as the same appears on the registry books maintained by the Registrar
pursuant to Section 2.03 hereof.
The notice shall identify the Securities to be redeemed (including the
CUSIP number(s) thereof) 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 and upon surrender of such Security, a new Security or
Securities in
<PAGE>
-40-
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;
(6) that unless the Company defaults in making the redemption
payment, interest on Securities called for redemption ceases to accrue on
and after the Redemption Date;
(7) the paragraph of the Securities pursuant to which the Securities
are being redeemed; and
(8) the aggregate principal amount of Securities that are being
redeemed.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's sole expense.
Section 3.04. Effect of Notice of Redemption.
------------------------------
Once the notice of redemption described in Section 3.03 is mailed,
Securities called for redemption become due and payable on the Redemption Date
and at the redemption price, including any premium, plus interest accrued to the
Redemption Date. Upon surrender to the Paying Agent, such Securities shall be
paid at the redemption price, including any premium, plus interest accrued to
the Redemption Date, provided that if the Redemption Date is after a regular
--------
interest payment record date and on or prior to the Interest Payment Date, the
accrued interest shall be payable to the Holder of the redeemed Securities
registered on the relevant record date, and provided, further, that if a
-------- -------
Redemption Date is a Legal Holiday, payment shall be made on the next succeeding
Business Day and no interest shall accrue for the period from such Redemption
Date to such succeeding Business Day.
Section 3.05. Deposit of Redemption Price.
---------------------------
On or prior to 10:00 A.M., New York City time, on each Redemption
Date, the Company shall deposit with the Paying Agent in immediately available
funds money sufficient to pay the redemption price of and accrued interest on
all Securities
<PAGE>
-41-
to be redeemed on that date other than Securities or portions thereof called for
redemption on that date which have been delivered by the Company to the Trustee
for cancellation.
On and after any Redemption Date, if money sufficient to pay the
redemption price of and accrued interest on Securities called for redemption
shall have been made available in accordance with the preceding paragraph, the
Securities called for redemption will cease to accrue interest and the only
right of the Holders of such Securities will be to receive payment of the
redemption price of and, subject to the first proviso in Section 3.04, accrued
and unpaid interest on such Securities to the Redemption Date. If any Security
called for redemption shall not be so paid, interest will be paid, from the
Redemption Date until such redemption payment is made, on the unpaid principal
of the Security and any interest not paid on such unpaid principal, in each
case, at the rate and in the manner provided in the Securities.
Section 3.06. Securities Redeemed in Part.
---------------------------
Upon surrender of a Security that is redeemed in part, the Trustee
shall authenticate for a Holder a new Security equal in principal amount to the
unredeemed portion of the Security surrendered.
Section 3.07. Optional Redemption.
--------------------
(a) The Company may redeem the Securities, in whole or in part, at
any time on or after June 15, 2001 at the following redemption prices (expressed
as a percentage of principal amount), together, in each case, with accrued and
unpaid interest to the Redemption Date, if redeemed during the twelve-month
period beginning on June 15 of each year listed below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2001........................................ 110%
2002........................................ 108%
2003........................................ 106%
2004........................................ 104%
2005........................................ 102%
2006........................................ 101%
2007 and thereafter......................... 100%
</TABLE>
(b) Notwithstanding the foregoing, the Company may redeem in the
aggregate up to 35% of the original principal
<PAGE>
-42-
amount of Securities at any time and from time to time on or prior to June 15,
2001 at a redemption price equal to 112% of the aggregate principal amount so
redeemed, plus accrued and unpaid interest to the Redemption Date with the Net
Proceeds of one or more Equity Offerings; provided that after any such
--------
redemption at least $75,000,000 aggregate principal amount of Securities remain
outstanding immediately after the occurrence of any such redemption pursuant to
an Equity Offering and that any such redemption occurs on or prior to 90 days
after the receipt by the Company of the proceeds of each such Equity Offering.
ARTICLE 4
COVENANTS
Section 4.01. Payment of Securities.
---------------------
The Company shall pay the principal of and interest on the Securities
on the dates and in the manner provided in the Securities and this Indenture.
An installment of principal of or interest on the Securities shall be considered
paid on the date it is due if the Trustee or Paying Agent holds on that date
money designated for and sufficient to pay the installment or, if the interest
is to be paid in Secondary Securities, if the Trustee or the Paying Agent holds
on that date duly authenticated Secondary Securities in an aggregate principal
amount equal to such installment. Interest will be computed on the basis of a
360-day year comprised of twelve 30-day months and, for periods not involving a
full calendar month, the actual number of days elapsed (but not to exceed 30
days). The Company shall deliver written notice to the Trustee of any
Additional Interest owed.
The Company shall pay interest on overdue principal (including post-
petition interest in a proceeding under any Bankruptcy Law), and overdue
interest, to the extent lawful, at the rate specified in the Securities.
Section 4.02. SEC Reports.
-----------
(a) The Company will file with the SEC all information, documents and
reports to be filed with the SEC pursuant to Section 13 or 15(d) of the Exchange
Act and will provide the Trustee and the Securityholders with copies of all such
information, documents and reports within 15 days of filing thereof with the
SEC; provided that if the Company is not required to
--------
<PAGE>
-43-
file such information, documents or reports with the SEC, it will nonetheless
continue to furnish such information, documents and reports to the Trustee and
the Securityholders within 15 days of the date on which filing with the SEC
would have been required. The Company shall also comply with the provisions of
TIA (S) 314(a). Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
(b) The Company will, upon request, provide to any Holder of
Securities or any prospective transferee of any such Holder any information
concerning the Company (including financial statements) necessary in order to
permit such Holder to sell or transfer Securities in compliance with Rule 144
and Rule 144A under the Securities Act.
Section 4.03. Waiver of Stay, Extension or Usury Laws.
---------------------------------------
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead (as a defense or otherwise) or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law which would prohibit or forgive the
Company from paying all or any portion of the principal of, premium, if any,
and/or interest on the Securities as contemplated herein, wherever enacted, now
or at any time hereafter in force, or which may affect the covenants or the
performance of this Indenture; and (to the extent that it may lawfully do so)
the Company hereby expressly waives all benefit or advantage of any such law,
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
Section 4.04. Compliance Certificate.
----------------------
(a) The Company shall deliver to the Trustee, within 120 days after
the end of each fiscal year, an Officers' Certificate (one of the signers of
which shall be the principal executive officer, principal financial officer or
principal accounting officer of the Company) stating that a review of the
activities of the Company and its Subsidiaries during such fiscal year or fiscal
quarter, as the case may be, has been made
<PAGE>
-44-
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 or her 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 or such Defaults or Events of Default of which he
or she may have knowledge and what action each is taking or proposes to take
with respect thereto) and that to the best of his or her knowledge no event has
occurred and remains in existence by reason of which payments on account of the
principal of or interest, if any, on the Securities is prohibited or if such
event has occurred, a description of the event and what action each is taking or
proposes to take with respect thereto.
(b) The Company will, so long as any of the Securities are
outstanding, deliver to the Trustee, within five Business Days of any Officer
becoming aware of any Default or Event of Default, an Officers' Certificate
specifying such Default or Event of Default and what action the Company is
taking or proposes to take with respect thereto.
Section 4.05. 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.
Section 4.06. Limitation on Incurrence of Additional Indebtedness.
---------------------------------------------------
The Company will not, and will not permit any Restricted Subsidiary of
the Company to, directly or indirectly incur any Indebtedness (including
Acquired Indebtedness) other than Permitted Indebtedness. Notwithstanding the
foregoing limitations, the Company and its Restricted Subsidiaries may incur
Indebtedness if (a) after giving effect to the incurrence of such Indebtedness
and the receipt and application of the proceeds thereof, the Company's
Consolidated Fixed Charge Coverage Ratio (determined on a pro forma basis for
the last four full fiscal quarters of the Company for which financial
information is available at the date of determination) is at least equal to
1.75:1; but no Restricted Subsidiary may incur Indebtedness which is not
---
Permitted Indebtedness unless its Consoli-
<PAGE>
-45-
dated Fixed Charge Coverage Ratio is at least equal to 2.75:1; provided,
--------
however, that if the Indebtedness which is the subject of a determination under
- -------
this provision is Acquired Indebtedness, or Indebtedness incurred in connection
with the simultaneous acquisition of any Person, business, property or assets,
then such ratio shall be determined by giving effect (on a pro forma basis, as
if the transaction had occurred at the beginning of the four quarter period) to
both the incurrence or assumption of such Acquired Indebtedness or such other
Indebtedness by the Company or such Restricted Subsidiary and the inclusion in
the Company's or such Restricted Subsidiary's Consolidated EBITDA of the
Consolidated EBITDA of the acquired Person, business, property or assets; and
provided, further, that in the event that the Consolidated EBITDA of the
- -------- -------
acquired Person, business, property or assets reflects an operating loss, no
amounts shall be deducted from the Company's or such Restricted Subsidiary's
Consolidated EBITDA in making the determinations described above and (b) no
Default or Event of Default shall have occurred and be continuing at the time or
as a consequence of the incurrence of such Indebtedness.
The Company will not (i) issue any Pari Passu Debt or (ii) incur any
Indebtedness which by is terms (or by the terms of any agreement governing such
Indebtedness) is subordinate in right of payment to any of the Indebtedness of
the Company unless such Indebtedness is also by its terms (or by the terms of
any agreement governing such Indebtedness) made expressly subordinate in right
of payment to the Securities pursuant to subordination provisions that are
substantively identical to the subordination provisions of such Indebtedness (or
such agreement) that are most favorable to the holders of any other Indebtedness
of the Company
Section 4.07. Limitation on Restricted Payments.
---------------------------------
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, make any Restricted Payment if at the
time of such Restricted Payment and immediately after giving effect thereto:
(i) any Default or Event of Default shall have occurred and be
continuing; or
(ii) the Company could not incur $1.00 of additional Indebtedness
(other than Permitted Indebtedness) in compliance with Section 4.06; or
<PAGE>
-46-
(iii) the aggregate amount of Restricted Payments declared or
made after the Issue Date (the amount expended for such purposes, if other
than in cash, being the fair market value of such property as determined by
the Board of Directors of the Company in good faith) exceeds the sum of (A)
50% of the Company's Consolidated Net Income for the period (taken as one
accounting period) commencing with the first full fiscal quarter of the
Company which commenced after the Issue Date to and including the fiscal
quarter of the Company ended immediately prior to the date of each
calculation (or in the event Consolidated Net Income is a deficit minus
100% of such deficit), plus (B) 100% of the aggregate Net Proceeds and the
fair market value of securities or other property received by the Company
from the issue or sale, after the date of original issuance of the
Securities, of Qualified Capital Stock (other than Capital Stock of the
Company issued to any Restricted Subsidiary of the Company) of the Company
or any Indebtedness or other securities of the Company convertible into or
exercisable or exchangeable for Qualified Capital Stock of the Company
which have been so converted or exercised or exchanged, as the case may be,
plus (C) $10,000,000, provided, that the amount of Restricted Payments
--------
permitted by this clause (C) shall not be reduced by any negative amounts
that occur under clause (A) above.
(b) Notwithstanding the foregoing, if no other Default or Event of
Default shall have occurred and be continuing or shall occur as a consequence
thereof, the provisions set forth in the immediately preceding paragraph will
not prohibit (A) payments with respect to the purchase or redemption of Capital
Stock or Subordinated Debt of the Company made by exchange for, or out of the
proceeds of the substantially concurrent sale (other than to a Subsidiary of the
Company or an Emerging Market Subsidiary) of, Qualified Capital Stock; (B)
payments in respect of any redemption, repurchase, acquisitions, cancellation or
other retirement for value of shares of Capital Stock of the Company or options,
stock appreciation or similar rights, in each case held by officers, directors
or employees of the Company or any of its Subsidiaries (or former officers,
directors or employees) (or their estates or beneficiaries under their estates)
or by an employee benefit plan, upon death, disability, retirement or
termination of employment of any such Person pursuant to the terms of any
employee benefit plan or any other agreement under which shares of Capital Stock
or stock appreciation or similar rights were issued or acquired, and the
purchase of shares of Capital Stock by the Company or any Restricted Subsidiary
for the purpose of con-
<PAGE>
-47-
tributing such shares to any employee benefit plan (provided, that all such
---------
payments and purchases referred to in this clause (B) may not exceed $2,000,000
in any 12 month period after the Issue Date); (C) the payment of dividends
(whether in cash or otherwise) on the Senior Preferred Stock or the payment of
any other dividend within 60 days after the date of its declaration if such
dividend could have been paid on the date of its declaration in compliance with
the foregoing provisions; (D) any purchase or defeasance of Subordinated Debt
upon a Change of Control or an Asset Sale to the extent required by this
Indenture or other agreement or instrument pursuant to which such Subordinated
Debt was issued, but only if the Company in the case of a Change of Control, has
complied with its obligations under Section 4.11; (E) the consummation of a cash
tender offer by the Company for shares of Capital Stock of the Company in an
aggregate amount not exceeding $430,000,000 in connection with the
Recapitalization; (F) the exchange of Senior Preferred Stock for Securities or
the retirement of the Senior Preferred Stock in accordance with the optional and
mandatory redemption provisions thereof, in each case as provided in the
Certificate of Designation as in effect on the Issue Date; or (G) cash payments
(and/or issuance or delivery of any note, instrument, agreement or other
obligation providing for future cash payments) resulting from antidilution or
other adjustments made in connection with the Recapitalization to options to
purchase Capital Stock or restricted or unvested Capital Stock held by
employees, directors or former employees or directors of the Company or any of
its Subsidiaries, to the extent that such adjustments and cash payments are
approved by the Board of Directors. Each Restricted Payment made or paid in
accordance with this paragraph (b) except those made pursuant to clause (E),
clause (F) or clause (G) shall be counted (without duplication) for purposes of
computing amounts utilized for Restricted Payments pursuant to clause (a)(iii)
of the immediately preceding paragraph. No payments made or paid pursuant to
clause (C) of this paragraph shall be counted for purposes of computing amounts
utilized for Restricted Payments pursuant to clause (a)(iii) of the immediately
preceding paragraph to the extent such amount was already counted for such
purposes.
Section 4.08. Limitation on Transactions with Affiliates.
------------------------------------------
(a) The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, enter into any transaction
or series of related transactions (including, without limitation, the sale,
purchase, exchange or lease of assets, property or services) with any Affiliate
of the Company (an "Affiliate Transaction") or extend,
<PAGE>
-48-
renew, waive or otherwise modify the terms of any Affiliate Transaction entered
into prior to the Issue Date unless (i) such Affiliate Transaction is between or
among the Company and its Restricted Subsidiaries; or (ii) such Affiliate
Transaction is entered into in good faith and the terms of such Affiliate
Transaction are fair and reasonable to the Company or such Restricted
Subsidiary, as the case may be. In any Affiliate Transaction involving an amount
or having a value in excess of $5,000,000 which is not permitted under clause
(i) above, the Company must obtain a Board Resolution of the Board of Directors
determining that such Affiliate Transaction complies with clause (ii) above. In
transactions with a value in excess of $10,000,000 which are not permitted under
clause (i) above, the Company must obtain a written opinion as to the fairness
of such a transaction, from a financial point of view to the Company or such
Restricted Subsidiary, as the case may be, from an independent investment
banking firm.
(b) Notwithstanding the foregoing, the provisions set forth in the
immediately preceding paragraph will not apply to: (i) Restricted Payments that
are not prohibited under Section 4.07; (ii) transactions permitted by, and
complying with, the provisions described under Section 5.01; (iii) transactions
in the ordinary course of business (including expense advances) between the
Company or any of its Restricted Subsidiaries or Unrestricted Subsidiaries, on
the one hand, and any employee thereof, on the other hand; (iv) employment
contracts existing on the Issue Date and employment contracts approved by the
Board of Directors of the Company the terms of which are consistent with past
practice; (v) the granting and performance of registration rights for shares of
Capital Stock of the Company under a written registration rights agreement
approved by a majority of directors of the Company that are disinterested with
respect to such transaction; (vi) transactions with Affiliates solely in their
capacity as holders of Indebtedness or Capital Stock of the Company or any of
its Restricted Subsidiaries or Unrestricted Subsidiaries, where such Affiliates
are treated no more favorably than holders of such Indebtedness or such Capital
Stock generally; (vii) any Permitted Investments; (viii) reasonable fees and
compensation paid to, and indemnity provided on behalf of, officers, directors,
employees or consultants of the Company or any Subsidiary of the Company as
determined in good faith by the Company's Board of Directors; (ix) transactions
exclusively between or among the Company and any of its Subsidiaries, provided
such transactions are not otherwise prohibited by this Indenture; (x) any
agreement as in effect as of the Issue Date or any amendment thereto or any
transaction contemplated thereby (including pursuant to any
<PAGE>
-49-
amendment thereto) or in any replacement agreement thereto so long as any such
amendment or replacement agreement is not more disadvantageous to the holders of
the Securities in any material respect than the original agreement as in effect
on the Issue Date; (xi) any payment, issuance of securities or other payments,
awards or grants, in cash or otherwise, pursuant to, or the funding of,
employment arrangements and Plans approved by the Board of Directors; (xii) the
grant of stock options or similar rights to employees and directors of the
Company and its Subsidiaries (or any adjustment or amendment thereto) pursuant
to Plans and employment contracts and stock option, stock bonus, restricted
stock and similar agreements approved by the Board of Directors; (xiii) loans or
advances to officers, directors or employees of the Company or its Restricted
Subsidiaries not in excess of $5,000,000 at any one time outstanding; and (xiv)
transactions, including, without limitation, the repurchase of the Company's
Common Stock, entered into in connection with the Recapitalization and the
financing therefor as described in the Offering Memorandum.
Section 4.09. 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 of any Securities for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of this Indenture or the Securities unless such consideration is offered to be
paid or agreed to be paid to all Holders of the Securities which so consent,
waive or agree to amend in the time frame set forth in solicitation documents
relating to such consent, waiver or agreement.
Section 4.10. Corporate Existence.
-------------------
Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
Restricted Subsidiary, in accordance with the respective organizational
documents (as the same may be amended from time to time) of each Restricted
Subsidiary and the rights (charter and statutory), licenses and franchises of
the Company and its Restricted 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 of its Restricted Subsidiaries,
if the Board of Directors shall determine that the preservation thereof is no
longer desirable in
<PAGE>
-50-
the conduct of the business of the Company and its Restricted Subsidiaries,
taken as a whole.
Section 4.11. Change of Control.
-----------------
(a) The Company shall notify the Trustee within five Business Days
after the Company knows, or reasonably should know, of the occurrence of a
Change of Control. Within 15 Business Days after the Company knows or
reasonably should know, of the occurrence of each Change of Control, the Company
will make an offer to purchase (the "Change of Control Offer") the outstanding
Securities at a purchase price equal to 101% of the principal amount thereof
plus any accrued and unpaid interest thereon to the Change of Control Payment
Date (such applicable purchase price being hereinafter referred to as the
"Change of Control Purchase Price") in accordance with the procedures set forth
in this Section 4.11.
(b) The Company will within 15 days after it knows, or reasonably
should know, of the Change of Control (i) cause a notice of the Change of
Control Offer to be sent at least once to the Dow Jones News Service or similar
business news service in the United States and (ii) send by first-class mail,
postage prepaid, to the Trustee and to each Holder of the Securities, at the
address appearing in the register maintained by the Registrar of the Securities,
a notice stating:
(i) that the Change of Control Offer is being made pursuant to
this Section 4.11 and that all Securities tendered will be accepted for
payment, and otherwise subject to the terms and conditions set forth
herein;
(ii) the Change of Control Purchase Price and the purchase date
(which shall be a Business Day no earlier than 20 Business Days nor more
than 60 Business Days from the date such notice is mailed (the "Change of
Control Payment Date"));
(iii) that any Security not tendered will continue to accrue
interest;
(iv) that, unless the Company defaults in the payment of the
Change of Control Purchase Price, any Securities accepted for payment
pursuant to the Change of Control Offer shall cease to accrue interest
after the Change of Control Payment Date;
<PAGE>
-51-
(v) that Holders accepting the offer to have their Securities
purchased pursuant to a Change of Control Offer will be required to
surrender the Securities to the Paying Agent at the address specified in
the notice prior to the close of business on the Business Day preceding the
Change of Control Payment Date;
(vi) that Holders will be entitled to withdraw their acceptance
if the Paying Agent receives, not later than the close of business on the
third 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 the Securities delivered for purchase,
and a statement that such Holder is withdrawing his election to have such
Securities purchased;
(vii) 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, provided that each
--------
Security purchased and each such new Security issued shall be in an
original principal amount in denominations of $1,000 and integral multiples
thereof;
(viii) a summary of any other procedures that a holder must
follow to accept a Change of Control Offer or effect withdrawal of such
acceptance; and
(ix) the name and address of the Paying Agent.
(c) On the Change of Control Payment Date, the Company shall,
to the extent lawful, (i) accept for payment Securities or portions thereof
tendered pursuant to the Change of Control Offer, (ii) deposit with the Paying
Agent money sufficient to pay the purchase price of all Securities or portions
thereof so tendered and (iii) deliver or cause to be delivered to the Trustee
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 Holder of Securities so accepted payment in an amount
equal to the purchase price for such Securities, and the Company shall execute
and issue, and the Trustee shall promptly authenticate and mail to such Holder,
a new Security equal in principal amount to any unpurchased portion of the
Securities surrendered; provided that each such new Security shall be issued in
--------
an original principal amount in denominations of $1,000 and integral multiples
thereof.
<PAGE>
-52-
(d) 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 purchase
of Securities pursuant to a Change of Control Offer.
Section 4.12. Maintenance of Office or Agency.
-------------------------------
The Company shall maintain an office or agency where Securities may be
surrendered for registration of transfer or exchange or for presentation for
payment and where notices and demands to or upon the Company in respect of the
Securities and this Indenture may be served. The Company shall give prompt
written notice to the Trustee of the location, and any change in the location,
of such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the address of the Trustee as set forth in Section 11.02.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations. The
Company shall give prompt written notice to the Trustee of such designation or
rescission and of any change in the location of any such other office or agency.
The Company hereby initially designates the Corporate Trust Office of
the Trustee set forth in Section 10.02 as such office of the Company.
ARTICLE 5
SUCCESSOR CORPORATION
Section 5.01. Limitation on Consolidation, Merger and
Sale of Assets.
---------------
The Company will not, in a single transaction or series of related
transactions, consolidate with or merge with or into, or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its assets to,
another Person unless (i) either (1) the Company is the survivor of such merger,
consolidation, sale, assignment, transfer, lease,
<PAGE>
-53-
conveyance or other disposition, or (2) the surviving or transferee Person is a
corporation, partnership or trust organized and existing under the laws of the
United States, any state thereof or the District of Columbia and such surviving
or transferee Person expressly assumes by supplemental indenture all the
obligations of the Company under the Securities and this Indenture; (ii)
immediately after giving effect to such transaction and the use of proceeds
therefrom (on a pro forma basis, including any Indebtedness incurred or
anticipated to be incurred in connection with such transaction), the Company or
the surviving or transferee Person is able to incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with Section
4.06; (iii) immediately after giving effect to such transaction (including any
Indebtedness incurred or anticipated to be incurred in connection with the
transaction) no Default or Event of Default has occurred and is continuing; and
(iv) the Company has delivered to the Trustee an Officers' Certificate and
Opinion of Counsel, each stating that such consolidation, merger, sale,
assignment, transfer, lease or other disposition complies with this Indenture,
and that all conditions precedent in this Indenture relating to such transaction
have been satisfied. For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise, in a single transaction or series of related
transactions) of all or substantially all of the properties and assets of one or
more Restricted Subsidiaries the Capital Stock of which constitutes all or
substantially all of the properties and assets of the Company will be deemed to
be the transfer of all or substantially all of the properties and assets of the
Company. Notwithstanding the foregoing clauses (ii) and (iii), but subject to
clauses (i) and (iv) thereof, the Company may consolidate with, merge into or
transfer all or part of its properties and assets to any Restricted Subsidiary
so long as all assets of the Company immediately prior to such transaction are
owned by such Restricted Subsidiary immediately after the consummation thereof.
Section 5.02. Successor Person Substituted.
----------------------------
Upon any consolidation or merger, or any transfer of all or
substantially all of the assets of the Company in accordance with Section 5.01
above, the successor corporation formed by such consolidation or into which the
Company is merged or to which such transfer 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 corporation had been
named as the Company herein, and thereafter the predecessor corporation shall be
relieved of all
<PAGE>
-54-
obligations and covenants under this Indenture and the Securities.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
-----------------
An "Event of Default" occurs if
(1) there is a failure to pay the principal or premium, if any, on
any Securities when such principal becomes due and payable, at maturity,
upon acceleration, redemption or otherwise, whether or not such payment is
prohibited by the provisions of Article 10 hereof;
(2) there is a failure to pay interest on any Security when the same
becomes due and payable and such Default continues for a period of 30 days,
whether or not such payment is prohibited by the provisions of Article 10
hereof;
(3) the Company fails to make a Change of Control Offer if such offer
is required by the provisions of Section 4.11 or fails to purchase
Securities from holders who elect to have such Securities purchased
pursuant to the Change of Control Offer;
(4) the Company defaults in the observance or performance of any other
covenant or agreement in the Securities or this Indenture which default
continues for a period of 60 days after the Company receives written notice
thereof specifying the default from the Trustee or the Holders of at least
25% in aggregate principal amount of outstanding Securities;
(5) (A) the Company fails to pay at the final stated maturity (after
giving effect to any extension thereof) the principal amount of any
Indebtedness, or the final stated maturity of any Indebtedness is
accelerated, if the aggregate principal amount of such Indebtedness,
together with the aggregate principal amount of any other Indebtedness in
default for failure to pay principal at the final stated maturity (after
giving effect to any extensions thereof) or which has been accelerated,
aggregates
<PAGE>
-55-
$50,000,000 or more at any time, in each case, after a 30-day period during
which such default shall not have been cured or such acceleration rescinded
or (B) the Company fails to make any scheduled payment of principal or
interest on any Indebtedness the outstanding principal amount of which
aggregate $50,000,000 or more, after a 180-day period during which such
default shall not have been cured;
(6) the Company or any Significant Restricted Subsidiary 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) admits in writing its inability to pay its debts generally as
they become due; or
(7) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or any Significant Restricted
Subsidiary in an involuntary case,
(B) appoints a Custodian of the Company or any Significant
Restricted Subsidiary or for all or substantially all of the property of
the Company or any Significant Restricted Subsidiary, or
(C) orders the liquidation of the Company or any Significant
Restricted Subsidiary,
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
Federal, state or foreign law for the relief of debtors. The term "Custodian"
means any receiver, trustee, as-
<PAGE>
-56-
signee, liquidator or similar official under any Bankruptcy Law.
The Trustee may withhold notice to the Holders of the Securities of
any Default (except in payment of principal or premium, if any, or interest on
the Securities) if the Trustee considers it to be in the best interest of the
Holders of the Securities to do so.
Section 6.02. Acceleration.
------------
Upon the happening of any Event of Default specified in Section 6.01,
the Trustee may, and the Trustee upon the request of 25% in principal amount of
the Securities shall or the Holders of at least 25% in aggregate principal
amount of outstanding Securities may, declare the principal of and accrued but
unpaid interest, if any, on all the Securities to be due and payable by notice
in writing to the Company and the Trustee specifying the respective Event of
Default and that it is a "notice of acceleration" (the "Acceleration Notice"),
and the same shall become immediately due and payable. If an Event of Default
described under clauses (6) or (7) of Section 6.01 with respect to the Company
occurs and is continuing, then such amount will ipso facto become and be
----------
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holder of Securities; provided, however, that at any time
-------- -------
after a declaration of acceleration with respect to the Securities, the Holders
of a majority in principal amount of the Securities then outstanding (by notice
to the Trustee) may rescind and cancel such declaration and its consequences if
(i) the rescission would not conflict with any judgment or decree of a court of
competent jurisdiction, (ii) all existing Events of Default have been cured or
waived except nonpayment of principal or interest on the Securities that has
become due solely by such declaration of acceleration, (iii) to the extent the
payment of such interest is lawful, interest (at the same rate specified in the
Securities) on overdue installments of interest and overdue principal which has
become due otherwise than by such declaration of acceleration has been paid,
(iv) the Company has paid the Trustee its reasonable compensation and reimbursed
the Trustee for its expenses, disbursements and advances and (v) in the event of
the cure or waiver of a Default or Event of Default (with respect to the
Company) of the type described in Section 6.01(6) or (7), the Trustee has
received an Officers' Certificate and an Opinion of Counsel that such Default or
Event of Default has been cured or waived. The Holders of a majority in
principal amount of the Securities may waive any existing Default or Event of
Default under this
<PAGE>
-57-
Indenture, and its consequences, except a default in the payment of the
principal of or interest on any Securities.
Section 6.03. Other Remedies.
--------------
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of, or premium, if any, and interest on the Securities or
to enforce the performance of any provision of the Securities or this Indenture
and may take any necessary action requested of it as Trustee to settle,
compromise, adjust or otherwise conclude any proceedings to which it is a party.
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. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
Section 6.04. Waiver of Past Defaults and Events of Default.
---------------------------------------------
Subject to Sections 6.02, 6.07 and 8.02 hereof, the Holders of a
majority in principal amount of the Securities then outstanding have the right
to waive any existing Default or Event of Default or compliance with any
provision of this Indenture or the Securities. Upon any such waiver, such
Default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured for every purpose of this Indenture; but no such
waiver shall extend to any subsequent or other Default or Event of Default or
impair any right consequent thereto.
Section 6.05. Control by Majority.
-------------------
The Holders of a majority in principal amount of the Securities then
outstanding 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 by this Indenture. The Trustee, however, may refuse to
follow any direction that conflicts with law or this Indenture or that the
Trustee determines may be unduly prejudicial to the rights of another
Securityholder not taking part in such direction, and the Trustee shall have the
right to decline to follow
<PAGE>
-58-
any such direction if the Trustee, being advised by counsel, determines that the
action so directed may not lawfully be taken or if the Trustee in good faith
shall, by a Trust Officer, determine that the proceedings so directed may
involve it in personal liability; provided that the Trustee may take any other
--------
action deemed proper by the Trustee which is not inconsistent with such
direction.
Section 6.06. Limitation on Suits.
-------------------
Subject to Section 6.07 below, a Securityholder may not institute any
proceeding or pursue any remedy with respect to this Indenture or the Securities
unless:
(1) the Holder gives to the Trustee written notice of a continuing
Event of Default;
(2) the Holders of at least 25% in aggregate principal amount of the
Securities then outstanding make a written request to the Trustee to pursue
the remedy;
(3) such Holder or Holders offer to the Trustee indemnity reasonably
satisfactory to the Trustee against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of indemnity; and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 60 day period by the Holders of a majority in
aggregate principal amount of the Securities then outstanding.
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 of, or premium, if any,
and interest of 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, is (subject to Section 10 hereof) absolute and
unconditional and shall not be impaired or affected without the consent of such
Holder.
<PAGE>
-59-
Section 6.08. Collection Suit by Trustee.
--------------------------
If an Event of Default in payment of principal, premium or interest
specified in Section 6.01(1) or (2) hereof occurs and is continuing, the Trustee
may recover judgment in its own name and as trustee of an express trust against
the Company (or any other obligor on the Securities) for the whole amount of
unpaid principal and accrued interest remaining unpaid, together with interest
on overdue principal and, to the extent that payment of such interest is lawful,
interest on overdue installments of interest, in each case at the rate then
borne by the Securities, and such further amounts as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.
Section 6.09. Trustee May File Proofs of Claim.
--------------------------------
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
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 and receive any monies or other securities
or property payable or deliverable upon the conversion or exchange of the
Securities or upon any such claims and to distribute the same after deduction of
its charges and expenses to the extent that any such charges and expenses are
not paid out of the estate in any such proceedings 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 payments 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.
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.
<PAGE>
-60-
Section 6.10. Priorities.
----------
If the Trustee collects any money pursuant to this Article 6, it shall
pay out the money in the following order:
FIRST: to the Trustee for amounts due under Section 7.07 hereof;
SECOND: to Securityholders for amounts due and unpaid on the
Securities for principal, premium, if any, and interest as to each,
ratably, without preference or priority of any kind, according to the
amounts due and payable on the Securities; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any payment to
Securityholders pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs.
---------------------
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by
a Holder pursuant to Section 6.07 hereof or a suit by Holders of more than 10%
in principal amount of the Securities then outstanding.
ARTICLE 7
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
exer-
<PAGE>
-61-
cise or use under the same 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.
(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.
(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.
(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 Sections 6.02 and 6.05 hereof.
(d) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its rights or powers if it shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity satisfactory to
it against such risk or liability is not reasonably assured to it.
(e) Whether or not therein expressly so provided, paragraphs (a),
(b), (c) and (d) of this Section 7.01 shall govern every provision of this
Indenture that in any way relates to the Trustee.
<PAGE>
-62-
(f) The Trustee is under no obligation and may refuse to perform any
duty or exercise any right or power under this Indenture at the request or
direction of any holders of the Securities unless such holders have offered the
Trustee reasonable indemnity or security against any loss, liability or expense.
(g) The Trustee shall not be liable for interest on any money or
assets received by it except as the Trustee may agree in writing with the
Company. Money or assets held in trust by the Trustee need not be segregated
from other funds or assets except to the extent required by the law.
Section 7.02. Rights of Trustee.
-----------------
Subject to Section 7.01 hereof:
(1) The Trustee may rely on any document reasonably 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.
(2) Before the Trustee acts or refrains from acting, it may consult
with counsel, require an Officers' Certificate or an Opinion of Counsel, or
both, which shall conform to the provisions of Section 10.05 hereof. The
Trustee shall be protected and shall not be liable for any action it takes
or omits to take in good faith and in reasonable reliance on such
certificate or opinion, except if such action violates the express
provisions of this Indenture.
(3) The Trustee may act through agents and attorneys and shall not be
responsible for the misconduct or negligence of any agent or attorney
appointed by it with due care.
(4) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it reasonably believes to be authorized or
within its rights or powers.
(5) The Trustee may consult with counsel of its selection, and the
advice or opinion of such counsel as to matters of law shall be full and
complete authorization and protection from liability in respect of any
action taken, omitted or suffered by it hereunder in good faith
<PAGE>
-63-
and in accordance with the advice or opinion of such counsel.
(6) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Securityholders pursuant to this Indenture, unless such
Securityholders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction.
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 make loans to, accept deposits from,
perform services for or otherwise deal with the Company, or any Affiliates
thereof, with the same rights it would have if it were not Trustee. Any Agent
may do the same with like rights. The Trustee, however, shall be subject to
Sections 7.10 and 7.11 hereof.
Section 7.04. Trustee's Disclaimer.
--------------------
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Securities, it shall not
be accountable for the Company's use of the proceeds from the sale of Securities
or any money paid to the Company pursuant to the terms of this Indenture and it
shall not be responsible for any statement of the Company in this Indenture or
any document issued in connection with the sale of Securities or any statement
in the Securities other than the Trustee's certificate of authentication.
Section 7.05. Notice of Defaults.
------------------
If a Default occurs and is continuing and if it is known to the
Trustee, the Trustee shall mail to each Securityholder notice of the Default
within 90 days after it occurs. Except in the case of a Default in payment of
the principal of, or premium, if any, or interest on any Security the Trustee
may withhold the notice if and so long as the board of directors of the Trustee,
the executive committee or any trust committee of such board and/or any of its
Trust Officers in good faith determine(s) that withholding the notice is in the
interests of the Securityholders.
<PAGE>
-64-
Section 7.06. Reports by Trustee to Holders.
-----------------------------
If required by TIA (S) 313(a), within 60 days after May 15 of any
year, commencing the May 15 following the date of this Indenture, the Trustee
shall mail to each Securityholder a brief report dated as of such May 15 that
complies with TIA (S) 313(a). The Trustee also shall comply with TIA (S)
313(b)(2). The Trustee shall also transmit by mail all reports as required by
TIA (S) 313(c) and TIA (S) 313(d).
Reports pursuant to this Section 7.06 shall be transmitted by mail:
(1) to all registered Holders of Securities, as the names and
addresses of such Holders appear on the Registrar's books; and
(2) to such Holder of Securities as have, within the two years
preceding such transmission, filed their names and addresses with the
Trustee for that purpose.
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 promptly notify the Trustee when the Securities are
listed on any securities exchange.
Section 7.07. Compensation and Indemnity.
--------------------------
The Company shall pay to the Trustee from time to time such
compensation as shall be agreed in writing between the Company and the Trustee
for its services hereunder (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust). The Company shall reimburse the Trustee upon request for all reasonable
disbursements, expenses and advances incurred or made by it in connection with
its duties under this Indenture, including the reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify each of the Trustee, any predecessor
Trustee for, and hold them harmless against, any and all loss, damage, claim,
liability or reasonable expense, including taxes (other than taxes based on the
income of the Trustee) incurred by it in connection with the acceptance or
performance of its duties under this Indenture including the reasonable costs
and expenses of enforcing this Indenture against the Company (including with
respect to this Sec-
<PAGE>
-65-
tion 7.07) and of defending itself against any claim (whether asserted by any
Securityholder or the Company) or liability in connection with the exercise or
performance of any of its powers or duties hereunder (including, without
limitation, settlement costs). The Trustee shall notify the Company in writing
promptly of any claim asserted against the Trustee for which it may seek
indemnity. However, the failure by the Trustee to so notify the Company shall
not relieve the Company of its obligations hereunder except to the extent the
Company is prejudiced thereby.
Notwithstanding the foregoing, the Company need not reimburse the
Trustee for any expense or indemnify it against any loss or liability incurred
by the Trustee through its negligence or bad faith. To secure the payment
obligations of the Company in this Section 7.07, the Trustee shall have a lien
prior to the Securities on all money or property held or collected by the
Trustee except such money or property held in trust to pay principal of and
interest on particular Securities. The Trustee's right to receive payment of
any amounts due under this Section 7.07 shall not be subordinate to any other
liability or indebtedness of the Company and the Securities shall be subordinate
(to the extent provided in Section 6.10) to the Trustee's right to receive such
payment. The obligations of the Company under this Section 7.07 to compensate
and indemnify the Trustee and each predecessor Trustee and to pay or reimburse
the Trustee and each predecessor Trustee for expenses, disbursements and
advances shall survive the resignation or removal of any Trustee, any rejection
or termination under any Bankruptcy Law and the satisfaction and discharge of
this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(6) or (7) hereof occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
For purposes of this Section 7.07, the term "Trustee" shall include
any trustee appointed pursuant to Article 9.
Section 7.08. Replacement of Trustee.
----------------------
The Trustee may resign by so notifying the Company in writing. The
Holders of a majority in principal amount of the outstanding Securities may
remove the Trustee by notifying the removed Trustee in writing and may appoint a
successor Trustee with the Company's written consent which consent shall not be
<PAGE>
-66-
unreasonably withheld. The Company may remove the Trustee at its election if:
(1) the Trustee fails to comply with Section 7.10 hereof;
(2) the Trustee is adjudged a bankrupt or an insolvent under any
Bankruptcy Law;
(3) a receiver or other public officer takes charge of the Trustee
or its property;
(4) the Trustee otherwise becomes incapable of acting; or
(5) a successor corporation becomes successor Trustee pursuant to
Section 7.09 below.
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.
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 a majority in principal amount of the 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 hereof, 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. Immediately following
such delivery, the retiring Trustee shall, subject to its rights under Section
7.07 hereof, transfer all property held by it as Trustee to the successor
Trustee, the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have all the rights, powers and
duties of the Trustee under this Indenture. A successor Trustee shall mail
notice of its succession to each Securityholder. 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.
<PAGE>
-67-
Section 7.09. Successor Trustee by Consolidation, Merger or Conversion.
--------------
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust assets to, another
corporation, subject to Section 7.10 hereof, 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 (S) 310(a)(1) and (2) in every respect. The Trustee shall
have a combined capital and surplus of at least $50,000,000 as set forth in its
most recent published annual report of condition. The Trustee shall comply with
TIA (S) 310(b), including the provision in (S) 310(b)(1); provided, however,
-------- -------
that there shall be excluded from the operation of TIA (S) 310(b)(1) any
indenture or indentures under which other securities, or certificates of
interest or participation in other securities, of the Company are outstanding,
if the requirements for such exclusion set forth in TIA (S) 310(b)(1) are met.
Section 7.11. Preferential Collection of Claims Against Company.
--------
The Trustee shall comply with TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311 (b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein.
ARTICLE 8
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 8.01. Without Consent of Holders.
--------------------------
The Company, when authorized by a Board Resolution, and the Trustee
may amend or supplement this Indenture or the Securities without notice to or
consent of any Securityholder:
(1) to comply with Section 5.01 hereof;
(2) to provide for uncertificated Securities in addition to or in
place of certificated Securities;
<PAGE>
-68-
(3) to comply with any requirements of the SEC under the TIA;
(4) to cure any ambiguity, defect or inconsistency, or to make any
other change that does not materially and adversely affect the rights of
any Securityholder; or
(5) to make any other change that does not, in the opinion of the
Trustee, materially and adversely affect the rights of any Securityholder.
The Trustee is hereby authorized to join with the Company in the
execution of any supplemental indenture authorized or permitted by the terms of
this Indenture and to make any further appropriate agreements and stipulations
which may be therein contained; provided, however, that the Company has
-------- -------
delivered to the Trustee an Officers' Certificate stating that such amendment or
supplement complies with the provisions of this Section 8.01 and; provided,
--------
further, that the Trustee shall not be obligated to enter into any such
- -------
supplemental indenture which adversely affects its own rights, duties or
immunities under this Indenture.
Section 8.02. With Consent of Holders.
-----------------------
Subject to the rights of holders of Senior Preferred Stock, if any,
provided for in paragraph (f)(ii)(D) of the Certificate of Designation, the
Company and the Trustee may modify or supplement this Indenture or the
Securities with the written consent of the Holders of not less than a majority
in aggregate principal amount of the outstanding Securities without notice to
any Securityholder. The Holders of not less than a majority in aggregate
principal amount of the outstanding Securities may waive compliance in a
particular instance by the Company with any provision of this Indenture or the
Securities without notice to any Securityholder. Subject to the rights of
holders of Senior Preferred Stock, if any, provided for in paragraph (f)(ii)(D)
of the Certificate of Designation, without the consent of each Securityholder
affected, however, an amendment, supplement or waiver, including a waiver
pursuant to Section 6.04, may not:
(1) reduce the amount of Securities whose Holders must consent to
an amendment, supplement or waiver to this Indenture or the Securities;
(2) reduce the rate of or change the time for payment of interest
on any Security;
<PAGE>
-69-
(3) reduce the principal of or premium on or change the stated
maturity of any Security;
(4) make any Security payable in money other than that stated in
the Security or change the place of payment from New York, New York;
(5) change the amount or time of any payment required by the
Securities or reduce the premium payable upon any redemption of the
Securities or change the time before which no redemption may be made;
(6) waive a default in the payment of the principal of, or interest
on, or redemption payment with respect to, any Security (including any
obligation to make a Change of Control Offer or modify any of the
provisions or definitions with respect to such offer);
(7) make any changes in Sections 6.04 or 6.07 hereof or this
sentence of Section 8.02;
(8) affect the ranking of the Securities in a manner adverse to the
Holders; or
(9) take any other action otherwise prohibited by this Indenture to
be taken without the consent of each Holder affected thereby.
After an amendment, supplement or waiver under this Section 8.02
becomes effective, the Company shall mail to the Holders a notice briefly
describing the amendment, supplement or waiver.
Upon receipt of a Company Request, accompanied by a Board
Resolution authorizing the execution of any such supplemental indenture, and
upon the receipt by the Trustee of evidence reasonably satisfactory to the
Trustee of the consent of the Securityholders as aforesaid and upon receipt by
the Trustee of the documents described in Section 8.06 hereof, the Trustee shall
join with the Company in the execution of such supplemental indenture unless
such supplemental indenture affects the Trustee's own rights, duties or
immunities under this Indenture, in which case the Trustee may in its
discretion, but shall not be obligated to, enter into such supplemental
indenture.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of
<PAGE>
-70-
any proposed amendment, supplement or waiver, but it shall be sufficient if such
consent approves the substance thereof.
Section 8.03. Compliance with Trust Indenture Act.
-----------------------------------
Every amendment to or supplement of this Indenture or the Securities
shall comply with the TIA as then in effect.
Section 8.04. Revocation and Effect of Consents.
---------------------------------
Until an amendment, supplement, waiver or other action becomes
effective, a consent to it by a Holder of a Security is a continuing consent
conclusive and binding upon such Holder and every subsequent Holder of the same
Security or portion thereof, and of any Security issued upon the transfer
thereof or in exchange therefor or in place thereof, even if notation of the
consent is not made on any such Security. Any such Holder or subsequent Holder,
however, may revoke the consent as to his Security or portion of a Security, if
the Trustee receives the notice of revocation before the date the amendment,
supplement, waiver or other action becomes effective.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement, or waiver. If a record date is fixed, then, notwithstanding the
preceding paragraph, those Persons who were Holders at such record date (or
their duly designated proxies), and only such Persons, shall be entitled to
consent to such amendment, supplement, or waiver or to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
record date. No such consent shall be valid or effective for more than 90 days
after such record date unless the consent of the requisite number of Holders has
been obtained.
After an amendment, supplement, waiver or other action becomes
effective, it shall bind every Securityholder, unless it makes a change
described in any of clauses (1) through (9) of Section 8.02 hereof. In that
case the amendment, supplement, waiver or other action shall bind each Holder of
a Security who has consented to it and every subsequent Holder of a Security or
portion of a Security that evidences the same debt as the consenting Holder's
Security.
<PAGE>
-71-
Section 8.05. Notation on or Exchange of Securities.
-------------------------------------
If an amendment, supplement, or waiver changes the terms of a
Security, the Trustee may request the Holder of the Security to deliver it to
the Trustee. In such case, the Trustee shall place an appropriate notation on
the Security about the changed terms and return it to the Holder.
Alternatively, if the Company or the Trustee so determines, the Company in
exchange for the Security shall issue and the Trustee shall authenticate a new
security that reflects the changed terms. Failure to make the appropriate
notation or issue a new Security shall not affect the validity and effect of
such amendment supplement or waiver.
Section 8.06. Trustee To Sign Amendments, etc.
-------------------------------
The Trustee shall sign any amendment, supplement or waiver authorized
pursuant to this Article 8 if the amendment, supplement or waiver does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may, but need not, sign it. In signing or refusing to
sign such amendment, supplement or waiver the Trustee shall be entitled to
receive and, subject to (and to the extent provided in) Section 7.01 hereof,
shall be fully protected in relying upon an Officers' Certificate and an Opinion
of Counsel stating that such amendment, supplement or waiver is authorized or
permitted by this Indenture and that such amendment, supplement or waiver
constitutes the legal, valid and binding obligation of the Company, enforceable
in accordance with its terms (subject to customary enforceability exceptions).
The Company may not sign an amendment or supplement until the Board of Directors
of the Company approves it. In signing any amendment, supplement or waiver, the
Trustee shall be entitled to receive an indemnity reasonably satisfactory to it.
ARTICLE 9
DISCHARGE OF INDENTURE; DEFEASANCE
Section 9.01. Discharge of Indenture.
----------------------
The Company may terminate its obligations under the Securities and
this Indenture, except the obligations referred to in the last paragraph of this
Section 9.01, if there shall have been cancelled by the Trustee or delivered to
the Trustee for cancellation all Securities theretofore authenticated and
<PAGE>
-72-
delivered (other than any Securities that are asserted to have been destroyed,
lost or stolen and that shall have been replaced as provided in Section 2.07
hereof) and the Company has paid all sums payable by it hereunder or deposited
all required sums with the Trustee.
After such delivery the Trustee upon request shall acknowledge in
writing the discharge of the Company's obligations under the Securities and this
Indenture except for those surviving obligations specified below.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company in Sections 7.07, 9.05 and 9.06 hereof shall survive.
Section 9.02. Legal Defeasance.
----------------
The Company may at its option, by Board Resolution, be discharged from
its obligations with respect to the Securities on the date the conditions set
forth in Section 9.04 below are satisfied (hereinafter, "Legal Defeasance").
For this purpose, such Legal Defeasance means that the Company shall be deemed
to have paid and discharged the entire indebtedness represented by the
Securities and to have satisfied all its other obligations under such Securities
and this Indenture insofar as such Securities are concerned (and the Trustee, at
the expense of the Company, shall, subject to Section 9.06 hereof, execute
proper instruments acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder: (A) the rights of
Holders of outstanding Securities to receive solely from the trust funds
described in Section 9.04 hereof and as more fully set forth in such Section,
payments in respect of the principal of, premium, if any, and interest on such
Securities when such payments are due, (B) the Company's obligations with
respect to such Securities under Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07,
2.08 and 4.12 hereof, (C) the rights, powers, trusts, duties, and immunities of
the Trustee hereunder (including claims of, or payments to, the Trustee under or
pursuant to Section 7.07 hereof) and (D) this Article 9. Subject to compliance
with this Article 9, the Company may exercise its option under this Section 9.02
with respect to the Securities notwithstanding the prior exercise of its option
under Section 9.03 below with respect to the Securities.
<PAGE>
-73-
Section 9.03. Covenant Defeasance.
-------------------
At the option of the Company, pursuant to a Board Resolution, the
Company shall be released from its obligations under Section 4.02, Sections 4.05
through 4.08 and Section 4.11 hereof, inclusive, and clause (ii) of Section 5.01
hereof with respect to the outstanding Securities on and after the date the
conditions set forth in Section 9.04 hereof are satisfied (hereinafter,
"Covenant Defeasance"). For this purpose, such Covenant Defeasance means that
the Company may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such specified Section or
portion thereof, whether directly or indirectly by reason of any reference
elsewhere herein to any such specified Section or portion thereof or by reason
of any reference in any such specified Section or portion thereof to any other
provision herein or in any other document, but the remainder of this Indenture
and the Securities shall be unaffected thereby.
Section 9.04. Conditions to Defeasance or Covenant Defeasance.
-----------------------------------------------
The following shall be the conditions to application of Section 9.02
or Section 9.03 hereof to the outstanding Securities:
(1) the Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements
of Section 7.10 hereof who shall agree to comply with the provisions of
this Article 9 applicable to it) as funds in trust for the purpose of
making the following payments, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of the Securities, (A)
money in an amount, or (B) U.S. Government Obligations which through the
scheduled payment of principal and interest in respect thereof in
accordance with their terms will provide, not later than the due date of
any payment, money in an amount, or (C) a combination thereof, sufficient,
in the opinion of a nationally-recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, to pay and discharge, and which shall be applied by the Trustee
(or other qualifying trustee) to pay and discharge, the principal of,
premium, if any, and accrued interest on the outstanding Securities at the
maturity date of such principal, premium, if any, or interest, or on dates
for payment and redemption of such principal, premium, if any, and interest
selected in accor-
<PAGE>
-74-
dance with the terms of this Indenture and of the Securities;
(2) no Event of Default or Default with respect to the Securities
shall have occurred and be continuing on the date of such deposit, or shall
have occurred and be continuing at any time during the period ending on the
91st day after the date of such deposit or, if longer, ending on the day
following the expiration of the longest preference period under any
Bankruptcy Law applicable to the Company in respect of such deposit (it
being understood that this condition shall not be deemed satisfied until
the expiration of such period);
(3) such Legal Defeasance or Covenant Defeasance shall not cause
the Trustee to have a conflicting interest for purposes of the TIA with
respect to any securities of the Company;
(4) such Legal Defeasance or Covenant Defeasance shall not result
in a breach or violation of, or constitute default under any other
agreement or instrument to which the Company is a party or by which it is
bound;
(5) the Company shall have delivered to the Trustee an Opinion of
Counsel stating that, as a result of such Legal Defeasance or Covenant
Defeasance, neither the trust nor the Trustee will be required to register
as an investment company under the Investment Company Act of 1940, as
amended;
(6) in the case of an election under Section 9.02 above, the
Company shall have delivered to the Trustee an Opinion of Counsel stating
that (i) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling to the effect that or (ii) there has been
a change in any applicable Federal income tax law with the effect that, and
such opinion shall confirm that, the Holders of the outstanding Securities
or persons in their positions will not recognize income, gain or loss for
Federal income tax purposes solely as a result of such Legal Defeasance and
will be subject to Federal income tax on the same amounts, in the same
manner, including as a result of prepayment, and at the same times as would
have been the case if such Legal Defeasance had not occurred;
(7) in the case of an election under Section 9.03 hereof, the
Company shall have delivered to the Trustee an
<PAGE>
-75-
Opinion of Counsel to the effect that the Holders of the outstanding
Securities will not recognize income, gain or loss for Federal income tax
purposes as a result of such Covenant Defeasance and will be subject to
Federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not
occurred;
(8) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to either the Legal Defeasance under
Section 9.02 above or the Covenant Defeasance under Section 9.03 hereof (as
the case may be) have been complied with;
(9) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit under clause (1) was not made by the
Company with the intent of defeating, hindering, delaying or defrauding any
creditors of the Company or others; and
(10) the Company shall have paid or duly provided for payment under
terms mutually satisfactory to the Company and the Trustee all amounts then
due to the Trustee pursuant to Section 7.07 hereof.
Section 9.05. Deposited Money and U.S. Government
Obligations To Be Held in Trust; Other
Miscellaneous Provisions.
-------------------------
All money and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee pursuant to Section 9.04 hereof in respect
of the outstanding Securities shall be held in trust and applied by the Trustee,
in accordance with the provisions of such Securities and this Indenture, to the
payment, either directly or through any Paying Agent as the Trustee may
determine, to the Holders of such Securities, of all sums due and to become due
thereon in respect of principal, premium, if any, and accrued interest, but such
money need not be segregated from other funds except to the extent required by
law.
The Company shall pay and indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 9.04 hereof or the principal, premium,
if any, and interest received in respect thereof other than any such tax, fee
<PAGE>
-76-
or other charge which by law is for the account of the Holders of the
outstanding Securities.
Anything in this Article 9 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in
Section 9.04 hereof which, in the opinion of a nationally-recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
Section 9.06. Reinstatement.
-------------
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 9.01, 9.02 or 9.03 hereof by
reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company's obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to this Article 9 until such time as the Trustee or Paying Agent is
permitted to apply all such money or U.S. Government Obligations in accordance
with Section 9.01 hereof; provided, however, that if the Company has made any
-------- -------
payment of principal of, premium, if any, or accrued interest on any Securities
because of 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 or U.S. Government Obligations held by the Trustee or Paying Agent.
Section 9.07. Moneys Held by Paying Agent.
---------------------------
In connection with the satisfaction and discharge of this Indenture,
all moneys then held by any Paying Agent under the provisions of this Indenture
shall, upon demand of the Company, be paid to the Trustee, or if sufficient
moneys have been deposited pursuant to Section 9.01 hereof, to the Company and
thereupon such Paying Agent shall be released from all further liability with
respect to such moneys.
Section 9.08. Moneys Held by Trustee.
----------------------
Any moneys deposited with the Trustee or any Paying Agent or then held
by the Company in trust for the payment of the principal of, or premium, if any,
or interest on any Secu-
<PAGE>
-77-
rity that are not applied but remain unclaimed by the Holder of such Security
for two years after the date upon which the principal of, or premium, if any, or
interest on such Security shall have respectively become due and payable shall
be repaid to the Company upon Company Request, or if such moneys are then held
by the Company in trust, such moneys shall be released from such trust; and the
Holder of such Security entitled to receive such payment shall thereafter, as an
unsecured general creditor, look only to the Company for the payment thereof,
and all liability of the Trustee or such Paying Agent with respect to such trust
money shall thereupon cease; provided, however, that the Trustee or any such
-------- -------
Paying Agent, before being required to make any such repayment, may, at the
expense of the Company, either mail to each Securityholder affected, at the
address shown in the register of the Securities maintained by the Registrar
pursuant to Section 2.03 hereof, or cause to be published once a week for two
successive weeks, in a newspaper published in the English language, customarily
published each Business Day and of general circulation in the City of New York,
New York, a notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
mailing or publication, any unclaimed balance of such moneys then remaining will
be repaid to the Company. After payment to the Company or the release of any
money held in trust by the Company, Securityholders entitled to the money must
look only to the Company for payment as general creditors unless applicable
abandoned property law designates another person.
ARTICLE 10
MISCELLANEOUS
Section 10.01. Trust Indenture Act Controls.
----------------------------
If any provision of this Indenture limits, qualifies or conflicts with
another provision which is required to be included in this Indenture by the TIA,
the required provision shall control.
Section 10.02. Notices.
-------
Any notice or communication shall be given in writing and delivered in
person, sent by telecopier, facsimile, telex, delivered by overnight commercial
courier service or mailed by
<PAGE>
-78-
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
If to the Company:
Samsonite Corporation
11200 East 45th Avenue
Denver, Colorado 80239
Attention: Chief Financial Officer with
a copy to General Counsel
Facsimile: (303) 373-6606
Copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022-3897
Attention: Gregory A. Fernicola, Esq.
Facsimile: (212) 735-2000
If to the Trustee:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Attention: Corporate Trust Department
Facsimile: (212) 852-1626
Such notices or communications shall be sufficiently given if so given
within the time prescribed in this Indenture.
The Company or the Trustee by written notice to the others may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication to the Company or the Trustee shall be
deemed to have been given or made as of the date so delivered, if personally
delivered; when answered back, if telexed; when receipt is acknowledged, if
telecopied; and upon receipt if sent by overnight commercial courier service or
if sent by registered or certified mail, postage prepaid (except that a notice
of change of address shall not be deemed to have been given until actually
received by the addressee).
Any notice or communication mailed to a Securityholder shall be mailed
to him by first-class mail, postage prepaid, at his address shown on the
register kept by the Registrar.
<PAGE>
-79-
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 to a Securityholder is mailed in
the manner provided above, it shall be deemed duly given, whether or not the
addressee receives it.
In case by reason of the suspension of regular mail service, or by
reason of any other cause, it shall be impossible to mail any notice as required
by this Indenture, then such method of notification as shall be made with the
approval of the Trustee shall constitute a sufficient mailing of such notice.
Section 10.03. Communications by Holders with Other Holders.
--------
Securityholders may communicate pursuant to TIA (S) 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 (S) 312(c).
Section 10.04. 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:
(1) an Officers' Certificate (which shall include the statements
set forth in Section 10.05 below) 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
(2) an Opinion of Counsel (which shall include the statements set
forth in Section 10.05 below) stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
Section 10.05. Statements Required in Certificate and Opinion.
--------
Each certificate and opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
<PAGE>
-80-
(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, it or he has
made such examination or investigation as is necessary to enable it or 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 covenant or condition has been complied with.
Notwithstanding anything to the contrary contained herein, any
opinion provided hereunder in connection with the issuance or authorization of
Securities may make certain customary assumptions.
Section 10.06. When Treasury Securities Disregarded.
------------------------------------
In determining whether the Holders of the required aggregate
principal amount of Securities have concurred in any direction, waiver or
consent, Securities owned by the Company or by any Affiliate of the Company
shall be disregarded, 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 actually knows are so owned shall be so
disregarded. Securities so owned which have been pledged in good faith shall not
be disregarded if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to the Securities and that the pledgee is
not the Company or any Affiliate of the Company.
Section 10.07. Rules by Trustee and Agents.
---------------------------
The Trustee may make reasonable rules for action by or meetings of
Securityholders. The Registrar and Paying Agent may make reasonable rules for
their functions.
<PAGE>
-81-
Section 10.08. Business Days; Legal Holidays.
-----------------------------
A "Business Day" is a day that is not a Legal Holiday. A "Legal
Holiday" is a Saturday, a Sunday, a federally-recognized holiday or a day on
which banking institutions are not required to be open in the State of New York.
If a payment date is a Legal Holiday at a place of payment, payment 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.
Section 10.09. Governing Law.
-------------
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE SECURITIES.
Section 10.10. No Adverse Interpretation of Other Agreements.
-----------
This Indenture may not be used to interpret another indenture, loan,
security or debt agreement of the Company or any Subsidiary thereof. No such
indenture, loan, security or debt agreement may be used to interpret this
Indenture.
Section 10.11. No Recourse Against Others.
--------------------------
A director, officer, employee, stockholder or incorporator, as such,
of the Company shall not have any liability for any obligations of the Company
under the Securities or this Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. Each Securityholder by
accepting a Security waives and releases all such liability. Such waiver and
release are part of the consideration for the issuance of the Securities.
Section 10.12. Successors.
----------
All agreements of the Company in this Indenture and the Securities
shall bind its successors. All agreements of the Trustee, any additional
trustee and any Paying Agents in this Indenture shall bind its successor.
<PAGE>
-82-
Section 10.13. Multiple Counterparts.
---------------------
The parties may sign multiple counterparts of this Indenture. Each
signed counterpart shall be deemed an original, but all of them together
represent one and the same agreement.
Section 10.14. Table of Contents, Headings, etc.
--------------------------------
The table of contents, cross-reference sheet 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 10.15. Separability.
------------
Each provision of this Indenture shall be considered separable and if
for any reason any provision which is not essential to the effectuation of the
basic purpose of this Indenture or 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.
<PAGE>
-83-
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed as of the date and year first written above.
[ ]
By: _____________________________
Name:
Title:
By: _____________________________
Name:
Title:
UNITED STATES TRUST COMPANY OF
NEW YORK, as Trustee
By: _____________________________
Name:
Title:
<PAGE>
EXHIBIT A
---------
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, 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 AND SUBJECT TO COMPLIANCE
WITH OTHER APPLICABLE LAWS. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE
HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO
THE DATE WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD THAT MAY HEREAFTER BE
PROVIDED UNDER RULE 144(K) (OR ANY SUCCESSOR PROVISION THEREOF) AS
PERMITTING THE RESALE BY NON-AFFILIATES OF RESTRICTED SECURITIES WITHOUT
RESTRICTION) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST
DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF
THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) (THE "RESALE
RESTRICTION TERMINATION DATE"), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON
IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO
NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
OTHERWISE IN COMPLIANCE WITH OTHER APPLICABLE LAWS, SUBJECT TO THE
COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF
THEM. THE LEGEND WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE
RESALE RESTRICTION TERMINATION DATE.
A-1
<PAGE>
NO. _____ CUSIP NO.
[ ]
13 7/8% Senior Debenture due 2010
$
[ ], a [ ] corporation (the
"Company"), for value received, promises to pay to or
registered assigns the principal sum of Dollars, on June 15, 2010.
Interest Payment Dates: March 15, June 15, September 15 and December
15
Record Dates: March 1, June 1, September 1 and December 1
Reference is made to the further provisions of this Security contained
herein, which will for all purposes have the same effect as if set forth at this
place.
IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officers.
[ ]
By: __________________________
Name:
Title:
By: __________________________
Name:
Title:
A-2
<PAGE>
Trustee's Certificate of Authentication
This is one of the 13 7/8% Senior Debentures due 2010 referred to in
the within-mentioned Indenture.
Dated:
UNITED STATES TRUST COMPANY OF
NEW YORK,
as Trustee
By: _________________________
Authorized Signatory
A-3
<PAGE>
(REVERSE OF SECURITY)
13 7/8% Senior Debentures due 2010
1. Interest. [ ], a [ ]
--------
corporation (the "Company"), promises to pay interest on the principal amount of
this Security at the rate per annum shown above. Interest on the Securities
will accrue from the most recent date on which interest has been paid or, if no
interest has been paid, from the date of original issuance of the Securities.
The Company will pay interest quarterly in arrears on each Interest Payment
Date, commencing on the first Interest Payment Date after the date of original
issuance of the Securities. Interest will be computed on the basis of a 360-day
year of twelve 30-day months and, for periods not involving a full calendar
month, the actual number of days elapsed but not to exceed 30 days.
Notwithstanding anything herein to the contrary, on each Interest
Payment Date through and including June 15, 2003, the entire amount of the
interest payment on the Securities may be paid, at the option of the Company, in
additional Securities ("Secondary Securities") (valued at 100% of the principal
amount thereof). The Company may, at its option, pay cash in lieu of issuing
any Secondary Security to the extent the principal amount such Secondary
Security is not an integral multiple of $1,000. The Company shall notify the
Trustee of the Company's election to pay interest in Secondary Securities not
less than 10 days prior to the Record Date for an Interest Payment Date. On
each such Interest Payment Date, the Trustee shall authenticate Secondary
Securities for original issuance to each holder of Securities on the preceding
Record Date, as shown on the Security Register, in the amount required to pay
such interest.
The Company shall pay interest on overdue principal and on overdue
installments of interest at the rate borne by the Securities to the extent
lawful.
2. Method of Payment. The Company shall pay interest on the
-----------------
Securities (except defaulted interest) to the Persons who are the registered
Holders at the close of business on the Record Date immediately preceding the
Interest Payment Date even if the Securities are cancelled on registration of
transfer or registration of exchange after such Record Date. Holders must
surrender Securities to a Paying Agent to collect principal payments. The
Company shall pay principal and inter-
A-4
<PAGE>
est (to the extent not paid in Secondary Securities) in money of the United
States that at the time of payment is legal tender for payment of public and
private debts ("U.S. Legal Tender"). However, the Company may pay principal and
interest by its check payable in such U.S. Legal Tender. The Company may deliver
any such interest payment to the Paying Agent or to a Holder at the Holder's
registered address.
3. Paying Agent and Registrar. Initially, UNITED STATES TRUST
--------------------------
COMPANY OF NEW YORK, a bank and trust company organized under the New York
Banking Law (the "Trustee"), will act as Paying Agent and Registrar. The
Company may change any Paying Agent or Registrar without notice to the Holders
of the Securities. Neither the Company nor any of its Affiliates may act as
Paying Agent but may act as registrar or co-registrar.
4. Indenture; Restrictive Covenants. The Company issued this
--------------------------------
Security under an Indenture dated as of [ ], [ ] (the "Indenture")
between the Company and the Trustee. The terms of this Security include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 (15 U.S. Code (S)(S) 77aaa-77bbbb) as in effect on
the date of the Indenture. This Security is subject to all such terms, and the
Holder of this Security is referred to the Indenture and said Trust Indenture
Act for a statement of them. All capitalized terms in this Security, unless
otherwise defined, have the meanings assigned to them by the Indenture.
The Securities are general unsecured obligations of the Company
limited to $350,000,000 aggregate principal amount. The Indenture imposes
certain restrictions on, among other things, the incurrence of indebtedness,
mergers and sale of assets, the payments of dividends on, or the repurchase of,
capital stock of the Company and its subsidiaries, certain other restricted
payments by the Company and its subsidiaries, certain transactions with, and
investments in, its affiliates, and a provision regarding change-of-control
transactions.
5. Optional Redemption. The Company may redeem the Securities, in
-------------------
the manner set forth in Section 3.07 of the Indenture.
6. Notice of Redemption. Notice of redemption will be mailed at
--------------------
least 30 days but not more than 60 days before the Redemption Date to each
Holder of Securities to be redeemed at such Holder's registered address. In
order to effect a redemption with the proceeds of an Equity Offering, the
Company shall send the redemption notice not later than 90 days after the
consummation of such Equity Offering. Securities in denominations larger than
$1,000 may be redeemed in part.
A-5
<PAGE>
7. Offers to Purchase. The Company is required to make an offer to
------------------
purchase Securities upon occurrence of a Change of Control in accordance with
procedures set forth in the Indenture.
8. Denominations; Transfer; Exchange. The Securities are in
---------------------------------
registered form, without coupons, in denominations of $1,000 and integral
multiples of $1,000; provided, however, that Secondary Securities and Securities
-------- -------
issued in exchange for the Senior Preferred Stock may be issued in denominations
of less than $1,000 (but not less than $1.00). A Holder shall register the
transfer of or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay certain transfer taxes or similar
governmental charges payable in connection therewith as permitted by the
Indenture. The Registrar need not register the transfer of or exchange any
Securities during a period beginning 15 days before the mailing of a redemption
notice for any Securities or portions thereof selected for redemption.
9. Persons Deemed Owners. The registered Holder of this Security
---------------------
shall be treated as the owner of it for all purposes.
10. Unclaimed Money. If money for the payment of principal, premium
---------------
or interest on any Security remains unclaimed for two years, the Trustee and the
Paying Agent will pay the money back to the Company at its request. After that,
Holders entitled to money must look to the Company for payment as general
creditors unless an "abandoned property" law designates another Person.
11. Amendment, Supplement and Waiver. Subject to certain exceptions,
--------------------------------
the Indenture or the Securities may be modified, amended or supplemented by the
Company and the Trustee with the consent of the Holders of at least a majority
in principal amount of the Securities then outstanding and any existing default
or compliance with any provision may be waived in a particular instance with the
consent of the Holders of a majority in principal amount of the Securities then
outstanding. Without the consent of Holders, the Company and the Trustee may
amend the Indenture or the Securities or supplement the Indenture for certain
specified purposes including, without limitation, providing for uncertificated
Securities in addition to certificated Securities, and curing any ambiguity,
defect or inconsistency, or making any other change that does not materially and
adversely affect the rights of any Holder.
12. Successor Entity. When a successor corporation assumes all the
----------------
obligations of its predecessor under the Secu-
A-6
<PAGE>
rities and the Indenture and immediately before and thereafter no Default exists
and certain other conditions are satisfied, the predecessor corporation will be
released from those obligations.
13. Defaults and Remedies. Events of Default are set forth in the
---------------------
Indenture. Upon the happening of any Event of Default specified in Section
6.01, the Trustee may, and the Trustee upon the request of 25% in principal
amount of the Securities shall or the Holders of at least 25% in aggregate
principal amount of outstanding Securities may, declare the principal of and
accrued but unpaid interest, if any, on all the Securities to be due and payable
by notice in writing to the Company and the Trustee specifying the respective
Event of Default and that it is a "notice of acceleration" (the "Acceleration
Notice"), and the same shall become immediately due and payable. If an Event of
Default described under clauses (6) or (7) of Section 6.01 with respect to the
Company occurs and is continuing, then such amount will ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holder of Securities; provided, however, that at any time
-------- -------
after a declaration of acceleration with respect to the Securities, the Holders
of a majority in principal amount of the Securities then outstanding (by notice
to the Trustee) may rescind and cancel such declaration and its consequences if
(i) the rescission would not conflict with any judgment or decree of a court of
competent jurisdiction, (ii) all existing Events of Default have been cured or
waived except nonpayment of principal or interest on the Securities that has
become due solely by such declaration of acceleration, (iii) to the extent the
payment of such interest is lawful, interest (at the same rate specified in the
Securities) on overdue installments of interest and overdue principal which has
become due otherwise than by such declaration of acceleration has been paid,
(iv) the Company has paid the Trustee its reasonable compensation and reimbursed
the Trustee for its expenses, disbursements and advances and (v) in the event of
the cure or waiver of a Default or Event of Default (with respect to the
Company) of the type described in Section 6.01(6) or (7), the Trustee has
received an Officers' Certificate and an Opinion of Counsel that such Default or
Event of Default has been cured or waived. The Holders of a majority in
principal amount of the Securities may waive any existing Default or Event of
Default under this Indenture, and its consequences, except a default in the
payment of the principal of or interest on any Securities.
14. Trustee Dealings With the Company. The Trustee under the
---------------------------------
Indenture, in its individual or any other capacity, may make loans to, accept
deposits from, and perform services
A-7
<PAGE>
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates as if it were not Trustee.
15. No Recourse Against Others. A director, officer, employee,
--------------------------
stockholder or incorporator, 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 creations. Each Securityholder by accepting a Security
waives and releases all such liability. Such waiver and release are part of the
consideration for the issuance of the Securities.
16. Defeasance and Covenant Defeasance. The Indenture contains
----------------------------------
provisions for defeasance of the entire indebtedness on this Security (pursuant
to Section 9.02 of the Indenture) and for defeasance of certain covenants in the
Indenture (pursuant to Section 9.03 of the Indenture) upon compliance by the
Company with certain conditions set forth in the Indenture.
17. Abbreviations. Customary abbreviations may be used in the name
-------------
of a Holder of a Security 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).
18. CUSIP Numbers. Pursuant to a recommendation promulgated by the
-------------
Committee on Uniform Note Identification Procedures, the Company has caused
CUSIP Numbers to be printed on the Securities and has directed the Trustee to
use CUSIP numbers in notices of redemption as a convenience to Holders of the
Securities. No representation is made as to the accuracy of such numbers either
as printed on the Securities or as contained in any notice of redemption and
reliance may be placed only on the other identification numbers placed thereon.
19. Indenture Controls. If any provision of this Note limits,
------------------
qualifies or conflicts with the provisions of the Indenture, the provisions of
the Indenture shall control.
20. GOVERNING LAW. THE INDENTURE AND THE SECURITIES SHALL BE
-------------
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO
SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THE INDENTURE OR THE SECURITIES.
A-8
<PAGE>
THE COMPANY WILL FURNISH TO ANY HOLDER OF A SECURITY UPON WRITTEN
REQUEST AND WITHOUT CHARGE A COPY OF THE INDENTURE, REQUESTS MAY BE MADE TO:
- -------
SAMSONITE CORPORATION, 11200 East 45th Avenue, Denver, Colorado 80239,
Attention: General Counsel.
A-9
<PAGE>
ASSIGNMENT
----------
I or we assign to PLEASE INSERT SOCIAL SECURITY OR TAX I.D. NUMBER
____________________________
_____________________________________________
(please print or type name and address)
the within Security and all rights thereunder, hereby irrevocably constituting
and appointing attorney to transfer the Security on the books
of the Company with full power of substitution in the premises.
Date: ____________________
NOTICE: The signature on this assignment must correspond with the name as it
appears upon the face of the within Security in every particular without
alteration or enlargement or any change whatsoever and be guaranteed by the
endorser's bank or broker.
Signature Guarantee: _______________________________________
A-10
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Security
purchased by the Company pursuant to Section 4.11 of the Indenture, check the
box:
- Section 4.11
If you want to have only part of the Security purchased by the Company
pursuant to Section 4.11 of the Indenture, state the amount you elect to have
purchased:
$_________________
Date: ____________
Your Signature: ____________________________________
(Sign exactly as your name appears on the face of this Security)
___________________________
Signature Guaranteed
A-11
<PAGE>
EXHIBIT B
---------
FORM OF LEGEND FOR GLOBAL SECURITIES
------------------------------------
Any Global Security authenticated and delivered hereunder shall bear a
legend (which would be in addition to any other legends required in the case of
a Restricted Security) in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME
OF A DEPOSITORY OR A NOMINEE OF A DEPOSITORY. THIS NOTE IS NOT
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON
OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS
SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY
THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF
THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE
DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (A NEW YORK
CORPORATION) ("DTC") TO THE COMPANY OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
B-1
<PAGE>
EXHIBIT C
---------
Form of Certificate to Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
-----------------------------------------
___________, ____
Re: [ ]
(the "Company") 13 7/8%
Senior Debentures
due 2010 (the "Debentures")
---------------------------
Dear Sirs:
In connection with our proposed purchase of $_______ aggregate
principal amount of the Debentures, we confirm that:
1. We understand that any subsequent transfer of the Debentures is
subject to certain restrictions and conditions set forth in the Indenture
dated as of June 24, 1998 relating to the Debentures and the undersigned
agrees to be bound by, and not to resell, pledge or otherwise transfer the
Debentures except in compliance with, such restrictions and conditions and
the Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the Debentures have not been registered under
the Securities Act, and that the Debentures may not be offered or sold
except as permitted in the following sentence. We agree, on our own behalf
and on behalf of any accounts for which we are acting as hereinafter
stated, that if we should sell any Debentures within two years after the
original issuance of the Debentures, we will do so only (A) to the Company
or any subsidiary thereof, (B) pursuant to a registration statement which
has been declared effective under the Securities Act, (C) for so long as
the Debentures are eligible for resale pursuant to Rule 144(A) ("Rule
144A") to a person we reasonably believe to be a "qualified institutional
buyer" as defined in Rule 144A that purchases for its own account or for
the account of a qualified institutional buyer to whom notice is given that
the transfer is being made in reliance on Rule 144A, (D) outside the United
States to non-U.S. persons in compliance with Rule 904 of Regulation S
under the Securities Act, or (E) pursuant to another available exemption
from the registration requirements of the Securities Act and otherwise in
compliance with other applicable laws, and we further agree to pro
C-1
<PAGE>
vide to any person purchasing any of the Debentures from us a notice
advising such purchaser that resales of the Debentures are restricted as
stated herein.
3. We understand that, on any proposed resale of any Debentures, we
will be required to furnish to you and the Company such certifications,
legal opinions and other information as you and the Company may reasonably
require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Debentures purchased by us
will bear a legend to the foregoing effect.
4. We are an "accredited investor" (as defined in Rule 501(a)(1),
(2), (3) or (7) under the Securities Act) and have such knowledge and
experience in financial and business matters as to be capable of evaluating
the merits and risks of our investment in the Debentures, and we and any
accounts for which we are acting are each able to bear the economic risk of
our or its investment.
5. We are acquiring the Debentures purchased by us for our own
account or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By: ___________________________
Authorized Signature
C-2
<PAGE>
EXHIBIT D
---------
Form of Certificate to Be
Delivered in Connection with
Transfers Pursuant to Regulation S
----------------------------------
______________, ____
Re: [ ]
(the "Company") 13 7/8% Senior
Debentures due 2010 (the "Debentures")
--------------------------------------
Dear Sirs:
In connection with our proposed sale of $___________ aggregate
principal amount of the Debentures, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Debentures was not made to a person in the United
States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United
States, or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been pre-
arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States in
contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act;
(5) we understand that, on any proposed resale of any Debentures, we
will be required to furnish to you and the Company such certifications,
legal opinions and other information as you and the Company may reasonably
require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Deben-
D-1
<PAGE>
tures purchased by us will bear a legend to the foregoing effect; and
(6) we have advised the transferee of the transfer restrictions
applicable to the Debentures.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By: ___________________________
Authorized Signature
D-2
<PAGE>
EXHIBIT 4.5
REGISTRATION RIGHTS AGREEMENT
Dated as of June 24, 1998
by and between
SAMSONITE CORPORATION
and
CIBC OPPENHEIMER CORP.,
as Initial Purchaser
__________________________
175,000 Shares of 13 7/8% Senior Redeemable
Exchangeable Preferred Stock,
$1,000 Liquidation Preference Per Share
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Definitions........................................................ 1
2. Exchange Offer..................................................... 5
3. Shelf Registration................................................. 9
4. Additional Dividends............................................... 11
5. Registration Procedures............................................ 13
6. Registration Expenses.............................................. 23
7. Indemnification.................................................... 24
8. Rules 144 and 144A................................................. 28
9. Underwritten Registrations......................................... 28
10. Miscellaneous...................................................... 29
(a) Remedies....................................................... 29
(b) No Inconsistent Agreements..................................... 29
(c) Adjustments Affecting Registrable Shares....................... 29
(d) Amendments and Waivers......................................... 30
(e) Notices........................................................ 30
(f) Successors and Assigns......................................... 31
(g) Counterparts................................................... 32
(h) Headings....................................................... 32
(i) Governing Law.................................................. 32
(j) Severability................................................... 32
(k) Shares Held by the Company or Its Affiliates................... 32
(l) Third Party Beneficiaries...................................... 33
(m) Entire Agreement............................................... 33
</TABLE>
-i-
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and
---------
entered into as of June 24, 1998, by and between Samsonite Corporation, a
Delaware corporation (the "Company"), and CIBC Oppenheimer Corp. (the "Initial
------- -------
Purchaser")
- ---------
This Agreement is entered into in connection with the Purchase
Agreement, dated June 18, 1998, by and between the Company and the Initial
Purchaser (the "Purchase Agreement") relating to the sale by the Company to the
------------------
Initial Purchaser of 175,000 Units consisting of 175,000 shares of the Company's
13 7/8% Senior Redeemable Exchangeable Preferred Stock, $1,000 liquidation
preference per share (the "Shares") and warrants to purchase common stock of the
------
Company. In order to induce the Initial Purchaser to enter into the Purchase
Agreement, the Company has agreed to provide the registration rights set forth
in this Agreement for the benefit of the Holders of Registrable Shares (as
defined), including, without limitation, the Initial Purchaser. The execution
and delivery of this Agreement is a condition to the Initial Purchaser's
obligation to purchase the Shares under the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
-----------
As used in this Agreement, the following terms shall have the
following meanings:
Additional Dividends: See Section 4(a).
--------------------
Advice: See the last paragraph of Section 5.
------
Agreement: See the first introductory paragraph to this Agreement.
---------
Applicable Period: See Section 2(b).
-----------------
Business Day: A day that is not a Saturday, a Sunday, or a day on
------------
which banking institutions in New York, New York are required to be closed.
Certificate of Designation: Dated as of June 24, 1998, by the
--------------------------
Company, pursuant to which the Shares are being issued, as amended or
supplemented from time to time in accordance with the terms thereof.
<PAGE>
-2-
Closing Date: The Closing Date as defined in the Purchase Agreement.
------------
Commission: The Securities and Exchange Commission.
----------
Company: See the first introductory paragraph to this Agreement.
-------
Debentures: means the 13 7/8% Subordinated Debentures due 2010 of the
----------
Company issuable under the Indenture, including without limitation, any
Debentures issuable as interest on outstanding Debentures.
Dividend Shares: means Shares issued as dividends on outstanding
---------------
Shares or Dividend Shares, as the case may be.
Effectiveness Date: The 150th day after the Issue Date, in the case
------------------
of the Exchange Registration Statement, and the 90th day after the delivery of
the Shelf Notice, in the case of the Initial Shelf Registration.
Effectiveness Period: See Section 3(a).
--------------------
Event Date: See Section 4(b).
----------
Exchange Act: The Securities Exchange Act of 1934, as amended, and
------------
the rules and regulations of the Commission promulgated thereunder.
Exchange Shares: See Section 2(a).
---------------
Exchange Offer: See Section 2(a).
--------------
Exchange Registration Statement: See Section 2(a).
-------------------------------
Filing Date: The 60th day after the Issue Date (regardless of whether
-----------
the actual filing precedes such date).
Holder: Any registered holder of Registrable Shares.
------
Indemnified Person: See Section 7(c).
------------------
Indemnifying Person: See Section 7(c).
-------------------
Indenture: The Indenture, dated as of June 24, 1998, by and between
---------
the Company and United States Trust Company of New York, as trustee, pursuant to
which the Debentures will be
<PAGE>
-3-
issued, if at all, as amended or supplemented from time to time in accordance
with the terms thereof.
Initial Purchaser: See the first introductory paragraph to this
-----------------
Agreement.
Initial Shelf Registration: See Section 3(a).
--------------------------
Inspectors: See Section 5(o).
----------
Issue Date: The date on which the original Shares were sold to the
----------
Initial Purchaser pursuant to the Purchase Agreement.
NASD: National Association of Securities Dealers, Inc.
----
Participant: See Section 7(a).
-----------
Participating Broker-Dealer: See Section 2(b).
---------------------------
Person: Any individual, corporation, partnership, limited liability
------
company, joint venture, association, joint stock company, trust, unincorporated
organization or government (including any agency or political subdivision
thereof).
Private Exchange: See Section 2(b).
----------------
Private Exchange Shares: See Section 2(b).
-----------------------
Prospectus: The prospectus included in any Registration Statement
----------
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the Registrable Shares covered by such Registration Statement, and all other
amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
Purchase Agreement: See the second introductory paragraph to this
------------------
Agreement.
Records: See Section 5(o).
-------
<PAGE>
-4-
Registrable Shares: Each Share upon original issuance thereof and at
------------------
all times subsequent thereto, each Exchange Share, if issued, as to which
Section 2(c)(iv) hereof is applicable upon original issuance thereof and at all
times subsequent thereto and each Private Exchange Share, if issued, upon
original issuance thereof and at all times subsequent thereto, until, in the
case of any such Share, Exchange Share or Private Exchange Share, as the case
may be, the earliest to occur of (i) a Registration Statement (other than, with
respect to any Exchange Share as to which Section 2(c)(iv) hereof is applicable)
covering such Share, Exchange Share or Private Exchange Share, as the case may
be, has been declared effective by the Commission and such Share, Exchange Share
or Private Exchange Share, as the case may be, has been disposed of in
accordance with such effective Registration Statement, (ii) such Share, Exchange
Share or Private Exchange Share, as the case may be, is sold in compliance with
Rule 144, (iii) in the case of any Share, such Share has been exchanged pursuant
to the Exchange Offer for an Exchange Share or Exchange Shares which may be
resold without restriction under federal securities laws, or (iv) such Share,
Exchange Share or Private Exchange Share, as the case may be, ceases to be
outstanding for purposes of the Certificate of Designation.
Registration Statement: Any registration statement of the Company,
----------------------
including, but not limited to, the Exchange Registration Statement, that covers
any of the Registrable Shares pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such registration
statement, including post-effective amendments, all exhibits, and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.
Rule 144: Rule 144 under the Securities Act, as such Rule may be
--------
amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the Commission providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
Rule 144A: Rule 144A under the Securities Act, as such Rule may be
---------
amended from time to time, or any similar rule (other than Rule 144) or
regulation hereafter adopted by the Commission.
<PAGE>
-5-
Rule 415: Rule 415 under the Securities Act, as such Rule may be
--------
amended from time to time, or any similar rule or regulation hereafter adopted
by the Commission.
Securities Act: The Securities Act of 1933, as amended, and the rules
--------------
and regulations of the Commission promulgated thereunder.
Shares: See the second introductory paragraph to this Agreement.
------
Shelf Notice: See Section 2(c).
------------
Shelf Registration: See Section 3(b).
------------------
Subsequent Shelf Registration: See Section 3(b).
-----------------------------
TIA: The Trust Indenture Act of 1939, as amended.
---
Transfer Agent: The Transfer Agent under the Certificate of
--------------
Designation.
Underwritten registration or underwritten offering: A registration in
--------------------------------------------------
which securities of the Company are sold to an underwriter for reoffering to the
public.
2. Exchange Offer
--------------
(a) To the extent not prohibited by any applicable law or
interpretation of the Staff of the Commission, the Company agrees to file with
the Commission no later than the Filing Date, an offer to exchange (the
"Exchange Offer") any and all of the Registrable Shares for a like aggregate
- ---------------
liquidation preference of preferred equity securities of the Company (other than
Private Exchange Shares, if any) which are identical in all material respects to
the Shares (the "Exchange Shares") (and which are entitled to the benefits of
---------------
the Certificate of Designation, except that the Exchange Shares shall have been
registered pursuant to an effective Registration Statement under the Securities
Act and (i) dividends on the Exchange Shares shall accrue from the last date on
which dividends were paid on the Shares or if no such dividend has been paid
from the Issue Date and (ii) the Exchange Shares shall contain no restrictive
legend thereon. The Exchange Offer shall be registered under the Securities Act
on the appropriate form (the "Exchange Registration Statement") and shall comply
-------------------------------
with all applicable tender offer rules and regulations under the Exchange Act.
The Exchange Registration
<PAGE>
-6-
Statement will also register any deemed offering of the Debentures. The Company
agrees to use its best efforts to (x) cause the Exchange Registration Statement
to be declared effective under the Securities Act on or before the Effectiveness
Date; and (y) keep the Exchange Offer open for at least 30 days (or longer if
required by applicable law) after the date that notice of the Exchange Offer is
first given to Holders. If after such Exchange Registration Statement is
initially declared effective by the Commission, the Exchange Offer or the
issuance of the Exchange Shares thereunder is interfered with by any stop order,
injunction or other order or requirement of the Commission or any other
governmental agency or court, such Exchange Registration Statement shall be
deemed not to have become effective for purposes of this Agreement. Each Holder
who participates in the Exchange Offer will be required to represent that any
Exchange Shares received by it will be acquired in the ordinary course of its
business, that at the time of the consummation of the Exchange Offer such Holder
will have no arrangement or understanding with any Person to participate in the
distribution of the Exchange Shares, that such Holder is not an affiliate of the
Company within the meaning of the Securities Act or, if it is an affiliate, that
such Holder will comply with the registration and prospectus delivery
requirements under the Securities Act to the extent applicable and any
additional representations that are necessary under then-existing
interpretations of the Commission in order for the Exchange Registration
Statement to be declared effective. Upon consummation of the Exchange Offer in
accordance with this Section 2, the provisions of this Agreement shall continue
to apply, mutatis mutandis, solely with respect to Registrable Shares that are
------- --------
Private Exchange Shares and Exchange Shares held by Participating Broker-
Dealers, and the Company shall have no further obligation to register
Registrable Shares (other than Private Exchange Shares and other than in respect
of any Exchange Shares as to which clause 2(c)(iv) hereof applies) pursuant to
Section 3 of this Agreement.
(b) The Company shall include within the Prospectus contained in the
Exchange Registration Statement a section entitled "Plan of Distribution,"
reasonably acceptable to the Initial Purchaser, which shall contain a summary
statement of the positions taken or policies made by the Staff of the Commission
with respect to the potential "underwriter" status of any broker-dealer that
holds Shares acquired for its own account that were acquired as a result of
market-making activities or other trading activities and that will become the
beneficial owner (as defined in Rule 13d-3 under the Exchange
<PAGE>
-7-
Act) of Exchange Shares received by such broker-dealer in the Exchange Offer (a
"Participating Broker-Dealer"), whether such positions or policies have been
---------------------------
publicly disseminated by the Staff of the Commission or such positions or
policies, in the judgment of the Initial Purchaser, represent the prevailing
views of the Staff of the Commission. Such "Plan of Distribution" section shall
also allow, to the extent permitted by applicable policies and regulations of
the Commission, the use of the Prospectus by all Persons subject to the
prospectus delivery requirements of the Securities Act, including, to the extent
so permitted, all Participating Broker-Dealers, and include a statement
describing the manner in which Participating Broker-Dealers may resell the
Exchange Shares.
The Company shall use its best efforts to keep the Exchange
Registration Statement effective, and to amend and supplement the Prospectus
contained therein, in order to permit such Prospectus to be lawfully delivered
by all Persons subject to the prospectus delivery requirements of the Securities
Act for a period of 180 days from the date on which the Exchange Offer is
consummated (the "Applicable Period").
-----------------
If the Initial Purchaser determines upon the advice of its outside
counsel that it is not eligible to participate in the Exchange Offer with
respect to the exchange of Shares constituting any portion of an unsold
allotment in the initial distribution, as soon as practicable upon receipt by
the Company of a written request from the Initial Purchaser and an opinion of
outside counsel for the Initial Purchaser, reasonably satisfactory in form and
substance to outside counsel of the Company, to the effect that such exchange
does not require compliance with the registration requirements of the Securities
Act, the Company upon the request of the Initial Purchaser shall, simultaneously
with the delivery of the Exchange Shares in the Exchange Offer, issue and
deliver to the Initial Purchaser, in exchange (the "Private Exchange") for the
----------------
Shares held by the Initial Purchaser, a like principal amount of preferred
equity securities of the Company that are identical in all material respects to
the Exchange Shares except for the existence of restrictions on transfer thereof
under the Securities Act and securities laws of the several states of the U.S.
(the "Private Exchange Shares") (and which are issued pursuant to the
-----------------------
Certificate of Designation). The Company will seek to cause the CUSIP Service
Bureau to issue the same CUSIP number for the Private Exchange Shares as the
Exchange Shares. The Company shall not have any liability under this Agreement
solely as a result of such Private Exchange Shares not bearing the same CUSIP
number as the Exchange Shares.
<PAGE>
-8-
In connection with the Exchange Offer, the Company shall:
(1) mail to each Holder a copy of the Prospectus forming part of the
Exchange Registration Statement, together with an appropriate letter of
transmittal and related documents;
(2) utilize the services of a depositary for the Exchange Offer with
an address in the Borough of Manhattan, The City of New York, which may be
the Transfer Agent or an affiliate thereof;
(3) permit Holders to withdraw tendered Registrable Shares at any time
prior to the close of business, New York time, on the last Business Day on
which the Exchange Offer shall remain open; and
(4) otherwise comply in all material respects with all applicable
laws.
As soon as practicable after the close of the Exchange Offer or the
Private Exchange, as the case may be, the Company shall:
(1) accept for exchange all Registrable Shares validly tendered and
not validly withdrawn pursuant to the Exchange Offer or the Private
Exchange;
(2) deliver to the Transfer Agent for cancellation all Registrable
Shares so accepted for exchange; and
(3) cause the Transfer Agent to authenticate and deliver promptly to
each Holder tendering such Registrable Shares, Exchange Shares or Private
Exchange Shares, as the case may be, equal in liquidation preference to the
Shares of such Holder so accepted for exchange.
The Exchange Shares and the Private Exchange Shares may be issued
under (i) the Certificate of Designation or (ii) a certificate of designation
identical in all material respects to the Certificate of Designation, which in
either event will provide that the Exchange Shares will not be subject to the
transfer restrictions set forth in the Certificate of Designation and that the
Exchange Shares, the Private Exchange Shares and the Shares, if any, will vote
and consent together on all matters as one class and that none of the Exchange
Shares, the
<PAGE>
-9-
Private Exchange Shares or the Shares, if any, will have the right to vote or
consent as a separate class on any matter.
(c) If because of any change in law or in currently prevailing
interpretations of the Staff of the Commission, the Company is not permitted to
effect an Exchange Offer with respect to any holder of Shares or in the case of
any Holder that participates in the Exchange Offer (and tenders its Registrable
Shares prior to the expiration thereof), such Holder does not receive Exchange
Shares on the date of the exchange that may be sold without restriction under
federal securities laws (other than due solely to the status of such Holder as
an affiliate of the Company within the meaning of the Securities Act) then, the
Holders of at least 10% of the Registrable Shares shall have the right to
require the Company on two separate occasions to require the Company to promptly
deliver to the Holders and the Transfer Agent written notice thereof (the "Shelf
-----
Notice") and shall on each such occasion, file a Shelf Registration, pursuant to
- ------
Section 3.
3. Shelf Registration; Other
Registration Statements
-----------------------
If any Shelf Notice is delivered as contemplated by Section 2(c),
then:
(a) Shelf Registration. The Company shall as promptly as reasonably
------------------
practicable file with the Commission a Registration Statement for an offering to
be made on a continuous basis pursuant to Rule 415 covering all of the
Registrable Shares (each on "Initial Shelf Registration"). If the Company shall
--------------------------
not have yet filed the Exchange Registration Statement, the Company shall file
with the Commission the Initial Shelf Registration on or prior to the Filing
Date and shall use its best efforts to cause such Initial Shelf Registration to
be declared effective under the Securities Act on or prior to the Effectiveness
Date. Otherwise, the Company shall file with the Commission the Initial Shelf
Registration within 60 days of the delivery of the Shelf Notice and shall use
its best efforts to cause such Shelf Registration to be declared effective under
the Securities Act on or prior to the Effectiveness Date. The Initial Shelf
Registration shall be on Form S-3, if then available for use by the Company, or
another appropriate form permitting registration of such Registrable Shares for
resale by Holders in the manner or manners designated by them (including,
without limitation, one or more underwritten offerings). The Initial Shelf
Registration will also register any deemed offering of Debentures. The Company
<PAGE>
-10-
shall not permit any securities other than the Registrable Shares and any
Debentures deemed to have been offered to be included in any Shelf Registration.
The Company shall use its best efforts to keep each Initial Shelf Registration
continuously effective under the Securities Act until the date which is six
months from the effective date of such Initial Shelf Registration (subject to
extension pursuant to the last paragraph of Section 5 hereof) (the
"Effectiveness Period") or such shorter period ending when (i) all Registrable
- ---------------------
Shares covered by such Initial Shelf Registration have been sold in the manner
set forth and as contemplated in the Initial Shelf Registration or (ii) a
Subsequent Shelf Registration covering all of the Registrable Shares has been
declared effective under the Securities Act.
(b) Subsequent Shelf Registrations. If any Initial Shelf
------------------------------
Registration or any Subsequent Shelf Registration ceases to be effective for any
reason at any time during the Effectiveness Period (other than because of the
sale of all of the securities registered thereunder), the Company shall use its
best efforts to obtain the prompt withdrawal of any order suspending the
effectiveness thereof, and in any event shall within 30 days of such cessation
of effectiveness amend such Shelf Registration in a manner to obtain the
withdrawal of the order suspending the effectiveness thereof, or file an
additional "shelf" Registration Statement pursuant to Rule 415 covering all of
the Registrable Shares and any Debentures deemed to have been offered (a
"Subsequent Shelf Registration"). If a Subsequent Shelf Registration is filed,
-----------------------------
the Company shall use its best efforts to cause the Subsequent Shelf
Registration to be declared effective as soon as practicable after such filing
and to keep such Subsequent Shelf Registration continuously effective for a
period equal to the number of days in the Effectiveness Period less the
aggregate number of days during which the applicable Initial Shelf Registration
or any Subsequent Shelf Registrations was previously continuously effective. As
used herein the term "Shelf Registration" means each applicable Initial Shelf
------------------
Registration and any related Subsequent Shelf Registration.
(c) Supplements and Amendments. The Company shall promptly
--------------------------
supplement and amend any Shelf Registration if required by the rules,
regulations or instructions applicable to the registration form used for such
Shelf Registration, if required by the Securities Act, or if reasonably
requested by the Holders of a majority of the Registrable Shares covered by such
Shelf Registration or by any underwriter of such
<PAGE>
-11-
Registrable Shares, in each case, with the Company's consent, which consent
shall not be unreasonably withheld or delayed.
(d) If the issuance of the Debentures or the Dividend Shares
requires registration under the Securities Act and any such issuance shall not
have been effectively registered under the Securities Act pursuant to the
Exchange Registration Statement then, prior to any issuance of Debentures or
Dividend Shares, as the case may be, the Company shall file with the Commission
and cause to become effective a registration statement registering the issuance
of such Debentures and/or Dividend Shares.
4. Additional Dividends
--------------------
(a) The Company and the Initial Purchaser agree that the Holders of
Registrable Shares will suffer damages if the Company fails to fulfill its
obligations under Section 2 or Section 3 hereof and that it would not be
feasible to ascertain the extent of such damages with precision. Accordingly,
the Company agrees to pay, as liquidated damages, additional dividends on the
Registrable Shares ("Additional Dividends") under the circumstances and to the
--------------------
extent set forth below (each of which shall be given independent effect):
(i) if (A) the Exchange Registration Statement has not been filed
on or prior to the Filing Date or (B) notwithstanding that the Company has
consummated or will consummate an Exchange Offer, the Company is required
to file a Shelf Registration and such Shelf Registration is not filed on or
prior to the 60th day after delivery of the Shelf Notice, then, in the case
of subclause (A), commencing on the day after the Filing Date or, in the
case of subclause (B), commencing on the 61st day following delivery of the
Shelf Notice, Additional Dividends shall accrue on the Registrable Shares
over and above the stated dividend at a rate of 0.50% per annum for the
first 90 days immediately following the Filing Date or such 60th day, as
the case may be, such Additional Dividends rate increasing by an additional
0.25% per annum at the beginning of each subsequent 90-day period;
(ii) if (A) neither the Exchange Registration Statement nor the
Initial Shelf Registration is declared effective on or prior to the
Effectiveness Date applicable thereto or (B) notwithstanding that the
Company has consummated or will consummate an Exchange Offer, the Company
is required to file a Shelf Registration and such Shelf
<PAGE>
-12-
Registration is not declared effective by the Commission on or prior to the
applicable Effectiveness Date, then, commencing on the day after such
applicable Effectiveness Date, Additional Dividends shall accrue on the
Registrable Shares over and above the stated dividend at a rate of 0.50%
per annum for the first 90 days immediately following the day after the
applicable Effectiveness Date, such Additional Dividends rate increasing by
an additional 0.25% per annum at the beginning of each subsequent 90-day
period; and
(iii) if (A) the Company has not exchanged Exchange Shares for all
Shares validly tendered in accordance with the terms of the Exchange Offer
on or prior to 180 days after the Issue Date, (B) the Exchange Registration
Statement ceases to be effective prior to consummation of the Exchange
Offer or (C) if applicable, a Shelf Registration has been declared
effective and such Shelf Registration ceases to be effective at any time
during the Effectiveness Period, then Additional Dividends shall accrue on
the Registrable Shares over and above the stated dividend at a rate of
0.50% per annum for the first 90 days commencing on the (x) 181st day after
such Issue Date in the case of (A) above or (y) the day such Exchange
Registration Statement or Shelf Registration ceases to be effective in the
case of (B) and (C) above, such Additional Dividend rate increasing by an
additional 0.25% per annum at the beginning of each such subsequent 90-day
period;
provided, however, that the Additional Dividend rate on the Registrable Shares
- -------- -------
may not exceed in the aggregate 1.0% per annum; provided further that (1) upon
-------- -------
the filing of the Exchange Registration Statement or each Shelf Registration (in
the case of (i) above), (2) upon the effectiveness of the Exchange Registration
Statement or each Shelf Registration, as the case may be (in the case of (ii)
above), or (3) upon the exchange of Exchange Shares for all Registrable Shares
tendered (in the case of (iii)(A) above) or upon the effectiveness of an
Exchange Registration Statement or Shelf Registration which had ceased to remain
effective (in the case of (iii)(B) and (C) above), Additional Dividends on any
Registrable Shares then accruing Additional Dividends as a result of such clause
(or the relevant subclause thereof), as the case may be, shall cease to accrue.
(b) The Company shall notify the Transfer Agent within one business
day after each and every date on which an event occurs in respect of which
Additional Dividends are
<PAGE>
-13-
required to be paid (an "Event Date"). Any amounts of Additional Dividends due
----------
pursuant to (a)(i), (a)(ii) or (a)(iii) of this Section 4 will be payable
quarterly at the Company's option either in cash or by the issuance of
additional Shares (including fractional shares) having an aggregate liquidation
preference equal to the amount of such Additional Dividends (but not less than
$1.00) on each regular dividend payment date and in the manner provided for the
payment of regular dividends, in each case, as specified in the Certificate of
Designation (to the Holders of Registrable Shares of record on the regular
record date therefor (as specified in the Certificate of Designation)
immediately preceding such dates), commencing with the first such regular
dividend payment date occurring after any such Additional Dividends commences to
accrue. The amount of Additional Dividends will be determined by multiplying the
applicable Additional Dividend rate by the principal amount of the Shares
subject thereto, multiplied by a fraction, the numerator of which is the number
of days such Additional Dividend rate was applicable during such period
(determined on the basis of a 360-day year comprised of twelve 30-day months),
and the denominator of which is 360.
5. Registration Procedures
-----------------------
In connection with the filing of any Registration Statement pursuant
to Sections 2 or 3 hereof, the Company shall effect such registrations to permit
the sale of such securities covered thereby in accordance with the intended
method or methods of disposition thereof, and pursuant thereto and in connection
with any Registration Statement filed by the Company hereunder, the Company
shall:
(a) Prepare and file with the Commission prior to the Filing Date,
the Exchange Registration Statement or if the Exchange Registration Statement is
not filed or is unavailable, a Shelf Registration as prescribed by Section 2 or
3, and use its best efforts to cause each such Registration Statement to become
effective and remain effective as provided herein; provided that, if (1) a Shelf
--------
Registration is filed pursuant to Section 3, or (2) a Prospectus contained in an
Exchange Registration Statement filed pursuant to Section 2 is required to be
delivered under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Shares during the Applicable Period and has advised the Company
that it is a Participating Broker-Dealer, before filing any Registration
Statement or Prospectus or any amendments or supplements thereto, the Company
shall, if requested, furnish to and afford
<PAGE>
-14-
the Holders of the Registrable Shares to be registered pursuant to such Shelf
Registration or each such Participating Broker-Dealer, as the case may be,
covered by such Registration Statement, their counsel and the managing
underwriters, if any, a reasonable opportunity to review copies of all such
documents (including copies of any documents to be incorporated by reference
therein and all exhibits thereto) proposed to be filed (in each case at least
five Business Days prior to such filing). The Company shall not file any such
Registration Statement or Prospectus or any amendments or supplements thereto if
the Holders of a majority of the Registrable Shares covered by such Registration
Statement, or any such Participating Broker-Dealer, as the case may be, their
counsel, or the managing underwriters, if any, shall reasonably object.
(b) Prepare and file with the Commission such amendments and post-
effective amendments to each Shelf Registration or Exchange Registration
Statement, as the case may be, as may be necessary to keep such Registration
Statement continuously effective for the Effectiveness Period or the Applicable
Period, as the case may be; cause the related Prospectus to be supplemented by
any Prospectus supplement required by applicable law, and as so supplemented to
be filed pursuant to Rule 424 (or any similar provisions then in force) under
the Securities Act; and comply with the provisions of the Securities Act and the
Exchange Act applicable to it with respect to the disposition of all securities
covered by such Registration Statement as so amended or in such Prospectus as so
supplemented and with respect to the subsequent resale of any securities being
sold by a Participating Broker-Dealer covered by any such Prospectus. The
Company shall be deemed not to have used its best efforts to keep a Registration
Statement effective during the Applicable Period if it voluntarily takes any
action that would result in selling Holders of the Registrable Shares covered
thereby or Participating Broker-Dealers seeking to sell Exchange Shares not
being able to sell such Registrable Shares or such Exchange Shares during that
period unless such action is required by applicable law, rule or regulation or
unless the Company complies with this Agreement, including, without limitation,
the provisions of paragraph 5(k) hereof and the last paragraph of Section 5.
(c) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Shares during the
<PAGE>
-15-
Applicable Period from whom the Company has received written notice that it will
be a Participating Broker-Dealer, notify the selling Holders of Registrable
Shares, and each such Participating Broker-Dealer, their counsel and the
managing underwriters, if any, promptly (but in any event within two Business
Days), and confirm such notice in writing, (i) when a Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and, with
respect to a Registration Statement or any post-effective amendment, when the
same has become effective (including in such notice a written statement that any
Holder may, upon request, obtain, without charge, one conformed copy of such
Registration Statement or post-effective amendment including financial
statements and schedules, documents incorporated or deemed to be incorporated by
reference and exhibits), (ii) of the issuance by the Commission of any stop
order suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus or the initiation
of any proceedings for that purpose, (iii) if at any time when a prospectus is
required by the Securities Act to be delivered in connection with sales of the
Registrable Shares the representations and warranties of the Company contained
in any agreement (including any underwriting agreement contemplated by Section
5(n) hereof) cease to be true and correct in any material respect, (iv) of the
receipt by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of a Registration Statement or any
of the Registrable Shares or the Exchange Shares to be sold by any Participating
Broker-Dealer for offer or sale in any jurisdiction, or the initiation or
threatening of any proceeding for such purpose, (v) of the happening of any
event, the existence of any condition or any information becoming known that
makes any statement made in such Registration Statement or related Prospectus or
any document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires the making of any changes in, or
amendments or supplements to, such Registration Statement, Prospectus or
documents so that, in the case of the Registration Statement, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, and that in the case of the Prospectus, it will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, and (vi) of the
Company's
<PAGE>
-16-
reasonable determination that a post-effective amendment to a Registration
Statement would be appropriate.
(d) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Shares during the
Applicable Period, use its best efforts to prevent the issuance of any order
suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of a Prospectus or suspending the qualification
(or exemption from qualification) of any of the Registrable Shares or the
Exchange Shares to be sold by any Participating Broker-Dealer, for sale in any
jurisdiction, and, if any such order is issued, to use its best efforts to
obtain the withdrawal of any such order at the earliest possible date.
(e) If a Shelf Registration is filed pursuant to Section 3 and if
requested by the managing underwriters, if any, or the Holders of a majority of
the Registrable Shares being sold in connection with an underwritten offering,
(i) as promptly as practicable incorporate in a prospectus supplement or post-
effective amendment such information or revisions to information therein
relating to such underwriters or selling Holders as the managing underwriters,
if any, or such Holders or their counsel reasonably request to be included or
made therein and (ii) make all required filings of such prospectus supplement or
such post-effective amendment as soon as practicable after the Company has
received notification of the matters to be incorporated in such prospectus
supplement or post-effective amendment.
(f) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Shares during the
Applicable Period, furnish to each selling Holder of Registrable Shares and to
each such Participating Broker-Dealer who so requests and to counsel and each
managing underwriter, if any, without charge, one conformed copy of the
Registration Statement or Registration Statements and each post-effective
amendment thereto, including financial statements and schedules, and, if
requested, all documents incorporated or deemed to be incorporated therein by
reference and all exhibits.
<PAGE>
-17-
(g) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer, deliver to each selling Holder of Registrable
Shares or each such Participating Broker-Dealer, as the case may be, their
respective counsel, and the underwriters, if any, without charge, as many copies
of the Prospectus or Prospectuses (including each form of preliminary
prospectus) and each amendment or supplement thereto and any documents
incorporated by reference therein as such Persons may reasonably request; and,
subject to the last paragraph of this Section 5, the Company hereby consents to
the use of such Prospectus and each amendment or supplement thereto by each of
the selling Holders of Registrable Shares and each Participating Broker-Dealer,
and the underwriters or agents, if any, and dealers (if any), in connection with
the offering and sale of the Registrable Shares covered by, or the sale by
Participating Broker-Dealers of the Exchange Shares pursuant to, such Prospectus
and any amendment or supplement thereto for, in the case of the sale by
Participating Broker-Dealers of the Exchange Shares, the Applicable Period.
(h) Prior to any public offering of Registrable Shares or any
delivery of a Prospectus contained in the Exchange Registration Statement by any
Participating Broker-Dealer who seeks to sell Exchange Shares during the
Applicable Period, use its best efforts to register or qualify, and cooperate
with the selling Holders of Registrable Shares and each such Participating
Broker-Dealer, the underwriters, if any, and their respective counsel in
connection with the registration or qualification (or exemption from such
registration or qualification) of such Registrable Shares or Exchange Shares, as
the case may be, for offer and sale under the securities or Blue Sky laws of
such jurisdictions within the United States as any selling Holder, Participating
Broker-Dealer, or the managing underwriter or underwriters, if any, reasonably
request in writing; provided that where Exchange Shares held by Participating
Broker-Dealers or Registrable Shares are offered pursuant to an underwritten
offering, counsel to the underwriters shall, at the cost and expense of the
Company, perform the Blue Sky investigations and file registrations and
qualifications required to be filed pursuant to this Section 5(h); keep each
such registration or qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be kept effective and do any
and all other acts or things reasonably necessary or advisable to enable the
disposition in such
<PAGE>
-18-
jurisdictions of the Exchange Shares by Participating Broker-Dealers or the
Registrable Shares covered by the applicable Registration Statement; provided
--------
that the Company shall not be required to (A) qualify generally to do business
in any jurisdiction where it is not then so qualified, (B) take any action that
would subject it to general service of process in any such jurisdiction where it
is not then so subject or (C) subject itself to taxation in excess of a nominal
dollar amount in any such jurisdiction where it is not then so subject.
(i) If a Shelf Registration is filed pursuant to Section 3, cooperate
with the selling Holders of Registrable Shares, any Participating Broker-Dealer
and the managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Shares to be
sold, which certificates shall not bear any restrictive legends and shall be in
a form eligible for deposit with The Depository Trust Company; and enable such
Registrable Shares to be in such denominations and registered in such names as
the managing underwriter or underwriters, if any, or Holders may reasonably
request.
(j) Use its best efforts to cause the Registrable Shares covered by
the Registration Statement to be registered with or approved by such
governmental agencies or authorities as may be necessary to enable the seller or
sellers thereof or the underwriters, if any, to consummate the disposition of
such Registrable Shares, in which case the Company will cooperate in all
reasonable respects with the filing of such Registration Statement and the
granting of such approvals.
(k) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Shares during the
Applicable Period, upon the occurrence of any event contemplated by paragraph
5(c)(v) or 5(c)(vi) hereof, as promptly as practicable prepare and (subject to
Section 5(a) hereof) file with the Commission, at the Company's sole expense, a
supplement or post-effective amendment to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable Shares being
sold thereunder or to the purchasers of the Exchange Shares to whom such
Prospectus will be delivered by a Participating Broker-Dealer, any such
<PAGE>
-19-
Prospectus will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(l) Use its best efforts to cause the Registrable Shares covered by a
Registration Statement to be rated with the appropriate rating agencies, if so
requested by the Holders of a majority of Registrable Shares covered by such
Registration Statement or the managing underwriter or underwriters, if any.
(m) Prior to the effective date of the first Registration Statement
relating to the Registrable Shares, (i) provide the Transfer Agent with printed
certificates for the Registrable Shares in a form eligible for deposit with The
Depository Trust Company and (ii) provide a CUSIP number for the Registrable
Shares.
(n) In connection with an underwritten offering of Registrable Shares
pursuant to a Shelf Registration, enter into an underwriting agreement as is
customary in underwritten offerings of preferred equity securities similar to
the Shares and take all such other actions as are reasonably requested by the
managing underwriter or underwriters in order to expedite or facilitate the
registration or the disposition of such Registrable Shares and, in such
connection, (i) make such representations and warranties to the underwriters,
with respect to the business of the Company and its subsidiaries and the
Registration Statement, Prospectus and documents, if any, incorporated or deemed
to be incorporated by reference therein, in each case, as are customarily made
by issuers to underwriters in underwritten offerings of preferred equity
securities similar to the Shares, and confirm the same in writing if and when
requested; (ii) obtain the opinion of counsel to the Company and updates thereof
in form and substance reasonably satisfactory to the managing underwriter or
underwriters, addressed to the underwriters covering the matters customarily
covered in opinions requested in underwritten offerings of preferred equity
securities similar to the Shares and such other matters as may be reasonably
requested by underwriters (it being agreed that the matters to be covered by
such opinion may be subject to customary qualifications and exceptions); (iii)
obtain "cold comfort" letters and updates thereof in form and substance
reasonably satisfactory to the managing underwriter or underwriters from the
independent certified public
<PAGE>
-20-
accountants of the Company (and, if necessary, any other independent certified
public accountants of any subsidiary of the Company or of any business acquired
by the Company for which financial statements and financial data are, or are
required to be, included in the Registration Statement), addressed to each of
the underwriters, such letters to be in customary form and covering matters of
the type customarily covered in "cold comfort" letters in connection with
underwritten offerings of preferred equity securities similar to the Shares and
such other matters as reasonably requested by the managing underwriter or
underwriters; and (iv) if an underwriting agreement is entered into, the same
shall contain indemnification provisions and procedures no less favorable than
those set forth in Section 7 hereof (or such other provisions and procedures
acceptable to Holders of a majority of the Registrable Shares covered by such
Registration Statement and the managing underwriter or underwriters or agents)
with respect to all parties to be indemnified pursuant to said Section. The
above shall be done at each closing under such underwriting agreement, or as and
to the extent required thereunder.
(o) If (1) a Shelf Registration is filed pursuant to Section 3, or (2)
a Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Shares during the
Applicable Period, make available for inspection by any selling Holder of such
Registrable Shares being sold, and each Participating Broker-Dealer, any
underwriter participating in any such disposition of Registrable Shares, if any,
and any attorney, accountant or other agent retained by any such selling Holder,
each Participating Broker-Dealer, as the case may be, or underwriter
(collectively, the "Inspectors"), at the offices where normally kept, during
----------
reasonable business hours, all financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries (collectively, the
"Records") as shall be reasonably necessary to enable them to exercise any
-------
applicable due diligence responsibilities, and cause the officers, directors and
employees of the Company and its subsidiaries to supply all information
reasonably requested by any such Inspector in connection with such Registration
Statement. Records which the Company determines, in good faith, to be
confidential and any Records which it notifies the Inspectors are confidential
shall not be disclosed by the Inspectors unless (i) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in such
Registration Statement, (ii) the release of such Records is ordered pursuant to
a subpoena or other order from a court of competent jurisdiction, (iii) the
information
<PAGE>
-21-
in such Records has been made generally available to the public other than as a
result of a disclosure or failure to safeguard by such Inspector or (iv)
disclosure of such information is, in the opinion of counsel for any Inspector,
necessary or advisable in connection with any action, claim, suit or proceeding,
directly or indirectly, involving or potentially involving such Inspector and
arising out of, based upon, related to, or involving this Agreement, or any
transactions contemplated hereby or arising hereunder. Each selling Holder of
such Registrable Shares and each Participating Broker-Dealer will be required to
agree that information obtained by it as a result of such inspections shall be
deemed confidential and shall not be used by it as the basis for any market
transactions in the securities of the Company unless and until such is made
generally available to the public. Each Inspector, each selling Holder of such
Registrable Shares and each Participating Broker-Dealer will be required to
further agree that it will, upon learning that disclosure of such Records is
sought in a court of competent jurisdiction pursuant to clauses (ii) or (iv) of
the previous sentence or otherwise, give notice to the Company and allow the
Company to undertake appropriate action to obtain a protective order or
otherwise prevent disclosure of the Records deemed confidential at its expense.
(p) Provide a Transfer Agent for the Registrable Shares or the
Exchange Shares.
(q) Comply with all applicable rules and regulations of the Commission
and make generally available to its securityholders earnings statements
satisfying the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder (or any similar rule promulgated under the Securities Act) no later
than 45 days after the end of any 12-month period (or 90 days after the end of
any 12-month period if such period is a fiscal year) (i) commencing at the end
of any fiscal quarter in which Registrable Shares are sold to underwriters in a
firm commitment or best efforts underwritten offering and (ii) if not sold to
underwriters in such an offering, commencing on the first day of the first
fiscal quarter of the Company after the effective date of a Registration
Statement, which statements shall cover said 12-month periods.
(r) If the Exchange Offer or a Private Exchange is to be consummated,
upon delivery of the Registrable Shares by Holders to the Company (or to such
other Person as directed by the Company) in exchange for the Exchange Shares or
the Private Exchange Shares, as the case may be, the Company shall mark, or
<PAGE>
-22-
caused to be marked, on such Registrable Shares that such Registrable Shares are
being canceled in exchange for the Exchange Shares or the Private Exchange
Shares, as the case may be; in no event shall such Registrable Shares be marked
as paid or otherwise satisfied.
(s) Cooperate with each seller of Registrable Shares covered by any
Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Shares and their respective counsel in
connection with any filings required to be made with the NASD.
The Company may require each seller of Registrable Shares as to which
any registration is being effected to furnish to the Company such information
regarding such seller and the distribution of such Registrable Shares as the
Company may, from time to time, reasonably request. The Company may exclude
from such registration the Registrable Shares of any seller who fails to furnish
such information within a reasonable time after receiving such request. Each
seller as to which any Shelf Registration Statement is being effected agrees to
furnish promptly to the Company all information required to be disclosed in
order to make the information previously furnished to the Company by such seller
not materially misleading.
Each Holder of Registrable Shares and each Participating Broker-Dealer
agrees by acquisition of such Registrable Shares or Exchange Shares to be sold
by such Participating Broker-Dealer, as the case may be, that, upon receipt of
any notice from the Company of the happening of any event of the kind described
in Section 5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi), such Holder will forthwith
discontinue disposition of such Registrable Shares covered by such Registration
Statement or Prospectus or Exchange Shares to be sold by such Holder or
Participating Broker-Dealer, as the case may be, and, in each case,
dissemination of such Prospectus until such Holder's or Participating Broker-
Dealer's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 5(k), or until it is advised in writing (the "Advice")
------
by the Company that the use of the applicable Prospectus may be resumed, and has
received copies of any amendments or supplements thereto. In the event the
Company shall give any such notice, each of the Effectiveness Period and the
Applicable Period shall be extended by the number of days during such periods
from and including the date of the giving of such notice to and including the
date when each seller of Registrable Shares covered by such Registration
Statement or Exchange Shares to be sold by such Participating Broker-Dealer, as
the case may be, shall have re-
<PAGE>
ceived (x) the copies of the supplemented or amended Prospectus contemplated by
Section 5(k) or (y) the Advice.
6. Registration Expenses
---------------------
All fees and expenses of the Company incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company
whether or not the Exchange Offer or a Shelf Registration is filed or becomes
effective, including, without limitation, (i) all registration and filing fees
(including, without limitation, (A) fees with respect to filings required to be
made with the NASD in connection with an underwritten offering and (B) fees and
expenses of compliance with state securities or Blue Sky laws (including,
without limitation, reasonable fees and disbursements of counsel in connection
with Blue Sky qualifications of the Registrable Shares or Exchange Shares and
determination of the eligibility of the Registrable Shares or Exchange Shares
for investment under the laws of such jurisdictions (x) where the holders of
Registrable Shares are located, in the case of the Exchange Shares, or (y) as
provided in Section 5(h) hereof, in the case of Registrable Shares or Exchange
Shares to be sold by a Participating Broker-Dealer during the Applicable
Period)), (ii) printing expenses, including, without limitation, expenses of
printing certificates for Registrable Shares or Exchange Shares in a form
eligible for deposit with The Depository Trust Company and of printing
prospectuses if the printing of prospectuses is requested by the managing
underwriter or underwriters, if any, or by the Holders of a of the Registrable
Shares included in any Registration Statement or by any Participating Broker-
Dealer, as the case may be, (iii) reasonable messenger, telephone and delivery
expenses incurred in connection with the Exchange Registration Statement and any
Shelf Registration, (iv) fees and disbursements of counsel for the Company and
fees and disbursements of special counsel for the Initial Purchaser and the
sellers of Registrable Shares, (v) fees and disbursements of all independent
certified public accountants referred to in Section 5(n)(iii) (including,
without limitation, the expenses of any "cold comfort" letters required by or
incident to such performance), (vi) rating agency fees, (vii) Securities Act
liability insurance, if the Company desires such insurance, (viii) fees and
expenses of all other Persons retained by the Company, (ix) internal expenses of
the Company (including, without limitation, all salaries and expenses of
officers and employees of the Company performing legal or accounting duties),
(x) the expense of any annual or special audit, (xi) the fees and disbursements
of underwriters, if any, customarily paid by issuers or sellers of securities
<PAGE>
-24-
(but not including any underwriting discounts or commissions or transfer taxes,
if any, attributable to the sale of the Registrable Shares which discounts,
commissions or taxes shall be paid by Holders of such Registrable Shares) and
(xii) the expenses relating to printing, word processing and distributing all
Registration Statements.
7. Indemnification
---------------
(a) The Company agrees to indemnify and hold harmless each Holder of
Registrable Shares and each Participating Broker-Dealer, the officers,
directors, employees and agents of each such Person, and each Person, if any,
who controls any such Person within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act (each, a "Participant"), from
-----------
and against any and all losses, claims, damages and liabilities (including,
without limitation, the reasonable legal fees and other reasonable expenses
actually incurred in connection with any suit, action or proceeding or any claim
asserted) caused by, arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement or Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) or caused by, arising out of or
based upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
except insofar as such losses, claims, damages or liabilities are caused by any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with information relating to any Participant
furnished to the Company in writing by or on behalf of such Participant
expressly for use therein; provided, however, that the Company shall not be
-------- -------
liable if such untrue statement or omission or alleged untrue statement or
omission was contained or made in any preliminary prospectus and corrected in
the Prospectus or any amendment or supplement thereto and any such loss,
liability, claim, damage or expense suffered or incurred by the Participants
resulted from any action, claim or suit by any Person who purchased Registrable
Shares or Exchange Shares which are the subject thereof from such Participant
and such Participant failed to deliver or provide a copy of the Prospectus (as
amended or supplemented) to such Person with or prior to the confirmation of the
sale of such Registrable Shares or Exchange Shares sold to such Person if
required by applicable law, unless such failure to deliver or provide a copy of
the Prospectus (as amended or supplemented) was a
<PAGE>
-25-
result of noncompliance by the Company with Section 5 of this Agreement.
(b) Each Participant will be required to agree, severally and not
jointly, to indemnify and hold harmless the Company, its directors and officers
and each Person who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Company to each Participant, but only with
reference to information relating to such Participant furnished to the Company
in writing by such Participant expressly for use in any Registration Statement
or Prospectus, any amendment or supplement thereto, or any preliminary
prospectus. The liability of any Participant under this paragraph shall in no
event exceed the proceeds received by such Participant from sales of Registrable
Shares or Exchange Shares giving rise to such obligations.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such Person (the "Indemnified Person") shall promptly
------------------
notify the Person against whom such indemnity may be sought (the "Indemnifying
------------
Person") in writing, and the Indemnifying Person shall be entitled to
- ------
participate therein, and to elect to assume the defense thereof with counsel
reasonably satisfactory to the Indemnified Person to represent the Indemnified
Person and any others the Indemnifying Person may reasonably designate in such
proceeding and shall pay the reasonable fees and expenses actually incurred by
such counsel related to such proceeding; provided, however, that the failure to
-------- -------
so notify the Indemnifying Person shall not relieve it of any obligation or
liability which it may have hereunder except to the extent that it has been
prejudiced in any material respect by such failure or otherwise. In any such
proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person unless (i) the Indemnifying Person and the Indemnified
Person shall have mutually agreed in writing to the contrary, (ii) the
Indemnifying Person has failed within a reasonable time to retain counsel
reasonably satisfactory to the Indemnified Person or (iii) the named parties in
any such proceeding (including any impleaded parties) include both the
Indemnifying Person and the Indemnified Person and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is
<PAGE>
-26-
understood that, unless there is a conflict among Indemnified Persons, the
Indemnifying Person shall not, in connection with any proceeding or related
proceeding in the same jurisdiction, be liable for the fees and expenses of more
than one separate firm (in addition to any local counsel) for all Indemnified
Persons, and that all such fees and expenses shall be reimbursed as they are
incurred. Any such separate firm for the Participants and such control Persons
of Participants shall be designated in writing by Participants who sold a
majority in interest of Registrable Shares sold by all such Participants and any
such separate firm for the Company, its directors, officers and such control
Persons of the Company shall be designated in writing by the Company. The
Indemnifying Person shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there is a final non-appealable judgment for the plaintiff, the Indemnifying
Person agrees to indemnify any Indemnified Person from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an Indemnified Person shall have requested an
Indemnifying Person to reimburse the Indemnified Person for reasonable fees and
expenses actually incurred by counsel as contemplated by the third sentence of
this paragraph, the Indemnifying Person agrees that it shall be liable for any
settlement of any proceeding effected without its consent if (i) such settlement
is entered into more than 30 days after receipt by such Indemnifying Person of
the aforesaid request and (ii) such Indemnifying Person shall not have
reimbursed the Indemnified Person in accordance with such request prior to the
date of such settlement; provided, however, that the Indemnifying Person shall
-------- -------
not be liable for any settlement effected without its consent pursuant to this
sentence if the Indemnifying Person is contesting, in good faith, the request
for reimbursement. No Indemnifying Person shall, without the prior written
consent of the Indemnified Person, effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Person, unless such settlement (A) includes an unconditional release
of such Indemnified Person, in form and substance satisfactory to such
Indemnified Person, from all liability on claims that are the subject matter of
such proceeding and (B) does not include any statement as to an admission of
fault, culpability or failure to act by or on behalf of an Indemnified Person.
(d) If the indemnification provided for in the first and second
paragraphs of this Section 7 is unavailable to, or
<PAGE>
-27-
insufficient to hold harmless, an Indemnified Person in respect of any losses,
claims, damages or liabilities referred to therein, then each Indemnifying
Person under such paragraphs, in lieu of indemnifying such Indemnified Person
thereunder and in order to provide for just and equitable contribution, shall
contribute to the amount paid or payable by such Indemnified Person as a result
of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Person or Persons
on the one hand and the Indemnified Person or Persons on the other in connection
with the statements or omissions (or alleged statements or omissions) that
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof) as well as any other relevant equitable considerations. The relative
fault of the parties shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or by the Participants or such other
Indemnified Person, as the case may be, on the other, the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission and any other equitable considerations appropriate
under the circumstances.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
--- ----
(even if the Participants were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any reasonable
legal or other expenses actually incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Shares or
Exchange Shares, as the case may be, exceeds the amount of any damages that such
Participant has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
<PAGE>
-28-
(f) The indemnity and contribution agreements contained in this
Section 7 will be in addition to any liability which the Indemnifying Persons
may otherwise have to the Indemnified Persons referred to above.
8. Rules 144 and 144A
------------------
For so long as the Company is subject to the reporting requirements of
Section 13 or 15 of the Exchange Act and any Registrable Shares remain
outstanding, the Company will use its best efforts to file the reports required
to be filed by it under the Securities Act and the Exchange Act and the rules
and regulations adopted by the Commission thereunder in a timely manner and, if
at any time it is not required to file such reports, it will, upon the request
of any Holder of Registrable Shares, make publicly available other information
so long as necessary to permit sales pursuant to Rule 144 and Rule 144A under
the Securities Act. The Company further covenants, for so long as any
Registrable Shares remain outstanding, to make available to any Holder or
beneficial owner of Registrable Shares in connection with any sale thereof and
any prospective purchaser of such Registrable Shares from such Holder or
beneficial owner, the information required by Rule 144A(d)(4) under the
Securities Act in order to permit resales of such Registrable Shares pursuant to
Rule 144A.
9. Underwritten Registrations
--------------------------
If any of the Registrable Shares covered by any Shelf Registration are
to be sold in an underwritten offering, the investment banker or investment
bankers and manager or managers that will manage the offering will be selected
by the Holders of a majority in aggregate principal amount of such Registrable
Shares included in such offering and reasonably acceptable to the Company.
No Holder of Registrable Shares may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Shares 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.
<PAGE>
-29-
10. Miscellaneous
-------------
(a) Remedies. In the event of a breach by the Company of any of
--------
its obligations under this Agreement, each Holder of Registrable Shares and each
Participating Broker-Dealer holding Exchange Shares, in addition to being
entitled to exercise all rights provided herein, in the Indenture or, in the
case of the Initial Purchaser, in the Purchase Agreement, or granted by law,
including recovery of damages, will be entitled to specific performance of its
rights under this Agreement. The 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.
(b) No Inconsistent Agreements. The Company has not entered, as of
--------------------------
the date hereof, and shall not enter, after the date of this Agreement, into any
agreement with respect to any of its securities that is inconsistent with the
rights granted to the Holders of Registrable Shares in this Agreement or
otherwise conflicts with the provisions hereof. The Company has not entered and
shall not enter into any agreement with respect to any of its securities which
will grant to any Person piggy-back rights with respect to a Registration
Statement.
(c) Adjustments Affecting Registrable Shares. The Company shall
----------------------------------------
not, directly or indirectly, take any action with respect to the Registrable
Shares as a class that would adversely affect the ability of the Holders of
Registrable Shares to include such Registrable Shares in a registration
undertaken pursuant to this Agreement.
(d) Amendments and Waivers. The provisions of this Agreement may
----------------------
not be amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given, otherwise than with the prior
written consent of (A) the Holders of not less than a majority of the then
outstanding Registrable Shares and (B) in circumstances that would adversely
affect Participating Broker-Dealers, the Participating Broker-Dealers holding
not less than a majority of the Exchange Shares held by all Participating
Broker-Dealers; provided, however, that Section 7 and this Section 10(d) may not
-------- -------
be amended, modified or supplemented without the prior written consent of each
Holder and each Participating Broker-Dealer (including any person who was a
Holder or Participating Broker-Dealer of Registrable Shares or
<PAGE>
-30-
Exchange Shares, as the case may be, disposed of pursuant to any Registration
Statement). Notwithstanding the foregoing, a waiver or consent to depart from
the provisions hereof with respect to a matter that relates exclusively to the
rights of Holders of Registrable Shares whose securities are being tendered
pursuant to the Exchange Offer or sold pursuant to a Registration Statement and
that does not directly or indirectly affect, impair, limit or compromise the
rights of other Holders of Registrable Shares may be given by Holders of at
least a majority of the Registrable Shares being tendered or being sold by such
Holders pursuant to such Registration Statement.
(e) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, next-day air courier or telecopier:
1. if to a Holder of Registrable Shares or any Participating Broker-
Dealer, at the most current address of such Holder or Participating Broker-
Dealer, as the case may be, set forth on the records of the registrar, with
a copy in like manner to the Initial Purchaser as follows:
CIBC OPPENHEIMER CORP.
425 Lexington Avenue
3rd Floor
New York, New York 10017
Facsimile No.: (212) 885-4998
Attention: Corporate Finance
Department
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Facsimile No.: (212) 269-5420
Attention: Roger Meltzer, Esq.
2. if to the Initial Purchaser, at the address specified in Section
10(e)(1);
<PAGE>
-31-
3. if to the Company, as follows:
SAMSONITE CORPORATION
11200 East 45th Avenue
Denver, Colorado 80239
Facsimile No.: (303) 373-6288
Attention: Chief Financial Officer
with copy to General Counsel
with a copy to:
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
919 Third Avenue
New York, New York 10022-3897
Facsimile No.: (212) 735-2000
Attention: Gregory A. Fernicola, Esq.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days after
being deposited in the mail, postage prepaid, if mailed; one business day after
being timely delivered to a next-day air courier guaranteeing overnight
delivery; and when receipt is acknowledged by the addressee, if telecopied.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Transfer Agent under
the Certificate of Designation.
(f) Successors and Assigns. This Agreement shall inure to the
----------------------
benefit of and be binding upon the successors and assigns of each of the parties
hereto and the Holders; provided, however, that this Agreement shall not inure
-------- -------
to the benefit of or be binding upon a successor or assign of a Holder unless
and to the extent such successor or assign holds Registrable Shares.
(g) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience
--------
of reference only and shall not limit or otherwise affect the meaning hereof.
<PAGE>
-32-
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(j) Severability. If any term, provision, covenant or restriction
------------
of this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(k) Shares Held by the Company or Its Affiliates. Whenever the
--------------------------------------------
consent or approval of Holders of a specified percentage of Registrable Shares
is required hereunder, Registrable Shares held by the Company or its affiliates
(as such term is defined in Rule 405 under the Securities Act) shall not be
counted in determining whether such consent or approval was given by the Holders
of such required percentage.
(l) Third Party Beneficiaries. Holders of Registrable Shares are
-------------------------
intended third party beneficiaries of this Agreement and this Agreement may be
enforced by such Persons.
(m) Entire Agreement. This Agreement, together with the Purchase
----------------
Agreement and the Certificate of Designation, is intended by the parties as a
final and exclusive statement of the agreement and understanding of the parties
hereto in respect of the subject matter contained herein and therein and any and
all prior oral or written agreements, representations, or warranties, contracts,
understandings, correspondence, conversations and memoranda between the Initial
Purchaser on the one hand and the Company on the other, or between or among
<PAGE>
-33-
any agents, representatives, parents, subsidiaries, affiliates, predecessors in
interest or successors in interest with respect to the subject matter hereof and
thereof are merged herein and replaced hereby.
<PAGE>
-34-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
SAMSONITE CORPORATION
By: ___________________________________
Name:
Title:
CIBC OPPENHEIMER CORP.
By: ___________________________________
Name:
Title:
<PAGE>
EXHIBIT 4.6
====================================================================
_____________________
SAMSONITE CORPORATION, as Issuer,
and
UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee
====================================================================
INDENTURE
Dated as of June 24, 1998
$350,000,000
10 3/4% Senior Subordinated Notes due 2008
<PAGE>
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
------- -------
<S> <C>
310 (a)(1).............................................. 7.10
(a)(2).............................................. 7.10
(a)(3).............................................. N.A.
(a)(4).............................................. N.A.
(b)................................................. 7.08; 7.10; 11.02
(b)(1).............................................. 7.10
(b)(9).............................................. 7.10
(c)................................................. N.A.
311 (a)................................................. 7.11
(b)................................................. 7.11
(c)................................................. N.A.
312 (a)................................................. 2.05
(b)................................................. 11.03
(c)................................................. 11.03
313 (a)................................................. 7.06
(b)(1).............................................. 7.06
(b)(2).............................................. 7.06
(c)................................................. 7.06; 11.02
(d)................................................. 7.06
314 (a)................................................. 4.02; 4.04; 11.02
(b)................................................. N.A.
(c)(1).............................................. 11.04; 11.05
(c)(2).............................................. 11.04; 11.05
(c)(3).............................................. N.A.
(d)................................................. N.A.
(e)................................................. 11.05
(f)................................................. N.A.
315 (a)................................................. 7.01; 7.02
(b)................................................. 7.05; 10.02
(c)................................................. 7.01
(d)................................................. 6.05; 7.01; 7.02
(e)................................................. 6.11
316 (a) (last sentence)................................. 11.06
(a)(1)(A)........................................... 6.05
(a)(1)(B)........................................... 6.04
(a)(2).............................................. 8.02
(b)................................................. 6.07
(c)................................................. 8.04
317 (a)(1).............................................. 6.08
(a)(2).............................................. 6.09
</TABLE>
<PAGE>
<TABLE>
<S> <C>
(b)................................................. N.A.
318 (a)................................................. 11.01
</TABLE>
____________________
N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
a part of this Indenture
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions............................................ 1
Section 1.02. Other Definitions...................................... 31
Section 1.03. Incorporation by Reference of Trust Indenture Act...... 32
Section 1.04. Rules of Construction.................................. 32
ARTICLE 2
THE SECURITIES
Section 2.01. Dating; Incorporation of Form in Indenture............. 33
Section 2.02. Execution and Authentication........................... 34
Section 2.03. Registrar and Paying Agent............................. 35
Section 2.04. Paying Agent To Hold Assets in Trust................... 35
Section 2.05. Securityholder Lists................................... 36
Section 2.06. Transfer and Exchange.................................. 36
Section 2.07. Replacement Securities................................. 36
Section 2.08. Outstanding Securities................................. 37
Section 2.09. Temporary Securities................................... 37
Section 2.10. Cancellation........................................... 38
Section 2.11. Defaulted Interest..................................... 38
Section 2.12. Deposit of Moneys...................................... 38
Section 2.13. CUSIP Number........................................... 39
Section 2.14. Book-Entry Provisions for Global Securities............ 39
Section 2.15. Special Transfer Provisions............................ 40
ARTICLE 3
REDEMPTION
Section 3.01. Notices to Trustee..................................... 43
Section 3.02. Selection by Trustee of Securities To Be Redeemed...... 43
Section 3.03. Notice of Redemption................................... 44
Section 3.04. Effect of Notice of Redemption......................... 44
Section 3.05. Deposit of Redemption Price............................ 45
Section 3.06. Securities Redeemed in Part............................ 45
Section 3.07. Optional Redemption.................................... 46
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
ARTICLE 4
COVENANTS
Section 4.01. Payment of Securities............................................. 46
Section 4.02. SEC Reports....................................................... 47
Section 4.03. Waiver of Stay, Extension or Usury Laws........................... 47
Section 4.04. Compliance Certificate............................................ 48
Section 4.05. Taxes............................................................. 48
Section 4.06. Limitation on Incurrence of Additional Indebtedness............... 49
Section 4.07. Limitation on Preferred Stock of Restricted Subsidiaries.......... 49
Section 4.08. Limitation on Restricted Payments................................. 50
Section 4.09. Limitation on Certain Asset Sales................................. 52
Section 4.10. Limitation on Transactions with Affiliates........................ 55
Section 4.11. Limitation on Other Senior Subordinated Debt...................... 57
Section 4.12. Payments for Consent.............................................. 57
Section 4.13. Corporate Existence............................................... 57
Section 4.14. Change of Control................................................. 58
Section 4.15. Maintenance of Office or Agency................................... 60
Section 4.16. Limitation on Liens............................................... 61
Section 4.17. Limitation on Emerging Market Subsidiaries........................ 61
Section 4.18. Limitation on Restricting Subsidiary Dividends; Restriction on
Sale and Issuance of Subsidiary Stock.......................... 62
ARTICLE 5
SUCCESSOR CORPORATION
Section 5.01. Limitation on Consolidation, Merger and Sale of Assets............ 64
Section 5.02. Successor Person Substituted...................................... 65
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default................................................. 65
Section 6.02. Acceleration...................................................... 67
Section 6.03. Other Remedies.................................................... 68
Section 6.04. Waiver of Past Defaults and Events of Default..................... 69
Section 6.05. Control by Majority............................................... 69
Section 6.06. Limitation on Suits............................................... 69
Section 6.07. Rights of Holders To Receive Payment.............................. 70
Section 6.08. Collection Suit by Trustee........................................ 70
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
Section 6.09. Trustee May File Proofs of Claim............................... 71
Section 6.10. Priorities..................................................... 71
Section 6.11. Undertaking for Costs.......................................... 72
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee.............................................. 72
Section 7.02. Rights of Trustee.............................................. 74
Section 7.03. Individual Rights of Trustee................................... 75
Section 7.04. Trustee's Disclaimer........................................... 75
Section 7.05. Notice of Defaults............................................. 75
Section 7.06. Reports by Trustee to Holders.................................. 75
Section 7.07. Compensation and Indemnity..................................... 76
Section 7.08. Replacement of Trustee......................................... 77
Section 7.09. Successor Trustee by Consolidation, Merger or Conversion....... 78
Section 7.10. Eligibility; Disqualification.................................. 79
Section 7.11. Preferential Collection of Claims Against Company.............. 79
ARTICLE 8
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 8.01. Without Consent of Holders..................................... 79
Section 8.02. With Consent of Holders........................................ 80
Section 8.03. Compliance with Trust Indenture Act............................ 81
Section 8.04. Revocation and Effect of Consents.............................. 82
Section 8.05. Notation on or Exchange of Securities.......................... 82
Section 8.06. Trustee To Sign Amendments, etc................................ 83
ARTICLE 9
DISCHARGE OF INDENTURE; DEFEASANCE
Section 9.01. Discharge of Indenture......................................... 83
Section 9.02. Legal Defeasance............................................... 84
Section 9.03. Covenant Defeasance............................................ 84
Section 9.04. Conditions to Defeasance or Covenant Defeasance................ 85
Section 9.05. Deposited Money and U.S. Government Obligations To Be
Held in Trust; Other Miscellaneous Provisions............... 87
Section 9.06. Reinstatement.................................................. 88
Section 9.07. Moneys Held by Paying Agent.................................... 88
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
Section 9.08. Moneys Held by Trustee.............................................. 88
ARTICLE 10
SUBORDINATION OF SECURITIES
Section 10.01. Securities Subordinate to Senior Debt............................... 89
Section 10.02. Payment Over of Proceeds upon Dissolution, etc...................... 89
Section 10.03. Suspension of Payment When Senior Debt in Default................... 91
Section 10.04. Trustee's Relation to Senior Debt................................... 94
Section 10.05. Subrogation to Rights of Holders of Senior Debt..................... 94
Section 10.06. Provisions Solely To Define Relative Rights......................... 95
Section 10.07. Trustee To Effectuate Subordination................................. 96
Section 10.08. No Waiver of Subordination Provisions............................... 96
Section 10.09. Notice to Trustee................................................... 97
Section 10.10. Reliance on Judicial Order or Certificate of Liquidating Agent...... 98
Section 10.11. Rights of Trustee as a Holder of Senior Debt; Preservation of
Trustee's Rights................................................. 99
Section 10.12. Article Applicable to Paying Agents................................. 99
Section 10.13. No Suspension of Remedies........................................... 99
ARTICLE 11
MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls........................................ 100
Section 11.02. Notices............................................................. 100
Section 11.03. Communications by Holders with Other Holders........................ 101
Section 11.04. Certificate and Opinion as to Conditions Precedent.................. 102
Section 11.05. Statements Required in Certificate and Opinion...................... 102
Section 11.06. When Treasury Securities Disregarded................................ 103
Section 11.07. Rules by Trustee and Agents......................................... 103
Section 11.08. Business Days; Legal Holidays....................................... 103
Section 11.09. Governing Law....................................................... 103
Section 11.10. No Adverse Interpretation of Other Agreements....................... 104
Section 11.11. No Recourse Against Others.......................................... 104
Section 11.12. Successors.......................................................... 104
Section 11.13. Multiple Counterparts............................................... 104
Section 11.14. Table of Contents, Headings, etc.................................... 104
Section 11.15. Separability........................................................ 104
</TABLE>
iv
<PAGE>
EXHIBITS
- --------
Exhibit A - Form of Security A-1
Exhibit B - Form of Legend for Global Securities B-1
Exhibit C - Form of Certificate to Be Delivered in Connection with Transfers
to Non-QIB Accredited Investors C-1
Exhibit D - Form of Certificate to Be Delivered in Connection with Transfers
Pursuant to Regulation S D-1
v
<PAGE>
INDENTURE, dated as of June 24, 1998, between SAMSONITE CORPORATION, a
Delaware corporation, as issuer (the "Company"), and UNITED STATES TRUST COMPANY
OF NEW YORK, a bank and trust company organized under the New York Banking Law,
as Trustee (the "Trustee").
Each party agrees as follows for the benefit of the other parties and
for the equal and ratable benefit of the Holders of the Company's 10 3/4% Senior
Subordinated Notes due 2008 (the "Securities").
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.
-----------
"Acquired Indebtedness" means Indebtedness of a Person (including
an Unrestricted Subsidiary) existing at the time such Person becomes a
Restricted Subsidiary or assumed in connection with the acquisition of assets
from such Person.
"Affiliate" means, with respect to any Person, a Person who,
directly or indirectly, through one or more intermediaries controls, or is
controlled by, or is under common control with, such other Person. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise; provided,
--------
however, that the ownership of at least 10% of the voting power of the Common
- -------
Stock of a Person, either directly or indirectly, shall be deemed control.
"Agent" means any Registrar, Paying Agent, co-registrar or agent
for service of notices and demands.
"Asset Sale" means the sale, transfer or other disposition (other
than to the Company or any of its Restricted Subsidiaries (other than any
Emerging Market Subsidiary)) in any single transaction or series of related
transactions involving assets with a fair market value in excess of $1,000,000
of (a) any Capital Stock of or other equity interest in any Restricted
Subsidiary of the Company other than in a transaction where the Company or such
Restricted Subsidiary receives therefor one or more properties with a fair
market value equal to the fair market value of the Capital Stock issued,
transferred or disposed of by the Company or the Restricted Subsidiary (with
such fair market values being determined by the Board of Directors of the
Company), (b) all or substantially all of the assets of the Company or of any
Restricted Subsidiary thereof, (c) real property or (d) all or substantially all
of the assets of any division, line of business or comparable business segment
of the Company or of any Restricted Subsidiary thereof; provided that Asset
--------
Sales shall not include (x) sales, leases, conveyances, transfer or other
dispositions to the Company or to a Restricted Subsidiary to any other Person
if, after giving effect
1
<PAGE>
to such sale, lease, conveyance, transfer or other disposition, such other
Person becomes a Restricted Subsidiary (other than any Emerging Market
Subsidiary), (y) the sale of all or substantially all of the assets of the
Company or a Restricted Subsidiary in a transaction complying with Section 5.01,
in which case only the assets not so sold shall be deemed an Asset Sale, or (z)
any sale, issuance or other disposition of Capital Stock or assets of any Joint
Venture Subsidiary in compliance with Section 4.18.
"Asset Sale Proceeds" means, with respect to any Asset Sale, (i) cash
received by the Company or any Restricted Subsidiary from such Asset Sale
(including cash received as consideration for the assumption of liabilities
incurred in connection with or in anticipation of such Asset Sale), after (a)
provision for all income or other taxes, estimated in good faith by the Company,
measured by or resulting from such Asset Sale, (b) payment of all brokerage
commissions, underwriting, accounting, legal and other fees and expenses related
to such Asset Sale, (c) provision for minority interest holders in any
Restricted Subsidiary as a result of such Asset Sale and (d) deduction of
appropriate amounts to be provided by the Company or a Restricted Subsidiary as
a reserve, in accordance with GAAP, against any liabilities associated with the
assets sold or disposed of in such Asset Sale and retained by the Company or a
Restricted Subsidiary after such Asset Sale, including, without limitation,
pension and other post-employment benefit liabilities and liabilities related to
environmental matters or against any indemnification obligations associated with
the assets sold or disposed of in such Asset Sale, and (ii) promissory notes and
other non-cash consideration received by the Company or any Restricted
Subsidiary from such Asset Sale or other disposition upon the liquidation or
conversion of such notes or non-cash consideration into cash.
"Available Asset Sale Proceeds" means, with respect to any Asset Sale,
the aggregate Asset Sale Proceeds from such Asset Sale that have not been
applied in accordance with clause (iii)(a) or (b) and that have not yet been the
subject of an Excess Proceeds Offer in accordance with clause (iii)(c) of
Section 4.09(a).
"Board of Directors" means the board of directors of the Company or
any authorized committee thereof (a "Board Committee"); provided that the term
--------
"Board of Directors" as used in the definition of "Change of Control" shall not
include any Board Committee.
"Board Resolution" means a copy of a resolution certified pursuant to
an Officers' Certificate to have been duly adopted by the Board of Directors of
the Company to be in full force and effect, and delivered to the Trustee.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated) of capital stock, including each class of common stock and
preferred stock of such Person and warrants or options to purchase any of the
foregoing and (ii) with respect to any Person that is not a corporation, any and
all partnership or other equity interests of such Person.
2
<PAGE>
"Capitalized Lease Obligation" means, as to any Person, the obligation
of such Person to pay rent or other amounts under a lease to which such Person
is a party that is required to be classified and accounted for as capital lease
obligations under GAAP and, for purposes of this definition, the amount of such
obligations at any date shall be the capitalized amount of such obligations at
such date, determined in accordance with GAAP.
"Cash Equivalents" means (i) marketable direct obligations issued by,
or unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either S&P or Moody's; (iii) commercial paper maturing no more
than one year from the date of creation thereof and, at the time of acquisition,
having a rating of at least A-1 from S&P or at least P-1 from Moody's; (iv)
certificates of deposit or bankers' acceptances maturing within one year from
the date of acquisition thereof issued by any commercial bank organized under
the laws of the United States of America or any state thereof or the District of
Columbia or any U.S. branch of a foreign bank having at the date of acquisition
thereof combined capital and surplus of not less than $250,000,000; (v)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clause (i) above entered into with any bank
meeting the qualifications specified in clause (iv) above; and (vi) investments
in money market funds which invest substantially all of their assets in
securities of the types described in clauses (i) through (v) above.
"Certificate of Designation" means the Certificate of Designation
under which the Senior Preferred Stock was issued, as in effect on the date of
this Indenture.
A "Change of Control" of the Company will be deemed to have occurred
at such time as (i) any Person (including a Person's Affiliates), other than a
Permitted Holder, becomes the beneficial owner (as defined under Rule 13d-3 or
any successor rule or regulation promulgated under the Exchange Act) of 50% or
more of the total voting power of the Company's Common Stock unless, as a result
of such transaction, the ultimate direct or indirect ownership of the Company is
substantially the same immediately after such transaction as it was immediately
prior to such transaction, (ii) any Person (including a Person's Affiliates),
other than a Permitted Holder, becomes the beneficial owner of more than 35% of
the total voting power of the Company's Common Stock, and the Permitted Holders
beneficially own, in the aggregate, a lesser percentage of the total voting
power of the Common Stock of the Company than such other Person and do not have
the right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the Board of Directors of the Company,
(iii) there shall be consummated any consolidation or merger of the Company in
which the Company is not the continuing or surviving corporation or pursuant to
which the Common Stock of the Company would be converted into cash, securities
or other property, other than a merger or consolidation of the Company in which
3
<PAGE>
the holders of the Common Stock of the Company outstanding immediately prior to
the consolidation or merger hold, directly or indirectly, at least a majority of
the voting power of the Common Stock of the surviving corporation immediately
after such consolidation or merger or (iv) during any period of two consecutive
years, individuals who at the beginning of such period constituted the Board of
Directors of the Company (together with any new directors whose election by such
Board of Directors or whose nomination for election by the shareholders of the
Company has been approved by a majority of the directors then still in office
who either were directors at the beginning of such period or whose election or
recommendation for election was previously so approved) cease to constitute a
majority of the Board of the Directors of the Company.
"Common Stock" of any Person means any and all shares, interests or
other participations in, and other equivalents (however designated and whether
voting or non-voting) of, such Person's common stock, whether outstanding on the
Issue Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common stock.
"Company" means the party named as such in the first paragraph of this
Indenture until a successor replaces such party pursuant to Article 5 of this
Indenture and thereafter means the successor obligor on the Securities.
"Company Request" means any written request signed in the name of the
Company by the Chief Executive Officer, the President, any Vice President, the
Chief Financial Officer or the Treasurer and attested to by the Secretary or any
Assistant Secretary of the Company.
"Consolidated EBITDA" means, for any Person and its Restricted
Subsidiaries, for any period, an amount equal to (a) the sum of Consolidated Net
Income for such period, plus, to the extent deducted from the revenues of such
Person and its Restricted Subsidiaries in determining Consolidated Net Income,
(i) the provision for taxes for such period based on income or profits and any
provision for taxes utilized in computing a loss in Consolidated Net Income
above, plus (ii) Consolidated Interest Expense (including, for this purpose,
dividends on the Senior Preferred Stock and any Redeemable Dividends in each
case only to the extent that such dividends were deducted in determining
Consolidated Net Income), plus (iii) Consolidated Non-Cash Charges, plus (iv)
without duplication, charges attributable to the exercise or adjustment of
employee options and fees and expenses, in each case, incurred in connection
with the Recapitalization or the transactions described under "Management's
Discussion and Analysis of Financial Condition and Results of Operations--Recent
Events and Proposed Recapitalization," in the Offering Memorandum plus (v)
without duplication, for any four quarter period that includes one or more
fiscal quarters of fiscal 1998 or either or both of the first two fiscal
quarters of fiscal 1999, restructuring charges, in an aggregate amount not to
exceed $12,000,000, but only to the extent actually incurred during each such
applicable quarter and minus (vi) without duplication, the amount of all cash
payments made by such Person or any of its Restricted Subsidiaries during such
period to the extent such payments relate to Consolidated Non-Cash Charges that
were added back in determining Consolidated EBITDA for such period or any prior
period, all as determined
4
<PAGE>
on a consolidated basis for such Person and its Restricted Subsidiaries in
accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" on any date of
determination (the "Transaction Date") means, with respect to any Person, the
ratio of (i) the aggregate amount of Consolidated EBITDA of such Person for the
Reference Period to (ii) the aggregate amount of Consolidated Fixed Charges of
such Person during the Reference Period; provided, that for purposes of such
--------
computation, in calculating Consolidated EBITDA and Consolidated Fixed Charges,
(a) the transaction giving rise to the need to calculate the Consolidated Fixed
Charge Coverage Ratio will be assumed to have occurred (on a pro forma basis) on
the first day of the Reference Period; (b) the incurrence of any Indebtedness
(other than Indebtedness incurred under any revolving credit or similar facility
to the extent that the proceeds were used to finance working capital
requirements in the ordinary course of business) or the issuance of any
Disqualified Capital Stock or Preferred Stock during the Reference Period or
subsequent thereto and on or prior to the Transaction Date (and the application
of the proceeds therefrom (other than a repayment of Indebtedness outstanding
under a revolving credit or similar facility to the extent that the proceeds
were used to finance working capital requirements in the ordinary course of
business) to the extent used to retire Indebtedness or Preferred Stock) will be
assumed to have occurred (on a pro forma basis) on the first day of such
Reference Period; (c) Consolidated Interest Expense attributable to any
Indebtedness (whether existing or being incurred) bearing a floating interest
rate shall be computed as if the rate in effect on the Transaction Date had been
the applicable rate for the entire period, unless such Person or any of its
Subsidiaries is a party to an Interest Rate Agreement (which shall remain in
effect for the 12-month period after the Transaction Date) that has the effect
of fixing the interest rate on the date of computation, in which case such rate
(whether higher or lower) shall be used; (d) the repayment of any Indebtedness
(other than under a revolving credit or similar facility to the extent that the
proceeds were used to finance working capital requirements in the ordinary
course of business), Disqualified Capital Stock or Preferred Stock during the
Reference Period or subsequent thereto and on or prior to the Transaction Date
with the proceeds of any sale or other disposition of assets or properties
referred to in clause (f) below will be assumed to have occurred (on a pro forma
basis) on the first day of the Reference Period; (e) the acquisition during the
Reference Period or subsequent thereto and on or prior to the Transaction Date
of any other Person which, as a result of such acquisition, becomes a
Subsidiary, will be assumed to have occurred (on a pro forma basis) on the first
day of the Reference Period; and (f) any sale or other disposition of assets or
properties constituting an existing business (whether existing as a separate
entity, subsidiary, division, unit or otherwise) outside the ordinary course of
business occurring during the Reference Period or subsequent thereto and on or
prior to the Transaction Date will be assumed to have occurred (on a pro forma
basis) on the first day of the Reference Period.
"Consolidated Fixed Charges" of any Person for any period means
(without duplication) the sum of (i) Consolidated Interest Expense of such
Person for such period (excluding amortization or write-off of deferred
financing fees and expenses) and (ii) without duplication, Redeemable Dividends
of such Person and its Restricted Subsidiaries (whether in cash or otherwise
(except dividends payable solely in shares of Qualified Capital Stock)) with
respect to
5
<PAGE>
Disqualified Capital Stock and Preferred Stock accrued during such period in
accordance with GAAP (but in the case of such Preferred Stock, only to the
extent that the aggregate amount of dividends paid or accrued from and after the
Issue Date exceeds the aggregate net cash proceeds to such Person from the
issuance and sale of such Preferred Stock), in each case excluding items
eliminated in consolidation of such Person and its Restricted Subsidiaries;
provided, that dividends accrued or paid on the Senior Preferred Stock shall not
- --------
be included in the calculation of Consolidated Fixed Charges.
"Consolidated Interest Expense" means, with respect to any Person, for
any period, the aggregate amount of interest which, in conformity with GAAP,
would be set forth opposite the caption "interest expense" or any like caption
on an income statement for such Person and its Restricted Subsidiaries on a
consolidated basis, including, but not limited to, Redeemable Dividends, whether
paid or accrued, on Restricted Subsidiary Preferred Stock, imputed interest
included in Capitalized Lease Obligations, all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers' acceptance
financing, the net costs associated with hedging obligations, amortization of
other financing fees and expenses, the interest portion of any deferred payment
obligation, amortization of discount or premium, if any, and all other non-cash
interest expense (other than interest amortized to cost of sales) plus, without
duplication, all net capitalized interest for such period and all interest
incurred or paid under any guarantee of Indebtedness (including a guarantee of
principal, interest or any combination thereof) of any Person, plus the amount
of all dividends or distributions paid on Disqualified Capital Stock (other than
dividends paid or payable in shares of Capital Stock of the Company), minus
interest income for such period.
"Consolidated Net Income" means, with respect to any Person, for any
period, the aggregate of the net income (or loss) of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP; provided, however, that (a) the net income of any Person
-------- -------
including of any Emerging Market Subsidiary or Unrestricted Subsidiary (each, an
"Other Person") in which the Person in question or any of its Restricted
Subsidiaries has less than a 100% interest (which interest does not cause the
net income of such Other Person to be consolidated into the net income of the
Person in question in accordance with GAAP) shall be included only to the extent
of the amount of dividends or distributions paid to the Person in question or to
any of its Restricted Subsidiaries, (b) the net income of any Restricted
Subsidiary of the Person in question that is subject to any restriction or
limitation on the payment of dividends or the making of other distributions
(other than pursuant to the Securities) shall be excluded to the extent of such
restriction or limitation, (c) (i) 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 (ii) any net gain or net loss resulting from
an Asset Sale by the Person in question or any of its Restricted Subsidiaries
other than in the ordinary course of business shall be excluded, (d)
extraordinary, unusual or non-recurring gains and losses shall be excluded and
(e) gains and losses associated with discontinued and terminated operations
shall be excluded.
"Consolidated Non-Cash Charges" means, with respect to any Person for
any
6
<PAGE>
period, the aggregate depreciation, amortization and other non-cash items (which
do not reflect an accrual of a cash expense which may be incurred in the future)
of such Person and its Restricted Subsidiaries reducing Consolidated Net Income
of such Person and its Restricted Subsidiaries less any such non-cash items
increasing Consolidated Net Income of such Person and its Restricted
Subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP.
"Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered, which office at the date of execution of this Indenture is
specified in Section 11.02.
"Credit Agreement" means (i) one or more credit agreements, loan
agreements or similar agreements providing for working capital advances, term
loans, letter of credit facilities or similar advances, loans, or facilities to
the Company, any Subsidiaries, domestic or foreign, or any or all of such
Persons, including the Credit Agreement, dated on or as in effect on or about
the Issue Date, among the Company and Samsonite Europe N.V., as borrowers, Bank
of America National Trust and Savings Association and BankBoston, N.A., and
certain other lenders party thereto from time to time, as the same may be
amended, modified, restated or supplemented from time to time and (ii) any one
or more agreements governing advances, loans or facilities provided to refund,
refinance, replace or renew (including subsequent or successive refundings,
refinancings, replacements and renewals) Indebtedness under the agreement or
agreements referred to in the foregoing clause (i), as the same may be amended,
modified, restated or supplemented from time to time.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement designed to address fluctuations in
currency values.
"Default" means an event or condition the occurrence of which is, or
with the lapse of time or the giving of notice or both would be, an Event of
Default.
"Depository" means, with respect to the Securities issued in the form
of one or more Global Securities, The Depository Trust Company or another Person
designated as Depository by the Company, which Person must be a clearing agency
registered under the Exchange Act.
"Designated Senior Debt" means (i) Indebtedness under the Original
Credit Agreement (and any guarantees thereof), and (ii) any other Indebtedness
constituting Senior Debt which, at the time of determination, has an aggregate
principal amount of at least $25,000,000 (or accreted value of at least such
amount in the case of Indebtedness issued at a discount) and is specifically
designated as "Designated Senior Debt" by the Company and, so long as the
Original Credit Agreement is in effect, by the Representative under the Original
Credit Agreement, and certified as such in an Officers' Certificate delivered to
the Trustee.
"Disqualified Capital Stock" means any Capital Stock which, by its
terms (or by the
7
<PAGE>
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures (excluding any
maturity as the result of an optional redemption by the issuer thereof) or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the sole option of the holder thereof, in whole or in part, on
or prior to the final maturity date of the Securities. Without limitation of the
foregoing, Disqualified Capital Stock shall be deemed to include (i) any
Preferred Stock of a Restricted Subsidiary of the Company and (ii) any Preferred
Stock of the Company, with respect to either of which, under the terms of such
Preferred Stock, by agreement or otherwise, such Restricted Subsidiary or the
Company is obligated to pay current dividends or distributions in cash during
the period prior to the maturity date of the Securities; provided, however, that
-------- -------
Preferred Stock of the Company or any Restricted Subsidiary thereof that is
issued with the benefit of provisions requiring a change of control offer to be
made for such Preferred Stock in the event of a change of control of the Company
or such Restricted Subsidiary, which provisions have substantially the same
effect as the provisions of Section 4.14 shall not be deemed to be Disqualified
Capital Stock solely by virtue of such provisions; and provided, further, that
-------- -------
the Senior Preferred Stock shall not be considered Disqualified Capital Stock.
"Emerging Market Subsidiary" means (i) any Initial Emerging Market
Subsidiary, (ii) any majority-owned Subsidiary of the Company the principal
operations of which are not located in the United States, Canada, Western Europe
or Japan that, at the time of determination, shall be an Emerging Market
Subsidiary (as designated by the Board of Directors, as provided below) and
(iii) any majority-owned Subsidiary of an Emerging Market Subsidiary. The Board
of Directors may designate (1) any Unrestricted Subsidiary of the Company to be
an Emerging Market Subsidiary, and (2) any Restricted Subsidiary of the Company
(including any newly acquired or newly formed Subsidiary at or prior to the time
it is so formed or acquired) to be an Emerging Market Subsidiary if it meets the
geographic test set forth above and (a) no Default or Event of Default is
existing or will occur as a consequence thereof, (b) with respect to previously
existing Restricted Subsidiaries, immediately after giving effect to such
designation, on a pro forma basis, the Company could incur at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) pursuant to Section
4.06 and (c) such Restricted Subsidiary does not own any Capital Stock of, or
own or hold any Lien on any property of, the Company or any Restricted
Subsidiary that is not a Subsidiary of the Restricted Subsidiary to be so
designated. At the time that a previously existing Restricted Subsidiary of the
Company is designated an Emerging Market Subsidiary, the Company shall be deemed
to make an "Investment" in such Emerging Market Subsidiary in an amount equal to
its Pro Rata Interest in the fair market value of the net assets of such
Restricted Subsidiary. A Restricted Subsidiary of the Company shall not be
considered to be a "previously existing Restricted Subsidiary" for purposes of
this definition if such Restricted Subsidiary is designated to be an Emerging
Market Subsidiary at or prior to the time of the formation of such Restricted
Subsidiary or at or prior to the time such Restricted Subsidiary is acquired by
the Company. The Board of Directors may designate any Emerging Market Subsidiary
to be a Restricted Subsidiary, provided that (i) no Default or Event of Default
is existing or will occur as a consequence thereof and (ii) either (x)
immediately after giving effect to such designation, on a pro forma basis, the
Company could incur at least $ 1.00 of additional
8
<PAGE>
Indebtedness (other than Permitted Indebtedness) pursuant to Section 4.06 or (y)
the Consolidated Fixed Charge Coverage Ratio of the Company immediately after
giving effect to such designation, on a pro forma basis, exceeds the
Consolidated Fixed Charge Coverage Ratio of the Company immediately prior (and
without giving effect) to such designation. Each such designation shall be
evidenced by the filing with the Trustee of a certified copy of the Board
Resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing conditions.
"Equity Offering" means a sale by the Company of shares of its
Qualified Capital Stock.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Debentures" means the 13 7/8% Subordinated Debentures due
2010 of the Company or the 13 7/8% Senior Debentures due 2010 of Holdings, as
the case may be, issuable in exchange for the Senior Preferred Stock in
accordance with the Certificate of Designation with respect to the Senior
Preferred Stock and pursuant to the Exchange Indenture including additional
Exchange Debentures issued as interest on outstanding Exchange Debentures
pursuant to the Exchange Indenture.
"Exchange Indenture" means the indenture dated as of June 24, 1998
between the Company, in the case of Exchange Debentures issued by the Company,
or the indenture dated as of the issue date of the Exchange Debentures between
Holdings, in the case of Exchange Debentures issued by Holdings, and, in either
case, United States Trust Company of New York, as trustee, governing the
Exchange Debentures.
"Exchange Securities" has the meaning provided for Exchange Notes in
the Registration Rights Agreement.
"Foreign Credit Agreement" means one or more Credit Agreements among
one or more Foreign Restricted Subsidiaries and the lenders party thereto.
"Foreign Restricted Subsidiary" means a Restricted Subsidiary of the
Company that is incorporated or otherwise organized in a jurisdiction other than
the United States, any state thereof or the District of Columbia.
"GAAP" means generally accepted accounting principles consistently
applied as in effect in the United States from time to time.
"Holder" or "Securityholder" means the Person in whose name a Security
is registered on the Registrar's books.
"Holdings" means a holding company of the Company which may be formed
after
9
<PAGE>
the Issue Date.
"incur" means, with respect to any Indebtedness or other obligation of
any Person, to create, issue, incur (by conversion, exchange or otherwise),
assume, guarantee or otherwise become liable in respect of such Indebtedness or
other obligation or the recording, as required pursuant to GAAP or otherwise, of
any such Indebtedness or other obligation on the balance sheet of such Person
(and "incurrence," "incurred," "incurrable" and "incurring" shall 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 shall
not be deemed an incurrence of such Indebtedness; provided, further, that the
-------- -------
amortization of original issue discount on Indebtedness issued with original
issue discount or the accumulation of distributions on Disqualified Capital
Stock shall not be deemed an incurrence of Indebtedness.
"Indebtedness" means (without duplication), with respect to any
Person, any indebtedness at any time outstanding, secured or unsecured,
contingent or otherwise, which is for borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such Person or only to a
portion thereof) or evidenced by bonds, notes, debentures or similar instruments
or representing the balance deferred and unpaid of the purchase price of any
property (excluding, without limitation, any balances that constitute accounts
payable or trade payables and other accrued liabilities or accrued expenses
arising in the ordinary course of business) if and to the extent any of the
foregoing indebtedness would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, and shall also include, to the extent
not otherwise included, (i) any Capitalized Lease Obligations, (ii) obligations
secured by a Lien to which the property or assets owned or held by such Person
are subject, whether or not the obligation or obligations secured thereby shall
have been assumed (provided, however, that if such obligation or obligations
-------- -------
shall not have been assumed, the amount of such Indebtedness shall be deemed to
be the lesser of the principal amount of the obligation or the fair market value
of the pledged property or assets), other than a Permitted Lien securing an
obligation that is not Indebtedness, (iii) guarantees of items of other Persons
which would be included within this definition for such other Persons (whether
or not such items would appear upon the balance sheet of the guarantor), (iv)
all obligations for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction, (v) Disqualified Capital
Stock of the Company or any Restricted Subsidiary thereof and (vi) obligations
of any such Person under any Interest Rate Agreement or Currency Agreement
applicable to any of the foregoing (if and to the extent such Interest Rate
Agreement or Currency Agreement obligations would appear as a liability upon a
balance sheet of such Person prepared in accordance with GAAP). The amount of
Indebtedness of any Person at any date shall be the outstanding balance at such
date of all unconditional obligations as described above and, with respect to
contingent obligations, the maximum liability upon the occurrence of the
contingency giving rise to the obligation, provided that (i) the amount
outstanding at any time of any Indebtedness issued with original issue discount
is the principal amount of such Indebtedness less the remaining unamortized
portion of the original issue discount of such Indebtedness at such time as
determined in conformity with GAAP and (ii) Indebtedness shall not include any
liability for federal, state, local or other taxes. Notwithstanding any other
provision of
10
<PAGE>
the foregoing definition, any trade payable arising from the purchase of goods
or materials or for services obtained in the ordinary course of business or
contingent obligations arising out of customary indemnification agreements with
respect to the sale of assets or securities shall not be deemed to be
"Indebtedness" of the Company or any Restricted Subsidiaries for purposes of
this definition. Furthermore, guarantees of (or obligations with respect to
letters of credit supporting) Indebtedness otherwise included in the
determination of such amount shall not also be included.
"Indenture" means this Indenture as amended, restated or supplemented
from time to time.
"Initial Emerging Market Subsidiary" means each of (i) Chia Tai
Samsonite (H.K.) Limited, (ii) Ningbo Chia Tai Samsonite Luggage Co. Ltd., (iii)
Samsonite Argentina S.A., (iv) Samsonite Brasil Ltda., (v) Samsonite India
Limited, (vi) Samsonite Korea Limited, (vii) Samsonite Mercosur Limited, (viii)
Samsonite Mauritius Limited, and (ix) Samsonite Singapore Limited.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
promulgated under the Securities Act.
"Interest Payment Date" means the stated maturity of any scheduled
installment of interest on the Securities.
"Interest Rate Agreement" means, for any Person, any interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement or
other similar agreement.
"Invested Capital" in an Emerging Market Subsidiary means the sum
(without duplication) of the aggregate net cash proceeds and non-cash
consideration (other than services) received by such Emerging Market Subsidiary
from (a) the issuance of any Qualified Capital Stock of such Emerging Market
Subsidiary; (b) the issuance of Disqualified Capital Stock or Indebtedness
securities of such Emerging Market Subsidiary to (and only so long as such
securities are beneficially owned by) the Company, a Restricted Subsidiary of
the Company or any other Person that beneficially owns 20% or more of the
Qualified Capital Stock of such Emerging Market Subsidiary (a "Significant
Partner"); provided, that proceeds from the issuance of Disqualified Capital
--------
Stock and Indebtedness securities that are beneficially owned by a Significant
Partner shall constitute Invested Capital only to the extent that the ratio of
(w) the Invested Capital under the preceding clause (a) attributable to Capital
Stock beneficially owned by such Significant Partner to (x) the proceeds from
the issuance of Disqualified Capital Stock and Indebtedness of such Emerging
Market Subsidiary beneficially owned by such Significant Partner is not greater
than the ratio of (y) the Invested Capital under the preceding clause (a)
attributable to Capital Stock beneficially owned by the Company and its
Restricted Subsidiaries, taken as a whole, to (z) the proceeds from the issuance
of Disqualified Capital Stock and Indebtedness of such Emerging Market
Subsidiary beneficially owned by the Company and its Restricted Subsidiaries,
taken as a
11
<PAGE>
whole; and (c) the issuance of Disqualified Capital Stock or Indebtedness
securities of such Emerging Market Subsidiary convertible into Qualified Capital
Stock of such Emerging Market Subsidiary, in each case upon such conversion
thereof into Qualified Capital Stock of such Emerging Market Subsidiary and that
is not considered Invested Capital pursuant to clause (b) above. For purposes of
this definition, the amount attributable to non-cash consideration shall be the
fair value thereof determined in good faith by the Board of Directors of such
Emerging Market Subsidiary.
"Investment" by any Person in any other Person means, directly or
indirectly, any advance, account receivable (other than an account receivable
arising in the ordinary course of business), loan or capital contribution to (by
means of transfers of property to others, payments for property or services for
the account or use of others or otherwise), the purchase of any stocks, bonds,
notes, debentures, partnership or joint venture interests or other securities
of, the acquisition, by purchase or otherwise, of all or substantially all of
the business or assets or stock or other evidence of beneficial ownership of,
such other Person or the making of any investment by such Person in any other
Person. Investments shall exclude extensions of trade credit on commercially
reasonable terms in accordance with normal trade practices and repurchases or
redemptions of the Securities, the Exchange Debentures issued by the Company or
the Senior Preferred Stock by the Company or any other security or evidence of
Indebtedness issued by the Company. Notwithstanding the foregoing, the following
shall not be considered Investments by a Person in any other Person: (i) trade
receivables and prepaid expenses, in each case arising in the ordinary course of
business; provided, that such receivables and prepaid expenses would be recorded
--------
as assets of such Person in accordance with GAAP, (ii) Investments received in
connection with the bankruptcy or reorganization of suppliers and customers or
in good faith bona fide settlement of delinquent ordinary course of business
trade receivables of customers, (iii) endorsements for collection or deposit in
the ordinary course of business by such Person of bank drafts and similar
negotiable instruments of such other Person received as payment for ordinary
course of business trade receivables, (iv) an Interest Rate Agreement or
Currency Agreement with an unaffiliated Person provided that such agreements
comply with the requirements of clause (iv) of the definition of Permitted
Indebtedness, (v) Investments received as consideration for, or customary
indemnities given in connection with, an Asset Sale in compliance with Section
4.09, and (vi) Investments for which the sole consideration provided is
Qualified Capital Stock. The Company shall be deemed to make an "Investment" in
an amount equal to its Pro Rata Interest in the fair market value of the net
assets of any previously existing Restricted Subsidiary, at the time that such
Restricted Subsidiary is designated an Unrestricted Subsidiary or an Emerging
Market Subsidiary, as the case may be; and any property transferred, directly or
indirectly (whether by merger or otherwise) to an Unrestricted Subsidiary or an
Emerging Market Subsidiary, as the case may be, from the Company or a Restricted
Subsidiary after the time of such designation shall be deemed an Investment
valued at its fair market value at the time of such transfer. A Restricted
Subsidiary of the Company shall not be considered to be a "previously existing
Restricted Subsidiary" for purposes of this definition if such Restricted
Subsidiary is designated to be an Emerging Market Subsidiary or an Unrestricted
Subsidiary, as the case may be, at or prior to the time of the formation of such
Restricted Subsidiary or at or prior to the time such Restricted
12
<PAGE>
Subsidiary is acquired by the Company.
"Issue Date" means the date of original issuance of the Securities.
"Joint Venture Subsidiary" means a Restricted Subsidiary of the
Company in which one or more Persons who have provided or are providing
operating assets or services to such Restricted Subsidiary beneficially own not
less than 50% of the Capital Stock of such Restricted Subsidiary not owned by
the Company or a Restricted Subsidiary of the Company.
"Lien" means any consensual lien, mortgage, deed of trust, pledge,
security interest, charge or encumbrance of any kind (including any conditional
sale or other title retention agreement, any lease in the nature thereof and any
agreement to give any security interest).
"Maturity Date" means June 15, 2008.
"Net Proceeds" means (a) in the case of any sale of Capital Stock by
the Company, the aggregate net proceeds received by the Company, after payment
of expenses, commissions and the like incurred in connection therewith, whether
such proceeds are in cash or in property (valued at the fair market value
thereof, as determined in good faith by the Board of Directors, at the time of
receipt) and (b) in the case of any exchange, exercise, conversion or surrender
of outstanding securities of any kind for or into shares of Qualified Capital
Stock of the Company, the net book value of such outstanding securities on the
date of such exchange, exercise, conversion or surrender (plus any additional
amount required to be paid by the holder to the Company upon such exchange,
exercise, conversion or surrender, less any and all payments made to the
holders, e.g., on account of fractional shares and less all expenses incurred by
the Company in connection therewith).
"Non-Payment Event of Default" means any event (other than a Payment
Default) the occurrence of which entitles one or more Persons to accelerate the
maturity of any Designated Senior Debt.
"Non-U.S. Person" means a person who is not a U.S. person, as defined
in Regulation S.
"Obligations" means all obligations for principal, premium, interest
(including post-petition interest whether or not such interest constitutes
allowed or allowable claims against the relevant obligor, in any bankruptcy,
reorganization or other insolvency proceeding, and, in the case of the
Securities, any additional interest or liquidated damages from time to time
payable pursuant to the Registration Rights Agreement), penalties, fees, costs,
indemnifications, reimbursements, repurchase, redemption, retirement or
defeasance obligations, damages and other liabilities and obligations payable
under the documentation governing, or otherwise relating to, any Indebtedness.
13
<PAGE>
"Offer Period" shall have the meaning specified in Section 4.09(b).
"Offering Memorandum" means the Offering Memorandum dated June 18,
1998 pursuant to which the Securities were offered.
"Officer" means the Chief Executive Officer, the President, any Vice
President, the Chief Financial Officer, the Treasurer, the Controller or the
Secretary of the Company, or any other officer designated by the Board of
Directors, as the case may be.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chief Executive Officer, the President or any Vice
President, the Chief Financial Officer, the Controller or any Treasurer of such
Person that shall comply with applicable provisions of this Indenture and is
reasonably acceptable to the Trustee if being delivered to the Trustee.
"Opinion of Counsel" means a written opinion from legal counsel which
counsel is reasonably acceptable to the Trustee.
"Original Credit Agreement" means the referenced Credit Agreement
described in clause (i) of the definition of Credit Agreement dated on or as in
effect on or about the Issue Date, as the same may be amended, modified,
restated or supplemented from time to time, and any one replacement agreement or
facility existing at any time provided to refund, refinance, replace or renew
(including subsequent or successive refundings, refinancings, replacements and
renewals) the Original Credit Agreement; such replacement agreement or facility
to be designated by the Company and certified in an Officers' Certificate
delivered to the Trustee.
"Pari Passu Debt" means any Indebtedness (secured or unsecured) of the
Company that ranks pari passu in right of payment with the Securities.
"Payment Default" means any default, whether or not any requirement
for the giving of notice, the lapse of time or both, or any other condition to
such default becoming an event of default has occurred, in the payment of
principal of (or premium, if any) or interest on or any other amount payable in
connection with Designated Senior Debt.
"Permitted Holders" means Apollo Advisors, L.P. and any Affiliate
thereof.
"Permitted Indebtedness" means, without duplication, each of the
following:
(i) Indebtedness under the Securities and this Indenture;
(ii) Indebtedness incurred pursuant to any Credit Agreements (and the
guarantees thereof) in an aggregate principal amount at any time outstanding
not to exceed $260,000,000;
14
<PAGE>
(iii) all other Indebtedness of the Company and its Restricted
Subsidiaries outstanding on the Issue Date;
(iv) (a) Obligations under Interest Rate Agreements of the Company
covering Indebtedness of the Company or any of its Restricted Subsidiaries;
provided, however, that such Interest Rate Agreements are entered into to
-------- -------
protect the Company and its Restricted Subsidiaries from fluctuations in
interest rates on Indebtedness otherwise permitted to be incurred hereunder
and not for speculative purposes to the extent the notional principal amount
of such Interest Rate Agreement does not exceed the principal amount of the
Indebtedness to which such Interest Rate Agreement relates and (b)
Indebtedness under Currency Agreements incurred by the Company in the
ordinary course of business to the extent that such obligations have been
entered into to protect against fluctuations in currency exchange rates and
not for speculative purposes; provided, that in the case of Currency
--------
Agreements which relate to Indebtedness, such Currency Agreements do not
increase the Indebtedness of the Company and the Restricted Subsidiaries
outstanding other than as a result of fluctuations in foreign currency
exchange rates or by reason of fees, indemnities and compensation payable
thereunder;
(v) Indebtedness of a Restricted Subsidiary of the Company to the
Company or to a Restricted Subsidiary of the Company for so long as such
Indebtedness is owned by the Company or a Restricted Subsidiary of the
Company, in each case with no Lien securing such Indebtedness held by a
Person other than the Company or a Restricted Subsidiary of the Company;
provided that if as of any date any Person other than the Company or a
--------
Restricted Subsidiary of the Company owns any such Indebtedness or holds a
Lien securing any such Indebtedness, such date shall be deemed the incurrence
of Indebtedness not constituting Permitted Indebtedness under this clause
(v);
(vi) Indebtedness of the Company to a Restricted Subsidiary of the
Company for so long as such Indebtedness is owned by a Restricted Subsidiary
of the Company, in each case with no Lien securing such Indebtedness;
provided that (a) any Indebtedness of the Company to any Restricted
--------
Subsidiary of the Company is subordinated, pursuant to a written agreement,
to the Company's Obligations under this Indenture and the Securities at least
to the same extent that the Securities are subordinated to Senior Debt, and
(b) if as of any date any Person other than a Restricted Subsidiary of the
Company owns any such Indebtedness or any Person holds a Lien securing any
such Indebtedness, such date shall be deemed the incurrence of Indebtedness
not constituting Permitted Indebtedness under this clause (vi);
(vii) Purchase Money Indebtedness and Capitalized Lease Obligations
incurred to acquire property in the ordinary course of business, the
principal amount of which Indebtedness and Capitalized Lease Obligations does
not in the aggregate at any time exceed $15,000,000;
(viii) Acquired Indebtedness of any Restricted Subsidiaries, provided
that such
15
<PAGE>
Indebtedness was not incurred by a Person in connection with, or in
anticipation or contemplation of, such Person becoming a Restricted
Subsidiary of the Company and provided further that after giving effect to
such incurrence or assumption of such Acquired Indebtedness the Consolidated
Fixed Charge Coverage Ratio of the Company and its Restricted Subsidiaries,
taken as whole, and the Restricted Subsidiary making such acquisition
independently, are at least equal to 2:00:1 as calculated in accordance with
Section 4.06;
(ix) Refinancing Indebtedness;
(x) Indebtedness solely in respect of performance bonds, surety
agreements, documentary letters of credit used for payment of goods
consistent with past practice, or other guarantees of performance (in each
case other than an obligation for the payment of borrowed money) incurred in
the ordinary course of business;
(xi) additional Indebtedness of the Company or any Restricted
Subsidiary in an aggregate principal amount not to exceed $50,000,000 at any
one time outstanding; and
(xii) Indebtedness incurred pursuant to any Foreign Credit Agreements
in an aggregate principal amount at any time outstanding not to exceed
$35,000,000 (and any guarantees thereof).
"Permitted Investments" means, for any Person, Investments made on or
after the Issue Date consisting of:
(i) Investments by the Company, or by a Restricted Subsidiary
thereof, in the Company or a Restricted Subsidiary thereof;
(ii) Cash Equivalents;
(iii) Investments by the Company, or by a Restricted Subsidiary
thereof, in a Person (or in all or substantially all of the business or
assets of a Person) if as a result of such Investment (a) such Person becomes
a Restricted Subsidiary of the Company, (b) 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
Restricted Subsidiary thereof or (c) such business or assets are owned by the
Company or a Restricted Subsidiary;
(iv) Investments in Emerging Market Subsidiaries in the aggregate
amount after the Issue Date not to exceed $50,000,000;
(v) reasonable and customary loans made to employees not to exceed
$500,000 to any employee, and not to exceed $5,000,000 in the aggregate at
any one time outstanding;
16
<PAGE>
(vi) an Investment that is made by the Company or a Restricted
Subsidiary thereof in the form of any stock, bonds, notes, debentures,
partnership or joint venture interests or other securities that are issued by
a third party to the Company or a Restricted Subsidiary solely as partial
consideration for the consummation of an Asset Sale that is otherwise
permitted under Section 4.09;
(vii) accounts receivable of the Company and its Restricted
Subsidiaries generated in the ordinary course of business;
(viii) Investments deemed to have been made as a result of the
acquisition of a Person that at the time of such acquisition held instruments
constituting Investments that were not acquired in contemplation of the
acquisition of such Person; and
(ix) additional Investments of the Company and its Restricted
Subsidiaries from time to time of an amount not to exceed $10,000,000.
Notwithstanding the foregoing, amounts available for Investments under
clauses (iv) and (ix) shall be increased by the aggregate amount of Returned
Investments received by the Company on or before the date of such Investment.
"Permitted Liens" means (a) Liens imposed by governmental authorities
for taxes, assessments or other charges that are either (i) not yet subject to
penalty or (ii) being contested in good faith and by appropriate proceedings, if
reserves with respect thereto are maintained on the applicable books of the
Company and its Subsidiaries in accordance with GAAP; (b) statutory Liens of
carriers, warehousemen, mechanics, materialmen, landlords, repairmen or other
like Liens arising by operation of law in the ordinary course of business;
provided, that (i) the underlying obligations are not overdue for a period of
- --------
more than 30 days or (ii) such Liens are being contested in good faith and by
appropriate proceedings and reserves with respect to such underlying obligations
are maintained on the applicable books of the Company and its Subsidiaries in
accordance with GAAP; (c) Liens securing the performance of bids, trade
contracts (other than borrowed money), leases not constituting Capitalized Lease
Obligations, statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature incurred in the ordinary course of
business; (d) easements, rights-of-way, zoning and other similar restrictions,
encumbrances or title defects which, singly or in the aggregate, do not in any
case materially detract from the value of the property subject thereto (as such
property is used by the Company or any of its Restricted Subsidiaries) or
interfere with the ordinary conduct of the business of the Company or any of its
Restricted Subsidiaries; (e) Liens arising by operation of law in connection
with judgments, only to the extent, for an amount and for a period not resulting
in an Event of Default with respect thereto; (f) pledges or deposits made in the
ordinary course of business in connection with worker's compensation,
unemployment insurance and other types of social security legislation; (g) Liens
on the property or assets of a Person existing at the time such Person or such
property or assets are acquired by the Company or any of its Subsidiaries;
provided, that such liens were incurred prior to and not in contemplation of
- --------
such acquisition; (h) Liens in favor of
17
<PAGE>
the Trustee arising under this Indenture; (i) Liens securing Indebtedness
incurred in accordance with clauses (ii), (iii), (iv), (v), (vii), (viii), (ix),
(x), (xi) or (xii) of the definition of Permitted Indebtedness or in accordance
with Section 4.06; (j) Liens in favor of the Pension Benefit Guaranty
Corporation with respect to collateral also securing Obligations under any
Credit Agreement, and (k) Liens existing on the Issue Date.
"Person" means an individual, partnership, corporation, unincorporated
organization, joint stock company, limited liability company, trust or joint
venture, or a governmental agency or political subdivision thereof.
"Plan" means any employee benefit plan, retirement plan, deferred
compensation plan, restricted stock plan, health, life, disability or other
insurance plan or program, employee stock purchase plan, employee stock
ownership plan, pension plan, stock option plan or similar plan or arrangement
of the Company or any Restricted Subsidiary of the Company, or any successor
plan thereof, and "Plans" shall have a correlative meaning.
"Preferred Stock" of any Person means any Capital Stock of such Person
that has preferential rights to any other Capital Stock of such Person with
respect to dividends or redemption or upon liquidation.
"Private Placement Legend" means the legend initially set forth on the
Securities in the form set forth on Exhibit A hereto.
---------
"Pro Rata Interest" of any Person in any other Person means a
fraction, the numerator of which is the amount of the equity or other ownership
interest in such other Person that are beneficially owned by such Person and its
Restricted Subsidiaries, and the denominator of which is the aggregate amount of
all equity or other ownership interests in such other Person that are
outstanding (for this purpose, equity or other ownership interests subject to
presently exercisable options, warrants or other rights to acquire such
interests shall be deemed to be outstanding and shall be included in both the
numerator and denominator). The Pro Rata Interest of any Person in any item of
income or expense or in the fair market value of the assets or liabilities of
any other Person means the amount obtained by multiplying (i) the amount of such
income or expense or the fair market value of the relevant asset or liability,
as the case may be, of such other Person by (ii) the Pro Rata Interest of such
Person in such other Person.
"Purchase Money Indebtedness" of any Person means any Indebtedness
incurred or assumed by a Person to finance the cost (including the cost of
construction) of an item of real or personal property or on the improvement of
such property, the principal amount of which Indebtedness does not exceed the
sum (i) 100% of such cost and (ii) reasonable fees and expenses of such Person
incurred in connection therewith and provided that such Indebtedness is incurred
or assumed within 90 days of the acquisition of, or improvement to, such
property.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital
18
<PAGE>
Stock.
"Qualified Institutional Buyer" or "QIB" shall have the meaning
specified in Rule 144A promulgated under the Securities Act.
"Recapitalization" means the transactions described as such in the
Offering Memorandum.
"Redeemable Dividend" means, for any dividend or distribution with
regard to Disqualified Capital Stock or Preferred Stock, the quotient of the
dividend or distribution divided by the difference between one and the maximum
statutory United States federal income tax rate (expressed as a decimal number
between 1 and 0) then applicable to the issuer of such Disqualified Capital
Stock or Preferred Stock, as the case may be.
"Redemption Date" when used with respect to any Security to be
redeemed means the date fixed for such redemption pursuant to this Indenture.
"Reference Period" with regard to any Person means the four full
fiscal quarters of such Person ended on or immediately preceding any date upon
which any determination is to be made pursuant to the terms of the Securities or
this Indenture; provided, that if the Transaction Date in question is more than
90 days after the end of such Person's most recently completed fiscal year or
more than 45 days after the end of such Person's most recently completed fiscal
quarter (other than the fourth fiscal quarter), then "Reference Period" shall
mean the four full fiscal quarters ended on the last day of such fiscal year or
fiscal quarter, as the case may be, unless financial information for a later
period of four full fiscal quarters is available.
"Refinancing Indebtedness" means an extension, renewal, replacement,
refinancing or refunding of any Indebtedness which is Permitted Indebtedness or
is otherwise incurred in accordance with Section 4.06 (such Indebtedness is
collectively referred to as "Refinancing Indebtedness"); provided, that (1) the
--------
maximum principal amount of the relevant Refinancing Indebtedness (or, if such
Refinancing Indebtedness (if not a revolving credit or similar arrangement) does
not require cash payments prior to maturity or is otherwise issued at a
discount, the original issue price of such Refinancing Indebtedness) may not
exceed (x) the maximum principal amount of the relevant Indebtedness or
Disqualified Capital Stock being extended, renewed, replaced, refinanced or
refunded, plus unpaid interest, prepayment penalties, redemption premiums, fees,
expenses and other amounts owing with respect thereto, plus reasonable financing
fees and other reasonable out-of-pocket expenses incurred in connection
therewith (collectively, "Refinancing Costs"), or (y) if such Indebtedness or
Disqualified Capital Stock being extended, renewed, replaced, refinanced or
refunded was issued at an original issue discount, the original issue price,
plus amortization of the original issue discount at the time of the incurrence
of the Refinancing Indebtedness plus Refinancing Costs, (2) if Pari Passu Debt
or Disqualified Capital Stock, such Refinancing Indebtedness has a Weighted
Average Life to Maturity and a final maturity that is equal to or greater than
the Pari Passu Debt or Disqualified Capital Stock being
19
<PAGE>
extended, renewed, replaced, refinanced or refunded at the time of such
extension, renewal, replacement, refinancing or refunding, (3) with respect to
Indebtedness or Disqualified Capital Stock of the Company or any Restricted
Subsidiaries, the relevant Refinancing Indebtedness shall rank in right of
payment with respect to the Securities to an extent no less favorable in respect
thereof to the holders of Securities than the Indebtedness or Disqualified
Capital Stock being refinanced, extended, renewed, replaced or refunded and (4)
Refinancing Indebtedness incurred by a Restricted Subsidiary of the Company
shall only be used to refinance outstanding Indebtedness or Disqualified Capital
Stock of such Restricted Subsidiary or any other Restricted Subsidiary of the
Company.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of June 24, 1998 among the Company and CIBC Oppenheimer
Corp., BancAmerica Robertson Stephens, BancBoston Securities Inc. and Goldman,
Sachs & Co., as Initial Purchasers, relating to the Securities.
"Regulation S" means Regulation S promulgated under the Securities
Act.
"Related Business" means (i) any line or lines of business or business
activity conducted by the Company, its Subsidiaries and Emerging Market
Subsidiaries on the Issue Date, including, without limitation, the licensing of
brand names, (ii) any line or lines of business or business activity reasonably
related thereto, and (iii) the manufacture, distribution, marketing, leasing
and/or sale of consumer travel and luggage products.
"Representative" means the representative appointed by the holders of
the applicable Designated Senior Debt.
"Restricted Payment" means (i) the declaration or payment of any
dividend or the making of any other distribution (other than dividends or
distributions payable in Qualified Capital Stock) on shares of the Company's
Capital Stock, (ii) the purchase, redemption, retirement or other acquisition
for value of any Capital Stock of the Company, or any warrants, rights or
options to acquire shares of Capital Stock of the Company, other than the
exchange of shares of Senior Preferred Stock for the Exchange Debentures or
other than through the exchange of such Capital Stock or any warrants, rights or
options to acquire shares of any class of such Capital Stock for Qualified
Capital Stock or warrants, rights or options to acquire Qualified Capital Stock,
(iii) the making of any principal payment on, or the purchase, defeasance,
redemption, prepayment, decrease or other acquisition or retirement for value,
prior to any scheduled final maturity, scheduled repayment or scheduled sinking
fund payment, of, any Subordinated Debt of the Company or its Subsidiaries, (iv)
the making of any Investment (other than a Permitted Investment) (provided that
the amount of any Investment for purposes of this clause (iv) shall be
calculated by subtracting the amount of any applicable Returned Investments, if
any, on any such Investment), (v) any designation of a Restricted Subsidiary as
an Unrestricted Subsidiary on the basis of the fair market value of such
Subsidiary utilizing standard valuation methodologies and approved by the Board
of Directors or (vi) forgiveness of any Indebtedness of an Affiliate of the
20
<PAGE>
Company to the Company or a Restricted Subsidiary; provided, however, that the
-------- -------
term "Restricted Payment" does not include (a) any defeasance, redemption,
repurchase or other acquisition or retirement for value, in whole or in part, of
Indebtedness of the Company or the Senior Preferred Stock payable solely in
shares of Qualified Capital Stock or Subordinated Debt or (b) the repayment or
retirement of Subordinated Debt with the proceeds of Refinancing Indebtedness
incurred in accordance with clause (ix) of the definition of Permitted
Indebtedness. For purposes of determining the amount available to make
Restricted Payments pursuant to clause (a)(iii) of Section 4.08, the amount of
any Restricted Payments made pursuant to clauses (iv) or (v) above shall be
calculated after giving effect to any Returned Investments.
"Restricted Security" has the meaning set forth in Rule 144(a)(3)
promulgated under the Securities Act; provided that the Trustee shall be
--------
entitled to request and conclusively rely upon an Opinion of Counsel with
respect to whether any Note is a Restricted Security.
"Restricted Subsidiary" means a Subsidiary of the Company other than
an Unrestricted Subsidiary and includes all of the Subsidiaries of the Company
(other than the Initial Emerging Market Subsidiaries) existing as of the Issue
Date, subject, however, to clause (v) of Section 4.17 providing for Emerging
Market Subsidiaries to constitute Restricted Subsidiaries but only to the extent
provided therein. The Board of Directors of the Company may designate any
Unrestricted Subsidiary or any Person that is to become a Subsidiary as a
Restricted Subsidiary if immediately after giving effect to such action (and
treating any Acquired Indebtedness as having been incurred at the time of such
action), the Company could have incurred at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to Section 4.06;
provided that the Company may not designate any Emerging Market Subsidiary to
- --------
become a Restricted Subsidiary unless such designation complies with the
requirements set forth in the definition of "Emerging Market Subsidiary"
relating thereto.
"Returned Investments" mean, with respect to all Investments made in
Emerging Market Subsidiaries or Unrestricted Subsidiaries pursuant to clause
(iv) or (ix), respectively, of the definition of "Permitted Investments" or
pursuant to clauses (iv) or (v) of the definition of "Restricted Payment," the
aggregate amount of (i) all payments made in respect of such Investments, other
than interest, dividends or other distributions not in the nature of a return or
repurchase of capital or a repayment of principal, that have been paid or
returned, without restriction, in cash to the Company and its Restricted
Subsidiaries and (ii) the Pro Rata Interest of the Company and its Restricted
Subsidiaries in the fair market value of the net assets of all Emerging Market
Subsidiaries or Unrestricted Subsidiaries, as the case may be, that have been
designated a Restricted Subsidiary of the Company after the Issue Date, such
fair market value to be determined as of the date of such designation; provided,
--------
that amounts under the foregoing clause (ii) with respect to each such Emerging
Market Subsidiary or Unrestricted Subsidiary, as the case may be, shall not
constitute Returned Investments to the extent that such amount exceeds the total
amount of Investments by the Company and its Restricted Subsidiaries in such
Emerging Market Subsidiary or Unrestricted Subsidiary, as the case may be.
Notwithstanding the foregoing, Returned Investments shall be credited to the
amounts available for Investments pursuant to
21
<PAGE>
clauses (iv) or (ix) of the definition of "Permitted Investments" or Investments
made pursuant to the provisions of clauses (iv) or (v) of the definition of
"Restricted Payment," as the case may be, only to the extent that such Returned
Investments are in respect of Investments made pursuant to each such clause or
provision.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"S&P" means Standard & Poor's Corporation and its successors.
"SEC" means the United States Securities and Exchange Commission as
constituted from time to time or any successor performing substantially the same
functions.
"Securities" means the Company's 10 3/4% Senior Subordinated Notes due
2008, as amended or supplemented from time to time in accordance with the terms
hereof, that are issued pursuant to this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Debt" means, the principal of, premium, if any, and interest
(including, without limitation, interest accruing or that would have accrued but
for the filing of a bankruptcy, reorganization or other insolvency proceeding,
whether or not such interest constitutes an allowed or allowable claim in such
proceeding) on, and any and all other fees, expense reimbursement obligations,
obligations in respect of letters of credit, bankers' acceptances and similar
transactions, indemnities and other amounts owing pursuant to the terms of all
agreements, documents and instruments providing for, creating, securing or
evidencing or otherwise entered into in connection with (a) all Indebtedness and
Obligations of the Company and its Subsidiaries owed under each Credit Agreement
(and any guarantees thereof), (b) all obligations of the Company with respect to
any Interest Rate Agreement or Currency Agreement to the extent incurred
pursuant to clause (iv) of the definition of Permitted Indebtedness, (c) all
obligations of the Company to reimburse any bank or other person in respect of
amounts paid under letters of credit, acceptances or other similar instruments,
(d) all other Indebtedness of the Company which does not provide that it is to
rank pari passu with or subordinate to the Securities and (e) all deferrals,
----------
renewals, extensions, replacements, refinancings and refundings of, and
amendments, modifications and supplements to, any of the Senior Debt described
above. Notwithstanding anything to the contrary in the foregoing, Senior Debt
will not include (i) Indebtedness of the Company to any of its Subsidiaries,
(ii) Indebtedness represented by the Securities, (iii) any Indebtedness which by
the express terms of the agreement or instrument creating, evidencing or
governing the same is junior or subordinate in right of payment to any item of
Senior Debt, (iv) any trade payable arising from the purchase of goods or
materials or for services obtained in the ordinary course of business or (v)
Indebtedness incurred in violation of this Indenture.
"Senior Preferred Stock" means the 13 7/8% Senior Redeemable
Exchangeable Preferred Stock, liquidation preference $1,000 per share of the
Company.
22
<PAGE>
"Significant Restricted Subsidiary" of the Company means any
Restricted Subsidiary of the Company which satisfies the requirements for being
a "significant subsidiary" as defined in Regulation S-X under the Securities Act
and the Exchange Act.
"Subordinated Debt" means Indebtedness of the Company or any
Subsidiary that is subordinated in right of payment by its express terms, or by
the express terms of any related document, to the Securities.
"Subsidiary", with respect to any Person, means (i) any corporation of
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly, by such Person or (ii) any
other Person of which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code (S)(S)
77aaa-77bbbb) as in effect on the date of this Indenture (except as provided in
Section 8.03 hereof).
"Trust Officer" means any officer or assistant officer of the Trustee
assigned by the Trustee to administer trust accounts.
"Trustee" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture and thereafter means the
successor.
"Unrestricted Subsidiary" means (a) any Emerging Market Subsidiary,
(b) any Subsidiary of an Unrestricted Subsidiary or an Emerging Market
Subsidiary and (c) any Subsidiary of the Company which is classified after the
Issue Date as an Unrestricted Subsidiary or an Emerging Market Subsidiary by a
resolution adopted by the Board of Directors of the Company; provided that a
--------
Subsidiary organized or acquired after the Issue Date may be so classified as an
Unrestricted Subsidiary only if such classification is in compliance with
Section 4.08 and; provided, further, that a Subsidiary may not be classified as
-------- -------
an Emerging Market Subsidiary unless such classification would be in compliance
with Section 4.17 and the provisions of the definition of "Emerging Market
Subsidiary." The Trustee shall be given prompt notice by the Company of each
resolution adopted by the Board of Directors of the Company under this
provision, together with a copy of each such resolution so adopted.
"U.S. Government Obligations" means (a) securities that are direct
obligations of the United States of America for the payment of which its full
faith and credit are pledged or (b) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America, the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act) as custodian with respect to any such U.S. Government
Obligation or a specific payment of principal of or interest on any such U.S.
23
<PAGE>
Government Obligation held by such custodian for the account of the holder of
such depository receipt; provided that (except as required by law) such
--------
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian in
respect of the U.S. Government Obligation or a specific payment of principal or
interest on any such U.S. Government Obligation held by such custodian for the
account of the holder of such depository receipt.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the total
of the product obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Wholly-Owned Subsidiary" means any Restricted Subsidiary all of the
outstanding voting securities (other than directors' qualifying shares) of which
are owned, directly or indirectly, by the Company.
Section 1.02. Other Definitions.
-----------------
The definitions of the following terms may be found in the
sections indicated as follows:
<TABLE>
<CAPTION>
Term Defined in Section
---- ------------------
<S> <C>
"Acceleration Notice" 6.02
"Affiliate Transaction" 4.10
"Bankruptcy Law" 6.01
"Bankruptcy Proceeding" 10.02
"Business Day" 11.08
"Change of Control Offer" 4.14
"Change of Control Payment Date" 4.14
"Change of Control Purchase Price" 4.14
"Covenant Defeasance" 9.03
"Custodian" 6.01
"Event of Default" 6.01
"Excess Proceeds Offer" 4.09
"Global Securities" 2.01
"Initial Blockage Period" 10.03
"Legal Defeasance" 9.02
"Legal Holiday" 11.08
"Offer Period" 4.09
"Offshore Physical Securities" 2.01
</TABLE>
24
<PAGE>
<TABLE>
<S> <C>
"Paying Agent" 2.03
"Payment Blockage Period" 10.03
"Payment Restriction" 4.18
"Physical Securities" 2.01
"Purchase Date" 4.09
"Registrar" 2.03
"Reinvestment Date" 4.09
"Required Filing Dates" 4.02
"U.S. Physical Securities" 2.01
</TABLE>
Section 1.03. Incorporation by Reference of Trust Indenture Act.
-------------------------------------------------
Whenever this Indenture refers to a provision of the TIA, the portion
of such provision required to be incorporated herein in order for this Indenture
to be qualified under the TIA is incorporated by reference in and made a part of
this Indenture. The following TIA terms used in this Indenture have the
following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture securityholder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor on the indenture securities" means the Company or any other
obligor on the Securities.
All other terms used in this Indenture that are defined by the TIA,
defined in the TIA by reference to another statute or defined by SEC rule have
the meanings therein assigned to them.
Section 1.04. Rules of Construction.
---------------------
Unless the context otherwise requires:
(1) a term has the meaning assigned to it herein, whether defined
expressly or by reference;
25
<PAGE>
(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) words used herein implying any gender shall apply to every
gender.
ARTICLE 2
THE SECURITIES
Section 2.01. Dating; Incorporation of Form in Indenture.
------------------------------------------
The Securities and the Trustee's certificate of authentication shall
be substantially in the form of Exhibit A which is incorporated in and made part
of this Indenture. The Securities may have notations, legends or endorsements
required by law, stock exchange rule or usage. The Company may use "CUSIP"
numbers in issuing the Securities. The Company shall approve the form of the
Securities. Each Security shall be dated the date of its authentication.
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, expressly agree to such terms and provisions and to be bound thereby;
provided that, if any provision of any Security limits, qualifies, or conflicts
with the provisions of this Indenture, the provisions of this Indenture shall
govern.
The Securities offered and sold in reliance on Rule 144A shall be
issued initially in the form of one or more permanent Global Securities in
registered form, substantially in the form set forth in Exhibit A ("Global
Securities"), deposited with the Trustee, as custodian for the Depository, duly
executed by the Company and authenticated by the Trustee as hereinafter pro
vided and shall bear the legend set forth on Exhibit B. The aggregate principal
amount of any Global Security may from time to time be increased or decreased by
adjustments made on the records of the Trustee, as custodian for the Depository,
as hereinafter provided.
Securities offered and sold in offshore transactions in reliance on
Regulation S may be issued in the form of certificated Securities in registered
form set forth in Exhibit A (the "Offshore Physical Securities"). Securities
offered and sold in reliance on any other exemption from registration under the
Securities Act other than as described in the preceding paragraph shall be
issued, and Securities offered and sold in reliance on Rule 144A may be issued,
in the form of certificated Securities in registered form in substantially the
form set forth in Exhibit A (the "U.S.
26
<PAGE>
Physical Securities"). The Offshore Physical Securities and the U.S. Physical
Securities are sometimes collectively herein referred to as the "Physical
Securities."
Section 2.02. Execution and Authentication.
----------------------------
The Securities shall be executed on behalf of the Company by two
Officers of the Company or an Officer and an Assistant Secretary of the Company.
Such signature may be either manual or facsimile.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall be
valid nevertheless.
A Security shall not be valid until the Trustee manually signs the
certificate of authentication on the Security. Such signature shall be
conclusive evidence that the Security has been authenticated under this
Indenture.
The Trustee or an authenticating agent shall authenticate Securities
for original issue in the aggregate principal amount of up to $350,000,000 upon
a Company Request. The aggregate principal amount of Securities outstanding at
any time may not exceed such amount except as provided in Section 2.07 hereof.
Upon receipt of the Company Request, the Trustee shall authenticate an
additional series of Securities in an aggregate principal amount not to exceed
$350,000,000 for issuance in exchange for all Securities previously issued
pursuant to an exchange offer registered under the Securities Act (a "Registered
Exchange") or pursuant to a Private Exchange (as defined in the Registration
Rights Agreement). Exchange Securities may have such distinctive series des-
ignation and "CUSIP" numbers as and such changes in the form thereof as are
specified in the Company Request referred to in the preceding sentence. Exchange
Securities issued pursuant to a Registered Exchange shall not bear the Private
Placement Legend.
The Trustee may appoint an authenticating agent 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 right as an Agent to deal with the Company or an Affiliate.
The Securities shall be issuable in fully registered form only,
without coupons, in denominations of $1,000 and any integral multiple thereof.
Section 2.03. Registrar and Paying Agent.
--------------------------
The Company shall maintain an office or agency where Securities may be
presented for registration of transfer or for exchange ("Registrar"), an office
or agency located in the Borough of Manhattan, City of New York, State of New
York where Securities may be presented
27
<PAGE>
for payment ("Paying Agent") and an office or agency where notices and demands
to or upon the Company in respect of the Securities and this Indenture may be
served. The Registrar shall keep a register of the Securities and of their
transfer and exchange. The Company may have one or more co-registrars and one or
more additional paying agents. Neither the Company nor any Affiliate may act as
Paying Agent. The Company may change any Paying Agent, Registrar or co-registrar
without notice to any Securityholder.
The Company shall enter into an appropriate agency agreement with any
Registrar or Paying Agent not a party to this Indenture. The agreement shall
implement the provisions of this Indenture that relate to such Agent. The
Company shall notify the Trustee of the name and address of any such Agent. If
the Company fails to maintain a Registrar or Paying Agent, or agent for service
of notices and demands, or fails to give the foregoing notice, the Trustee shall
act as such. The Company initially appoints the Trustee as Registrar, Paying
Agent and agent for service of notices and demands in connection with the
Securities.
Section 2.04. Paying Agent To Hold Assets in Trust.
------------------------------------
On or before each due date of the principal of and interest on any
Securities, the Company shall deposit with the Paying Agent a sum sufficient to
pay such principal and interest so becoming due. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee, and the
Trustee may at any time during the continuance of any Payment Default or Non-
Payment Event of Default, upon written request to a Paying Agent, require such
Paying Agent to forthwith pay to the Trustee all sums so held in trust by such
Paying Agent together with a complete accounting of such sums. Upon doing so,
the Paying Agent shall have no further liability for such money.
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
Securityholders. If the Trustee is not the Registrar, the Company shall furnish
to the Trustee on or before each June 1 and December 1 in each year, and at such
other times as the Trustee may request in writing, a list as of the applicable
Record Date and in such form and as of such date as the Trustee may reasonably
require of the names and addresses of Securityholders.
Section 2.06. Transfer and Exchange.
---------------------
When a Security is presented to the Registrar with a request to
register the transfer thereof, the Registrar shall register the transfer as
requested if the requirements of applicable law are met and, when Securities are
presented to the Registrar with a request to exchange them for an equal
principal amount of Securities of other authorized denominations, the Registrar
shall make the exchange as requested provided that every Security presented or
surrendered for registration of transfer or exchange shall be duly endorsed, or
be accompanied by a written instrument of transfer
28
<PAGE>
in form satisfactory to the Company and the Registrar duly executed by the
Holder thereof or his attorney duly authorized in writing. To permit transfers
and exchanges, upon surrender of any Security for registration of transfer at
the office or agency maintained pursuant to Section 2.03 hereof, the Company
shall execute and the Trustee shall authenticate Securities at the Registrar's
request. Any exchange or transfer shall be without charge, except that the
Company may require payment by the Holder of a sum sufficient to cover any tax
or other governmental charge that may be imposed in relation to a transfer or
exchange, but this provision shall not apply to any exchange pursuant to
Sections 2.09, 3.06 or 8.05 hereof. The Trustee shall not be required to
register transfers of Securities or to exchange Securities for a period of 15
days before selection of any Securities to be redeemed. The Trustee shall not be
required to exchange or register transfers of any Securities called or being
called for redemption in whole or in part, except the unredeemed portion of any
Security being redeemed in part.
Section 2.07. Replacement Securities.
----------------------
If a mutilated Security is surrendered to the Trustee or if the Holder
of a Security presents evidence to the satisfaction of the Company and the
Trustee that the Security has been lost, destroyed or wrongfully taken, the
Company shall issue and the Trustee shall authenticate a replacement Security if
the requirements of Section 8-405 of the New York Uniform Commercial Code as in
effect on the date of this Indenture are met. An indemnity bond shall be
required that is sufficient in the judgment of the Company and the Trustee to
protect the Company, the Trustee or any Agent from any loss which any of them
may suffer if a Security is replaced. In every case of destruction, loss or
theft, the applicant shall also furnish to the Company and to the Trustee
evidence to their satisfaction of the destruction, loss or the theft of such
Security and the ownership thereof. The Company and the Trustee may charge for
its expenses in replacing a Security. Every replacement Security is an
additional obligation of the Company.
Section 2.08. Outstanding Securities.
----------------------
Securities outstanding at any time are all Securities authenticated by
the Trustee except for those cancelled by it, those delivered to it for
cancellation, and those described in this Section 2.08 as not outstanding.
If a Security is replaced pursuant to Section 2.07, it ceases to be
outstanding until the Company and the Trustee receive proof satisfactory to each
of them that the replaced Security is held by a bona fide purchaser.
If a Paying Agent holds on a Redemption Date or Maturity Date money
sufficient to pay the principal of, premium, if any, and accrued interest on
Securities payable on that date, then on and after that date such Securities
cease to be outstanding and interest on them ceases to accrue.
Subject to Section 11.06, a Security does not cease to be outstanding
solely because
29
<PAGE>
the Company or an Affiliate holds the Security.
Section 2.09. Temporary Securities.
--------------------
Until definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall, upon receipt of a Company Request, authenticate
temporary Securities. Temporary Securities shall be substantially in the form,
and shall carry all rights, 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 presented to it.
Section 2.10. Cancellation.
------------
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to them for transfer, exchange or payment. The
Trustee shall cancel and retain or, upon written request of the Company, may
destroy or return to the Company in accordance with its normal practice, all
Securities surrendered for transfer, exchange, payment or cancellation and if
such Securities are destroyed, deliver a certificate of destruction to the
Company unless the Company instructs the Trustee in writing to deliver the
Securities to the Company. Subject to Section 2.07 hereof, the Company may not
issue new Securities to replace Securities in respect of which it has previously
paid all principal, premium and interest accrued thereon, or delivered to the
Trustee for cancellation.
Section 2.11. Defaulted Interest.
------------------
If the Company defaults in a payment of interest on the Securities, it
shall pay the defaulted amounts, plus any interest payable on defaulted amounts
pursuant to Section 4.01 hereof, to the persons who are Securityholders on a
subsequent special record date. The Company shall fix the special record date
and payment date in a manner satisfactory to the Trustee and provide the Trustee
at least 20 days notice of the proposed amount of default interest to be paid
and the special payment date. At least 15 days before the special record date,
the Company shall mail or cause to be mailed to each Securityholder at his
address as it appears on the Securities register maintained by the Registrar a
notice that states the special record date, the payment date (which shall be not
less than five nor more than ten days after the special record date), and the
amount to be paid. In lieu of the foregoing procedures, the Company may pay
defaulted interest in any other lawful manner satisfactory to the Trustee.
Section 2.12. Deposit of Moneys.
-----------------
Prior to 10:00 a.m., New York City time, on each Interest Payment Date
and Maturity Date, the Company shall have deposited with the Paying Agent in
immediately available funds money sufficient to make cash payments, if any, due
on such Interest Payment Date or
30
<PAGE>
Maturity Date, as the case may be, in a timely manner which permits the Trustee
to remit payment to the Holders on such Interest Payment Date or Maturity Date,
as the case may be.
Section 2.13. CUSIP Number.
------------
The Company in issuing the Securities may use a "CUSIP" number(s), and
if so, the Trustee shall use the CUSIP number(s) in notices of redemption or
exchange as a convenience to Holders, provided that any such notice may state
--------
that no representation is made as to the correctness or accuracy of the CUSIP
number(s) printed in the notice or on the Securities, and that reliance may be
placed only on the other identification numbers printed on the Securities. The
Company shall promptly inform the Trustee of any change in the CUSIP number(s).
Section 2.14. Book-Entry Provisions for Global Securities.
-------------------------------------------
(a) The Global Securities initially shall (i) be registered in the
name of the Depository or the nominee of such Depository, (ii) be delivered to
the Trustee as custodian for such Depository and (iii) bear legends as set forth
in Exhibit B.
Members of, or participants in, the Depository ("Agent Members")
shall have no rights under this Indenture with respect to any Global Security
held on their behalf by the Depository, or the Trustee as its custodian, or
under the Global Security, and the Depository may be treated by the Company, the
Trustee and any agent of the Company or the Trustee as the absolute owner of the
Global Security for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Trustee or any agent of the
Company or the Trustee from giving effect to any written certification, proxy or
other authorization furnished by the Depository or impair, as between the
Depository and its Agent Members, the operation of customary practices governing
the exercise of the rights of a Holder of any Security.
(b) Transfers of Global Securities shall be limited to transfer in
whole, but not in part, to the Depository, its successors or their respective
nominees. Interests of beneficial owners in the Global Securities may be
transferred or exchanged for Physical Securities in accordance with the rules
and procedures of the Depository and the provisions of Section 2.15. In
addition, Physical Securities shall be transferred to all beneficial owners in
exchange for their beneficial interests in Global Securities if (i) the
Depository notifies the Company that it is unwilling or unable to continue as
Depository for any Global Security and a successor depositary is not appointed
by the Company within 90 days of such notice or (ii) an Event of Default has
occurred and is continuing and the Registrar has received a written request from
the Depository to issue Physical Securities.
(c) In connection with any transfer or exchange of a portion of the
beneficial interest in any Global Security to beneficial owners pursuant to
paragraph (b), the Registrar shall (if one or more Physical Securities are to be
issued) reflect on its books and records the date and a decrease in the
principal amount of the Global Security in an amount equal to the principal
amount of the beneficial interest in the Global Security to be transferred, and
the Company shall execute, and the
31
<PAGE>
Trustee shall upon receipt of a written order from the Company authenticate and
make available for delivery, one or more Physical Securities of like tenor and
amount.
(d) In connection with the transfer of Global Securities as an
entirety to beneficial owners pursuant to paragraph (b), the Global Securities
shall be deemed to be surrendered to the Trustee for cancellation, and the
Company shall execute, and the Trustee shall authenticate and deliver, to each
beneficial owner identified by the Depository in writing in exchange for its
beneficial interest in the Global Securities, an equal aggregate principal
amount of Physical Securities of authorized denominations.
(e) Any Physical Security constituting a Restricted Security
delivered in exchange for an interest in a Global Security pursuant to paragraph
(b), (c) or (d) shall, except as otherwise provided by paragraphs (a)(i)(x) and
(c) of Section 2.15, bear the Private Placement Legend.
(f) The Holder of any Global Security may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Securities.
Section 2.15. Special Transfer Provisions.
---------------------------
(a) Transfers to Non-QIB Institutional Accredited Investors and Non-
---------------------------------------------------------------
U.S. Persons. The following provisions shall apply with respect to the
- ------------
registration of any proposed transfer of a Security constituting a Restricted
Security to any Institutional Accredited Investor which is not a QIB or to any
Non-U.S. Person:
(i) the Registrar shall register the transfer of any Security
constituting a Restricted Security, whether or not such Security bears the
Private Placement Legend, if (x) the requested transfer is subsequent to a
date which is two years after the later of the Issue Date and the last date
on which the Company or any of its Affiliates was the owner of such Security
or (y) (1) in the case of a transfer to an Institutional Accredited Investor
which is not a QIB (excluding Non-U.S. Persons), the proposed transferee has
delivered to the Registrar a certificate substantially in the form of Exhibit
C hereto or (2) in the case of a transfer to a Non-U.S. Person (including a
QIB), the proposed transferor has delivered to the Registrar a certificate
substantially in the form of Exhibit D hereto; and
(ii) if the proposed transferor is an Agent Member holding a
beneficial interest in a Global Security, upon receipt by the Registrar of
(x) the certificate, if any, required by paragraph (i) above and (y)
instructions given in accordance with the Depository's and the Registrar's
procedures,
whereupon (a) the Registrar shall reflect on its books and records the date and
(if the transfer does not involve a transfer of outstanding Physical Securities)
a decrease in the principal amount of a Global Security in an amount equal to
the principal amount of the beneficial interest in a Global
32
<PAGE>
Security to be transferred, and (b) the Company shall execute and the Trustee
shall authenticate and make available for delivery one or more Physical
Securities of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply with respect
-----------------
to the registration of any proposed transfer of a Security constituting a
Restricted Security to a QIB (excluding transfers to Non-U.S. Persons):
(i) the Registrar shall register the transfer if such transfer is
being made by a proposed transferor who has checked the box provided for on
the form of Security stating, or has otherwise advised the Company and the
Registrar in writing, that the sale has been made in compliance with the
provisions of Rule 144A to a transferee who has signed the certification
provided for on the form of Security stating, or has otherwise advised the
Company and the Registrar in writing, that it is purchasing the Security
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a QIB within the
meaning of Rule 144A, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as it has requested pursuant to Rule 144A
or has determined not to request such information and that it is aware that
the transferor is relying upon its foregoing representations in order to
claim the exemption from registration provided by Rule 144A; and
(ii) if the proposed transferee is an Agent Member, and the Securities
to be transferred consist of Physical Securities which after transfer are
to be evidenced by an interest in the Global Security, upon receipt by the
Registrar of instructions given in accordance with the Depository's and the
Registrar's procedures, the Registrar shall reflect on its books and
records the date and an increase in the principal amount of the Global
Security in an amount equal to the principal amount of the Physical
Securities to be transferred, and the Trustee shall cancel the Physical
Securities so transferred.
(c) Private Placement Legend. Upon the transfer, exchange or replacement
------------------------
of Securities not bearing the Private Placement Legend, the Registrar shall
deliver Securities that do not bear the Private Placement Legend. Upon the
transfer, exchange or replacement of Securities bearing the Private Placement
Legend, the Registrar shall deliver only Securities that bear the Private
Placement Legend unless (i) the circumstances contemplated by paragraph
(a)(i)(x) of this Section 2.15 exist, (ii) there is delivered to the Registrar
an Opinion of Counsel reasonably satisfactory to the Company and the Trustee to
the effect that neither such legend nor the related restrictions on transfer are
required in order to maintain compliance with the provisions of the Securities
Act or (iii) such Security has been sold pursuant to an effective registration
statement under the Securities Act.
(d) General. By its acceptance of any Security bearing the Private
-------
Placement Legend, each Holder of such a Security acknowledges the restrictions
on transfer of such Security set forth in this Indenture and in the Private
Placement Legend and agrees that it will transfer such Security only as provided
in this Indenture.
33
<PAGE>
The Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 2.14 or this Section
2.15. The Company shall have the right to inspect and make copies of all such
letters, notices or other written communications at any reasonable time upon the
giving of reasonable notice to the Registrar.
ARTICLE 3
REDEMPTION
Section 3.01. Notices to Trustee.
-------------------
If the Company elects to redeem Securities pursuant to Section
3.07, (i) at least 60 days prior to the Redemption Date in the case of a partial
redemption, (ii) at least 45 days prior to the Redemption Date in the case of a
total redemption or (iii) during such other period as the Trustee may agree to,
the Company shall notify the Trustee in writing of the Redemption Date, the
principal amount of Securities to be redeemed and the redemption price, and
deliver to the Trustee an Officers' Certificate stating that such redemption
will comply with the conditions contained in Section 3.07 hereof, as
appropriate.
Section 3.02. Selection by Trustee of Securities To Be Redeemed.
-------------------------------------------------
In the event that fewer than all of the Securities are to be redeemed,
the Trustee shall select the Securities to be redeemed, if the Securities are
listed on a national securities exchange, in accordance with the rules of such
exchange or, if the Securities are not so listed, on either a pro rata basis or
--- ----
by lot, or such other method as it shall deem fair and equitable; provided,
--------
however, that a redemption pursuant to Section 3.07(b) shall be made by the
- -------
Trustee on a pro rata basis, unless such method is prohibited. The Trustee shall
promptly notify the Company of the Securities selected for redemption and, in
the case of any Securities selected for partial redemption, the principal amount
thereof to be redeemed. The Trustee may select for redemption portions of the
principal of Securities that have denominations larger than $1,000. Securities
and portions thereof the Trustee selects shall be redeemed in amounts of $1,000
or whole multiples of $1,000. For all purposes of this Indenture unless the
context otherwise requires, provisions of this Indenture that apply to
Securities called for redemption also apply to portions of Securities called for
redemption.
Section 3.03. Notice of Redemption.
--------------------
At least 30 days, and no more than 60 days, before a Redemption Date,
the Company shall mail, or cause to be mailed, a notice of redemption by first-
class mail to each Holder of Securities to be redeemed at his or her last
address as the same appears on the registry books maintained by the Registrar
pursuant to Section 2.03 hereof.
The notice shall identify the Securities to be redeemed (including the
CUSIP
34
<PAGE>
number(s) thereof) 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 and 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;
(6) that unless the Company defaults in making the redemption
payment, interest on Securities called for redemption ceases to accrue on
and after the Redemption Date;
(7) the paragraph of the Securities pursuant to which the Securities
are being redeemed; and
(8) the aggregate principal amount of Securities that are being
redeemed.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's sole expense.
Section 3.04. Effect of Notice of Redemption.
------------------------------
Once the notice of redemption described in Section 3.03 is
mailed, Securities called for redemption become due and payable on the
Redemption Date and at the redemption price, including any premium, plus
interest accrued to the Redemption Date. Upon surrender to the Paying Agent,
such Securities shall be paid at the redemption price, including any premium,
plus interest accrued to the Redemption Date, provided that if the Redemption
--------
Date is after a regular interest payment record date and on or prior to the
Interest Payment Date, the accrued interest shall be payable to the Holder of
the redeemed Securities registered on the relevant record date, and provided,
--------
further, that if a Redemption Date is a Legal Holiday, payment shall be made on
- -------
the next succeeding Business Day and no interest shall accrue for the period
from such Redemption Date to such succeeding Business Day.
Section 3.05. Deposit of Redemption Price.
---------------------------
35
<PAGE>
On or prior to 10:00 A.M., New York City time, on each Redemption
Date, the Company shall deposit with the Paying Agent in immediately available
funds 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
thereof called for redemption on that date which have been delivered by the
Company to the Trustee for cancellation.
On and after any Redemption Date, if money sufficient to pay the
redemption price of and accrued interest on Securities called for redemption
shall have been made available in accordance with the preceding paragraph, the
Securities called for redemption will cease to accrue interest and the only
right of the Holders of such Securities will be to receive payment of the
redemption price of and, subject to the first proviso in Section 3.04, accrued
and unpaid interest on such Securities to the Redemption Date. If any Security
called for redemption shall not be so paid, interest will be paid, from the
Redemption Date until such redemption payment is made, on the unpaid principal
of the Security and any interest not paid on such unpaid principal, in each
case, at the rate and in the manner provided in the Securities.
Section 3.06. Securities Redeemed in Part.
---------------------------
Upon surrender of a Security that is redeemed in part, the Trustee
shall authenticate for a Holder a new Security equal in principal amount to the
unredeemed portion of the Security surrendered.
Section 3.07. Optional Redemption.
-------------------
(a) The Company may redeem the Securities, in whole or in part, at
any time on or after June 15, 2003 at the following redemption prices (expressed
as a percentage of principal amount), together, in each case, with accrued and
unpaid interest to the Redemption Date, if redeemed during the twelve-month
period beginning on June 15 of each year listed below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2003...................... 105.3750%
2004...................... 103.5833%
2005...................... 101.7917%
2006 and thereafter....... 100.0000%
</TABLE>
(b) Notwithstanding the foregoing, the Company may redeem in the
aggregate up to 40% of the original principal amount of Securities at any time
and from time to time on or prior to June 15, 2001 at a redemption price equal
to 110.75% of the aggregate principal amount so redeemed, plus accrued and
unpaid interest to the Redemption Date with the Net Proceeds of one or more
Equity Offerings; provided that after any such redemption at least $210,000,000
--------
aggregate principal amount of Securities remain outstanding immediately after
the occurrence of any such redemption pursuant to an Equity Offering and that
any such redemption occurs on or
36
<PAGE>
prior to 90 days after the receipt by the Company of the proceeds of each such
Equity Offering.
ARTICLE 4
COVENANTS
Section 4.01. Payment of Securities.
---------------------
The Company shall pay the principal of and interest (including all
Additional Interest (as defined in the Registration Rights Agreement) as
provided in the Registration Rights Agreement) on the Securities on the dates
and in the manner provided in the Securities and this Indenture. An installment
of principal of or interest on the Securities shall be considered paid on the
date it is due if the Trustee or Paying Agent holds on that date money
designated for and sufficient to pay the installment. Interest will be computed
on the basis of a 360-day year comprised of twelve 30-day months and, for
periods not involving a full calendar month, the actual number of days elapsed
(but not to exceed 30 days). The Company shall deliver written notice to the
Trustee of any Additional Interest owed.
The Company shall pay interest on overdue principal (including post-
petition interest in a proceeding under any Bankruptcy Law), and overdue
interest, to the extent lawful, at the rate specified in the Securities.
Section 4.02. SEC Reports.
-----------
(a) The Company will file with the SEC all information, documents and
reports to be filed with the SEC pursuant to Section 13 or 15(d) of the Exchange
Act and will provide the Trustee and the Securityholders with copies of all such
information, documents and reports within 15 days of filing thereof with the
SEC; provided that if the Company is not required to file such information,
--------
documents or reports with the SEC, it will nonetheless continue to furnish such
information, documents and reports to the Trustee and the Securityholders within
15 days of the date on which filing with the SEC would have been required. The
Company shall also comply with the provisions of TIA (S) 314(a). Delivery of
such reports, information and documents to the Trustee is for informational
purposes only and the Trustee's receipt of such shall not constitute
constructive notice of any information contained therein or determinable from
information contained therein, including the Company's compliance with any of
its covenants hereunder (as to which the Trustee is entitled to rely exclusively
on Officers' Certificates).
(b) The Company will, upon request, provide to any Holder of
Securities or any prospective transferee of any such Holder any information
concerning the Company (including financial statements) necessary in order to
permit such Holder to sell or transfer Securities in compliance with Rule 144
and Rule 144A under the Securities Act.
Section 4.03. Waiver of Stay, Extension or Usury Laws.
---------------------------------------
37
<PAGE>
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead (as a defense or otherwise) or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law which would prohibit or forgive the
Company from paying all or any portion of the principal of, premium, if any,
and/or interest on the Securities as contemplated herein, wherever enacted, now
or at any time hereafter in force, or which may affect the covenants or the
performance of this Indenture; and (to the extent that it may lawfully do so)
the Company hereby expressly waives all benefit or advantage of any such law,
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
Section 4.04. Compliance Certificate.
----------------------
(a) The Company shall deliver to the Trustee, within 120 days after
the end of each fiscal year, an Officers' Certificate (one of the signers of
which shall be the principal executive officer, principal financial officer or
principal accounting officer of the Company) stating that a review of the
activities of the Company and its Subsidiaries during such fiscal year or fiscal
quarter, as the case may be, 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 or her
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 or such Defaults
or Events of Default of which he or she may have knowledge and what action each
is taking or proposes to take with respect thereto) and that to the best of his
or her knowledge no event has occurred and remains in existence by reason of
which payments on account of the principal of or interest, if any, on the
Securities is prohibited or if such event has occurred, a description of the
event and what action each is taking or proposes to take with respect thereto.
(b) The Company will, so long as any of the Securities are
outstanding, deliver to the Trustee, within five Business Days of any Officer
becoming aware of any Default or Event of Default, an Officers' Certificate
specifying such Default or Event of Default and what action the Company is
taking or proposes to take with respect thereto.
Section 4.05. 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.
Section 4.06. Limitation on Incurrence of Additional Indebtedness.
---------------------------------------------------
38
<PAGE>
The Company will not, and will not permit any Restricted Subsidiary of
the Company to, directly or indirectly incur any Indebtedness (including
Acquired Indebtedness) other than Permitted Indebtedness. Notwithstanding the
foregoing limitations, the Company and its Restricted Subsidiaries may incur
Indebtedness if (a) after giving effect to the incurrence of such Indebtedness
and the receipt and application of the proceeds thereof, the Company's
Consolidated Fixed Charge Coverage Ratio (determined on a pro forma basis for
the last four full fiscal quarters of the Company for which financial
information is available at the date of determination) is at least equal to
2:00:1; but no Restricted Subsidiary may incur Indebtedness which is not
---
Permitted Indebtedness unless its Consolidated Fixed Charge Coverage Ratio is at
least equal to 3:00:1; provided, however, that if the Indebtedness which is the
-------- -------
subject of a determination under this provision is Acquired Indebtedness, or
Indebtedness incurred in connection with the simultaneous acquisition of any
Person, business, property or assets, then such ratio shall be determined by
giving effect (on a pro forma basis, as if the transaction had occurred at the
beginning of the four quarter period) to both the incurrence or assumption of
such Acquired Indebtedness or such other Indebtedness by the Company or such
Restricted Subsidiary and the inclusion in the Company's or such Restricted
Subsidiary's Consolidated EBITDA of the Consolidated EBITDA of the acquired
Person, business, property or assets; and provided, further, that in the event
-------- -------
that the Consolidated EBITDA of the acquired Person, business, property or
assets reflects an operating loss, no amounts shall be deducted from the
Company's or such Restricted Subsidiary's Consolidated EBITDA in making the
determinations described above and (b) no Default or Event of Default shall have
occurred and be continuing at the time or as a consequence of the incurrence of
such Indebtedness.
Section 4.07. Limitation on Preferred Stock of Restricted Subsidiaries.
--------------------------------------------------------
The Company will not permit any Restricted Subsidiary to issue any
Preferred Stock (except to the Company or to a Restricted Subsidiary) or permit
any Person (other than the Company or a Restricted Subsidiary) to hold any such
Preferred Stock unless the Company or such Restricted Subsidiary would be
entitled to incur or assume Indebtedness in compliance with Section 4.06 in an
aggregate principal amount equal to the aggregate liquidation value of the
Preferred Stock to be issued.
Section 4.08. Limitation on Restricted Payments.
---------------------------------
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, make any Restricted Payment if at the
time of such Restricted Payment and immediately after giving effect thereto:
(i) any Default or Event of Default shall have occurred and be
continuing; or
(ii) the Company could not incur $1.00 of additional Indebtedness
(other than Permitted Indebtedness) in compliance with Section 4.06; or
39
<PAGE>
(iii) the aggregate amount of Restricted Payments declared or made
after the Issue Date (the amount expended for such purposes, if other than
in cash, being the fair market value of such property as determined by the
Board of Directors of the Company in good faith) exceeds the sum of (A) 50%
of the Company's Consolidated Net Income for the period (taken as one
accounting period) commencing with the first full fiscal quarter of the
Company which commenced after the Issue Date to and including the fiscal
quarter of the Company ended immediately prior to the date of each
calculation (or in the event Consolidated Net Income is a deficit minus
100% of such deficit), plus (B) 100% of the aggregate Net Proceeds and the
fair market value of securities or other property received by the Company
from the issue or sale, after the Issue Date, of Qualified Capital Stock
(other than Capital Stock of the Company issued to any Restricted
Subsidiary of the Company) of the Company or any Indebtedness or other
securities of the Company convertible into or exercisable or exchangeable
for Qualified Capital Stock of the Company which have been so converted or
exercised or exchanged, as the case may be, plus (C) $10,000,000, provided,
that the amount of Restricted Payments permitted by this clause (C) shall
not be reduced by any negative amounts that occur under clause (A) above.
(b) Notwithstanding the foregoing, if no other Default or Event of
Default shall have occurred and be continuing or shall occur as a consequence
thereof, the provisions set forth in the immediately preceding paragraph will
not prohibit (A) payments with respect to the purchase or redemption of Capital
Stock or Subordinated Debt of the Company made by exchange for, or out of the
proceeds of the substantially concurrent sale (other than to a Subsidiary of the
Company or an Emerging Market Subsidiary) of, Qualified Capital Stock; (B)
payments in respect of any redemption, repurchase, acquisitions, cancellation or
other retirement for value of shares of Capital Stock of the Company or options,
stock appreciation or similar rights, in each case held by officers, directors
or employees of the Company or any of its Subsidiaries (or former officers,
directors or employees) (or their estates or beneficiaries under their estates)
or by an employee benefit plan, upon death, disability, retirement or
termination of employment of any such Person pursuant to the terms of any
employee benefit plan or any other agreement under which shares of Capital Stock
or stock appreciation or similar rights were issued or acquired, and the
purchase of shares of Capital Stock by the Company or any Restricted Subsidiary
for the purpose of contributing such shares to any employee benefit plan
(provided, that all such payments and purchases referred to in this clause (B)
--------
may not exceed $2,000,000 in any 12 month period after the Issue Date); (C) the
payment of cash dividends on the Senior Preferred Stock after June 15, 2003; (D)
the payment of any dividend within 60 days after the date of its declaration if
such dividend could have been paid on the date of its declaration in compliance
with the foregoing provisions; (E) any purchase or defeasance of Subordinated
Debt upon a Change of Control or an Asset Sale to the extent required by this
Indenture or other agreement or instrument pursuant to which such Subordinated
Debt was issued, but only if the Company (i) in the case of a Change of Control,
has complied with its obligations under Section 4.14 or (ii) in the case of an
Asset Sale, has applied the Asset Sale Proceeds from such Asset Sale in
accordance with Section 4.09; (F) the consummation of a cash tender offer by the
Company for shares of Capital Stock of the Company in an aggregate amount not
exceeding $430,000,000 in connection with the Recapitalization; or
40
<PAGE>
(G) cash payments (and/or issuance or delivery of any note, instrument,
agreement or other obligation providing for future cash payments) resulting from
antidilution or other adjustments made in connection with the Recapitalization
to options to purchase Capital Stock or restricted or unvested Capital Stock
held by employees, directors or former employees or directors of the Company or
any of its Subsidiaries, to the extent that such adjustments and cash payments
are approved by the Board of Directors. Each Restricted Payment made or paid in
accordance with this paragraph (b) except those made pursuant to clause (F) or
clause (G) shall be counted (without duplication) for purposes of computing
amounts utilized for Restricted Payments pursuant to clause (a)(iii) of the
immediately preceding paragraph. No payments made or paid pursuant to clause
(C) or (D) of this paragraph shall be counted for purposes of computing amounts
utilized for Restricted Payments pursuant to clause (a)(iii) of the immediately
preceding paragraph to the extent such amount was already counted for such
purposes.
Section 4.09. Limitation on Certain Asset Sales.
---------------------------------
(a) The Company will not, and will not cause or permit any of
its Restricted Subsidiaries to, consummate an Asset Sale or series of related
Asset Sales unless (i) the Company or such Restricted Subsidiary, as the case
may be, receives consideration at least equal to the fair market value thereof
on the date the Company or Restricted Subsidiary (as applicable) entered into
the agreement to consummate such Asset Sale (as determined in good faith by the
Company's Board of Directors, and evidenced by a Board Resolution of such Board
of Directors); (ii) not less than 75% of the consideration received by the
Company or its Restricted Subsidiaries, as the case may be, is in the form of
cash or Cash Equivalents other than in the case where the Company is exchanging
all or substantially all of the assets or one or more properties operated by the
Company (including by way of the transfer of capital stock) for all or
substantially all of the assets (including by way of the transfer of capital
stock) constituting one or more properties operated by another Person, provided
that at least 75% of the consideration received by the Company (50% with respect
to Emerging Market Subsidiaries) in such exchange, other than the properties, is
in the form of cash or Cash Equivalents; and (iii) the Asset Sale Proceeds
received by the Company or such Restricted Subsidiary are applied (a) first, to
the extent the Company elects, or is required, to prepay, repay, reduce credit
commitments, or purchase or cash collateralize Indebtedness under any then
existing Senior Debt of the Company or any Restricted Subsidiary within 270 days
following the receipt of the Asset Sale Proceeds from any Asset Sale; (b)
second, to the extent of the balance of Asset Sale Proceeds after application as
described above, to the extent the Company elects, to make an investment in
assets (including Capital Stock or other securities purchased in connection with
the acquisition of Capital Stock or property of another Person) used or useful
in businesses similar or ancillary to the business of the Company or Restricted
Subsidiary as conducted at the time of such Asset Sale, provided that such
Investment occurs or the Company or a Restricted Subsidiary enters into
contractual commitments to make such investment, subject only to customary
conditions (other than the obtaining of financing), on or prior to the 270th day
following receipt of such Asset Sale Proceeds (the "Reinvestment Date") and
Asset Sales Proceeds contractually committed are so applied within 360 days
following the receipt of such Asset Sale Proceeds; and (c) third, if on the
Reinvestment Date with respect to any Asset Sale, the Available
41
<PAGE>
Asset Sale Proceeds exceed $10,000,000, the Company shall apply an amount equal
to such Available Asset Sale Proceeds to an offer to repurchase the Securities,
at a purchase price in cash equal to 100% of the principal amount thereof plus
accrued and unpaid interest, if any, to the date of repurchase (an "Excess
Proceeds Offer").
(b) If the Company is required to make an Excess Proceeds Offer, the
Company shall mail, within 30 days following the Reinvestment Date, a notice to
the registered holders stating, among other things: (1) that such holders have
the right to require the Company to apply the Available Asset Sale Proceeds to
repurchase such Securities at a purchase price in cash equal to 100% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase; (2) the purchase date (the "Purchase Date"), which shall be no
earlier than 30 days and not later than 60 days from the date such notice is
mailed; (3) the instructions, determined by the Company, that each holder must
follow in order to have such Securities repurchased; and (4) the calculations
used in determining the amount of Available Asset Sale Proceeds to be applied to
the repurchase of such Securities. The Excess Proceeds Offer shall remain open
for a period of 20 Business Days following its commencement (the "Offer
Period"). The notice, which shall govern the terms of the Excess Proceeds
Offer, shall also state:
(1) that the Excess Proceeds Offer is being made pursuant to this
Section 4.09 and the length of time the Excess Proceeds Offer will remain
open;
(2) the purchase price and the Purchase Date;
(3) that any Security not tendered or accepted for payment will
continue to accrue interest;
(4) that any Security accepted for payment pursuant to the Excess
Proceeds Offer shall cease to accrue interest on and after the Purchase
Date;
(5) that Holders electing to have a Security purchased pursuant to
any Excess Proceeds Offer will be required to surrender the Security, with
the form entitled "Option of Holder to Elect Purchase" on the reverse of the
Security completed, to the Company, a depositary, if appointed by the
Company, or a Paying Agent at the address specified in the notice at least
three Business Days before the Purchase Date;
(6) that Holders will be entitled to withdraw their election if the
Company, depositary or Paying Agent, as the case may be, receives, not later
than the expiration of the Offer Period, a facsimile transmission or letter
setting forth the name of the Holder, the principal amount of the Security
the Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have the Security purchased;
(7) that, if the aggregate principal amount of Securities surrendered
by Holders exceeds the Available Asset Sale Proceeds, the Company shall
select the Securities to be
42
<PAGE>
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Securities in denominations of
$1,000, or integral multiples thereof, shall be purchased); and
(8) that Holders whose Securities were purchased only in part will
be issued new Securities equal in principal amount to the unpurchased portion
of the Securities surrendered.
(c) On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary,
Securities or portions thereof tendered pursuant to the Excess Proceeds Offer,
deposit with the Paying Agent U.S. legal tender sufficient to pay the purchase
price plus accrued interest, if any, on the Securities to be purchased and
deliver to the Trustee an Officers' Certificate stating that such Securities or
portions thereof were accepted for payment by the Company in accordance with the
terms of this Section 4.09. The Paying Agent shall promptly (but in any case not
later than 5 days after the Purchase Date) mail or deliver to each tendering
Holder an amount equal to the purchase price of the Security tendered by such
Holder and accepted by the Company for purchase, and the Company shall promptly
issue a new Security, and the Trustee shall authenticate and mail or make
available for delivery such new Security to such Holder equal in principal
amount to any unpurchased portion of the Security surrendered. Any Security not
so accepted shall be promptly mailed or delivered by the Company to the Holder
thereof. The Company will publicly announce the results of the Excess Proceeds
Offer on the Purchase Date. If an Excess Proceeds Offer is not fully
subscribed, the Company may retain that portion of the Available Asset Sale
Proceeds not required to repurchase Securities.
(d) Notwithstanding the foregoing:
(i) the Company and any Restricted Subsidiary of the Company may, in
the ordinary course of business, convey, sell, lease, transfer or otherwise
dispose of assets and license brand names in the ordinary course of business;
(ii) the Company may convey, sell, lease, transfer or otherwise
dispose of as pursuant to and in accordance with Section 5.01;
(iii) the Company and its Restricted Subsidiaries may (a) sell
damaged, worn out or other obsolete property in the ordinary course of
business or other property no longer necessary for the proper conduct of the
business or (b) abandon such property if it cannot, through reasonable
efforts, be sold;
(iv) the Company and its Restricted Subsidiaries may convey, sell,
lease, transfer or otherwise dispose of assets which are reflected on the
consolidated balance sheet of the Company at January 31, 1998 as being held
for sale; and
43
<PAGE>
(v) the Company and its Restricted Subsidiaries may convey, sell,
lease, transfer or otherwise dispose of assets to the extent that the
aggregate Asset Sale Proceeds from all such asset dispositions not otherwise
permitted do not exceed $10,000,000 in any fiscal year of the Company.
Section 4.10. Limitation on Transactions with Affiliates.
------------------------------------------
(a) The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, enter into any transaction
or series of related transactions (including, without limitation, the sale,
purchase, exchange or lease of assets, property or services) with any Affiliate
of the Company (an "Affiliate Transaction") or extend, renew, waive or otherwise
modify the terms of any Affiliate Transaction entered into prior to the Issue
Date unless (i) such Affiliate Transaction is between or among the Company and
its Restricted Subsidiaries; or (ii) such Affiliate Transaction is entered into
in good faith and the terms of such Affiliate Transaction are fair and
reasonable to the Company or such Restricted Subsidiary, as the case may be. In
any Affiliate Transaction involving an amount or having a value in excess of
$5,000,000 which is not permitted under clause (i) above, the Company must
obtain a Board Resolution of the Board of Directors determining that such
Affiliate Transaction complies with clause (ii) above. In transactions with a
value in excess of $10,000,000 which are not permitted under clause (i) above,
the Company must obtain a written opinion as to the fairness of such a
transaction, from a financial point of view to the Company or such Restricted
Subsidiary, as the case may be, from an independent investment banking firm.
(b) Notwithstanding the foregoing, the provisions set forth in the
immediately preceding paragraph will not apply to: (i) Restricted Payments that
are not prohibited under Section 4.08; (ii) transactions permitted by, and
complying with, the provisions described under Section 5.01; (iii) transactions
in the ordinary course of business (including expense advances) between the
Company or any of its Restricted Subsidiaries or Unrestricted Subsidiaries, on
the one hand, and any employee thereof, on the other hand; (iv) employment
contracts existing on the Issue Date and employment contracts approved by the
Board of Directors of the Company the terms of which are consistent with past
practice; (v) the granting and performance of registration rights for shares of
Capital Stock of the Company under a written registration rights agreement
approved by a majority of directors of the Company that are disinterested with
respect to such transaction; (vi) transactions with Affiliates solely in their
capacity as holders of Indebtedness or Capital Stock of the Company or any of
its Restricted Subsidiaries or Unrestricted Subsidiaries, where such Affiliates
are treated no more favorably than holders of such Indebtedness or such Capital
Stock generally; (vii) any Permitted Investments; (viii) reasonable fees and
compensation paid to, and indemnity provided on behalf of, officers, directors,
employees or consultants of the Company or any Subsidiary of the Company as
determined in good faith by the Company's Board of Directors; (ix) transactions
exclusively between or among the Company and any of its Subsidiaries, provided
such transactions are not otherwise prohibited by this Indenture; (x) any
agreement as in effect as of the Issue Date or any amendment thereto or any
transaction contemplated thereby (including pursuant to any amendment thereto)
or in any replacement
44
<PAGE>
agreement thereto so long as any such amendment or replacement agreement is not
more disadvantageous to the holders of the Securities in any material respect
than the original agreement as in effect on the Issue Date; (xi) any payment,
issuance of securities or other payments, awards or grants, in cash or
otherwise, pursuant to, or the funding of, employment arrangements and Plans
approved by the Board of Directors; (xii) the grant of stock options or similar
rights to employees and directors of the Company and its Subsidiaries (or any
adjustment or amendment thereto) pursuant to Plans and employment contracts and
stock option, stock bonus, restricted stock and similar agreements approved by
the Board of Directors; (xiii) loans or advances to officers, directors or
employees of the Company or its Restricted Subsidiaries not in excess of
$5,000,000 at any one time outstanding; and (xiv) transactions, including,
without limitation, the repurchase of the Company's Common Stock, entered into
in connection with the Recapitalization and the financing therefor as described
in the Offering Memorandum.
Section 4.11. Limitation on Other Senior Subordinated Debt.
--------------------------------------------
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, incur, contingently or otherwise, any
Indebtedness that is both (i) subordinate in right of payment to any Senior Debt
of the Company or its Restricted Subsidiaries, as the case may be, and (ii)
senior in right of payment to the Securities. For purposes of this Section
4.11, Indebtedness is deemed to be senior in right of payment to the Securities,
if it is not explicitly subordinate in right of payment to Senior Debt at least
to the same extent as the Securities are subordinate to Senior Debt.
Section 4.12. 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 of any Securities for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of this Indenture or the Securities unless such consideration is offered to be
paid or agreed to be paid to all Holders of the Securities which so consent,
waive or agree to amend in the time frame set forth in solicitation documents
relating to such consent, waiver or agreement.
Section 4.13. Corporate Existence.
-------------------
Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
Restricted Subsidiary, in accordance with the respective organizational
documents (as the same may be amended from time to time) of each Restricted
Subsidiary and the rights (charter and statutory), licenses and franchises of
the Company and its Restricted 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 of its Restricted Subsidiaries,
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
Restricted Subsidiaries,
45
<PAGE>
taken as a whole.
Section 4.14. Change of Control.
-----------------
(a) The Company shall notify the Trustee within five Business Days
after the Company knows, or reasonably should know, of the occurrence of a
Change of Control. Within 15 Business Days after the Company knows or
reasonably should know, of the occurrence of each Change of Control, the Company
will make an offer to purchase (the "Change of Control Offer") the outstanding
Securities at a purchase price equal to 101% of the principal amount thereof
plus any accrued and unpaid interest thereon to the Change of Control Payment
Date (such applicable purchase price being hereinafter referred to as the
"Change of Control Purchase Price") in accordance with the procedures set forth
in this Section 4.14.
(b) Prior to the mailing of the notice referred to above, but in
any event within 30 days following the date on which the Company has actual
knowledge of a Change of Control, the Company covenants that if the purchase of
the Securities would violate or constitute a default under any then outstanding
Senior Debt, then the Company will, to the extent needed to permit such purchase
of Securities, either (i) repay in full all such Indebtedness on the basis
required by such Senior Debt to permit such purchase of Securities or (ii)
obtain the requisite consents under the agreements, documents and instrument(s)
governing such Senior Debt to permit the repurchase of the Securities as
provided in paragraph (a) above. The Company will first comply with the covenant
in the preceding sentence before it will be required to repurchase Securities
pursuant to the provisions described this Section 4.14; provided that the
--------
Company's failure to comply with the covenant described in the preceding
sentence will constitute an Event of Default to the extent provided in clause
(3) under Section 6.01.
(c) The Company will within 15 days after it knows, or reasonably
should know, of the Change of Control (i) cause a notice of the Change of
Control Offer to be sent at least once to the Dow Jones News Service or similar
business news service in the United States and (ii) send by first-class mail,
postage prepaid, to the Trustee and to each Holder of the Securities, at the
address appearing in the register maintained by the Registrar of the Securities,
a notice stating:
(i) that the Change of Control Offer is being made pursuant to
this Section 4.14 and that all Securities tendered will be accepted for
payment, and otherwise subject to the terms and conditions set forth herein;
(ii) the Change of Control Purchase Price and the purchase date
(which shall be a Business Day no earlier than 20 Business Days nor more than
60 Business Days from the date such notice is mailed (the "Change of Control
Payment Date"));
(iii) that any Security not tendered will continue to accrue
interest;
(iv) that, unless the Company defaults in the payment of the Change
of Control
46
<PAGE>
Purchase Price, any Securities accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after the Change of Control
Payment Date;
(v) that Holders accepting the offer to have their Securities
purchased pursuant to a Change of Control Offer will be required to surrender
the Securities to the Paying Agent at the address specified in the notice
prior to the close of business on the Business Day preceding the Change of
Control Payment Date;
(vi) that Holders will be entitled to withdraw their acceptance if
the Paying Agent receives, not later than the close of business on the third
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 the Securities delivered for purchase, and a statement
that such Holder is withdrawing his election to have such Securities
purchased;
(vii) 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, provided that each Security purchased
--------
and each such new Security issued shall be in an original principal amount in
denominations of $1,000 and integral multiples thereof;
(viii) a summary of any other procedures that a holder must follow to
accept a Change of Control Offer or effect withdrawal of such acceptance; and
(ix) the name and address of the Paying Agent.
(d) On the Change of Control Payment Date, the Company shall, to
the extent lawful, (i) accept for payment Securities or portions thereof
tendered pursuant to the Change of Control Offer, (ii) deposit with the Paying
Agent money sufficient to pay the purchase price of all Securities or portions
thereof so tendered and (iii) deliver or cause to be delivered to the Trustee
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 Holder of Securities so accepted payment in an amount
equal to the purchase price for such Securities, and the Company shall execute
and issue, and the Trustee shall promptly authenticate and mail to such Holder,
a new Security equal in principal amount to any unpurchased portion of the
Securities surrendered; provided that each such new Security shall be issued in
--------
an original principal amount in denominations of $1,000 and integral multiples
thereof.
(e) 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
purchase of Securities pursuant to a Change of Control Offer.
Section 4.15. Maintenance of Office or Agency.
-------------------------------
47
<PAGE>
The Company shall maintain an office or agency where Securities may be
surrendered for registration of transfer or exchange or for presentation for
payment and where notices and demands to or upon the Company in respect of the
Securities and this Indenture may be served. The Company shall give prompt
written notice to the Trustee of the location, and any change in the location,
of such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the address of the Trustee as set forth in Section 11.02.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations. The
Company shall give prompt written notice to the Trustee of such designation or
rescission and of any change in the location of any such other office or agency.
The Company hereby initially designates the Corporate Trust Office of
the Trustee set forth in Section 11.02 as such office of the Company.
Section 4.16. Limitation on Liens.
-------------------
The Company may not and may not permit any Restricted Subsidiary to,
directly or indirectly, incur or suffer to exist any Lien (other than Permitted
Liens) upon any of its property or assets, whether now owned or hereafter
acquired, that secures Subordinated Debt or Pari Passu Debt unless (i) in the
case of Liens securing Subordinated Debt, the Securities are secured by a Lien
on such property or assets that is senior in priority to such Liens, and (ii) in
the case of Liens securing Pari Passu Debt, the Securities are equally and
ratably secured by a Lien on such property or assets.
Section 4.17. Limitation on Emerging Market Subsidiaries.
------------------------------------------
The Company or a Wholly-Owned Subsidiary must designate Persons at all
times constituting a majority of the directors (or members of the governing
body) of, and at all times have the power to direct the management and policies
of, each Emerging Market Subsidiary; (ii) the Company will not, and will not
permit any of its Subsidiaries to, directly or indirectly own any Capital Stock
or other ownership interests in an Emerging Market Subsidiary unless the Company
and its Subsidiaries or Emerging Market Subsidiaries own, in the aggregate,
Capital Stock or other ownership interests such that the Emerging Market
Subsidiary at all times satisfies the conditions necessary for a Person to be a
Subsidiary of the Company under the definition of "Subsidiary" in this
Indenture; (iii) the Company will not permit any Emerging Market Subsidiary to
incur Indebtedness or issue Disqualified Capital Stock (other than Indebtedness
or Disqualified Capital Stock issued to or held by a Subsidiary of such Emerging
Market Subsidiary or to another Emerging Market Subsidiary or any Subsidiary of
another Emerging Market Subsidiary) if, immediately after giving effect thereto
(including the redemption, repurchase, repayment or
48
<PAGE>
retirement of Indebtedness or Disqualified Capital Stock with the proceeds
thereof), the aggregate outstanding principal amount of Indebtedness and
liquidation or redemption value (whichever is the greater) of Disqualified
Capital Stock (other than Capital Stock issued to the Company or a Restricted
Subsidiary and other than Indebtedness that constitutes Invested Capital) of all
Emerging Market Subsidiaries on a combined consolidated basis would exceed the
greater of (A) $50,000,000 and (B) the product of (x) the greater of (A) the
combined consolidated stockholders' equity (calculated in accordance with GAAP)
of all Emerging Market Subsidiaries and (B) the aggregate amount, determined on
a combined consolidated basis, of Invested Capital (whether by the Company or a
Subsidiary of the Company or any other Person or Persons) in all Emerging Market
Subsidiaries and (y) 2.5; (iv) the Company will not permit any Emerging Market
Subsidiary to directly or indirectly (A) make any material Investment or (B)
engage to any material extent in, any line or lines of business activity, in
each case, other than in a Related Business; and (v) each Emerging Market
Subsidiary will be deemed to be a Restricted Subsidiary for purposes of Section
4.09 and the definitions as applicable thereto but only to the extent such
definitions are used therein and only to the extent not specifically excluded
therefrom.
Section 4.18. Limitation on Restricting Subsidiary Dividends; Restriction on
--------------------------------------------------------------
Sale and Issuance of Subsidiary Stock.
-------------------------------------
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or assume any consensual
encumbrance or restriction on the ability of any Restricted Subsidiary of the
Company to pay dividends or make other distributions on the Capital Stock of any
Restricted Subsidiary of the Company or pay any obligation to the Company or any
of its Restricted Subsidiaries or otherwise transfer assets or make or pay loans
or advances to the Company or any of its Restricted Subsidiaries (collectively,
"Payment Restrictions"), except Payment Restrictions existing under (i) this
Indenture and the Securities and the Exchange Indenture and the Exchange
Debentures or Refinancing Indebtedness incurred to refinance the Securities or
the Exchange Debentures, as the case may be; provided, that such encumbrances
--------
and restrictions are no more restrictive than those contained in this Indenture
or the Exchange Indenture, as the case may be, as in effect on the Issue Date,
(ii) Indebtedness incurred under clause (ii) or clause (xi) or clause (xii) of
the definition of "Permitted Indebtedness," or Indebtedness (other than
Permitted Indebtedness) incurred under Section 4.06, provided, that such
--------
encumbrances and restrictions are no more restrictive than those set forth in
the Original Credit Agreement as in effect on the Issue Date, (iii) Indebtedness
existing on the Issue Date or Refinancing Indebtedness incurred to refinance
such existing Indebtedness; provided, that such encumbrances and restrictions
--------
are no more restrictive than those contained in the agreements governing
Indebtedness existing on the Issue Date as in effect on the Issue Date, (iv)
leasing agreements as in effect on the Issue Date and (v) any agreement of a
Person acquired by the Company or a Restricted Subsidiary of the Company, which
restrictions existed at the time of acquisition, were not put in place in
anticipation of such acquisition and are not applicable to any Person or
property, other than the Person or any property of the Person so acquired.
Notwithstanding the foregoing, (a) customary provisions restricting subletting
or assignment of any lease or license entered into the ordinary course of
business consistent with past practice and
49
<PAGE>
(b) Liens permitted under Section 4.16 on assets securing Indebtedness incurred
in accordance with Section 4.06 shall not in and of themselves be considered a
Payment Restriction. The Company will not sell, and will not permit any of its
Restricted Subsidiaries to issue or sell, any shares of Capital Stock of any
Restricted Subsidiary of the Company to any Person other than the Company or a
Restricted Subsidiary of the Company; provided, that the Company and its
--------
Restricted Subsidiaries may sell all (but not less than all) of the outstanding
shares of Capital Stock of any Restricted Subsidiary of the Company held by them
in a single transaction or a series of substantially contemporaneous
transactions if the provisions described under Section 4.09 are complied with.
Notwithstanding the foregoing, the issuance or sale of shares of Capital Stock
of any Restricted Subsidiary of the Company shall not violate the provisions of
the immediately preceding sentence if (i) such shares are issued or sold in
connection with (x) the formation or capitalization of a Restricted Subsidiary
which, at the time of such issuance or sale and after giving effect thereto, is
a Joint Venture Subsidiary or (y) a single transaction or a series of
substantially contemporaneous transactions whereby such Restricted Subsidiary
becomes a Restricted Subsidiary of the Company by reason of the acquisition of
securities or assets from another Person or (ii) such shares constitute
directors' qualifying shares not exceeding one percent of the outstanding
Capital Stock of such Restricted Subsidiary.
ARTICLE 5
SUCCESSOR CORPORATION
Section 5.01. Limitation on Consolidation, Merger and Sale of Assets.
-------------------------------------------------------
The Company will not, in a single transaction or series of related
transactions, consolidate with or merge with or into, or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its assets to,
another Person unless (i) either (1) the Company is the survivor of such merger,
consolidation, sale, assignment, transfer, lease, conveyance or other
disposition, or (2) the surviving or transferee Person is a corporation,
partnership or trust organized and existing under the laws of the United States,
any state thereof or the District of Columbia and such surviving or transferee
Person expressly assumes by supplemental indenture all the obligations of the
Company under the Securities and this Indenture; (ii) immediately after giving
effect to such transaction and the use of proceeds therefrom (on a pro forma
basis, including any Indebtedness incurred or anticipated to be incurred in
connection with such transaction), the Company or the surviving or transferee
Person is able to incur $1.00 of additional Indebtedness (other than Permitted
Indebtedness) in compliance with Section 4.06; (iii) immediately after giving
effect to such transaction (including any Indebtedness incurred or anticipated
to be incurred in connection with the transaction) no Default or Event of
Default has occurred and is continuing; and (iv) the Company has delivered to
the Trustee an Officers' Certificate and Opinion of Counsel, each stating that
such consolidation, merger, sale, assignment, transfer, lease or other
disposition complies with this Indenture and that all conditions precedent in
this Indenture relating to such transaction have been satisfied. For purposes
of the foregoing, the transfer (by lease, assignment, sale or otherwise, in a
single transaction or series of related transactions) of all or substantially
all
50
<PAGE>
of the properties and assets of one or more Restricted Subsidiaries the Capital
Stock of which constitutes all or substantially all of the properties and assets
of the Company will be deemed to be the transfer of all or substantially all of
the properties and assets of the Company. Notwithstanding the foregoing clauses
(ii) and (iii), but subject to clauses (i) and (iv) thereof, (a) the Company may
consolidate with, merge into or transfer all or part of its properties and
assets to any Restricted Subsidiary so long as all assets of the Company
immediately prior to such transaction are owned by such Restricted Subsidiary
immediately after the consummation thereof, and (b) the Company may merge with
an Affiliate that is a corporation that has no material assets or liabilities
and that was incorporated solely for the purpose of (A) reincorporating the
Company in the same or another jurisdiction of the United States, any state
thereof or the District of Columbia or (B) the creation of a holding company of
the Company.
Section 5.02. Successor Person Substituted.
----------------------------
Upon any consolidation or merger, or any transfer of all or
substantially all of the assets of the Company in accordance with Section 5.01
above, the successor corporation formed by such consolidation or into which the
Company is merged or to which such transfer 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 corporation had been
named as the Company herein, and thereafter the predecessor corporation shall be
relieved of all obligations and covenants under this Indenture and the
Securities.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
-----------------
An "Event of Default" occurs if
(1) there is a failure to pay the principal or premium, if any, on any
Securities when such principal becomes due and payable, at maturity, upon
acceleration, redemption or otherwise, whether or not such payment is
prohibited by the provisions of Article 10 hereof;
(2) there is a failure to pay interest on any Security when the same
becomes due and payable and such Default continues for a period of 30 days,
whether or not such payment is prohibited by the provisions of Article 10
hereof;
(3) the Company fails to make a Change of Control Offer if such offer
is required by the provisions of Section 4.14 or fails to purchase Securities
from holders who elect to have such Securities purchased pursuant to the
Change of Control Offer;
(4) the Company defaults in the observance or performance of any other
51
<PAGE>
covenant or agreement in the Securities or this Indenture which default
continues for a period of 60 days after the Company receives written notice
thereof specifying the default from the Trustee or the Holders of at least
25% in aggregate principal amount of outstanding Securities;
(5) there is a default in the payment at final maturity of principal
in an aggregate amount of $10,000,000 or more with respect to any
Indebtedness of the Company or any Restricted Subsidiary thereof which
default shall not be cured, waived or postponed pursuant to an agreement with
the holders of such Indebtedness within 60 days after written notice, or the
acceleration of any such Indebtedness aggregating $10,000,000 or more which
acceleration shall not be rescinded or annulled within 30 days after written
notice to the Company of such Default by the Trustee or any Holder;
(6) any final judgment or judgments which can no longer be appealed
for the payment of money in excess of $10,000,000 shall be rendered against
the Company or any Restricted Subsidiary thereof, and shall not be discharged
for a period of 60 consecutive days during which a stay of enforcement of
such judgment shall not be in effect;
(7) the Company or any Significant Restricted Subsidiary 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) admits in writing its inability to pay its debts generally as they
become due; or
(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 Significant Restricted
Subsidiary in an involuntary case,
(B) appoints a Custodian of the Company or any Significant Restricted
Subsidiary or for all or substantially all of the property of the Company or
any Significant Restricted Subsidiary, or
52
<PAGE>
(C) orders the liquidation of the Company or any Significant
Restricted Subsidiary,
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
Federal, state or foreign law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.
The Trustee may withhold notice to the Holders of the Securities of
any Default (except in payment of principal or premium, if any, or interest on
the Securities) if the Trustee considers it to be in the best interest of the
Holders of the Securities to do so.
Section 6.02. Acceleration.
------------
Upon the happening of any Event of Default specified in Section 6.01,
the Trustee may, and the Trustee upon the request of 25% in principal amount of
the Securities shall or the Holders of at least 25% in aggregate principal
amount of outstanding Securities may, declare the principal of and accrued but
unpaid interest, if any, on all the Securities to be due and payable by notice
in writing to the Company and the Trustee specifying the respective Event of
Default and that it is a "notice of acceleration" (the "Acceleration Notice"),
and the same (i) shall (except as provided in clause (ii) of this sentence)
become immediately due and payable or (ii) if there are any amounts outstanding
under any of the agreements, documents, and instruments constituting Designated
Senior Debt, will become due and payable upon the first to occur of an
acceleration under any of the agreements, documents, and instruments
constituting Designated Senior Debt or five Business Days after receipt by the
Company and the Representative of such Acceleration Notice (unless all Events of
Default specified in such Acceleration Notice have been cured or waived). If an
Event of Default described under clauses (7) or (8) of Section 6.01 with respect
to the Company occurs and is continuing, then such amount will ipso facto become
----------
and be immediately due and payable without any declaration or other act on the
part of the Trustee or any Holder of Securities; provided, however, that at any
-------- -------
time after a declaration of acceleration with respect to the Securities, the
Holders of a majority in principal amount of the Securities then outstanding (by
notice to the Trustee) may rescind and cancel such declaration and its
consequences if (i) the rescission would not conflict with any judgment or
decree of a court of competent jurisdiction, (ii) all existing Events of Default
have been cured or waived except nonpayment of principal or interest on the
Securities that has become due solely by such declaration of acceleration, (iii)
to the extent the payment of such interest is lawful, interest (at the same rate
specified in the Securities) on overdue installments of interest and overdue
principal which has become due otherwise than by such declaration of
acceleration has been paid, (iv) the Company has paid the Trustee its reasonable
compensation and reimbursed the Trustee for its expenses, disbursements and
advances and (v) in the event of the cure or waiver of a Default or Event of
Default (with respect to the Company) of the type described in Section 6.01(7)
or (8), the Trustee has received an Officers' Certificate and an Opinion of
Counsel that such Default or Event
53
<PAGE>
of Default has been cured or waived. The Holders of a majority in principal
amount of the Securities may waive any existing Default or Event of Default
under this Indenture, and its consequences, except a default in the payment of
the principal of or interest on any Securities.
Section 6.03. Other Remedies.
--------------
If an Event of Default occurs and is continuing, the Trustee may
(subject to Section 10 hereof) pursue any available remedy by proceeding at law
or in equity to collect the payment of principal of, or premium, if any, and
interest on the Securities or to enforce the performance of any provision of the
Securities or this Indenture and may take any necessary action requested of it
as Trustee to settle, compromise, adjust or otherwise conclude any proceedings
to which it is a party.
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. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
Section 6.04. Waiver of Past Defaults and Events of Default.
---------------------------------------------
Subject to Sections 6.02, 6.07 and 8.02 hereof, the Holders of a
majority in principal amount of the Securities then outstanding have the right
to waive any existing Default or Event of Default or compliance with any
provision of this Indenture or the Securities. Upon any such waiver, such
Default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured for every purpose of this Indenture; but no such
waiver shall extend to any subsequent or other Default or Event of Default or
impair any right consequent thereto.
Section 6.05. Control by Majority.
-------------------
The Holders of a majority in principal amount of the Securities then
outstanding 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 by this Indenture. The Trustee, however, may refuse to
follow any direction that conflicts with law or this Indenture or that the
Trustee determines may be unduly prejudicial to the rights of another
Securityholder not taking part in such direction, and the Trustee shall have the
right to decline to follow any such direction if the Trustee, being advised by
counsel, determines that the action so directed may not lawfully be taken or if
the Trustee in good faith shall, by a Trust Officer, determine that the
proceedings so directed may involve it in personal liability; provided that the
--------
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction.
Section 6.06. Limitation on Suits.
-------------------
54
<PAGE>
Subject to Section 6.07 below, a Securityholder may not institute any
proceeding or pursue any remedy with respect to this Indenture or the Securities
unless:
(1) the Holder gives to the Trustee written notice of a continuing
Event of Default;
(2) the Holders of at least 25% in aggregate principal amount of the
Securities then outstanding make a written request to the Trustee to pursue
the remedy;
(3) such Holder or Holders offer to the Trustee indemnity reasonably
satisfactory to the Trustee against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of indemnity; and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 60 day period by the Holders of a majority in
aggregate principal amount of the Securities then outstanding.
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 of, or premium, if any,
and interest of 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, is (subject to Section 10 hereof) absolute and
unconditional and shall not be impaired or affected without the consent of such
Holder.
Section 6.08. Collection Suit by Trustee.
--------------------------
If an Event of Default in payment of principal, premium or interest
specified in Section 6.01(1) or (2) hereof occurs and is continuing, the Trustee
may recover judgment in its own name and as trustee of an express trust against
the Company (or any other obligor on the Securities) for the whole amount of
unpaid principal and accrued interest remaining unpaid, together with interest
on overdue principal and, to the extent that payment of such interest is lawful,
interest on overdue installments of interest, in each case at the rate then
borne by the Securities, and such further amounts as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.
Section 6.09. Trustee May File Proofs of Claim.
--------------------------------
55
<PAGE>
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
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 and receive any monies or other securities
or property payable or deliverable upon the conversion or exchange of the
Securities or upon any such claims and to distribute the same after deduction of
its charges and expenses to the extent that any such charges and expenses are
not paid out of the estate in any such proceedings 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 payments 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.
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 6, it shall
pay out the money in the following order:
FIRST: to the Trustee for amounts due under Section 7.07 hereof;
SECOND: to Securityholders for amounts due and unpaid on the
Securities for principal, premium, if any, and interest as to each, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Securities; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any payment to
Securityholders pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs.
---------------------
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees and
56
<PAGE>
expenses, against any party litigant in the suit, having due regard to the
merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit in good faith
by any holder of Senior Debt to enforce its rights under Section 10 hereof, a
suit by a Holder pursuant to Section 6.07 hereof or a suit by Holders of more
than 10% in principal amount of the Securities then outstanding.
ARTICLE 7
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 same 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.
(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.
(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.
(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 Sections 6.02 and 6.05 hereof.
(d) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its rights or
57
<PAGE>
powers if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity satisfactory to it against such risk or liability is
not reasonably assured to it.
(e) Whether or not therein expressly so provided, paragraphs (a), (b),
(c) and (d) of this Section 7.01 shall govern every provision of this Indenture
that in any way relates to the Trustee.
(f) The Trustee is under no obligation and may refuse to perform any
duty or exercise any right or power under this Indenture at the request or
direction of any holders of the Securities unless such holders have offered the
Trustee reasonable indemnity or security against any loss, liability or expense.
(g) The Trustee shall not be liable for interest on any money or
assets received by it except as the Trustee may agree in writing with the
Company. Money or assets held in trust by the Trustee need not be segregated
from other funds or assets except to the extent required by the law.
Section 7.02. Rights of Trustee.
-----------------
Subject to Section 7.01 hereof:
(1) The Trustee may rely on any document reasonably 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.
(2) Before the Trustee acts or refrains from acting, it may consult
with counsel, require an Officers' Certificate or an Opinion of Counsel, or
both, which shall conform to the provisions of Section 11.05 hereof. The
Trustee shall be protected and shall not be liable for any action it takes or
omits to take in good faith and in reasonable reliance on such certificate or
opinion, except if such action violates the express provisions of this
Indenture.
(3) The Trustee may act through agents and attorneys and shall not be
responsible for the misconduct or negligence of any agent or attorney
appointed by it with due care.
(4) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it reasonably believes to be authorized or within
its rights or powers.
(5) The Trustee may consult with counsel of its selection, and the
advice or opinion of such counsel as to matters of law shall be full and
complete authorization and protection from liability in respect of any action
taken, omitted or suffered by it hereunder in good faith and in accordance
with the advice or opinion of such counsel.
58
<PAGE>
(6) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Securityholders pursuant to this Indenture, unless such
Securityholders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be incurred
by it in compliance with such request or direction.
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 make loans to, accept deposits from,
perform services for or otherwise deal with the Company, or any Affiliates
thereof, with the same rights it would have if it were not Trustee. Any Agent
may do the same with like rights. The Trustee, however, shall be subject to
Sections 7.10 and 7.11 hereof.
Section 7.04. Trustee's Disclaimer.
--------------------
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Securities, it shall not
be accountable for the Company's use of the proceeds from the sale of Securities
or any money paid to the Company pursuant to the terms of this Indenture and it
shall not be responsible for any statement of the Company in this Indenture or
any document issued in connection with the sale of Securities or any statement
in the Securities other than the Trustee's certificate of authentication.
Section 7.05. Notice of Defaults.
------------------
If a Default occurs and is continuing and if it is known to the
Trustee, the Trustee shall mail to each Securityholder notice of the Default
within 90 days after it occurs. Except in the case of a Default in payment of
the principal of, or premium, if any, or interest on any Security the Trustee
may withhold the notice if and so long as the board of directors of the Trustee,
the executive committee or any trust committee of such board and/or any of its
Trust Officers in good faith determine(s) that withholding the notice is in the
interests of the Securityholders.
Section 7.06. Reports by Trustee to Holders.
-----------------------------
If required by TIA (S) 313(a), within 60 days after May 15 of any
year, commencing the May 15 following the date of this Indenture, the Trustee
shall mail to each Securityholder a brief report dated as of such May 15 that
complies with TIA (S) 313(a). The Trustee also shall comply with TIA (S)
313(b)(2). The Trustee shall also transmit by mail all reports as required by
TIA (S) 313(c) and TIA (S) 313(d).
Reports pursuant to this Section 7.06 shall be transmitted by mail:
(1) to all registered Holders of Securities, as the names and
addresses of such
59
<PAGE>
Holders appear on the Registrar's books; and
(2) to such Holder of Securities as have, within the two years
preceding such transmission, filed their names and addresses with the Trustee
for that purpose.
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 promptly notify the Trustee when the Securities are
listed on any securities exchange.
Section 7.07. Compensation and Indemnity.
--------------------------
The Company shall pay to the Trustee from time to time such
compensation as shall be agreed in writing between the Company and the Trustee
for its services hereunder (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust). The Company shall reimburse the Trustee upon request for all reasonable
disbursements, expenses and advances incurred or made by it in connection with
its duties under this Indenture, including the reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify each of the Trustee, any predecessor
Trustee for, and hold them harmless against, any and all loss, damage, claim,
liability or reasonable expense, including taxes (other than taxes based on the
income of the Trustee) incurred by it in connection with the acceptance or
performance of its duties under this Indenture including the reasonable costs
and expenses of enforcing this Indenture against the Company (including with
respect to this Section 7.07) and of defending itself against any claim (whether
asserted by any Securityholder or the Company) or liability in connection with
the exercise or performance of any of its powers or duties hereunder (including,
without limitation, settlement costs). The Trustee shall notify the Company in
writing promptly of any claim asserted against the Trustee for which it may seek
indemnity. However, the failure by the Trustee to so notify the Company shall
not relieve the Company of its obligations hereunder except to the extent the
Company is prejudiced thereby.
Notwithstanding the foregoing, the Company need not reimburse the
Trustee for any expense or indemnify it against any loss or liability incurred
by the Trustee through its negligence or bad faith. To secure the payment
obligations of the Company in this Section 7.07, the Trustee shall have a lien
prior to the Securities on all money or property held or collected by the
Trustee except such money or property held in trust to pay principal of and
interest on particular Securities. The Trustee's right to receive payment of
any amounts due under this Section 7.07 shall not be subordinate to any other
liability or indebtedness of the Company (even though the Securities may be so
subordinated) and the Securities shall be subordinate (to the extent provided in
Section 6.10) to the Trustee's right to receive such payment. The obligations
of the Company under this Section 7.07 to compensate and indemnify the Trustee
and each predecessor Trustee and to pay or reimburse the Trustee and each
predecessor Trustee for expenses, disbursements and advances shall survive the
resignation or removal of any Trustee, any rejection
60
<PAGE>
or termination under any Bankruptcy Law and the satisfaction and discharge of
this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(7) or (8) hereof occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
For purposes of this Section 7.07, the term "Trustee" shall include
any trustee appointed pursuant to Article 9.
Section 7.08. Replacement of Trustee.
----------------------
The Trustee may resign by so notifying the Company in writing. The
Holders of a majority in principal amount of the outstanding Securities may
remove the Trustee by notifying the removed Trustee in writing and may appoint a
successor Trustee with the Company's written consent which consent shall not be
unreasonably withheld. The Company may remove the Trustee at its election if:
(1) the Trustee fails to comply with Section 7.10 hereof;
(2) the Trustee is adjudged a bankrupt or an insolvent under any
Bankruptcy Law;
(3) a receiver or other public officer takes charge of the Trustee or
its property;
(4) the Trustee otherwise becomes incapable of acting; or
(5) a successor corporation becomes successor Trustee pursuant to
Section 7.09 below.
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.
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 a majority in principal amount of the 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 hereof, 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. Immediately following
such delivery, the retiring Trustee
61
<PAGE>
shall, subject to its rights under Section 7.07 hereof, transfer all property
held by it as Trustee to the successor Trustee, the resignation or removal of
the retiring Trustee shall become effective, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under this Indenture. A
successor Trustee shall mail notice of its succession to each Securityholder.
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.
Section 7.09. Successor Trustee by Consolidation, Merger or Conversion.
--------------------------------------------------------
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust assets to, another
corporation, subject to Section 7.10 hereof, 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 (S) 310(a)(1) and (2) in every respect. The Trustee shall
have a combined capital and surplus of at least $50,000,000 as set forth in its
most recent published annual report of condition. The Trustee shall comply with
TIA (S) 310(b), including the provision in (S) 310(b)(1); provided, however,
-------- -------
that there shall be excluded from the operation of TIA (S) 310(b)(1) any
indenture or indentures under which other securities, or certificates of
interest or participation in other securities, of the Company are outstanding,
if the requirements for such exclusion set forth in TIA (S) 310(b)(1) are met.
Section 7.11. Preferential Collection of Claims Against Company.
-------------------------------------------------
The Trustee shall comply with TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311 (b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein.
ARTICLE 8
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 8.01. Without Consent of Holders.
--------------------------
The Company, when authorized by a Board Resolution, and the Trustee
may amend or supplement this Indenture or the Securities without notice to or
consent of any Securityholder:
(1) to comply with Section 5.01 hereof;
(2) to provide for uncertificated Securities in addition to or in
place of certificated Securities;
62
<PAGE>
(3) to comply with any requirements of the SEC under the TIA;
(4) to cure any ambiguity, defect or inconsistency, or to make any
other change that does not materially and adversely affect the rights of any
Securityholder; or
(5) to make any other change that does not, in the opinion of the
Trustee, materially and adversely affect the rights of any Securityholder.
The Trustee is hereby authorized to join with the Company in the
execution of any supplemental indenture authorized or permitted by the terms of
this Indenture and to make any further appropriate agreements and stipulations
which may be therein contained; provided, however, that the Company has
-------- -------
delivered to the Trustee an Officers' Certificate stating that such amendment or
supplement complies with the provisions of this Section 8.01 and; provided,
--------
further, that the Trustee shall not be obligated to enter into any such
- -------
supplemental indenture which adversely affects its own rights, duties or
immunities under this Indenture.
Section 8.02. With Consent of Holders.
-----------------------
The Company and the Trustee may modify or supplement this Indenture or
the Securities with the written consent of the Holders of not less than a
majority in aggregate principal amount of the outstanding Securities without
notice to any Securityholder. The Holders of not less than a majority in
aggregate principal amount of the outstanding Securities may waive compliance in
a particular instance by the Company with any provision of this Indenture or the
Securities without notice to any Securityholder. Without the consent of each
Securityholder affected, however, an amendment, supplement or waiver, including
a waiver pursuant to Section 6.04, may not:
(1) reduce the amount of Securities whose Holders must consent to an
amendment, supplement or waiver to this Indenture or the Securities;
(2) reduce the rate of or change the time for payment of interest on
any Security;
(3) reduce the principal of or premium on or change the stated
maturity of any Security;
(4) make any Security payable in money other than that stated in the
Security or change the place of payment from New York, New York;
(5) change the amount or time of any payment required by the
Securities or reduce the premium payable upon any redemption of the
Securities or change the time before which no redemption may be made;
63
<PAGE>
(6) waive a default in the payment of the principal of, or interest
on, or redemption payment with respect to, any Security (including any
obligation to make a Change of Control Offer or, after the Company's
obligation to purchase Securities arises thereunder, an Excess Proceeds Offer
or modify any of the provisions or definitions with respect to such offers);
(7) make any changes in Sections 6.04 or 6.07 hereof or this sentence
of Section 8.02;
(8) affect the ranking of the Securities in a manner adverse to the
Holders; or
(9) take any other action otherwise prohibited by this Indenture to be
taken without the consent of each Holder affected thereby.
After an amendment, supplement or waiver under this Section 8.02
becomes effective, the Company shall mail to the Holders a notice briefly
describing the amendment, supplement or waiver.
Upon receipt of a Company Request, accompanied by a Board Resolution
authorizing the execution of any such supplemental indenture, and upon the
receipt by the Trustee of evidence reasonably satisfactory to the Trustee of the
consent of the Securityholders as aforesaid and upon receipt by the Trustee of
the documents described in Section 8.06 hereof, the Trustee shall join with the
Company in the execution of such supplemental indenture unless such supplemental
indenture affects the Trustee's own rights, duties or immunities under this
Indenture, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such supplemental indenture.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
Section 8.03. Compliance with Trust Indenture Act.
-----------------------------------
Every amendment to or supplement of this Indenture or the Securities
shall comply with the TIA as then in effect.
Section 8.04. Revocation and Effect of Consents.
---------------------------------
Until an amendment, supplement, waiver or other action becomes
effective, a consent to it by a Holder of a Security is a continuing consent
conclusive and binding upon such Holder and every subsequent Holder of the same
Security or portion thereof, and of any Security issued upon the transfer
thereof or in exchange therefor or in place thereof, even if notation of the
consent is not made on any such Security. Any such Holder or subsequent Holder,
however, may
64
<PAGE>
revoke the consent as to his Security or portion of a Security, if the Trustee
receives the notice of revocation before the date the amendment, supplement,
waiver or other action becomes effective.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement, or waiver. If a record date is fixed, then, notwithstanding the
preceding paragraph, those Persons who were Holders at such record date (or
their duly designated proxies), and only such Persons, shall be entitled to
consent to such amendment, supplement, or waiver or to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
record date. No such consent shall be valid or effective for more than 90 days
after such record date unless the consent of the requisite number of Holders has
been obtained.
After an amendment, supplement, waiver or other action becomes
effective, it shall bind every Securityholder, unless it makes a change
described in any of clauses (1) through (9) of Section 8.02 hereof. In that
case the amendment, supplement, waiver or other action shall bind each Holder of
a Security who has consented to it and every subsequent Holder of a Security or
portion of a Security that evidences the same debt as the consenting Holder's
Security.
Section 8.05. Notation on or Exchange of Securities.
-------------------------------------
If an amendment, supplement, or waiver changes the terms of a
Security, the Trustee may request the Holder of the Security to deliver it to
the Trustee. In such case, the Trustee shall place an appropriate notation on
the Security about the changed terms and return it to the Holder.
Alternatively, if the Company or the Trustee so determines, the Company in
exchange for the Security shall issue and the Trustee shall authenticate a new
security that reflects the changed terms. Failure to make the appropriate
notation or issue a new Security shall not affect the validity and effect of
such amendment supplement or waiver.
Section 8.06. Trustee To Sign Amendments, etc.
-------------------------------
The Trustee shall sign any amendment, supplement or waiver authorized
pursuant to this Article 8 if the amendment, supplement or waiver does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may, but need not, sign it. In signing or refusing to
sign such amendment, supplement or waiver the Trustee shall be entitled to
receive and, subject to (and to the extent provided in) Section 7.01 hereof,
shall be fully protected in relying upon an Officers' Certificate and an Opinion
of Counsel stating that such amendment, supplement or waiver is authorized or
permitted by this Indenture and that such amendment, supplement or waiver
constitutes the legal, valid and binding obligation of the Company, enforceable
in accordance with its terms (subject to customary enforceability exceptions).
The Company may not sign an amendment or supplement until the Board of Directors
of the Company approves it. In signing any amendment, supplement or waiver, the
Trustee shall be entitled to receive an indemnity reasonably satisfactory to it.
65
<PAGE>
ARTICLE 9
DISCHARGE OF INDENTURE; DEFEASANCE
Section 9.01. Discharge of Indenture.
----------------------
The Company may terminate its obligations under the Securities and
this Indenture, except the obligations referred to in the last paragraph of this
Section 9.01, if there shall have been cancelled by the Trustee or delivered to
the Trustee for cancellation all Securities theretofore authenticated and
delivered (other than any Securities that are asserted to have been destroyed,
lost or stolen and that shall have been replaced as provided in Section 2.07
hereof) and the Company has paid all sums payable by it hereunder or deposited
all required sums with the Trustee.
After such delivery the Trustee upon request shall acknowledge in
writing the discharge of the Company's obligations under the Securities and this
Indenture except for those surviving obligations specified below.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company in Sections 7.07, 9.05 and 9.06 hereof shall survive.
Section 9.02. Legal Defeasance.
----------------
The Company may at its option, by Board Resolution, be discharged from
its obligations with respect to the Securities on the date the conditions set
forth in Section 9.04 below are satisfied (hereinafter, "Legal Defeasance").
For this purpose, such Legal Defeasance means that the Company shall be deemed
to have paid and discharged the entire indebtedness represented by the
Securities and to have satisfied all its other obligations under such Securities
and this Indenture insofar as such Securities are concerned (and the Trustee, at
the expense of the Company, shall, subject to Section 9.06 hereof, execute
proper instruments acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder: (A) the rights of
Holders of outstanding Securities to receive solely from the trust funds
described in Section 9.04 hereof and as more fully set forth in such Section,
payments in respect of the principal of, premium, if any, and interest on such
Securities when such payments are due, (B) the Company's obligations with
respect to such Securities under Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07,
2.08 and 4.15 hereof, (C) the rights, powers, trusts, duties, and immunities of
the Trustee hereunder (including claims of, or payments to, the Trustee under or
pursuant to Section 7.07 hereof) and (D) this Article 9. Subject to compliance
with this Article 9, the Company may exercise its option under this Section 9.02
with respect to the Securities notwithstanding the prior exercise of its option
under Section 9.03 below with respect to the Securities.
Section 9.03. Covenant Defeasance.
-------------------
66
<PAGE>
At the option of the Company, pursuant to a Board Resolution, the
Company shall be released from its obligations under Sections 4.02, 4.05 through
4.14 and 4.16 through 4.18 hereof, inclusive, and clause (ii) of Section 5.01
hereof with respect to the outstanding Securities on and after the date the
conditions set forth in Section 9.04 hereof are satisfied (hereinafter,
"Covenant Defeasance"). For this purpose, such Covenant Defeasance means that
the Company may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such specified Section or
portion thereof, whether directly or indirectly by reason of any reference
elsewhere herein to any such specified Section or portion thereof or by reason
of any reference in any such specified Section or portion thereof to any other
provision herein or in any other document, but the remainder of this Indenture
and the Securities shall be unaffected thereby.
Section 9.04. Conditions to Defeasance or Covenant Defeasance.
-----------------------------------------------
The following shall be the conditions to application of Section 9.02
or Section 9.03 hereof to the outstanding Securities:
(1) the Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements of
Section 7.10 hereof who shall agree to comply with the provisions of this
Article 9 applicable to it) as funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of the Securities, (A) money in an
amount, or (B) U.S. Government Obligations which through the scheduled
payment of principal and interest in respect thereof in accordance with their
terms will provide, not later than the due date of any payment, money in an
amount, or (C) a combination thereof, sufficient, in the opinion of a
nationally-recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, to pay and discharge,
and which shall be applied by the Trustee (or other qualifying trustee) to
pay and discharge, the principal of, premium, if any, and accrued interest on
the outstanding Securities at the maturity date of such principal, premium,
if any, or interest, or on dates for payment and redemption of such
principal, premium, if any, and interest selected in accordance with the
terms of this Indenture and of the Securities;
(2) no Event of Default or Default with respect to the Securities
shall have occurred and be continuing on the date of such deposit, or shall
have occurred and be continuing at any time during the period ending on the
91st day after the date of such deposit or, if longer, ending on the day
following the expiration of the longest preference period under any
Bankruptcy Law applicable to the Company in respect of such deposit (it being
understood that this condition shall not be deemed satisfied until the
expiration of such period);
(3) such Legal Defeasance or Covenant Defeasance shall not cause the
Trustee to have a conflicting interest for purposes of the TIA with respect
to any securities of the
67
<PAGE>
Company;
(4) such Legal Defeasance or Covenant Defeasance shall not result in
a breach or violation of, or constitute default under any other agreement or
instrument to which the Company is a party or by which it is bound;
(5) the Company shall have delivered to the Trustee an Opinion of
Counsel stating that, as a result of such Legal Defeasance or Covenant
Defeasance, neither the trust nor the Trustee will be required to register as
an investment company under the Investment Company Act of 1940, as amended;
(6) in the case of an election under Section 9.02 above, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that (i)
the Company has received from, or there has been published by, the Internal
Revenue Service a ruling to the effect that or (ii) there has been a change
in any applicable Federal income tax law with the effect that, and such
opinion shall confirm that, the Holders of the outstanding Securities or
persons in their positions will not recognize income, gain or loss for
Federal income tax purposes solely as a result of such Legal Defeasance and
will be subject to Federal income tax on the same amounts, in the same
manner, including as a result of prepayment, and at the same times as would
have been the case if such Legal Defeasance had not occurred;
(7) in the case of an election under Section 9.03 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect that
the Holders of the outstanding Securities will not recognize income, gain or
loss for Federal income tax purposes as a result of such Covenant Defeasance
and will be subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Covenant
Defeasance had not occurred;
(8) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to either the Legal Defeasance under Section
9.02 above or the Covenant Defeasance under Section 9.03 hereof (as the case
may be) have been complied with;
(9) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit under clause (1) was not made by the
Company with the intent of defeating, hindering, delaying or defrauding any
creditors of the Company or others; and
(10) the Company shall have paid or duly provided for payment under
terms mutually satisfactory to the Company and the Trustee all amounts then
due to the Trustee pursuant to Section 7.07 hereof.
Section 9.05. Deposited Money and U.S. Government Obligations To Be Held in
-------------------------------------------------------------
Trust; Other Miscellaneous Provisions.
-------------------------------------
68
<PAGE>
All money and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee pursuant to Section 9.04 hereof in respect
of the outstanding Securities shall be held in trust and applied by the Trustee,
in accordance with the provisions of such Securities and this Indenture, to the
payment, either directly or through any Paying Agent as the Trustee may
determine, to the Holders of such Securities, of all sums due and to become due
thereon in respect of principal, premium, if any, and accrued interest, but such
money need not be segregated from other funds except to the extent required by
law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 9.04 hereof or the principal, premium, if any, and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding
Securities.
Anything in this Article 9 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in
Section 9.04 hereof which, in the opinion of a nationally-recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
Section 9.06. Reinstatement.
-------------
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 9.01, 9.02 or 9.03 hereof by
reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company's obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to this Article 9 until such time as the Trustee or Paying Agent is
permitted to apply all such money or U.S. Government Obligations in accordance
with Section 9.01 hereof; provided, however, that if the Company has made any
-------- -------
payment of principal of, premium, if any, or accrued interest on any Securities
because of 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 or U.S. Government Obligations held by the Trustee or Paying Agent.
Section 9.07. Moneys Held by Paying Agent.
---------------------------
In connection with the satisfaction and discharge of this Indenture,
all moneys then held by any Paying Agent under the provisions of this Indenture
shall, upon demand of the Company, be paid to the Trustee, or if sufficient
moneys have been deposited pursuant to Section 9.01 hereof, to the Company and
thereupon such Paying Agent shall be released from all further liability with
respect to such moneys.
69
<PAGE>
Section 9.08. Moneys Held by Trustee.
----------------------
Any moneys deposited with the Trustee or any Paying Agent or then held
by the Company in trust for the payment of the principal of, or premium, if any,
or interest on any Security that are not applied but remain unclaimed by the
Holder of such Security for two years after the date upon which the principal
of, or premium, if any, or interest on such Security shall have respectively
become due and payable shall be repaid to the Company upon Company Request, or
if such moneys are then held by the Company in trust, such moneys shall be
released from such trust; and the Holder of such Security entitled to receive
such payment shall thereafter, as an unsecured general creditor, look only to
the Company for the payment thereof, and all liability of the Trustee or such
Paying Agent with respect to such trust money shall thereupon cease; provided,
--------
however, that the Trustee or any such Paying Agent, before being required to
- -------
make any such repayment, may, at the expense of the Company, either mail to each
Securityholder affected, at the address shown in the register of the Securities
maintained by the Registrar pursuant to Section 2.03 hereof, or cause to be
published once a week for two successive weeks, in a newspaper published in the
English language, customarily published each Business Day and of general
circulation in the City of New York, New York, a notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less than
30 days from the date of such mailing or publication, any unclaimed balance of
such moneys then remaining will be repaid to the Company. After payment to the
Company or the release of any money held in trust by the Company,
Securityholders entitled to the money must look only to the Company for payment
as general creditors unless applicable abandoned property law designates another
person.
ARTICLE 10
SUBORDINATION OF SECURITIES
Section 10.01. Securities Subordinate to Senior Debt.
-------------------------------------
The Company covenants and agrees, and each Holder of Securities, by
its acceptance thereof, likewise covenants and agrees, that, to the extent and
in the manner hereinafter set forth in this Article 10, the Indebtedness
represented by the Securities and the payment of the principal of, premium, if
any, and interest on the Securities and all other Obligations under the
Securities, this Indenture, and the Registration Rights Agreement are hereby
expressly made subordinate and subject in right of payment as provided in this
Article 10 to the prior indefeasible payment in full in cash of all existing and
future Senior Debt.
This Article 10 shall constitute a continuing offer to all Persons
who, in reliance upon such provisions, become holders of or continue to hold
Senior Debt; and such provisions are made for the benefit of the holders of
Senior Debt; and such holders are made obligees hereunder and they or each of
them may directly enforce such provisions.
Section 10.02. Payment Over of Proceeds upon Dissolution, etc.
----------------------------------------------
70
<PAGE>
In the event of (a) any insolvency or bankruptcy case or proceeding,
or any receivership, liquidation, arrangement, reorganization or other similar
case or proceeding in connection therewith, relative to the Company or to its
creditors, as such, or to its assets, whether voluntary or involuntary, or (b)
any liquidation, dissolution or other winding-up of the Company, whether
voluntary or involuntary and whether or not involving insolvency or bankruptcy,
or (c) any general assignment for the benefit of creditors or other marshaling
of assets or liabilities of the Company (except in connection with the merger or
consolidation of the Company or its liquidation or dissolution following the
transfer of substantially all of its assets, upon the terms and conditions
permitted under the circumstances described under Section 5.01) (all and each of
the foregoing being referred to herein individually as a "Bankruptcy Proceeding"
and collectively as "Bankruptcy Proceedings") the holders of Senior Debt will be
entitled to receive indefeasible payment and satisfaction in full in cash of all
amounts due or owing on or in respect of all Senior Debt before the holders of
the Securities are entitled to receive or retain any payment or distribution of
any kind on account of the Securities, or for or on account of the purchase or
redemption or other acquisition of Securities or on account of any Obligations
under the Securities, the Registration Rights Agreement or this Indenture.
In the event that, notwithstanding the foregoing, the Trustee or any
holder of Securities receives any payment or distribution of assets or
securities of the Company of any kind or character or any other payment or
distribution on account of the Securities, or for or on account of the purchase
or redemption or other acquisition of Securities or account of any Obligations
under the Securities, the Registration Rights Agreement or this Indenture,
whether in cash, property or securities, including, without limitation, by way
of set-off or otherwise, in respect of the Securities, or in respect of the
purchase or redemption or other acquisition of Securities, or in respect of any
Obligations under the Securities, the Registration Rights Agreement or this
Indenture before all Senior Debt is indefeasibly paid and satisfied in full in
cash, then such payment or distribution will be held by the recipient in trust
for the benefit of holders of Senior Debt and will be immediately paid over or
delivered by the Trustee or such holders of Securities to the holders of Senior
Debt or their representative or representatives to the extent necessary to make
payment in full in cash of all Senior Debt remaining unpaid, after giving effect
to any concurrent payment or distribution, or provision therefor, to or for the
holders of Senior Debt.
The consolidation of the Company with, or the merger of the Company
with or into, another Person or the liquidation or dissolution of the Company
following the conveyance, transfer or lease of its properties and assets
substantially as an entirety to another Person upon the terms and conditions set
forth in Article 5 hereof shall not be deemed a dissolution, winding-up,
liquidation, reorganization, assignment for the benefit of creditors or
marshaling of assets and liabilities of the Company for the purposes of this
Article 10 if the Person formed by such consolidation or the surviving entity of
such merger or the Person which acquires by conveyance, transfer or lease such
properties and assets substantially as an entirety, as the case may be, shall,
as a part of such consolidation, merger, conveyance, transfer or lease, comply
with the conditions set forth in such Article 5 hereof.
71
<PAGE>
Section 10.03. Suspension of Payment When Senior Debt in Default.
-------------------------------------------------
(a) Unless Section 10.02 hereof shall be applicable, no payment
or distribution of any assets or securities of the Company or any Subsidiary of
any kind or character (including, without limitation, cash, property and any
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 by the Company, other than Qualified Capital Stock of
the Company or subordinated debt securities of the Company that require no
payment of principal prior to the stated maturity of the Securities and that are
subordinated and junior in right of payment to Senior Debt at least to the same
extent as the Securities, with terms no less favorable to the Company and the
holders of the Designated Senior Debt than the terms of the Securities and this
Indenture) may be made by the Company or any Subsidiary, including, without
limitation, by way of set-off or otherwise, for or on account of the Securities
or any Obligations under the Securities, the Registration Rights Agreement or
this Indenture, or for or on account of the purchase or redemption or other
acquisition of Securities or any other Obligations under the Securities, the
Registration Rights Agreement or this Indenture, and neither the Trustee nor any
holder or owner of any Securities shall take or receive from the Company or any
Subsidiary, directly or indirectly in any manner, any payment or distribution in
respect of all or any portion of Securities or for or on account of the
purchase, redemption or other acquisition of the Securities or in respect of any
other Obligations under the Securities, the Registration Rights Agreement or
this Indenture, which prohibition shall be applicable upon the occurrence and
during the continuation of a Payment Default and such prohibition shall continue
until such Payment Default is cured, waived in writing or ceases to exist. At
such time as the prohibition set forth in the preceding sentence shall no longer
be in effect, subject to the provisions of the following paragraph (b), the
Company shall resume making any and all required payments in respect of the
Securities, including any missed payments, or any such other Obligations under
the Securities, the Registration Rights Agreement or this Indenture.
(b) Unless Section 10.02 hereof shall be applicable, upon the
occurrence and during the continuance of a Non-Payment Event of Default, no
payment or distribution of any assets or securities of the Company or any
Subsidiary of any kind or character (including, without limitation, cash,
property and any 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 by the Company, other than
Qualified Capital Stock of the Company or subordinated debt securities of the
Company that require no payment of principal prior to the stated maturity of the
Securities and that are subordinated and junior in right of payment to Senior
Debt at least to the same extent as the Securities, with terms no less favorable
to the Company and the holders of the Designated Senior Debt than the terms of
the Securities and this Indenture) may be made by the Company or any Subsidiary,
including, without limitation, by way of set-off or otherwise, for or on account
of the Securities or any Obligations under the Securities, the Registration
Rights Agreement or this Indenture, or for or on account of the purchase or
redemption or other acquisition of Securities or any other Obligations under the
Securities, the Registration Rights Agreement or this Indenture, and neither the
Trustee nor any holder or owner
72
<PAGE>
of any Securities shall take or receive from the Company or any Subsidiary,
directly or indirectly in any manner, any payment or distribution in respect of
all or any portion of Securities, or for or on account of the purchase,
redemption, or other acquisition of the Securities, or in respect of any such
other Obligations under the Securities, the Registration Rights Agreement or
this Indenture for a period (a "Payment Blockage Period") commencing on the date
of receipt by the Trustee of written notice from the Representative of such Non-
Payment Event of Default unless and until (subject to any blockage of payments
that may then be in effect under the preceding paragraph (a) of this Section
10.03) the earliest of (w) more than 179 days shall have elapsed since the date
of receipt of such written notice by the Trustee, (x) such Non-Payment Event of
Default shall have been cured or waived in writing or shall have ceased to
exist, (y) such Designated Senior Debt shall have been paid in full in cash or
(z) such Payment Blockage Period shall have been terminated by written notice to
the Company or the Trustee from such Representative, after which, in the case of
clause (w), (x), (y) or (z), the Company shall resume making any and all
required payments in respect of the Securities, including any missed payments.
Notwithstanding any other provision of this Indenture, in no event shall any
particular Payment Blockage Period commenced in accordance with the provisions
of this Section 10.03(b) extend beyond the date 179 days after the date of the
receipt by the Trustee of the applicable written notice referred to above given
by the Representative to commence such Payment Blockage Period (each such period
commencing on such date of receipt and ending after such 179 days after such
date of receipt, being referred to as an "Initial Blockage Period"). Any number
of additional Payment Blockage Periods may be commenced during any Initial
Blockage Period or any other Payment Blockage Period; provided, however, that no
-------- -------
such additional Payment Blockage Period commenced during an existing Payment
Blockage Period shall extend beyond 179 days after the date of receipt by the
Trustee of the applicable written notice from the Representative which commences
such Initial Blockage Period. After the expiration of any Payment Blockage
Period, no Payment Blockage Period may be commenced until at least 180
consecutive days have elapsed from the last day of such Payment Blockage Period.
Notwithstanding any other provision of this Indenture, no Non-Payment Event of
Default with respect to Designated Senior Debt which existed or was continuing
on the date of the commencement of any Payment Blockage Period initiated by the
Representative shall be, or be made, the basis for the commencement of a second
Payment Blockage Period initiated by the Representative, whether or not within
the Initial Blockage Period, unless such Non-Payment Event of Default shall have
been waived or cured for a period of not less than 90 consecutive days.
(c) In the event that, notwithstanding the foregoing, the Trustee
or any holder of Securities receives any payment or distribution of assets or
securities of the Company or any Subsidiary of any kind or character or any
other payment or distribution on account of the Securities, or for or on account
of the purchase or redemption or other acquisition of Securities, or on account
of any Obligations under the Securities, the Registration Rights Agreement or
this Indenture, whether in cash, property or securities, including, without
limitation, by way of set-off or otherwise, in respect of the Securities, or in
respect of the purchase or redemption or other acquisition of Securities, or in
respect of any Obligations under the Securities, the Registration Rights
Agreement or this Indenture at a time when such payment or distribution was
prohibited by the provisions of this Section 10.03, before all Senior Debt is
indefeasibly paid and satisfied in full
73
<PAGE>
in cash, then such payment or distribution will be held by the recipient in
trust for the benefit of holders of Senior Debt and will be immediately paid
over or delivered by the Trustee or such holders of Securities to the
Representative to the extent necessary to make payment in full in cash of all
Designated Senior Debt remaining unpaid, after giving effect to any concurrent
payment or distribution, or provision therefor, to or for the holders of
Designated Senior Debt.
Section 10.04. Trustee's Relation to Senior Debt.
---------------------------------
The Trustee and any Paying Agent shall be entitled to all the
rights set forth in this Article with respect to any Senior Debt which may at
any time be held by it in its individual or any other capacity to the same
extent as any other holder of Senior Debt, and nothing in this Indenture shall
deprive the Trustee or any Paying Agent of any of its rights as such holder.
With respect to the holders of Senior Debt, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article 10, and no implied covenants or
obligations with respect to the holders of Senior Debt shall be read into this
Indenture against the Trustee. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Debt and the Trustee shall not be liable
to any holder of Senior Debt (other than for its willful misconduct or
negligence) if it shall mistakenly pay over or deliver to the Holders of
Securities, the Company or any other Person moneys or assets to which any holder
of Senior Debt shall be entitled by virtue of this Article 10 or otherwise.
Nothing in this Section 10.04 shall affect the obligation of any other such
Person, the Company, or the Holders to hold such money or assets for the benefit
of, and to pay such money or assets over to, the holders of the Senior Debt or
their applicable representative or representatives.
Section 10.05. Subrogation to Rights of Holders of Senior Debt.
-----------------------------------------------
Upon the payment in full in cash of all Senior Debt, the Holders
of the Securities shall be subrogated to the rights of the holders of such
Senior Debt to receive payments and distributions of cash, property and
securities applicable to the Senior Debt until the principal of, premium, if any
and interest on the Securities shall be paid in full. For purposes of such
subrogation, no payments or distributions to the holders of Senior Debt 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 10, and no
payments over pursuant to the provisions of this Article 10 to the holders of
Senior Debt by Holders of the Securities or the Trustee, shall, as among the
Company, its creditors other than holders of Senior Debt, and the Holders of the
Securities, be deemed to be a payment or distribution by the Company to or on
account of the Senior Debt.
If any payment or distribution to which the Holders would
otherwise have been entitled but for the provisions of this Article 10 shall
have been applied, pursuant to the provisions of this Article 10, to the payment
in full in cash of all amounts owing under or in respect of the Senior Debt of
the Company, then and in such case the Holders shall be entitled to receive from
the holders of such Senior Debt at the time outstanding any payments or
distributions received by
74
<PAGE>
such holders of such Senior Debt in excess of the amount sufficient to pay all
amounts owing under or in respect of such Senior Debt in full in cash.
Section 10.06. Provisions Solely To Define Relative Rights.
-------------------------------------------
The provisions of this Article 10 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 Debt on the other hand. Nothing contained
in this Article 10 or elsewhere in this Indenture or in the Securities is
intended to or shall (a) impair, as among the Company, its creditors other than
holders of Senior Debt, and the Holders of the Securities, the obligation of the
Company, which is absolute and unconditional, to pay to the Holders of the
Securities the principal of, premium, if any, and interest on the Securities as
and when the same shall become due and payable in accordance with their terms;
or (b) affect the relative rights against the Company of the Holders of the
Securities and creditors of the Company other than the holders of Senior Debt;
or (c) prevent the Trustee or the Holder of any Security from exercising all
remedies otherwise permitted by applicable law upon a Default or an Event of
Default under this Indenture, subject to the rights of the holders of the
Designated Senior Debt under Section 6.02 hereof and subject to the rights, if
any, under this Article 10 of the holders of Senior Debt (1) in any case,
proceeding, dissolution, liquidation or other winding-up, assignment for the
benefit of creditors or other marshaling of assets and liabilities of the
Company referred to in Section 10.02 hereof, or in any other applicable
circumstances described in Section 10.02 to receive, pursuant to and in
accordance with such Section, cash, property and securities otherwise payable or
deliverable to the Trustee or such Holder, or (2) under the conditions and in
the applicable circumstances specified in Section 10.03, to prevent any payment
or distribution prohibited by such Section or enforce their rights pursuant to
Section 10.03(c) hereof.
The failure to make a payment on account of principal of,
premium, if any, or interest on the Securities by reason of any provision of
this Article 10 shall not be construed as preventing the occurrence of a Default
or an Event of Default hereunder.
Section 10.07. Trustee To Effectuate Subordination.
-----------------------------------
Each Holder of a Security by his acceptance thereof agrees to be
bound by such provisions and authorizes and directs the Trustee, on his behalf,
to take such action as may be necessary or appropriate to effectuate the
subordination provided in this Article and appoints the Trustee his attorney-in-
fact for any and all such purposes, including, in the event of any Bankruptcy
Proceedings or other dissolution, winding-up, liquidation or reorganization of
the Company whether in bankruptcy, insolvency, receivership proceedings, or
otherwise, the prompt and timely filing of a claim for the unpaid balance of the
indebtedness of the Company owing to such Holder in the form required in such
proceedings and the causing of such claim to be approved. If the Trustee does
not file such a claim prior to 30 days before the expiration of the time to file
such a claim, the holders of Senior Debt, or any Representative, may, and hereby
are authorized to, file such a claim on behalf of Holders of the applicable
Securities.
75
<PAGE>
Section 10.08. No Waiver of Subordination Provisions.
-------------------------------------
(a) No right of any present or future holder of any Senior Debt
to enforce the subordination provisions herein provided shall at any time in any
way be prejudiced or impaired by any act or failure to act on the part of the
Company or by any act or failure to act, in good faith, by any such holder, or
by any 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.
(b) Without limiting the generality of subsection (a) of this
Section 10.08, the holders of Senior Debt may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article 10
or the obligations hereunder of the Holders of the Securities to the holders of
Senior Debt, do any one or more of the following: (1) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, Senior
Debt or any instrument evidencing the same or any agreement under which Senior
Debt is outstanding; (2) sell, exchange, release or otherwise deal with any
property pledged, mortgaged or otherwise securing Senior Debt; (3) release any
Person liable in any manner for the collection or payment of Senior Debt; and
(4) exercise or refrain from exercising any rights against the Company and any
other Person; provided, however, that in no event shall any such actions limit
-------- -------
the right of the Holders of the Securities to take any action to accelerate the
maturity of the Securities pursuant to Article 6 hereof or to pursue any rights
or remedies hereunder or under applicable laws if the taking of such action does
not otherwise violate the terms of this Indenture.
Section 10.09. Notice to Trustee.
-----------------
(a) The Company shall give prompt written notice to the Trustee
of any fact known to the Company which would prohibit the making of any payment
to or by the Trustee at its Corporate Trust Office in respect of the Securities.
Notwithstanding the provisions of this Article 10 or any other provision of this
Indenture, the Trustee shall not be charged with knowledge of the existence of
any facts which would prohibit the making of any payment to or by the Trustee in
respect of the Securities, unless and until the Trustee shall have received
written notice thereof from the Company or a holder of Senior Debt or from any
trustee, fiduciary, representative, or agent therefor no later than one Business
Day prior to such payment; and, prior to the receipt of any such written notice,
the Trustee, subject to the provisions of this Section 10.09, and subject to the
provisions of Sections 7.01 and 7.02 hereof, shall be entitled in all respects
to assume that no such facts exist; provided, however, that if the Trustee shall
-------- -------
not have received the notice referred to in this Section 10.09 at least one
Business Day prior to the date upon which by the terms hereof any such payment
may become payable for any purpose under this Indenture (including, without
limitation, the payment of the principal of, premium, if any, or interest on any
Security), then, anything herein contained to the contrary notwithstanding but
without limiting the rights and remedies of the holders of Senior Debt or any
trustee, fiduciary,
76
<PAGE>
representative, or agent therefor as against the Holders of the Securities or
any other Person, the Trustee shall have full power and authority to receive
such money and to apply the same to the purpose for which such money was
received and shall not be affected by any notice to the contrary which may be
received by it less than one Business Day prior to such date; nor shall the
Trustee be charged with knowledge of the curing of any such applicable default
in respect of Designated Senior Debt or the elimination of the act or condition
preventing any such payment unless and until the Trustee shall have received an
Officers' Certificate to such effect (subject to the rights of the holders of
the Designated Senior Debt under Section 10.03 hereof).
(b) Subject to the provisions of Section 7.01 hereof, the Trustee
shall be entitled to rely (to the extent reasonable and in good faith) on the
delivery to it of a written notice to the Trustee and the Company by a Person
representing itself to be a holder of Senior Debt (or a trustee, fiduciary,
representative, or agent therefor) for purposes of establishing that such notice
actually has been given by a holder of Senior Debt (or a trustee, fiduciary,
representative, or agent therefor); provided, however, that failure to give such
-------- -------
notice to the Company shall not affect in any way the ability of the Trustee to
rely on such notice. In the event that the Trustee determines in good faith
that further evidence is required with respect to the right of any Person as a
holder of Senior Debt to participate in any payment or distribution pursuant to
this Article 10, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Debt held by
such Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article 10, and if such evidence is not furnished, the
Trustee, acting in good faith, may defer any payment to such Person pending
judicial determination as to the right of such Person to receive such payment.
Section 10.10. Reliance on Judicial Order or Certificate of Liquidating
--------------------------------------------------------
Agent.
-----
Upon any payment or distribution pursuant to this Article 10, the
Trustee, subject to the provisions of Section 7.01 hereof, and the Holders shall
be entitled to rely (to the extent reasonable and in good faith) upon any order
or decree entered by any court of competent jurisdiction in which any applicable
insolvency, bankruptcy, receivership, liquidation, reorganization, dissolution,
winding-up or similar case or proceeding of the type referred to in Section
10.02 is pending, or a certificate of the trustee in bankruptcy, receiver,
liquidating trustee, custodian, assignee for the benefit of creditors, agent or
other Person making such payment or distribution in connection with such case or
proceeding, delivered to the Trustee or to the Holders, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of Senior Debt and other Indebtedness of the Company,
the amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article 10; provided
--------
that the foregoing shall apply only if such court in which such case or
proceeding is pending has been fully apprised of the provisions of this Article
10.
Section 10.11. Rights of Trustee as a Holder of Senior Debt; Preservation
----------------------------------------------------------
of Trustee's Rights.
--------------------
77
<PAGE>
The Trustee in its individual capacity shall be entitled to all
the rights set forth in this Article 10 with respect to any Senior Debt which
may at any time be held by it, to the same extent as any other holder of Senior
Debt, and nothing in this Indenture shall deprive the Trustee of any of its
rights as such holder. Nothing in this Article 10 shall apply to claims of, or
payments to, the Trustee for its compensation owing pursuant to and in
accordance with, the first sentence of Section 7.07 hereof.
Section 10.12. 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 10 shall in such case (unless the context
otherwise requires) be construed as extending to and including such Paying Agent
within its meaning as fully for all intents and purposes as if such Paying Agent
were named in this Article 10 in addition to or in place of the Trustee.
Section 10.13. No Suspension of Remedies.
-------------------------
Nothing contained in this Article 10 shall limit the right of the
Trustee or the Holders of Securities to take any action to accelerate the
maturity of the Securities pursuant to Article 6 (subject to the rights of the
holders of the Designated Senior Debt under clause (ii) of the first sentence of
Section 6.02 hereof) or to pursue any rights or remedies hereunder or under
applicable law, subject to the rights, if any, under this Article 10 of the
holders, from time to time, of Senior Debt.
ARTICLE 11
MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls.
----------------------------
If any provision of this Indenture limits, qualifies or conflicts
with another provision which is required to be included in this Indenture by the
TIA, the required provision shall control.
Section 11.02. Notices.
-------
Any notice or communication shall be given in writing and
delivered in person, sent by telecopier, facsimile, telex, delivered by
overnight commercial courier service or mailed by registered or certified mail,
postage prepaid, return receipt requested, addressed as follows:
If to the Company:
Samsonite Corporation
78
<PAGE>
11200 East 45th Avenue
Denver, Colorado 80239
Attention: Chief Financial Officer with
a copy to General Counsel
Facsimile: (303) 373-6606
Copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022-3897
Attention: Gregory A. Fernicola, Esq.
Facsimile: (212) 735-2000
If to the Trustee:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Attention: Corporate Trust Department
Facsimile: (212) 852-1626
Such notices or communications shall be sufficiently given if so given
within the time prescribed in this Indenture.
The Company or the Trustee by written notice to the others may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication to the Company or the Trustee shall be
deemed to have been given or made as of the date so delivered, if personally
delivered; when answered back, if telexed; when receipt is acknowledged, if
telecopied; and upon receipt if sent by overnight
79
<PAGE>
commercial courier service or if sent by registered or certified mail, postage
prepaid (except that a notice of change of address shall not be deemed to have
been given until actually received by the addressee).
Any notice or communication mailed to a Securityholder shall be
mailed to him by first-class mail, postage prepaid, at 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 to a Securityholder is mailed in
the manner provided above, it shall be deemed duly given, whether or not the
addressee receives it.
In case by reason of the suspension of regular mail service, or
by reason of any other cause, it shall be impossible to mail any notice as
required by this Indenture, then such method of notification as shall be made
with the approval of the Trustee shall constitute a sufficient mailing of such
notice.
Section 11.03. Communications by Holders with Other Holders.
--------------------------------------------
Securityholders may communicate pursuant to TIA (S) 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 (S) 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:
(1) an Officers' Certificate (which shall include the statements
set forth in Section 11.05 below) 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
(2) an Opinion of Counsel (which shall include the statements set
forth in Section 11.05 below) stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
Section 11.05. Statements Required in Certificate and Opinion.
----------------------------------------------
Each certificate and 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
80
<PAGE>
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, it or he has
made such examination or investigation as is necessary to enable it or 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 covenant or condition has been complied with.
Notwithstanding anything to the contrary contained herein, any
opinion provided hereunder in connection with the issuance or authorization of
Securities may make certain customary assumptions.
Section 11.06. When Treasury Securities Disregarded.
------------------------------------
In determining whether the Holders of the required aggregate
principal amount of Securities have concurred in any direction, waiver or
consent, Securities owned by the Company or by any Affiliate of the Company
shall be disregarded, 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 actually knows are so owned shall be so
disregarded. Securities so owned which have been pledged in good faith shall not
be disregarded if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to the Securities and that the pledgee is
not the Company or any Affiliate of the Company.
Section 11.07. Rules by Trustee and Agents.
---------------------------
The Trustee may make reasonable rules for action by or meetings
of Securityholders. The Registrar and Paying Agent may make reasonable rules for
their functions.
Section 11.08. Business Days; Legal Holidays.
-----------------------------
A "Business Day" is a day that is not a Legal Holiday. A "Legal
Holiday" is a Saturday, a Sunday, a federally-recognized holiday or a day on
which banking institutions are not required to be open in the State of New York.
If a payment date is a Legal Holiday at a place of payment, payment 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.
Section 11.09. Governing Law.
-------------
81
<PAGE>
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE SECURITIES.
Section 11.10. No Adverse Interpretation of Other Agreements.
---------------------------------------------
This Indenture may not be used to interpret another indenture, loan,
security or debt agreement of the Company or any Subsidiary thereof. No such
indenture, loan, security or debt agreement may be used to interpret this
Indenture.
Section 11.11. No Recourse Against Others.
--------------------------
A director, officer, employee, stockholder or incorporator, as such,
of the Company shall not have any liability for any obligations of the Company
under the Securities or this Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. Each Securityholder by
accepting a Security waives and releases all such liability. Such waiver and
release are part of the consideration for the issuance of the Securities.
Section 11.12. Successors.
----------
All agreements of the Company in this Indenture and the Securities
shall bind its successors. All agreements of the Trustee, any additional
trustee and any Paying Agents in this Indenture shall bind its successor.
Section 11.13. Multiple Counterparts.
---------------------
The parties may sign multiple counterparts of this Indenture. Each
signed counterpart shall be deemed an original, but all of them together
represent one and the same agreement.
Section 11.14. Table of Contents, Headings, etc.
--------------------------------
The table of contents, cross-reference sheet 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 11.15. Separability.
------------
82
<PAGE>
Each provision of this Indenture shall be considered separable and if
for any reason any provision which is not essential to the effectuation of the
basic purpose of this Indenture or 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.
83
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed as of the date and year first written above.
SAMSONITE CORPORATION
By: _____________________________
Name:
Title:
By: _____________________________
Name:
Title:
UNITED STATES TRUST COMPANY OF
NEW YORK, as Trustee
By: _____________________________
Name:
Title:
84
<PAGE>
EXHIBIT A
---------
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, 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 AND SUBJECT TO COMPLIANCE
WITH OTHER APPLICABLE LAWS. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE
HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO
THE DATE WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD THAT MAY HEREAFTER BE
PROVIDED UNDER RULE 144(K) (OR ANY SUCCESSOR PROVISION THEREOF) AS
PERMITTING THE RESALE BY NON-AFFILIATES OF RESTRICTED SECURITIES WITHOUT
RESTRICTION) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST
DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF
THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) (THE "RESALE
RESTRICTION TERMINATION DATE"), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON
IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO
NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
OTHERWISE IN COMPLIANCE WITH OTHER APPLICABLE LAWS, SUBJECT TO THE
COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF
THEM. THE LEGEND WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE
RESALE RESTRICTION TERMINATION DATE.
1
<PAGE>
NO. _____ CUSIP NO.
SAMSONITE CORPORATION
10 3/4% Senior Subordinated Note due 2008
$
SAMSONITE CORPORATION, a Delaware corporation (the "Company"), for
value received, promises to pay to or registered assigns the
principal sum of Dollars, on June 15, 2008.
Interest Payment Dates: June 15 and December 15
Record Dates: June 1 and December 1
Reference is made to the further provisions of this Security contained
herein, which will for all purposes have the same effect as if set forth at this
place.
IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officers.
SAMSONITE CORPORATION
By: __________________________
Name:
Title:
By: __________________________
Name:
Title:
2
<PAGE>
Trustee's Certificate of Authentication
This is one of the 10 3/4% Senior Subordinated Notes due 2008 referred
to in the within-mentioned Indenture.
Dated:
UNITED STATES TRUST COMPANY OF
NEW YORK, as Trustee
By: _________________________
Authorized Signatory
3
<PAGE>
(REVERSE OF SECURITY)
10 3/4% Senior Subordinated Note due 2008
1. Interest. SAMSONITE CORPORATION, a Delaware corporation (the
--------
"Company"), promises to pay interest on the principal amount of this Security at
the rate per annum shown above. Interest on the Securities will accrue from the
most recent date on which interest has been paid or, if no interest has been
paid, from the date of original issuance of the Securities. The Company will
pay interest semi-annually in arrears on each Interest Payment Date, commencing
December 15, 1998. Interest will be computed on the basis of a 360-day year of
twelve 30-day months and, for periods not involving a full calendar month, the
actual number of days elapsed but not to exceed 30 days.
The Company shall pay interest on overdue principal and on overdue
installments of interest at the rate borne by the Securities to the extent
lawful.
2. Method of Payment. The Company shall pay interest on the
-----------------
Securities (except defaulted interest) to the Persons who are the registered
Holders at the close of business on the Record Date immediately preceding the
Interest Payment Date even if the Securities are cancelled on registration of
transfer or registration of exchange after such Record Date. Holders must
surrender Securities to a Paying Agent to collect principal payments. The
Company shall pay principal and interest in money of the United States that at
the time of payment is legal tender for payment of public and private debts
("U.S. Legal Tender"). However, the Company may pay principal and interest by
its check payable in such U.S. Legal Tender. The Company may deliver any such
interest payment to the Paying Agent or to a Holder at the Holder's registered
address.
3. Paying Agent and Registrar. Initially, UNITED STATES TRUST
--------------------------
COMPANY OF NEW YORK, a bank and trust company organized under the New York
Banking Law (the "Trustee"), will act as Paying Agent and Registrar. The
Company may change any Paying Agent or Registrar without notice to the Holders
of the Securities. Neither the Company nor any of its Affiliates may act as
Paying Agent but may act as registrar or co-registrar.
4. Indenture; Restrictive Covenants. The Company issued this
--------------------------------
Security under an Indenture dated as of June 24, 1998 (the "Indenture") between
the Company and the Trustee. The terms of this Security include those stated in
the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S. Code (S)(S) 77aaa-77bbbb) as in effect on the
date of the Indenture. This Security is subject to all such terms, and the
Holder of this Security is referred to the Indenture and said Trust Indenture
Act for a statement of them. All capitalized terms in this Security, unless
otherwise defined, have the meanings assigned to them by the Indenture.
The Securities are general unsecured obligations of the Company
limited to $350,000,000 aggregate principal amount. The Indenture imposes
certain restrictions on, among other things, the incurrence of indebtedness, the
issuance of preferred stock by the Company and its subsidiaries, mergers and
sale of assets, the payments of dividends on, or the repurchase of, capital
stock of the Company and its subsidiaries, certain other restricted payments by
the
4
<PAGE>
Company and its subsidiaries, certain transactions with, and investments in, its
affiliates, and a provision regarding change-of-control transactions.
5. Subordination. The Indebtedness evidenced by the Securities is,
-------------
to the extent and in the manner provided in the Indenture, subordinated and
subject in right of payment to the prior indefeasible payment in full in cash of
all Senior Debt as defined in the Indenture and this Security is issued subject
to such provisions. Each Holder of this Security, by accepting the same, (a)
agrees to and shall be bound by such provisions, (b) authorizes and directs the
Trustee, on behalf of such Holder, to take such action as may be necessary or
appropriate to effectuate the subordination as provided in the Indenture and (c)
appoints the Trustee attorney-in-fact of such Holder for such purpose.
6. Optional Redemption. The Company may redeem the Securities, in
-------------------
the manner set forth in Section 3.07 of the Indenture.
7. Notice of Redemption. Notice of redemption will be mailed at
--------------------
least 30 days but not more than 60 days before the Redemption Date to each
Holder of Securities to be redeemed at such Holder's registered address. In
order to effect a redemption with the proceeds of an Equity Offering, the
Company shall send the redemption notice not later than 90 days after the
consummation of such Equity Offering. Securities in denominations larger than
$1,000 may be redeemed in part.
8. Offers to Purchase. The Indenture requires that certain proceeds
------------------
from Asset Sales be used, subject to further limitations contained therein, to
make an offer to purchase certain amounts of Securities in accordance with the
procedures set forth in the Indenture. The Company is also required to make an
offer to purchase Securities upon occurrence of a Change of Control in
accordance with procedures set forth in the Indenture.
9. Denominations; Transfer; Exchange. The Securities are in
---------------------------------
registered form, without coupons, in denominations of $1,000 and integral
multiples of $1,000. A Holder shall register the transfer of or exchange
Securities in accordance with the Indenture. The Registrar may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and to pay certain transfer taxes or similar governmental charges payable in
connection therewith as permitted by the Indenture. The Registrar need not
register the transfer of or exchange any Securities during a period beginning 15
days before the mailing of a redemption notice for any Securities or portions
thereof selected for redemption.
10. Persons Deemed Owners. The registered Holder of this Security
---------------------
shall be treated as the owner of it for all purposes.
11. Unclaimed Money. If money for the payment of principal, premium
---------------
or interest on any Security remains unclaimed for two years, the Trustee and the
Paying Agent will pay the money back to the Company at its request. After that,
Holders entitled to money must look to the Company for payment as general
creditors unless an "abandoned property" law designates another Person.
5
<PAGE>
12. Amendment, Supplement and Waiver. Subject to certain exceptions,
--------------------------------
the Indenture or the Securities may be modified, amended or supplemented by the
Company and the Trustee with the consent of the Holders of at least a majority
in principal amount of the Securities then outstanding and any existing default
or compliance with any provision may be waived in a particular instance with the
consent of the Holders of a majority in principal amount of the Securities then
outstanding. Without the consent of Holders, the Company and the Trustee may
amend the Indenture or the Securities or supplement the Indenture for certain
specified purposes including, without limitation, providing for uncertificated
Securities in addition to certificated Securities, and curing any ambiguity,
defect or inconsistency, or making any other change that does not materially and
adversely affect the rights of any Holder.
13. Successor Entity. When a successor corporation assumes all the
----------------
obligations of its predecessor under the Securities and the Indenture and
immediately before and thereafter no Default exists and certain other conditions
are satisfied, the predecessor corporation will be released from those
obligations.
14. Defaults and Remedies. Events of Default are set forth in the
---------------------
Indenture. Upon the happening of any Event of Default specified in Section 6.01,
the Trustee may, and the Trustee upon the request of 25% in principal amount of
the Securities shall or the Holders of at least 25% in aggregate principal
amount of outstanding Securities may, declare the principal of and accrued but
unpaid interest, if any, on all the Securities to be due and payable by notice
in writing to the Company and the Trustee specifying the respective Event of
Default and that it is a "notice of acceleration" (the "Acceleration Notice"),
and the same (i) shall (except as provided in clause (ii) of this sentence)
become immediately due and payable or (ii) if there are any amounts outstanding
under any of the instruments constituting Designated Senior Debt, will become
due and payable upon the first to occur of an acceleration under any of the
instruments constituting Designated Senior Debt or five Business Days after
receipt by the Company and the Representative of such Acceleration Notice
(unless all Events of Default specified in such Acceleration Notice have been
cured or waived). If an Event of Default described under clauses (7) or (8) of
Section 6.01 with respect to the Company occurs and is continuing, then such
amount will ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder of Securities;
provided, however, that at any time after a declaration of acceleration with
- -------- -------
respect to the Securities, the Holders of a majority in principal amount of the
Securities then outstanding (by notice to the Trustee) may rescind and cancel
such declaration and its consequences if (i) the rescission would not conflict
with any judgment or decree of a court of competent jurisdiction, (ii) all
existing Events of Default have been cured or waived except nonpayment of
principal or interest on the Securities that has become due solely by such
declaration of acceleration, (iii) to the extent the payment of such interest is
lawful, interest (at the same rate specified in the Securities) on overdue
installments of interest and overdue principal which has become due otherwise
than by such declaration of acceleration has been paid, (iv) the Company has
paid the Trustee its reasonable compensation and reimbursed the Trustee for its
expenses, disbursements and advances and (v) in the event of the cure or waiver
of a Default or Event of Default (with respect to the Company) of the type
described in Section 6.01(7) or (8), the Trustee has received an Officers'
Certificate and an Opinion of Counsel that such Default or Event of Default has
been cured or waived. The Holders of a majority in principal amount of the
6
<PAGE>
Securities may waive any existing Default or Event of Default under this
Indenture, and its consequences, except a default in the payment of the
principal of or interest on any Securities.
15. Trustee Dealings With the Company. The Trustee under the
---------------------------------
Indenture, 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.
16. No Recourse Against Others. A director, officer, employee,
--------------------------
stockholder or incorporator, 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 creations. Each Securityholder by accepting a Security
waives and releases all such liability. Such waiver and release are part of the
consideration for the issuance of the Securities.
17. Defeasance and Covenant Defeasance. The Indenture contains
----------------------------------
provisions for defeasance of the entire indebtedness on this Security (pursuant
to Section 9.02 of the Indenture) and for defeasance of certain covenants in the
Indenture (pursuant to Section 9.03 of the Indenture) upon compliance by the
Company with certain conditions set forth in the Indenture.
18. Abbreviations. Customary abbreviations may be used in the name
-------------
of a Holder of a Security 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).
19. CUSIP Numbers. Pursuant to a recommendation promulgated by the
-------------
Committee on Uniform Note Identification Procedures, the Company has caused
CUSIP Numbers to be printed on the Securities and has directed the Trustee to
use CUSIP numbers in notices of redemption as a convenience to Holders of the
Securities. No representation is made as to the accuracy of such numbers either
as printed on the Securities or as contained in any notice of redemption and
reliance may be placed only on the other identification numbers placed thereon.
20. Indenture Controls. If any provision of this Note limits,
------------------
qualifies or conflicts with the provisions of the Indenture, the provisions of
the Indenture shall control.
21. GOVERNING LAW. THE INDENTURE AND THE SECURITIES SHALL BE
-------------
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO
SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THE INDENTURE OR THE SECURITIES.
THE COMPANY WILL FURNISH TO ANY HOLDER OF A SECURITY UPON
7
<PAGE>
WRITTEN REQUEST AND WITHOUT CHARGE A COPY OF THE INDENTURE, REQUESTS MAY BE MADE
TO: SAMSONITE CORPORATION, 11200 East 45th Avenue, Denver, Colorado 80239,
Attention: General Counsel.
8
<PAGE>
ASSIGNMENT
----------
I or we assign to PLEASE INSERT SOCIAL SECURITY OR TAX I.D. NUMBER
____________________________
_____________________________________________
(please print or type name and address)
the within Security and all rights thereunder, hereby irrevocably constituting
and appointing attorney to transfer the Security on the books
of the Company with full power of substitution in the premises.
Date: ____________________
NOTICE: The signature on this assignment must correspond with the name as it
appears upon the face of the within Security in every particular without
alteration or enlargement or any change whatsoever and be guaranteed by the
endorser's bank or broker.
Signature Guarantee: _______________________________________
9
<PAGE>
If you want to have only part of the Security purchased by the Company
pursuant to Section 4.09 or Section 4.14 of the Indenture, state the amount you
elect to have purchased:
OPTION OF HOLDER TO ELECT PURCHASE
$_________________
If you want to elect to have all or any part of this Security
purchased by the Company pursuant to Section 4.09 or Section 4.14 of the
------------ ------------
Indenture, check the appropriate box:
Your Signature: ____________________________________
(Sign exactly as your name appears on the face of this Security)
___________________________
Signature Guaranteed
10
<PAGE>
EXHIBIT B
---------
FORM OF LEGEND FOR GLOBAL SECURITIES
Any Global Security authenticated and delivered hereunder shall bear a
legend (which would be in addition to any other legends required in the case of
a Restricted Security) in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY. THIS NOTE IS NOT EXCHANGEABLE FOR SECURITIES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE
EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO
TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A
WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF
THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY
BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY (A NEW YORK CORPORATION) ("DTC") TO THE
COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRE SENTATIVE 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
<PAGE>
EXHIBIT C
---------
Form of Certificate To Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
-----------------------------------------
___________, ____
Re: Samsonite Corporation
(the "Company") 10 3/4%
Senior Subordinated Notes
due 2008 (the "Notes")
----------------------
Dear Sirs:
In connection with our proposed purchase of $_______ aggregate
principal amount of the Notes, we confirm that:
1. We understand that any subsequent transfer of the Notes is subject
to certain restrictions and conditions set forth in the Indenture dated as of
June 24, 1998 relating to the Notes and the undersigned agrees to be bound
by, and not to resell, pledge or otherwise transfer the Securities except in
compliance with, such restrictions and conditions and the Securities Act of
1933, as amended (the "Securities Act").
2. We understand that the Notes have not been registered under the
Securities Act, and that the Notes may not be offered or sold except as
permitted in the following sentence. We agree, on our own behalf and on
behalf of any accounts for which we are acting as hereinafter stated, that if
we should sell any Notes within two years after the original issuance of the
Notes, we will do so only (A) to the Company or any subsidiary thereof, (B)
pursuant to a registration statement which has been declared effective under
the Securities Act, (C) for so long as the Notes are eligible for resale
pursuant to Rule 144(A) ("Rule 144A") to a person we reasonably believe to be
a "qualified institutional buyer" as defined in Rule 144A that purchases for
its own account or for the account of a qualified institutional buyer to whom
notice is given that the transfer is being made in reliance on Rule 144A, (D)
outside the United States to non-U.S. persons in compliance with Rule 904 of
Regulation S under the Securities Act, or (E) pursuant to another available
exemption from the registration requirements of the Securities Act and
otherwise in compliance with other applicable laws, and we further agree to
provide to any person purchasing any of the Notes from us a notice advising
such purchaser that resales of the Notes are restricted as stated herein.
1
<PAGE>
3. We understand that, on any proposed resale of any Notes, we will
be required to furnish to you and the Company such certifications, legal
opinions and other information as you and the Company may reasonably require
to confirm that the proposed sale complies with the foregoing restrictions.
We further understand that the Notes purchased by us will bear a legend to
the foregoing effect.
4. We are an "accredited investor" (as defined in Rule 501(a)(1),
(2), (3) or (7) under the Securities Act) and have such knowledge and
experience in financial and business matters as to be capable of evaluating
the merits and risks of our investment in the Notes, and we and any accounts
for which we are acting are each able to bear the economic risk of our or its
investment.
5. We are acquiring the Notes purchased by us for our own account or
for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By: ___________________________
Authorized Signature
2
<PAGE>
EXHIBIT D
---------
Form of Certificate to Be
Delivered in Connection with
Transfers Pursuant to Regulations
----------------------------------
______________, ____
Re: Samsonite Corporation
(the "Company") 10 3/4%
Senior Subordinated Notes
due 2008 (the "Notes")
----------------------
Dear Sirs:
In connection with our proposed sale of $___________ aggregate
principal amount of the Notes, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Notes was not made to a person in the United
States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United States,
or (b) the transaction was executed in, on or through the facilities of a
designated off-shore securities market and neither we nor any person acting
on our behalf knows that the transaction has been pre-arranged with a buyer
in the United States;
(3) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act;
(5) we understand that, on any proposed resale of any Notes, we will
be required to furnish to you and the Company such certifications, legal
opinions and other
1
<PAGE>
information as you and the Company may reasonably require to confirm that the
proposed sale complies with the foregoing restrictions. We further
understand that the Notes purchased by us will bear a legend to the foregoing
effect; and
(6) we have advised the transferee of the transfer restrictions
applicable to the Notes.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By: ___________________________
Authorized Signature
<PAGE>
EXHIBIT 4.7
REGISTRATION RIGHTS AGREEMENT
Dated as of June 24, 1998
by and among
SAMSONITE CORPORATION
and
CIBC OPPENHEIMER CORP.,
BANCAMERICA ROBERTSON STEPHENS,
BANCBOSTON SECURITIES INC. AND
GOLDMAN, SACHS & CO.
as Initial Purchasers
--------------------------
$350,000,000
10 3/4% SENIOR SUBORDINATED NOTES DUE 2008
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
1. Definitions........................................... 1
-----------
2. Exchange Offer........................................ 5
--------------
3. Shelf Registration.................................... 9
------------------
4. Additional Interest................................... 10
-------------------
5. Registration Procedures............................... 12
-----------------------
6. Registration Expenses................................. 23
---------------------
7. Indemnification....................................... 24
---------------
8. Rules 144 and 144A.................................... 28
------------------
9. Underwritten Registrations............................ 28
--------------------------
10. Miscellaneous......................................... 28
-------------
(a) Remedies......................................... 28
--------
(b) No Inconsistent Agreements....................... 29
--------------------------
(c) Adjustments Affecting Registrable Notes.......... 29
---------------------------------------
(d) Amendments and Waivers........................... 29
----------------------
(e) Notices.......................................... 30
-------
(f) Successors and Assigns........................... 31
----------------------
(g) Counterparts..................................... 31
------------
(h) Headings......................................... 31
--------
(i) Governing Law.................................... 32
-------------
(j) Severability..................................... 32
------------
(k) Notes Held by the Company or Its Affiliates...... 32
-------------------------------------------
(l) Third Party Beneficiaries........................ 32
-------------------------
(m) Entire Agreement................................. 32
----------------
-i-
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and
---------
entered into as of June 24, 1998, by and among Samsonite Corporation, a Delaware
corporation (the "Company"), and CIBC Oppenheimer Corp., BancAmerica Robertson
-------
Stephens, BancBoston Securities Inc. and Goldman, Sachs & Co. (the "Initial
-------
Purchasers").
- ----------
This Agreement is entered into in connection with the Purchase
Agreement, dated June 18, 1998, by and among the Company and the Initial
Purchasers (the "Purchase Agreement") relating to the sale by the Company to the
------------------
Initial Purchasers of $350,000,000 aggregate principal amount of the Company's
10 3/4% Senior Subordinated Notes due 2008 (the "Notes"). In order to induce
-----
the Initial Purchasers to enter into the Purchase Agreement, the Company has
agreed to provide the registration rights set forth in this Agreement for the
benefit of the Holders of Registrable Notes (as defined), including, without
limitation, the Initial Purchasers. The execution and delivery of this
Agreement is a condition to the Initial Purchasers' obligation to purchase the
Notes under the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
-----------
As used in this Agreement, the following terms shall have the
following meanings:
Additional Interest: See Section 4(a).
-------------------
Advice: See the last paragraph of Section 5.
------
Agreement: See the first introductory paragraph to this Agreement.
---------
Applicable Period: See Section 2(b).
-----------------
Business Day: A day that is not a Saturday, a Sunday, or a day on
------------
which banking institutions in New York, New York are required to be closed.
Closing Date: The Closing Date as defined in the Purchase Agreement.
------------
Commission: The Securities and Exchange Commission.
----------
<PAGE>
-2-
Company: See the first introductory paragraph to this Agreement.
-------
Effectiveness Date: The 150th day after the Issue Date, in the case
------------------
of the Exchange Registration Statement, and the 90th day after the delivery of
the Shelf Notice, in the case of the Initial Shelf Registration.
Effectiveness Period: See Section 3(a).
--------------------
Event Date: See Section 4(b).
----------
Exchange Act: The Securities Exchange Act of 1934, as amended, and
------------
the rules and regulations of the Commission promulgated thereunder.
Exchange Notes: See Section 2(a).
--------------
Exchange Offer: See Section 2(a).
--------------
Exchange Registration Statement: See Section 2(a).
-------------------------------
Filing Date: The 60th day after the Issue Date (regardless of whether
-----------
the actual filing precedes such date).
Holder: Any registered holder of Registrable Notes.
------
Indemnified Person: See Section 7(c).
------------------
Indemnifying Person: See Section 7(c).
-------------------
Indenture: The Indenture, dated as of June 24, 1998, by and between
---------
the Company and United States Trust Company of New York, as trustee, pursuant to
which the Notes are being issued, as amended or supplemented from time to time
in accordance with the terms thereof.
Initial Purchasers: See the first introductory paragraph to this
------------------
Agreement.
Initial Shelf Registration: See Section 3(a).
--------------------------
Inspectors: See Section 5(o).
----------
Issue Date: The date on which the original Notes were sold to the
----------
Initial Purchasers pursuant to the Purchase Agreement.
<PAGE>
-3-
NASD: National Association of Securities Dealers, Inc.
----
Notes: See the second introductory paragraph to this Agreement.
-----
Participant: See Section 7(a).
-----------
Participating Broker-Dealer: See Section 2(b).
---------------------------
Person: Any individual, corporation, partnership, limited liability
------
company, joint venture, association, joint stock company, trust, unincorporated
organization or government (including any agency or political subdivision
thereof).
Private Exchange: See Section 2(b).
----------------
Private Exchange Notes: See Section 2(b).
----------------------
Prospectus: The prospectus included in any Registration Statement
----------
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the Registrable Notes covered by such Registration Statement, and all other
amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
Purchase Agreement: See the second introductory paragraph to this
------------------
Agreement.
Records: See Section 5(o).
-------
Registrable Notes: Each Note upon original issuance thereof and at
-----------------
all times subsequent thereto, each Exchange Note, if issued, as to which Section
2(c)(iv) hereof is applicable upon original issuance thereof and at all times
subsequent thereto and each Private Exchange Note, if issued, upon original
issuance thereof and at all times subsequent thereto, until, in the case of any
such Note, Exchange Note or Private Exchange Note, as the case may be, the
earliest to occur of (i) a Registration Statement (other than, with respect to
any Exchange Note as to which Section 2(c)(iv) hereof is applicable) covering
such Note, Exchange Note or Private Exchange
<PAGE>
-4-
Note, as the case may be, has been declared effective by the Commission and such
Note, Exchange Note or Private Exchange Note, as the case may be, has been
disposed of in accordance with such effective Registration Statement, (ii) such
Note, Exchange Note or Private Exchange Note, as the case may be, is sold in
compliance with Rule 144, (iii) in the case of any Note, such Note has been
exchanged pursuant to the Exchange Offer for an Exchange Note or Exchange Notes
which may be resold without restriction under federal securities laws, or (iv)
such Note, Exchange Note or Private Exchange Note, as the case may be, ceases to
be outstanding for purposes of the Indenture.
Registration Statement: Any registration statement of the Company,
----------------------
including, but not limited to, the Exchange Registration Statement, that covers
any of the Registrable Notes pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such registration
statement, including post-effective amendments, all exhibits, and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.
Rule 144: Rule 144 under the Securities Act, as such Rule may be
--------
amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the Commission providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
Rule 144A: Rule 144A under the Securities Act, as such Rule may be
---------
amended from time to time, or any similar rule (other than Rule 144) or
regulation hereafter adopted by the Commission.
Rule 415: Rule 415 under the Securities Act, as such Rule may be
--------
amended from time to time, or any similar rule or regulation hereafter adopted
by the Commission.
Securities Act: The Securities Act of 1933, as amended, and the rules
--------------
and regulations of the Commission promulgated thereunder.
Shelf Notice: See Section 2(c).
------------
Shelf Registration: See Section 3(b).
------------------
Subsequent Shelf Registration: See Section 3(b).
-----------------------------
<PAGE>
-5-
TIA: The Trust Indenture Act of 1939, as amended.
---
Trustee: The trustee under the Indenture and, if existent, the
-------
trustee under any indenture governing the Exchange Notes and Private Exchange
Notes (if any), in either case, including any successor trustee thereunder.
Underwritten registration or underwritten offering: A registration in
--------------------------------------------------
which securities of the Company are sold to an underwriter for reoffering to the
public.
2. Exchange Offer
--------------
(a) To the extent not prohibited by any applicable law or
interpretation of the Staff of the Commission, the Company agrees to file with
the Commission no later than the Filing Date, an offer to exchange (the
"Exchange Offer") any and all of the Registrable Notes for a like aggregate
--------------
principal amount of debt securities of the Company (other than Private Exchange
Notes, if any) which are identical in all material respects to the Notes (the
"Exchange Notes") (and which are entitled to the benefits of the Indenture or a
--------------
trust indenture which is identical in all material respects to the Indenture
(other than such changes to the Indenture or any such identical trust indenture
as are necessary to comply with any requirements of the Commission to effect or
maintain the qualification thereof under the TIA) and which, in either case, has
been qualified under the TIA), except that the Exchange Notes shall have been
registered pursuant to an effective Registration Statement under the Securities
Act and (i) interest on the Exchange Notes shall accrue from the last date on
which interest was paid on the Notes or if no such interest has been paid from
the Issue Date and (ii) the Exchange Notes shall contain no restrictive legend
thereon. The Exchange Offer shall be registered under the Securities Act on the
appropriate form (the "Exchange Registration Statement") and shall comply with
-------------------------------
all applicable tender offer rules and regulations under the Exchange Act. The
Company agrees to use its best efforts to (x) cause the Exchange Registration
Statement to be declared effective under the Securities Act on or before the
Effectiveness Date; and (y) keep the Exchange Offer open for at least 30 days
(or longer if required by applicable law) after the date that notice of the
Exchange Offer is first given to Holders. If after such Exchange Registration
Statement is initially declared effective by the Commission, the Exchange Offer
or the issuance of the Exchange Notes thereunder is interfered with by any stop
order, injunction or other order or requirement of the Commission or
<PAGE>
-6-
any other governmental agency or court, such Exchange Registration Statement
shall be deemed not to have become effective for purposes of this Agreement.
Each Holder who participates in the Exchange Offer will be required to represent
that any Exchange Notes received by it will be acquired in the ordinary course
of its business, that at the time of the consummation of the Exchange Offer such
Holder will have no arrangement or understanding with any Person to participate
in the distribution of the Exchange Notes, that such Holder is not an affiliate
of the Company within the meaning of the Securities Act or, if it is an
affiliate, that such Holder will comply with the registration and prospectus
delivery requirements under the Securities Act to the extent applicable and any
additional representations that are necessary under then-existing
interpretations of the Commission in order for the Exchange Registration
Statement to be declared effective. Upon consummation of the Exchange Offer in
accordance with this Section 2, the provisions of this Agreement shall continue
to apply, mutatis mutandis, solely with respect to Registrable Notes that are
------- --------
Private Exchange Notes and Exchange Notes held by Participating Broker-Dealers,
and the Company shall have no further obligation to register Registrable Notes
(other than Private Exchange Notes and other than in respect of any Exchange
Notes as to which clause 2(c)(iv) hereof applies) pursuant to Section 3 of this
Agreement.
(b) The Company shall include within the Prospectus contained in the
Exchange Registration Statement a section entitled "Plan of Distribution,"
reasonably acceptable to the Initial Purchasers, which shall contain a summary
statement of the positions taken or policies made by the Staff of the Commission
with respect to the potential "underwriter" status of any broker-dealer that
holds Notes acquired for its own account that were acquired as a result of
market-making activities or other trading activities and that will become the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of Exchange
Notes received by such broker-dealer in the Exchange Offer (a "Participating
-------------
Broker-Dealer"), whether such positions or policies have been publicly
- -------------
disseminated by the Staff of the Commission or such positions or policies, in
the judgment of the Initial Purchasers, represent the prevailing views of the
Staff of the Commission. Such "Plan of Distribution" section shall also allow,
to the extent permitted by applicable policies and regulations of the
Commission, the use of the Prospectus by all Persons subject to the prospectus
delivery requirements of the Securities Act, including, to the extent so
permitted, all Participating Broker-Dealers, and
<PAGE>
-7-
include a statement describing the manner in which Participating Broker-Dealers
may resell the Exchange Notes.
The Company shall use its best efforts to keep the Exchange
Registration Statement effective and to amend and supplement the Prospectus
contained therein, in order to permit such Prospectus to be lawfully delivered
by all Persons subject to the prospectus delivery requirements of the Securities
Act for a period of 180 days from the date on which the Exchange Offer is
consummated (the "Applicable Period").
-----------------
If any Initial Purchaser determines upon the advice of its outside
counsel that it is not eligible to participate in the Exchange Offer with
respect to the exchange of Notes constituting any portion of an unsold allotment
in the initial distribution, as soon as practicable upon receipt by the Company
of a written request from such Initial Purchaser and an opinion of outside
counsel for such Initial Purchaser, reasonably satisfactory in form and
substance to outside counsel of the Company, to the effect that such exchange
does not require compliance with the registration requirements of the Securities
Act, the Company upon the request of any Initial Purchaser shall, simultaneously
with the delivery of the Exchange Notes in the Exchange Offer, issue and deliver
to such Initial Purchaser, in exchange (the "Private Exchange") for the Notes
----------------
held by such Initial Purchaser, a like principal amount of debt securities of
the Company that are identical in all material respects to the Exchange Notes
except for the existence of restrictions on transfer thereof under the
Securities Act and securities laws of the several states of the U.S. (the
"Private Exchange Notes") (and which are issued pursuant to the same indenture
----------------------
as the Exchange Notes). The Company will seek to cause the CUSIP Service Bureau
to issue the same CUSIP number for the Private Exchange Notes as the Exchange
Notes. The Company shall not have any liability under this Agreement solely as
a result of such Private Exchange Notes not bearing the same CUSIP number as the
Exchange Notes.
In connection with the Exchange Offer, the Company shall:
(1) mail to each Holder a copy of the Prospectus forming part of
the Exchange Registration Statement, together with an appropriate letter of
transmittal and related documents;
(2) utilize the services of a depositary for the Exchange Offer
with an address in the Borough of Manhattan,
<PAGE>
-8-
The City of New York, which may be the Trustee or an affiliate thereof;
(3) permit Holders to withdraw tendered Registrable Notes at any time
prior to the close of business, New York time, on the last Business Day on
which the Exchange Offer shall remain open; and
(4) otherwise comply in all material respects with all applicable
laws.
As soon as practicable after the close of the Exchange Offer or the
Private Exchange, as the case may be, the Company shall:
(1) accept for exchange all Registrable Notes validly tendered and
not validly withdrawn pursuant to the Exchange Offer or the Private
Exchange;
(2) deliver to the Trustee for cancellation all Registrable Notes so
accepted for exchange; and
(3) cause the Trustee to authenticate and deliver promptly to each
Holder tendering such Registrable Notes, Exchange Notes or Private Exchange
Notes, as the case may be, equal in principal amount to the Notes of such
Holder so accepted for exchange.
The Exchange Notes and the Private Exchange Notes may be issued under
(i) the Indenture or (ii) an indenture identical in all material respects to the
Indenture, which in either event will provide that the Exchange Notes will not
be subject to the transfer restrictions set forth in the Indenture and that the
Exchange Notes, the Private Exchange Notes and the Notes, if any, will vote and
consent together on all matters as one class and that none of the Exchange
Notes, the Private Exchange Notes or the Notes, if any, will have the right to
vote or consent as a separate class on any matter.
(c) If (i) because of any change in law or in currently prevailing
interpretations of the Staff of the Commission, the Company is not permitted to
effect an Exchange Offer, (ii) the Exchange Offer is not consummated within 180
days of the Issue Date, (iii) any holder of Private Exchange Notes so requests
in writing to the Company or (iv) in the case of any Holder that participates in
the Exchange Offer (and tenders its Registrable Notes prior to the expiration
thereof), such Holder does not receive Exchange Notes on the date of the
<PAGE>
-9-
exchange that may be sold without restriction under federal securities laws
(other than due solely to the status of such Holder as an affiliate of the
Company within the meaning of the Securities Act) and so notifies the Company
within 30 days following the consummation of the Exchange Offer (and providing a
reasonable basis to the Company for its conclusions), in the case of each of
clauses (i)-(iv), then the Company shall promptly deliver to the Holders and the
Trustee written notice thereof (the "Shelf Notice") and shall file a Shelf
------------
Registration pursuant to Section 3.
3. Shelf Registration
------------------
If a Shelf Notice is delivered as contemplated by Section 2(c), then:
(a) Shelf Registration. The Company shall as promptly as reasonably
------------------
practicable file with the Commission a Registration Statement for an offering to
be made on a continuous basis pursuant to Rule 415 covering all of the
Registrable Notes (the "Initial Shelf Registration"). If the Company shall not
--------------------------
have yet filed the Exchange Registration Statement, the Company shall file with
the Commission the Initial Shelf Registration on or prior to the Filing Date and
shall use its best efforts to cause such Initial Shelf Registration to be
declared effective under the Securities Act on or prior to the Effectiveness
Date. Otherwise, the Company shall file with the Commission the Initial Shelf
Registration within 60 days of the delivery of the Shelf Notice and shall use
its best efforts to cause such Shelf Registration to be declared effective under
the Securities Act on or prior to the Effectiveness Date. The Initial Shelf
Registration shall be on Form S-3, if then available for use by the Company, or
another appropriate form permitting registration of such Registrable Notes for
resale by Holders in the manner or manners designated by them (including,
without limitation, one or more underwritten offerings). The Company shall not
permit any securities other than the Registrable Notes to be included in any
Shelf Registration. The Company shall use its best efforts to keep the Initial
Shelf Registration continuously effective under the Securities Act until the
date which is 24 months from the effective date of such Initial Shelf
Registration (or, if Rule 144(k) under the Securities Act is amended to permit
unlimited resales by non-affiliates within a lesser period, such lesser period)
(subject to extension pursuant to the last paragraph of Section 5 hereof) (the
"Effectiveness Period") or such shorter period ending when (i) all Registrable
- ---------------------
Notes covered by the Initial Shelf Registration have been sold in the
<PAGE>
-10-
manner set forth and as contemplated in the Initial Shelf Registration or (ii) a
Subsequent Shelf Registration covering all of the Registrable Notes has been
declared effective under the Securities Act.
(b) Subsequent Shelf Registrations. If the Initial Shelf Registration
------------------------------
or any Subsequent Shelf Registration ceases to be effective for any reason at
any time during the Effectiveness Period (other than because of the sale of all
of the securities registered thereunder), the Company shall use its best efforts
to obtain the prompt withdrawal of any order suspending the effectiveness
thereof, and in any event shall within 30 days of such cessation of
effectiveness amend the Shelf Registration in a manner to obtain the withdrawal
of the order suspending the effectiveness thereof, or file an additional "shelf"
Registration Statement pursuant to Rule 415 covering all of the Registrable
Notes (a "Subsequent Shelf Registration"). If a Subsequent Shelf Registration
-----------------------------
is filed, the Company shall use its best efforts to cause the Subsequent Shelf
Registration to be declared effective as soon as practicable after such filing
and to keep such Subsequent Shelf Registration continuously effective for a
period equal to the number of days in the Effectiveness Period less the
aggregate number of days during which the Initial Shelf Registration or any
Subsequent Shelf Registrations was previously continuously effective. As used
herein the term "Shelf Registration" means the Initial Shelf Registration and
------------------
any Subsequent Shelf Registration.
(c) Supplements and Amendments. The Company shall promptly supplement
--------------------------
and amend any Shelf Registration if required by the rules, regulations or
instructions applicable to the registration form used for such Shelf
Registration, if required by the Securities Act, or if reasonably requested by
the Holders of a majority in aggregate principal amount of the Registrable Notes
covered by such Shelf Registration or by any underwriter of such Registrable
Notes, in each case, with the Company's consent, which consent shall not be
unreasonably withheld or delayed.
4. Additional Interest
-------------------
(a) The Company and the Initial Purchasers agree that the Holders of
Registrable Notes will suffer damages if the Company fails to fulfill its
obligations under Section 2 or Section 3 hereof and that it would not be
feasible to ascertain the extent of such damages with precision. Accordingly,
the Company agrees to pay, as liquidated damages, additional
<PAGE>
-11-
interest on the Registrable Notes ("Additional Interest") under the
-------------------
circumstances and to the extent set forth below (each of which shall be given
independent effect):
(i) if (A) neither the Exchange Registration Statement nor the
Initial Shelf Registration has been filed on or prior to the Filing Date,
if so required in the case of an Initial Shelf Registration by this
Agreement, or (B) notwithstanding that the Company has consummated or will
consummate an Exchange Offer, the Company is required to file a Shelf
Registration and such Shelf Registration is not filed on or prior to the
60th day after delivery of the Shelf Notice, then, in the case of subclause
(A), commencing on the day after the Filing Date or, in the case of
subclause (B), commencing on the 61st day following delivery of the Shelf
Notice, Additional Interest shall accrue on the Registrable Notes over and
above the stated interest at a rate of 0.50% per annum for the first 90
days immediately following the Filing Date or such 60th day, as the case
may be, such Additional Interest rate increasing by an additional 0.25% per
annum at the beginning of each subsequent 90-day period;
(ii) if (A) neither the Exchange Registration Statement nor the
Initial Shelf Registration is declared effective on or prior to the
Effectiveness Date applicable thereto or (B) notwithstanding that the
Company has consummated or will consummate an Exchange Offer, the Company
is required to file a Shelf Registration and such Shelf Registration is not
declared effective by the Commission on or prior to the applicable
Effectiveness Date, then, commencing on the day after such applicable
Effectiveness Date, Additional Interest shall accrue on the Registrable
Notes over and above the stated interest at a rate of 0.50% per annum for
the first 90 days immediately following the day after the applicable
Effectiveness Date, such Additional Interest rate increasing by an
additional 0.25% per annum at the beginning of each subsequent 90-day
period; and
(iii) if (A) the Company has not exchanged Exchange Notes for all
Notes validly tendered in accordance with the terms of the Exchange Offer
on or prior to 180 days after the Issue Date, (B) the Exchange Registration
Statement ceases to be effective prior to consummation of the Exchange
Offer or (C) if applicable, a Shelf Registration has been declared
effective and such Shelf Registration ceases to be effective at any time
during the Effective-
<PAGE>
-12-
ness Period, then Additional Interest shall accrue on the Registrable Notes
over and above the stated interest at a rate of 0.50% per annum for the
first 90 days commencing on the (x) 181st day after such Issue Date in the
case of (A) above or (y) the day such Exchange Registration Statement or
Shelf Registration ceases to be effective in the case of (B) and (C) above,
such Additional Interest rate increasing by an additional 0.25% per annum
at the beginning of each such subsequent 90-day period;
provided, however, that the Additional Interest rate on the Registrable Notes
- -------- -------
may not exceed in the aggregate 1.0% per annum; provided further that (1) upon
-------- -------
the filing of the Exchange Registration Statement or each Shelf Registration (in
the case of (i) above), (2) upon the effectiveness of the Exchange Registration
Statement or each Shelf Registration, as the case may be (in the case of (ii)
above), or (3) upon the exchange of Exchange Notes for all Registrable Notes
tendered (in the case of (iii)(A) above) or upon the effectiveness of an
Exchange Registration Statement or Shelf Registration which had ceased to remain
effective (in the case of (iii)(B) and (C) above), Additional Interest on any
Registrable Notes then accruing Additional Interest as a result of such clause
(or the relevant subclause thereof), as the case may be, shall cease to accrue.
(b) The Company shall notify the Trustee within one business day after
each and every date on which an event occurs in respect of which Additional
Interest is required to be paid (an "Event Date"). Any amounts of Additional
----------
Interest due pursuant to (a)(i), (a)(ii) or (a)(iii) of this Section 4 will be
payable in cash semi-annually on each regular interest payment date specified in
the Indenture (to the Holders of Registrable Notes of record on the regular
record date therefor (as specified in the Indenture) immediately preceding such
dates), commencing with the first such regular interest payment date occurring
after any such Additional Interest commences to accrue. The amount of
Additional Interest will be determined by multiplying the applicable Additional
Interest rate by the principal amount of the Notes subject thereto, multiplied
by a fraction, the numerator of which is the number of days such Additional
Interest rate was applicable during such period (determined on the basis of a
360-day year comprised of twelve 30-day months), and the denominator of which is
360.
5. Registration Procedures
-----------------------
In connection with the filing of any Registration Statement pursuant
to Sections 2 or 3 hereof, the Company shall
<PAGE>
-13-
effect such registrations to permit the sale of such securities covered thereby
in accordance with the intended method or methods of disposition thereof, and
pursuant thereto and in connection with any Registration Statement filed by the
Company hereunder, the Company shall:
(a) Prepare and file with the Commission prior to the Filing Date, the
Exchange Registration Statement or if the Exchange Registration Statement is not
filed or is unavailable, a Shelf Registration as prescribed by Section 2 or 3,
and use its best efforts to cause each such Registration Statement to become
effective and remain effective as provided herein; provided that, if (1) a Shelf
--------
Registration is filed pursuant to Section 3, or (2) a Prospectus contained in an
Exchange Registration Statement filed pursuant to Section 2 is required to be
delivered under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Notes during the Applicable Period and has advised the Company
that it is a Participating Broker-Dealer, before filing any Registration
Statement or Prospectus or any amendments or supplements thereto, the Company
shall, if requested, furnish to and afford the Holders of the Registrable Notes
to be registered pursuant to such Shelf Registration or each such Participating
Broker-Dealer, as the case may be, covered by such Registration Statement, their
counsel and the managing underwriters, if any, a reasonable opportunity to
review copies of all such documents (including copies of any documents to be
incorporated by reference therein and all exhibits thereto) proposed to be filed
(in each case at least five Business Days prior to such filing). The Company
shall not file any such Registration Statement or Prospectus or any amendments
or supplements thereto if the Holders of a majority in aggregate principal
amount of the Registrable Notes covered by such Registration Statement, or any
such Participating Broker-Dealer, as the case may be, their counsel, or the
managing underwriters, if any, shall reasonably object.
(b) Prepare and file with the Commission such amendments and post-
effective amendments to each Shelf Registration or Exchange Registration
Statement, as the case may be, as may be necessary to keep such Registration
Statement continuously effective for the Effectiveness Period or the Applicable
Period, as the case may be; cause the related Prospectus to be supplemented by
any Prospectus supplement required by applicable law, and as so supplemented to
be filed pursuant to Rule 424 (or any similar provisions then in force) under
the Securities Act; and comply with the provisions of the Securities Act and the
Exchange Act applicable to it with
<PAGE>
-14-
respect to the disposition of all securities covered by such Registration
Statement as so amended or in such Prospectus as so supplemented and with
respect to the subsequent resale of any securities being sold by a Participating
Broker-Dealer covered by any such Prospectus. The Company shall be deemed not to
have used its best efforts to keep a Registration Statement effective during the
Applicable Period if it voluntarily takes any action that would result in
selling Holders of the Registrable Notes covered thereby or Participating
Broker-Dealers seeking to sell Exchange Notes not being able to sell such
Registrable Notes or such Exchange Notes during that period unless such action
is required by applicable law, rule or regulation or unless the Company complies
with this Agreement, including, without limitation, the provisions of paragraph
5(k) hereof and the last paragraph of Section 5.
(c) If (1) a Shelf Registration is filed pursuant to Section 3, or (2) a
Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period from whom the Company has received written notice that it will
be a Participating Broker-Dealer, notify the selling Holders of Registrable
Notes, and each such Participating Broker-Dealer, their counsel and the managing
underwriters, if any, promptly (but in any event within two Business Days), and
confirm such notice in writing, (i) when a Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with respect to a
Registration Statement or any post-effective amendment, when the same has become
effective (including in such notice a written statement that any Holder may,
upon request, obtain, without charge, one conformed copy of such Registration
Statement or post-effective amendment including financial statements and
schedules, documents incorporated or deemed to be incorporated by reference and
exhibits), (ii) of the issuance by the Commission of any stop order suspending
the effectiveness of a Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus or the initiation of any
proceedings for that purpose, (iii) if at any time when a prospectus is required
by the Securities Act to be delivered in connection with sales of the
Registrable Notes the representations and warranties of the Company contained in
any agreement (including any underwriting agreement contemplated by Section 5(n)
hereof) cease to be true and correct in any material respect, (iv) of the
receipt by the Company of any notification with respect to the suspension of the
<PAGE>
-15-
qualification or exemption from qualification of a Registration Statement or any
of the Registrable Notes or the Exchange Notes to be sold by any Participating
Broker-Dealer for offer or sale in any jurisdiction, or the initiation or
threatening of any proceeding for such purpose, (v) of the happening of any
event, the existence of any condition or any information becoming known that
makes any statement made in such Registration Statement or related Prospectus or
any document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires the making of any changes in, or
amendments or supplements to, such Registration Statement, Prospectus or
documents so that, in the case of the Registration Statement, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, and that in the case of the Prospectus, it will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, and (vi) of the
Company's reasonable determination that a post-effective amendment to a
Registration Statement would be appropriate.
(d) If (1) a Shelf Registration is filed pursuant to Section 3, or (2) a
Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, use its best efforts to prevent the issuance of any order
suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of a Prospectus or suspending the qualification
(or exemption from qualification) of any of the Registrable Notes or the
Exchange Notes to be sold by any Participating Broker-Dealer, for sale in any
jurisdiction, and, if any such order is issued, to use its best efforts to
obtain the withdrawal of any such order at the earliest possible date.
(e) If a Shelf Registration is filed pursuant to Section 3 and if
requested by the managing underwriters, if any, or the Holders of a majority in
aggregate principal amount of the Registrable Notes being sold in connection
with an underwritten offering, (i) as promptly as practicable incorporate in a
prospectus supplement or post-effective amendment such information or revisions
to information therein relating to such underwriters or selling Holders as the
managing underwriters, if any, or such Holders or their counsel
<PAGE>
-16-
reasonably request to be included or made therein and (ii) make all required
filings of such prospectus supplement or such post-effective amendment as soon
as practicable after the Company has received notification of the matters to be
incorporated in such prospectus supplement or post-effective amendment.
(f) If (1) a Shelf Registration is filed pursuant to Section 3, or (2) a
Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, furnish to each selling Holder of Registrable Notes and to
each such Participating Broker-Dealer who so requests and to counsel and each
managing underwriter, if any, without charge, one conformed copy of the
Registration Statement or Registration Statements and each post-effective
amendment thereto, including financial statements and schedules, and, if
requested, all documents incorporated or deemed to be incorporated therein by
reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section 3, or (2) a
Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer, deliver to each selling Holder of Registrable Notes
or each such Participating Broker-Dealer, as the case may be, their respective
counsel, and the underwriters, if any, without charge, as many copies of the
Prospectus or Prospectuses (including each form of preliminary prospectus) and
each amendment or supplement thereto and any documents incorporated by reference
therein as such Persons may reasonably request; and, subject to the last
paragraph of this Section 5, the Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
Holders of Registrable Notes and each Participating Broker-Dealer, and the
underwriters or agents, if any, and dealers (if any), in connection with the
offering and sale of the Registrable Notes covered by, or the sale by
Participating Broker-Dealers of the Exchange Notes pursuant to, such Prospectus
and any amendment or supplement thereto for, in the case of the sale by
Participating Broker-Dealers of the Exchange Notes, the Applicable Period.
(h) Prior to any public offering of Registrable Notes or any delivery of a
Prospectus contained in the Exchange Registration Statement by any Participating
Broker-Dealer who
<PAGE>
-17-
seeks to sell Exchange Notes during the Applicable Period, use its best efforts
to register or qualify, and cooperate with the selling Holders of Registrable
Notes and each such Participating Broker-Dealer, the underwriters, if any, and
their respective counsel in connection with the registration or qualification
(or exemption from such registration or qualification) of such Registrable Notes
or Exchange Notes, as the case may be, for offer and sale under the securities
or Blue Sky laws of such jurisdictions within the United States as any selling
Holder, Participating Broker-Dealer, or the managing underwriter or
underwriters, if any, reasonably request in writing; provided that where
--------
Exchange Notes held by Participating Broker-Dealers or Registrable Notes are
offered pursuant to an underwritten offering, counsel to the underwriters shall,
at the cost and expense of the Company, perform the Blue Sky investigations and
file registrations and qualifications required to be filed pursuant to this
Section 5(h); keep each such registration or qualification (or exemption
therefrom) effective during the period such Registration Statement is required
to be kept effective and do any and all other acts or things reasonably
necessary or advisable to enable the disposition in such jurisdictions of the
Exchange Notes by Participating Broker-Dealers or the Registrable Notes covered
by the applicable Registration Statement; provided that the Company shall not be
--------
required to (A) qualify generally to do business in any jurisdiction where it is
not then so qualified, (B) take any action that would subject it to general
service of process in any such jurisdiction where it is not then so subject or
(C) subject itself to taxation in excess of a nominal dollar amount in any such
jurisdiction where it is not then so subject.
(i) If a Shelf Registration is filed pursuant to Section 3, cooperate
with the selling Holders of Registrable Notes, any Participating Broker-Dealer
and the managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Notes to be
sold, which certificates shall not bear any restrictive legends and shall be in
a form eligible for deposit with The Depository Trust Company; and enable such
Registrable Notes to be in such denominations and registered in such names as
the managing underwriter or underwriters, if any, or Holders may reasonably
request.
(j) Use its best efforts to cause the Registrable Notes covered by the
Registration Statement to be registered with or approved by such governmental
agencies or authorities as may be necessary to enable the seller or sellers
thereof or
<PAGE>
-18-
the underwriters, if any, to consummate the disposition of such Registrable
Notes, in which case the Company will cooperate in all reasonable respects with
the filing of such Registration Statement and the granting of such approvals.
(k) If (1) a Shelf Registration is filed pursuant to Section 3, or (2)
a Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, upon the occurrence of any event contemplated by paragraph
5(c)(v) or 5(c)(vi) hereof, as promptly as practicable prepare and (subject to
Section 5(a) hereof) file with the Commission, at the Company's sole expense, a
supplement or post-effective amendment to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable Notes being
sold thereunder or to the purchasers of the Exchange Notes to whom such
Prospectus will be delivered by a Participating Broker-Dealer, any such
Prospectus will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(l) Use its best efforts to cause the Registrable Notes covered by a
Registration Statement to be rated with the appropriate rating agencies, if so
requested by the Holders of a majority in aggregate principal amount of
Registrable Notes covered by such Registration Statement or the managing
underwriter or underwriters, if any.
(m) Prior to the effective date of the first Registration Statement
relating to the Registrable Notes, (i) provide the Trustee with printed
certificates for the Registrable Notes in a form eligible for deposit with The
Depository Trust Company and (ii) provide a CUSIP number for the Registrable
Notes.
(n) In connection with an underwritten offering of Registrable Notes
pursuant to a Shelf Registration, enter into an underwriting agreement as is
customary in underwritten offerings of debt securities similar to the Notes and
take all such other actions as are reasonably requested by the managing
underwriter or underwriters in order to expedite or facilitate
<PAGE>
-19-
the registration or the disposition of such Registrable Notes and, in such
connection, (i) make such representations and warranties to the underwriters,
with respect to the business of the Company and its subsidiaries and the
Registration Statement, Prospectus and documents, if any, incorporated or deemed
to be incorporated by reference therein, in each case, as are customarily made
by issuers to underwriters in underwritten offerings of debt securities similar
to the Notes, and confirm the same in writing if and when requested; (ii) obtain
the opinion of counsel to the Company and updates thereof in form and substance
reasonably satisfactory to the managing underwriter or underwriters, addressed
to the underwriters covering the matters customarily covered in opinions
requested in underwritten offerings of debt securities similar to the Notes and
such other matters as may be reasonably requested by underwriters (it being
agreed that the matters to be covered by such opinion may be subject to
customary qualifications and exceptions); (iii) obtain "cold comfort" letters
and updates thereof in form and substance reasonably satisfactory to the
managing underwriter or underwriters from the independent certified public
accountants of the Company (and, if necessary, any other independent certified
public accountants of any subsidiary of the Company or of any business acquired
by the Company for which financial statements and financial data are, or are
required to be, included in the Registration Statement), addressed to each of
the underwriters, such letters to be in customary form and covering matters of
the type customarily covered in "cold comfort" letters in connection with
underwritten offerings of debt securities similar to the Notes and such other
matters as reasonably requested by the managing underwriter or underwriters; and
(iv) if an underwriting agreement is entered into, the same shall contain
indemnification provisions and procedures no less favorable than those set forth
in Section 7 hereof (or such other provisions and procedures acceptable to
Holders of a majority in aggregate principal amount of Registrable Notes covered
by such Registration Statement and the managing underwriter or underwriters or
agents) with respect to all parties to be indemnified pursuant to said Section.
The above shall be done at each closing under such underwriting agreement, or as
and to the extent required thereunder.
(o) If (1) a Shelf Registration is filed pursuant to Section 3, or (2)
a Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
<PAGE>
-20-
Applicable Period, make available for inspection by any selling Holder of such
Registrable Notes being sold, and each Participating Broker-Dealer, any
underwriter participating in any such disposition of Registrable Notes, if any,
and any attorney, accountant or other agent retained by any such selling Holder,
each Participating Broker-Dealer, as the case may be, or underwriter
(collectively, the "Inspectors"), at the offices where normally kept, during
----------
reasonable business hours, all financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries (collectively, the
"Records") as shall be reasonably necessary to enable them to exercise any
-------
applicable due diligence responsibilities, and cause the officers, directors and
employees of the Company and its subsidiaries to supply all information
reasonably requested by any such Inspector in connection with such Registration
Statement. Records which the Company determines, in good faith, to be
confidential and any Records which it notifies the Inspectors are confidential
shall not be disclosed by the Inspectors unless (i) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in such
Registration Statement, (ii) the release of such Records is ordered pursuant to
a subpoena or other order from a court of competent jurisdiction, (iii) the
information in such Records has been made generally available to the public
other than as a result of a disclosure or failure to safeguard by such Inspector
or (iv) disclosure of such information is, in the opinion of counsel for any
Inspector, necessary or advisable in connection with any action, claim, suit or
proceeding, directly or indirectly, involving or potentially involving such
Inspector and arising out of, based upon, related to, or involving this
Agreement, or any transactions contemplated hereby or arising hereunder. Each
selling Holder of such Registrable Notes and each Participating Broker-Dealer
will be required to agree that information obtained by it as a result of such
inspections shall be deemed confidential and shall not be used by it as the
basis for any market transactions in the securities of the Company unless and
until such is made generally available to the public. Each Inspector, each
selling Holder of such Registrable Notes and each Participating Broker-Dealer
will be required to further agree that it will, upon learning that disclosure of
such Records is sought in a court of competent jurisdiction pursuant to clauses
(ii) or (iv) of the previous sentence or otherwise, give notice to the Company
and allow the Company to undertake appropriate action to obtain a protective
order or otherwise prevent disclosure of the Records deemed confidential at its
expense.
<PAGE>
-21-
(p) Provide an indenture trustee for the Registrable Notes or the
Exchange Notes, as the case may be, and cause the Indenture or the trust
indenture provided for in Section 2(a), as the case may be, to be qualified
under the TIA not later than the effective date of the Exchange Offer or the
first Registration Statement relating to the Registrable Notes; and in
connection therewith, cooperate with the trustee under any such indenture and
the Holders of the Registrable Notes, to effect such changes to such indenture
as may be required for such indenture to be so qualified in accordance with the
terms of the TIA; and execute, and use its best efforts to cause such trustee to
execute, all documents as may be required to effect such changes, and all other
forms and documents required to be filed with the Commission to enable such
indenture to be so qualified in a timely manner.
(q) Comply with all applicable rules and regulations of the Commission
and make generally available to its securityholders earnings statements
satisfying the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder (or any similar rule promulgated under the Securities Act) no later
than 45 days after the end of any 12-month period (or 90 days after the end of
any 12-month period if such period is a fiscal year) (i) commencing at the end
of any fiscal quarter in which Registrable Notes are sold to underwriters in a
firm commitment or best efforts underwritten offering and (ii) if not sold to
underwriters in such an offering, commencing on the first day of the first
fiscal quarter of the Company after the effective date of a Registration
Statement, which statements shall cover said 12-month periods.
(r) Upon consummation of the Exchange Offer or a Private Exchange, if
requested by the Trustee, obtain an opinion of counsel to the Company, in a form
customary for underwritten transactions, addressed to the Trustee, that the
Exchange Notes or the Private Exchange Notes, as the case may be, and the
related indenture constitute legally valid and binding obligations of the
Company, enforceable against the Company in accordance with their respective
terms, subject to customary qualifications and exceptions.
(s) If the Exchange Offer or a Private Exchange is to be consummated,
upon delivery of the Registrable Notes by Holders to the Company (or to such
other Person as directed by the Company) in exchange for the Exchange Notes or
the Private Exchange Notes, as the case may be, the Company shall mark, or
caused to be marked, on such Registrable Notes that such Registrable Notes are
being cancelled in exchange for the
<PAGE>
-22-
Exchange Notes or the Private Exchange Notes, as the case may be; in no event
shall such Registrable Notes be marked as paid or otherwise satisfied.
(t) Cooperate with each seller of Registrable Notes covered by any
Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Notes and their respective counsel in connection
with any filings required to be made with the NASD.
The Company may require each seller of Registrable Notes as to which
any registration is being effected to furnish to the Company such information
regarding such seller and the distribution of such Registrable Notes as the
Company may, from time to time, reasonably request. The Company may exclude
from such registration the Registrable Notes of any seller who fails to furnish
such information within a reasonable time after receiving such request. Each
seller as to which any Shelf Registration Statement is being effected agrees to
furnish promptly to the Company all information required to be disclosed in
order to make the information previously furnished to the Company by such seller
not materially misleading.
Each Holder of Registrable Notes and each Participating Broker-Dealer
agrees by acquisition of such Registrable Notes or Exchange Notes to be sold by
such Participating Broker-Dealer, as the case may be, that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi), such Holder will forthwith
discontinue disposition of such Registrable Notes covered by such Registration
Statement or Prospectus or Exchange Notes to be sold by such Holder or
Participating Broker-Dealer, as the case may be, and, in each case,
dissemination of such Prospectus until such Holder's or Participating Broker-
Dealer's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 5(k), or until it is advised in writing (the "Advice")
------
by the Company that the use of the applicable Prospectus may be resumed, and has
received copies of any amendments or supplements thereto. In the event the
Company shall give any such notice, each of the Effectiveness Period and the
Applicable Period shall be extended by the number of days during such periods
from and including the date of the giving of such notice to and including the
date when each seller of Registrable Notes covered by such Registration
Statement or Exchange Notes to be sold by such Participating Broker-Dealer, as
the case may be, shall have received (x) the copies of the supplemented or
amended Prospectus contemplated by Section 5(k) or (y) the Advice.
<PAGE>
-23-
6. Registration Expenses
---------------------
All fees and expenses of the Company incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company
whether or not the Exchange Offer or a Shelf Registration is filed or becomes
effective, including, without limitation, (i) all registration and filing fees
(including, without limitation, (A) fees with respect to filings required to be
made with the NASD in connection with an underwritten offering and (B) fees and
expenses of compliance with state securities or Blue Sky laws (including,
without limitation, reasonable fees and disbursements of counsel in connection
with Blue Sky qualifications of the Registrable Notes or Exchange Notes and
determination of the eligibility of the Registrable Notes or Exchange Notes for
investment under the laws of such jurisdictions (x) where the holders of
Registrable Notes are located, in the case of the Exchange Notes, or (y) as
provided in Section 5(h) hereof, in the case of Registrable Notes or Exchange
Notes to be sold by a Participating Broker-Dealer during the Applicable
Period)), (ii) printing expenses, including, without limitation, expenses of
printing certificates for Registrable Notes or Exchange Notes in a form eligible
for deposit with The Depository Trust Company and of printing prospectuses if
the printing of prospectuses is requested by the managing underwriter or
underwriters, if any, or by the Holders of a majority in aggregate principal
amount of the Registrable Notes included in any Registration Statement or by any
Participating Broker-Dealer, as the case may be, (iii) reasonable messenger,
telephone and delivery expenses incurred in connection with the Exchange
Registration Statement and any Shelf Registration, (iv) fees and disbursements
of counsel for the Company and fees and disbursements of special counsel for the
Initial Purchasers and the sellers of Registrable Notes, (v) fees and
disbursements of all independent certified public accountants referred to in
Section 5(n)(iii) (including, without limitation, the expenses of any "cold
comfort" letters required by or incident to such performance), (vi) rating
agency fees, (vii) Securities Act liability insurance, if the Company desires
such insurance, (viii) fees and expenses of all other Persons retained by the
Company, (ix) internal expenses of the Company (including, without limitation,
all salaries and expenses of officers and employees of the Company performing
legal or accounting duties), (x) the expense of any annual or special audit,
(xi) the fees and disbursements of underwriters, if any, customarily paid by
issuers or sellers of securities (but not including any underwriting discounts
or commissions or transfer taxes, if any, attributable to the sale of the
Registrable Notes which discounts, com-
<PAGE>
-24-
missions or taxes shall be paid by Holders of such Registrable Notes) and (xii)
the expenses relating to printing, word processing and distributing all
Registration Statements.
7. Indemnification
---------------
(a) The Company agrees to indemnify and hold harmless each Holder of
Registrable Notes and each Participating Broker-Dealer, the officers, directors,
employees and agents of each such Person, and each Person, if any, who controls
any such Person within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act (each, a "Participant"), from and against any and
-----------
all losses, claims, damages and liabilities (including, without limitation, the
reasonable legal fees and other reasonable expenses actually incurred in
connection with any suit, action or proceeding or any claim asserted) caused by,
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in any Registration Statement or Prospectus (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) or caused by, arising out of or based upon any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except insofar as such losses,
claims, damages or liabilities are caused by any untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity
with information relating to any Participant furnished to the Company in writing
by or on behalf of such Participant expressly for use therein; provided,
--------
however, that the Company shall not be liable if such untrue statement or
- -------
omission or alleged untrue statement or omission was contained or made in any
preliminary prospectus and corrected in the Prospectus or any amendment or
supplement thereto and any such loss, liability, claim, damage or expense
suffered or incurred by the Participants resulted from any action, claim or suit
by any Person who purchased Registrable Notes or Exchange Notes which are the
subject thereof from such Participant and such Participant failed to deliver or
provide a copy of the Prospectus (as amended or supplemented) to such Person
with or prior to the confirmation of the sale of such Registrable Notes or
Exchange Notes sold to such Person if required by applicable law, unless such
failure to deliver or provide a copy of the Prospectus (as amended or
supplemented) was a result of noncompliance by the Company with Section 5 of
this Agreement.
<PAGE>
-25-
(b) Each Participant will be required to agree, severally and not
jointly, to indemnify and hold harmless the Company, its directors and officers
and each Person who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Company to each Participant, but only with
reference to information relating to such Participant furnished to the Company
in writing by such Participant expressly for use in any Registration Statement
or Prospectus, any amendment or supplement thereto, or any preliminary
prospectus. The liability of any Participant under this paragraph shall in no
event exceed the proceeds received by such Participant from sales of Registrable
Notes or Exchange Notes giving rise to such obligations.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such Person (the "Indemnified Person") shall promptly
------------------
notify the Person against whom such indemnity may be sought (the "Indemnifying
------------
Person") in writing, and the Indemnifying Person shall be entitled to
- ------
participate therein, and to elect to assume the defense thereof with counsel
reasonably satisfactory to the Indemnified Person to represent the Indemnified
Person and any others the Indemnifying Person may reasonably designate in such
proceeding and shall pay the reasonable fees and expenses actually incurred by
such counsel related to such proceeding; provided, however, that the failure to
-------- -------
so notify the Indemnifying Person shall not relieve it of any obligation or
liability which it may have hereunder except to the extent that it has been
prejudiced in any material respect by such failure or otherwise. In any such
proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person unless (i) the Indemnifying Person and the Indemnified
Person shall have mutually agreed in writing to the contrary, (ii) the
Indemnifying Person has failed within a reasonable time to retain counsel
reasonably satisfactory to the Indemnified Person or (iii) the named parties in
any such proceeding (including any impleaded parties) include both the
Indemnifying Person and the Indemnified Person and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that, unless there is a
conflict among Indemnified Persons, the Indemnifying Person shall not, in
connection with any proceeding or related proceeding in the same jurisdiction,
<PAGE>
-26-
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all Indemnified Persons, and that all such fees and
expenses shall be reimbursed as they are incurred. Any such separate firm for
the Participants and such control Persons of Participants shall be designated in
writing by Participants who sold a majority in interest of Registrable Notes
sold by all such Participants and any such separate firm for the Company, its
directors, officers and such control Persons of the Company shall be designated
in writing by the Company. The Indemnifying Person shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there is a final non-appealable judgment for the
plaintiff, the Indemnifying Person agrees to indemnify any Indemnified Person
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an Indemnified Person
shall have requested an Indemnifying Person to reimburse the Indemnified Person
for reasonable fees and expenses actually incurred by counsel as contemplated by
the third sentence of this paragraph, the Indemnifying Person agrees that it
shall be liable for any settlement of any proceeding effected without its
consent if (i) such settlement is entered into more than 30 days after receipt
by such Indemnifying Person of the aforesaid request and (ii) such Indemnifying
Person shall not have reimbursed the Indemnified Person in accordance with such
request prior to the date of such settlement; provided, however, that the
-------- -------
Indemnifying Person shall not be liable for any settlement effected without its
consent pursuant to this sentence if the Indemnifying Person is contesting, in
good faith, the request for reimbursement. No Indemnifying Person shall,
without the prior written consent of the Indemnified Person, effect any
settlement of any pending or threatened proceeding in respect of which any
Indemnified Person is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Person, unless such settlement (A) includes
an unconditional release of such Indemnified Person, in form and substance
satisfactory to such Indemnified Person, from all liability on claims that are
the subject matter of such proceeding and (B) does not include any statement as
to an admission of fault, culpability or failure to act by or on behalf of an
Indemnified Person.
(d) If the indemnification provided for in the first and second
paragraphs of this Section 7 is unavailable to, or insufficient to hold
harmless, an Indemnified Person in respect of any losses, claims, damages or
liabilities referred to therein, then each Indemnifying Person under such
paragraphs,
<PAGE>
-27-
in lieu of indemnifying such Indemnified Person thereunder and in order to
provide for just and equitable contribution, shall contribute to the amount paid
or payable by such Indemnified Person as a result of such losses, claims,
damages or liabilities in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Person or Persons on the one hand and the
Indemnified Person or Persons on the other in connection with the statements or
omissions (or alleged statements or omissions) that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof) as well as any
other relevant equitable considerations. The relative fault of the parties shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or by the Participants or such other Indemnified Person, as the case may be, on
the other, the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission and any other
equitable considerations appropriate under the circumstances.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
--- ----
(even if the Participants were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any reasonable
legal or other expenses actually incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Notes or
Exchange Notes, as the case may be, exceeds the amount of any damages that such
Participant has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
(f) The indemnity and contribution agreements contained in this
Section 7 will be in addition to any
<PAGE>
-28-
liability which the Indemnifying Persons may otherwise have to the Indemnified
Persons referred to above.
8. Rules 144 and 144A
------------------
For so long as the Company is subject to the reporting requirements of
Section 13 or 15 of the Exchange Act and any Registrable Notes remain
outstanding, the Company will use its best efforts to file the reports required
to be filed by it under the Securities Act and the Exchange Act and the rules
and regulations adopted by the Commission thereunder in a timely manner and, if
at any time it is not required to file such reports, it will, upon the request
of any Holder of Registrable Notes, make publicly available other information so
long as necessary to permit sales pursuant to Rule 144 and Rule 144A under the
Securities Act. The Company further covenants, for so long as any Registrable
Notes remain outstanding, to make available to any Holder or beneficial owner of
Registrable Notes in connection with any sale thereof and any prospective
purchaser of such Registrable Notes from such Holder or beneficial owner, the
information required by Rule 144A(d)(4) under the Securities Act in order to
permit resales of such Registrable Notes pursuant to Rule 144A.
9. Underwritten Registrations
--------------------------
If any of the Registrable Notes covered by any Shelf Registration are
to be sold in an underwritten offering, the investment banker or investment
bankers and manager or managers that will manage the offering will be selected
by the Holders of a majority in aggregate principal amount of such Registrable
Notes included in such offering and reasonably acceptable to the Company.
No Holder of Registrable Notes may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Notes on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.
10. Miscellaneous
-------------
(a) Remedies. In the event of a breach by the Company of any of
--------
its obligations under this Agreement, each Holder of Registrable Notes and each
Participating Broker-
<PAGE>
-29-
Dealer holding Exchange Notes, in addition to being entitled to exercise all
rights provided herein, in the Indenture or, in the case of an Initial
Purchaser, in the Purchase Agreement, or granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. The 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.
(b) No Inconsistent Agreements. The Company has not entered, as of
--------------------------
the date hereof, and shall not enter, after the date of this Agreement, into any
agreement with respect to any of its securities that is inconsistent with the
rights granted to the Holders of Registrable Notes in this Agreement or
otherwise conflicts with the provisions hereof. The Company has not entered and
shall not enter into any agreement with respect to any of its securities which
will grant to any Person piggy-back rights with respect to a Registration
Statement.
(c) Adjustments Affecting Registrable Notes. The Company shall
---------------------------------------
not, directly or indirectly, take any action with respect to the Registrable
Notes as a class that would adversely affect the ability of the Holders of
Registrable Notes to include such Registrable Notes in a registration undertaken
pursuant to this Agreement.
(d) Amendments and Waivers. The provisions of this Agreement may
----------------------
not be amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given, otherwise than with the prior
written consent of (A) the Holders of not less than a majority in aggregate
principal amount of the then outstanding Registrable Notes and (B) in
circumstances that would adversely affect Participating Broker-Dealers, the
Participating Broker-Dealers holding not less than a majority in aggregate
principal amount of the Exchange Notes held by all Participating Broker-Dealers;
provided, however, that Section 7 and this Section 10(d) may not be amended,
- -------- -------
modified or supplemented without the prior written consent of each Holder and
each Participating Broker-Dealer (including any person who was a Holder or
Participating Broker-Dealer of Registrable Notes or Exchange Notes, as the case
may be, disposed of pursuant to any Registration Statement). Notwithstanding
the foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of Holders of
<PAGE>
-30-
Registrable Notes whose securities are being tendered pursuant to the Exchange
Offer or sold pursuant to a Registration Statement and that does not directly or
indirectly affect, impair, limit or compromise the rights of other Holders of
Registrable Notes may be given by Holders of at least a majority in aggregate
principal amount of the Registrable Notes being tendered or being sold by such
Holders pursuant to such Registration Statement.
(e) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, next-day air courier or telecopier:
1. if to a Holder of Registrable Notes or any Participating Broker-
Dealer, at the most current address of such Holder or Participating Broker-
Dealer, as the case may be, set forth on the records of the registrar under
the Indenture, with a copy in like manner to the Initial Purchasers as
follows:
CIBC OPPENHEIMER CORP.
BANCAMERICA ROBERTSON STEPHENS
BANCBOSTON SECURITIES INC.
GOLDMAN, SACHS & CO.
c/o CIBC Oppenheimer
425 Lexington Avenue
3rd Floor
New York, New York 10017
Facsimile No.: (212) 885-4998
Attention: Corporate Finance
Department
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Facsimile No.: (212) 269-5420
Attention: Roger Meltzer, Esq.
2. if to the Initial Purchasers, at the address specified in Section
10(e)(1);
<PAGE>
-31-
3. if to the Company, as follows:
SAMSONITE CORPORATION
11200 East 45th Avenue
Denver, Colorado 80239
Facsimile No.: (303) 373-6288
Attention: Chief Financial Officer
with copy to General Counsel
with a copy to:
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
919 Third Avenue
New York, New York 10022-3897
Facsimile No.: (212) 735-2000
Attention: Gregory A. Fernicola, Esq.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; one business day
after being timely delivered to a next-day air courier guaranteeing overnight
delivery; and when receipt is acknowledged by the addressee, if telecopied.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee under the
Indenture at the address specified in such Indenture.
(f) Successors and Assigns. This Agreement shall inure to the
----------------------
benefit of and be binding upon the successors and assigns of each of the parties
hereto and the Holders; provided, however, that this Agreement shall not inure
-------- -------
to the benefit of or be binding upon a successor or assign of a Holder unless
and to the extent such successor or assign holds Registrable Notes.
(g) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience
--------
of reference only and shall not limit or otherwise affect the meaning hereof.
<PAGE>
-32-
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(j) Severability. If any term, provision, covenant or restriction
------------
of this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(k) Notes Held by the Company or Its Affiliates. Whenever the
-------------------------------------------
consent or approval of Holders of a specified percentage of Registrable Notes is
required hereunder, Registrable Notes held by the Company or its affiliates (as
such term is defined in Rule 405 under the Securities Act) shall not be counted
in determining whether such consent or approval was given by the Holders of such
required percentage.
(l) Third Party Beneficiaries. Holders of Registrable Notes are
-------------------------
intended third party beneficiaries of this Agreement and this Agreement may be
enforced by such Persons.
(m) Entire Agreement. This Agreement, together with the Purchase
----------------
Agreement and the Indenture, is intended by the parties as a final and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein and any and all prior oral or
written agreements, representations, or warranties, contracts, understandings,
correspondence, conversations and memoranda among the Initial Purchasers on the
one hand and the Company on the other, or between or among any agents,
<PAGE>
-33-
representatives, parents, subsidiaries, affiliates, predecessors in interest or
successors in interest with respect to the subject matter hereof and thereof are
merged herein and replaced hereby.
<PAGE>
-34-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
SAMSONITE CORPORATION
By:
------------------------------------
Name:
Title:
CIBC OPPENHEIMER CORP.
By:
------------------------------------
Name:
Title:
BANCAMERICA ROBERTSON STEPHENS
By:
------------------------------------
Name:
Title:
BANCBOSTON SECURITIES INC.
By:
------------------------------------
Name:
Title:
GOLDMAN, SACHS & CO.
By:
------------------------------------
Name:
Title:
<PAGE>
Exhibit 5.1
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022-3897
August 14, 1998
Samsonite Corporation
Samsonite Holdings Inc.
11200 East 45th Avenue
Denver, Colorado 80239-3018
Re: Samsonite Corporation and
Samsonite Holdings Inc.
Registration Statement on Form S-4
----------------------------------
Ladies and Gentlemen:
We have acted as special counsel to Samsonite Corporation, a Delaware
corporation (the "Company"), and Samsonite Holdings Inc., a Delaware corporation
and wholly owned subsidiary of the Company ("Holdings"), in connection with the
Registration Statement of the Company and Holdings on Form S-4 (the
"Registration Statement") to be filed with the Securities and Exchange
Commission on the date hereof. The Registration Statement relates to (a) up to
$175,000,000 aggregate liquidation preference of the Company's 13% Senior
Redeeemable Exchangeable Preferred Stock (the "New Preferred Stock"), (b) up to
$175,000,000 aggregate principal amount of the Company's 13% Junior
Subordinated Debentures due 2010 (the "Company Exchange Debentures"), issuable
at the Company's option in exchange for the New Preferred Stock and (c) up to
$175,000,000 aggregate principal amount of Holdings' 13% Senior Debentures due
2010 (the "Holdings Exchange Debentures"), issuable at the Company's option in
exchange for the New Preferred Stock.
<PAGE>
The New Preferred Stock is to be issued pursuant to an exchange
offer (the "Exchange Offer"), in exchange for a like liquidation preference of
the issued and outstanding 13% Senior Redeeemable Exchangeable Preferred Stock
of the Company (the "Old Preferred Stock"), as contemplated by the Registration
Rights Agreement dated as of June 24, 1998 (the "Registration Rights
Agreement"), between the Company and CIBC Oppenheimer Corp. (the "Initial
Purchaser").
This opinion is being furnished in accordance with the requirements of
Item 601(b)(5) of Regulation S-K under the Securities Act of 1933, as amended
(the "Act").
In connection with this opinion, we have examined originals or
copies, certified or otherwise identified to our satisfaction, of (i) the
Registration Statement; (ii) an executed copy of the Registration Rights
Agreement; (iii) a copy of the Certificate of Designation relating to the Old
Preferred Stock and the New Preferred Stock filed by the Company with the
Secretary of State of the State of Delaware on June 23, 1998 (the "Certificate
of Designation"); (iv) an executed copy of the Indenture (the "Company Exchange
Debentures Indenture"), dated as of June 24, 1998, relating to the Company
Exchange Debentures, between the Company and United States Trust Company of
New York (the "Trustee"); (v) a copy of the form of the Indenture relating to
the Holdings Exchange Debentures filed as an exhibit to the Registration
Statement (the "Holdings Exchange Debentures Indenture"); (vi) an executed copy
of the Purchase Agreement, dated as of June 18, 1998, between the Company and
the Initial Purchaser, relating to the Old Preferred Stock; (vii) the Cross-
Receipt between the Company and the Initial Purchaser acknowledging payment in
full for the Old Preferred Stock; (viii) the Amended and Restated Certificate of
Incorporation of the Company, as amended to date; (ix) the By-Laws of the
Company, as amended to date; (x) the Certificate of Incorporation of Holdings,
as currently in effect; (xi) the By-Laws of Holdings, as currently in effect;
(xii) certain resolutions adopted by the Board of Directors of the Company and
the Executive
<PAGE>
Committee of the Board of Directors of the Company relating to the Exchange
Offer, the Old Preferred Stock, the New Preferred Stock, the Company Exchange
Debentures, the Certificate of Designation, the Company Exchange Debentures
Indenture and related matters; (xiii) the Form T-1 of the Trustee related to the
Company Exchange Debentures Indenture filed as an exhibit to the Registration
Statement; (xiv) the Form T-1 of the Trustee related to the Holdings Exchange
Debentures Indenture filed as an exhibit to the Registration Statement; (xv)
the form of certificate evidencing the New Preferred Stock; (xvi) the form of
certificate evidencing the Company Exchange Debentures; and (xvii) the form of
certificate evidencing the Holdings Exchange Debentures. We have also examined
originals or copies, certified or otherwise identified to our satisfaction, of
such records of the Company and Holdings and such agreements, certificates of
public officials, certificates of officers or other representatives of the
Company, Holdings and others, and such other documents, certificates and records
as we have deemed necessary or appropriate as a basis for the opinions set forth
herein.
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified, conformed or photostatic copies and the
authenticity of the originals of such latter documents. In making our
examination of executed documents or documents to be executed, we have assumed
that the parties thereto other than the Company and Holdings had or will have
the power, corporate or other, to enter into and perform all obligations
thereunder and have also assumed the due authorization by all requisite action,
corporate or other, and execution and delivery by such parties of such documents
and the validity and binding effect thereof on such parties. As to any facts
material to the opinions expressed herein which we have not independently
established or verified, we have relied upon statements and representations of
officers and other representatives of the Company, Holdings and others.
<PAGE>
Members of our firm are admitted to the bar in the State of New York,
and we do not express any opinion as to the laws of any other jurisdiction other
than the Delaware General Corporation Law (the "DGCL").
Based upon and subject to the foregoing and the limitations,
qualifications, exceptions and assumptions set forth herein, we are of the
opinion that:
1. When the New Preferred Stock has been issued, executed and
delivered in accordance with the Certificate of Designation and the Registration
Rights Agreement against receipt of the Old Preferred Stock pursuant to the
Exchange Offer (and assuming compliance with Section 160 of the DGCL), the New
Preferred Stock will be validly issued, fully paid and non-assessable.
2. When the Company Exchange Debentures have been duly executed and
authenticated in accordance with the terms of the Company Exchange Debentures
Indenture and have been delivered against receipt of the New Preferred Stock
in accordance with the terms of the Certificate of Designation (and assuming
compliance with Section 160 of the DGCL), the Company Exchange Debentures will
constitute valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms, except to the extent that (a)
enforcement thereof may be limited by (i) bankruptcy, insolvency, reorganiza-
tion, moratorium, fraudulent conveyance or other similar laws now or hereafter
in effect relating to creditors' rights generally and (ii) general principles of
equity (regardless of whether enforceability is considered in a proceeding at
law or in equity) and (b) the waiver contained in Section 4.03 of the Company
Exchange Debentures Indenture may be deemed unenforceable.
3. When the Holdings Exchange Debentures have been duly authorized
by all necessary corporate action on the part of Holdings, the Holdings Exchange
Debentures Indenture has been duly executed and delivered by the parties
thereto, and the Holdings Exchange Debentures are executed and authenticated in
accordance with the terms of the Holdings Exchange Debentures Indenture and have
been delivered against receipt of the New Preferred Stock in accordance with the
terms of the Certificate of Designation, the Holdings Exchange Debentures will
constitute valid and binding obligations of Holdings, enforceable against
Holdings in accordance with their terms, except to the extent that (a)
enforcement thereof may be
<PAGE>
limited by (i) bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws now or hereafter in effect relating to
creditors' rights generally and (ii) general principles of equity (regardless
of whether enforceability is considered in a proceeding at law or in equity) and
(b) the waiver contained in Section 4.03 of the Holdings Exchange Debentures
Indenture may be deemed unenforceable.
In rendering the opinions set forth above, we have assumed that the
execution and delivery by the Company of the Company Exchange Debentures
Indenture and the Company Exchange Debentures, the execution and delivery by
Holdings of the Holdings Exchange Debentures Indenture and the Holdings Exchange
Debentures, and the performance by the Company and Holdings of their respec-
tive obligations thereunder, will not violate, conflict with or constitute a
default under (i) any agreement or instrument to which the Company or Holdings
or their respective properties are subject at the time of execution and
issuance thereof (except that we do not make the assumption set forth in this
clause (i) with respect to the Company's Amended and Restated Certificate of
Incorporation, the Company's By-Laws, the Company Exchange Debentures
Indenture, the Purchase Agreement, the Registration Rights Agreement,
Holdings' Certificate of Incorporation, Holdings' By-Laws or the Holdings
Exchange Debentures Indenture), (ii) any law, rule, or regulation to which the
Company or Holdings is subject (except that we do not make the assumption set
forth in this clause (ii) with respect to the DGCL (as in effect on the date
hereof) or those laws, rules and regulations (as in effect on the date hereof)
of the State of New York and the United States of America, in each case, which,
in our experience, are normally applicable to transactions of the type
contemplated by the Purchase Agreement, the Company Exchange Debentures
Indenture, the Holdings Exchange Debentures Indenture and the Exchange Offer,
but without our having made any special investigation with respect to any other
laws, rules or regulations), (iii) any judicial or regulatory order or decree of
any governmental authority or (iv) any consent, approval, license, authorization
or validation of, or filing, recording or registration with any governmental
authority. In addition, we have assumed that the Holdings Exchange Debentures
Indenture, if executed, will conform to the form thereof examined by us.
We hereby consent to the filing of this opinion with the Commission as
an exhibit to the Registration Statement. We also consent to the reference to
our firm under the caption "Legal Matters" in the Registration Statement. In
giving this
<PAGE>
consent, we do not thereby admit that we are included in the category of persons
whose consent is required under Section 7 of the Act or the rules and
regulations of the Commission.
Very truly yours,
/s/ Skadden, Arps, Slate,
Meagher & Flom LLP
<PAGE>
EXHIBIT 10.1
- --------------------------------------------------------------------------------
SECOND AMENDED AND RESTATED
---------------------------
MULTICURRENCY REVOLVING CREDIT AND
----------------------------------
TERM LOAN AGREEMENT
-------------------
dated as of June 24, 1998
by and among
SAMSONITE CORPORATION,
a Delaware corporation,
SAMSONITE EUROPE N.V.,
a Belgian corporation,
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
BANKBOSTON, N.A. (f/k/a The First National Bank of Boston)
and the other lending institutions listed on Schedule 1 hereto,
----------
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
as Administrative Agent,
and
BANKBOSTON, N.A.
as Syndication Agent,
CANADIAN IMPERIAL BANK OF COMMERCE
as Documentation Agent,
and the other parties thereto
with BANCAMERICA ROBERTSON STEPHENS
and
BANCBOSTON SECURITIES INC.
AS ARRANGERS
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. DEFINITIONS AND RULES OF INTERPRETATION........................................................... 2
1.1. Definitions................................................................................ 2
1.2. Rules of Interpretation.................................................................... 46
2. THE REVOLVING CREDIT FACILITY..................................................................... 47
2.1. Commitment to Lend......................................................................... 47
2.2. The Swing Line............................................................................. 47
2.2.1. The Swing Line Loans.............................................................. 47
2.2.2. Notice............................................................................ 48
2.2.3. Irrevocable Notice................................................................ 50
2.2.4. Purchase of Swing Line Loan....................................................... 50
2.3. Revolving Commitment Fee................................................................... 50
2.4. Reduction and Reallocation of Total Revolving Commitment................................... 50
2.4.1. Optional Reduction of Total Revolving Commitment.................................. 50
2.4.2. Reallocation of Total Revolving Commitment........................................ 51
2.5. Revolving Credit Notes..................................................................... 52
2.6. Interest on Revolving Credit Loans and Swing Line Loans.................................... 52
2.7. Requests for Revolving Credit Loans........................................................ 53
2.8. Conversion Options......................................................................... 53
2.8.1. Conversion to Different Type of Revolving Credit Loan............................. 53
2.8.2. Continuation of Type of Revolving Credit Loan..................................... 54
2.8.3. Eurodollar Rate Loans............................................................. 55
2.9. Funds for Revolving Credit Loans........................................................... 55
2.9.1. Funding Procedures................................................................ 55
2.9.2. Advances by Administrative Agent.................................................. 56
2.10. Pro Rata Treatment......................................................................... 56
2.11. Intentionally Deleted...................................................................... 56
2.12. Repayment of the Revolving Credit Loans and Swing Line Loans............................... 56
2.12.1. Maturity.......................................................................... 56
2.12.2. Mandatory Repayments of Revolving Credit Loans.................................... 56
2.12.3. Optional Repayments of Revolving Credit Loans and Swing Line Loans................ 57
2.12.4. Intentionally Deleted............................................................. 58
2.12.5. Intentionally Deleted............................................................. 58
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
3. TERM LOANS.
3.1. Commitment to Lend
3.1.1. Domestic Term Loan................................................................ 58
3.1.2. Foreign Term Loan................................................................. 58
3.2. Term Note/Loan Account for the Term Loans.................................................. 58
3.2.1. Domestic Term Loan................................................................ 58
3.2.2. Foreign Term Loan................................................................. 59
3.3. Mandatory Payments of Principal of the Term Loans.......................................... 59
3.3.1. Scheduled Payment of the Term Loans............................................... 59
3.3.2. Intentionally Deleted............................................................. 60
3.3.3. Proceeds of Debt Issuances, Asset Sales, and Certain Other Events................. 60
3.4. Optional Prepayment of the Term Loans...................................................... 63
3.5. Interest on the Term Loans................................................................. 64
3.5.1. Interest Rates Applicable to the Domestic Term Loan............................... 64
3.5.2. Interest Rates Applicable the Foreign Term Loan................................... 64
3.5.3. Notifications by Borrowers........................................................ 64
3.5.4. Amounts, etc...................................................................... 65
3.6. Funds for the Term Loans................................................................... 65
3.6.1. Domestic Term Loan................................................................ 65
3.6.2. Foreign Term Loan................................................................. 66
4. THE MULTICURRENCY FACILITY........................................................................ 66
4.1. Commitment to Lend......................................................................... 66
4.2. The Multicurrency Swing Line............................................................... 67
4.2.1. The Multicurrency Swing Line Loans................................................ 67
4.2.2. Notice............................................................................ 68
4.2.3. Irrevocable Notice................................................................ 71
4.2.4. Purchase of Swing Line Loan....................................................... 71
4.3. Multicurrency Commitment Fee............................................................... 71
4.4. Reduction of Total Revolving Multicurrency Commitment...................................... 72
4.4.1. Optional Reduction of Total Revolving Multicurrency Commitment.................... 72
4.4.2. Reallocation of Total Revolving Multicurrency Commitment.......................... 72
4.5. Multicurrency Loan Accounts................................................................ 74
4.6. Interest on Revolving Multicurrency Loans and Multicurrency Swing Line Loans............... 74
4.7. Requests for Revolving Multicurrency Loans................................................. 75
4.8. Continuation Options, etc.................................................................. 75
4.8.1. Continuation of Type of Multicurrency Loan........................................ 75
4.8.2. Multicurrency Loans............................................................... 77
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
4.9. Funds for Revolving Multicurrency Loans.................................................... 77
4.9.1. Funding Procedures................................................................ 77
4.9.2. Advances by Foreign Agent......................................................... 78
4.10. Pro Rata Treatment......................................................................... 79
4.11. Optional Currencies........................................................................ 79
4.11.1. Request for Optional Currency..................................................... 79
4.11.2. Exchange Rate..................................................................... 80
4.11.3. Multiple Denominations............................................................ 80
4.11.4. Repayment......................................................................... 81
4.11.5. Funding........................................................................... 81
4.11.6. European Monetary Union........................................................... 81
4.12. Repayment of Revolving Multicurrency Loans................................................. 82
4.12.1. Maturity of Revolving Multicurrency Loans......................................... 82
4.12.2. Multicurrency Swing Line Loans.................................................... 83
4.13. Mandatory Repayments of Revolving Multicurrency Loans...................................... 83
4.14. Optional Repayments of Revolving Multicurrency
Loans and Multicurrency Swing Line Loans.......................................................... 82
5. LETTERS OF CREDIT AND FOREIGN LETTERS OF CREDIT................................................... 83
5.1. Letter of Credit and Foreign Letter of Credit Commitments.................................. 83
5.1.1. Commitment to Issue Letters of Credit and Foreign Letters of Credit............... 83
5.1.2. Letter of Credit Applications and Foreign Letter of Credit Applications........... 84
5.1.3. Terms of Letters of Credit and Foreign Letter of Credit........................... 85
5.1.4. Reimbursement Obligations of Lenders.............................................. 85
5.1.5. Participations of Lenders......................................................... 86
5.2. Reimbursement Obligation of the Borrowers.................................................. 86
5.2.1. Reimbursement Obligation of the Company........................................... 86
5.2.2. Reimbursement Obligation of Samsonite Europe...................................... 87
5.3. Payments................................................................................... 88
5.3.1. Letter of Credit Payments......................................................... 88
5.3.2. Foreign Letter of Credit Payments................................................. 89
5.4. Obligations Absolute....................................................................... 90
5.5. Reliance by Issuer......................................................................... 90
5.6. Letter of Credit and Foreign Letter of Credit Fees......................................... 91
5.6.1. Letter of Credit Fees............................................................. 91
5.6.2. Foreign Letter of Credit Fees..................................................... 91
6. CERTAIN GENERAL PROVISIONS........................................................................ 93
6.1. Fees....................................................................................... 93
</TABLE>
-iii-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
6.2. Funds for Payments......................................................................... 93
6.2.1. Payments to Administrative Agent and Foreign Agent................................ 93
6.2.2. No Offset, etc.................................................................... 94
6.2.3. Withholding Forms................................................................. 94
6.2.4. Exclusions........................................................................ 95
6.2.5. Mitigation........................................................................ 95
6.2.6. Replacement of Non-Exempt Lenders................................................. 96
6.3. Payment Provisions; Computations........................................................... 97
6.3.1. Currency of Account............................................................... 97
6.3.2. Application of Interest Payments for Multicurrency Loans; Risk Participation Fees. 97
6.3.3. Computations...................................................................... 98
6.3.4. Computations by Foreign Agent..................................................... 99
6.3.5. Notices from Issuing Banks........................................................ 99
6.3.6. Crediting of Payments............................................................. 99
6.4. Inability to Determine Eurodollar Rate or Eurocurrency Rate................................ 99
6.5. Illegality................................................................................. 100
6.6. Additional Costs, etc...................................................................... 101
6.7. Capital Adequacy........................................................................... 102
6.8. Certificate................................................................................ 103
6.9. Indemnity.................................................................................. 103
6.10. Interest After Default..................................................................... 104
6.11. Fronting Bank Provisions................................................................... 105
6.11.1. Payments to Administrative Agent and Fronting Bank................................ 105
6.11.2. Currency Conversions and Contingent Funding Agreement............................. 105
6.11.3. Change of Status of Multicurrency Lender.......................................... 109
6.11.4. Resignation of Fronting Bank...................................................... 111
6.12. Certain Notifications For Samsonite Europe................................................. 111
7. COLLATERAL SECURITY AND GUARANTEES................................................................ 112
7.1. Security of Borrowers...................................................................... 112
7.2. Guaranties and Security of Subsidiaries.................................................... 113
7.3. Guaranty by the Company of the Obligations................................................. 113
7.3.1. Guaranty.......................................................................... 113
7.3.2. Guaranty Absolute................................................................. 114
7.3.3. Effectiveness; Enforcement........................................................ 115
7.3.4. Waiver............................................................................ 116
7.3.5. Subordination; Subrogation........................................................ 116
7.3.6. Payments.......................................................................... 117
7.3.7. Receipt of Information............................................................ 117
8. REPRESENTATIONS AND WARRANTIES.................................................................... 117
</TABLE>
-iv-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
8.1. Corporate Authority.
8.1.1. Incorporation; Good Standing...................................................... 117
8.1.2. Authorization..................................................................... 117
8.1.3. Enforceability.................................................................... 118
8.2. Governmental Approvals..................................................................... 118
8.3. Title to Properties; Leases................................................................ 118
8.4. Financial Statements and Projections....................................................... 119
8.4.1. Financial Statements.............................................................. 119
8.4.2. Projections....................................................................... 119
8.4.3. Solvency.......................................................................... 120
8.5. No Material Changes, etc................................................................... 120
8.6. Franchises, Patents, Copyrights, etc....................................................... 120
8.7. Litigation................................................................................. 120
8.8. No Materially Adverse Contracts, etc....................................................... 120
8.9. Compliance with Other Instruments, Laws, etc............................................... 121
8.10. Tax Status................................................................................. 121
8.11. No Event of Default........................................................................ 121
8.12. Holding Company and Investment Company Acts................................................ 121
8.13. Absence of Financing Statements, etc....................................................... 121
8.14. Perfection of Security Interest............................................................ 121
8.15. Certain Transactions....................................................................... 122
8.16. Employee Benefit Plans..................................................................... 122
8.16.1. In General........................................................................ 122
8.16.2. Terminability of Welfare Plans.................................................... 122
8.16.3. Guaranteed Pension Plans.......................................................... 123
8.16.4. Multiemployer Plans............................................................... 123
8.16.5. ERISA Reportable Event............................................................ 123
8.16.6. Plan Agreements................................................................... 123
8.16.7. PBGC Letter....................................................................... 124
8.17. Use of Proceeds; Regulations U and X....................................................... 124
8.18. Environmental Compliance................................................................... 124
8.19. Status of Loans as Senior Debt............................................................. 125
8.20. Fiscal Year................................................................................ 126
8.21. Significant Contracts...................................................................... 126
8.22. Emerging Market Subsidiaries............................................................... 126
8.23. Subsidiaries, etc.......................................................................... 127
8.24. Significant Contracts...................................................................... 127
8.25. No Other Senior Debt....................................................................... 127
8.26. No Withholding, etc........................................................................ 127
8.27. No Filings Required........................................................................ 127
8.28. Related Transactions....................................................................... 128
8.29. Year 2000.................................................................................. 128
9. AFFIRMATIVE COVENANTS OF THE BORROWERS............................................................ 128
9.1. Punctual Payment........................................................................... 128
</TABLE>
-v-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
9.2. Maintenance of Office...................................................................... 129
9.3. Records and Accounts....................................................................... 129
9.4. Financial Statements, Certificates and Information......................................... 129
9.5. Notices.................................................................................... 131
9.5.1. Defaults.......................................................................... 131
9.5.2. Environmental Events.............................................................. 132
9.5.3. Notification of Claim against Collateral.......................................... 132
9.5.4. Notice of Litigation and Judgments................................................ 132
9.5.5. ERISA Notices..................................................................... 132
9.5.6. Plan Terminations................................................................. 133
9.5.7. PBGC Letter, etc.................................................................. 133
9.5.8. Underfunding Changes.............................................................. 133
9.5.9. Material Changes.................................................................. 133
9.5.10. Notice of Borrower or Affiliate of Borrower Becoming Lender or Participant........ 133
9.5.11. Notice of Debt Issuance or Asset Sale............................................. 134
9.6. Corporate Existence; Maintenance of Properties............................................. 134
9.7. Insurance.................................................................................. 134
9.7.1. General........................................................................... 134
9.7.2. Insurance Proceeds................................................................ 134
9.8. Taxes...................................................................................... 135
9.9. Inspection of Properties and Books, etc.................................................... 135
9.9.1. General........................................................................... 135
9.9.2. Communications with Accountants................................................... 136
9.10. Compliance with Laws, Contracts, Licenses, and Permits.................................... 136
9.11. Employee Benefit Plans.................................................................... 136
9.12. Use of Proceeds........................................................................... 137
9.13. Guarantors................................................................................ 137
9.14. Syndication Efforts....................................................................... 137
9.15. Pledge of Stock........................................................................... 138
9.16. Preparation of Environmental Reports...................................................... 139
9.17. Performance of Significant Contracts...................................................... 139
9.18. Notification Regarding Significant Subsidiaries........................................... 140
9.19. Notification of Investments............................................................... 140
9.20. Emerging Market Subsidiaries.............................................................. 140
9.21. Further Assurances........................................................................ 140
9.22. Status of Loans as Senior Debt............................................................ 140
9.23. Subordinated Guarantees................................................................... 141
9.24. Granting and Perfection of Liens.......................................................... 141
9.25. Notes to Evidence Non-Ordinary Course Intercompany Indebtedness........................... 142
9.26. Commercial Finance Examination............................................................ 142
9.27. Appraisal of Intellectual Property........................................................ 142
</TABLE>
-vi-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
9.28. Landlord Waivers.......................................................................... 142
9.29. Funding of Equity Tender Offer............................................................ 143
10. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS...................................................... 143
10.1. Restrictions on Indebtedness.............................................................. 143
10.2. Restrictions on Liens..................................................................... 147
10.3. Restrictions on Investments............................................................... 149
10.4. Distributions............................................................................. 153
10.5. Merger, Consolidation and Disposition of Assets........................................... 154
10.5.1. Mergers and Acquisitions...................................................... 154
10.5.2. Disposition of Assets......................................................... 159
10.6. Sale and Leaseback........................................................................ 162
10.7. Compliance with Environmental Laws........................................................ 162
10.8. Subordinated Debt......................................................................... 163
10.9. Employee Benefit Plans.................................................................... 163
10.10. Fiscal Year............................................................................... 163
10.11. Modification of Documents................................................................. 163
10.12. Prohibition on Negative Pledges........................................................... 164
10.13. Transactions with Affiliates.............................................................. 164
10.14. Prohibition on Subsidiary Being Subject to Distribution Limitations....................... 164
10.15. Change in Nature of Business.............................................................. 165
10.16. Charter Amendments........................................................................ 165
10.17. Accounting Changes........................................................................ 165
10.18. Senior Debt............................................................................... 165
10.19. Limitation on Issuance of Shares of Subsidiaries;
Disposition of Shares and Indebtedness of Subsidiaries............................................ 166
10.19.1. Subsidiaries Issuing or Selling Capital Stock................................... 166
10.19.2. Disposition by Borrowers of Subsidiaries' Capital Stock......................... 166
10.20. Limitations on Hedging Arrangements............................................. 167
10.21. Limitation on Transfer of Operating Assets...................................... 167
10.22. Preferred Stock Documents................................................................. 167
10.23. Use of Subordinated Indenture Debt Provisions............................................. 167
10.24. Ineligible Securities..................................................................... 168
10.25. PBGC Letter............................................................................... 168
11. FINANCIAL COVENANTS OF THE BORROWERS.............................................................. 168
11.1. Senior Leverage Ratio..................................................................... 168
11.2. Interest Coverage Ratio................................................................... 169
11.3. Capital Expenditures...................................................................... 169
12. CLOSING CONDITIONS............................................................................... 170
12.1. Loan Documents............................................................................ 170
12.1.1. Loan Documents.................................................................. 170
12.1.2. Documents for Related Transactions.............................................. 170
</TABLE>
-vii-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
12.1.3. Significant Contracts......................................................... 170
12.2. Certified Copies of Charter Documents..................................................... 170
12.3. Corporate Action.......................................................................... 171
12.4. Incumbency Certificate.................................................................... 171
12.5. Validity of Liens......................................................................... 171
12.6. UCC Search Results........................................................................ 171
12.7. Solvency Opinion.......................................................................... 171
12.8. Pro Forma Balance Sheet................................................................... 172
12.9. Opinion of Counsel........................................................................ 172
12.10. Payment of Fees........................................................................... 172
12.11. Payout Letter............................................................................. 172
12.12. Closing of Related Transactions........................................................... 172
12.13. Disbursement Instructions................................................................. 173
12.14. Consents and Approvals.................................................................... 173
12.15. Foreign Subsidiary Indebtedness........................................................... 173
12.16. E-II Bankruptcy Matters................................................................... 173
12.17. Delivery of Financial Information......................................................... 173
12.18. Senior Debt Assurances.................................................................... 173
12.19. [Intentionally Deleted.].................................................................. 174
12.20. Belgian Shareholder Approval.............................................................. 174
12.21. Transfer of Subsidiaries.................................................................. 174
12.22. [Intentionally Deleted.].................................................................. 174
12.23. PBGC Letter............................................................................... 174
13. CONDITIONS TO ALL BORROWINGS...................................................................... 174
13.1. Representations True; No Event of Default................................................. 174
13.2. No Legal Impediment....................................................................... 175
13.3. Governmental Regulation................................................................... 175
13.4. Proceedings and Documents................................................................. 175
14. EVENTS OF DEFAULT; ACCELERATION; ETC.............................................................. 175
14.1. Events of Default and Acceleration........................................................ 175
14.2. Termination of Commitments................................................................ 180
14.3. Remedies.................................................................................. 180
14.4. Exchange Rate............................................................................. 181
14.5. Distribution of Collateral Proceeds....................................................... 181
15. SETOFF............................................................................................ 182
16. THE ADMINISTRATIVE AGENT, THE FOREIGN AGENT AND THE SYNDICATION AGENT............................. 183
16.1. Appointment and Authorization; "Agent".................................................... 183
16.2. Delegation of Duties...................................................................... 184
16.3. Liability of Agent........................................................................ 184
16.4. Reliance by Agent......................................................................... 184
16.5. Notice of Default......................................................................... 185
16.6. Credit Decision........................................................................... 185
16.7. Indemnification of Agents................................................................. 185
</TABLE>
-viii-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
16.8. Agents in Individual Capacity............................................................ 186
16.9. Successor Agents......................................................................... 186
16.10. Collateral Matters....................................................................... 187
16.11. Delinquent Lenders....................................................................... 189
16.12. Holders of Notes......................................................................... 190
16.13. No Rights or Duties of Documentation Agent............................................... 190
16.14. Payments to Agent; Distribution of Funds by Agent........................................ 190
17. EXPENSES......................................................................................... 190
18. INDEMNIFICATION.................................................................................. 191
19. SURVIVAL OF COVENANTS, ETC....................................................................... 192
20. ASSIGNMENT AND PARTICIPATION; NEW LENDERS........................................................ 192
20.1. Conditions to Assignment by Lenders...................................................... 192
20.2. Certain Representations and Warranties; Limitations; Covenants........................... 194
20.3. Register................................................................................. 195
20.4. New Notes................................................................................ 195
20.5. Participations........................................................................... 196
20.6. Disclosure............................................................................... 196
20.7. Assignee or Participant Affiliated with the Borrowers.................................... 196
20.8. Miscellaneous Assignment Provisions...................................................... 197
20.9. Assignment by Borrowers.................................................................. 197
20.10. Belgian Share Pledge Registration........................................................ 197
20.11. Sharing of Information with Section 20 Subsidiary........................................ 198
20.12. New Lenders.............................................................................. 198
21. NOTICES, ETC..................................................................................... 202
22. GOVERNING LAW.................................................................................... 203
23. HEADINGS......................................................................................... 204
24. COUNTERPARTS..................................................................................... 204
25. ENTIRE AGREEMENT, ETC............................................................................ 204
26. WAIVER OF JURY TRIAL............................................................................. 204
27. CONSENTS, AMENDMENTS, WAIVERS, ETC............................................................... 205
28. SEVERABILITY..................................................................................... 207
29. RELEASE OF COLLATERAL............................................................................ 208
30. TRANSITIONAL ARRANGEMENTS........................................................................ 208
30.1. Prior Credit Agreement Superseded........................................................ 208
30.2. Return of Notes.......................................................................... 209
30.3. Interest and Fees Under Superseded Agreement............................................. 209
</TABLE>
-ix-
<PAGE>
SCHEDULES AND EXHIBITS
----------------------
<TABLE>
<CAPTION>
Schedules
- ---------
<S> <C>
Schedule 1 Lending Institutions, Lending Offices, Commitments and
Commitment Percentages
Schedule 1A Significant Domestic Subsidiaries
Schedule 1B Existing Letters of Credit
Schedule 1C Existing Foreign Letters of Credit
Schedule 1D Intentionally Deleted
Schedule 8.3 Title to Properties; Leases
Schedule 8.4 Liabilities Not Included in Financial Statements
Schedule 8.6 Exceptions Regarding Franchises, Patents, Copyrights, Etc.
Schedule 8.7 Litigation
Schedule 8.13 Existing Liens
Schedule 8.15 Affiliate Transactions
Schedule 8.16.4 Certain Employee Benefit Plan Matters
Schedule 8.18 Environmental Compliance
Schedule 8.22 Emerging Market Subsidiaries
Schedule 8.23 Subsidiaries
Schedule 8.24 Significant Contracts
Schedule 9.5.7 Landlord Waivers
Schedule 10.1 Indebtedness
Schedule 10.1(p) Indebtedness Owed on Closing Date by Emerging Market
Subsidiaries
Schedule 10.2 Existing Liens
Schedule 10.3(a) Investments held in Non-U.S. Government Obligations
Schedule 10.3(b) Investments held in Non-U.S. Banks
Schedule 10.3(c) Investments in Non-U.S. Commercial Paper
Schedule 10.3(d) Other Investments as of the Closing Date
Schedule 10.5.2(b) Assets Held for Sale
Schedule 10.5.2(c)(iv) Scheduled Assets
Schedule 10.12 Existing Negative Pledges
Schedule 10.13 Transactions with Affiliates
Schedule 10.14 Existing Restrictions on Dividends
Schedule 21 Addresses for Fronting Bank, Foreign Agent, and Syndication
Agent
Exhibits
- --------
Exhibit A-1 Revolving Credit Note
Exhibit A-2 Term Note
Exhibit B-1 Intentionally Deleted
Exhibit B-2 Intentionally Deleted
Exhibit B-3 Intentionally Deleted
Exhibit B-4 Intentionally Deleted
Exhibit C Loan Request
</TABLE>
-x-
<PAGE>
<TABLE>
<S> <C>
Exhibit D Revolving Multicurrency Loan Request
Exhibit E Compliance Certificate
Exhibit F Assignment and Acceptance
Exhibit G Format for Consolidating Reports
</TABLE>
-xi-
<PAGE>
SECOND AMENDED AND RESTATED MULTICURRENCY
-----------------------------------------
REVOLVING CREDIT AND TERM LOAN AGREEMENT
----------------------------------------
This SECOND AMENDED AND RESTATED MULTICURRENCY REVOLVING CREDIT AND TERM
LOAN AGREEMENT is made as of June 24, 1998, by and among (a) SAMSONITE
CORPORATION (the "Company"), a Delaware corporation having its principal place
of business at 11200 East 45th Avenue, Denver, Colorado 80239, (b) SAMSONITE
EUROPE N.V. ("Samsonite Europe"), a corporation organized under the laws of
Belgium having its principal place of business at Westerring 17 B-9700
Oudenaarde, Belgium, (c) BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
A NATIONAL BANKING ASSOCIATION, BANKBOSTON, N.A. (FORMERLY KNOWN AS THE FIRST
NATIONAL BANK OF BOSTON), A NATIONAL BANKING ASSOCIATION, AND THE OTHER LENDING
INSTITUTIONS LISTED ON SCHEDULE 1, (D) BANK OF AMERICA NATIONAL TRUST AND
----------
SAVINGS ASSOCIATION, AS ADMINISTRATIVE AGENT FOR THE AGENTS (AS HEREINAFTER
DEFINED) AND THE LENDERS (AS HEREINAFTER DEFINED), (E) BANKBOSTON, N.A., AS
SYNDICATION AGENT FOR THE AGENTS AND THE LENDERS, (F) GENERALE BANK N.V., AS
FOREIGN AGENT FOR THE AGENTS AND THE LENDERS, AND (G) GENERALE BANK N.V., AS
FRONTING BANK FOR THE LENDERS. IN ADDITION, CANADIAN IMPERIAL BANK OF COMMERCE
SHALL BE REFERRED TO AS A DOCUMENTATION AGENT HEREUNDER. BANCAMERICA ROBERTSON
STEPHENS ("BARS") AND BANCBOSTON SECURITIES INC. ("BSI") ACTED AS ARRANGERS WITH
RESPECT HERETO.
WHEREAS, PURSUANT TO AN AMENDED AND RESTATED MULTICURRENCY REVOLVING CREDIT
AGREEMENT DATED AS OF JUNE 12, 1997 (AS AMENDED FROM TIME TO TIME, THE "PRIOR
CREDIT AGREEMENT") BY AND AMONG THE COMPANY, SAMSONITE EUROPE, CERTAIN OF THE
LENDERS AND CERTAIN OF THE AGENTS, THE LENDERS PARTY THERETO MADE LOANS
AVAILABLE TO THE COMPANY AND SAMSONITE EUROPE FOR, AMONG OTHER THINGS, GENERAL
CORPORATE AND WORKING CAPITAL PURPOSES; AND
WHEREAS, THE COMPANY AND SAMSONITE EUROPE HAVE REQUESTED, AMONG OTHER
THINGS, TO AMEND AND RESTATE THE PRIOR CREDIT AGREEMENT AND FOR THE LENDERS TO
PROVIDE ADDITIONAL FINANCING, TO FUND THE RECAPITALIZATION (AS HEREINAFTER
DEFINED), AND TO PROVIDE FUNDS FOR WORKING CAPITAL AND GENERAL CORPORATE
PURPOSES AND THE LENDERS ARE WILLING TO AMEND AND RESTATE THE PRIOR CREDIT
AGREEMENT AND TO PROVIDE SUCH ADDITIONAL FINANCING ON THE TERMS AND CONDITIONS
SET FORTH HEREIN;
NOW, THEREFORE, THE COMPANY, SAMSONITE EUROPE, THE LENDERS AND THE AGENTS
AGREE THAT ON AND AS OF THE CLOSING DATE (AS HEREINAFTER DEFINED) THE PRIOR
CREDIT AGREEMENT IS HEREBY AMENDED AND RESTATED IN ITS ENTIRETY AND SHALL REMAIN
IN FULL FORCE AND EFFECT ONLY AS EXPRESSLY SET FORTH HEREIN.
<PAGE>
-2-
1. DEFINITIONS AND RULES OF INTERPRETATION.
---------------------------------------
1.1. Definitions. The following terms shall have the meanings set
-----------
forth in this (S)1 or elsewhere in the provisions of this Credit Agreement
referred to below:
Ace. Ace Parent Company or any one or more of its operating Subsidiaries
---
through which all or substantially all of the consolidated business and
operations of Ace Parent Company are conducted.
Ace Parent Company. Ace Company Limited, a corporation organized under the
------------------
laws of Japan, which is the licensee of the Company under the Japanese License
Agreement.
Acquisition Consideration. See (S)10.5.1 hereof.
-------------------------
Additional Commitment Amounts. See (S)20.12 hereof.
-----------------------------
Additional Commitment Conditions. The following conditions, as determined
--------------------------------
in relation to any date on which an Additional Commitment Request is given,
after giving effect to the proposed Additional Commitment Amounts of the
prospective New Lender:
(a) no Default or Event of Default shall have occurred and be continuing on
or as of such date and none would exist after giving effect to any such
Additional Commitment Amounts;
(b) no more than three (3) Additional Commitment Requests, including the
Additional Commitment Request with respect to which these Additional Commitment
Conditions are being applied, shall have been made to the Administrative Agent
and the total of all Additional Commitment Amounts, on an aggregate, cumulative
basis, shall not exceed $50,000,000;
(c) the Additional Commitment Amounts of the New Lender shall include both
a Revolving Commitment and a Revolving Multicurrency Commitment; and
(d) the Revolving Commitment of the prospective New Lender shall be the
same percentage of the aggregate, applicable Additional Commitment Amounts of
the New Lender as the percentage equivalent of the fraction, the numerator of
which is the Total Revolving Commitment before giving effect to the Additional
Commitment Amounts of such New Lender and the denominator of which is the sum of
Total Revolving Commitment and the Total Revolving Multicurrency Commitment (in
each case) before giving effect to the Additional Commitment Amounts of such New
Lender; and the Revolving Multicurrency Commitment of the New Lender shall be
the same percentage of the aggregate, applicable Additional Commitment Amounts
of the New Lender as the percentage equivalent of the fraction, the numerator of
which is the Total Revolving Multicurrency Commitment before giving
<PAGE>
-3-
effect to the Additional Commitment Amounts of such New Lender and the
denominator of which is the sum of Total Revolving Commitment and the Total
Revolving Multicurrency Commitment (in each case) before giving effect to the
Additional Commitment Amounts of such New Lender; and the proposed Revolving
Commitment Percentage for such New Lender (in respect of its applicable
Additional Commitment Amounts) must be the same as the proposed Revolving
Multicurrency Commitment Percentage for such New Lender (in respect of its
applicable Additional Commitment Amounts).
Additional Commitment Request. See (S)20.12 hereof.
-----------------------------
Additional Subordinated Debt. Indebtedness that is incurred by the Company
----------------------------
pursuant to Debt Issuances from time to time after the date hereof by the
Company pursuant to (S)10.1(f) hereof, provided, however, that (i) the Company
-------- -------
complies with the applicable requirements set forth in (S)3.3.3 hereof in
connection therewith; (ii) all of such Indebtedness is expressly subordinated in
right of payment to the prior payment in full of all of the Obligations
(including all obligations refinancing, refunding or replacing all or any part
of the Obligations from time to time) on terms no less favorable to the holders
of any of such Obligations than the subordination provisions contained in the
Subordinated Indenture as initially in effect, (iii) the interest payable on
such Indebtedness is payable in arrears, no more frequently than semi-annually,
(iv) none of such Indebtedness is secured by any lien or security interest
granted by the Company or any of its Subsidiaries with respect to any assets or
capital stock of the Company or any of its Subsidiaries, (v) no Subsidiaries of
the Company have any liability (contingent or otherwise) of any kind in respect
of any such Indebtedness other than pursuant to Conforming Subordinated
Guarantees, (vi) the stated final maturity date of such Indebtedness is not
earlier than the later to occur of the date six (6) months after the Revolving
Credit Loan Maturity Date or, if any portion of the Domestic Term Loan remains
outstanding after giving effect to the application of the proceeds of such
Additional Subordinated Debt, the date six (6) months after the Domestic Term
Loan Maturity Date, (vii) except for customary mandatory prepayment provisions
in connection with a Change of Control (as defined in the Subordinated
Indenture), or a change of control or similar event, or an asset sale or similar
event, in each case as described in any other Subordinated Debt Documents, no
part of the principal of such Indebtedness, and none of the Subordinated Debt
Documents relating to such Indebtedness, is subject to any obligations of the
Company or any of its Subsidiaries in respect of "put" rights or subject to any
mandatory repayment, prepayment, redemption, repurchase, defeasance, sinking
fund or other obligations of the Company or any of its Subsidiaries required to
be made or paid at any time prior to the earlier of (x) the stated final
maturity date referred to in clause (vi) above of this definition and (y) the
date on which all of the Obligations (and any Indebtedness entitled to the
benefits of the subordination provisions referred to in clause (ii) and used to
refinance, refund, or replace the Obligations) have been paid in full, provided
--------
that, in the case of prepayment provisions in connection with asset sales or
similar events, such provisions do not
<PAGE>
-4-
conflict with any mandatory prepayment or other provisions with respect to the
Obligations (and with respect to any Indebtedness entitled to the benefit of the
subordination provisions referred to in clause (ii) and used to refinance,
refund or replace the Obligations), (viii) the covenants, events of default,
acceleration and remedy terms, and other provisions affecting the foregoing or
having a purpose or effect similar to the foregoing, contained in the
Subordinated Debt Documents relating to such Indebtedness, individually and
taken as a whole, are neither more restrictive, burdensome, or onerous to the
Company and its Subsidiaries than those contained in the Subordinated Notes and
the Subordinated Indenture, each as initially in effect, nor (except with
respect to covenants restricting the incurrence of additional Subordinated Debt)
more onerous, restrictive, or burdensome to the Company and its Subsidiaries
than those contained in this Credit Agreement as in effect at the time of
incurrence of such other Indebtedness; without limitation of the generality of
the foregoing, (A) any covenant in the applicable Subordinated Debt Documents
limiting incurrences of Indebtedness shall permit (in addition to permitting all
of the Indebtedness permitted by (S)10.1 hereof at the time of incurrence of
such proposed Additional Subordinated Debt) there to be incurred and to remain
outstanding (among other things) Indebtedness consisting of all of the
Obligations as the same may be increased, amended, extended, refinanced,
refunded, or replaced from time to time (so long as the maximum aggregate
principal amount of the Obligations (as so increased, amended, extended,
refinanced, refunded, or replaced) does not at any time exceed $260,000,000),
and shall also permit there to be incurred and to remain outstanding other
Obligations and other Indebtedness (without restriction as to purpose) in an
aggregate principal amount outstanding at any time of at least $50,000,000
(provided that there shall be no limitation in the applicable Subordinated Debt
--------
documents as to how such additional principal amount of up to $50,000,000 may be
allocated between the Obligations and any other Indebtedness), with all such
Obligations and other Indebtedness referred to in this clause (A) to be
permitted without regard to any so-called "debt incurrence" test consisting of a
fixed charge coverage ratio, interest coverage ratio or other financial
performance tests, and (B) any covenant in the applicable Subordinated Debt
Documents limiting the granting of liens and security interests shall not
restrict the granting of liens and security interests to secure the Obligations
(and any refinancing, refunding, or replacement thereof), (ix) immediately
prior, and immediately after giving effect, to the issuance of such Indebtedness
and the application of the Net Debt Issuance Proceeds from the issuance thereof,
each of the Special Conditions is satisfied, and such Indebtedness is not
incurred in violation of any provision of the Subordinated Indenture, (x) all
Net Debt Issuance Proceeds thereof remaining after compliance with (S)3.3.3
hereof shall be used solely for purposes permitted (or required) by this Credit
Agreement, (xi) the Subordinated Debt Documents relating to such Indebtedness
shall require written notice to the Administrative Agent, in the manner provided
in, and giving not less than the number of days of notice required by, the
applicable provisions of the Subordinated Indenture, prior to any acceleration
of such Indebtedness and (xii) concurrent with incurrence of such Indebtedness,
the
<PAGE>
-5-
Company shall notify the Administrative Agent thereof and provide to the
Administrative Agent accurate and complete copies of the relevant Subordinated
Debt Documents relating to such Additional Subordinated Debt.
Adjustment Date. The first Business Day which is fifty (50) days after the
---------------
end of each fiscal quarter of the Company.
Administrative Agent. BofA, acting as administrative agent for the Agents
--------------------
and the Lenders.
Administrative Agent's Head Office. The Administrative Agent's head office
----------------------------------
located at 1455 Market Street, San Francisco, California 94103, or at such other
location as the Administrative Agent may designate from time to time.
Administrative Agent's Special Counsel. Bingham Dana LLP or such other
--------------------------------------
local, foreign or special counsel to the Administrative Agent as may be approved
by the Administrative Agent.
Affected Lenders. See (S)6.2.6 hereof.
----------------
Affiliate. With respect to any specified Person, (a) any other Person
---------
directly or indirectly controlling or controlled by, or under direct or indirect
common control with, such specified Person or (b) any officer, director or
controlling shareholder of such other Person. For purposes of this definition,
the term "control" means (i) the power to direct the management and policies of
a Person, directly or through one or more intermediaries, whether through the
ownership of voting securities, by contract, or otherwise, or (ii) without
limiting the foregoing, the beneficial ownership of five percent (5%) or more of
the voting power of the outstanding voting capital stock of such Person (on a
fully diluted basis) (for this purpose, beneficial ownership includes shares
subject to presently exercisable options, warrants or other rights to acquire
such shares).
Agent-Related Persons. Each of the Agents and any successor agents arising
---------------------
under (S)16.9, together with their respective Affiliates (including, in the case
of BofA and BKB, the Arrangers), and the officers, directors, employees, agents
and attorneys-in-fact of such Persons and Affiliates.
Agents. Collectively, the Administrative Agent, the Foreign Agent, and the
------
Syndication Agent. The term "Agents" does not include the Documentation Agent.
Agent's Fee. See (S)6.1 hereof.
-----------
Applicable Belgium Time. The local time in effect in the city in which the
-----------------------
Foreign Agent's principal office in Belgium is located on any date of
determination.
<PAGE>
-6-
Applicable Entities. See (S)14.1(g) hereof.
-------------------
Applicable Margin. For each period commencing on an Adjustment Date (or,
-----------------
as applicable, the Closing Date) through the date immediately preceding the next
(or, as applicable, the first) Adjustment Date (each a "Rate Adjustment
Period"), the Leverage Ratio shall be determined based upon the financial
results for the Reference Period ending on the fiscal quarter end date occurring
on or about the date fifty (50) days before the applicable Adjustment Date, and
the resulting margin shall be as set forth below. The pricing tier applicable
for the Leverage Ratio applicable for such period as set forth below shall then
be the Applicable Margin for such Rate Adjustment Period.
@@
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Eurodollar Rate
Loans (other than
the Domestic Term Documentary Letter Base Rate
Loan), Multicurrency Eurodollar Rate of Credit Fee Rate Base Rate Loans Loans that
Loans, and Loans that are and Foreign (other than are the
Pricing Leverage Multicurrency Swing the Domestic Documentary Letter Domestic Term Domestic Commitment
Tier Ratio Line Loans Term Loan of Credit Fee Rate Loan) Term Loan Fee Rate
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Tier 7 Greater than 2.50% 2.75% 1.9375% 1.50% 1.75% 0.500%
or equal to
5.50:1.00
- ------------------------------------------------------------------------------------------------------------------------------------
Tier 6 Less than 2.25% 2.50% 1.7625% 1.25% 1.50% 0.500%
5.50:1.00,
but greater
than or
equal to
5.00: 1.00
- ------------------------------------------------------------------------------------------------------------------------------------
Tier 5 Less than 1.875% 2.50% 1.4625% 0.875% 1.50% 0.375%
5.00:1.00,
but greater
than or
equal to
4.50:1.00
- ------------------------------------------------------------------------------------------------------------------------------------
Tier 4 Less than 1.625% 2.25% 1.25% 0.625% 1.25% 0.375%
4.50:1.00,
but greater
than or
equal to
4.00:1.00
</TABLE>
<PAGE>
-7-
<TABLE>
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Tier 3 Less than 1.375% 2.25% 1.125% 0.375% 1.25% 0.300%
4.00:1.00,
but greater
than or
equal to
5.50:1.00
- --------------------------------------------------------------------------------------------------------------
Tier 2 Less than 1.00% 2.00% 0.70% 0% 1.00% 0.300%
3.50:1.00,
but greater
than or
equal to
3.00:1.00
- --------------------------------------------------------------------------------------------------------------
Tier 1 Less than 0.750% 2.00% 0.4750% 0% 1.00% 0.250%
5.00:1.00
- --------------------------------------------------------------------------------------------------------------
</TABLE>
@@
Notwithstanding the foregoing,
(a) for purposes of the rate of interest on Loans outstanding, the
Commitment Fee Rate, the determination of Standby Letter of Credit Fees, the
determination of Foreign Standby Letter of Credit Fees, the Foreign Documentary
Letter of Credit Fee Rate and the Documentary Letter of Credit Fee Rate with
respect to the period commencing on the Closing Date through the date
immediately preceding the Adjustment Date occurring on March 22, 1999, the
Applicable Margin shall be the Applicable Margin set forth in Tier 7 above;
(b) in the event the Company's estimates of the Leverage Ratio based on the
Company's fourth quarter performance in any fiscal year pursuant to (S)9.4(c)
hereof proves to be inaccurate after final calculations of fourth quarter
financial statements pursuant to the audited financial statements for such
fiscal year and the result of such inaccuracy was such that the Applicable
Margin applied for any applicable such Rate Adjustment Period was (i) too low,
the applicable Borrower shall, within five (5) Business Days upon becoming aware
of (or receiving notice from the Administrative Agent in reasonable detail,
requesting an adjustment hereunder with respect to) such inaccuracy, pay to the
Administrative Agent for the respective ratable accounts of the Lenders the
difference between the interest, Commitment Fees, Standby Letter of Credit Fees,
Foreign Standby Letter of Credit Fees, Foreign Documentary Letter of Credit Fees
and Documentary Letter of Credit Fees the applicable Borrower should have paid
with respect to such Rate Adjustment Period and what was actually paid or (ii)
too high, the Lenders severally, on a ratable basis, shall (within five (5)
Business Days after receiving notice thereof from the Company, in reasonable
detail, requesting an adjustment hereunder with respect thereto) credit to the
next interest payment, payment of Commitment Fees, payment of Standby Letter of
Credit Fees, payment of Foreign Standby Letter of Credit Fees, payment of
Foreign Documentary Letter of Credit Fees or payment of Documentary Letter of
Credit Fees due by the applicable
<PAGE>
-8-
Borrower with (or if no Obligations are owing hereunder, severally, on a ratable
basis, shall refund to the applicable Borrower) the difference between the
interest, Commitment Fees, Standby Letter of Credit Fees, Foreign Standby Letter
of Credit Fees, Foreign Documentary Letter of Credit Fees and Documentary Letter
of Credit Fees the applicable Borrower actually paid with respect to such Rate
Adjustment Period and what should have been paid; and
(c) if the Company fails to deliver any quarterly financial statements or
quarterly Compliance Certificate when required by (S)9.4(b) or (S)9.4(c) hereof
then, for the period commencing on the Adjustment Date immediately following the
period for which such quarterly financial statements or quarterly Compliance
Certificates are delinquent and continuing through the earlier of the date of
delivery of such quarterly financial statements or quarterly Compliance
Certificate (as the case may be) and the next Adjustment Date, the Applicable
Margin shall be the Applicable Margin set forth in Tier 7 above.
Arrangers. BancAmerica Robertson Stephens and BancBoston Securities Inc.
---------
(each being an "Arranger").
Asset Sale. Any one or series of related transactions in which any
----------
applicable Person conveys, sells, transfers, or otherwise disposes of, directly
or indirectly, any of its properties, businesses, or assets (including the sale
or issuance of capital stock of a Non-Excluded Subsidiary), whether owned on the
Closing Date or thereafter acquired.
Asset Sale Calculation Date. See (S)10.5.2(c)(v).
---------------------------
Assignment and Acceptance. See (S)20.1 hereof.
-------------------------
Attorney Costs. See the definition of Indemnified Liabilities.
--------------
Balance Sheet Date. January 31, 1998.
------------------
Bargain Time. Bargain Time, Inc.
------------
BARS. As defined in the Preamble hereto.
----
Base Rate. For any day, the higher of: (a) 0.50% per annum above the
---------
latest Federal Funds Rate; and (b) the rate of interest in effect for such day
as publicly announced from time to time by BofA in San Francisco, California, as
its "reference rate." (The "reference rate" is a rate set by BofA based upon
various factors including BofA's costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above, or below such announced rate.) Any change
in the reference rate announced by BofA shall take effect at the opening of
business on the day specified in the public announcement of such change.
<PAGE>
-9-
Base Rate Borrowing. A Borrowing comprised of Base Rate Loans.
-------------------
Base Rate Loans. Those Revolving Credit Loans, Swing Line Loans, and all
---------------
or any portion of the Domestic Term Loan bearing interest calculated by
reference to the Base Rate.
Belgian Financing Agreements. (a) (i) The "Akte van hypothecaire lening"
----------------------------
agreed between Samsonite Europe, Generale Bank N.V., Bank Brussel Lambert N.V.
and Kredietbank N.V. and drawn up by notary Andre Toye of Oudenaarde, Belgium,
on March 12, 1993, (ii) the "Overeenkomst van kredietverhoging" between
Samsonite Europe, Generale Bank N.V., Bank Brussel Lambert N.V. and Kredietbank
N.V. of March 12, 1993, (iii) the "Eerste Amendment bij de Overeenkomst van
kredietverhoging" between Samsonite Europe, Generale Bank N.V., Bank Brussel
Lambert N.V. and Kredietbank N.V. dated as of March 6, 1995, and (iv) the
"Tweede Amendment bij de Overeenkomst van kredietverhoging" between Samsonite
Europe, Generale Bank N.V., Bank Brussel Lambert N.V. and Kredietbank N.V. dated
July 14, 1995, and (b) all other documents, instruments or agreements evidencing
or securing the same or otherwise executed in connection therewith.
Belgian Lending Office. Initially, the head office of Generale Bank N.V.,
----------------------
in its capacity as Fronting Bank, located in Brussels, Belgium, and thereafter
such office in Belgium as the Fronting Bank, in its sole discretion acting in
good faith, may notify to the Administrative Agent and the Borrowers.
Belgian License Agreement. The Amended and Restated License Agreement
-------------------------
dated as of February 1, 1997 between Samsonite Europe and the Company (and as
amended, restated, modified or supplemented from time to time as and to the
extent permitted by (S)10.11 hereof).
Belgian Pledge Agreement. The Belgian law Amended and Restated Stock
------------------------
Pledge Agreement, dated or to be dated on or prior to the Closing Date, among
the Company, Samsonite Europe and the Administrative Agent acting in its own
name and for its own account and in the name and for the account of the Agents
and the Lenders pursuant to which the Company has pledged sixty-six percent
(66%) of the capital stock of Samsonite Europe, and in form and substance
satisfactory to the Lenders and the Administrative Agent.
BIBOR Rate. With respect to any Multicurrency Swing Line Loan, in relation
----------
to any period, the rate per annum offered in the Brussels Interbank market for
deposits of a similar tenor in an appropriate amount in Belgian francs for such
period, as reported on page 29,200 of the Telerate screen, or, in case of
unavailability thereof, on the BEFIXING page of the Reuters screen (or any
successor to such pages or such screens) at or about 11:00 a.m. (Applicable
Belgium Time) on the Drawdown Date of such Multicurrency Swing Line Loan or, if
such rate shall not be so reported, the arithmetic
<PAGE>
-10-
mean (rounded upwards, as the case may be, to the nearest 1/32%) of the rates
offered to prime banks in Brussels by the Foreign Agent for deposits of an
appropriate tenor and amount by the Foreign Agent in Belgian francs for such
period at or about 11:00 a.m. (Applicable Belgium Time) on such Drawdown Date.
Board of Directors. With respect to any Person, the board of directors (or
------------------
similar governing body) of such Person or any committee of the board of
directors (or similar governing body) of such Person properly and lawfully
authorized, with respect to any particular matter, to exercise the power of the
board of directors (or similar governing body) of such Person.
BofA. Bank of America National Trust and Savings Association, a national
----
banking association.
BKB. BankBoston, N.A., a national banking association, in its individual
---
capacity.
Borrower. The Company or Samsonite Europe, as the context requires and
--------
"Borrowers" shall mean the Company and Samsonite Europe.
Borrowing. A group of Loans of a single Type made by the Lenders on a
---------
single date and as to which a single Interest Period is in effect, or a
borrowing hereunder consisting of Letters of Credit issued by the Issuing Bank
or Foreign Letters of Credit issued by the Foreign Issuing Bank.
BSI. As defined in the Preamble hereto.
---
Business Day. Any day other than a Saturday, Sunday or other day on which
------------
commercial banks in New York City or San Francisco, California or Boston,
Massachusetts are authorized or required by law to close and, in addition, (a)
if Eurodollar Rate Loans are involved, a day which is also a Eurodollar Business
Day; (b) if Multicurrency Loans are involved, a day on which dealings and
exchange in Dollars and the relevant Optional Currency can be carried on in the
relevant Eurocurrency Interbank Market and Dollar settlements of such dealings
may be effected in New York, New York and Brussels, Belgium, (c) if a
Multicurrency Swing Line Loan is involved, a day on which banking institutions
in Brussels, Belgium are open for the transaction of corporate banking business,
and (d) if any Optional Currency is involved, a day on which dealings and
exchange in Dollars and in the relevant Optional Currency can be carried on in
the principal financial center of the country in which such currency is legal
tender and in Brussels, Belgium.
Capital Expenditures. Without duplication, amounts paid or indebtedness
--------------------
incurred by any of the Borrowers or any of their Non-Excluded Subsidiaries in
connection with the acquisition, purchase or lease by such Borrower or any such
Non-Excluded Subsidiary of capital assets that would be required to be
capitalized (including the applicable amount in respect of
<PAGE>
-11-
capitalized interest) and which amounts would be shown as such capital
expenditures on the consolidated statement of cash flows of such Person in
accordance with generally accepted accounting principles, provided, however
-------- -------
Capital Expenditures shall not include (a) amounts paid or indebtedness incurred
in connection with capital assets purchased pursuant to an acquisition permitted
pursuant to (S)10.5.1 hereof, (b) amounts paid with (and only to the extent of
the application of) insurance proceeds or proceeds of a condemnation within
eighteen (18) months after receipt by the Obligors from the applicable insurer
of such insurance proceeds or from the applicable governmental agency of such
condemnation proceeds, as the case may be, in connection with the purchase of
capital assets (or capital assets similar to those destroyed or taken, as the
case may be) to replace the capital assets destroyed in the casualty loss giving
rise to such insurance proceeds or taken in the condemnation proceeding giving
rise to such condemnation proceeds, as the case may be, or (c) amounts
consisting of Reinvested Net Asset Sale Proceeds.
Capitalized Leases. Leases under which the Company or any of its Non-
------------------
Excluded Subsidiaries (or such other applicable Person as the context requires)
is the lessee or obligor, the discounted future rental payment obligations under
which are required to be capitalized on the balance sheet of the lessee or
obligor in accordance with generally accepted accounting principles.
CERCLA. See the definition of "Release".
------
Change of Control. See (S)14.1(r) hereof.
-----------------
Closing Date. The first date on which the conditions set forth in (S)12
------------
have been satisfied and the Term Loans and any Revolving Credit Loans, Swing
Line Loans, Revolving Multicurrency Loans or Multicurrency Swing Line Loans are
to be made or any Letter of Credit or Foreign Letter of Credit is to be issued
hereunder.
Code. The Internal Revenue Code of 1986.
----
Collateral. All of the property, rights and interests of any of the
----------
Borrowers and their Subsidiaries that are to be subject to the security
interests, pledges, liens and mortgages (if any) created by the Security
Documents.
Collateral Agency Agreement(s). The several collateral agency
------------------------------
agreement(s), dated or to be dated on or after the Closing Date, between certain
of the Obligors and the Collateral Agent and in form and substance satisfactory
to the Collateral Agent, entered into for purposes of (among other things)
further evidencing the arrangements provided for in certain of the Security
Documents securing the Obligations and the related arrangements required by the
PBGC Letter with respect to the PBGC Ratable Lien.
<PAGE>
-12-
Collateral Agent. BofA, as Collateral Agent under certain of the Security
----------------
Documents pursuant to the Collateral Agency Agreements.
Collateral Assignment of Contracts. The Collateral Assignment of
----------------------------------
Contracts, dated as of a date on or after the Closing Date, from the Company to
the Administrative Agent assigning all of the Company's rights under the Belgian
License Agreement, together with the written consent of Samsonite Europe
thereto, each in form and substance satisfactory to the Administrative Agent.
Commitment Fee Rate. As referred to as such in the table contained in the
-------------------
definition of Applicable Margin.
Commitment Fees. Collectively, the Revolving Commitment Fee and the
---------------
Multicurrency Commitment Fee.
Commitments. Collectively, the Revolving Commitments and the Revolving
-----------
Multicurrency Commitments.
Company. As defined in the preamble hereto.
-------
Compliance Certificate. See (S)9.4(c) hereof.
----------------------
Conforming Subordinated Guarantees. A guaranty by a Subsidiary of the
----------------------------------
Company of Additional Subordinated Debt, which guaranty (a) is expressly
subordinated in right of payment to the prior payment in full of all of the
Obligations (including all obligations refinancing, refunding or replacing all
or any part of the Obligations from time to time) to the same extent and on the
same terms that the Indebtedness guaranteed thereby is subordinated to the
Obligations, (b) is a guaranty by a Subsidiary that is a Guarantor hereunder,
and (c) provides that it will be released automatically at such time as (i) the
guaranty by such Subsidiary of the Obligations is released or (ii) all or
substantially all of the capital stock (or other equity interests) of such
Subsidiary held by the Company and other Subsidiaries (or substantially all of
such Subsidiary's assets) are sold or otherwise disposed of (other than to an
affiliate) in a transaction that is permitted by the relevant Subordinated
Debt Documents relating to such Additional Subordinated Debt and Conforming
Subordinated Guarantees.
Consolidated or consolidated. With reference to any term defined herein,
----------------------------
shall mean that term as applied to the accounts of the Company and its
Subsidiaries, or the Company and its Non-Excluded Subsidiaries, as the context
requires, consolidated in accordance with generally accepted accounting
principles.
Consolidated Net Income (or Loss). The consolidated net income (or loss)
---------------------------------
of the Company and its Non-Excluded Subsidiaries, after deduction of all
expenses, taxes, and other charges against consolidated net income, determined
in accordance with generally accepted accounting principles;
<PAGE>
-13-
provided that the consolidated net income of any Excluded Subsidiary shall be
- --------
included therein to (but only to) the extent of the amount of cash dividends or
cash Distributions actually paid in the relevant period to the Company or a Non-
Excluded Subsidiary thereof by such Excluded Subsidiary.
Consolidated Total Assets. All assets of the Company and its Non-Excluded
-------------------------
Subsidiaries determined on a consolidated basis in accordance with generally
accepted accounting principles.
Consolidated Total Interest Expense. For any period, the aggregate amount
-----------------------------------
of interest required to be paid or accrued by the Company and its Non-Excluded
Subsidiaries during such period on all Indebtedness of the Company and its Non-
Excluded Subsidiaries outstanding during all or any part of such period, but
only if such interest was or is required to be reflected as an item of expense,
including payments consisting of interest in respect of Capitalized Leases, and
also including Commitment Fees, Letter of Credit Fees, Foreign Letter of Credit
Fees, agency fees, facility fees, commitment fees, balance deficiency fees and
similar fees or expenses in connection with the borrowing of money, but
excluding any closing fees, structuring fees or arrangement fees that have been
or are capitalized or which have been treated as an extraordinary loss in
accordance with generally accepted accounting principles during such period in
connection with the accelerated recognition of expenses for such items,
provided, that for the purpose of calculating the Consolidated Total Interest
- --------
Expense for any applicable period ending prior to the passage of four (4) full
consecutive fiscal quarters beginning and ending after the fiscal quarter in
which the Closing Date occurs, Consolidated Total Interest Expense shall be that
amount, determined on a pro forma basis, that Consolidated Total Interest
Expense would have been had the Subordinated Notes been outstanding for the
entire period of time for which the Consolidated Total Interest Expense is being
calculated and had the amount included in Consolidated Total Interest Expense on
account of this Credit Agreement been the Pro Forma Bank Interest Amount, rather
than the actual expense incurred on account of interest and fees on account of
this Credit Agreement (in addition to interest on all other Indebtedness of the
Company and its Non-Excluded Subsidiaries during such period, other than
Indebtedness that was repaid with the proceeds of the Subordinated Notes and the
Loans).
Consolidating. With reference to any term defined herein, shall mean that
-------------
term as applied to the accounts or financial statements, as applicable, of the
United States, Canadian and Mexican portion of the business of the Company, as
well as the Latin American export business of the Company, taken together, all
Non-Excluded Subsidiaries located in Europe taken together, and other applicable
portions of the business, which is presented in the format set forth on Exhibit
-------
G hereto, which format may be modified with the written consent of the
- -
Administrative Agent and the Borrowers.
<PAGE>
-14-
Conversion Request. A notice given by a Borrower to the Administrative
------------------
Agent or the Foreign Agent, as the case may be, of such Borrower's election to
convert or continue a Loan in accordance with (S)2.8 or (S)4.8, as the case may
be.
Copyright Memoranda. The several Memorandum of Grant of Security Interest
-------------------
in Copyrights, dated or to be dated as of a date on or after the Closing Date,
made by Samsonite and McGregor in favor of the Collateral Agent for the benefit
of the Lenders, each in form and substance satisfactory to the Administrative
Agent.
Credit Agreement (or this Agreement). This Second Amended and Restated
-----------------------------------
Multicurrency Revolving Credit and Term Loan Agreement, including the Schedules
and Exhibits hereto.
Culligan. Culligan Water Technologies, Inc., a Delaware corporation.
--------
Debt Issuance. The sale or issuance by any Borrower or any of its Non-
-------------
Excluded Subsidiaries of any Indebtedness permitted pursuant to (S)10.1 (other
than Indebtedness permitted pursuant to (S)10.1(a) through (e), (S)10.1(g)
through (q) or (S)10.1(s)).
Default. See (S)14.1 hereof.
-------
Delinquent Lender. See (S)16.11 hereof.
-----------------
Distribution. The declaration or payment of any dividend on or in respect
------------
of any shares of any class of capital stock of any of the Borrowers, or their
Non-Excluded Subsidiaries, other than dividends payable solely in shares of
common stock of such Person; the purchase, redemption, or other retirement of
any shares of any class of capital stock of any of the Borrowers, or their Non-
Excluded Subsidiaries, directly or indirectly through a Subsidiary of such
Person or otherwise other than for consideration consisting solely of common
stock of such Person; the return of capital by any of the Borrowers, or their
Non-Excluded Subsidiaries, to its shareholders as such; or any other
distribution on or in respect of any shares of any class of capital stock of any
of the Borrowers or their Non-Excluded Subsidiaries.
Distribution Agreement. The Distribution Agreement, dated as of July 14,
----------------------
1995, between the Company and Culligan.
Documentary Letter of Credit Fee Rate. As referred to as such in the table
-------------------------------------
contained in the definition of Applicable Margin.
Documentary Letter of Credit Fee. See (S)5.6.1 hereof.
--------------------------------
Documentary Letter of Credit Issuance Fee. See (S)5.6.1 hereof.
-----------------------------------------
<PAGE>
-15-
Documentation Agent. Canadian Imperial Bank of Commerce, in its capacity
-------------------
as Documentation Agent, subject to (S)16.13 hereof.
Dollar Equivalent. On any particular date, with respect to any amount
-----------------
denominated in Dollars, such amount of Dollars, and with respect to any amount
denominated in a currency other than Dollars, the amount (as conclusively
ascertained by the Foreign Agent absent manifest error) of Dollars which could
be purchased by the Foreign Agent (in accordance with its normal banking
practices) in the Brussels, Belgium foreign currency deposit markets with such
amount of such currency at the spot rate of exchange prevailing at or about
11:00 a.m. (Applicable Belgium Time) on such date.
Dollars or $. Dollars in lawful currency of the United States of America.
------- -
Domestic Lending Office. Initially, the office of each Lender designated
-----------------------
as such in Schedule 1 hereto; thereafter, such other office of such Lender, if
-------- -
any, located within the United States that will be making or maintaining Base
Rate Loans.
Domestic Excluded Subsidiary. An Excluded Subsidiary that is a Domestic
----------------------------
Subsidiary.
Domestic Non-Excluded Subsidiary. A Non-Excluded Subsidiary that is a
--------------------------------
Domestic Subsidiary.
Domestic Subsidiary. A Subsidiary which is not a Foreign Subsidiary.
-------------------
Domestic Term Loan. The term loan made or to be made by the Lenders, in
------------------
each case according to their Domestic Term Loan Commitment Percentages thereof,
to the Company in Dollars on the Closing Date in the aggregate principal amount
of $60,000,000 pursuant to (S)3.1.1.
Domestic Term Loan Commitment Percentage. With respect to each Lender, the
----------------------------------------
percentage set forth on Schedule 1 hereto as such Lender's percentage of the
----------
Domestic Term Loan.
Domestic Term Loan Maturity Date. June 24, 2005.
--------------------------------
Domestic Term Obligations. See (S)20.1 hereof.
-------------------------
Drawdown Date. The date on which the Term Loans, any Revolving Credit
-------------
Loan, Multicurrency Swing Line Loan, Swing Line Loan or any Revolving
Multicurrency Loan is made or is to be made, and the date on which any Revolving
Credit Loan is converted or continued in accordance with (S)2.8, all of any
portion of the Domestic Term Loan is converted or continued in accordance with
(S)3.5.3(a), or any Multicurrency Loan is continued in accordance with (S)4.8.
<PAGE>
-16-
EBIT. With respect to the Company and its Non-Excluded Subsidiaries for
----
any fiscal period, that amount which would appear on their consolidated income
statement as the line item for "Operating Income", as determined for such period
calculated in accordance with generally accepted accounting principles and in
accordance with the Company's past accounting practices, consistently applied.
EBITDA. With respect to the Company and its Non-Excluded Subsidiaries for
------
any fiscal period, an amount equal to EBIT for such period, plus, to the extent
----
otherwise excluded from the calculation of EBIT (or, in the case of depreciation
and amortization, to the extent charged against the calculation of EBIT) for
such period, and without duplication, (a) recurring interest income for such
period, plus (b) recurring rental income for such period, plus (c) realized
---- ----
hedge gains (or minus in the case of realized hedge losses) for such period,
-----
plus (d) depreciation and amortization for such period; provided, however, for
- ---- -------- -------
purposes of this Credit Agreement, for the avoidance of doubt, the determination
of EBITDA shall exclude, in any event, and without duplication, any and all
reversals of charges, recovery of cash, or income or gain items, attributable to
(i) any matters relating to the obligation of the Company and its Subsidiaries
to pay or otherwise fund any interest on overdue interest accruing prior to the
Reorganization relating to certain pre-Reorganization debt securities of E-II
Holdings, (ii) any collection or other realization of any loans or other
advances made to the E-II Settlement Trust, or any write-ups or write-downs of
assets consisting of amounts owing in respect of, or receivables relating to,
such loans or advances or increases or decreases in reserves with respect
thereto, (iii) any revaluation of balance sheet liabilities previously accrued
with respect to the applicable pension plans which are (or were) subject to any
Plan Agreements (as defined in the Prior Credit Agreement) made upon the
assumption or merger of any Guaranteed Pension Plan which is (or was) the
subject of a Plan Agreement with a Guaranteed Pension Plan not so subject;
further, provided, however, the determination of EBITDA shall exclude, without
- ------- --------
duplication, to the extent deducted in determining EBIT or EBITDA, the
following: (A) the applicable transaction expenses associated with the
refinancing of the Prior Credit Agreement contemplated by this Credit Agreement,
and any charges in respect of fees and expenses incurred in connection with the
Recapitalization and the Related Transactions, (B) the premium associated with
the Subordinated Note Tender Offer for purchasing or defeasing (if applicable)
the Subordinated Notes (to the extent such premium does not exceed 20% of par
value) and all other transaction expenses related thereto, (C) any non-cash
charges that are not associated with the operations of the Borrowers or their
Subsidiaries, (D) restructuring charges (and one-time charges or costs
associated with the relevant restructuring giving rise to restructuring charges)
of up to $8,293,000 in aggregate that may be incurred during the fiscal year
ending January 31, 1999, (E) charges consisting of not more than $4,000,000 in
the aggregate of U.S. and Mexico production variances to the extent incurred
during the last two fiscal quarters of the fiscal year ending January 31, 1998,
(F) costs and expenses (not in excess of $5,200,000) related to the
<PAGE>
-17-
previous matters involving the potential sale and evaluation of other strategic
alternatives of the Company including legal and investment banking fees, (G) net
restructuring charges (and net one-time charges or costs associated with the
relevant restructuring charges) of up to $1,900,000 incurred during the last
fiscal quarter of the fiscal year ended January 31, 1998, (H) any non-cash
charges in the fiscal year ending January 31, 1999 in respect of the potential
disposal or liquidation of the Company's investment in its joint venture in
China; and (I) charges associated with the exercise or adjustment of employee
stock options and employee restricted stock in connection with the
Recapitalization and the Related Transactions, of which not more than $2,000,000
of such excluded charges shall consist of cash charges (as determined on a
cumulative, aggregate basis).
Solely for the purpose of the calculation of EBITDA as utilized in the
determination of the Senior Leverage Ratio and the Leverage Ratio, for Reference
Periods ending on or after the consummation of an acquisition of an entity or
business pursuant to (S)10.5.1(c) or (S)10.5.1(f), without duplication (x) for
such portions of the applicable Reference Period that are prior to the effective
date of the consummation of such acquisition (the "Pre-Acquisition Period"),
except as provided in clause (y) of this sentence, the amount equal to the
"operating income" (before provision for interest expense and income taxes) of
the acquired entity or business (or the equivalent term, as used by such entity
in its financial statements) determined in accordance with generally accepted
accounting principles plus, to the extent otherwise excluded from the
----
calculation of such "operating income" (or, in the case of depreciation and
amortization, to the extent charged against the calculation of such "operating
income") for such period, and without duplication, for such entity or business,
(a) recurring interest income for such period, plus (b) recurring rental income
----
for such period, plus (c) realized hedge gains (or minus in the case of realized
---- -----
hedge losses) for such period, plus (d) depreciation and amortization for such
----
period, shall be added to the calculation of EBITDA for any applicable Reference
Period that includes such Pre-Acquisition Period, and (y) for such Pre-
Acquisition Period of the applicable Reference Period, the determination of the
"operating income" of the acquired entity or business and the determination of
EBITDA shall exclude in any event, and without duplication, all items of income,
revenue and expenses that were realized or incurred by the acquired entity or
business and the Company and its Non-Excluded Subsidiaries arising out of
transactions between the acquired entity or business and the Company and its
Non-Excluded Subsidiaries (as if such acquired entity or business were deemed to
be consolidated with the Company and its Non-Excluded Subsidiaries during all of
such Pre-Acquisition Period).
E-II Holdings. E-II Holdings, Inc., a Delaware corporation and predecessor
-------------
to the Company (prior to the Reorganization).
E-II Settlement Trust. The settlement trust established pursuant to the E-
---------------------
II Settlement Trust Agreement.
<PAGE>
-18-
E-II Settlement Trust Agreement. The Settlement Trust Agreement dated June
-------------------------------
8, 1993 among E-II Holdings, Astrum, and Hillel Weinberger as trustee.
Eligible Assignee. Any of (a) a commercial bank or finance company
-----------------
organized under the laws of the United States, or any State thereof or the
District of Columbia, and having total assets in excess of $3,000,000,000 and
having combined capital and surplus of at least $100,000,000; (b) a savings and
loan association or savings bank organized under the laws of the United States,
or any State thereof or the District of Columbia, and having total assets in
excess of $3,000,000,000 and having combined capital and surplus of at least
$100,000,000; (c) a commercial bank organized under the laws of any other
country which is a member of the Organization for Economic Cooperation and
Development (the "OECD") or has concluded special lending arrangements with the
International Monetary Fund associated with its General Arrangements to Borrow,
or of a political subdivision of any such country, and having total assets in
excess of $3,000,000,000 and having combined capital and surplus of at least
$100,000,000, provided that such bank is acting through a branch or agency
--------
located in the United States, the country in which it is organized or another
country which is also a member of the OECD; (d) the central bank of any country
which is a member of the OECD; (e) a finance company, insurance company or other
financial institution or fund (whether a corporation, partnership, trust or
other entity) that is engaged in making, purchasing or otherwise investing in
commercial loans in the ordinary course of its business and having a combined
capital and surplus in excess of $250,000,000; and (f) any other Permitted
Entity; provided, in eachcase, that (except as provided in clause (a) of (S)
--------
20.1) such Person is approved by the Administrative Agent, the Foreign Agent,
the Issuing Bank, the Foreign Issuing Bank, the Fronting Bank, the Swing Line
Lender, the Multicurrency Swing Line Lender, and (as provided in (S)20.1, so
long as no Event of Default is continuing) the Borrowers, such approval (as
provided in (S)20.1, in the case of the Borrowers) not to be unreasonably
withheld or delayed (except that in the case of an assignment solely with
respect to either or both of the Term Loans, no such approval shall be required
to be obtained from the Issuing Bank, the Foreign Issuing Bank, the Swing Line
Lender, or the Multicurrency Swing Line Lender, and in the case of an assignment
solely with respect to the Domestic Term Loan, no approval shall be required to
be obtained from the Foreign Agent or the Fronting Bank). The Company or an
Affiliate of the Company shall not qualify as an Eligible Assignee.
Emerging Market Subsidiary. Any Foreign Subsidiary of the Company, direct
--------------------------
or indirect, as to which (a) the principal operations of such Subsidiary are not
located in the United States of America, Canada, Western Europe or Japan, (b)
the Board of Directors of the Company has designated such Subsidiary as an
Emerging Market Subsidiary, and the Company has provided written notice to the
Administrative Agent in reasonable detail of such designation within five (5)
Business Days after designation thereof, (c) such Foreign Subsidiary has never
been a
<PAGE>
-19-
Non-Excluded Subsidiary after previously being an Emerging Market Subsidiary,
and (d) such Subsidiary does not own any capital stock of, or own or hold any
lien, security interest or encumbrance on, any property of the Company or any
Non-Excluded Subsidiary of the Company, provided, however, no Subsidiary shall
-------- -------
be subsequently designated as an Emerging Market Subsidiary if any Default or
Event of Default has occurred and is continuing, or would exist immediately
after giving effect to such designation. The Foreign Subsidiaries listed on
Schedule 8.22 hereto will be deemed to have been timely designated as Emerging
- -------------
Market Subsidiaries and will accordingly be Emerging Market Subsidiaries if they
meet and continue to meet the requirements of clauses (a), (c) and (d) of this
definition. For the purposes of determining whether the Company's interest in
Chia Tai Samsonite (H.K.) Limited otherwise meets the definition of Emerging
Market Subsidiary, the Company's joint venture interest in Chia Tai Samsonite
(H.K.) Limited shall be deemed to be a Foreign Subsidiary of the Company which
has been timely designated as an Emerging Market Subsidiary and will accordingly
be an Emerging Market Subsidiary if it meets and continues to meet the
requirements of clauses (a), (c) and (d) of this definition.
Employee Benefit Plan. Any employee benefit plan within the meaning of
---------------------
(S)3(3) of ERISA maintained or contributed to by any Borrower or any of its
ERISA Affiliates, other than a Multiemployer Plan.
Environmental Laws. See (S)8.18(a) hereof.
------------------
Equity Tender Offer. The Company's offer, pursuant to the Equity Tender
-------------------
Offer Documents, to purchase up to 10,500,000 shares of the Company's Common
Stock on the Closing Date at a price of $40.00 per share (up to $420,000,000 in
the aggregate).
Equity Tender Offer Documents. The Offer to Purchase dated May 20, 1998
-----------------------------
relating to the Equity Tender Offer, as modified by the Supplement thereto dated
June 9, 1998, and as extended through a date prior to the Closing Date on terms
satisfactory to the Administrative Agent, together with all schedules, exhibits,
and annexes thereto, in the form delivered to and approved by the Administrative
Agent prior to the Closing Date.
ERISA. The Employee Retirement Income Security Act of 1974, as amended and
-----
in effect from time to time.
ERISA Affiliate. Any Person which is treated as a single employer with a
---------------
specified Person under (S)414 of the Code.
ERISA Reportable Event. A reportable event within the meaning of (S)4043
----------------------
of ERISA and the regulations promulgated thereunder as to which the requirement
of notice has not been waived.
"Euro" or "Euro" Currency. See (S)4.11.6 hereof.
------------------------
<PAGE>
-20-
Eurocurrency Interbank Market. Any lawful recognized market in which
-----------------------------
deposits of Dollars and the relevant Optional Currencies are offered by
international banking units of United States banking institutions and by foreign
banking institutions to each other and in which foreign currency and exchange
operations or eurocurrency funding operations are customarily conducted.
Eurocurrency Lending Office. Initially, the office of each Multicurrency
---------------------------
Lender and the Fronting Bank designated as such in Schedule 1 hereto;
-------- -
thereafter, such other office of such Multicurrency Lender and Fronting Bank, if
any, that shall be making or maintaining Multicurrency Loans.
Eurocurrency Offered Rate. For any Interest Period with respect to a
-------------------------
Multicurrency Loan, the rate per annum (rounded upwards to the nearest 1/16 of
one percent) equal to the rate at which the Fronting Bank is offered deposits in
Dollars or the relevant Optional Currency, as the case may be, two (2) Business
Days prior to the beginning of such Interest Period in the Eurocurrency
Interbank Market where the foreign currency and exchange operations or
eurocurrency funding operations of the Fronting Bank are customarily conducted
at or about 10:00 a.m. (Applicable Belgium Time) for delivery on the first day
of such Interest Period and for the number of days comprised therein and in an
amount comparable to the amount of the Multicurrency Loan of the Fronting Bank
to which such Interest Period applies.
Eurocurrency Rate. With respect to all Multicurrency Loans for any
-----------------
Interest Period, the annual rate of interest, rounded to the nearest 1/16th of
1%, determined by the Foreign Agent for such Interest Period in accordance with
the following formula:
Eurocurrency Rate = Eurocurrency Offered Rate
-----------------------------
1 - Eurocurrency Reserve Rate
Eurocurrency Reserve Rate. With respect to any Interest Period for any
-------------------------
Multicurrency Loan, the aggregate of the rates (expressed as a decimal) of
reserve requirements current on the date two (2) Business Days prior to the
beginning of such Interest Period (including, without limitation, basic,
supplemental, marginal and emergency reserves under any regulations of the Board
of Governors of the Federal Reserve System or other governmental authority
having jurisdiction with respect thereto), as now and from time to time
hereafter in effect, dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency liabilities" in
Regulation D of such Board) required to be maintained by a member bank of such
System or other governmental authority having jurisdiction with respect thereto.
Eurodollar Borrowing. A Borrowing comprised of Eurodollar Rate Loans or
--------------------
Multicurrency Loans.
<PAGE>
-21-
Eurodollar Business Day. Any day on which commercial banks are open for
-----------------------
international business (including dealings in Dollar deposits) in London or such
other eurodollar interbank market as may be selected by the Administrative Agent
in its sole discretion acting in good faith.
Eurodollar Lending Office. Initially, the office of each Lender designated
-------------------------
as such in Schedule 1 hereto; thereafter, such other office of such Lender, if
-------- -
any, that shall be making or maintaining Eurodollar Rate Loans.
Eurodollar Rate. For any Interest Period with respect to Eurodollar Rate
---------------
Loans, the rate of interest per annum (rounded upward to the next 1/16th of 1%)
determined by the Administrative Agent as follows:
Eurodollar Rate = Eurodollar Offered Rate
-----------------------------------
1.00 Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means for any day for any Interest
-----------------------------
Period the maximum reserve percentage (expressed as a decimal, rounded
upward to the next 1/100th of 1%) in effect on such day (whether or not
applicable to any Lender) under regulations issued from time to time by the
Board of Governors of the Federal Reserve System or other governmental
authority having jurisdiction with respect thereto for determining the
maximum reserve requirement (including any emergency, supplemental or other
marginal reserve requirement) with respect to Eurocurrency funding
(currently referred to as "Eurocurrency liabilities"); and
"Eurodollar Offered Rate" means the rate of interest per annum
-----------------------
notified to the Administrative Agent by the Reference Bank as the rate of
interest per annum (rounded upward to the nearest 1/16 of one percent) at
which Dollar deposits in the approximate amount of the amount of the Loan
to be made or continued as, or converted into, a Eurodollar Rate Loan by
the Reference Bank and having a maturity comparable to such Interest Period
would be offered to major banks in the interbank eurodollar market where
the eurodollar and foreign currency and exchange operations of the
Reference Bank's Eurodollar Lending Office are customarily conducted, at
their request at approximately 11:00 a.m. (London time) two Eurodollar
Business Days prior to the commencement of such Interest Period.
The Eurodollar Rate shall be adjusted automatically on and as of the effective
date of any change in the Eurodollar Reserve Percentage.
Eurodollar Rate Loans. Those Revolving Credit Loans and all or any
---------------------
portions of the Domestic Term Loan bearing interest calculated by reference to
the Eurodollar Rate.
<PAGE>
-22-
Event of Default. See (S)14.1 hereof.
----------------
Excluded Entities. Any Person which is (a) a Subsidiary that is not a
-----------------
Guarantor; (b) an Excluded Subsidiary; or (c) a Person that is not a Subsidiary.
Excluded Possessory Collateral. See (S)7.1 hereof.
------------------------------
Excluded Subsidiary. (a) Bargain Time; (b) York Industrial; and (c) each
-------------------
Emerging Market Subsidiary, provided, however, that in the event any Excluded
-------- -------
Subsidiary shall for any reason be or become (or be required to become) a
Guarantor hereunder, such Excluded Subsidiary shall, immediately upon being or
becoming a Guarantor, no longer be considered an Excluded Subsidiary.
Existing Foreign Letters of Credit. Certain Foreign Letters of Credit
----------------------------------
outstanding on the Closing Date that were issued by Generale Bank N.V. for the
account of the Samsonite Europe pursuant to the Prior Credit Agreement, which
Foreign Letters of Credit are more fully described and listed on Schedule 1C
-----------
hereto.
Existing Letters of Credit. Certain Letters of Credit outstanding on the
--------------------------
Closing Date that were issued by BKB for the account of the Company or any of
its Subsidiaries pursuant to the Prior Credit Agreement, which Letters of Credit
are more fully described and listed on Schedule 1B hereto.
-----------
Federal Funds Rate. For any day, the rate set forth in the weekly
------------------
statistical release designated as H.15(519), or any successor publication,
published by the Federal Reserve Bank of New York (including any such successor,
"H.15(519)") on the Business Day opposite the caption "Federal Funds
(Effective)"; or, if for any relevant day such rate is not so published on any
such Business Day, the rate for such day will be the arithmetic mean as
determined by the Administrative Agent of the rates for the last transaction in
overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on that
day by each of three leading brokers of Federal funds transactions in New York
City selected by the Administrative Agent.
Fee Letters. The fee letter initially dated as of June 8, 1998 by and
-----------
among the Company, the Lead Agents, and the Arrangers, as amended and restated
as of the Closing Date, and the fee letter dated as of the Closing Date by and
among the Company and the Foreign Agent, as each of the same may be amended,
supplemented, restated or otherwise modified from time to time.
Foreign Agent. Generale Bank N.V., in its capacity as foreign agent for
-------------
the Agents and the Lenders.
Foreign Documentary Letter of Credit Fee. See (S)5.6.2 hereof.
----------------------------------------
<PAGE>
-23-
Foreign Documentary Letter of Credit Fee Rate. As referred to as such in
---------------------------------------------
the table contained in the definition of Applicable Margin.
Foreign Documentary Letter of Credit Issuance Fee. See (S)5.6.2 hereof.
-------------------------------------------------
Foreign Excluded Subsidiary. An Excluded Subsidiary that is a Foreign
---------------------------
Subsidiary.
Foreign Issuing Bank. Generale Bank N.V., as issuer of the Foreign Letters
--------------------
of Credit for the account of Samsonite Europe.
Foreign Letter of Credit. See (S)5.1.1(b) hereof.
------------------------
Foreign Letter of Credit Application. See (S)5.1.2(b) hereof.
------------------------------------
Foreign Letter of Credit Fee. See (S)5.6.2 hereof.
----------------------------
Foreign Letter of Credit Participation. See (S)5.1.4(b) hereof.
--------------------------------------
Foreign Non-Excluded Subsidiary. A Non-Excluded Subsidiary that is a
-------------------------------
Foreign Subsidiary.
Foreign Pledge Agreements. Collectively, (a) the Belgian Pledge Agreement,
-------------------------
(b) the Securities Pledge Agreement dated or to be dated on or prior to the
Closing Date among the Company, Samsonite Canada Inc. and the Administrative
Agent, pursuant to which the Company pledges sixty-six percent (66%) of the
capital stock of Samsonite Canada Inc. to the Administrative Agent, and in form
and substance satisfactory to the Administrative Agent, (c) the Stock Pledge
Agreement dated or to be dated on or prior to the Closing Date among the
Company, Samsonite Latinoamerica, S.A. de C.V., and the Administrative Agent,
pursuant to which the Company pledges sixty-six percent (66%) of the capital
stock of Samsonite Latinoamerica, S.A. de C.V. to the Administrative Agent, and
in form and substance satisfactory to the Administrative Agent, and (d) pledge
agreements evidencing such other pledges of the equity interests of Foreign
Subsidiaries as are required by (S)9.15 hereof.
Foreign Reimbursement Obligation. Samsonite Europe's obligation to
--------------------------------
reimburse the Foreign Issuing Bank and the Lenders on account of any drawing
under any Foreign Letter of Credit as provided in (S)5.2.2.
Foreign Standby Letter of Credit Fee. See (S)5.6.2 hereof.
------------------------------------
Foreign Standby Letter of Credit Issuance Fee. See (S)5.6.2 hereof.
---------------------------------------------
Foreign Subsidiary. Any Subsidiary which conducts substantially all of its
------------------
business in countries other than the United States of America and that is
organized under the laws of a jurisdiction other than the United States of
America and the States (or the District of Columbia) thereof.
<PAGE>
-24-
Foreign Term Loan. The term loan made or to be made by the Multicurrency
-----------------
Lenders and the Fronting Bank to Samsonite Europe in Belgian francs on the
Closing Date, with risk participations therein held by the Non-Multicurrency
Lenders, in each case according to their Foreign Term Loan Commitment
Percentages thereof, in the aggregate principal amount of Belgian francs
1,853,750,000 (the Dollar Equivalent of which amount is $50,000,000 as of the
Closing Date) pursuant to (S)3.1.2.
Foreign Term Loan Commitment Percentage. With respect to each Lender, the
---------------------------------------
percentage set forth on Schedule 1 hereto as such Lender's percentage (giving
----------
effect to the risk participation of such Lender in that portion of the Foreign
Term Loan that is a Fronted Loan, if such Lender is a Non-Multicurrency Lender)
of the Foreign Term Loan.
Foreign Term Loan Maturity Date. June 24, 2003.
-------------------------------
Foreign Term Loan Refinancing Debt. See (S)10.1(r) hereof.
----------------------------------
Foreign Term Obligations. See (S)20.1 hereof.
------------------------
Foreign Unpaid Reimbursement Obligation. Any Foreign Reimbursement
---------------------------------------
Obligation for which Samsonite Europe does not reimburse the Foreign Issuing
Bank and the Lenders on the date specified in, and in accordance with, (S)5.2.2.
Fronted Loans. That portion of the Multicurrency Loans and the
-------------
Multicurrency Swing Line Loans which are funded by the Fronting Bank and are not
funded by another Multicurrency Lender.
Fronting Bank. Generale Bank N.V., acting through its Brussels, Belgium
-------------
head office, as fronting bank and any other Person who replaces Generale Bank
N.V. as Fronting Bank pursuant to the provisions of (S)6.11.4 hereof, provided,
--------
for purposes of this Credit Agreement, in the event the Fronting Bank is also a
Multicurrency Lender, such Person's funding requirements in its capacity as
Fronting Bank shall not include its independent requirement in its individual
capacity to fund as a Multicurrency Lender.
Fronting Fee. See (S)6.11 hereof.
-------- ---
Fronting Loan Event. A Fronting Loan Event shall be deemed to occur if at
-------------------
any time it should become illegal or would violate any law, order, regulation or
policy (including any internal banking or other lending policy of the Fronting
Bank) or would otherwise not be practicable for the Fronting Bank to hold the
Fronted Loans.
generally accepted accounting principles or Generally Accepted Accounting
----------------------------------------- -----------------------------
Principles or GAAP. (a) When used in (S)11, whether directly or indirectly
- ----------- ----
through reference to a capitalized term used therein, means (i)
<PAGE>
-25-
principles that are consistent with the principles promulgated or adopted by the
Financial Accounting Standards Board and its predecessors, in effect for the
fiscal year ended on the Balance Sheet Date, and (ii) to the extent consistent
with such principles, the accounting practice of the Company and its
Subsidiaries reflected in its financial statements for the year ended on the
Balance Sheet Date, and (b) when used in general, other than as provided above,
means principles that are (i) consistent with the principles promulgated or
adopted by the Financial Accounting Standards Board and its predecessors, as in
effect from time to time, and (ii) consistently applied with past financial
statements of the Company and its Subsidiaries adopting the same principles,
provided that in each case referred to in this definition of "generally accepted
- --------
accounting principles" a certified public accountant would, insofar as the use
of such accounting principles is pertinent, be in a position to deliver an
unqualified opinion (other than a qualification regarding changes in generally
accepted accounting principles) as to financial statements in which such
principles have been properly applied.
Guaranteed Obligations. See (S)7.3.1. hereof.
---------- -----------
Guaranteed Pension Plan. Any employee pension benefit plan within the
-----------------------
meaning of (S)3(2) of ERISA maintained or contributed to by any Borrower or any
of its ERISA Affiliates that is subject to the requirements of Title IV of
ERISA, other than a Multiemployer Plan.
Guarantees. The Guarantees, dated or to be dated on or prior to the
----------
Closing Date, or such later date as required by (S)9.13, made by the Guarantors
in favor of the Lenders and the Agents pursuant to which such Guarantors
guarantee to the Lenders and the Agents the payment and performance of the
Obligations and in form and substance satisfactory to the Lenders and the
Administrative Agent.
Guarantors. The Significant Domestic Subsidiaries, and such other Persons
----------
which are required to be or become guarantors from time to time pursuant to
(S)9.13 hereof.
Hazardous Substances. Any waste, contaminant, pollutant, hazardous
--------------------
substance, toxic substance, hazardous waste, special waste, industrial substance
or waste, radio-active materials, petroleum or petroleum-derived substance or
waste, or any constituent or combination of any such substance or waste, which
substance, contaminant, pollutant or material or waste is or shall hereafter
become regulated under, governed by, or defined by any Environmental Law.
Indebtedness. Collectively, as to any particular Person(s), but without
------------
duplication of amounts, (a) all indebtedness for borrowed money or credit
obtained, (b) all obligations for the deferred purchased price of property or
services (other than trade payables not overdue by more than ninety (90) days
incurred in the ordinary course of business), (c) all
<PAGE>
-26-
obligations evidenced by notes, bonds, debentures or other similar instruments,
(d) all obligations 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), (e) all
Capitalized Leases, (f) all obligations, contingent or otherwise, under
acceptance, letter of credit or similar facilities, (g) all obligations to
purchase, redeem, retire, defease or otherwise make any payment (including any
mandatory dividends or Distributions) in respect of any capital stock or other
equity interests or any warrants, rights or options to acquire such capital
stock or other equity interests, (h) all Indebtedness of others referred to in
clauses (a) through (g) above guaranteed directly or indirectly in any manner,
or in effect guaranteed directly or indirectly through an agreement (i) to pay
or purchase such Indebtedness or to advance or supply funds for the payment or
purchase of such Indebtedness, (ii) to purchase, sell or lease (as lessee or
lessor) property, or to purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such Indebtedness or to assure the holder
of such Indebtedness against loss, (iii) to supply funds to or in any other
manner invest in the debtor (including any agreement to pay for property or
services irrespective of whether such property is received or such services are
rendered) or (iv) otherwise to assure a creditor against loss, and (i) all
Indebtedness referred to in clauses (a) through (g) above secured or supported
by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured or supported by) any lien on (or other
right of recourse to or against) property (including, without limitation,
accounts and contract rights), even though the owner of the property has not
assumed or become liable, contractually or otherwise, for the payment of such
Indebtedness.
Indemnified Liabilities. Any and all liabilities, obligations, losses,
-----------------------
damages, penalties, actions, judgments, suits, costs, charges, expenses and
disbursements (including reasonable fees and disbursements of any law firm or
other external counsel, and the allocated cost of internal legal services and
disbursements of internal counsel) (the foregoing being referred to herein as
("Attorney Costs") of any kind or nature whatsoever which may at any time
--------------
(including at any time following repayment of the Loans and the termination,
resignation or replacement of the Agents or replacement of any Lender) be
imposed on, incurred by or asserted against any such Person in any way relating
to or arising out of this Credit Agreement or any document contemplated by or
referred to herein, or the transactions contemplated hereby, or any action taken
or omitted by any such Person under or in connection with any of the foregoing,
including with respect to any investigation, litigation or proceeding (including
any bankruptcy or insolvency proceeding or appellate proceeding) related to or
arising out of this Credit Agreement or the other Loan Documents or the Loans or
the use of the proceeds thereof, whether or not any indemnified Person is a
party thereto.
<PAGE>
-27-
Indenture Trustee. United States Trust Company of New York, as Trustee
-----------------
under the Subordinated Indenture.
Instrument of Adherence. See (S)20.12 hereof.
-----------------------
Insurance Event. See (S)9.7.2 hereof.
---------------
Interest Coverage Ratio. As at any date of determination, the ratio of (a)
-------- -------- -----
EBITDA for the Reference Period ended on such date to (b) Consolidated Total
Interest Expense (other than interest charges not required to be paid in cash)
of the Company and its Non-Excluded Subsidiaries for the Reference Period ended
on such date. For purposes of clause (b) of this definition only, Consolidated
Total Interest Expense shall also include, without duplication, (i) interest
expense otherwise attributable (x) to Indebtedness of Excluded Subsidiaries,
with respect to which Indebtedness of Excluded Subsidiaries, the Borrowers or
their Non-Excluded Subsidiaries are subject to guaranties or other commitments
or arrangements described in clauses (h) or (i) of the definition of
"Indebtedness", or (y) if a default or event of default in respect of any
particular Indebtedness of any Excluded Subsidiary exists that causes or results
in a default or event of default in respect of any Indebtedness of the Borrowers
or their Non-Excluded Subsidiaries in the principal amount in excess of $500,000
outstanding in the aggregate that permits or entitles the holders of any such
Indebtedness of the Borrowers or their Non-Excluded Subsidiaries (as to which
there has occurred any required giving of notice, or the passage of time, or
both, as appropriate, with respect to such default or event of default
applicable thereto) to accelerate the maturity thereof, to such Indebtedness of
such Excluded Subsidiary and (ii) Distributions paid in cash with respect to the
1998 Preferred Stock.
Ineligible Securities. Securities which may not be underwritten or dealt
---------------------
in by member banks of the Federal Reserve System under Section 16 of the federal
Banking Act of 1933 (12 U.S.C. (S)24, Seventh), as amended.
Insurance Event. See (S)9.7.2 hereof.
---------------
Interest Payment Date. (a) As to any Base Rate Loan, the last day of each
---------------------
calendar quarter, including the calendar quarter during which there occurs the
Drawdown Date thereof; and (b) as to any Eurodollar Rate Loan, Multicurrency
Loan, or Multicurrency Swing Line Loan in respect of which the Interest Period
is (i) 3 months or less, the last day of such Interest Period and (i) more than
3 months, the date that is 3 months from the first day of such Interest Period
and, in addition, the last day of such Interest Period.
Interest Period. With respect to each Revolving Credit Loan, Swing Line
---------------
Loan, Revolving Multicurrency Loan, Multicurrency Swing Line Loan or all or any
relevant portion of either of the Term Loans, (a) initially, the period
commencing on the Drawdown Date of such Loan and ending on the last day of one
of the periods set forth below, as selected by the applicable
<PAGE>
-28-
Borrower in a Loan Request (i) for any Base Rate Loan, the end of each day; (ii)
for any Multicurrency Swing Line Loan, one (1), seven (7) or fourteen (14) days;
and (iii) for any Multicurrency Loan or a Eurodollar Rate Loan, one (1), two
(2), three (3) or six (6) months (provided that a Borrower may select an
--------
Interest Period of between seven (7) days and two (2) months for a Eurodollar
Rate Loan or Multicurrency Loan if the amount that is the subject of such
Interest Period is to be used to make a mandatory payment or mandatory
prepayment of either Term Loan that is payable in sixty (60) days or less from
the beginning of the Interest Period); and (b) thereafter, each period
commencing on the last day of the next preceding Interest Period applicable to
such Revolving Credit Loan, Swing Line Loan, Revolving Multicurrency Loan,
Multicurrency Swing Line Loan or all or such portion of either of the Term Loans
and ending on the last day of one of the periods set forth above, as selected by
the applicable Borrower in a Conversion Request; provided that all of the
--------
foregoing provisions relating to Interest Periods are subject to the following:
(a) if any Interest Period with respect to (i) a Eurodollar Rate
Loan would otherwise end on a day that is not a Eurodollar Business
Day, that Interest Period shall be extended to the next succeeding
Eurodollar Business Day unless the result of such extension would be
to carry such Interest Period into another calendar month, in which
event such Interest Period shall end on the immediately preceding
Eurodollar Business Day; and (ii) a Multicurrency Loan or a
Multicurrency Swing Line Loan would otherwise end on a day that is not
a Business Day, that Interest Period shall be extended to the next
succeeding Business Day unless the result of such extension would be
to carry such Interest Period into another calendar month, in which
event such Interest Period shall end on the immediately preceding
Business Day;
(b) if any Interest Period with respect to a Base Rate Loan
would end on a day that is not a Business Day, that Interest Period
shall end on the next succeeding Business Day;
(c) if the relevant Borrower shall fail to give notice as
provided in (S)2.8, (S)3.5.3, and (S)4.8, as the case may be, such
Borrower shall (i) in the case of Revolving Credit Loans and all or
the applicable portion of the Domestic Term Loan, be deemed to have
requested a conversion of the affected Eurodollar Rate Loan to a Base
Rate Loan and the continuance of all Base Rate Loans as Base Rate
Loans on the last day of the then current Interest Period with respect
thereto; (ii) in the case of Revolving Multicurrency Loans, be deemed
to have requested the continuation of such Multicurrency Loans for a
one (1) month Interest Period on the last day of the current Interest
Period with respect thereto and (iii) in the case of all or the
applicable portion of the Foreign Term Loan, be deemed to have
requested
<PAGE>
-29-
the continuation of such Multicurrency Loan for a one (1) month
Interest Period on the last day of the then current Interest Period
with respect thereto;
(d) any Interest Period relating to any (i) Eurodollar Rate Loan
that begins on the last Eurodollar Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in
the calendar month at the end of such Interest Period) shall end on
the last Eurodollar Business Day of a calendar month; and (ii)
Multicurrency Loan that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on
the last Business Day of a calendar month;
(e) any Interest Period relating to any Eurodollar Rate Loan,
Multicurrency Loan or Multicurrency Swing Line Loan that would
otherwise extend beyond the Revolving Credit Loan Maturity Date (if
comprising a Revolving Credit Loan), the Domestic Term Loan Maturity
Date (if comprising the Domestic Term Loan or a portion thereof), the
Foreign Term Loan Maturity Date (if comprising the Foreign Term Loan
or a portion thereof) or the Multicurrency Loan Maturity Date (if
comprising a Revolving Multicurrency Loan or a Multicurrency Swing
Line Loan) shall end on the Revolving Credit Loan Maturity Date,
Domestic Term Loan Maturity Date, Foreign Term Loan Maturity Date or
Revolving Multicurrency Loan Maturity Date, as applicable;
(f) interest shall accrue for the first day of each Interest
Period and for each day thereafter up to but not including the last
day of the Interest Period; however, if an Interest Period is one day,
then interest shall accrue for such day; and
(g) from the Closing Date until the end of the Primary
Syndication Period, (i) each Interest Period commenced for the Foreign
Term Loan must have a duration of one month; (ii) each Interest Period
commenced for all or any portion of the Domestic Term Loan
constituting a Eurodollar Rate Loan must have a duration of one month;
(iii) each Interest Period for all or any portion of the Term Loans
(other than the portions of the Domestic Term Loan constituting Base
Rate Loans) must be co-terminous with all other Interest Periods
applicable to the Term Loans (other than the portions of the Domestic
Term Loan constituting Base Rate Loans); and (iv) each Interest Period
commenced for all or any portion of any Loans (other than Term Loans,
and other than Base Rate Loans) must be co-terminous with the Interest
Periods for the Term Loans
<PAGE>
-30-
(other than the portions of the Domestic Term Loan constituting Base
Rate Loans).
Investments. Without duplication, all expenditures made and all
-----------
Indebtedness incurred (contingently or otherwise) for the acquisition of stock
or Indebtedness of, or for loans, advances, capital contributions or transfers
of property to, or in respect of any guaranties (or other commitments or
arrangements as described under clauses (h) or (i) of the definition of
Indebtedness), or obligations of, any Person. In determining the aggregate
amount of Investments outstanding at any particular time: (a) the amount of any
Investment represented by any such guaranty or other commitment or arrangement
shall be taken at not less than the principal amount of the obligations
guaranteed or otherwise supported and still outstanding; (b) there shall be
included as an Investment all interest accrued with respect to Indebtedness
constituting an Investment unless and until such interest is paid; (c) except
for purposes of (S)10.3(h) hereof, (but without affecting the calculations with
respect to Returned Investments provided for therein) there shall be deducted in
respect of each such Investment any amount received in the nature of a return or
repurchase of capital or a repayment of principal; (d) there shall not be
deducted in respect of any Investment any amounts received as earnings on such
Investment, whether as dividends, interest or otherwise, except that accrued
interest included as provided in the foregoing clause (b) may be deducted when
paid; and (e) there shall not be deducted from the aggregate amount of
Investments any decrease in the value thereof.
Issuing Bank. BKB, as issuer of certain Letters of Credit for the account
------------
of the Company issued prior to the Closing Date, and BofA, as issuer of the
Letters of Credit for the account of the Company issued on or after the Closing
Date.
Japanese License Agreements. Both of (a) the License Agreement, dated as
---------------------------
of December 3, 1990, among Samsonite, Ace Company Limited and Ace Luggage Co.,
Ltd., as amended by the First Amendment and Renewal of License Agreement, dated
as of November 11, 1994, and by the Second Amendment to License Agreement dated
January 1, 1996, and (b) the Amended and Restated License Agreement, dated as of
November 11, 1994, between Samsonite and Ace Company Limited for Lark and
American Tourister Trademarks - Japan.
Joint Venture Subsidiary. A Non-Excluded Subsidiary of the Company in
------------------------
which one or more Persons who have provided or are providing operating assets or
services to such Non-Excluded Subsidiary beneficially owns not less than fifty
percent (50%) of the portion of the capital stock or ownership interests of such
Non-Excluded Subsidiary which are not owned by the Company or a Non-Excluded
Subsidiary of the Company.
JV Interest Holding Company. See (S)10.3(f) hereof.
---------------------------
<PAGE>
-31-
Lead Agents. Collectively, the Administrative Agent and the Syndication
-----------
Agent.
Lenders. BofA, BKB, and the other lending institutions listed on Schedule
------- --------
1 hereto (as such Schedule 1 may be amended from time to time pursuant
- - ----------
(S)(S)20.4 or 20.12 hereof) and any other Person who becomes an assignee of any
rights and obligations of a Lender pursuant to (S)20 (other than any such
Persons acting solely in the capacity of participants) or a New Lender pursuant
to (S)20.12 and, unless the context otherwise requires, the Fronting Bank, the
Foreign Issuing Bank, and the Issuing Bank. References to the Lenders in the
context of Loans of a particular Type shall be construed as references to only
those Lenders having Commitments or holding Loans of such Type.
Letter of Credit. See (S)5.1.1(a) hereof.
----------------
Letter of Credit Application. See (S)5.1.1(a) hereof.
----------------------------
Letter of Credit Fee. See (S)5.6.1 hereof.
--------------------
Letter of Credit Participation. See (S)5.1.4(a) hereof.
------------------------------
Leverage Ratio. As at any date of determination, the ratio of (a) Total
--------------
Funded Indebtedness of the Company and its Non-Excluded Subsidiaries outstanding
on such date to (b) EBITDA of the Company and its Non-Excluded Subsidiaries for
the Reference Period ended on such date.
Loan Accounts. Collectively, the Term Loan Account and the Multicurrency
-------------
Loan Account.
Loan Documents. This Credit Agreement, the Notes, the Letter of Credit
--------------
Applications, the Foreign Letter of Credit Applications, the Letters of Credit,
the Foreign Letters of Credit, the Fee Letters, and the Security Documents.
Loan Request. See (S)2.7 hereof.
------------
Loans. The Revolving Credit Loans, the Swing Line Loans, the Revolving
-----
Multicurrency Loans, the Multicurrency Swing Line Loans, and the Term Loans.
Majority Domestic Term Loan Lenders. As of any date, the Lenders whose
-----------------------------------
aggregate Domestic Term Loan Commitment Percentages total at least fifty-one
percent (51%).
Majority Foreign Term Loan Lenders. As of any date, the Lenders whose
----------------------------------
aggregate Foreign Term Loan Commitment Percentages total at least fifty-one
percent (51%).
<PAGE>
-32-
Majority Lenders. As of any date, (a) the Lenders having Total Percentages
----------------
aggregating to at least fifty-one percent (51%) on such date, or (b) for
purposes of acceleration of the Loans and all other amounts owing under this
Credit Agreement and the other Loan Documents pursuant to (S)14 hereof, those
Lenders whose share of (i) Loans and Letter of Credit Participations in Unpaid
Reimbursement Obligations outstanding on such date (including such Lender's
unfunded portion of any Swing Line Loan or Multicurrency Swing Line Loan) and
Foreign Letter of Credit Participations in Foreign Unpaid Reimbursement
Obligations outstanding on such date plus (ii) the aggregate Maximum Drawing
----
Amount of all Letters of Credit and Foreign Letters of Credit, plus (iii) the
----
participating risks associated with any Fronted Loan aggregate to at least fifty
one percent (51%) of the sum of the aggregate principal amount of Loans, Unpaid
Reimbursement Obligations, and Foreign Unpaid Reimbursement Obligations
outstanding on such date plus the aggregate Maximum Drawing Amount of all
Letters of Credit and Foreign Letters of Credit outstanding on such date.
Majority Revolving Lenders. As of any date of determination, the Lenders
--------------------------
whose aggregate Commitments constitute at least fifty-one percent (51%) of the
sum of the Total Revolving Commitment and the Total Revolving Multicurrency
Commitment, or, if the Commitments are terminated, the Lenders holding at least
fifty-one percent (51%) of the sum of the outstanding principal amount on such
date of all Revolving Credit Loans, Revolving Multicurrency Loans, Letter of
Credit Participations in Unpaid Reimbursement Obligations, Foreign Letter of
Credit Participations in Foreign Unpaid Reimbursement Obligations and
participating interests in the risk relating to outstanding Letters of Credit,
Foreign Letters of Credit and Fronted Loans that are Revolving Multicurrency
Loans).
Material Adverse Effect. A material adverse effect on (a) the business,
-----------------------
condition (financial or otherwise), operations, performance, properties or
prospects of the Company, individually, or the Company and its Subsidiaries
taken as a whole, (b) the validity, perfection, or priority of the security
interest of the Lenders in the Collateral created pursuant to the Security
Documents, (c) the rights and remedies of the Agents or any Lender under any
Loan Document or (d) the ability of the Obligors to perform their Obligations
under the Loan Documents.
Maximum Drawing Amount. The maximum aggregate amount that the
----------------------
beneficiaries may at any time draw under outstanding Letters of Credit or
Foreign Letters of Credit, as the case may be, as such aggregate amount may be
reduced from time to time pursuant to the terms of the Letters of Credit or
Foreign Letter of Credit, as the case may be.
Maximum Unused Revolving Commitment. With respect to any Lender at any
------- ------ --------- ----------
time, (a) such Lender's Revolving Commitment at such time minus (b) the sum of
-----
(i) the aggregate principal amount of all Revolving Credit Loans and Swing Line
Loans made (in each case) by such Lender and
<PAGE>
-33-
which are outstanding at such time and Unpaid Reimbursement Obligations owing to
such Lender, plus (ii) without duplication, such Lender's Revolving Credit
Commitment Percentage of the Maximum Drawing Amount of all Letters of Credit
issued and outstanding at such time.
Maximum Unused Revolving Multicurrency Commitment. With respect to any
-------------------------------------------------
Lender at any time, (a) such Lender's Revolving Multicurrency Commitment at such
time minus (b) the sum of (i) such Lender's Revolving Multicurrency Commitment
-----
Percentage of all Revolving Multicurrency Loans which are outstanding at such
time, (ii) the aggregate principal amount of all Multicurrency Swing Line Loans
made by such Lender and which are outstanding at such time and Foreign Unpaid
Reimbursement Obligations owing to such Lender, plus (iii) without duplication,
such Lender's Revolving Multicurrency Commitment Percentage of the Maximum
Drawing Amount of all Foreign Letters of Credit issued and outstanding at such
time.
McCrory. McCrory Corporation, a Delaware corporation.
-------
McGregor. McGregor II, LLC, a Delaware limited liability company.
--------
Moody's. Moody's Investors Service, Inc.
-------
Multicurrency Commitment Fee. See (S)4.3 hereof.
----------------------------
Multicurrency Lender. Any Lender which, at the time of making any
--------------------
applicable Multicurrency Loan or Multicurrency Swing Line Loan, or, for purposes
of (S)6.11.3 hereof, at the relevant date of determination, (a) has a
Multicurrency Lending Office, (b) would not, by virtue of making any
Multicurrency Loan or Multicurrency Swing Line Loan to Samsonite Europe, subject
Samsonite Europe to any withholding tax as a result of the making of such
Multicurrency Loan or Multicurrency Swing Line Loan (including the payment of
principal and interest on such Multicurrency Loan or Multicurrency Swing Line
Loan to such Lender by Samsonite Europe), (c) has the requisite (i)
organizational power and authority, (ii) power and authority under all Belgian
and other laws and regulations and (iii) governmental consents, licenses and
permits from all applicable jurisdictions, governmental agencies, authorities
and central banks, if any, to make the Multicurrency Loan or Multicurrency Swing
Line Loan, (d) can lawfully make such Multicurrency Loan or Multicurrency Swing
Line Loan and receive and enforce payments of principal and interest thereon,
(e) is not subject to any withholding tax as a result of making such
Multicurrency Loan or Multicurrency Swing Line Loan, or receiving any principal
or interest payments in respect thereof, and (f) is properly qualified to do
business as a bank, to lend and make commercial loans, and to take deposits in
Belgium. Notwithstanding the foregoing, BofA will not be a Multicurrency Lender
until the earlier of (i) July 31, 1998, or (ii) the date
<PAGE>
-34-
specified by BofA in a notice to the Fronting Bank. As of the Closing Date, the
only Multicurrency Lender is Generale Bank N.V.
Multicurrency Lending Office. The lending office of each Multicurrency
----------------------------
Lender located in Belgium that will be making or maintaining Multicurrency
Loans.
Multicurrency Loan Account. See (S)4.5 hereof.
--------------------------
Multicurrency Loans. Collectively, the Revolving Multicurrency Loans and
-------------------
the Foreign Term Loan.
Multicurrency Swing Line Borrowing. A borrowing consisting of a
----------------------------------
Multicurrency Swing Line Loan made by any Multicurrency Swing Line Lender.
Multicurrency Swing Line Facility. See (S)4.2.1 hereof.
---------------------------------
Multicurrency Swing Line Lender. Generale Bank N.V.
-------------------------------
Multicurrency Swing Line Loan. Any Loan made by (a) any Multicurrency
------------------------ ----
Swing Line Lender pursuant to (S)4.2.1 or (b) any Multicurrency Lender and the
Fronting Bank pursuant to (S)4.2.2.
Multiemployer Plan. Any multiemployer plan within the meaning of (S)3(37)
------------------
of ERISA maintained or contributed to by any Borrower or any of its ERISA
Affiliates.
Net Asset Sale Proceeds. The net cash proceeds received by the Company and
-----------------------
its Non-Excluded Subsidiaries in respect of any Asset Sale (including cash
received as consideration for the assumption of liabilities incurred in
connection with or in anticipation of such Asset Sale), less the sum of (a) all
reasonable out-of-pocket fees, commissions and other expenses incurred in
connection with such Asset Sale, including the amount (estimated in good faith
by such Person) of income, franchise, sales and other applicable taxes required
to be paid by such Person in connection with such Asset Sale, (b) the aggregate
amount of cash so received by such Person which is used to retire (in whole or
in part) any Indebtedness (other than under the Loan Documents) of such Person
permitted by this Credit Agreement that was secured by a lien or security
interest (if any) permitted by this Credit Agreement having priority over the
liens and security interests (if any) of the Administrative Agent (for the
benefit of the Lenders) with respect to such assets transferred and which is
required to be repaid in whole or in part (which repayment, in the case of any
other revolving credit arrangement or multiple advance arrangement, reduces the
commitment thereunder) in connection with such Asset Sale, (c) any amount of
cash required to be placed in escrow by one or more third parties to a
transaction relating to contingent liabilities associated with such Asset Sale
until such cash is released to such Person, and (d) the amount of reasonable
reserves
<PAGE>
-35-
determined in accordance with generally accepted accounting principles relating
to contingent liabilities associated with a such Asset Sale, with such amount to
be reduced as such reserves are reduced. Upon the liquidation or conversion into
cash of any promissory notes and other non-cash consideration received by the
Company or any Non-Excluded Subsidiary in respect of any Asset Sale, the amount
of such cash shall be deemed to be cash proceeds received by the Company and its
Non-Excluded Subsidiaries in respect of an Asset Sale as of the date of such
liquidation or conversion.
Net Debt Issuance Proceeds. With respect to any Debt Issuance, the gross
--------------------------
cash proceeds received by such Person from such Debt Issuance minus the
-----
reasonable and customary transaction expenses (including without limitation, any
underwriting discounts and commissions) actually incurred in connection with
such Debt Issuance.
Net Insurance Proceeds. The insurance proceeds received by any Borrower or
----------------------
Non-Excluded Subsidiary in respect of any Insurance Event, less the sum of (a)
all reasonable out-of-pocket expenses incurred in order to collect such
insurance proceeds, and (b) the amount of such insurance proceeds that was
received in respect of Collateral (i) which was permitted by this Agreement to
be subject to a lien having priority over the lien granted to the Collateral
Agent pursuant to the Security Documents, (ii) which was in fact secured by such
lien having priority over the lien granted therein to the Collateral Agent
pursuant to the Security Documents, (iii) as to which the holder of the lien
described in clause (ii) of this definition was named as a loss payee or
mortgagee in respect of the casualty insurance that secured such Collateral, and
(iv) which was actually paid in cash to the holder of such lien that was
described in clause (ii) of this definition.
New Lender. See (S)20.12 hereof.
----------
1995 Subordinated Indenture. The Indenture dated as of July 14, 1995
---------------------------
between the Company and United States Trust Company of New York, as trustee,
relating to the 1995 Subordinated Notes, as modified pursuant to the
Subordinated Note Tender Offer Documents.
1995 Subordinated Notes. The 11 1/8% Senior Subordinated Notes due 2005 in
-----------------------
the initial aggregate amount of $190,000,000 issued pursuant to the 1995
Subordinated Indenture.
1998 Preferred Stock. The Company's 13.875% Senior Redeemable Exchangeable
--------------------
Preferred Stock, par value $0.01 per share, liquidation preference $1,000 per
share, issued pursuant to the 1998 Preferred Stock Documents.
1998 Preferred Stock Documents. The Company's Certificate of Designation
------------------------------
of the Powers, Preferences and Relative, Participating, Optional and Other
Special Rights of 13.875% Senior Redeemable
<PAGE>
-36-
Exchangeable Preferred Stock, Series A, and Qualifications, Limitations and
Restrictions Thereof relating to the 1998 Preferred Stock, and the Registration
Rights Agreement, relating thereto dated as of June 24, 1998, in each case in
the form delivered to the Administrative Agent prior to the Closing Date.
1998 Preferred Stock Issuance. The transaction pursuant to which the 1998
-----------------------------
Preferred Stock was issued.
1998 Subordinated Debt. The Indebtedness incurred by the Company
----------------------
consisting of the Subordinated Notes issued pursuant to the Subordinated
Indenture.
1998 Subordinated Debt Issuance. The transaction pursuant to which the
-------------------------------
1998 Subordinated Debt was incurred and the Subordinated Indenture was executed.
Non-Affected Lenders. See (S)6.2.6 hereof.
--------------------
Non-Excluded Subsidiary. Any Subsidiary which is not an Excluded
-----------------------
Subsidiary. For the avoidance of doubt, the parties confirm that Samsonite
Europe is a Non-Excluded Subsidiary. The Company and its Subsidiaries shall not
have the right to change the status of an Excluded Subsidiary to a Non-Excluded
Subsidiary unless (a) such Excluded Subsidiary gives notice to the
Administrative Agent that it has irrevocably elected to be a Non-Excluded
Subsidiary for purposes of this Credit Agreement, (b) such Person becomes a
Guarantor hereunder (if required by (S)9.13 hereof), and (c) no Default or Event
of Default has occurred and is continuing at the time such notice is given, and
no Default or Event of Default would occur by virtue of, or exist after giving
effect to, such Excluded Subsidiary becoming a Non-Excluded Subsidiary.
Non-Multicurrency Lenders' Commitment. The aggregate Revolving
-------------------------------------
Multicurrency Commitments of all Non-Multicurrency Lenders.
Non-Multicurrency Lenders' Commitment Percentage. The aggregate Revolving
------------------------------------------------
Multicurrency Commitment Percentages of all Non-Multicurrency Lenders.
Non-Multicurrency Lender(s). Any Lender which is not a Multicurrency
---------------------------
Lender.
Non-Ordinary Course Intercompany Indebtedness. Indebtedness described in
---------------------------------------------
(S)10.1(i) or (S)10.1(m) other than the following, to the extent that the
following are incurred in the ordinary course of business: (a) accounts
receivable arising out of the sale of goods, and (b) advances solely in the
operation of the Company's cash management system. For the avoidance of doubt,
Non-Ordinary Course Intercompany Indebtedness includes (without limiting the
generality of other Indebtedness that is included therein) any
<PAGE>
-37-
Indebtedness that serves a purpose similar to that of an investment or which is
in the nature of long-term debt.
Notes. The Revolving Credit Notes and the Term Notes.
-----
Notice of Multicurrency Swing Line Borrowing. See (S)4.2.2. hereof.
--------------------------------------------
Notice of Swing Line Borrowing. See (S)2.2.2 hereof.
------------------------------
Obligations. All indebtedness, obligations and liabilities of any of the
-----------
Obligors to any of the Lenders and the Agents, individually or collectively,
existing on the date of this Credit Agreement or arising thereafter, direct or
indirect, joint or several, absolute or contingent, matured or unmatured,
liquidated or unliquidated, secured or unsecured, arising by contract, operation
of law or otherwise, in each case arising or incurred under this Credit
Agreement or any of the other Loan Documents or in respect of any of the Loans
made or Reimbursement Obligations incurred or Foreign Reimbursement Obligations
incurred or any of the Notes, Letter of Credit Applications, Foreign Letter of
Credit Applications, Letters of Credit or Foreign Letters of Credit or arising
or incurred in connection with any interest rate protection arrangements
provided by the Lenders, foreign exchange and/or currency risk protection
arrangements entered into with any of the Lenders, or any documents, agreements
or instruments executed in connection therewith, or other instruments at any
time evidencing any thereof.
Obligors. The Borrowers and the Guarantors, collectively.
--------
OECD. See the definition of Eligible Assignee.
----
Operating Assets. Assets, used or useful in the operations of the
----------------
Company's business, excluding the Capital Stock of any Subsidiary, cash,
inventory and accounts receivable and any property or equipment that has become
worn out, obsolete or damaged or is otherwise better suited to use by one or
more of the Company's Subsidiaries.
Optional Currency. Any currency other than Dollars, constituting legal
-----------------
tender, which is freely convertible into Dollars and which is traded on any
recognized Eurocurrency Interbank Market requested by Samsonite Europe and
approved by the Foreign Agent in good faith; provided, however, in the event
-------- -------
Samsonite Europe requests an Optional Currency (whether for a Multicurrency Loan
or a Foreign Letter of Credit) consisting of a currency other than Belgian
francs, German marks, Spanish pesetas, French francs, United Kingdom pounds
sterling, Dutch guilders, Italian lira, the "ECU" (the European Currency Unit),
or the "Euro", the funding of such request for such other Optional Currency (or
the issuance of such Foreign Letter of Credit) shall be subject to the consent
of all of the Lenders.
Optional Currency Notice. See (S)4.11.1 hereof.
------------------------
<PAGE>
-38-
Original Credit Agreement. The Revolving Credit Agreement and Term Loan
-------------------------
Agreement dated as of July 14, 1995 among the Company, BKB, Bank of America
Illinois, and certain other parties, which was amended and restated in its
entirety by the Prior Credit Agreement.
outstanding. With respect to the Loans, the aggregate unpaid principal
-----------
thereof as of any date of determination.
Overnight Rate. For any day, the overnight rate of interest per annum
--------- ----
which appears in the publication known in Belgium as "De Financieel-Economische
Tijd" as the "centraal tarief" rate appearing in the left column under the
heading of "Interventietarieven NBB", and, if such a rate is not available, or
the method for determining such rate shall change in any material respect, or
such rate is not applicable to a currency for which such determination is being
made, then the rate of interest per annum at which overnight deposits in the
applicable Optional Currency, in an amount approximately equal to the amount
with respect to which such rate is being determined, would be offered for such
day by the Foreign Agent to major banks in the Belgian interbank market.
Patent Agreements. The Patent Security Agreements dated or to be dated as
-----------------
of a date on or after the Closing Date, made by the Company and such Guarantors
(if any) as may hold any United States patents, in favor of the Collateral Agent
for the benefit of the Lenders, each in form and substance satisfactory to the
Administrative Agent.
PBGC. The Pension Benefit Guaranty Corporation created by (S)4002 of ERISA
----
and any successor entity or entities having similar responsibilities.
PBGC Letter. The binding term sheet dated June 5, 1998 between (and signed
-----------
by both of) the Company and PBGC, in the form reviewed and approved by the
Administrative Agent prior to the date hereof and any agreement implementing or
succeeding such term sheet, which agreement is entered into in accordance with
(S)10.25 hereof.
PBGC Ratable Lien. A security interest granted to the Collateral Agent for
-----------------
the benefit of the PBGC as contemplated by (but only to the extent required by)
the PBGC Letter, pursuant to which the PBGC will (only to the extent and only
for the duration required by the PBGC Letter) have the benefit of a security
interest in the Collateral (except in any event for Collateral that is excluded
from the PBGC Ratable Lien pursuant to the terms of the PBGC Letter) which is of
equal and ratable priority with the security interest held by the Collateral
Agent for the benefit of the Lenders in such Collateral, which security interest
shall be granted and effective at such time or times as are, and the
arrangements, terms and conditions with respect to which must be, in all
respects satisfactory to the Administrative Agent. For the avoidance of doubt,
the parties confirm that this Credit Agreement creates no rights or benefits in
favor of the PBGC, and that the
<PAGE>
-39-
PBGC shall not in any event be construed to be a "third-party beneficiary" of
this Credit Agreement.
Perfection Certificates. The Perfection Certificates as defined in the
-----------------------
Security Agreements.
Permitted Acquisitions. See (S)10.5.1 hereof.
--------- ------------
Permitted Entities. Any financial institution or other "accredited
------------------
investor" (as defined in Regulation D of the federal Securities and Exchange
Commission promulgated under the federal Securities Act of 1933) that is engaged
in making, purchasing, or otherwise investing in commercial loans in the
ordinary course of its business.
Permitted Liens. Liens, security interests and other encumbrances
---------------
permitted by (S)10.2 hereof.
Person. Any individual, corporation, partnership, trust, unincorporated
------
association, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.
Pre-Acquisition Period. See the definition of EBITDA.
----------------------
Primary Syndication Parties. BofA, BKB, and CIBC Inc.
---------------------------
Primary Syndication Period. The period of time commencing on the Closing
--------------------------
Date and ending on the date ninety (90) days thereafter (or on such earlier date
as each of the Primary Syndication Parties shall mutually determine in writing
in good faith constitutes the end of the Primary Syndication Period).
Prior Credit Agreement. See the preamble hereto.
----------------------
Pro Forma Bank Interest Amount. As used in the definition of Consolidated
------------------------------
Total Interest Expense, the sum of (a) the actual amount of expense for interest
with respect to the fiscal quarters of the Company, contained in the applicable
Reference Period, that began and ended after the Closing Date and ended on or
before the date that is the end of the Reference Period for which Consolidated
Total Interest Expense is being calculated hereunder, and (b) with respect to
each other fiscal quarter of the Company that is included in the applicable
Reference Period, the amount of expense for interest and fees of the types
included within the definition of Consolidated Total Interest Expense on account
of this Credit Agreement with respect to such fiscal quarter had the Loans
outstanding on the Closing Date (or, if greater, the Loans outstanding at the
end of the applicable Reference Period) been outstanding for the entire period
of each such other fiscal quarter included in such applicable Reference Period
for which the Consolidated Total Interest Expense is being calculated. For the
purposes of calculating the amount referred to in the foregoing clause (b) of
<PAGE>
-40-
this definition, the interest and fees bearing a floating interest rate or a
rate based upon the Leverage Ratio of the Company shall be computed as if the
rate in effect on the Closing Date had been the applicable rate for the entire
period for which such calculation under clause (b) is being made.
Pro Rata Interest. With respect to the equity or ownership interests of
-----------------
any Person in any other Person, a fraction, the numerator of which is the amount
of the equity or other ownership interests in such other Person that are
beneficially owned by such Person and its Non-Excluded Subsidiaries, and the
denominator of which is the aggregate amount of all equity or other ownership
interest in such other Person that are outstanding (and for such purpose the
equity or other ownership interests subject to presently exercisable options,
warrants or other rights to acquire such interests shall be deemed to be
outstanding and shall be included in both the numerator and the denominator).
Pro Rata Reduction Percentage. As used in (S)3.3.3, the percentage
-----------------------------
equivalent of a fraction, to be determined in connection with an event pursuant
to which the Borrowers are required to reduce the Commitments, (a) the numerator
of which is (i) with respect to the Revolving Credit Loans, the amount of the
Total Revolving Commitments at the time that the applicable reduction must be
made (but immediately prior to giving effect thereto), and (ii) with respect to
the Revolving Multicurrency Loans, the amount of the Total Revolving
Multicurrency Commitments at the time that the applicable reduction must be made
(but immediately prior to giving effect thereto), and (b) the denominator of
which is the sum at such time of the Total Revolving Commitments and Total
Revolving Multicurrency Commitments.
PTO. The Patent and Trademark Office of the United States of America.
---
Rate Adjustment Period. As defined in the definition of "Applicable
----------------------
Margin".
Rate of Exchange Amount. See (S)4.11.2 hereof.
-----------------------
RCRA. See the definition of "Release".
----
Real Estate. All real property owned or leased (as lessee or sublessee) by
-----------
any of the Obligors.
Recapitalization. The recapitalization of the Company to be effected as
----------------
part of the Related Transactions, by way of the repurchase pursuant to the
Equity Tender Offer (and the concurrent cancellation) of certain amounts of
previously outstanding shares of the Company's Common Stock, as further
described in (S)10.4 hereof.
<PAGE>
-41-
Record. The grid attached to a Note, or the continuation of such grid, or
------
any other similar record, including computer records, maintained by any Lender
with respect to any Loan referred to in such Note or in this Agreement.
Reference Bank. BofA.
--------------
Reference Period. The period of four (4) consecutive fiscal quarters of
--------- ------
the Company ending on the relevant date.
Register. See (S)20.3 hereof.
--------
Reimbursement Obligation. The Company's obligation to reimburse the
------------------------
Issuing Bank and the Lenders on account of any drawing under any Letter of
Credit as provided in (S)5.2.1.
Reinvested Insurance Proceeds. The amount of insurance proceeds referred
-----------------------------
to in (S)9.7.2(b) which are reinvested by the Borrowers or a Non-Excluded
Subsidiary in a Related Business within 269 days after the applicable casualty
loss referred to in (S)9.7.2(b) which gave rise to such insurance proceeds.
Reinvested Net Asset Sale Proceeds. Net Asset Sale Proceeds that are
----------------------------------
reinvested by the Borrowers or a Non-Excluded Subsidiary in a Related Business
within 269 days after the consummation of the Asset Sale that generated such Net
Asset Sale Proceeds, in the manner contemplated by the Subordinated Indenture
for "investment" of such Net Asset Sale Proceeds in assets used or useful in
Related Businesses.
Related Business. (a) Any line or lines of business or business activity
----------------
conducted by the Company and its Non-Excluded Subsidiaries on the Closing Date,
including, without limitation, the licensing of brand names (other than the
business of owning, operating or otherwise engaging in the business of
television or cable broadcasting or the business of leasing real property, in
each case, except as reasonably necessary to dispose of the business and/or
properties of the Company and its Subsidiaries that engage in such business
activities on the Closing Date), (b) any line or lines of business activity
reasonably related thereto, and (c) the manufacture, distribution, marketing or
licensing and/or sale of travel related consumer products.
Related Transactions. The Subordinated Note Tender Offer, the
--------------------
Recapitalization, the 1998 Preferred Stock Issuance, and the 1998 Subordinated
Debt Issuance.
Release. Shall have the meaning specified in the Comprehensive
-------
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.
(S)(S)9601 et seq. ("CERCLA") and the term "Disposal" (or "Disposed") shall have
------
the meaning specified in the Resource Conservation and Recovery Act of
<PAGE>
-42-
1976, 42 U.S. (S)(S)9601 et seq. ("RCRA") and the regulations promulgated
-- ---
thereunder; provided that to the extent that the laws of a state wherein any
-------- ----
Real Estate lies establish a meaning for "Release" or "Disposal" which is
broader than specified in either CERCLA or RCRA, such broader meaning shall
apply to any of the Borrowers' or their Subsidiaries' activities in that state.
Reorganization. The previous proceedings under Chapter 11 of the United
--------------
States Bankruptcy Code (11 U.S.C. (S)(S)101 et seq.) with respect to E-II
-- ---
Holdings.
Returned Investment. With respect to Investments made pursuant to
-------------------
(S)10.3(f)(ii) or (S)10.3(h), the aggregate amount of all payments made in
respect of such Investment, other than interest, dividends or other
distributions not in the nature of a return or repurchase of capital or a
repayment of principal, that have been paid or returned, without restriction, in
cash to the Person making such Investment.
Revolving Commitment. With respect to each Lender, the amount set forth on
--------------------
Schedule 1 hereto as the amount of such Lender's commitment to make Revolving
- -------- -
Credit Loans to, and to participate in the issuance, extension and renewal of
Letters of Credit for the account of, the Company, as the same may be reduced
from time to time or modified pursuant to (S)2.4.2. hereof; or if such
commitment is terminated pursuant to the provisions hereof, zero.
Revolving Commitment Fee. See (S)2.3 hereof.
------------------------
Revolving Commitment Percentage. With respect to each Lender, the
-------------------------------
percentage set forth on Schedule 1 hereto (as such Schedule 1 may be amended
-------- - -------- -
from time to time) as such Lender's percentage of the aggregate Total Revolving
Commitment.
Revolving Credit Loan Maturity Date. June 24, 2003.
-----------------------------------
Revolving Credit Loans. Revolving credit loans made or to be made by the
----------------------
Lenders to the Company pursuant to (S)2.1 hereof.
Revolving Credit Notes. See (S)2.5 hereof.
----------------------
Revolving Lender. A Lender having Commitments hereunder.
--------- ------
Revolving Multicurrency Commitment. With respect to each Lender, the
----------------------------------
amount set forth on Schedule 1 hereto in Dollars as the amount of such Lender's
-------- -
commitment to either (a) make Revolving Multicurrency Loans to Samsonite Europe,
to the extent such Lender is a Multicurrency Lender or (b) purchase a risk
participation from the Fronting Bank for Revolving Multicurrency Loans made to
Samsonite Europe by the Fronting Bank pursuant to (S)6.11.2 hereof, and of each
Lender to participate in the issuance,
<PAGE>
-43-
extension and renewal of Foreign Letters of Credit for the account of Samsonite
Europe, as the same may be reduced from time to time or modified pursuant to
(S)4.4.2 hereof; or if such commitment is terminated pursuant to the provisions
hereof, zero.
Revolving Multicurrency Commitment Percentage. With respect to each
---------------------------------------------
Lender, the percentage set forth on Schedule 1 hereto (as such Schedule 1 may be
---------- ----------
amended from time to time) as such Lender's percentage of the aggregate Total
Revolving Multicurrency Commitment.
Revolving Multicurrency Loan Maturity Date. June 24, 2003.
------------------------------------------
Revolving Multicurrency Loan Request. See (S)4.7 hereof.
------------------------------------
Revolving Multicurrency Loans. Loans made or to be made by the
-----------------------------
Multicurrency Lenders and the Fronting Bank to Samsonite Europe pursuant to
(S)4.1.
Revolving Obligations. See (S)20.1 hereof.
---------------------
Risk Participation Fee. See (S)6.3.2.
----------------------
Same Day Funds. With respect to disbursements and payments in (a) Dollars,
--------------
immediately available funds, and (b) an Optional Currency, same day or other
funds as may be determined by the Foreign Agent to be customary in the place of
disbursement or payment for the settlement of international banking transactions
in the relevant Optional Currency.
Samsonite Europe. As defined in the preamble hereto.
----------------
Samsonite Italia. See (S)10.4 hereof.
----------------
Schedule 10.5.2(b) Assets. See (S)10.5.2(b).
-------------------------
Schenley. SCH Holding Corp., a Delaware corporation.
--------
SCS. Samsonite Company Stores, Inc. (formerly known as A.T. Retail, Inc.),
---
an Indiana corporation and wholly-owned Subsidiary of the Company.
Section 20 Subsidiary. A Subsidiary of the bank holding company
---------------------
controlling any Lender, which Subsidiary has been granted authority by the
Federal Reserve Board to underwrite and deal in certain Ineligible Securities.
Security Agreements. The several Security Agreements, dated or to be dated
-------------------
as of a date on or after the Closing Date, between the Obligors and the
Collateral Agent, each in form and substance satisfactory to the Administrative
Agent.
<PAGE>
-44-
Security Documents. The Guarantees, the Stock Pledge Agreement, the
------------------
Foreign Pledge Agreements, the Security Agreements, the Patent Agreement(s), the
Trademark Agreements, the Copyright Memoranda, the Collateral Assignment of
Contracts, and the Collateral Agency Agreements, together with other similar
documents entered into from time to time to guarantee, or to provide credit
support or collateral security arrangements for, the Obligations.
Senior Leverage Ratio. As at any date of determination, the ratio of (a)
---------------------
Total Funded Indebtedness of the Company and its Non-Excluded Subsidiaries
outstanding on such date minus Subordinated Debt to (b) EBITDA of the Company
-----
and its Non-Excluded Subsidiaries for the Reference Period ended on such date.
Significant Contracts. Collectively, (a) the Belgian License Agreement and
----------- ---------
(b) with respect to any Person, each contract to which such Person is a party
involving aggregate consideration payable to or by such Person of $5,000,000 or
more in any year or otherwise material to the business, condition (financial or
otherwise), operations, performance, properties or prospects of such Person,
other than supply, distribution, purchase, employee or sale contracts entered
into in the ordinary course of business and other than the Japanese License
Agreements.
Significant Domestic Subsidiaries. Collectively, (a) those Subsidiaries
---------------------------------
(if any) set forth on Schedule 1A hereto, (b) a Domestic Subsidiary which
-----------
qualifies as a "Significant Restricted Subsidiary" pursuant to (and as defined
in) the Subordinated Indenture, (c) McGregor and SCS, (d) any Non-Excluded
Subsidiary of the Company (i) which is a Domestic Subsidiary, (ii) either (x)
the book value of the consolidated total assets of which as of the last day of
each of any two (2) consecutive fiscal quarters of the Company ending after the
Closing Date, represents more than five percent (5%) of the book value of the
Consolidated Total Assets of the Company and its Non-Excluded Subsidiaries or
(y) the EBITDA of which for any period (taken as one accounting period) of any
two (2) consecutive fiscal quarters of the Company ending after the Closing
Date, accounts for more than five percent (5%) of the EBITDA of the Company and
its Non-Excluded Subsidiaries for such period, and (e) in any event, any Person
which is otherwise required to become a guarantor with respect to any
Subordinated Debt pursuant to any Subordinated Debt Documents (whether or not
such Person would otherwise constitute a Significant Domestic Subsidiary or a
Significant Foreign Subsidiary).
Significant Foreign Subsidiaries. Collectively, (a) Samsonite Europe and
--------------------------------
(b) those Foreign Subsidiaries which would, except for the requirement of clause
(d)(i) of the definition of Significant Domestic Subsidiaries, qualify as
Significant Domestic Subsidiaries under clause (d) of the definition thereof.
<PAGE>
-45-
Significant Subsidiaries. Collectively, the Significant Domestic
------------------------
Subsidiaries and Significant Foreign Subsidiaries.
Single Employer Plan. A single employer plan of any Person, as defined in
--------------------
(S)4001(a)(15) of ERISA, that (a) is maintained for employees of such Person or
any of its ERISA Affiliates and no Person other than such Person and its ERISA
Affiliates or (b) was so maintained and in respect of which such Person or any
of its ERISA Affiliates could have liability under (S)4069 of ERISA in the event
such plan has been or were to be terminated.
Solvent or Solvency. With respect to any Person on a particular date, that
-------- ---------
on such date (a) the fair value of the property of such Person is greater than
the total amount of liabilities, including, without limitation, contingent
liabilities, of such Person, (b) the present fair salable value of the assets of
such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person's ability to pay as such debts and
liabilities mature and (d) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person's property would constitute an unreasonably small capital. The
amount of contingent liabilities at any time shall be computed as the amount
that, in the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.
Special Conditions. The "Special Conditions" are comprised of the
------------------
following conditions, as determined in relation to any date on which any
particular transaction or other matter is to be consummated or effected by the
Company or any of its Subsidiaries:
(a) no Default or Event of Default shall have occurred and be
continuing on or as of such date;
(b) no Default or Event of Default shall occur, exist, or be
continuing immediately after giving effect to the relevant transaction or
other matter; and
(c) the Administrative Agent shall have received a pro forma
---------
Compliance Certificate and such other evidence as it may reasonably
require, demonstrating (and which shall constitute a representation,
warranty, and certification) that no breach of the financial covenants set
forth in (S)11 hereof would have occurred as of the end of the Reference
Period ending immediately prior to the date of completion of such
transaction had such financial covenants been calculated (on a pro forma
---------
basis) for such Reference Period as if such transaction were completed
immediately prior to the beginning of such Reference Period.
<PAGE>
-46-
Specified Investments. See (S)10.3(h) hereof.
---------------------
Standard & Poor's. Standard & Poor's Ratings Group, a division of McGraw-
-----------------
Hill, Inc., a New York corporation.
Standby Letter of Credit Fee. See (S)5.6.1 hereof.
----------------------------
Standby Letter of Credit Issuance Fee. See (S)5.6.1 hereof.
-------------------------------------
Stock Pledge Agreement. The Amended and Restated Pledge Agreement, dated
----------------------
or to be dated on or prior to the Closing Date, between the Company and the
Administrative Agent and in form and substance satisfactory to the Lenders and
the Administrative Agent.
Subordinated Debt. Unsecured Indebtedness consisting of (a) the
-----------------
Subordinated Notes (and any applicable Subordinated Guarantees) issued pursuant
to the Subordinated Indenture, (b) the 1995 Subordinated Notes (and any
applicable Subordinated Guarantees) issued pursuant to the 1995 Subordinated
Indenture, or (c) other applicable Indebtedness constituting Additional
Subordinated Debt.
Subordinated Debt Documents. The Subordinated Indenture, the Subordinated
---------------------------
Notes, any applicable Subordinated Guarantees related thereto, the 1995
Subordinated Notes issued (and any related Subordinated Guarantees) entered into
pursuant to the 1995 Subordinated Indenture, and, as applicable, the documents
evidencing, governing, or pursuant to which there is incurred or assumed any
liability for, Additional Subordinated Debt (including, without limitation, any
related Conforming Subordinated Guarantees).
Subordinated Guarantees. The guarantees, if any, to be entered into
-----------------------
pursuant to the Subordinated Indenture, or entered into pursuant to the 1995
Subordinated Indenture.
Subordinated Indenture. The Indenture dated as of June 24, 1998 between
----------------------
the Company and the Indenture Trustee relating to the Subordinated Notes.
Subordinated Notes. The 10.75% Senior Subordinated Notes due 2008 in the
------------------
initial aggregate principal amount of $350,000,000 issued pursuant to the
Subordinated Indenture.
Subordinated Note Tender Offer. The Company's offer, pursuant to the
------------------------------
Subordinated Note Tender Offer Documents, to repurchase all 1995 Subordinated
Notes, and concurrently modify the 1995 Subordinated Indenture in the manner set
forth in the Subordinated Note Tender Offer Documents.
Subordinated Note Tender Offer Documents. The Offer to Purchase and
----------------------------------------
Consent Solicitation Statement dated March 26, 1998, relating to the
<PAGE>
-47-
1995 Subordinated Notes and the 1995 Subordinated Indenture, together with all
schedules, exhibits, and annexes thereto, in the form delivered to and approved
by the Administrative Agent prior to the Closing Date.
Subsidiary. Any corporation, association, trust, or other business entity
----------
of which the designated parent shall at any time own directly or indirectly
through a Subsidiary or Subsidiaries at least a majority (by number of votes) of
the outstanding Voting Stock.
Swing Line Borrowing. A borrowing consisting of a Swing Line Loan made by
--------------------
any Swing Line Lender.
Swing Line Facility. See (S)2.2.1 hereof.
-------------------
Swing Line Lender. BofA.
-----------------
Swing Line Loan. Any loan made by (a) any Swing Line Lender pursuant to
---------------
(S)2.2.1 or (b) any Lender pursuant to (S)2.2.2.
Syndication Agent. BKB, acting as syndication agent for the Agents and the
-----------------
Lenders.
Tax Sharing Agreement. The Tax Sharing Agreement, dated as of July 14,
---------------------
1995, between the Company and Culligan.
Term Loan Account. See (S)3.2.2 hereof.
-----------------
Term Loans. Collectively, the Foreign Term Loan and the Domestic Term
----------
Loan.
Term Notes. See (S)3.2.1 hereof.
----------
Total Funded Indebtedness. As of any date of determination, an amount
----- ------ ------------
equal to the sum of all Indebtedness of the Company and its Subsidiaries
determined on a consolidated basis in accordance with generally accepted
accounting principles pursuant to any agreement or instrument to which the
Company or any of its Non-Excluded Subsidiaries is a party relating to (without
duplication) the borrowing of money or the obtaining of credit (including
letters of credit but excluding Letters of Credit to the extent the same support
Indebtedness otherwise included in this definition) or in respect of Capitalized
Leases, guarantees and other commitments or arrangements as described in clauses
(h) or (i) of the definition of "Indebtedness", but excluding therefrom up to
$5,000,000 in the aggregate of issued and outstanding documentary Letters of
Credit and documentary Foreign Letters of Credit. In addition, but without
duplication, if a default or event of default in respect of any particular
Indebtedness of any Excluded Subsidiary exists and causes or results in a
default or event of default in respect of any Indebtedness of the Company or its
Non-Excluded Subsidiaries in the principal amount in excess of $500,000
outstanding in the aggregate of the types described in the first sentence of
<PAGE>
-48-
this definition that permits or entitles the holders of any such described
Indebtedness in the principal amount in excess of $500,000 outstanding in the
aggregate of the Company or its Non-Excluded Subsidiaries (as to which there has
occurred any required giving of notice, or passage of time, or both, as
appropriate, with respect to such default or event of default applicable
thereto), to accelerate the maturity thereof, Total Funded Indebtedness shall
also include such Indebtedness of such Excluded Subsidiary. For the avoidance
of doubt, the determination of Total Funded Indebtedness shall include all
Subordinated Debt and shall exclude the 1998 Preferred Stock.
Total Percentage. With respect to each Lender, as of any date of
----------------
determination, a percentage equal to a fraction, the numerator of which is the
sum of (i) the amount equal to such Lender's Foreign Term Loan Commitment
Percentage of the Dollar Equivalent of the outstanding principal amount of the
Foreign Term Loan on such date plus (ii) the amount equal to such Lender's
----
Domestic Term Loan Commitment Percentage of the outstanding principal amount of
the Domestic Term Loan on such date, plus (iii) the Commitments (or, if the
----
Commitments are terminated, Revolving Credit Loans, Revolving Multicurrency
Loans, Letter of Credit Participations in Unpaid Reimbursement Obligations,
Foreign Letter of Credit Participations in Foreign Unpaid Reimbursement
Obligations and participating interests in the risks relating to outstanding
Letters of Credit, Foreign Letters of Credit and Fronted Loans) held by such
Lender, and the denominator of which is the sum of (a) the sum of the Dollar
Equivalent of the outstanding principal amounts of the Term Loans on such date
plus (b) the greater of (I) the sum of (A) the Total Revolving Commitment plus
- ---- ----
(B) the Total Revolving Multicurrency Commitment or (II) the outstanding
principal amount of the Revolving Credit Loans, Revolving Multicurrency Loans,
Unpaid Reimbursement Obligations, Foreign Unpaid Reimbursement Obligations and
the Maximum Drawing Amount of Letters of Credit and Foreign Letters of Credit.
Total Revolving Commitment. The sum of the Revolving Commitments of the
--------------------------
Lenders, as in effect from time to time and as the same may be modified pursuant
to (S)2.4.2. As of the Closing Date, the Total Revolving Commitment is
$75,000,000.
Total Revolving Multicurrency Commitment. The sum of the Revolving
----------------------------------------
Multicurrency Commitments of the Lenders, as in effect from time to time and as
the same may be modified pursuant to (S)4.4.3 hereof. As of the Closing Date,
the Total Revolving Multicurrency Commitment is $25,000,000.
Trademark Agreements. The several Trademark Collateral Security and Pledge
--------------------
Agreements, dated or to be dated as of a date on or after the Closing Date, made
by the Company and certain of the Guarantors in favor of the Collateral Agent
for the benefit of the Lenders, each in form and substance satisfactory to the
Administrative Agent.
<PAGE>
-49-
Type. As to any Revolving Credit Loan or all or any portion of the
----
Domestic Term Loan, its nature as a Base Rate Loan or a Eurodollar Rate Loan.
Multicurrency Loans shall be of a single Type, comprised of Multicurrency Loans
bearing interest calculated by reference to the Eurocurrency Rate, and
Multicurrency Swing Line Loans shall be of a single Type, bearing interest
calculated by reference to the BIBOR Rate.
UCC. See (S)12.6 hereof.
---
Unfunded Termination Basis Benefit Liabilities. An amount equal to the
----------------------------------------------
aggregate (subject to the following sentence) of each Guaranteed Pension Plan's
(a) benefit liabilities, as calculated on a PBGC termination basis in accordance
with Section 4001(a)(18) of ERISA and the methodologies set forth in 29 C.F.R.
2628.8(d) minus (b) the market value of the assets of such Plan, in each case as
-----
of the most recent February 28th as contemplated by the PBGC Letter. For
purposes of computing Unfunded Termination Basis Benefit Liabilities, the
benefit liabilities and assets of any Guaranteed Pension Plan which individually
has assets in excess of benefit liabilities shall be disregarded.
Uniform Customs. With respect to any Letter of Credit or Foreign Letter of
---------------
Credit, the Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication No. 500 or any
successor version thereto adopted by the Issuing Bank or Foreign Issuing Bank,
as the case may be, in the ordinary course of its business as a letter of credit
issuer and in effect at the time of issuance of such Letter of Credit or Foreign
Letter of Credit, as the case may be.
Unpaid Reimbursement Obligation. Any Reimbursement Obligation for which
-------------------------------
the Company does not reimburse the Issuing Bank and the Lenders on the date
specified in, and in accordance with, (S)5.2.1.
Unspent Amount. See (S)11.3 hereof.
--------------
Voting Stock. Stock or similar interests, of any class or classes (however
------------
designated), the holders of which are at the time entitled, as such holders, to
vote for the election of a majority of the directors (or persons performing
similar functions) of the corporation, association, trust or other business
entity involved, whether or not the right so to vote exists by reason of the
happening of a contingency.
Wholly-Owned Subsidiary. A Non-Excluded Subsidiary, all of the capital
-----------------------
stock of which (other than directors' qualifying shares or other similar nominee
shares in the aggregate not exceeding one percent (1%) of the outstanding
capital stock of such Non-Excluded Subsidiary) is owned directly or indirectly
by the Company or Non-Excluded Subsidiaries of the Company.
York Industrial. York Industrial Management Corp.
---------------
<PAGE>
-50-
1.1 Rules of Interpretation.
-----------------------
(a) A reference to any document or agreement shall include such
document or agreement as amended, modified, restated or supplemented
from time to time in accordance with its terms and the terms of this
Credit Agreement.
(b) The singular includes the plural and the plural includes
the singular.
(c) A reference to any law includes any amendment or
modification to such law.
(d) A reference to any Person includes its permitted successors
and permitted assigns.
(e) Accounting terms not otherwise defined herein have the
meanings assigned to them by generally accepted accounting principles
applied on a consistent basis by the accounting entity to which they
refer.
(f) The words "include", "includes" and "including" are not
limiting.
(g) All terms not specifically defined herein or by generally
accepted accounting principles, which terms are defined in the Uniform
Commercial Code as in effect in the State of New York, have the
meanings assigned to them therein, with the term "instrument" being
that defined under Article 9 of the Uniform Commercial Code.
(h) Reference to a particular "(S)" refers to that section of
this Credit Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words of like
import shall refer to this Credit Agreement as a whole and not to any
particular section or subdivision of this Credit Agreement.
2. THE REVOLVING CREDIT FACILITY.
-----------------------------
2.1. Commitment to Lend. Subject to the terms and conditions set forth
------------------
in this Credit Agreement, each of the Lenders severally agrees to lend to
the Company, and the Company may borrow, repay, and reborrow from time to
time between the Closing Date and the Revolving Credit Loan Maturity Date,
upon notice by the Company to the Administrative Agent given in accordance
with (S)2.7, such sums as are requested by the Company in an amount for
each such advance not to exceed (after giving effect to all amounts
requested) such Lender's Revolving Commitment minus the aggregate principal
-----
<PAGE>
-51-
amount of such Lender's outstanding Revolving Credit Loans, minus the
-----
amount by which the Swing Line Loans outstanding at such time shall be
deemed to have used such Lender's Revolving Commitment pursuant to (S)2.10
hereof, minus (without duplication) the sum of such Lender's Revolving
-----
Commitment Percentage of the Maximum Drawing Amount of all outstanding
Letters of Credit and the Unpaid Reimbursement Obligations owing to such
Lender, provided that (a) the sum of the outstanding amount of the
--------
Revolving Credit Loans (after giving effect to all amounts requested) plus
----
the outstanding amount of the Swing Line Loans plus the Maximum Drawing
----
Amount and all Unpaid Reimbursement Obligations with respect to all Letters
of Credit shall not at any time exceed the Total Revolving Commitment, and
(b) at all times the outstanding aggregate principal amount of all
Revolving Credit Loans made by each Lender shall equal such Lender's
Revolving Commitment Percentage of the outstanding aggregate principal
amount of all Revolving Credit Loans made pursuant to (S)2 hereof. The
Revolving Credit Loans shall be made pro rata in accordance with each
--- ----
Lender's Revolving Commitment Percentage. Each request for a Revolving
Credit Loan hereunder shall constitute a representation and warranty by the
Company that the conditions set forth in (S)12 and (S)13, in the case of
the initial Revolving Credit Loans to be made on the Closing Date, and
(S)13, in the case of all other Revolving Credit Loans, have been satisfied
on the date of such request.
2.2. The Swing Line.
--------------
2.2.1. The Swing Line Loans. The Company may request any Swing
--------------------
Line Lender to make, and such Swing Line Lender may, if in its sole
discretion it elects to do so, and without any commitment whatsoever
by any such Swing Line Lender to do so, make, on the terms and
conditions hereinafter set forth, Swing Line Loans to the Company from
time to time on any Business Day during the period from the date
hereof until the Revolving Credit Loan Maturity Date in an amount (for
the Swing Line Loans of all Swing Line Lenders taken together) not to
exceed at any time outstanding $10,000,000 in the aggregate (the
"Swing Line Facility"), provided, however, that while the outstanding
-------- -------
amount of all outstanding Swing Line Loans and outstanding Revolving
Credit Loans made by a Lender may exceed such Lender's Revolving
Commitment, the aggregate amount of all Swing Line Loans outstanding
shall not exceed the Total Revolving Commitment less all Revolving
----
Credit Loans outstanding less the Maximum Drawing Amount and all
----
Unpaid Reimbursement Obligations with respect to all Letters of
Credit. No Swing Line Loan shall be used for the purpose of funding
the payment of principal of any other Swing Line Loan or of any
Multicurrency Swing Line Loan. Each Swing Line Borrowing shall be in
an amount of $100,000 or an
<PAGE>
-52-
integral multiple of $100,000 in excess thereof and shall consist of a
Base Rate Loan. Swing Line Loans must be Base Rate Loans only, and may
not be Eurodollar Rate Loans. Within the limits of the Swing Line
Facility and within the limits referred to in (S)2.1(b) above, so long
as any Swing Line Lender, in its sole discretion, elects to make Swing
Line Loans, the Company may borrow under this (S)2.2.1, repay pursuant
to (S)2.12.1 or repay pursuant to (S)2.12.3 and reborrow under this
(S)2.2.1.
2.2.2. Notice. Each Swing Line Borrowing shall be made on notice,
------
given not later than 1:00 p.m. (New York City time) on the date of the
proposed Swing Line Borrowing, by the Company to any Swing Line Lender
and the Administrative Agent. The Administrative Agent shall
immediately advise such Swing Line Lender of the available amount of
the Swing Line Facility. Each such notice of a Swing Line Borrowing (a
"Notice of Swing Line Borrowing") shall be by telephone, telex or
telecopier, confirmed immediately in writing, specifying therein the
requested (a) date of such borrowing, (b) amount of such borrowing and
(c) maturity of such borrowing (which maturity shall be no later than
the fourteenth (14th) day after the requested date of such borrowing).
If, in its sole discretion, it elects to make the requested Swing Line
Loan, such Swing Line Lender will make the amount thereof available to
the Administrative Agent at the Administrative Agent's Head Office, in
same day funds. After the Administrative Agent's receipt of such funds
and upon fulfillment of the applicable conditions set forth in (S)12
(for any Swing Line Loan to be made on the Closing Date) and (S)13,
the Administrative Agent will make such funds available to the Company
in such manner as the Company and the Administrative Agent may agree.
Upon written demand by any Swing Line Lender with an outstanding Swing
Line Loan, with a copy of such demand to the Administrative Agent,
each other Lender shall purchase from such Swing Line Lender, and such
Swing Line Lender shall sell and assign to each such other Lender,
such other Lender's pro rata share (determined by its Revolving
--- ----
Commitment Percentage) of such outstanding Swing Line Loan as of the
date of such demand, by making available on behalf of its Domestic
Lending Office to the Administrative Agent for the account of such
Swing Line Lender, in immediately available funds, an amount equal to
the portion of the outstanding principal amount of such Swing Line
Loan to be purchased by such Lender. In the event that any
bankruptcy, reorganization, liquidation, receivership or similar cases
or proceedings in which the Company is a debtor prevents any Lender
from making a Revolving Credit Loan to effect a settlement to the
Swing Line Lender as contemplated hereby, such Lender will make such
dispositions and arrangements with the other
<PAGE>
-53-
Lenders and the Swing Line Lender with respect to such Swing Line
Loans, either by way of purchase of participations, distribution, pro
tanto assignment of claims, subrogation or otherwise as shall result
in each Lender's share of the outstanding Swing Line Loans and
Revolving Credit Loans being equal, as nearly as may be, to such
Lender's Revolving Commitment Percentage of the outstanding amount of
the Swing Line Loans and Revolving Credit Loans. The Company hereby
agrees to each such sale and assignment. Each Lender agrees to
purchase its pro rata share (determined by its Revolving Commitment
--- ----
Percentage) of an outstanding Swing Line Loan on (a) the Business Day
on which demand therefor is made by the Swing Line Lender which made
such Swing Line Loan, provided that notice of such demand is given not
--------
later than 1:00 p.m. (New York City time) on such Business Day or (b)
the first Business Day next succeeding such demand if notice of such
demand is given after such time. Upon any such assignment by a Swing
Line Lender to any other Lender of a portion of a Swing Line Loan,
such Swing Line Lender represents and warrants to such other Lender
that such Swing Line Lender is the legal and beneficial owner of such
interest being assigned by it, but makes no other representation or
warranty and assumes no responsibility with respect to such Swing Line
Loan, the Loan Documents or any Obligor. If and to the extent that
any Lender shall not have so made its pro rata share of the amount of
--- ----
such Swing Line Loan available to the Administrative Agent, such
Lender agrees to pay to the Administrative Agent for the account of
such Swing Line Lender forthwith on demand by such Swing Line Lender
such amount together with interest thereon, for each day from the date
of demand by such Swing Line Lender until the date such amount is paid
to the Administrative Agent, at the Federal Funds Rate. If such
Lender shall pay to the Administrative Agent such amount for the
account of such Swing Line Lender on any Business Day, such amount so
paid in respect of principal shall constitute a Swing Line Loan made
by such Lender on such Business Day for purposes of this Credit
Agreement, and the outstanding principal amount of the Swing Line Loan
made by such Swing Line Lender shall be reduced by such amount on such
Business Day.
2.2.3. Irrevocable Notice. Each Notice of Swing Line Borrowing
------------------
shall be irrevocable and binding on the Company.
2.2.4. Purchase of Swing Line Loan. Each Lender severally agrees
---------------------------
that it shall be absolutely liable, without regard to the occurrence
of any Default or Event of Default or any other condition precedent
whatsoever, to the extent of such Lender's pro rata share (determined
--- ----
by its Revolving
<PAGE>
-54-
Commitment Percentage) of the outstanding Swing Line Loans, to
purchase from the Swing Line Lender on demand such Lender's pro rata
--- ----
share (as so determined) of such outstanding Swing Line Loan as of the
date of such demand.
2.3. Revolving Commitment Fee. For the period commencing on the
------------------------
Closing Date and ending on the Revolving Credit Loan Maturity Date, the
Company promises to pay to the Administrative Agent, for the accounts of
each of the respective Lenders a commitment fee (the "Revolving Commitment
Fee") calculated, at a rate per annum equal to the Commitment Fee Rate, as
in effect from time to time, on the daily Maximum Unused Revolving
Commitment of such applicable Lender during each calendar quarter or
portion thereof. The Revolving Commitment Fee shall be payable quarterly in
arrears on the last day of each calendar quarter for the calendar quarter
or portion thereof then ending, commencing on the first such date following
the date hereof, with a final payment on the Revolving Credit Loan Maturity
Date or any earlier date on which the Revolving Commitments shall
terminate.
2.4. Reduction and Reallocation of Total Revolving Commitment.
--------------------------------------------------------
2.4.1. Optional Reduction of Total Revolving Commitment. The
------------------------------------------------
Company shall have the right at any time and from time to time upon
five (5) Business Days prior written notice to the Administrative
Agent to reduce by $10,000,000 or a greater integral multiple of
$5,000,000 in excess thereof, or to terminate entirely, the Total
Revolving Commitment, whereupon the Revolving Commitments of the
Lenders shall be reduced pro rata in accordance with their
--- ----
respective Revolving Commitment Percentages of the amount specified in
such notice or, as the case may be, terminated. Promptly after
receiving any notice of the Company delivered pursuant to this
(S)2.4.1, the Administrative Agent will notify the Lenders of the
substance thereof. The Total Revolving Commitment shall never be
reduced pursuant to this (S)2.4.1 to an amount less than the sum of
the outstanding amount of the Revolving Credit Loans plus the
----
outstanding amount of the Swing Line Loans plus the Maximum Drawing
----
Amount of outstanding Letters of Credit plus all Unpaid Reimbursement
----
Obligations. No reduction or termination of the Revolving Commitments
may be reinstated.
2.4.2. Reallocation of Total Revolving Commitment. The Borrowers
------------------------------------------
shall have the right from time to time, so long as no Default or Event
of Default has occurred and is continuing or would exist as a result
thereof, but not more frequently than once each calendar year, upon
five (5) Business Days prior written notice to the Administrative
Agent and the Foreign
<PAGE>
-55-
Agent, to reallocate the then-applicable amounts of the Total
Revolving Commitment and the Total Revolving Multicurrency Commitment
between such two credit facilities, subject to the provisions of this
(S)2.4.2 and the provisions of (S)4.4.2; provided, however, the sum of
-------- -------
the Dollar Equivalents of the Total Revolving Commitment and the Total
Revolving Multicurrency Commitment, after giving effect to such
reallocation, shall not exceed the Dollar Equivalent of such sum as it
existed immediately prior to giving effect to such reallocation. Prior
to the effectiveness of any such reallocation, the Borrowers shall
provide the Administrative Agent with five (5) Business Days prior
written notice of their election for such a reallocation, which notice
shall provide (a) the amount that the Total Revolving Commitment then
in effect shall be increased or decreased, as the case may be, and (b)
the date such increase or decrease shall take effect. To the extent
the Borrowers are requesting an increase in the Total Revolving
Multicurrency Commitment (in which case the Borrowers must
simultaneously therefore effect a dollar for dollar decrease in the
same amount in the Total Revolving Commitment), if at the time of such
reallocation the sum of the outstanding amount of the Revolving Credit
Loans plus the outstanding amount of the Swing Line Loans plus the
---- ----
Maximum Drawing Amount of outstanding Letters of Credit plus all
----
Unpaid Reimbursement Obligations exceeds the Total Revolving
Commitment in effect after giving effect to the applicable requested
reduction and allocation pursuant to this (S)2.4.2, then the Company
shall immediately pay the amount of such excess to the Administrative
Agent for the respective accounts of the Lenders for application
first, to any Swing Line Loans, second, to the Unpaid Reimbursement
----- ------
Obligations, third, to the Revolving Credit Loans, and fourth, to
----- ------
provide the Administrative Agent cash collateral for Reimbursement
Obligations as contemplated by (S)5.2.1 hereof. Until such time as the
Company has paid such excess, the Total Revolving Multicurrency
Commitment shall not be increased. In addition, as a condition
precedent to the effectiveness of any reallocation pursuant to this
(S)2.4.2, the Borrowers shall also deliver to the Administrative Agent
(a) evidence, in form and substance satisfactory to the Administrative
Agent, of all appropriate and necessary corporate authorizations and
approvals for the reallocation being requested hereunder and (b)
confirmatory legal opinions, in form and substance satisfactory to the
Administrative Agent. At such time as the Borrowers have complied
with this (S)2.4.2 and (S)4.4.2, the Revolving Commitments of the
Lenders shall be reduced (in the case of a reallocation to increase
the Total Revolving Multicurrency Commitment) or increased (in the
case of a reallocation to increase the Total Revolving Commitment) pro
---
rata in
----
<PAGE>
-56-
accordance with their respective Revolving Commitment Percentages of
the amount specified in such notice. Promptly after receiving any
notice of the Borrowers delivered pursuant to this (S)2.4.2, the
Administrative Agent will notify the Lenders of the substance thereof.
2.5. Revolving Credit Notes. The Revolving Credit Loans and the Swing
----------------------
Line Loans shall be evidenced by separate amended and restated promissory
notes of the Company in substantially the form of Exhibit A-1 hereto (each
-----------
a "Revolving Credit Note"), dated as of the Closing Date and completed with
appropriate insertions. One Revolving Credit Note shall be payable to the
order of each Lender having a Revolving Commitment in a principal amount
equal to such Lender's Revolving Commitment Percentage of the sum of the
Total Revolving Commitment and the Total Revolving Multicurrency Commitment
or, if different, the outstanding amount of all Revolving Credit Loans and
Swing Line Loans made (or held) by such Lender, plus interest accrued
thereon, as set forth below. The Company irrevocably authorizes each Lender
to make or cause to be made, at or about the time of the Drawdown Date of
any Revolving Credit Loan or Swing Line Loan or at the time of receipt of
any payment of principal on such Lender's Revolving Credit Note, an
appropriate notation on such Lender's applicable Record reflecting the
making of such Revolving Credit Loan or Swing Line Loan or (as the case may
be) the receipt of such payment. The outstanding amount of the Revolving
Credit Loans and Swing Line Loans set forth on such Lender's Record shall
be prima facie evidence of the principal amount thereof owing and unpaid to
such Lender, but the failure to record, or any error in so recording, any
such amount on such Lender's Record shall not limit or otherwise affect the
obligations of the Company hereunder or under any Revolving Credit Note to
make payments of principal of or interest on any Revolving Credit Note when
due.
2.6. Interest on Revolving Credit Loans and Swing Line Loans. Except
-------------------------------------------------------
as otherwise provided in (S)6.10,
(a) Each Base Rate Loan (other than Base Rate Loans that
constitute all or a portion of the Domestic Term Loan) shall bear
interest for the period commencing with the Drawdown Date thereof and
ending on the last day of the Interest Period with respect thereto at
the Base Rate plus the Applicable Margin set forth in the column
----
headed "Base Rate Loans (other than Domestic Term Loan)".
(b) Each Eurodollar Rate Loan (other than the Domestic Term
Loan) shall bear interest for the period commencing with the Drawdown
Date thereof and ending on the last day of the Interest Period with
respect thereto at the Eurodollar Rate determined for such Interest
Period plus the
----
<PAGE>
-57-
Applicable Margin set forth in the column headed "Eurodollar Rate
Loans (other than the Domestic Term Loan), Multicurrency Loans and
Multicurrency Swing Line Loans".
(c) Each Base Rate Loan that constitutes all or any portion of
the Domestic Term Loan shall bear interest for the period commencing
with the Drawdown Date thereof and ending on the last day of the
Interest Period with respect thereto at the Base Rate plus the
----
Applicable Margin set forth in the column headed "Base Rate Loans that
are the Domestic Term Loan".
(d) Each Eurodollar Rate Loan that constitutes all or any
portion of the Domestic Term Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the last day
of the Interest Period with respect thereto at the Eurodollar Rate
determined for such Interest Period plus the Applicable Margin set
----
forth in the column headed "Eurodollar Rate Loans that are the
Domestic Term Loan".
(e) The Company promises to pay interest on each Revolving
Credit Loan and Swing Line Loan in arrears on each Interest Payment
Date with respect thereto. Each payment of interest on any Swing Line
Loan Borrowing shall be allocated pro rata among the Lenders
--- ----
participating in such Borrowing in accordance with the respective
amounts of accrued and unpaid interest on their outstanding Swing Line
Loans, as the case may be, comprising such Borrowing.
2.7. Requests for Revolving Credit Loans. The Company shall give to
-----------------------------------
the Administrative Agent written notice in the form of Exhibit C hereto (or
---------
telephonic notice confirmed in writing in the form of Exhibit C hereto) of
---------
each Revolving Credit Loan requested hereunder (a "Loan Request") no later
than (a) 1:00 p.m. (New York City time) one (1) Business Day prior to the
proposed Drawdown Date of any Base Rate Loan and (b) 1:00 p.m. (New York
City time) three (3) Eurodollar Business Days prior to the proposed
Drawdown Date of any Eurodollar Rate Loan. Each such notice shall specify
(i) the principal amount of the Revolving Credit Loan requested, (ii) the
proposed Drawdown Date of such Revolving Credit Loan, (iii) the Interest
Period for such Revolving Credit Loan and (iv) the Type of such Revolving
Credit Loan. Promptly upon receipt of any such notice, the Administrative
Agent shall notify each of the Lenders thereof. Each Loan Request shall be
irrevocable and binding on the Company and shall obligate the Company to
accept the Revolving Credit Loan requested from the Lenders on the proposed
Drawdown Date. Each Loan Request shall be in a minimum aggregate amount of
$3,000,000 or a greater integral multiple of $500,000 in excess thereof.
<PAGE>
-58-
2.8. Conversion Options.
------------------
2.8.1. Conversion to Different Type of Revolving Credit Loan.
-----------------------------------------------------
The Company may elect from time to time to convert any outstanding
Revolving Credit Loan to a Revolving Credit Loan of another Type,
provided that (a) with respect to any such conversion of a Eurodollar
--------
Rate Loan to a Base Rate Loan, the Company shall give the
Administrative Agent written notice of such election by not later than
1:00 p.m. (New York City time) one (1) Business Day prior to such
election; (b) with respect to any such conversion of a Base Rate Loan
to a Eurodollar Rate Loan, the Company shall give the Administrative
Agent written notice of such election by not later than 1:00 p.m. (New
York City time) three (3) Eurodollar Business Days prior to such
election; (c) with respect to any such conversion of a Eurodollar Rate
Loan into a Base Rate Loan, such conversion shall only be made on the
last day of the Interest Period with respect thereto and (d) no
Revolving Credit Loan may be converted into a Eurodollar Rate Loan
when any Default or Event of Default has occurred and is continuing.
On the date on which such conversion is being made each Lender shall
take such action as is necessary to transfer its Revolving Commitment
Percentage of such Revolving Credit Loans to its Domestic Lending
Office or its Eurodollar Lending Office, as the case may be. All or
any part of outstanding Revolving Credit Loans of any Type may be
converted into a Revolving Credit Loan of another Type as provided
herein, provided that any partial conversion shall be in an aggregate
--------
principal amount of $3,000,000 or a greater integral multiple of
$500,000 in excess thereof. Each Conversion Request relating to the
conversion of a Revolving Credit Loan to a Eurodollar Rate Loan shall
be irrevocable by the Company.
2.8.2. Continuation of Type of Revolving Credit Loan. Any
---------------------------------------------
Revolving Credit Loan of any Type may be continued as a Revolving
Credit Loan of the same Type upon the expiration of an Interest
Period with respect thereto by compliance by the Company with the not
ice provisions contained in (S)2.7; provided that no Eurodollar
--------
Rate Loan may be continued as such when any Default or Event of
Default has occurred and is continuing, but shall be automatically
converted to a Base Rate Loan on the last day of the first Interest
Period relating thereto ending during the continuance of any Default
or Event of Default of which officers of the Administrative Agent
active upon the Company's account have actual knowledge. In the event
that the Company fails to provide any such notice with respect to the
continuation of any Eurodollar Rate Loan as such, then such Eurodollar
Rate Loan shall be automatically converted to a Base Rate Loan on the
<PAGE>
-59-
last day of the first Interest Period relating thereto. The
Administrative Agent shall notify the Lenders promptly when any such
automatic conversion contemplated by this (S)2.8.2 is scheduled to
occur.
2.8.3. Eurodollar Rate Loans. Any borrowing of, or conversion
---------------------
to or from Eurodollar Rate Loans shall be in such amounts and be made
pursuant to such elections so that, after giving effect thereto, the
aggregate principal amount of all Eurodollar Rate Loans having the
same Interest Period shall not be less than $3,000,000 or a greater
integral multiple of $500,000 in excess thereof. In addition, there
shall not at any time be more than fifteen (15) Eurodollar Rate Loans
with different Interest Periods outstanding at any one time. As
provided in (S)3.5.3(a), this (S)2.8.3 shall be applied with respect
to all Eurodollar Rate Loans, whether constituting Revolving Credit
Loans or any applicable portion of the Domestic Term Loan.
2.9. Funds for Revolving Credit Loans.
--------------------------------
2.9.1. Funding Procedures. Not later than 11:00 a.m. (New York
------------------
City time) on the proposed Drawdown Date of any Revolving Credit
Loans, each of the Lenders will make available to the Administrative
Agent, at the Administrative Agent's Head Office, in immediately
available funds, the amount of such Lender's Revolving Commitment
Percentage of the amount of the requested Revolving Credit Loans. Upon
receipt from each Lender of such amount, and upon receipt of the
documents required by (S)12 (for the initial Revolving Credit Loans to
be made on the Closing Date) and (S)13 and the satisfaction of the
other conditions set forth therein, to the extent applicable, the
Administrative Agent will make available to the Company the aggregate
amount of such Revolving Credit Loans made available to the
Administrative Agent by the Lenders. The failure or refusal of any
Lender to make available to the Administrative Agent at the aforesaid
time and place on any Drawdown Date the amount of its Revolving
Commitment Percentage of the requested Revolving Credit Loans shall
not relieve any other Lender from its several obligation hereunder to
make available to the Administrative Agent the amount of such other
Lender's Revolving Commitment Percentage of any requested Revolving
Credit Loans.
2.9.2. Advances by Administrative Agent. The Administrative
--------------------------------
Agent may, unless notified to the contrary by any Lender prior to a
Drawdown Date, assume that such Lender has made available to the
Administrative Agent on such
<PAGE>
-60-
Drawdown Date the amount of such Lender's Revolving Commitment
Percentage of the Revolving Credit Loans to be made on such Drawdown
Date, and the Administrative Agent may (but it shall not be required
to), in reliance upon such assumption, make available to the Company a
corresponding amount. If any Lender makes available to the
Administrative Agent such amount on a date after such Drawdown Date,
such Lender shall pay to the Administrative Agent on demand an amount
equal to the product of (a) the weighted average, computed for the
period referred to in clause (c) below, of the Federal Funds Rate, for
each day included in such period, times (b) the amount of such
-----
Lender's Revolving Commitment Percentage of such Revolving Credit
Loans times (c) a fraction, the numerator of which is the number of
-----
days that elapse from and including such Drawdown Date to the date on
which the amount of such Lender's Revolving Commitment Percentage of
such Revolving Credit Loans shall become immediately available to the
Administrative Agent, and the denominator of which is 365. A statement
of the Administrative Agent submitted to such Lender with respect to
any amounts owing under this paragraph shall be prima facie evidence
----- -----
of the amount due and owing to the Administrative Agent by such
Lender. If the amount of such Lender's Revolving Commitment Percentage
of such Revolving Credit Loans is not made available to the
Administrative Agent by such Lender within three (3) Business Days
following such Drawdown Date, the Administrative Agent shall be
entitled to recover such amount from the Company on demand, with
interest thereon at the rate per annum applicable to the Revolving
Credit Loans made on such Drawdown Date.
2.10. Pro Rata Treatment. For purposes of determining the applicable
------------------
available unused Revolving Commitments of the respective Lenders at any
time, each outstanding Swing Line Loan shall be deemed to have utilized the
Revolving Commitments of the Lenders (including those Lenders which are not
the Swing Line Lender actually making such Swing Line Loan) pro rata in
--- ----
accordance with such respective Revolving Commitments.
2.11. Intentionally Deleted.
---------------------
2.12. Repayment Of The Revolving Credit Loans And Swing Line Loans.
------------------------------------------------------------
2.12.1. Maturity.
--------
(a) Revolving Credit Loans.The Company promises to pay
----------------------
on the Revolving Credit Loan Maturity Date, and there shall
become absolutely due and payable
<PAGE>
-61-
on the Revolving Credit Loan Maturity Date, all of the Revolving
Credit Loans outstanding on such date, together with any and all
accrued and unpaid interest thereon.
(b) Swing Line Loans. The Company shall repay to the
----------------
Administrative Agent for the account of each Swing Line Lender
and each other Lender which has made a Swing Line Loan the
outstanding principal amount of each Swing Line Loan made to the
Company on the earlier of the maturity date specified in the
applicable Notice of Swing Line Borrowing (which maturity shall
be no later than the fourteenth (14th) day after the requested
date of such borrowing) and the Revolving Credit Loan Maturity
Date.
2.12.2. Mandatory Repayments of Revolving Credit Loans. If at any
----------------------------------------------
time the sum of the outstanding amount of the Revolving Credit Loans,
Swing Line Loans, the Maximum Drawing Amount and all Unpaid
Reimbursement Obligations exceeds the Total Revolving Commitment then
the Company shall immediately pay the amount of such excess to the
Administrative Agent for the respective accounts of the Lenders for
application: first, to any Swing Line Loans; second, to any Unpaid
Reimbursement Obligations; third, to the Revolving Credit Loans; and
fourth, to provide to the Administrative Agent cash collateral for
Reimbursement Obligations with respect to outstanding Letters of
Credit, as contemplated by (S)5.2.1(b). Each payment of any Unpaid
Reimbursement Obligations or prepayment of Revolving Credit Loans
shall be allocated among the Lenders, in proportion, as nearly as
practicable, to each Reimbursement Obligation or (as the case may be)
the respective unpaid principal amount of each Lender's Revolving
Credit Note, with adjustments to the extent practicable to equalize
any prior payments or repayments not exactly in proportion. The
Company agrees to indemnify the Lenders in accordance with (S)6.9 with
respect to any prepayment under this (S)2.12.2 to which (S)6.9 is
applicable.
2.12.3. Optional Repayments of Revolving Credit Loans and Swing
-------------------------------------------------------
Line Loans. The Company shall have the right, at its election, to
----------
repay the outstanding amount of the Revolving Credit Loans and Swing
Line Loans, as a whole or in part, at any time without penalty or
premium, provided that any full or partial prepayment of the
--------
outstanding amount of any Eurodollar Rate Loans pursuant to this
(S)2.12.3 may be made only on the last day of the Interest Period
relating thereto or, if made prior to the last day of the Interest
Period relating thereto, the Company agrees to indemnify the Lenders
for any
<PAGE>
-62-
loss, cost or expense that any Lender may sustain or incur as a
consequence of such repayment all as more fully set forth in (S)6.9
hereof. The Company shall give the Administrative Agent, no later than
11:00 a.m. (New York City time) on the date of any proposed
prepayment, prior written or telephonic notice of any proposed
prepayment pursuant to this (S)2.12.3 of Swing Line Loans, and no
later than 12:00 noon (New York City time) at least one (1) Business
Day prior written notice of any proposed prepayment pursuant to this
(S)2.12.3 of Revolving Credit Loans constituting Base Rate Loans, and
no later than 12:00 noon (New York City time) at least three (3)
Eurodollar Business Days prior written notice of any proposed
prepayment pursuant to this (S)2.12.3 of Revolving Credit Loans
constituting Eurodollar Rate Loans, in each case specifying the
proposed date of prepayment of Revolving Credit Loans or Swing Line
Loans and the principal amount to be prepaid. Each such partial
prepayment of (a) the Revolving Credit Loans shall be in the principal
amount of $3,000,000 or a greater integral multiple of $500,000 in
excess thereof and (b) the Swing Line Loans shall be in the principal
amount of $100,000 or a greater integral multiple of $10,000 in excess
thereof and shall be applied, in the absence of instruction by the
Company, first to the principal of Base Rate Loans and then to the
principal of Eurodollar Rate Loans. Each partial prepayment of
Revolving Credit Loans or Swing Line Loans, as the case may be, shall
be allocated among the Lenders, in proportion, as nearly as
practicable, to the respective unpaid principal amount of Revolving
Credit Loans or Swing Line Loans, as the case may be, under each
Lender's Note, with adjustments to the extent practicable to equalize
any prior repayments not exactly in proportion.
2.14.4. Intentionally Deleted.
---------------------
2.12.5. Intentionally Deleted.
---------------------
3. THE TERM LOANS.
--------------
3.1. Commitment To Lend.
------------------
3.1.1. Domestic Term Loan. Subject to the terms and conditions
------------------
set forth in this Credit Agreement, each Lender having a non-zero
Domestic Term Loan Commitment Percentage agrees to lend in Dollars to
the Company on the Closing Date the amount of its Domestic Term Loan
Commitment Percentage of the principal amount of $60,000,000.
3.1.2. Foreign Term Loan. Subject to the terms and conditions
-----------------
set forth in this Credit Agreement, (a) each of the
<PAGE>
-63-
Multicurrency Lenders agrees to lend to Samsonite Europe, in Belgian
francs, on the Closing Date the amount of its Foreign Term Loan
Commitment Percentage, and (b) the Fronting Bank agrees to lend the
aggregate Foreign Term Loan Commitment Percentage of each of the Non-
Multicurrency Lenders, of the aggregate amount of Belgian francs
1,853,750,000 (constituting the Dollar Equivalent as of the Closing
Date of the principal amount of $50,000,000). The Foreign Term Loan
shall be made pro rata in accordance with each Multicurrency Lender's
--------
Foreign Term Loan Commitment Percentage (and, in the case of the
Fronting Bank, pro rata in accordance with the aggregate Foreign Term
--------
Loan Commitment Percentages of the Non-Multicurrency Lenders). The
Foreign Term Loan shall be funded from the applicable Multicurrency
Lending Office of each Multicurrency Lender located in Belgium and the
Fronting Bank's Belgian Lending Office, as the case may be, and shall
be denominated in Belgian francs. The Foreign Term Loan shall
constitute a Multicurrency Loan and shall be subject to the provisions
contained in this Credit Agreement relating thereto.
3.2. Term Note/loan Account for the Term Loans.
-----------------------------------------
3.2.1. Domestic Term Loan. The Domestic Term Loan shall be
------------------
evidenced by promissory notes of the Company in substantially the form
of Exhibit A-2 hereto (each a "Term Note"), dated the Closing Date and
-----------
completed with appropriate insertions. One Term Note shall be payable
to the order of each Lender holding any portion of the Domestic Term
Loan in a principal amount equal to such Lender's Domestic Term Loan
Commitment Percentage of the Domestic Term Loan and representing the
obligation of the Company to pay to such Lender such principal amount,
plus interest accrued thereon, as set forth below. The Company
irrevocably authorizes each such Lender to make or cause to be made a
notation on such Lender's Record with respect to its Term Note
reflecting the original principal amount of such Lender's Domestic
Term Loan Commitment Percentage of the Domestic Term Loan and, at or
about the time of such Lender's receipt of any principal payment in
respect of the Domestic Term Loan on such Lender's Term Note, an
appropriate notation on such Lender's Record with respect to its Term
Note reflecting such payment. The aggregate unpaid amount set forth on
such Lender's Record with respect to its Term Note shall be prima
-----
facie evidence of the principal amount thereof owing and with respect
-----
to its Term Note unpaid to such Lender, but the failure to record, or
any error in so recording, any such amount on such Record shall not
affect the obligation of the Company hereunder or
<PAGE>
-64-
under any Term Note to make payments of principal of and interest on
any Term Note when due.
3.2.2. Foreign Term Loan. The obligations of Samsonite Europe to
-----------------
repay all amounts borrowed by it as the Foreign Term Loan, all
interest thereon and all other amounts payable by it in respect
thereof shall be evidenced by this Credit Agreement, including any
recordations made by any applicable Multicurrency Lender or the
Fronting Bank, as the case may be, in respect of the date, amount and
currency of the Foreign Term Loan, each Interest Period relating
thereto, the date and amount of each payment or prepayment of
principal, interest or fees of the Foreign Term Loan made to such
Multicurrency Lender or Fronting Bank, as the case may be
(collectively, the " Term Loan Account") it being the intention of the
parties hereto that Samsonite Europe's obligations with respect to the
Foreign Term Loan owed by it hereunder shall be evidenced only as
stated herein and not by separate promissory notes or other
instruments. The aggregate unpaid amount set forth on such
Multicurrency Lender's or Fronting Bank's Record with respect to the
Foreign Term Loan shall be prima facie evidence of the amount thereof
----- -----
owing and with respect to the Foreign Term Loan unpaid to such Lender,
but the failure to record, or any error in so recording, any such
amount on such Record shall not affect the obligation of Samsonite
Europe hereunder to make payments of principal of and interest on the
Foreign Term Loan when due.
3.3. Mandatory Payments of Principal of the Term Loans.
-------------------------------------------------
3.3.1. Scheduled Payment of the Term Loans.
-----------------------------------
(a) The Company promises to pay to the Administrative
Agent for the account of the applicable Lenders the principal
amount of the Domestic Term Loan in thirteen (13) consecutive
periodic installment payments payable on the dates and in the
amounts (set forth as percentages of the initial principal amount
of the Domestic Term Loan) set forth in the table below,
commencing on the first such date after the Closing Date, with a
final payment on the Domestic Term Loan Maturity Date in an
amount equal to the unpaid balance of the Domestic Term Loan.
(b) Samsonite Europe promises to pay to the Foreign Agent
for the account of the applicable Multicurrency Lenders and the
Fronting Bank the principal amount of the Foreign Term Loan in
full on the Foreign Term Loan Maturity Date.
<PAGE>
-65-
(c) All payments in respect of the Domestic Term Loan
shall be in Dollars and all payments in respect of the Foreign
Term Loan shall be in Belgian francs.
@@
<TABLE>
<CAPTION>
-----------------------------------------------------------------
Percentage of Original Principal
Payment Date: Amount of the Domestic Term Loan
-----------------------------------------------------------------
<S> <C>
June 24, 1999 1.0%
-----------------------------------------------------------------
December 24, 1999 0.5%
-----------------------------------------------------------------
June 24, 2000 0.5%
-----------------------------------------------------------------
December 24, 2000 0.5%
-----------------------------------------------------------------
June 24, 2001 0.5%
-----------------------------------------------------------------
December 24, 2001 0.5%
-----------------------------------------------------------------
June 24, 2002 0.5%
-----------------------------------------------------------------
December 24, 2002 0.5%
-----------------------------------------------------------------
June 24, 2003 0.5%
-----------------------------------------------------------------
December 24, 2003 23.75%
-----------------------------------------------------------------
June 24, 2004 23.75%
-----------------------------------------------------------------
December 24, 2004 23.75%
-----------------------------------------------------------------
Domestic Term Loan Maturity Date Remaining unpaid balance of
Domestic Term Loan
-----------------------------------------------------------------
</TABLE>
@@
3.3.2. Intentionally Deleted.
---------------------
3.3.3. Proceeds of Debt Issuances, Asset Sales, and Certain Other
----------------------------------------------------------
Events.
------
(a) Upon the occurrence of any Debt Issuance (other than
the Subordinated Notes), the Company shall make a prepayment of
principal in respect of the Domestic Term Loan to the
Administrative Agent for the pro rata account of the Lenders
--- ----
(according to their Domestic Term Loan Commitment Percentages) in
an aggregate amount equal to one hundred percent (100%) of the
Net Debt Issuance Proceeds resulting from such Debt Issuance (or,
with respect to the Foreign Term Loan Refinancing Debt, the
amount provided for in (S)10.1(r) to be so applied pursuant to
this (S)3.3.3). After the Domestic Term Loan has been paid in
full, no further prepayment from Net Debt Issuance Proceeds will
be required pursuant to this (S)3.3.3(a).
<PAGE>
-66-
(b) Upon the occurrence of any Asset Sale to be consummated
after the date hereof, to the extent and at the time required by
(S)10.5.2, and upon the occurrence of any Insurance Event after
the date hereof, to the extent and at the time required by
(S)9.7.2, the Company shall make a prepayment of principal in
respect of the Domestic Term Loan and/or Samsonite Europe shall
make a prepayment of principal in respect of the Foreign Term
Loan. The Company shall have the right to determine in what
proportions any such prepayment is made as between the Domestic
Term Loan and/or the Foreign Term Loan, so long as the aggregate
Dollar Equivalent amount of the prepayment in respect of the Term
Loans made at such time is the applicable amount of the Net Asset
Sale Proceeds required to be so applied under (S)10.5.2 or the
amount of Net Insurance Proceeds required to be so applied under
(S)9.7.2, as applicable. Any prepayment of the Domestic Term
Loan shall be made to the Administrative Agent for the pro rata
--------
account of the Lenders (according to their Domestic Term Loan
Commitment Percentages), and any prepayment of the Foreign Term
Loan shall be made to the Foreign Agent for the pro rata account
--------
of the Multicurrency Lenders and the Fronting Bank (according to
the Multicurrency Lenders' Foreign Term Loan Commitment
Percentages and, in the case of the Fronting Bank, the aggregate
Foreign Term Loan Commitment Percentages of the Non-Multicurrency
Lenders).
(c) Upon the occurrence of any Asset Sale to be consummated
after the date hereof, to the extent and at the time required by
(S)10.5.2, and upon the occurrence of any Insurance Event after
the date hereof, to the extent and at the time required by
(S)9.7.2, in the event the Term Loans have been paid in full
(including, for this purpose, by way of prepayments made at such
time under paragraph (b) of this (S)3.3.3), with any remaining
amounts of Net Asset Sale Proceeds or Net Insurance Proceeds
required to be applied under this (S)3.3.3, the Total Revolving
Commitment shall at such time be automatically and permanently
reduced by the amount of the Pro Rata Reduction Percentage of any
such remaining Net Asset Sale Proceeds or Net Insurance Proceeds
required to be so applied as such Pro Rata Reduction Percentage
is determined with respect to the Revolving Credit Loans (and the
Company shall then make a concurrent prepayment of principal on
the Revolving Credit Loans to the Administrative Agent for the
pro rata account of the Lenders (according to their
--- ----
<PAGE>
-67-
Revolving Commitment Percentages), in the amount of the lesser of
the amount of such reduction of the Total Revolving Commitment
and the outstanding principal balance of the Revolving Credit
Loans at the time that the prepayment thereon pursuant to this
(S)3.3.3 is payable), and the Total Revolving Multicurrency
Commitment shall at such time be automatically and permanently
reduced by the amount of the Pro Rata Reduction Percentage of any
remaining such Net Asset Sale Proceeds required to be so applied
as such Pro Rata Prepayment Percentage is determined with respect
to the Revolving Multicurrency Loans (and Samsonite Europe shall
then make a concurrent prepayment of principal on the Revolving
Multicurrency Loans to the Administrative Agent for the pro rata
--- ----
account of the Multicurrency Lenders and the Fronting Bank
(according to the Multicurrency Lenders' Revolving Multicurrency
Commitment Percentages and, in the case of the Fronting Bank, the
aggregate Revolving Multicurrency Commitment Percentages of the
Non-Multicurrency Lenders) in the amount of the lesser of the
amount of such reduction of the Total Revolving Multicurrency
Commitment and the outstanding principal balance of the Revolving
Multicurrency Loans at the time that the prepayment thereon
pursuant to this (S)3.3.3 is payable).
(d) All required prepayments in respect of the Term Loans
pursuant to this (S)3.3.3 shall be due and payable within two (2)
Business Days of receipt of the related Net Debt Issuance
Proceeds or at the time provided in (S)10.5.2 with respect to Net
Asset Sale Proceeds, or in (S)9.7.2 with respect to Net Insurance
Proceeds, as applicable, by the Borrowers or their Non-Excluded
Subsidiaries and, with respect to prepayments of the Domestic
Term Loan, shall be applied pro rata to the remaining unpaid
--------
scheduled installments of principal relating to the Domestic Term
Loan, provided that, so long as no Default or Event of Default
--------
has occurred and is continuing and none would exist as a result
thereof, the prepayment with respect to Net Debt Issuance
Proceeds may be delayed by up to 30 days, to the extent necessary
to avoid the Company's incurring obligations pursuant to (S)6.9,
if the Company gives notice to the Administrative Agent within
two (2) Business Days after its receipt of such proceeds, setting
forth a calculation of the amount owed under this (S)3.3.3 and
specifying the amount subject to the applicable Interest Period
and setting forth when such payment will be
<PAGE>
-68-
made (within the said 30-day period). All such payments in
respect of the Domestic Term Loan shall be in Dollars; all such
payments in respect of the Foreign Term Loan shall be in Belgian
francs; all such payments in respect of the Revolving Credit
Loans shall be in Dollars; and all such payments in respect of
Revolving Multicurrency Loans shall be in the currency in which
such Revolving Multicurrency Loans were made; if Revolving
Multicurrency Loans are then outstanding in more than one
currency, Samsonite Europe may designate which of such loans
shall be so prepaid, so long as the Dollar Equivalent as of the
time of payment of the aggregate amount of Revolving
Multicurrency Loans that are so prepaid is the amount thereof
required by this (S)3.3.3 to be so prepaid. If the remaining
balance of Term Loans at the time a payment is due under
(S)3.3.3(b) is less than the amount of such payment, then the
payment shall be applied first to pay the Term Loans in full and
then the balance shall be applied in accordance with (S)3.3.3(c)
hereof.
3.4. Optional Prepayment Of The Term Loans. Samsonite Europe shall have
-------------------------------------
the right at any time to prepay the Foreign Term Loan on or before the
Foreign Term Loan Maturity Date, as a whole, or in part, upon not less than
four (4) Business Days' prior written notice to the Foreign Agent, without
premium or penalty, and the Company shall have the right at any time to
prepay the Domestic Term Loan on or before the Domestic Term Loan Maturity
Date, as a whole, or in part, upon not less than four (4) Business Days'
prior written notice to the Administrative Agent, without premium or
penalty, provided that (a) each partial prepayment shall be in the
--------
principal Dollar Equivalent amount of $5,000,000 or a greater integral
multiple in Dollar Equivalent amount of $1,000,000 in excess thereof, (b)
no portion of a Term Loan bearing interest at a rate determined by
reference to the Eurodollar Rate or the Eurocurrency Rate may be prepaid
pursuant to this (S)3.4 except on the last day of the Interest Period
relating thereto (or, if made prior to the last day of the Interest Period
relating thereto, the Company agrees to indemnify the Lenders for any loss,
cost or expense that any Lender may sustain or incur as a consequence of
such repayment all as more fully set forth in (S)6.9 hereof), and (c) each
partial prepayment of the Domestic Term Loan shall be allocated among the
Lenders holding portions thereof, in proportion, as nearly as practicable,
to the respective outstanding amount of such Lender's Term Note, and each
partial prepayment of the Foreign Term Loan shall be allocated among the
Multicurrency Lenders and the Fronting Bank, in proportion, as nearly as
practicable, to the respective unpaid principal amount owing in respect of
the Term Loan Account of such Multicurrency Lender and Fronting Bank, with
adjustments in each case to the extent
<PAGE>
-69-
practicable to equalize any prior prepayments not exactly in proportion. No
amount repaid with respect to any Term Loan may be reborrowed. All such
payments in respect of the Foreign Term Loan shall be in Belgian francs and
all such payments in respect of the Domestic Term Loan shall be in Dollars.
All prepayments of the Domestic Term Loan pursuant to (S)3.3.3 or this
(S)3.4 will be applied pro rata to each of the remaining unpaid scheduled
--------
installments of principal with respect thereto.
3.5. Interest on the Term Loans.
---------------------------
3.5.1. Interest Rates Applicable to the Domestic Term Loan.
---------------------------------------------------
Except as otherwise provided in (S)6.10, the Domestic Term Loan shall
bear interest during each Interest Period relating to all or any
portion of the Domestic Term Loan at the following rates:
(a) To the extent that all or any portion of the Domestic
Term Loan bears interest during such Interest Period determined
by reference to the Base Rate, the Domestic Term Loan or such
portion shall bear interest during such Interest Period at the
Base Rate plus the Applicable Margin set forth under the column
----
headed "Base Rate Loans that are the Domestic Term Loan".
(b) To the extent that all or any portion of the Domestic
Term Loan bears interest during such Interest Period determined
by reference to the Eurodollar Rate, the Domestic Term Loan or
such portion shall bear interest during such Interest Period at
the Eurodollar Rate plus the Applicable Margin under the column
----
headed "Eurodollar Rate Loans that are the Domestic Term Loan".
The Company promises to pay interest on the Domestic Term Loan or any
portion thereof outstanding during each Interest Period in arrears on
each Interest Payment Date applicable to such Interest Period.
3.5.2. Interest Rates Applicable to the Foreign Term Loan.
--------------------------------------------------
Except as otherwise provided in (S)6.10, each portion of the Foreign
Term Loan shall bear interest during each Interest Period applicable
thereto at the Eurocurrency Rate determined for such Interest Period
plus the Applicable Margin set forth in the column headed "Eurodollar
----
Rate Loans (other than the Domestic Term Loan), Multicurrency Loans,
and Multicurrency Swing Line Loans." Samsonite Europe promises to pay
interest on the Foreign Term Loan in arrears on each Interest Payment
Date applicable to such Interest Period.
<PAGE>
-70-
3.5.3. Notifications by Borrowers.
------------- -- ---------
(a) Domestic Term Loan. The Company shall notify the
------------------
Administrative Agent, such notice to be irrevocable, by not later
than 11:00 a.m. (New York City time) on the Closing Date if all
or any portion of the Domestic Term Loan is to bear interest at a
rate determined by reference to the Base Rate and by not later
than 1:00 p.m. (New York City time) at least three (3) Eurodollar
Business Days prior to the Drawdown Date of the Domestic Term
Loan if all or any portion of the Domestic Term Loan is to bear
interest at a rate determined by reference to the Eurodollar
Rate. After the Domestic Term Loan has been made, the provisions
of (S)2.8 shall apply mutatis mutandis with respect to all or any
----------------
portion of the Domestic Term Loan so that the Company may have
the same interest rate options with respect to all or any portion
of the Domestic Term Loan as it would be entitled to with respect
to the Revolving Credit Loans.
(b) Foreign Term Loan. Samsonite Europe shall notify the
-----------------
Foreign Agent (with a copy to the Administrative Agent), such
notice to be irrevocable, by not later than 11:00 a.m.
(Applicable Belgium Time) at least three (3) Business Days prior
to the Drawdown Date of the Foreign Term Loan. Such notice shall
specify the proposed Interest Period(s) for and, if applicable,
related principal amounts of the respective tranches of the
Foreign Term Loan. After the Foreign Term Loan has been made, the
provisions of (S)4.8 shall apply with respect to the Foreign Term
Loan.
3.5.4. Amounts, etc. Any portion of either Term Loan bearing
------------
interest determined by reference to the Eurocurrency Rate relating to
any Interest Period shall be in the amount of the Dollar Equivalent of
$3,000,000 or a greater integral multiple of the Dollar Equivalent of
$500,000 in excess thereof (or the entire balance of the applicable
Term Loan in excess of such multiple), provided that, if the amount
--------
relating to such Interest Period is to be used to make a mandatory
payment or mandatory prepayment of a Term Loan, then such amount may
be the amount needed by the Company or Samsonite Europe to make such
payment or prepayment without regard to the amount otherwise required
by this sentence to bear interest by reference to the Eurodollar Rate
in such Interest Period. No Interest Period relating to any Term Loan
or any portion thereof bearing interest at the Eurodollar Rate or the
Eurocurrency Rate shall extend beyond the date on which a
<PAGE>
-71-
regularly scheduled installment payment of the principal of such Term
Loan is to be made unless a portion of such Term Loan at least equal
to such installment payment has an Interest Period ending on such date
or is then bearing interest at the Base Rate.
3.6. Funds for the Term Loans.
------------------------
3.6.1. Domestic Term Loan. Not later than 1:00 p.m. (New York
------------------
City time) on the proposed Drawdown Date of the Domestic Term Loan,
each of the Lenders will make available to the Administrative Agent,
at the Administrative Agent's Head Office, in immediately available
funds, the amount of such Lender's Domestic Term Loan Commitment
Percentage of the amount of the Domestic Term Loan. Upon receipt from
each Lender of such amount, and upon receipt of the documents required
by (S)(S)12 and 13 and the satisfaction of the other conditions set
forth therein, to the extent applicable, the Administrative Agent will
make available to the Company the aggregate amount of the Domestic
Term Loan.
3.6.2. Foreign Term Loan. Not later than 1:00 p.m. (Applicable
-----------------
Belgium Time) on the proposed Drawdown Date of the Term Loan, each of
the Multicurrency Lenders and the Fronting Bank will make available to
the Foreign Agent, at the Foreign Agent's Belgian Lending Office, in
Belgian francs in Same Day Funds (a) in the case of each Multicurrency
Lender, the amount of such Multicurrency Lender's Foreign Term Loan
Commitment Percentage of the amount of the Foreign Term Loan and (b)
in the case of the Fronting Bank, the Non-Multicurrency Lenders'
Foreign Term Loan Commitment Percentages of the amount of the Foreign
Term Loan. Upon receipt from each Multicurrency Lender and the
Fronting Bank, as the case may be, of such amount, and upon receipt of
the documents required by (S)(S)12 and 13 and the satisfaction of the
other conditions set forth therein, to the extent applicable, the
Foreign Agent will make available to Samsonite Europe the aggregate
amount of the Foreign Term Loan.
4. THE MULTICURRENCY FACILITY.
--------------------------
4.1. Commitment to Lend. Subject to the terms and conditions set forth
------------------
in this Credit Agreement, each of the Multicurrency Lenders and the
Fronting Bank severally agrees to lend to Samsonite Europe, and Samsonite
Europe may borrow, repay, and reborrow from time to time between the
Closing Date and the Revolving Multicurrency Loan Maturity Date, upon
notice by Samsonite Europe to the Foreign Agent given in accordance with
(S)4.7, such sums, in Dollars and/or at Samsonite Europe's option from time
to time, subject to (S)4.11 hereof
<PAGE>
-72-
(including, without limitation, any restrictions arising from currency
fluctuations as set forth in (S)4.11.4), in an Optional Currency, as are
requested by Samsonite Europe in an amount for each such advance not to
exceed (after giving effect to all amounts requested), in the Dollar
Equivalent amount (a) in the case of any Multicurrency Lender, such
Lender's Revolving Multicurrency Commitment minus the aggregate principal
-----
amount of such Multicurrency Lender's outstanding Revolving Multicurrency
Loans, minus the amount by which the Multicurrency Swing Line Loans
-----
outstanding at such time shall be deemed to have used such Multicurrency
Lender's Revolving Multicurrency Commitment pursuant to (S)4.10 hereof,
minus (without duplication) the sum of such Multicurrency Lender's
-----
Revolving Multicurrency Commitment Percentage of the Maximum Drawing Amount
of all outstanding Foreign Letters of Credit and the Foreign Unpaid
Reimbursement Obligations owing to such Multicurrency Lenders and (b) in
the case of the Fronting Bank, the aggregate Non-Multicurrency Lenders'
Commitments minus the aggregate principal amount of the Fronting Bank's
-----
outstanding Fronted Loans consisting of Revolving Multicurrency Loans,
minus the aggregate amount by which the Multicurrency Swing Line Loans
-----
outstanding at such time shall be deemed to have used each such Non-
Multicurrency Lender's Revolving Multicurrency Commitment pursuant to
(S)4.10, minus (without duplication) the sum of each Non-Multicurrency
-----
Lender's Revolving Multicurrency Commitment Percentage of the Maximum
Drawing Amount of all outstanding Foreign Letters of Credit and the Foreign
Unpaid Reimbursement Obligations owing to each Non-Multicurrency Lender,
provided that (a) the sum in the Dollar Equivalent amount of the
--------
outstanding amount of the Revolving Multicurrency Loans (after giving
effect to all amounts requested) plus the outstanding amount of the
----
Multicurrency Swing Line Loans plus the Maximum Drawing Amount and all
Foreign Unpaid Reimbursement Obligations with respect to all Foreign
Letters of Credit shall not at any time exceed the Total Revolving
Multicurrency Commitment and (b) at all times the outstanding aggregate
principal Dollar Equivalent amount of all Revolving Multicurrency Loans
made by (i) each Multicurrency Lender shall equal such Multicurrency
Lender's Revolving Multicurrency Commitment Percentage of the outstanding
aggregate principal amount of all Multicurrency Loans made pursuant to (S)4
hereof and (ii) the Fronting Bank shall equal the Non-Multicurrency
Lenders' Commitment Percentages of the outstanding aggregate principal
amount of all Revolving Multicurrency Loans made pursuant to (S)4 hereof.
The Revolving Multicurrency Loans shall be made pro rata in accordance with
--- ----
each Multicurrency Lender's Revolving Multicurrency Commitment Percentage;
provided, however, the Fronting Bank shall be required to make that portion
-------- -------
of the Revolving Multicurrency Loans which would otherwise be required to
be made by a Non-Multicurrency Lender. Each request for a Revolving
Multicurrency Loan hereunder shall constitute a
<PAGE>
-73-
representation and warranty by Samsonite Europe that the conditions set
forth in (S)12 and (S)13, in the case of the initial Revolving
Multicurrency Loans to be made on the Closing Date, and (S)13, in the case
of all other Revolving Multicurrency Loans, have been satisfied on the date
of such request. Each Revolving Multicurrency Loan shall be funded from the
applicable Multicurrency Lending Office of each Multicurrency Lender
located in Belgium and the Fronting Bank's Belgian Lending Office, as the
case may be, and shall be denominated in Dollars, or, subject to (S)4.11
hereof, in an Optional Currency.
4.2. The Multicurrency Swing Line.
----------------------------
4.2.1.The Multicurrency Swing Line Loans. Samsonite Europe may
----------------------------------
request any Multicurrency Swing Line Lender to make, and such
Multicurrency Swing Line Lender may, if in its sole discretion it
elects to do so, and without any commitment whatsoever by any such
Multicurrency Swing Line Lender to do so, make, on the terms and
conditions hereinafter set forth, Multicurrency Swing Line Loans to
Samsonite Europe from time to time on any Business Day during the
period from the date hereof until the Revolving Multicurrency Loan
Maturity Date in an aggregate amount not to exceed at any time
outstanding $10,000,000 (or the Dollar Equivalent thereof in the
applicable Optional Currencies) (the "Multicurrency Swing Line
Facility"), provided, however, that while the outstanding Dollar
-------- -------
Equivalent amount of all outstanding Multicurrency Swing Line Loans
and outstanding Revolving Multicurrency Loans made by either (a) a
Multicurrency Lender may exceed such Multicurrency Lender's Revolving
Multicurrency Commitment or (b) the Fronting Bank may exceed the Non-
Multicurrency Lenders' Commitments, the aggregate Dollar Equivalent
amount of all Multicurrency Swing Line Loans outstanding shall not
exceed the Total Revolving Multicurrency Commitment less all Revolving
----
Multicurrency Loans outstanding less the Maximum Drawing Amount and
----
all Foreign Unpaid Reimbursement Obligations with respect to all
Foreign Letters of Credit. No Multicurrency Swing Line Loan shall be
used for the purpose of funding the payment of principal of any other
Multicurrency Swing Line Loan or of any Swing Line Loan. Each
Multicurrency Swing Line Borrowing shall be in a Dollar Equivalent
amount in Belgian francs equal to $100,000 or an integral multiple
thereof, shall be denominated only in Belgian francs and shall bear
interest at the BIBOR Rate plus the Applicable Margin set forth in the
column headed "Eurodollar Rate Loans (other than the Domestic Term
Loan), Multicurrency Loans, and Multicurrency Swing Line Loans".
Multicurrency Swing Line Loans must bear interest at such a rate
determined by reference to the BIBOR Rate only, and shall not be
eligible to bear interest at a rate
<PAGE>
-74-
determined by reference to the Eurocurrency Rate. Within the limits of
the Multicurrency Swing Line Facility and within the limits referred
to in (S)4.2.1(b) above, so long as any Multicurrency Swing Line
Lender, in its sole discretion, elects to make Multicurrency Swing
Line Loans, Samsonite Europe may borrow under this (S)4.2.1, repay
pursuant to (S)4.12.2 or repay pursuant to (S)4.14 and reborrow under
this (S)4.2.1.
4.2.2. Notice. Each Multicurrency Swing Line Borrowing shall be
------
made on notice, given not later than 11:00 a.m. (Applicable Belgium
Time) on the date of the proposed Multicurrency Swing Line Borrowing,
by Samsonite Europe to any Multicurrency Swing Line Lender and the
Foreign Agent. The Foreign Agent shall immediately advise such
Multicurrency Swing Line Lender of the available amount of the
Multicurrency Swing Line Facility. Each such notice of a Multicurrency
Swing Line Borrowing (a "Notice of Multicurrency Swing Line
Borrowing") shall be by telephone, telex or telecopier, confirmed
immediately in writing, specifying therein the requested (a) date of
such borrowing, (b) amount of such borrowing and (c) maturity of such
borrowing (which maturity shall be no later than the fourteenth day
after the requested date of such borrowing). If, in its sole
discretion, it elects to make the requested Multicurrency Swing Line
Loan, such Multicurrency Swing Line Lender will make the amount
thereof available to the Foreign Agent at the Belgian Lending Office,
in same day funds. After the Foreign Agent's receipt of such funds and
upon fulfillment of the applicable conditions set forth in (S)(S)12
(for any Multicurrency Swing Line Loan to be made on the Closing Date)
and 13, the Foreign Agent will make such funds available to Samsonite
Europe in such manner as Samsonite Europe and the Foreign Agent may
agree. Upon written demand by any Multicurrency Swing Line Lender with
an outstanding Multicurrency Swing Line Loan, with a copy of such
demand to the Foreign Agent, each other Multicurrency Lender and the
Fronting Bank shall purchase from such Multicurrency Swing Line
Lender, and such Multicurrency Swing Line Lender shall sell and assign
to each such other Multicurrency Lender and the Fronting Bank, (a) in
the case of a Multicurrency Lender, such other Multicurrency Lender's
pro rata share (determined by its Revolving Multicurrency Commitment
--- ----
Percentage) of such outstanding Multicurrency Swing Line Loan as of
the date of such demand and (b) in the case of the Fronting Bank, the
aggregate amount of all Non-Multicurrency Lenders' pro rata share
--- ----
(determined by Non-Multicurrency Lenders' Commitment Percentages), by
making available to the Foreign Agent for the account of such
Multicurrency Swing Line Lender, in Same Day Funds (denominated in
Belgian francs), an amount equal to the
<PAGE>
-75-
portion of the outstanding principal amount of such Multicurrency
Swing Line Loan to be purchased by such Multicurrency Lender and the
Fronting Bank, as the case may be. Samsonite Europe hereby agrees to
each such sale and assignment. In the event any Multicurrency Lender
or the Fronting Bank is unable, or it is not practicable, for such
Multicurrency Lender or the Fronting Bank, as the case may be, to
obtain Belgian francs, such Multicurrency Lender or Fronting Bank, as
the case may be, shall be permitted to pay to the Foreign Agent, for
the account of the Multicurrency Swing Line Lender, such Multicurrency
Lender's and the Fronting Bank's, as the case may be, pro rata share
--- ----
of such outstanding Multicurrency Swing Line Loan in Dollars (which
amount shall be detailed in a written notice delivered by the Foreign
Agent to such Multicurrency Lender or Fronting Bank, as the case may
be, and based on the actual exchange rate at which the Foreign Agent
anticipates being able to obtain Belgian francs, with any excess
payment being refunded to such Multicurrency Lender or Fronting Bank,
as the case may be, and any deficiency remaining payable by such
Multicurrency Lender or Fronting Bank, as the case may be). In the
event that any bankruptcy, reorganization, liquidation, receivership
or similar cases or proceedings in which Samsonite Europe is a debtor
prevents any Lender from making a Revolving Multicurrency Loan to
effect a settlement to the Multicurrency Swing Line Lender as
contemplated hereby, such Lender will make such dispositions and
arrangements with the other Lenders with respect to such Multicurrency
Swing Line Loans, either by way of purchase of participations,
distribution, pro tanto assignment of claims, subrogation or otherwise
as shall result in each Lender's share of the outstanding Revolving
Multicurrency Loans and Multicurrency Swing Line Loans being equal, as
nearly as may be, to such Lender's Revolving Multicurrency Commitment
Percentage (or, in the case of the Fronting Bank, the aggregate
Revolving Multicurrency Commitment Percentages of the Non-
Multicurrency Lenders, of the outstanding amount of the Revolving
Multicurrency Loans and Multicurrency Swing Line Loans. Each
Multicurrency Lender agrees to purchase its pro rata share (determined
--- ----
by its Revolving Multicurrency Commitment Percentage) of an
outstanding Multicurrency Swing Line Loan, and the Fronting Bank
agrees to purchase its pro rata shares (determined by the aggregate
--- ----
amount of the Non-Multicurrency Lenders' Commitment Percentages) on
(a) the Business Day on which demand therefor is made by the
Multicurrency Swing Line Lender which made such Multicurrency Swing
Line Loan, provided that notice of such demand is given not later than
--------
11:00 a.m. (Applicable Belgium Time) on such Business Day or (b) the
first Business Day next succeeding such demand if
<PAGE>
-76-
notice of such demand is given after such time. Upon any such
assignment by a Multicurrency Swing Line Lender to any other
Multicurrency Lender or the Fronting Bank of a portion of a
Multicurrency Swing Line Loan, such Multicurrency Swing Line Lender
represents and warrants to such other Multicurrency Lender and the
Fronting Bank that such Multicurrency Swing Line Lender is the legal
and beneficial owner of such interest being assigned by it, but makes
no other representation or warranty and assumes no responsibility with
respect to such Multicurrency Swing Line Loan, the Loan Documents or
any Obligor. If and to the extent that any Multicurrency Lender or the
Fronting Bank, as the case may be, shall not have so made the amount
of such Multicurrency Swing Line Loan available to the Foreign Agent,
such Multicurrency Lender and the Fronting Bank, as the case may be,
agrees to pay to the Foreign Agent for the account of such
Multicurrency Swing Line Lender forthwith on demand by such
Multicurrency Swing Line Lender such amount together with interest
thereon, for each day from the date of demand by such Multicurrency
Swing Line Lender until the date such amount is paid to the Foreign
Agent, at the Overnight Rate. If such Multicurrency Lender or the
Fronting Bank, as the case may be, shall pay to the Foreign Agent such
amount for the account of such Multicurrency Swing Line Lender on any
Business Day, such amount so paid in respect of principal shall
constitute a Multicurrency Swing Line Loan made by such Multicurrency
Lender and the Fronting Bank on such Business Day for purposes of this
Credit Agreement, and the outstanding principal amount of the
Multicurrency Swing Line Loan made by such Multicurrency Swing Line
Lender shall be reduced by such amount on such Business Day.
<PAGE>
-77-
4.2.3. Irrevocable Notice. Each Notice of Multicurrency Swing
-----------------
Line Borrowing shall be irrevocable and binding on Samsonite Europe.
4.2.4. Purchase of Swing Line Loan. Each Multicurrency Lender
---------------------------
and the Fronting Bank severally agrees that it shall be absolutely
liable, without regard to the occurrence of any Default or Event of
Default or any other condition precedent whatsoever, to the extent of
(a) as to each Multicurrency Lender, such Multicurrency Lender's pro
---
rata share (determined by its Revolving Multicurrency Commitment
----
Percentage) of the outstanding Multicurrency Swing Line Loans and (b)
as to the Fronting Bank, the aggregate amount of all Non-Multicurrency
Lenders' pro rata share (determined by the aggregate amount of all
--------
Non-Multicurrency Lenders' Commitment Percentages), to purchase from
the Multicurrency Swing Line Lender on demand such Multicurrency
Lender's and Fronting Bank's pro rata share (as so determined) of such
--------
outstanding Multicurrency Swing Line Loan, in Belgian francs, as of
the date of such demand. In the event any Multicurrency Lender or the
Fronting Bank, as the case may be, is unable, or it is not
practicable, for such Multicurrency Lender or the Fronting Bank, as
the case may be, to obtain Belgian francs, such Multicurrency Lender
or the Fronting Bank, as the case may be, shall be permitted to pay to
the Foreign Agent, for the account of the Multicurrency Swing Line
Lender, such Multicurrency Lender's or Fronting Bank's pro rata share
--------
of such outstanding Multicurrency Swing Line Loan in Dollars (which
amount shall be detailed in a written notice delivered by the Foreign
Agent to such Multicurrency Lender or Fronting Bank, as the case may
be, and to the Administrative Agent, and based on the actual exchange
rate at which the Foreign Agent anticipates being able to obtain
Belgian francs, with any excess payment being refunded to such
Multicurrency Lender or Fronting Bank, as the case may be, and any
deficiency remaining payable by such Multicurrency Lender or Fronting
Bank, as the case may be).
4.3. Multicurrency Commitment Fee. For the period commencing on the
----------------------------
Closing Date and ending on the Revolving Multicurrency Loan Maturity Date,
the Company promises to pay to the Administrative Agent, for the accounts
of each of the respective Lenders a commitment fee (the "Multicurrency
Commitment Fee") calculated at a rate per annum equal to the Commitment Fee
Rate as in effect from time to time, on the daily Maximum Unused Revolving
Multicurrency Commitment of such applicable Lender during each calendar
quarter or portion thereof. The Multicurrency Commitment Fee shall be
payable in Dollars quarterly in arrears on the first
<PAGE>
-78-
Business Day of each calendar quarter for the immediately preceding
calendar quarter or portion thereof then ended, commencing on the first
such date following the date hereof, with a final payment on the Revolving
Multicurrency Loan Maturity Date or any earlier date on which the Revolving
Multicurrency Commitments shall terminate. Prior to each date that a fee is
payable under this paragraph, the Foreign Agent shall calculate such fee
(based upon the actual exchange rate, at the time of such calculation, at
which the Foreign Agent would be able to exchange Belgian francs for
Dollars) and shall give notice of the amount thereof to the Administrative
Agent and the Company.
4.4.Reduction of Total Revolving Multicurrency Commitment.
-----------------------------------------------------
4.4.1. Optional Reduction Of Total Revolving Multicurrency
---------------------------------------------------
Commitment. Samsonite Europe shall have the right at any time and
----------
from time to time upon five (5) Business Days prior written notice to
the Foreign Agent to reduce by $3,000,000 (or the Dollar Equivalent
thereof) or a greater integral multiple of $500,000 (or the Dollar
Equivalent thereof) in excess thereof or terminate entirely the Total
Revolving Multicurrency Commitment, whereupon the Revolving
Multicurrency Commitments of the Lenders shall be reduced pro rata in
--------
accordance with their respective Revolving Multicurrency Commitment
Percentages of the amount specified in such notice or, as the case
may be, terminated. Promptly after receiving any notice of Samsonite
Europe delivered pursuant to this (S)4.4.1, the Foreign Agent will
notify the Lenders of the substance thereof. The Total Revolving
Multicurrency Commitment shall never be reduced pursuant to this
(S)4.4.1 to an amount less than the sum of the outstanding Dollar
Equivalent amount of the Multicurrency Revolving Loans plus the
----
outstanding Dollar Equivalent amount of the Multicurrency Swing Line
Loans plus the Dollar Equivalent of the Maximum Drawing Amount of all
issued and outstanding Foreign Letters of Credit plus the Dollar
----
Equivalent of all Foreign Unpaid Reimbursement Obligations. No
reduction or termination of the Revolving Multicurrency Commitments
may be reinstated.
4.4.2. Reallocation of Total Revolving Multicurrency Commitment.
--------------------------------------------------------
The Borrowers shall have the right from time to time, so long as no
Default or Event of Default has occurred and is continuing or would
exist as a result thereof, but not more frequently than once each
calendar year, upon five (5) Business Days prior written notice to the
Administrative Agent and the Foreign Agent, to reallocate the then-
applicable amounts of the Total Revolving Commitment and the Total
Revolving Multicurrency Commitment between such two credit
<PAGE>
-79-
facilities, subject to the provisions of this (S)4.4.2 and the
provisions of (S)2.4.2; provided, however, the sum of the Dollar
-------- -------
Equivalents of the Total Revolving Commitment and the Total Revolving
Multicurrency Commitment, after giving effect to such reallocation,
shall not exceed the Dollar Equivalent of such sum as it existed
immediately prior to giving effect to such reallocation. Prior to the
effectiveness of any such reallocation, the Borrowers shall provide
the Administrative Agent with five (5) Business Days prior written
notice of their election for such a reallocation, which notice shall
provide (a) the amount that the Total Revolving Multicurrency
Commitment shall be increased or decreased, as the case may be, and
(b) the date such increase or decrease shall take effect. To the
extent the Borrowers are requesting an increase in the Total Revolving
Commitment (in which case the Borrowers must simultaneously therefore
effect a dollar for dollar decrease in the same amount in the Total
Revolving Multicurrency Commitment), if at the time of such
reallocation the sum of the Dollar Equivalents of the outstanding
amount of the Revolving Multicurrency Loans plus the outstanding
amount of the Multicurrency Swing Line Loans plus the Maximum Drawing
Amount of outstanding Foreign Letters of Credit plus all Foreign
------
Unpaid Reimbursement Obligations exceeds the Total Revolving
Multicurrency Commitment in effect after giving effect to the
applicable requested reduction and allocation pursuant to this
(S)4.4.2, then Samsonite Europe shall immediately pay the amounts of
such excess to the Foreign Agent for the respective accounts of the
Lenders for application first, to any Multicurrency Swing Line Loans,
-----
second, to the Foreign Unpaid Reimbursement Obligations, third, to the
------ -----
Revolving Multicurrency Loans, and fourth, to provide the Foreign
Agent cash collateral for Foreign Reimbursement Obligations as
contemplated by (S)5.2.2 hereof. Until such time as Samsonite Europe
has paid such excess, the Total Revolving Commitment shall not be
increased. In addition, as a condition precedent to the effectiveness
of any reallocation pursuant to this (S)4.4.2, the Borrowers shall
also deliver to the Administrative Agent (a) evidence, in form and
substance satisfactory to the Administrative Agent, of all appropriate
and necessary corporate authorizations and approvals for the
reallocation being requested hereunder and (b) confirmatory legal
opinions, in form and substance satisfactory to the Administrative
Agent. At such time as the Borrowers have complied with this (S)4.4.2
and (S)2.4.2, the Revolving Multicurrency Commitments of the Lenders
shall be reduced (in the case of a reallocation to increase the Total
Revolving Commitment) or increased (in the case of a reallocation to
increase the Total Revolving Multicurrency Commitment) pro rata in
--- ----
accordance with their respective
<PAGE>
-80-
Revolving Multicurrency Commitment Percentages of the amount specified
in such notice. Promptly after receiving any notice of the Borrowers
delivered pursuant to this (S)4.4.2, the Administrative Agent will
notify the Lenders of the substance thereof.
<PAGE>
-81-
4.5. Multicurrency Loan Accounts. The obligations of Samsonite Europe
---------------------------
to repay all amounts borrowed by it as Revolving Multicurrency Loans and
Multicurrency Swing Line Loans, all interest thereon and all other amounts
payable by it in respect thereof shall be evidenced by this Credit
Agreement, including any recordations made by any Multicurrency Lender or
the Fronting Bank, as the case may be, in respect of the date, amount and
currency of each Revolving Multicurrency Loan or Multicurrency Swing Line
Loan, each Interest Period relating thereto, the date and amount of each
payment or prepayment of principal, interest or fees of each Revolving
Multicurrency Loan or Multicurrency Swing Line Loan made to such
Multicurrency Lender or Fronting Bank, as the case may be (collectively,
the "Multicurrency Loan Account"), it being the intention of the parties
hereto that Samsonite Europe's obligations with respect to the Revolving
Multicurrency Loans and the Multicurrency Swing Line Loans owed by it
hereunder shall be evidenced only as stated herein and not by separate
promissory notes or other instruments. The aggregate unpaid amount set
forth on each Multicurrency Lender's or Fronting Bank's Record with respect
to any Revolving Multicurrency Loan or Multicurrency Swing Line Loan shall
be prima facie evidence of the amount thereof owing and unpaid to such
Multicurrency Lender or Fronting Bank, but the failure to record, or any
error in so recording, any such amount on such Record shall not affect the
obligation of Samsonite Europe hereunder to make payments of principal and
interest thereon when due.
4.6. Interest On Revolving Multicurrency Loans And Multicurrency Swing
-----------------------------------------------------------------
Line Loans. Except as otherwise provided in (S)6.10,
----------
(a) Each Multicurrency Swing Line Loan shall bear interest for
the period commencing on the Drawdown Date thereof and ending on the
last day of the Interest Period with respect thereto at the BIBOR Rate
plus the Applicable Margin set forth in the column headed "Eurodollar
----
Rate Loans (other than the Domestic Term Loan), Multicurrency Loans
and Multicurrency Swing Line Loans."
(b) Each Revolving Multicurrency Loan shall bear interest for
the period commencing with the Drawdown Date thereof and ending on the
last day of the Interest Period with respect thereto at the
Eurocurrency Rate determined for such Interest Period plus the
----
Applicable Margin set forth in the column headed "Eurodollar Rate
Loans (other than the Domestic Term Loan), Multicurrency Loans and
Multicurrency Swing Line Loans".
<PAGE>
-82-
(c) Samsonite Europe promises to pay interest on each Revolving
Multicurrency Loan and Multicurrency Swing Line Loans in arrears on
each Interest Payment Date with respect thereto and in accordance with
(S)6.3.2 hereof.
4.7. Requests For Revolving Multicurrency Loans. Samsonite Europe
------------------------------------------
shall give to the Foreign Agent (with a copy to the Administrative Agent)
written notice in the form of Exhibit D hereto (or telephonic notice
---------
confirmed in writing in the form of Exhibit D hereto) of each Revolving
---------
Multicurrency Loan requested hereunder (a "Revolving Multicurrency Loan
Request") no later than 11:00 a.m. (Applicable Belgium Time) three (3)
Business Days prior to the proposed Drawdown Date of any Revolving
Multicurrency Loan; provided, that any such notice requesting an Optional
--------
Currency must comply with the requirements of this (S)4.7 and the
requirements of an Optional Currency Notice pursuant to (S)4.11.1. Each
such notice shall specify (a) the principal amount of the Revolving
Multicurrency Loan requested, stated either in Dollars, or, subject to
(S)4.11, in an Optional Currency, (b) the proposed Drawdown Date of such
Revolving Multicurrency Loan, and (c) the Interest Period for such
Revolving Multicurrency Loan. Promptly upon receipt of any such notice, the
Foreign Agent shall notify each of the Lenders and the Fronting Bank
thereof and the Foreign Agent shall notify the Administrative Agent as to
the Foreign Agent's computation of the Dollar Equivalents of the amounts
referred to in clauses (a) through (e) of (S)6.3.4. Each Revolving
Multicurrency Loan Request shall be irrevocable and binding on Samsonite
Europe and shall obligate Samsonite Europe to accept the Revolving
Multicurrency Loan requested from the Multicurrency Lenders and the
Fronting Bank on the proposed Drawdown Date. Each Revolving Multicurrency
Loan Request shall be in a minimum aggregate amount of $3,000,000 or a
greater integral multiple of $500,000 in excess thereof (or the Dollar
Equivalent thereof in Optional Currency if such request is for an Optional
Currency).
4.8. Continuation Options, etc.
-------------------------
4.8.1. Continuation of Type of Multicurrency Loan. Any
------------------------------------------
Multicurrency Loan may be continued as a Multicurrency Loan (and not
repaid) upon the expiration of an Interest Period with respect thereto
by providing the Foreign Agent with a written notice of such election
prior to 11:00 a.m. (Applicable Belgium Time) at least three (3)
Business Days prior to the date of the expiration of such Interest
Period; provided that no Multicurrency Loan may be continued as such
--------
when any Default or Event of Default has occurred and is continuing,
but shall be repaid by Samsonite Europe on the last day of the first
Interest Period relating thereto (or such earlier day as the
Multicurrency Loans may become payable pursuant to (S)14
<PAGE>
-83-
hereof) unless, but only in the event that, such Multicurrency Loan
constitutes all or a portion of the Foreign Term Loan, in which event
such Multicurrency Loan may be continued as provided in the last
sentence of (S)6.10, without prejudice to the rights of the Lenders
under (S)14 hereof. In the event that Samsonite Europe fails to
provide any such notice with respect to the continuation of any
Multicurrency Loan as such, then Samsonite Europe shall be deemed to
have requested the continuation of such Multicurrency Loan for a one
(1) month Interest Period on the last day of the current Interest
Period relating thereto. The Foreign Agent shall notify the Lenders
promptly when any such payment contemplated by this (S)4.8.1 is
scheduled to occur.
4.8.2. Multicurrency Loans. Any borrowing of Multicurrency Loans
-------------------
shall be in such amounts and be made pursuant to such elections so
that, after giving effect thereto, the aggregate principal Dollar
Equivalent amount of all Multicurrency Loans having the same Interest
Period shall not be less than $3,000,000 or a greater integral
multiple of $500,000 in excess thereof. In addition, there shall not
at any time be more than ten (10) Multicurrency Loans with different
Interest Periods outstanding at any one time.
4.9. Funds for Revolving Multicurrency Loans.
---------------------------------------
4.9.1. Funding Procedures. Not later than 11:00 a.m. (Applicable
------------------
Belgium Time) on the proposed Drawdown Date of any Revolving
Multicurrency Loans, each of the Revolving Multicurrency Lenders and
the Fronting Bank will make available to the Foreign Agent, at the
Foreign Agent's Belgian Lending Office, in Same Day Funds (a) in the
case of each Multicurrency Lender, the amount of such Multicurrency
Lender's Revolving Multicurrency Commitment Percentage of the amount
of the requested Revolving Multicurrency Loans and (b) in the case of
the Fronting Bank, the Non-Multicurrency Lenders' Revolving
Multicurrency Commitment Percentages of the amount of the requested
Revolving Multicurrency Loan, and, in the case of a Revolving
Multicurrency Loan denominated in an Optional Currency, in Same Day
Funds of the country in which such Optional Currency is legal tender.
Upon receipt from each Multicurrency Lender and the Fronting Bank, as
the case may be, of such amount, and upon receipt of the documents
required by (S)12 (for the initial Revolving Multicurrency Loan to be
made on the Closing Date) and (S)13 and the satisfaction of the other
conditions set forth therein, to the extent applicable, the Foreign
Agent will make available to Samsonite Europe the aggregate amount of
such Revolving Multicurrency Loans
<PAGE>
-84-
made available to the Foreign Agent by the Multicurrency Lenders and
the Fronting Bank. The failure or refusal of any Multicurrency Lender
or the Fronting Bank to make available to the Foreign Agent at the
aforesaid time and place on any Drawdown Date the amount of (a) in the
case of each Multicurrency Lender, its Revolving Multicurrency
Commitment Percentage of the requested Revolving Multicurrency Loans
and (b) in the case of the Fronting Bank, the Non-Multicurrency
Lenders' Revolving Multicurrency Commitment Percentages of the
requested Revolving Multicurrency Loans, shall not relieve any other
Multicurrency Lender or the Fronting Bank from its several obligation
hereunder to make available to the Foreign Agent the amount of such
other Multicurrency Lender's or Fronting Bank's applicable portion of
any requested Revolving Multicurrency Loans.
4.9.2. Advances by Foreign Agent. The Foreign Agent may, unless
-------------------------
notified to the contrary by any Multicurrency Lender or the Fronting
Bank, as the case may be, prior to a Drawdown Date, assume that such
Multicurrency Lender or Fronting Bank has made available to the
Foreign Agent on such Drawdown Date the amount of (a) in the case of a
Multicurrency Lender, such Multicurrency Lender's Revolving
Multicurrency Commitment Percentage of the Revolving Multicurrency
Loans to be made on such Drawdown Date and (b) in the case of a
Fronting Bank, the Non-Multicurrency Lenders' Commitment Percentages
of the Revolving Multicurrency Loans to be made on such Drawdown Date,
and the Foreign Agent may (but it shall not be required to), in
reliance upon such assumption, make available to Samsonite Europe a
corresponding amount. If any Multicurrency Lender or the Fronting Bank
makes available to the Foreign Agent such amount on a date after such
Drawdown Date, such Multicurrency Lender or the Fronting Bank, as the
case may be, shall pay to the Foreign Agent on demand an amount equal
to the product of (a) the weighted average, computed for the period
referred to in clause (c) below, of the Overnight Rate for each day
included in such period, times (b) (i) in the case of a Multicurrency
-----
Lender, the amount of such Multicurrency Lender's Revolving
Multicurrency Commitment Percentage of such Revolving Multicurrency
Loans and (ii) in the case of the Fronting Bank, the applicable Non-
Multicurrency Lenders' Commitment Percentages of such Revolving
Multicurrency Loans, times (c) a fraction, the numerator of which is
-----
the number of days that elapse from and including such Drawdown Date
to the date on which the amount of such Multicurrency Lender's or
Fronting Bank's applicable portion of such Revolving Multicurrency
Loans shall become immediately
4
<PAGE>
-85-
available to the Foreign Agent, and the denominator of which is 365. A
statement of the Foreign Agent submitted to such Multicurrency Lender
or Fronting Bank with respect to any amounts owing under this
paragraph shall be prima facie evidence of the amount due and owing to
----- -----
the Foreign Agent by such Multicurrency Lender or the Fronting Bank.
If the amount of (a) in the case of a Multicurrency Lender, such
Multicurrency Lender's Revolving Multicurrency Commitment Percentage
of such Revolving Multicurrency Loans and (b) in the case of the
Fronting Bank, the aggregate amount of all Non-Multicurrency Lenders'
Multicurrency Commitment Percentages of such Revolving Multicurrency
Loans is not made available to the Foreign Agent by such Multicurrency
Lender or the Fronting Bank, as the case may be, within three (3)
Business Days following such Drawdown Date, the Foreign Agent shall be
entitled to recover such amount from Samsonite Europe on demand, with
interest thereon at the rate per annum applicable to the Revolving
Multicurrency Loans made on such Drawdown Date.
4.10. Pro Rata Treatment. For purposes of determining the applicable
------------------
available unused Revolving Multicurrency Commitments of the respective
Lenders at any time, each outstanding Multicurrency Swing Line Loan shall
be deemed to have utilized the Revolving Multicurrency Commitments of the
Lenders (including those Lenders which are not the Multicurrency Swing Line
Lender actually making such Multicurrency Swing Line Loan) pro rata in
--- ----
accordance with such respective Revolving Multicurrency Commitments.
4.11. Optional Currencies.
-------------------
4.11.1. Request for Optional Currency. Subject to the
-----------------------------
limitations set forth in (S)4.1, Samsonite Europe may, upon at least
three (3) Business Days' notice to the Foreign Agent (an "Optional
Currency Notice"), request that one or more Revolving Multicurrency
Loans be made in an Optional Currency, provided that any Revolving
--------
Multicurrency Loan proposed to be made under this (S)4.11.1 shall be
in an amount not less than $3,000,000, or a greater amount which is an
integral multiple of $500,000, or the Dollar Equivalent in an Optional
Currency. Each Optional Currency Notice requesting a Revolving
Multicurrency Loan in an Optional Currency shall be by written notice
(or telephonic notice confirmed in writing by Samsonite Europe),
specifying (a) the Revolving Multicurrency Loan to be made, (b) the
requested Drawdown Date of the proposed Borrowing, (c) the requested
Optional Currency in which the Revolving Multicurrency Loan is to be
made, and (d) the initial Interest Period for the Revolving
Multicurrency Loan to be borrowed. If any Multicurrency
<PAGE>
-86-
Lender or the Fronting Bank, as the case may be, on or prior to any
Drawdown Date, determines (which determination shall be conclusive)
that the requested Optional Currency is not freely transferable and
convertible into Dollars or that it will be impracticable for such
Multicurrency Lender or the Fronting Bank, as the case may be, to fund
the Revolving Multicurrency Loan in such Optional Currency, then such
Multicurrency Lender or Fronting Bank, as the case may be, shall
immediately so notify the Foreign Agent, which notification shall be
given immediately by the Foreign Agent to Samsonite Europe, and such
Multicurrency Lender's or Fronting Bank's portion, as the case may be,
of the requested Revolving Multicurrency Loan shall instead be
denominated in Dollars. In the event that Samsonite Europe repays such
portion of a Revolving Multicurrency Loan denominated in Dollars in
accordance with (S)4.12 hereof and such repayment, and the fluctuation
of currency exchange rates, results in Revolving Multicurrency Loans
being then outstanding that are not in Dollar Equivalent amounts held
pro rata in accordance with the Revolving Multicurrency Commitment
--- ----
Percentages, then all subsequent principal repayments denominated in
the Optional Currency which the applicable Multicurrency Lender or
Fronting Bank did not advance shall be made by Samsonite Europe to the
Foreign Agent for the respective accounts of such Multicurrency
Lenders other than such Multicurrency Lender on a pro rata basis until
--- ----
such time as the Revolving Multicurrency Loans are outstanding on a
pro rata basis. Subject to the foregoing and to the satisfaction of
--- ----
the terms and conditions of (S)12 (in the case of such Loans to be
made on the Closing Date) and (S)13, each Revolving Multicurrency Loan
requested to be made in an Optional Currency will be made on the
Drawdown Date specified therefor in the Optional Currency Notice, in
the currency requested in the Optional Currency Notice and, upon being
so made, will have the Interest Period requested in the Optional
Currency Notice.
4.11.2. Exchange Rate. For purposes of this Credit Agreement the
-------------
amount in one Optional Currency which shall be equivalent on any
particular date to a specified amount in another Optional Currency
shall be that amount (as conclusively ascertained by the Foreign Agent
by its normal banking practices, absent manifest error) in the first
Optional Currency which is or could be purchased by the Foreign Agent
(in accordance with normal banking practices) with such specified
amount in the second Optional Currency in any recognized Eurocurrency
Interbank Market selected by the Foreign Agent in good faith for
delivery on such date at the spot rate of exchange prevailing at 10:00
a.m. (Applicable Belgium Time) (or as soon thereafter as practicable)
on such date.
<PAGE>
-87-
4.11.3. Multiple Denominations. In the event that any portion of
----------------------
the funds available under the terms of this Credit Agreement is
denominated in one or more Optional Currencies, the Dollar Equivalent
of such portion of the funds shall be calculated pursuant to the
definition of "Dollar Equivalent". The amount so determined shall then
be added to the amount already outstanding in Dollars for the purpose
of determining the remaining availability of funds under (S)4.1 and
(S)4.11.1 hereof and any required repayments under the following
(S)4.11.4.
4.11.4. Repayment. If at any time prior to the Revolving
---------
Multicurrency Loan Maturity Date, the Dollar Equivalent of the
aggregate principal amount outstanding of all Revolving Multicurrency
Loans hereunder shall exceed the Total Revolving Multicurrency
Commitment as a result of fluctuations in respective currency
conversion rates for three (3) or more consecutive Business Days,
Samsonite Europe shall pay or cause to be paid immediately, upon
demand made by the Foreign Agent, such amounts as are sufficient to
eliminate such excess and to reduce the aggregate principal amount
outstanding to the Dollar Equivalent in the applicable currencies of
the Total Revolving Multicurrency Commitment. In the event there are
any Revolving Multicurrency Loans outstanding which are denominated in
an Optional Currency, the Foreign Agent shall provide the Lenders and
Samsonite Europe with calculations on the last day of each calendar
month in which such Revolving Multicurrency Loans in Optional
Currencies are outstanding as to the amount in Dollar Equivalents of
such Revolving Multicurrency Loans.
4.11.5. Funding. Each Multicurrency Lender and the Fronting Bank
-------
may make any Revolving Multicurrency Loan denominated in an Optional
Currency by causing its Multicurrency Lending Office or a Belgian
branch or affiliate to make such Revolving Multicurrency Loan (whether
or not such lending office, branch or affiliate constituting the
applicable Multicurrency Lending Office is named as a lending office
on the signature pages hereof); provided that in such event the
--------
obligation of Samsonite Europe to repay such Revolving Multicurrency
Loan shall nevertheless be to such Multicurrency Lender and the
Fronting Bank, as the case may be, and shall, for all purposes of this
Credit Agreement (including without limitation for purposes of the
definition of the term "Majority Lenders") be deemed made by such
Multicurrency Lender or Fronting Bank, as the case may be, to the
extent of such Revolving Multicurrency Loan, for the account of such
applicable lending office, branch or affiliate.
<PAGE>
-88-
4.11.6. European Monetary Union.
-----------------------
(a) If, as a result of the implementation of European
monetary union, (i) any Optional Currency ceases to be lawful
currency of the nation issuing the same and is replaced by a
European single currency (the so-called "Euro") or (ii) any
Optional Currency and the "Euro" are at the same time recognized
by the central bank or comparable authority of the nation issuing
such Optional Currency as lawful currency of such nation and the
Administrative Agent or the Majority Lenders shall so request in
a notice delivered to the Company, then any amount payable
hereunder by the Lenders to any Borrower, or by any Borrower to
the Lenders, in such Optional Currency shall instead be payable
in the "Euro" and the amount so payable shall be determined by
translating the amount payable in such Optional Currency to the
"Euro" at the exchange rate recognized by the European Central
Bank for the purpose of implementing European monetary union.
(b) The Company agrees, at the request of any Lender, to
compensate such Lender for any reasonable loss, cost, expense or
reduction in return that shall be incurred or sustained by such
Lender (other than through such Lender's gross negligence or
willful misconduct) as a result of the implementation of European
monetary union, that would not have been incurred or sustained
but for the transactions provided for herein and that, to the
extent that such loss, cost, expense or reduction is of a type
generally applicable to extensions of credit similar to the
extensions of credit hereunder, is generally being requested from
borrowers subject to similar provisions. A certificate of a
Lender setting forth (x) the amount or amounts necessary to
compensate such Lender (y) describing the nature of the loss or
expense sustained or incurred by such Lender as a consequence
thereof and (z) setting forth a reasonably detailed explanation
of the calculation thereof shall be delivered to the Company and
shall be conclusive absent manifest error. The Company shall pay
such Lender the amount shown as due on any such certificate
within 10 days after receipt thereof.
(c) Each of the Borrowers agrees, at the request of the
Majority Lenders, at the time of or at any time following the
implementation of European monetary union, to enter into an
agreement amending this Credit Agreement in such manner as the
Majority Lenders shall
<PAGE>
-89-
reasonably specify in order to reflect the implementation of
such European monetary union to place the parties hereto in the
position they would have been in had such European monetary
union not been implemented.
4.12. Repayment of Revolving Multicurrency Loans.
------------------------------------------
4.12.1. Maturity of Revolving Multicurrency Loans. Samsonite
-----------------------------------------
Europe promises to pay on the Revolving Multicurrency Loan Maturity
Date, and there shall become absolutely due and payable on the
Revolving Multicurrency Loan Maturity Date, all of the Revolving
Multicurrency Loans outstanding on such date, together with any and
all accrued and unpaid interest thereon.
4.12.1. Multicurrency Swing Line Loans. Samsonite Europe shall
------------------------------
repay to the Foreign Agent for the account of each Multicurrency Swing
Line Lender and each other Multicurrency Lender and the Fronting Bank
which has made a Multicurrency Swing Line Loan the outstanding
principal amount of each Multicurrency Swing Line Loan made to
Samsonite Europe on the earlier of the maturity date specified in the
applicable Notice of Multicurrency Swing Line Borrowing (which
maturity shall be no later than the fourteenth (14th) day after the
requested date of such borrowing) and the Revolving Multicurrency Loan
Maturity Date.
4.13. Mandatory Repayments of Revolving Multicurrency Loans. If at any
-----------------------------------------------------
time the sum of the Dollar Equivalents of the outstanding amount of the
Revolving Multicurrency Loans, Multicurrency Swing Line Loans, the Maximum
Drawing Amount of all Foreign Letters of Credit and all Foreign Unpaid
Reimbursement Obligations exceeds the Total Revolving Multicurrency
Commitment then Samsonite Europe shall immediately pay the amount of such
excess to the Foreign Agent for the respective accounts of the
Multicurrency Lenders and the Fronting Bank for application: first, to any
Multicurrency Swing Line Loans; second, to any Foreign Unpaid Reimbursement
Obligations; third, to any Revolving Multicurrency Loans; and fourth, to
provide to the Foreign Agent cash collateral for Foreign Reimbursement
Obligations as contemplated by (S)5.2.2(b). Each prepayment of any Foreign
Unpaid Reimbursement Obligations shall be allocated among the Lenders, in
proportion, as nearly as practicable, to each Foreign Reimbursement
Obligation, with adjustments to the extent practicable to equalize any
prior payments or prepayments not exactly in proportion. Each prepayments
of Revolving Multicurrency Loans shall be allocated among the Multicurrency
Lenders and the Fronting Bank, in proportion, as nearly as practicable, to
the respective unpaid
<PAGE>
-90-
principal amount owing in respect of the Multicurrency Loan Account of such
Multicurrency Lender and Fronting Bank, with adjustments to the extent
practicable to equalize any prior payments or repayments not exactly in
proportion.
4.14. Optional Repayments of Revolving Multicurrency Loans and
--------------------------------------------------------
Multicurrency Swing Line Loans. Samsonite Europe shall have the right, at
------------------------------
its election, to repay the outstanding amount of the Revolving
Multicurrency Loans and Multicurrency Swing Line Loans, as a whole or in
part, at any time without penalty or premium, provided that any full or
--------
partial prepayment of the outstanding amount of any Revolving Multicurrency
Loans pursuant to this (S)4.14 may be made only on the last day of the
Interest Period relating thereto or, if made prior to the last day of the
Interest Period relating thereto, Samsonite Europe agrees to indemnify the
Multicurrency Lenders and the Fronting Bank for any loss, cost or expense
that any Multicurrency Lender and the Fronting Bank may sustain or incur as
a consequence of such repayment all as more fully set forth in (S)6.9
hereof. Samsonite Europe shall give the Foreign Agent, no later than 11:00
a.m. (Applicable Belgium Time) on the date of any proposed prepayment,
prior written or telephonic notice of any proposed prepayment pursuant to
this (S)4.14 of Multicurrency Swing Line Loans, and no later than 11:00
a.m. (Applicable Belgium Time) at least three (3) Business Days prior
written notice of any proposed prepayment pursuant to this (S)4.14 of
Revolving Multicurrency Loans, in each case specifying the proposed date of
prepayment of Revolving Multicurrency Loans or Multicurrency Swing Line
Loans and the principal amount to be prepaid. Each such partial prepayment
of (a) the Revolving Multicurrency Loans shall be in the principal amount
of $3,000,000 or a greater integral multiple of $500,000 in excess thereof
(or the Dollar Equivalent) and (b) the Multicurrency Swing Line Loans shall
be in the principal amount of $100,000 or a greater integral multiple of
$10,000 in excess thereof (or the Dollar Equivalent). Each partial
prepayment of Revolving Multicurrency Loans or Multicurrency Swing Line
Loans, as the case may be, shall be allocated among the Multicurrency
Lenders and the Fronting Bank, in proportion, as nearly as practicable, to
the respective unpaid principal amount of Revolving Multicurrency Loans or
Multicurrency Swing Line Loans, as the case may be, under each
Multicurrency Lender's and Fronting Bank's Multicurrency Loan Account, with
adjustments to the extent practicable to equalize any prior repayments not
exactly in proportion.
<PAGE>
-91-
5. LETTERS OF CREDIT AND FOREIGN LETTERS OF CREDIT.
-----------------------------------------------
5.1. Letter of Credit and Foreign Letter of Credit Commitments.
---------------------------------------------------------
5.1.1. Commitment to Issue Letters of Credit and Foreign
-------------------------------------------------
Letters of Credit.
-----------------
(a) Subject to the terms and conditions hereof and
the execution and delivery by the Company to the Issuing
Bank and the Administrative Agent of a letter of credit
application on the Issuing Bank's customary form (a "Letter
of Credit Application"), the Issuing Bank on behalf of the
Lenders and in reliance upon the agreement of the Lenders
set forth in (S)5.1.4 and upon the representations and
warranties of the Company contained herein, agrees, in its
individual capacity, to issue, extend and renew for the
account of the Company one or more standby or documentary
letters of credit (individually, a "Letter of Credit"), in
such form as may be requested from time to time by the
Company and agreed to by the Issuing Bank; provided,
--------
however, that, after giving effect to such request, (a) the
-------
sum of the aggregate Maximum Drawing Amount and all Unpaid
Reimbursement Obligations shall not exceed $50,000,000 at
any one time; and (b) the sum of (1) the Maximum Drawing
Amount of all Letters of Credit, (2) all Unpaid
Reimbursement Obligations, and (3) the amount of all
Revolving Credit Loans and Swing Line Loans outstanding
shall not at any time exceed the Total Revolving Commitment.
The parties hereto hereby acknowledge and agree that any
Existing Letters of Credit issued and outstanding as of the
Closing Date shall, on the Closing Date be deemed to be, and
shall become, Letters of Credit outstanding hereunder for
the account of the Company, and shall be subject to all the
provisions of this Credit Agreement relating to a Letter of
Credit issued hereunder.
(b) Subject to the terms and conditions hereof and
the execution and delivery by Samsonite Europe to the
Foreign Agent, the Administrative Agent and the Foreign
Issuing Bank of a letter of credit application on the
Foreign Issuing Bank's customary form (a "Foreign Letter of
Credit Application"), the Foreign Issuing Bank on behalf of
the Lenders and in reliance upon the agreement of the
Lenders set forth in (S)5.1.4 and upon the representations
and warranties of Samsonite Europe contained herein, agrees,
in its individual capacity, to
<PAGE>
-92-
issue, extend and renew for the account of Samsonite Europe
one or more standby or documentary letters of credit
(individually, a "Foreign Letter of Credit"), which Foreign
Letter of Credit may be issued in an Optional Currency if so
requested by Samsonite Europe, in such form as may be
requested from time to time by Samsonite Europe and agreed
to by the Foreign Issuing Bank; provided, however, that,
-------- -------
after giving effect to such request, (a) the sum of the
aggregate Maximum Drawing Amount of all Foreign Letters of
Credit and all Foreign Unpaid Reimbursement Obligations
shall not exceed $20,000,000 in a Dollar Equivalent amount
at any one time; and (b) the sum of the Dollar Equivalent
amounts of (1) the Maximum Drawing Amount of all Foreign
Letters of Credit, (2) all Foreign Unpaid Reimbursement
Obligations, and (3) the amount of all Revolving
Multicurrency Loans and Multicurrency Swing Line Loans
outstanding shall not at any time exceed the Total Revolving
Multicurrency Commitment. Upon receipt of a Foreign Letter
of Credit Application, the Foreign Agent shall promptly
notify the Administrative Agent as to the Dollar Equivalent
amount that is thereby applied for and as to the aggregate
Dollar Equivalent Maximum Drawing Amount and Unpaid
Reimbursement Obligations for all Foreign Letters of Credit,
and of each of the other amounts referred to in clauses (a)
through (e) of (S)6.3.4, after giving effect to the issuance
of the Foreign Letter of Credit that is thereby applied for.
The parties hereto hereby acknowledge and agree that any
Existing Foreign Letters of Credit issued and outstanding as
of the Closing Date shall, on the Closing Date be deemed to
be, and shall become, Foreign Letters of Credit outstanding
hereunder for the account of the Company, and shall be
subject to all the provisions of this Credit Agreement
relating to a Foreign Letter of Credit issued hereunder.
5.1.2. Letter of Credit Applications and Foreign Letter of
--------------------------------------------------
Credit Applications.
-------------------
(a) Each Letter of Credit Application shall be
completed to the satisfaction of the Issuing Bank. In the
event that any provision of any Letter of Credit Application
shall be inconsistent with any provision of this Credit
Agreement, then the provisions of this Credit Agreement
shall, to the extent of any such inconsistency, govern.
<PAGE>
-93-
(b) Each Foreign Letter of Credit Application shall
be completed to the satisfaction of the Foreign Issuing
Bank. In the event that any provision of any Foreign Letter
of Credit Application shall be inconsistent with any
provision of this Credit Agreement, then the provisions of
this Credit Agreement shall, to the extent of any such
inconsistency, govern.
5.1.3. Terms of Letters of Credit and Foreign Letter of
------------------------------------------------
Credit.
------
(a) Each Letter of Credit issued, extended or renewed
hereunder shall, among other things, (i) provide for the
payment of sight drafts for honor thereunder when presented
in accordance with the terms thereof and when accompanied by
the documents described therein, and (ii) have an expiry
date no later than the earlier to occur of (A) 180 days from
the date of issuance for documentary Letters of Credit and
one year from the date of issuance for standby Letters of
Credit and (B) the date which is fourteen (14) days (or, if
the Letter of Credit is confirmed by a confirmer or
otherwise provides for one or more nominated Persons to take
up documents thereunder, thirty (30) days) prior to the
Revolving Credit Loan Maturity Date. Each Letter of Credit
so issued, extended or renewed shall be subject to the
Uniform Customs.
(b) Each Foreign Letter of Credit issued, extended or
renewed hereunder shall, among other things, (i) provide for
the payment of sight drafts for honor thereunder when
presented in accordance with the terms thereof and when
accompanied by the documents described therein, and (ii)
have an expiry date no later than the earlier to occur of
(A) 180 days from the date of issuance for documentary
Foreign Letters of Credit and one year from the date of
issuance for standby Foreign Letters of Credit and (B) the
date which is fourteen (14) days (or, if the Foreign Letter
of Credit is confirmed by a confirmer or otherwise provides
for one or more nominated Persons to take up documents
thereunder, thirty (30) days) prior to the Revolving
Multicurrency Loan Maturity Date. Each Foreign Letter of
Credit so issued, extended or renewed shall be subject to
the Uniform Customs (unless otherwise expressly provided in
the Foreign Letter of Credit).
<PAGE>
-94-
5.1.4. Reimbursement Obligations of Lenders.
------------------------------------
(a) Each Lender severally agrees that it shall be
absolutely liable, without regard to the occurrence of any
Default or Event of Default or any other condition precedent
whatsoever, to the extent of such Lender's Revolving
Commitment Percentage, to reimburse the Issuing Bank on
demand for the amount of each draft paid by the Issuing Bank
under each Letter of Credit (to the extent that such amount
is not reimbursed by the Company pursuant to (S)5.2),
together with the amounts required to be paid by each Lender
pursuant to (S)5.3.1 (such agreement of a Lender under this
paragraph being called herein the "Letter of Credit
Participation" of such Lender).
(b) Each Lender severally agrees that it shall be
absolutely liable, without regard to the occurrence of any
Default or Event of Default or any other condition precedent
whatsoever, to the extent of such Lender's Revolving
Multicurrency Commitment Percentage, to reimburse the
Foreign Issuing Bank on demand for the amount of each draft
paid by the Foreign Issuing Bank under each Foreign Letter
of Credit (to the extent that such amount is not reimbursed
by Samsonite Europe pursuant to (S)5.2) together with the
amounts required to be paid by each Lender pursuant to
(S)5.3.2 (such agreement of a Lender being called herein the
"Foreign Letter of Credit Participation" of such Lender).
5.1.5. Participations of Lenders.
-------------------------
(a) Each such payment made by a Lender shall be
treated as the purchase by such Lender of a participating
interest in the Company's Reimbursement Obligation under
(S)5.2.1 in an amount equal to such payment. Each Lender
shall share in accordance with its participating interest in
any interest which accrues pursuant to (S)5.2.1 after the
date of the purchase of such participating interest by such
Lender.
(b) Each such payment made by a Lender shall be
treated as the purchase by such Lender of a participating
interest in Samsonite Europe's Foreign Reimbursement
Obligation under (S)5.2.2 in an amount equal to such
payment. Each Lender shall share in accordance with its
participating interest in any interest which accrues
pursuant to (S)5.2.2 after the date of the purchase of such
participating interest by such Lender.
<PAGE>
-95-
5.2. Reimbursement Obligation of the Borrowers.
-----------------------------------------
5.2.1. Reimbursement Obligation of the Company. In order to
---------------------------------------
induce the Issuing Bank to issue, extend and renew each Letter of
Credit and the Lenders to participate therein, the Company hereby
agrees to reimburse or pay to the Issuing Bank, for the account
of the Issuing Bank or (as the case may be) the Lenders, with
respect to each Letter of Credit issued, extended or renewed by
the Issuing Bank hereunder,
(a) except as otherwise expressly provided in
(S)5.2.1(b), on each date that any draft presented under
such Letter of Credit is honored by the Issuing Bank, or the
Issuing Bank otherwise makes a payment with respect thereto,
(i) the amount paid by the Issuing Bank under or with
respect to such Letter of Credit, and (ii) the amount of any
taxes, fees, charges or other costs and expenses whatsoever
incurred by the Issuing Bank or any Lender in connection
with any payment made by the Issuing Bank or any Lender
under, or with respect to, such Letter of Credit, and
(b) upon the termination of the Total Revolving
Commitment, or the acceleration of the Reimbursement
Obligations with respect to all Letters of Credit in
accordance with (S)14, an amount equal to the then Maximum
Drawing Amount on all Letters of Credit, which amount shall
be held by the Administrative Agent for the benefit of the
Lenders and the Administrative Agents as cash collateral for
all Reimbursement Obligations.
Each such payment shall be made to the Issuing Bank at the
Issuing Bank's head office in immediately available funds.
Interest on any and all amounts remaining unpaid by the Company
under this (S)5.2.1 at any time from the date such amounts become
due and payable (whether as stated in this (S)5.2.1, by
acceleration or otherwise) until payment in full (whether before
or after judgment) shall be payable to the Administrative Agent
on demand at the rate specified in (S)6.10 for overdue principal
on the Revolving Credit Loans constituting Base Rate Loans.
5.2.2. Reimbursement Obligation of Samsonite Europe. In
--------------------------------------------
order to induce the Foreign Issuing Bank to issue, extend and
renew each Foreign Letter of Credit and the Lenders to
participate therein, Samsonite Europe hereby agrees to reimburse
or pay to the Foreign Issuing Bank, for the account of the
Foreign Issuing Bank or (as the case may be) the
<PAGE>
-96-
Lenders, with respect to each Foreign Letter of Credit issued,
extended or renewed by the Foreign Issuing Bank hereunder,
(a) except as otherwise expressly provided in
(S)5.2.2(b), on each date that any draft presented under
such Foreign Letter of Credit is honored by the Foreign
Issuing Bank, or the Foreign Issuing Bank otherwise makes a
payment with respect thereto (in the same currency in which
such Foreign Letter of Credit was issued), (i) the amount
paid by the Foreign Issuing Bank under or with respect to
such Foreign Letter of Credit, and (ii) the amount of any
taxes, fees, charges or other costs and expenses whatsoever
incurred by the Foreign Issuing Bank or any Lender in
connection with any payment made by the Foreign Issuing Bank
or any Lender under, or with respect to, such Foreign Letter
of Credit, and
(b) upon the termination of the Total Revolving
Multicurrency Commitment, or the acceleration of the Foreign
Reimbursement Obligations with respect to all Foreign
Letters of Credit in accordance with (S)14, an amount equal
to the then Maximum Drawing Amount on all Foreign Letters of
Credit (in the same currency in which such Foreign Letter of
Credit was issued), which amount shall be held by the
Foreign Agent for the benefit of the Lenders and the Foreign
Agent as cash collateral for all Foreign Reimbursement
Obligations.
Each such payment shall be made to the Foreign Issuing Bank
at the Foreign Issuing Bank's head office in Same Day Funds, and
shall be made in the currency in which such Letter of Credit was
issued. Interest on any and all amounts remaining unpaid by
Samsonite Europe under this (S)5.2.2 at any time from the date
such amounts become due and payable (whether as stated in this
(S)5.2.2, by acceleration or otherwise) until payment in full
(whether before or after judgment) shall be payable to the
Foreign Agent on demand at the rate specified in (S)6.10 for
overdue principal on the Base Rate Loans (subject to the final
sentence of (S)5.3.2 hereof).
5.3. Payments.
--------
5.3.1. Letter of Credit Payments. If any draft shall be
-------------------------
presented or other demand for payment shall be made under any
Letter of Credit, the Issuing Bank shall notify the Company of
the date and amount of the draft presented or demand for payment
and of the date and time when it expects to pay such draft or
honor such demand for payment. If the Company fails
<PAGE>
-97-
to reimburse the Issuing Bank as provided in (S)5.2(a) on or
before the date that such draft is paid or other payment is made
by the Issuing Bank, the Issuing Bank may at any time thereafter
notify the Lenders and the Administrative Agent of the amount of
any such Unpaid Reimbursement Obligation. No later than 3:00 p.m.
(New York City time) on the Business Day next following the
receipt of such notice, each Lender shall make available to the
Issuing Bank, at its head office, in immediately available funds,
such Lender's Revolving Commitment Percentage of such Unpaid
Reimbursement Obligation, together with an amount equal to the
product of (a) the weighted average, computed for the period
referred to in clause (c) below, of the Federal Funds Rate, for
each day included in such period, times (b) the amount equal to
-----
such Lender's Revolving Commitment Percentage of such Unpaid
Reimbursement Obligation, times (c) a fraction, the numerator of
-----
which is the number of days that elapse from and including the
date the Issuing Bank paid the draft presented for honor or
otherwise made payment to the date on which such Lender's
Revolving Commitment Percentage of such Unpaid Reimbursement
obligation shall become immediately available to the Issuing
Bank, and the denominator of which is 365. The responsibility of
the Issuing Bank to the Company and the Lenders shall be only to
determine that the documents (including each draft) delivered
under each Letter of Credit in connection with such presentment
shall be in conformity in all material respects with such Letter
of Credit.
5.3.2. Foreign Letter of Credit Payments. If any draft shall
---------------------------------
be presented or other demand for payment shall be made under any
Foreign Letter of Credit, the Foreign Issuing Bank shall notify
Samsonite Europe of the date and amount of the draft presented or
demand for payment and of the date and time when it expects to
pay such draft or honor such demand for payment. If Samsonite
Europe fails to reimburse the Foreign Issuing Bank as provided in
(S)5.2.2 on or before the date that such draft is paid or other
payment is made by the Foreign Issuing Bank, the Foreign Issuing
Bank may at any time thereafter notify the Lenders and the
Administrative Agent of the amount of any such Foreign Unpaid
Reimbursement Obligation and shall specify such amount in Dollars
(based upon the actual exchange rate at which the Foreign Issuing
Bank anticipates being able to obtain the relevant Optional
Currency on the relevant date, with any excess payment being
refunded to the Lenders and any deficiency remaining payable by
the Lenders) required from such Lender. No later than 3:00 p.m.
(Applicable Belgium Time) on the Business Day next following the
receipt of such notice, each Lender shall make available to the
Foreign Issuing Bank, at its head office, in
<PAGE>
-98-
Same Day Funds, such Lender's Revolving Multicurrency Commitment
Percentage of such Foreign Unpaid Reimbursement Obligation so
specified by the Foreign Issuing Bank, together with an amount
equal to the product of (a) the weighted average, computed for
the period referred to in clause (c) below, of the Overnight
Rate, for each day included in such period, times (b) the amount
-----
equal to such Lender's Revolving Multicurrency Commitment
Percentage of such Foreign Unpaid Reimbursement Obligation, times
-----
(c) a fraction, the numerator of which is the number of days that
elapse from and including the date the Foreign Issuing Bank paid
the draft presented for honor or otherwise made payment to the
date on which such Lender's Revolving Multicurrency Commitment
Percentage of such Foreign Unpaid Reimbursement Obligation shall
become immediately available to the Foreign Issuing Bank, and the
denominator of which is 365. The responsibility of the Foreign
Issuing Bank to Samsonite Europe and the Lenders shall be only to
determine that the documents (including each draft) delivered
under each Foreign Letter of Credit in connection with such
presentment shall be in conformity in all material respects with
such Foreign Letter of Credit. From and after such purchase of
the applicable Foreign Letter of Credit Participations, such
Foreign Unpaid Reimbursement Obligations shall be deemed to have
been converted into Base Rate Loans denominated in Dollars made
by the Lenders (with such conversion constituting, for purposes
of (S)6.9, a conversion of a Loan of one Type into a Loan of
another Type prior to the expiration of the relevant Interest
Period), and all amounts from time to time accruing, and all
amounts from time to time payable, on account of such Foreign
Unpaid Reimbursement Obligations shall be payable in Dollars as
if such Foreign Letter of Credit had originally been issued in
Dollars.
5.4. Obligations Absolute. The respective Borrower's obligations
--------------------
under this (S)5 shall be absolute and unconditional under any and all
circumstances and irrespective of the occurrence of any Default or
Event of Default or any condition precedent whatsoever or any setoff,
counterclaim or defense to payment which such Borrower may have or
have had against the Issuing Bank or the Foreign Issuing Bank, as the
case may be, any Lender or any beneficiary of a Letter of Credit or
Foreign Letter of Credit, as the case may be. Each Borrower further
agrees with the Issuing Bank and the Foreign Issuing Bank, as the case
may be, and the Lenders that the Issuing Bank, the Foreign Issuing
Bank and the Lenders shall not be responsible for, and the Company's
Reimbursement Obligations under (S)5.2.1 and Samsonite Europe's
Foreign Reimbursement Obligations under (S)5.2.2 shall not be affected
by, among other things, the validity or genuineness of documents or of
any endorsements thereon, even if such documents should in fact prove
to be in any or all respects
<PAGE>
-99-
invalid, fraudulent or forged, or any dispute between or among the
respective Borrower, the beneficiary of any Letter of Credit or Foreign
Letter of Credit or any financing institution or other party to which any
Letter of Credit or Foreign Letter of Credit, as the case may be, may be
transferred or any claims or defenses whatsoever of such Borrower against
the beneficiary of any Letter of Credit, any Foreign Letter of Credit or
any such transferee. The Issuing Bank, the Foreign Issuing Bank and the
Lenders shall not be liable for any error, omission, interruption or delay
in transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit or Foreign Letter of
Credit except where such error, omission, interruption or delay arises
solely from the Issuing Bank's or the Foreign Issuing Bank's gross
negligence or willful misconduct. Each Borrower agrees that any action
taken or omitted by the Issuing Bank, the Foreign Issuing Bank or any
Lender under or in connection with each Letter of Credit, Foreign Letter of
Credit and the respective related drafts and documents, if done in good
faith and absent gross negligence or willful misconduct, shall be binding
upon such Borrower and shall not result in any liability on the part of the
Issuing Bank, the Foreign Issuing Bank or any Lender to such Borrower.
5.5. Reliance by Issuer. To the extent not inconsistent with (S)5.4,
------------------
the Issuing Bank and the Foreign Issuing Bank, as the case may be, shall be
entitled to rely, and shall be fully protected in relying upon, any Letter
of Credit or Foreign Letter of Credit, as the case may be, draft, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements
of legal counsel, independent accountants and other experts selected by the
Issuing Bank or the Foreign Issuing Bank, as the case may be. The Issuing
Bank and the Foreign Issuing Bank, as the case may be, shall be fully
justified in failing or refusing to take any action under this Credit
Agreement unless it shall first have received such advice or concurrence of
the Majority Lenders as it reasonably deems appropriate or it shall first
be indemnified to its reasonable satisfaction by the Lenders against any
and all liability and expense which may be incurred by it by reason of
taking or continuing to take any such action. The Issuing Bank and the
Foreign Issuing Bank, as the case may be, shall in all cases be fully
protected in acting, or in refraining from acting, under this Credit
Agreement in accordance with a request of the Majority Lenders, and such
request and any action taken or failure to act pursuant thereto shall be
binding upon the Lenders and all future holders of the Revolving Credit
Notes, Loan Accounts or of a Letter of Credit Participation or a Foreign
Letter of Credit Participation.
<PAGE>
-100-
5.6. Letter of Credit and Foreign Letter of Credit Fees.
--------------------------------------------------
5.6.1. Letter of Credit Fees. The Company shall, quarterly in
---------------------
arrears on the first day of each calendar quarter (for the quarter or
portion thereof then ended) and at such other time or times as such charges
are customarily made by the Issuing Bank, pay a fee (in each case, a
"Letter of Credit Fee") to the Administrative Agent, in Dollars, in arrears
(a) in respect of each standby Letter of Credit equal to (i) 1/8% per annum
with respect to the aggregate Maximum Drawing Amount from time to time of
such standby Letter of Credit (the "Standby Letter of Credit Issuance
Fee"), such Standby Letter of Credit Issuance Fee to be for the account of
the Issuing Bank and (ii) the Applicable Margin per annum for Eurodollar
Rate Loans (other than the Domestic Term Loan) with respect to the
aggregate Maximum Drawing Amount from time to time of such standby Letter
of Credit (the "Standby Letter of Credit Fee"), which Standby Letter of
Credit Fee shall be allocated pro rata (according to the applicable
--- ----
Revolving Commitment Percentages) to each of the Lenders, and (b) in
respect of each documentary Letter of Credit equal to (i) 1/8% per annum
with respect to the aggregate Maximum Drawing Amount from time to time of
such documentary Letter of Credit (the "Documentary Letter of Credit
Issuance Fee"), such Documentary Letter of Credit Issuance Fee to be for
the account of the Issuing Bank and (ii) the applicable Documentary Letter
of Credit Fee Rate per annum with respect to the aggregate Maximum Drawing
Amount from time to time of such documentary Letter of Credit (the
"Documentary Letter of Credit Fee"), which Documentary Letter of Credit Fee
shall be allocated pro rata (according to the applicable Revolving
--- ----
Commitment Percentages) to the Lenders. In addition, the Company shall from
time to time pay to the Issuing Bank, for its own account, such incidental
issuance fees, modification fees, negotiation fees, transfer fees and other
similar processing fees and charges in connection with the issuance or
administration of each such Letters of Credit as shall then be generally
charged by such Issuing Bank in connection with similar letter of credit-
related transactions. For purposes of the foregoing, the Existing Letters
of Credit shall be deemed to be issued on the Closing Date.
5.6.1 Foreign Letter of Credit Fees. Samsonite Europe shall,
-----------------------------
quarterly in arrears on the first day of each calendar quarter (for the
quarter or portion thereof then ended) and at such other time or times as
such charges are customarily made by the Foreign Issuing Bank, pay a fee
(in each case, a "Foreign Letter of Credit Fee") to the Administrative
Agent in Dollars, in arrears (a) in respect of each standby Foreign Letter
of Credit equal to (i) 1/8% per annum with respect to the aggregate
<PAGE>
-101-
Maximum Drawing Amount from time to time of such standby Foreign Letter of
Credit (the "Foreign Standby Letter of Credit Issuance Fee"), such Foreign
Standby Letter of Credit Issuance Fee to be for the account of the Foreign
Issuing Bank and (ii) the Applicable Margin per annum for Multicurrency
Loans with respect to the aggregate Maximum Drawing Amount from time to
time of such standby Foreign Letter of Credit (the "Foreign Standby Letter
of Credit Fee"), which Foreign Standby Letter of Credit Fee shall be
allocated pro rata (according to the applicable Revolving Multicurrency
--- ----
Commitment Percentages) to each of the Lenders, and (b) in respect of each
documentary Foreign Letter of Credit equal to (i) 1/8% per annum with
respect to the aggregate Maximum Drawing Amount from time to time of such
documentary Foreign Letter of Credit (the "Foreign Documentary Letter of
Credit Issuance Fee"), such Foreign Documentary Letter of Credit Issuance
Fee to be for the account of the Foreign Issuing Bank and (ii) the
applicable Foreign Documentary Letter of Credit Fee Rate per annum with
respect to the aggregate Maximum Drawing Amount from time to time of such
documentary Foreign Letter of Credit (the "Foreign Documentary Letter of
Credit Fee"), which Foreign Documentary Letter of Credit Fee shall be
allocated pro rata (according to the applicable Revolving Multicurrency
--- ----
Commitment Percentages) to the Lenders. In addition, Samsonite Europe shall
from time to time pay to the Foreign Issuing Bank, for its own account,
such incidental issuance fees, modification fees, negotiation fees,
transfer fees and other similar processing fees and charges in connection
with the issuance or administration of each such Foreign Letters of Credit
as shall then be generally charged by such Foreign Issuing Bank in
connection with similar letter of credit-related transactions. For purposes
of the foregoing, the Existing Foreign Letters of Credit shall be deemed to
be issued on the Closing Date. Prior to the time that a fee is payable
under this paragraph, the Foreign Issuing Bank shall give notice in
reasonable detail to the Foreign Agent and the Administrative Agent as to
the daily Maximum Drawing Amount of the Foreign Letters of Credit issued by
the Foreign Issuing Bank with respect to the period for which such fee is
payable, and the Foreign Agent shall calculate such fee (based upon the
actual exchange rate, at the time of such calculation, at which the Foreign
Agent would be able to exchange the relevant Optional Currency for Dollars)
and shall give notice of the amount thereof to the Administrative Agent and
the Borrowers.
<PAGE>
-102-
6. CERTAIN GENERAL PROVISIONS.
--------------------------
6.1. Fees. The Company agrees to pay to the Administrative Agent, for the
----
account of the applicable Person(s), on the Closing Date, the fees required to
be paid on the Closing Date to such Persons in the amounts set forth in the Fee
Letters. In addition, the Company shall from time to time pay to the
Administrative Agent for the applicable specified accounts of the applicable
Persons an Agent's Fee (in each case, an "Agent's Fee") and such other fees as
are set forth in the Fee Letters, in each case at the times and in the amounts
set forth in the Fee Letters.
6.2. Funds for Payments.
------------------
6.2.1. Payments to Administrative Agent and Foreign Agent. All
--------------------------------------------------
payments of principal, interest, Commitment Fees, and any other amounts due
hereunder or under any of the other Loan Documents, other than payments of
principal, interest and Foreign Letter of Credit Fees made in respect of
the Multicurrency Loans, Multicurrency Swing Line Loans, Foreign
Reimbursement Obligations and Foreign Letters of Credit shall be made to
the Administrative Agent, for the respective applicable accounts of the
Lenders and the Administrative Agent, at the Administrative Agent's Head
Office or at such other location in the San Francisco, California, area
that the Administrative Agent may from time to time designate, in each case
in Same Day Funds. All payments of principal and interest due hereunder or
under any of the other Loan Documents in respect of the Multicurrency
Loans, Multicurrency Swing Line Loans, Foreign Reimbursement Obligations
and Foreign Letters of Credit shall be made to the Foreign Agent, for the
respective applicable accounts of the Foreign Agent and the Lenders, at the
Foreign Agent's Belgian Lending Office or such other location in Belgium
that the Foreign Agent may from time to time designate, in each case in
Same Day Funds and in the applicable currency as more fully set forth in
(S)6.3 hereof. Each payment in respect of any Multicurrency Loan,
Multicurrency Swing Line Loan, Foreign Reimbursement Obligation or Foreign
Unpaid Reimbursement Obligation made by Samsonite Europe shall be made in
the same currency in which such Loan was made or such Foreign Letter of
Credit issued, as the case may be, unless otherwise expressly set forth in
this Credit Agreement or otherwise agreed to by the Lenders. All payments
of Reimbursement Obligations, Letter of Credit Fees and Foreign Letter of
Credit Fees shall be made to the Administrative Agent, for the respective
accounts of the Lenders, the Issuing Bank, and/or the Foreign Issuing Bank,
as applicable, at the Administrative Agent's Head Office or at such other
location that the Administrative Agent may
<PAGE>
-103-
from time to time designate, in each case in immediately available funds in
Dollars. All payments of Foreign Reimbursement Obligations shall be made to
the Foreign Agent, for the respective accounts of the Lenders and the
Foreign Issuing Bank, at the Foreign Issuing Bank's head office or at such
other location that the Foreign Issuing Bank may from time to time
designate, in each case in Same Day Funds in the currency in which such
Foreign Letter of Credit was issued, unless expressly set forth in this
Credit Agreement or otherwise agreed to by the Lenders.
6.2.2. No Offset, etc. All payments by the Borrowers hereunder and
--------------
under any of the other Loan Documents shall be made without setoff or
counterclaim and free and clear of and without deduction for any foreign or
domestic taxes, levies, imposts, duties, charges, fees, deductions,
withholdings, compulsory loans, restrictions or conditions of any nature
now or hereafter imposed or levied by any jurisdiction or any political
subdivision thereof or taxing or other authority therein unless such
Borrower is required by law to make such deduction or withholding. Except
as otherwise expressly provided in this (S)6.2, if any such obligation is
imposed upon any of the Borrowers with respect to any amount payable by it
hereunder or under any of the other Loan Documents, the Borrowers will pay
to the Administrative Agent, for the account of the Lenders or (as the case
may be) the applicable Agents, on the date on which such amount is due and
payable hereunder or under such other Loan Document, such additional amount
in Dollars or such other Optional Currency as may be applicable as shall be
necessary to enable the Lenders or the applicable Agents to receive the
same net amount which the Lenders or the applicable Agents would have
received on such due date had no such obligation been imposed upon such
Borrower. The Borrowers will deliver promptly to the Administrative Agent
certificates or other valid vouchers for all taxes or other charges
deducted from or paid with respect to payments made by the Borrowers
hereunder or under such other Loan Document.
6.2.3. Withholding Forms. Each Lender that is not incorporated or
-----------------
organized under the laws of the United States of America or a state thereof
or the District of Columbia (a "Non-U.S. Lender") agrees that it will
deliver to the Company and the Administrative Agent, on or before the
Closing Date, or, in the case of any Non-U.S. Lender that becomes a Lender
pursuant to an Assignment and Acceptance, on or before the date of such
Assignment and Acceptance, two duly completed copies of United States
Internal Revenue Service Form 1001 or 4224 (or a successor form) certifying
that such Non-U.S. Lender
<PAGE>
-104-
is entitled to receive all payments under this Credit Agreement and the
Notes without deduction or withholding of any United States federal income
taxes, provided that any such Lender may instead deliver such documents or
--------
follow such other procedure as the Administrative Agent reasonably
determines is sufficient for the purposes of this paragraph under then
applicable United States tax laws. Each Non-U.S. Lender that so delivers a
Form 1001 or 4224 (or delivering such other documents or following such
other procedures) further undertakes to deliver to the Company and the
Administrative Agent two (2) additional copies of such form (or a successor
form) on or before the date that such form expires or becomes obsolete or
promptly after the occurrence of any event requiring a change in the most
recent form so delivered by it (or when otherwise required by any alternate
document or procedure), and such amendments thereto or extensions or
renewals thereof as may be reasonably requested by the Company or the
Administrative Agent, in each case certifying that such Non-U.S. Lender is
entitled to receive payments under this Credit Agreement and the Notes
without deduction or withholding of any United States federal income taxes,
unless an event (including any change in treaty, law, or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required that renders all such forms inapplicable or that would prevent
such Non-U.S. Lender from duly completing and delivering any such form with
respect to it and such Non-U.S. Lender advises the Company and the
Administrative Agent that it is not capable of receiving payments without
any deduction or withholding of United States federal income tax.
6.2.4. Exclusions. The Company shall not be required to pay any
----------
additional amounts to any Non-U.S. Lender in respect of United States
Federal withholding tax pursuant to (S)6.2.2 above to the extent that (a)
the obligation to withhold amounts with respect to United States Federal
withholding tax existed on the date such Non-U.S. Lender became a party to
this Credit Agreement or, with respect to payments to a different lending
office designated by the Non-U.S. Lender as its applicable lending office
(a "New Lending Office"), on the date such Non-U.S. Lender designated such
New Lending Office with respect to a Loan; provided, however, that this
-------- -------
clause (a) shall not apply with respect to any transferee or New Lending
Office as a result of an assignment, transfer or designation made at the
request of the Company; and provided further, however, that this clause (a)
-------- -------
shall not apply to the extent the indemnity payment or additional amounts
any transferee, or Non-U.S. Lender through a New Lending Office, would be
entitled to receive without regard to this clause (a) do not exceed the
indemnity payment or additional amounts that the Person
<PAGE>
-105-
making the assignment or transfer to such transferee, or Non-U.S. Lender
making the designation of such New Lending Office, would have been entitled
to receive in the absence of such assignment, transfer or designation; or
(b) the obligation to pay such additional amounts would not have arisen but
for a failure by such Non-U.S. Lender to comply with the provisions of
(S)6.2.3 above.
6.2.5. Mitigation. Notwithstanding the foregoing, each Lender agrees
----------
to use reasonable efforts (consistent with legal and regulatory
restrictions) to change its Domestic Lending Office or Eurodollar Lending
Office to avoid or to minimize any amounts otherwise payable under (S)6.2.2
in each case solely if such change can be made in a manner so that such
Lender, in its sole determination, suffers no legal, economic or regulatory
disadvantage.
6.2.6. Replacement of Non-Exempt Lenders. Within thirty (30) days
---------------------------------
after the Company is required to make a deduction or withholding for the
account of, or payment of any additional amount to, any Non-U.S. Lender
pursuant to (S)6.2.2 in respect of United States Federal withholding tax
(any such Lender described in the preceding sentence is hereinafter
referred to as an "Affected Lender"), the Company may request that the
other Lenders (such Lenders being hereinafter referred to as the "Non-
Affected Lenders") acquire at par all, but not less than all, of the
Affected Lender's outstanding Loans, Unpaid Reimbursement Obligations,
Foreign Unpaid Reimbursement Obligations and its participating interest in
the risk relating to any Letters of Credit, Foreign Letters of Credit and
Fronted Loans, and assume all, but not less than all, of the Affected
Lender's Revolving Commitment Percentage and Revolving Multicurrency
Commitment Percentage. If the Company so requests, the Non-Affected Lenders
may elect to acquire at par all or any portion of the Affected Lender's
outstanding Loans, Unpaid Reimbursement Obligations, Foreign Unpaid
Reimbursement Obligations and its participating interest in the risk
relating to any Letters of Credit, Foreign Letters of Credit and Fronted
Loans, and assume all, but not less than all, of the Affected Lender's
Revolving Commitment Percentage and Revolving Multicurrency Commitment. If
the Non-Affected Lenders do not elect to acquire or assume all of the
Affected Lender's outstanding Loans, Unpaid Reimbursement Obligations,
Foreign Unpaid Reimbursement Obligations and its participating interest in
the risk relating to any Letters of Credit, Foreign Letters of Credit and
Fronted Loans, and assume all, but not less than all, of the Affected
Lender's Revolving Commitment Percentage and Revolving Multicurrency
Commitment Percentage, the Company may
<PAGE>
-106-
designate a replacement lender or lenders, which replacement lender or
lenders must in each case be an Eligible Assignee and, in each case the
Company must have obtained the prior written consent of the Administrative
Agent, the Fronting Bank, the Issuing Bank and the Foreign Issuing Bank
with respect to such replacement lender or lenders which consent by the
Administrative Agent, the Fronting Bank, the Issuing Bank and the Foreign
Issuing Bank shall not be unreasonably withheld, to acquire at par and
assume that portion of the outstanding Loans, Unpaid Reimbursement
Obligations, Foreign Unpaid Reimbursement Obligations, participating
interest in the risk relating to any Letters of Credit, Foreign Letters of
Credit and Fronted Loans, Revolving Commitment Percentage and Revolving
Multicurrency Commitment Percentage of the Affected Lender not being
acquired or assumed by the Non-Affected Lenders. The provisions of (S)20
hereof shall apply to all reallocations pursuant to this (S)6.2.6, and the
Affected Lender and any Non-Affected Lenders and/or replacement lenders
which are to acquire the Loans, Unpaid Reimbursement Obligations, Foreign
Unpaid Reimbursement Obligations, participating interest in the risk
relating to any Letters of Credit, any Foreign Letters of Credit and
Fronted Loans, Revolving Commitment Percentage and Revolving Multicurrency
Commitment Percentage of the Affected Lender, together with the applicable
Borrower, shall execute and deliver to the Administrative Agent, in
accordance with the provisions of (S)20 hereof, such Assignments and
Acceptances and other instruments, including, without limitation, such
Notes as are required pursuant to (S)20 to give effect to such
reallocations. On the effective date of the applicable Assignments and
Acceptances, the Company and Samsonite Europe shall pay to the Affected
Lender all interest accrued on its Loans up to but excluding such date,
along with any fees payable to such Affected Lender for periods hereunder
up to but excluding such date.
6.3. Payment Provisions; Computations.
----------------- --------------
6.3.1. Currency of Account. Dollars are the currency of account and
-------------------
payment for each and every sum at any time due from the Borrowers
hereunder; provided that:
--------
(a) except as expressly provided in (S)5.3 or (S)6.11 hereof,
or as elsewhere expressly provided in this Credit Agreement, each
repayment of a Loan or a part thereof shall be made in the currency
in which such Loan is denominated at the time of that repayment;
<PAGE>
-107-
(b) each payment of interest and Fronting Fees shall be made
in the currency in which such principal, or other sum, in respect of
which such interest is payable, is denominated;
(c) each payment in respect of costs and expenses shall be
made in the currency in which the same were incurred; and
(d) any amount expressed to be payable in a currency other
than Dollars shall be paid in that other currency.
6.3.2. Application of Interest Payments for Multicurrency Loans;
---------------------------------------------------------
Risk Participation Fees. Interest and fees, if any, payable by Samsonite
-----------------------
Europe on the Multicurrency Loans shall be paid as follows: (a) as to
interest due with respect to a Multicurrency Loan that was held by a
Multicurrency Lender, to the Foreign Agent for the respective account of
each such Multicurrency Lender and (b) as to interest due with respect to
Fronted Loans to the Fronting Bank, for the account of the Fronting Bank,
provided that as promptly as is practicable following each date upon which
--------
the Fronting Bank receives a payment of interest under this Credit
Agreement on account of any Fronted Loans, such Fronting Bank shall convert
into Dollars based upon the actual exchange rate then applicable to the
Fronting Bank the amount equal to the portion of such payment which
constitutes the Applicable Margin thereof (or, with respect to each Non-
Multicurrency Lender which funded the purchase of a participating interest
in such Fronted Loan pursuant to (S)6.11.2 hereof, as the case may be, such
Non-Multicurrency Lender's Revolving Multicurrency Commitment Percentage of
the full amount of such interest payment to the extent that it relates to
Fronted Loans that are Revolving Multicurrency Loans or such Non-
Multicurrency Lender's Foreign Term Loan Commitment Percentage of the full
amount of such interest payment to the extent that it relates to Fronted
Loans that constitute all or a portion of the Foreign Term Loan). In
consideration of the agreement set forth in this Credit Agreement of the
Non-Multicurrency Lenders to purchase participating interests in the
Fronted Loans, the Fronting Bank hereby agrees to pay to the Administrative
Agent, for the ratable accounts (based on their respective Revolving
Multicurrency Commitment Percentages or Foreign Term Loan Commitment
Percentages, as applicable) of each Non-Multicurrency Lender, a risk
participation fee (the "Risk Participation Fee") in the amount equal to the
proceeds received by such Fronting Bank from such conversion to Dollars or,
if no such conversion is required, the amount in
<PAGE>
-108-
Dollars which would have been converted if such interest had been paid in
an Optional Currency; provided, however, that in the event that any Non-
-------- -------
Multicurrency Lender has funded the purchase of participating interests in
the extensions of credit on account of which such interest payment was made
pursuant to (S)6.11, such Fronting Bank shall instead pay to the
Administrative Agent, for the account of each Non-Multicurrency Lender
which has so funded such purchase, the amount equal to such Non-
Multicurrency Lender's Revolving Multicurrency Commitment Percentage or
Foreign Term Loan Commitment Percentage of the proceeds received by such
Fronting Bank from such conversion relating to Fronted Loans that are
Revolving Multicurrency Loans or all or a portion of the Foreign Term Loan,
respectively. Such amount shall be payable to the Administrative Agent in
Dollars on the date upon which the Fronting Bank receives the proceeds of
such conversion.
6.3.3. Computations. All computations of interest with respect to
------------
Eurodollar Rate Loans, Multicurrency Loans and Multicurrency Swing Line
Loans and of Commitment Fees, Letter of Credit Fees, Foreign Letter of
Credit Fees or other fees shall, unless otherwise expressly provided
herein, be based on a 360-day year and paid for the actual number of days
elapsed. All computations of interest with respect to Base Rate Loans shall
be based on a 365-day or 366-day year, as the case may be, and paid for the
actual number of days elapsed. Except as otherwise provided in the
definition of the term "Interest Period" with respect to Eurodollar Rate
Loans and Multicurrency Loans, whenever a payment hereunder or under any of
the other Loan Documents becomes due on a day that is not a Business Day,
the due date for such payment shall be extended to the next succeeding
Business Day, and interest shall accrue during such extension. The
outstanding amount of the Loans and computation of interest thereon as
reflected on the Records and the Loan Accounts from time to time shall be
considered correct and binding on the Borrowers unless within five (5)
Business Days after receipt of any notice given by the Administrative
Agent, the Foreign Agent or any of the Lenders of such outstanding amount
or interest, the Borrowers shall notify such Person in writing to the
contrary.
6.3.4. Computations by Foreign Agent. In addition to any other
-----------------------------
computations and notices provided for herein, the Foreign Agent shall give
notice to the Administrative Agent and the Company within 5 days after the
end of each month, which notice shall set forth the Dollar Equivalent
amount as of the end of such month of (a) the Maximum Drawing Amount of the
Foreign Letters of Credit, (b) the Unpaid Reimbursement
<PAGE>
-109-
Obligations with respect to Foreign Letters of Credit, (c) the
principal amount of and accrued interest on the Foreign Term Loan, (d)
the principal amount of and accrued interest on the outstanding
Multicurrency Swing Line Loans, and (e) the principal amount of and
accrued interest on the outstanding Revolving Multicurrency Loans.
6.3.5. Notices from Issuing Banks. Each Issuing Bank shall give
--------------------------
notice to the Administrative Agent on the last day of each fiscal
quarter of the Company, which notice shall set forth (a) the aggregate
Maximum Drawing Amount as of the end of such fiscal quarter of the
Company of all Letters of Credit issued by such Issuing Bank, and (b)
the daily aggregate Maximum Drawing Amount during such fiscal quarter
of the Company of all Letters of Credit issued by such Issuing Bank.
6.3.6. Crediting of Payments. All payments and prepayments of
---------------------
principal, interest or fees by the Company hereunder that are received
by the Administrative Agent after 11:00 a.m. (New York City time) (or,
with respect to payments made to the Foreign Agent, that are received
by the Foreign Agent after 11:00 a.m. (Applicable Belgium Time)) will
be deemed for all purposes to have been received on the next Business
Day.
6.4. Inability to Determine Eurodollar Rate or Eurocurrency Rate. In
-----------------------------------------------------------
the event, prior to the commencement of any Interest Period relating to any
Eurodollar Rate Loan or Multicurrency Loan, the Administrative Agent or the
Foreign Agent, as the case may be, shall determine or be notified by the
Majority Lenders that adequate and reasonable methods do not exist for
ascertaining the Eurodollar Rate or the Eurocurrency Rate, as the case may
be, that would otherwise determine the rate of interest to be applicable to
any Eurodollar Rate Loan or Multicurrency Loan during any Interest Period,
the Administrative Agent or the Foreign Agent, as the case may be, shall
forthwith give notice of such determination (which shall be conclusive and
binding on the Borrowers and the Lenders) to the Borrowers and the Lenders.
In such event (a) if adequate and reasonable methods do not exist for
ascertaining the Eurodollar Rate, (i) any Loan Request or Conversion
Request with respect to Eurodollar Rate Loans shall be automatically
withdrawn and with respect to Revolving Credit Loans, shall be deemed a
request for Base Rate Loans, (ii) each Eurodollar Rate Loan will
automatically, on the last day of the then current Interest Period relating
thereto, become a Base Rate Loan and (iii) the obligations of the Lenders
to make Eurodollar Rate Loans shall be suspended until the Administrative
Agent or the Majority Lenders determine that the circumstances giving rise
to such suspension no longer exists, whereupon the Administrative Agent, or
the Administrative Agent upon the
<PAGE>
-110-
instruction of the Majority Lenders, shall so notify the Borrowers and the
Lenders; and (b) if adequate and reasonable methods do not exist for
ascertaining the Eurocurrency Rate, (i) any Revolving Multicurrency Loan
Request shall be automatically withdrawn and (ii) each Multicurrency Loan
will automatically, on the last day of the then current Interest Period
relating thereto, be due and payable and must then be repaid; unless, but
only in the event that, such Multicurrency Loan constitutes all or a
portion of the Foreign Term Loan, each of the Administrative Agent, the
Foreign Agent, the Fronting Bank and those Multicurrency Lenders holding
portions of the Foreign Term Loan consents and agrees to continue such
Multicurrency Loan on a short-term basis during which period it shall bear
interest at a rate reasonably determined by the Fronting Bank and those
Multicurrency Lenders holding such portions of the Foreign Term Loan to be
equal to their weighted average cost of funds in Belgian francs for making
or maintaining such Multicurrency Loan plus the Applicable Margin for
----
Multicurrency Loans and (iii) the obligations of the Lenders to make
Multicurrency Loans shall be suspended until the Foreign Agent or the
Majority Lenders determine that the circumstances giving rise to such
suspension no longer exist, whereupon the Foreign Agent or, as the case may
be, the Foreign Agent upon the instruction of the Majority Lenders, shall
so notify the Borrowers and the Lenders.
6.5. Illegality. Notwithstanding any other provisions herein, if any
----------
present or future law, regulation, treaty or directive or in the
interpretation or application thereof shall make it unlawful for any Lender
to make or maintain Eurodollar Rate Loans, Multicurrency Loans or perform
its obligations in respect of any Loans in an Optional Currency or
Currencies, such Lender shall forthwith give notice of such circumstances
to the Borrowers and the other Lenders and thereupon (a) the commitment of
such Lender to make Eurodollar Rate Loans or Multicurrency Loans or convert
Base Rate Loan to Eurodollar Rate Loans, or to make Loans in such Optional
Currency, as the case may be, shall forthwith be suspended, (b) to the
extent it is unlawful to make or maintain Eurodollar Rate Loans, such
Lender's Revolving Credit Loans then outstanding as Eurodollar Rate Loans,
if any, shall be converted automatically to Base Rate Loans on the last day
of each Interest Period applicable to such Eurodollar Rate Loans or within
such earlier period as may be required by law and (c) to the extent it is
unlawful to make or maintain Multicurrency Loans or for a Lender to perform
its obligation in respect of any Loans in an Optional Currency, such
Lender's Multicurrency Loans then outstanding, if any, shall be repaid on
the last day of each Interest Period applicable to such Multicurrency Loan
or within such earlier period as may be required by law; unless, but only
in the event that such Multicurrency Loan constitutes all or a portion of
the Foreign Term Loan, each of the Administrative Agent, the Foreign Agent,
the Fronting Bank and
<PAGE>
-111-
those Multicurrency Lenders holding portions of the Foreign Term Loan
consents and agrees to continue such Multicurrency Loan on a short-term
basis during which period it shall bear interest at a rate reasonably
determined by the Fronting Bank and those Multicurrency Lenders holding
such portions of the Foreign Term Loan to be equal to their weighted
average cost of funds in Belgian francs for making or maintaining such
Multicurrency Loan plus the Applicable Margin for Multicurrency Loans and
----
such continuation would remedy such unlawful maintenance or performance
with respect to such Multicurrency Loan. Each of the Borrowers hereby
agrees promptly to pay the Administrative Agent or the Foreign Agent, as
the case may be, for the account of such Lender, upon demand by such
Lender, any additional amounts necessary to compensate such Lender for any
costs incurred by such Lender in making any conversion or suffering such
repayment in accordance with this (S)6.5, including any interest or fees
payable by such Lender to lenders of funds obtained by it in order to make
or maintain its Eurodollar Rate Loans and Multicurrency Loans hereunder.
6.6. Additional Costs, etc. If any introduction, adoption or change in
---------------------
any applicable law or regulation, or changes in the interpretations thereof
by any competent court or by any governmental or other regulatory body or
official charged with the administration or the interpretation thereof, or
the compliance with any guideline, directive, or request promulgated or
issued after the date hereof by or from any central bank or other
governmental or other regulatory body or official (whether or not having
the force of law) shall:
(a) subject any Lender or any Agent to any tax, levy, impost,
duty, charge, fee, deduction or withholding of any nature with respect
to this Credit Agreement, the other Loan Documents, any Letters of
Credit, any Foreign Letters of Credit, such Lender's Commitment or
fronting obligation or the Loans (other than taxes based upon or
measured by the income or profits of such Lender or such Agent), or
(b) materially change the basis of taxation (except for
changes in taxes on income or profits) of payments to any Lender of
the principal of or the interest on any Loans or any other amounts
payable to any Lender or any Agent under this Credit Agreement or any
of the other Loan Documents, or
(c) impose or increase or render applicable (other than to the
extent specifically provided for elsewhere in this Credit Agreement)
any special deposit, reserve, assessment, liquidity, capital adequacy
or other similar requirements (whether or not having the force of law)
against assets held by,
<PAGE>
-112-
or deposits in or for the account of, or loans by, or letters of
credit issued by, or commitments of an office of any Lender, or
(d) impose on any Lender or any Agent any other conditions or
requirements with respect to this Credit Agreement, the other Loan
Documents, any Letters of Credit, any Foreign Letters of Credit, the
Loans, such Lender's Revolving Commitment, fronting obligations or
Revolving Multicurrency Commitment, or any class of loans, letters of
credit or commitments of which any of the Loans, Letters of Credit,
Foreign Letters of Credit or such Lender's Revolving Commitment,
fronting obligations or Revolving Multicurrency Commitment forms a
part, and the result of any of the foregoing is
(i) to increase the cost to any Lender of making,
funding, issuing, renewing, extending or maintaining any of the
Loans or such Lender's Revolving Commitment, fronting
obligations, or Revolving Multicurrency Commitment, or any Letter
of Credit or Foreign Letter of Credit, or
(ii) to reduce the amount of principal, interest,
Reimbursement Obligation, Foreign Reimbursement Obligation or
other amount payable to such Lender or such Agent hereunder on
account of such Lender's Revolving Commitment, fronting
obligations, or Revolving Multicurrency Commitment, any Letter of
Credit, any Foreign Letter of Credit or any of the Loans, or
(iii) to require such Lender or such Agent to make any
payment or to forego any interest, fee, or other sum payable
hereunder, the amount of which payment or foregone interest, fee,
or other sum is calculated by reference to the gross amount of
any sum receivable or deemed received by such Lender or such
Agent from the Borrowers hereunder,
then, and in each such case, upon demand made by such Lender or (as the
case may be) the Administrative Agent or the Foreign Agent, the Borrower
whose Loan, credit facility, Letter of Credit or Foreign Letter of Credit
is giving rise to any of the foregoing will at any time and from time to
time and as often as the occasion therefor may arise, pay to such Lender or
such Agent such additional amounts as will be sufficient to compensate such
Lender or such Agent for such additional cost, reduction, payment or
foregone interest, fee, or other sum.
<PAGE>
-113-
6.7. Capital Adequacy. If after the date hereof any Lender or Lead
----------------
Agent determines that (a) the adoption of or change in any law,
governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law) regarding capital requirements for banks or
bank holding companies or any change in the interpretation or application
thereof by a court or governmental authority with appropriate
jurisdiction, or (b) compliance by such Lender, or such Lead Agent or any
corporation controlling such Lender or such Lead Agent with any law,
governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law) of any such entity regarding capital
adequacy, has the effect of reducing the return on such Lender's or such
Lead Agent's commitment with respect to any Loans to a level below that
which such Lender or such Lead Agent could have achieved but for such
adoption, change or compliance (taking into consideration such Lender's or
such Lead Agent's then existing policies with respect to capital adequacy
and assuming full utilization of such entity's capital) by any amount
deemed by such Lender or (as the case may be) such Lead Agent to be
material, then such Lender or such Lead Agent may notify the Borrowers of
such fact. To the extent that the amount of such reduction in the return
on capital is not reflected in the Base Rate (as to Revolving Credit Loans
and the Domestic Term Loan) or the Overnight Rate (as to Multicurrency
Loans), or such other interest rate as may be applicable to the Loans, the
applicable Borrower agrees to pay such Lender or such Agent (as the case
may be) the amount of such reduction in the return on capital as and when
such reduction is determined upon presentation by such Lender or such
Agent (as the case may be) of a certificate in accordance with (S)6.8
hereof.
6.8. Certificate. A certificate setting forth any additional amounts
-----------
payable pursuant to (S)(S)6.6 or 6.7 and a brief explanation of such
amounts which are due, submitted by any Lender or such Agent to the
Borrowers, shall be conclusive, absent manifest error, that such amounts
are due and owing.
6.9. Indemnity. Each Borrower agrees to indemnify each Lender and to
---------
hold each Lender harmless from and against any loss, cost, or expense (but
excluding loss of anticipated profits) that such Lender may sustain or
incur as a consequence of (a) default by such Borrower in payment of the
principal amount of or any interest on any Eurodollar Rate Loans,
Multicurrency Loan, or Multicurrency Swing Line Loans as and when due and
payable, including any such loss, cost, or expense arising from interest
or fees payable by such Lender to lenders of funds obtained by it in order
to maintain its Eurodollar Rate Loans, Multicurrency Loans and
Multicurrency Swing Line Loans, (b) default by such Borrower in making a
borrowing or conversion after such Borrower has given (or is deemed to
have given) a Notice of Swing Line Borrowing, Notice of Multicurrency
Swing Line Borrowing, Loan Request, Revolving
<PAGE>
-114-
Multicurrency Loan Request, or a Conversion Request relating thereto in
accordance with (S)2.7 or (S)2.8 or (S)4.7 or (S)4.8 or (c) the making of
any payment (including without limitation any mandatory or optional
prepayment pursuant to (S)3) of a Eurodollar Rate Loan, Multicurrency Loan,
or Multicurrency Swing Line Loan or the making of any conversion of any
such Eurodollar Rate Loan, Multicurrency Loan, or Multicurrency Swing Line
Loan to a Base Rate Loan on a day that is not the last day of the
applicable Interest Period with respect thereto (or, if the relevant
Borrower has requested, or is deemed to have requested, that an Interest
Period relating to a Revolving Multicurrency Loan or all or any portion of
the Foreign Term Loan be continued, the making of a payment on a day that
is the last day of the Interest Period that was so continued), including
interest or fees payable by such Lender to lenders of funds obtained by it
in order to maintain any such Loans, assuming, hypothetically, for purposes
of such calculations that (but regardless of whether) such Lender has
funded such Eurodollar Rate Loan, Multicurrency Swing Line Loan or
Multicurrency Loan in the applicable interbank market with a loan to it or
deposit of the same amount and Interest Period as such Eurodollar Rate
Loan, Multicurrency Swing Line Loan, or Multicurrency Loan, as the case may
be. The losses, costs, and expenses that are subject to this (S)6.9
include, without limitation, any loss, cost, or expense arising from
currency conversions or exchange rate fluctuations, or from the
liquidation, re-employment, or exchange for (or conversion into) another
currency of any funds obtained by any party seeking indemnification
pursuant to this (S)6.9.
6.10. Interest After Default. During the continuance of a Default or
----------------------
an Event of Default until such Default or Event of Default has been cured
or remedied or such Default or Event of Default has been waived by the
Majority Lenders (or, as applicable, all of the Lenders) pursuant to (S)27,
each Borrower shall pay interest on (a) the unpaid principal amount of all
Loans made to the Borrowers and owing to each Lender, compounded monthly
and payable in arrears on the dates referred to in (S)(S)2.6, 3.5, and 4.6,
at a rate per annum equal to all times to two percent (2%) over the highest
rate of interest otherwise applicable to such Loans pursuant to (S)(S)2.6,
3.5, and 4.6, as the case may be (after as well as before judgment), and
(b) (to the extent permitted by applicable law) all interest, fees and
other amounts payable hereunder (other than principal) payable but not paid
when due, from the date such amount shall be due until such amount shall be
paid in full, compounded monthly and payable in arrears on the date such
amount shall be paid in full and on demand, at a rate per annum equal at
all times to two percent (2%) over the highest rate of interest otherwise
applicable to such Loans pursuant to (S)(S)2.6, 3.5, and 4.6, as the case
may be (after as well as before judgment) and, in the case of Obligations
not subject to an Applicable Margin, at a rate per annum equal to the Base
Rate plus two percent (2%); provided, however, that, on and after the
---- -------- -------
expiration of any
<PAGE>
-115-
Interest Period applicable to any Multicurrency Loan or Multicurrency Swing
Line Loan outstanding on the date of occurrence of such Default or Event of
Default or acceleration, the principal amount of such Loan shall, during
the continuance of such Default or Event of Default or after acceleration,
bear interest at a rate per annum equal to the Base Rate plus two percent
----
(2%). Notwithstanding anything to the contrary contained herein, while any
Default or Event of Default exists, and subject to the effects of
(S)(S)5.2.2 and 6.11.2 (but without prejudice to the rights of the Lenders
under (S)14), Multicurrency Loans and Multicurrency Swing Line Loans may be
continued on a monthly basis (or, in the case of the Multicurrency Swing
Line Loans, for such Interest Period applicable thereto as may be chosen by
the Multicurrency Swing Line Lender) and the Applicable Margin set forth in
the column applicable thereto shall be increased by two percent (2%) per
annum.
6.11. Fronting Bank Provisions.
------------------------
6.11.1. Payments to Administrative Agent and Fronting Bank.
--------------------------------------------------
Samsonite Europe agrees to pay to the Fronting Bank for the account of
the Fronting Bank a fronting fee (the "Fronting Fee") calculated at
the rate of one-eighth of one percent (1/8%) per annum on the average
principal amount of Fronted Loans outstanding (including amounts
requested) during each calendar quarter or portion thereof from the
Closing Date to the later of the Revolving Multicurrency Loan Maturity
Date and the Foreign Term Loan Maturity Date. The Fronting Fee shall
be payable on each Interest Payment Date pertaining to such Fronted
Loans for the immediately preceding Interest Period, commencing on the
first such date following the date hereof, with a final payment on the
later to occur of (a) the Revolving Multicurrency Loan Maturity Date,
or any earlier date on which the Total Revolving Multicurrency
Commitment has terminated and (b) the Foreign Term Loan Maturity Date.
6.11.2. Currency Conversions and Contingent Funding Agreement.
-----------------------------------------------------
(a) Each of the Non-Multicurrency Lenders hereby
unconditionally and irrevocably agrees to purchase (in Dollars)
an undivided participating interest in (x) its ratable share,
determined by reference to its Revolving Multicurrency Commitment
Percentage, of such Multicurrency Loans and Multicurrency Swing
Line Loans made by the Fronting Bank and (y) its ratable share,
determined by reference to its Foreign Term Loan Commitment
Percentage, of the portion of the Foreign Term Loan made by the
Fronting Bank, as the
<PAGE>
-116-
Foreign Agent may at any time request after receipt by such
Non-Multicurrency Lender of proper documentary notice given by
the Foreign Agent to such Non-Multicurrency Lenders to make any
such payment, provided that:
--------
(i) the Foreign Agent hereby agrees that, unless an
Event of Default has occurred and is continuing, it will not
request any such purchase of participating interests unless
a Fronting Loan Event has occurred and the Foreign Agent has
given to the Borrowers seven (7) Business Days' prior
written notice thereof;
(ii) the Foreign Agent hereby agrees that it promptly
will request that the Non-Multicurrency Lenders purchase
such participating interest in all outstanding Fronted Loans
made by the Fronting Bank if the Fronting Bank provides to
the Foreign Agent and the Administrative Agent a written
certification that an Event of Default has occurred and is
continuing and requesting that such a request be made by the
Foreign Agent to the Non-Multicurrency Lenders; and
(iii) in the event that any of the events described in
(S)14.1(g), (h) or (j) (other than solely pursuant to the
1995 Subordinated Indenture) shall have occurred, each Non-
Multicurrency Lender shall be deemed to have purchased,
automatically and without request, such participating
interest in the Fronted Loans made by the Fronting Bank to
Samsonite Europe.
Any such request by the Foreign Agent shall be made in
writing to each Non-Multicurrency Lender, with a copy to the
Administrative Agent, and shall specify the amount of Dollars
(based upon the actual exchange rate at which the Foreign Agent
anticipates being able to obtain the relevant Optional Currency
on the relevant date, with any excess payment being refunded to
the Non-Multicurrency Lenders and any deficiency remaining
payable by the Non-Multicurrency Lenders) required from such Non-
Multicurrency Lender in order to effect the purchase by such Non-
Multicurrency Lender of a participating interest in the amount
equal to its Revolving Multicurrency Commitment Percentage times
the aggregate then outstanding principal amount (in the
<PAGE>
-117-
applicable Optional Currency) of the Multicurrency Loans and
Multicurrency Swing Line Loans or its Foreign Term Loan
Commitment Percentage times the aggregate then outstanding
principal amount (in Belgian francs) of the Foreign Term Loan, as
applicable (which participating interest shall thereafter also
cover accrued interest thereon and other amounts owing in
connection therewith), in such Optional Currency. Promptly upon
receipt of such request, each Non-Multicurrency Lender shall
deliver to the Administrative Agent (in Same Day Funds), for
delivery to the Foreign Agent (in Same Day Funds) the amount so
specified by the Foreign Agent. The Foreign Agent shall convert
such amounts into the relevant Optional Currency and shall
promptly deliver the proceeds of such conversion to the Fronting
Bank in immediately available funds. Promptly following receipt
thereof, the Fronting Bank will deliver to each Non-Multicurrency
Lender (through the Foreign Agent) a certificate setting forth
the amount of the Fronted Loans purchased by such Non-
Multicurrency Lender, dated the date of receipt of such funds and
in such amount. From and after such purchase, (i) the outstanding
Multicurrency Loans and Multicurrency Swing Line Loans shall be
deemed to have been converted into Base Rate Loans denominated in
Dollars (with such conversion constituting, for purposes of
(S)6.9, a conversion of a Loan of one Type into a Loan of another
Type prior to the expiration of the relevant Interest Period),
(ii) any further Revolving Multicurrency Loans or Multicurrency
Swing Line Loans to be made to Samsonite Europe shall be made in
Dollars, with each Non-Multicurrency Lender purchasing a
participating interest therein in the manner described in the
foregoing provisions of this (S)6.11.2 immediately upon the
making thereof in the amount equal to such Non-Multicurrency
Lender's Revolving Multicurrency Commitment Percentage thereof
(with the Foreign Agent hereby agreeing to provide prompt notice
to each such Non-Multicurrency Lender of its receipt from the
Fronting Bank of a notice of Borrowing and the making of the
Fronted Loans), (iii) all amounts from time to time accruing, and
all amounts from time to time payable, on account of such Fronted
Loans (including, without limitation, any interest and other
amounts which were accrued but unpaid on the date of such
purchase) and Multicurrency Loans funded by any Multicurrency
Lender shall be payable in Dollars as if such Fronted Loans or
Multicurrency Lender, as the case may be, had originally been
made in Dollars and as to Fronted Loans
<PAGE>
-118-
shall be distributed by the Fronting Bank to the Foreign Agent,
for the accounts of the Non-Multicurrency Lenders, on account of
such participating interests. Notwithstanding anything to the
contrary contained in this (S)6.11, the failure of any Non-
Multicurrency Lender to purchase its participating interest in
any Fronted Loans shall not relieve any other Non-Multicurrency
Lender of its obligations hereunder to purchase its participating
interest in a timely manner, but no Non-Multicurrency Lender
shall be responsible for the failure of any other Non-
Multicurrency Lender to purchase the participating interest to be
purchased by such other Non-Multicurrency Lenders on any date.
(b) If any amount required to be paid by any Non-
Multicurrency Lender pursuant to (S)6.11.2(a) hereof is paid to
the Foreign Agent within three (3) Business Days following the
date upon which such Non-Multicurrency Lender receives notice
from the Foreign Agent that the Fronted Loan in which such Non-
Multicurrency Lender has purchased a participating interest has
been made, such Non-Multicurrency Lender shall pay to the Foreign
Agent on demand an amount equal to the product of (i) such
amount, times (ii) the daily average Overnight Rate during the
period from and including the date such payment is required to
the date on which such payment is immediately available to the
Foreign Agent, times (iii) a fraction the numerator of which is
the number of days that elapse during such period and the
denominator of which is 365. If any such amount required to be
paid by any Non-Multicurrency Lender pursuant to (S)6.11.2 is not
in fact made available to the Foreign Agent within three (3)
Business Days following the date upon which such Non-
Multicurrency Lender receives notice from the Foreign Agent that
the Fronted Loan in which such Non-Multicurrency Lender has
purchased a participating interest has been made, the Foreign
Agent shall be entitled to recover from such Non-Multicurrency
Lender, on demand, such amount with interest thereon calculated
from such due date at the rate per annum applicable to Base Rate
Loans hereunder. A certificate from the Foreign Agent submitted
to any Non-Multicurrency Lender with respect to any amounts owing
under this (S)6.11.2(b) shall be conclusive in the absence of
manifest error. Amounts payable by any Non-Multicurrency Lender
pursuant to this (S)6.11.2(b) shall be paid to the Foreign Agent,
for the account of the Fronting Bank.
<PAGE>
-119-
(c) Whenever at any time after the Fronting Bank has
received from any Non-Multicurrency Lender such Non-Multicurrency
Lender's participating interest in a Fronted Loan pursuant to
(S)6.11.2(b) above, the Fronting Bank receives any payment on
account thereof, such Fronting Bank will distribute to the
Foreign Agent, for the account of such Non-Multicurrency Lender,
such Non-Multicurrency Lender's participating interest in such
amount (appropriately adjusted, in the case of interest payments,
to reflect the period of time during which such Non-Multicurrency
Lender's participating interest was outstanding) in like funds
received; provided, however, that in the event that any such
-------- -------
payment received by the Fronting Bank is required to be returned,
such Non-Multicurrency Lender will return to the Fronting Bank
any portion thereof previously distributed by the Fronting Bank
to the Non-Multicurrency Lender in like funds as such payment is
required to be returned by the Fronting Bank.
(d) Each Non-Multicurrency Lender's obligation to purchase
participating interests pursuant to this (S)6.11 shall be
absolute and unconditional and shall not be affected by any
circumstance, including without limitation, (i) any set-off,
counterclaim, recoupment, defense or other right which such Non-
Multicurrency Lender may have against the Fronting Bank, any
Borrower or any other Person for any reason whatsoever; (ii) the
occurrence and continuation of any Default or Event of Default;
(iii) any adverse change in the condition (financial or
otherwise) of the Borrowers or any other Lender; (iv) any breach
of this Credit Agreement by the Borrowers or any other Lender; or
(v) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing; provided that no
--------
Non-Multicurrency Lender shall be obligated to purchase
participating interests in any Fronted Loans made by the Fronting
Bank to the extent that such Fronted Loans (at the time when
made) caused the Dollar Equivalent amount of the sum of all
Revolving Multicurrency Loans and Multicurrency Swing Line Loans
outstanding plus all then outstanding Foreign Unpaid
Reimbursement Obligations plus the Maximum Drawing Amount of then
outstanding Foreign Letters of Credit to exceed the Total
Revolving Multicurrency Commitment then in effect.
<PAGE>
-120-
6.11.3 Change of Status of Multicurrency Lender.
----------------------------------------
(a) In the event that any Lender was, at the time of
making a Multicurrency Loan, a Multicurrency Lender and
subsequently becomes a Non-Multicurrency Lender while such
Multicurrency Loans made by such Lender are still outstanding,
such Lender shall immediately upon becoming aware that it is no
longer a Multicurrency Lender notify the Administrative Agent,
the Fronting Bank, the Foreign Agent, and the Borrowers of such a
change in its status. As of the effective date of such a change
in status, such Lender shall be considered a Non-Multicurrency
Lender for all Multicurrency Loans made after such date, until
such time, if ever, as such Lender would again constitute a
Multicurrency Lender. As to any Multicurrency Loans made by such
Lender when it was a Multicurrency Lender, such Lender shall be
considered a Multicurrency Lender as to such Multicurrency Loans,
unless the Fronting Bank, in its sole and absolute discretion,
elects to purchase (at par) from such Lender those outstanding
Multicurrency Loans made by such Lender when it was a
Multicurrency Lender. If the Fronting Bank elects to purchase
such Multicurrency Loans, from and after the date of such
purchase, such Multicurrency Loans shall be considered Fronted
Loans, and the rights and obligations of such Lender, the
Fronting Bank and Samsonite Europe shall be governed by this
(S)6.11 as if such Multicurrency Loans were made as Fronted Loans
on the date of such purchase. Any and all interest accrued and
unpaid on such Multicurrency Loans as of the date of purchase
shall be governed by (S)6.3.2(b). Upon any such sale by a Lender
to the Fronting Bank hereunder, such Lender represents and
warrants to the Fronting Bank that such Lender is the legal and
beneficial owner of such interest being sold by it, but makes no
other representation or warranty and assumes no responsibility
with respect to such Multicurrency Loans, the Loan Documents or
any Borrower.
(b) In the event that any Lender was, at the time of
making a Multicurrency Loan which is still outstanding, a Non-
Multicurrency Lender and such Lender subsequently becomes a
Multicurrency Lender, such Lender shall notify the Administrative
Agent, the Fronting Bank, the Foreign Agent, and the Borrowers of
such a change in its status. As of the effective date of such a
change in status, such Lender shall be considered a Multicurrency
Lender for all Multicurrency Loans
<PAGE>
-121-
made after such date, until such time, if ever, as such Lender
would again constitute a Non-Multicurrency Lender. As to any
Multicurrency Loans fronted by the Fronting Bank (and as to any
risk participation in such Fronted Loans held by such Lender)
when such Lender was a Non-Multicurrency Lender, such Lender
shall, immediately upon a change in its status to a Multicurrency
Lender, purchase (at par) from the Fronting Bank its pro rata
--- ----
share, determined by reference (i) in the case of Revolving
Multicurrency Loans, to the portion of the aggregate Non-
Multicurrency Lenders Commitments represented by its Revolving
Multicurrency Commitment Percentage, of all Fronted Loans that
are Revolving Multicurrency Loans and (ii) in the case of the
Foreign Term Loan, to the portion of the aggregate Foreign Term
Loan Commitment Percentages of the Non-Multicurrency Lenders
represented by its Foreign Term Loan Commitment Percentage, of
the Foreign Term Loan. From and after the date of such purchase,
such Lender's portion of the Fronted Loans so purchased by such
Lender shall be considered Multicurrency Loans made on such date,
and the rights and obligations of such Lender, the Fronting Bank
and Samsonite Europe shall be governed by this (S)6.11 as if such
Lender's pro rata share, determined by reference (i) in the case
--- ----
of Revolving Multicurrency Loans, to the portion of the Non-
Multicurrency Lenders Commitments represented by its Revolving
Multicurrency Commitment Percentage, of the Fronted Loans that
are Revolving Multicurrency Loans and (ii) in the case of the
Foreign Term Loan, to the portion of the aggregate Foreign Term
Loan Commitment Percentages of the Non-Multicurrency Lenders
represented by its Foreign Term Loan Commitment Percentage, of
the Foreign Term Loan, were made as Multicurrency Loans on the
date of such purchase. Any and all interest accrued and unpaid on
such Multicurrency Loans as of the date of purchase shall be
governed by (S)6.3.2(a). Upon any such sale by the Fronting Bank
to any Lender hereunder, the Fronting Bank represents and
warrants to the Lender that the Fronting Bank is the legal and
beneficial owner of such interest being sold by it, but makes no
other representation or warranty and assumes no responsibility
with respect to such Multicurrency Loans, the Loan Documents or
any Borrower.
(c) Each Lender (other than BofA, BKB and CIBC Inc., which
are not Multicurrency Lenders on the Closing Date) shall, on the
Closing Date, or (if
<PAGE>
-122-
applicable) such later date as such Lender becomes a party to
this Agreement, specify in a written notice to the Fronting Bank
as to whether such Lender qualifies as a Multicurrency Lender. In
addition, each Lender shall immediately notify the Fronting Bank
upon a change in such Lender's status from a Multicurrency Lender
to a Non-Multicurrency Lender, or from a Non-Multicurrency Lender
to a Multicurrency Lender.
6.11.4. Resignation of Fronting Bank. The Fronting Bank may
----------------------------
resign at any time by giving sixty (60) days prior written notice
thereof to the Foreign Agent, the Lenders, the Administrative Agent,
and the Borrowers; provided such resignationshall not become
--------
effective until the date upon which a replacement Fronting Bank
reasonably acceptable to the Majority Lenders and the Lead Agents, and
so long as no Default or Event of Default has occurred and is
continuing, the Borrowers, has been selected and has assumed the
rights and obligations of a Fronting Bank hereunder. Unless a Default
or Event of Default shall have occurred and be continuing, such
successor Fronting Bank shall be reasonably acceptable to the
Borrowers. If no successor Fronting Bank shall have been so appointed
by the Majority Lenders and shall have accepted such appointment
within thirty (30) days after the resigning Fronting Bank's giving of
notice of resignation, then the resigning Fronting Bank may, on behalf
of the Lenders, appoint a successor Fronting Bank, which shall be a
financial institution having a rating of not less than A or its
equivalent by Standard & Poor's, which qualifies as a Multicurrency
Lender, and having otherwise the ability to fund the Multicurrency
Loans from a Multicurrency Lending Office. Upon the acceptance of any
appointment as Fronting Bank hereunder by a successor Fronting Bank,
such successor Fronting Bank shall thereupon succeed to and become
vested with all the rights, powers, privileges, duties and obligations
of the resigning Fronting Bank, and the resigning Fronting Bank shall
be discharged from its duties and obligations hereunder. After any
resigning Fronting Bank's resignation, the provisions of this Credit
Agreement and the other Loan Documents shall continue in effect for
its benefit in respect of any actions taken or omitted to be taken by
it while it was acting as Fronting Bank.
6.12. Certain Notifications For Samsonite Europe. In the
------------------------------------------
event that any Lender, the Multicurrency Swing Line Lender or the
Fronting Bank sells, assigns, or otherwise transfers all or any part
of its interests in any Multicurrency Loan, Multicurrency Swing Line
Loan, Foreign Unpaid Reimbursement Obligations, participating
interests in the risk relating to any Foreign Letters of Credit and
<PAGE>
-123-
Fronted Loans or its Revolving Multicurrency Commitment to any other
Lender, Eligible Assignee or the Fronting Bank, as the case may be, the
Lender, Eligible Assignee or the Fronting Bank obtaining or receiving such
transfer shall provide written notice of such transfer to Samsonite Europe
(which notice shall be via registered mail); provided, however, that a
-------- -------
failure to so provide such notice shall in no manner relieve Samsonite
Europe of any of its obligations hereunder. In addition, a notice to
Samsonite Europe delivered by the Foreign Agent on behalf of such Lender,
Eligible Assignee or Fronting Bank obtaining or receiving such transfer
shall constitute compliance with this (S)6.12. The Foreign Agent is hereby
authorized to deliver such notice in the name and for the account of such
Lender, Eligible Assignee or Fronting Bank obtaining or receiving such
transfer
7. COLLATERAL SECURITY AND GUARANTEES.
----------------------------------
7.1 Security of Borrowers. The Obligations shall be secured by a
---------------------
perfected first priority security interest (pari passu with the PBGC
---- -----
Ratable Lien only as to certain Collateral to the extent required by the
PBGC Letter, and subject only to Permitted Liens entitled to priority under
applicable law) in Collateral consisting of substantially all of the assets
of the Company (including, without limitation, the capital stock and other
equity interests required to be pledged under (S)9.15), whether now owned
or hereafter acquired, pursuant to the terms of the Security Documents to
which the Company is a party (other than the following: (a) real property;
(b) the capital stock, owned by either Borrower, of a Subsidiary which is
not a Significant Subsidiary (other than any Subsidiary the capital stock
of which is pledged pursuant to the Security Documents); (c) a portion
equal to thirty-four percent (34%) of the total issued and outstanding
capital stock of any Significant Foreign Subsidiary (or such lower non-
pledged percentage as may result from the application of the provisions of
(S)9.15 hereof); (d) promissory notes executed and delivered by officers
and directors of the Company as consideration for the purchase by such
officers and directors of the common stock of the Company in accordance
with the applicable compensation arrangements between the Company and such
officers and directors as approved by the Board of Directors of the
Company; and (e) assets subject to liens permitted by (S)10.2(g) hereof and
assets subject to existing Capitalized Leases or existing purchase money
security interests set forth on Schedule 10.2 hereto; provided, however,
-------- ---- -------- -------
the Administrative Agent shall not require a perfected security interest in
(i) any motor vehicles owned by the Company; (ii) any tangible assets owned
by the Company on the Closing Date which are physically located in
jurisdictions outside of the United States (other than shares of capital
stock or other equity interests which are the subject of the Security
Documents); and (iii) any trademarks, patents or copyrights owned, licensed
or used by the Company and granted under the laws of any jurisdiction
outside of the United States; provided, further, that the
-------- -------
<PAGE>
-124-
Company shall not be required to deliver to the Administrative Agent any
checks or similar instruments received for deposit or collection in the
ordinary course of business, or instruments in stated principal amounts of
$50,000 or less, calculated individually (the "Excluded Possessory
Collateral"). The Obligations of Samsonite Europe shall be secured by a
perfected, first priority pledge of 100% of the capital stock and other
equity interests of any Significant Subsidiary now owned or hereafter
acquired by Samsonite Europe (in each case to the extent provided in
(S)9.15 hereof).
7.2. Guaranties And Security Of Subsidiaries. The Obligations shall
---------------------------------------
also be guaranteed by the Guarantors pursuant to the terms of the
Guarantees, as further provided in (S)9.13. The obligations of the
Guarantors that are Domestic Subsidiaries under the Guarantees shall be in
turn secured by a perfected first priority security interest (pari passu
---- -----
with the PBGC Ratable Lien only as to certain Collateral to the extent
required by the PBGC Letter, and subject only to Permitted Liens entitled
to priority under applicable law) in Collateral consisting of substantially
all of the assets of each such Guarantor, whether now owned or hereafter
acquired, pursuant to the terms of the Security Documents to which such
Guarantors are party (other than the following: (a) real property; (b) the
capital stock, owned by any Guarantor, of a Subsidiary which is not a
Significant Subsidiary (other than any Subsidiary the capital stock of
which is pledged pursuant to the Security Documents); (c) a portion equal
to thirty-four percent (34%) of the total issued and outstanding capital
stock of any Significant Foreign Subsidiary (or such lower non-pledged
percentage as may result from the application of the provisions of (S)9.15
hereof); and (d) assets subject to liens permitted by (S)10.2(g) hereof and
assets subject to existing Capitalized Leases or existing purchase money
security interests set forth on Schedule 10.2 hereto; provided, however,
------------- -------- -------
the Administrative Agent shall not require a perfected security interest in
(i) any motor vehicles owned by the Guarantors; (ii) any tangible assets
owned by any Guarantor on the Closing Date which are physically located in
jurisdictions outside of the United States (other than shares of capital
stock which are the subject of the Security Documents); and (iii) any
trademarks, patents or copyrights owned, licensed or used by any Guarantor
and granted under the laws of any jurisdiction outside of the United
States; provided, further, that the Guarantors shall not be required to
-------- -------
deliver to the Administrative Agent any of the Excluded Possessory
Collateral. The Obligations of the Guarantors shall also be secured by a
perfected, first priority pledge of such portion (if any) of the capital
stock and other equity interests of any Significant Subsidiary now owned or
hereafter acquired by such Guarantors as shall be required by (and in each
case to the extent provided in) (S)9.15 hereof.
<PAGE>
-125-
7.3 Guaranty by the Company of the Obligations.
------------------------------------------
7.3.1 Guaranty. For value received and hereby acknowledged and
--------
as an inducement to the Lenders and the Agents to make the Loans,
Letters of Credit and Foreign Letters of Credit available to the
Borrowers, the Company hereby unconditionally and irrevocably
guarantees (a) the full punctual payment when due, whether at stated
maturity, by acceleration or otherwise, of all Obligations of
Samsonite Europe now or hereafter existing whether for principal,
interest, fees, expenses or otherwise, and (b) the strict performance
and observance by Samsonite Europe of all agreements, warranties and
covenants applicable to Samsonite Europe in the Loan Documents and (c)
the obligations of Samsonite Europe under the Loan Documents (such
Obligations collectively being hereafter referred to as the
"Guaranteed Obligations").
7.3.2 Guaranty Absolute. The Company guarantees that the
-----------------
Guaranteed Obligations will be paid strictly in accordance with the
terms hereof, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or
the rights of the Bank with respect thereto. The liability of the
Company under this guaranty with regard to the Guaranteed Obligations
of Samsonite Europe shall be absolute and unconditional irrespective
of:
(a) Samsonite Europe's lack of authorization,
execution, validity or enforceability of this Credit Agreement
and any amendment hereof (with regard to such Guaranteed
Obligations), or any other obligation, agreement or instrument
relating thereto (it being agreed by the Company that the
Guaranteed Obligations shall not be discharged prior to the final
and complete satisfaction of all of the Obligations of Samsonite
Europe) or any failure to obtain any necessary governmental
consent or approvals or necessary third party consents or
approvals;
(b) any Agent's or any Lender's exercise or enforcement
of, or failure or delay in exercising or enforcing, legal
proceedings to collect the Obligations or the Guaranteed
Obligations or any power, right or remedy with respect to any of
the Obligations or the Guaranteed Obligations, including (i) any
suspension of any Agent or any Lender's right to enforce against
Samsonite Europe of the Guaranteed Obligations, or (ii) any
change in the time, manner or place of payment of, or in any
other term of, all or any of the Guaranteed
<PAGE>
-126-
Obligations of Samsonite Europe or any other amendment or waiver
of or any consent to departure from this Credit Agreement or the
other Loan Documents (with regard to such Guaranteed Obligations)
or any other agreement or instrument governing or evidencing any
of the Guaranteed Obligations;
(c) any exchange, release or non-perfection of any
collateral, or any release or amendment or waiver of or consent
to departure from any other guaranty, for all or any of the
Guaranteed Obligations of Samsonite Europe;
(d) any change in ownership of Samsonite Europe;
(e) any acceptance of any partial payment(s) from Samsonite
Europe;
(f) any insolvency, bankruptcy, reorganization, arrangement,
adjustment, composition, assignment for the benefit of creditors,
appointment of a receiver or trustee for all or any part of
Samsonite Europe's assets;
(g) any assignment, participation or other transfer or
reallocation, in whole or in part (whether or not subject to a
conversion of a loan of one Type into a loan of another Type or a
conversion from one currency to another), of any Agent's or any
Lender's interest in and rights under this Credit Agreement or
any other Loan Document, or of any Agent or any Lender's interest
in the Obligations or the Guaranteed Obligations;
(h) any cancellation, renunciation or surrender of any
pledge, guaranty or any debt instrument evidencing the
Obligations or the Guaranteed Obligations;
(i) any Agent's or any Lender's vote, claim, distribution,
election, acceptance, action or inaction in any bankruptcy or
reorganization case related to the Obligations or the Guaranteed
Obligations; or
(j) any other action or circumstance, other than payment,
which might otherwise constitute a defense available to, or a
discharge of, Samsonite Europe or the Guarantor in respect of its
Guaranteed Obligations (other than the defense of payment in full
in cash).
<PAGE>
-127-
This guaranty shall continue to be effective or be reinstated, as
the case may be, if at any time any payment of any Guaranteed
Obligation is rescinded or must otherwise be returned by any Agent or
any Lender upon the insolvency, bankruptcy or reorganization of
Samsonite Europe or otherwise, all as though such payment had not been
made.
7.3.3 Effectiveness; Enforcement. The guaranty hereunder
--------------------------
shall be effective and shall be deemed to be made with respect to each
applicable Loan made and each Foreign Letter of Credit issued as of
the time it is made, issued or accepted, as applicable. No invalidity,
irregularity or unenforceability by reason of any bankruptcy or
similar law, or any law or order of any government or agency thereof
purporting to reduce, amend or otherwise affect any liability of
Samsonite Europe, and no defect in or insufficiency or want of powers
of Samsonite Europe or irregular or improperly recorded exercise
thereof, shall impair, affect, be a defense to or claim against such
guaranty. The guaranty hereunder is a continuing guaranty and shall
(a) survive any termination of this Credit Agreement, and (b) remain
in full force and effect until payment in full of, and performance of,
all Guaranteed Obligations and all other amounts payable under the
guaranty hereunder, all the Commitments shall have expired and been
terminated, all of the Foreign Letters of Credit shall have expired or
been terminated and all lending and other credit commitments of the
Lenders in respect thereof have terminated. The guaranty under this
Credit Agreement is made for the benefit of the Agents and the Lenders
and their successors and assigns, and may be enforced from time to
time as often as occasion therefor may arise and without requirement
on the part of the Agents or the Lenders first to exercise any rights
against Samsonite Europe, or to resort to any other source or means of
obtaining payment of any of the said Obligations or to elect any other
remedy.
7.3.4. Waiver. The Company hereby waives promptness, diligence
------
, protest, notice of protest, all suretyship defenses, notice of
acceptance and any other notice with respect to any of the Guaranteed
Obligations and this guaranty and any requirement that any Agent or
any Lender secure, perfect or protect any security interest or lien on
any property subject thereto or exhaust any right or take any action
against Samsonite Europe or any other person or any collateral. The
Company also irrevocably waives, to the fullest extent permitted by
law, all defenses which at any time may be available to it in respect
of the Guaranteed Obligations by virtue of any statute of limitations,
valuation, stay, moratorium law or similar law now or hereinafter in
effect.
<PAGE>
-128-
7.3.6 Subordination; Subrogation. Until the payment and
--------------------------
performance in full of all the Obligations, the Company shall not
exercise and hereby waives any rights against Samsonite Europe as a
result of payment by the Company hereunder, by way of subrogation,
reimbursement, restitution, contribution or otherwise, and the Company
will not prove any claim in competition with any Agent or any Lender
in respect of any payment hereunder in bankruptcy, insolvency, or
reorganization proceedings of any nature; the Company will not claim
any set-off, recoupment or counterclaim against Samsonite Europe in
respect of any liability of the Company to Samsonite Europe; and the
Company waives any benefit of and any right to participate in any
collateral which may be held by any Lender or any Agent. The Company
agrees that, after the occurrence and during the continuance of any
Default or Event of Default, the Company will not demand, sue for or
otherwise attempt to collect any indebtedness of Samsonite Europe to
the Company until all of the Obligations of Samsonite Europe shall
have been paid in full. If, notwithstanding the foregoing sentence,
the Company shall collect, enforce or receive any amounts in respect
of such indebtedness in violation of the foregoing sentence while any
Obligations of Samsonite Europe are still outstanding, such amounts
shall be collected, enforced and received by the Company as trustee
for the Lenders and the Agents and be paid over to the Administrative
Agent, for the benefit of the Lenders and the Agents on account of the
Obligations of Samsonite Europe without affecting in any manner the
liability of the Company under the other provisions hereof. The
provisions of this section shall survive the expiration or termination
of the Credit Agreement and the other Loan Documents.
7.3.6 Payments. The Company shall pay the Guaranteed
--------
Obligations in the currency in which such Obligation is payable by
Samsonite Europe and all payments by the Company hereunder shall be
made without setoff or counterclaim and shall be free and clear of and
without deduction for any foreign or domestic taxes, levies, imposts,
duties, charges, fees, deductions, withholdings, compulsory loans,
restrictions or conditions of any nature now or hereafter imposed or
levied by any jurisdiction or any political subdivision thereof or
taxing or other authority therein unless Samsonite Europe is required
by law to make such deduction or withholding. Except as otherwise
expressly provided in this (S)7.3.6, if any such obligation is imposed
upon the Company or Samsonite Europe with respect to any amounts
payable by it hereunder or under any of the Loan Documents, the
Company will pay to the Administrative Agent for the account of the
Lenders or, as the case may be the Agents, on the date on which such
amount is
<PAGE>
-129-
due and payable hereunder or under such other Loan Documents, such
additional amount in Dollars as shall be necessary to enable the
Lenders or the Agents to receive the same net amount which the Lenders
or the Agents would have received on such due date had not such
obligation been imposed on the Company or Samsonite Europe.
7.3.7. Receipt oF Information. The Company acknowledges and
----------------------
confirms that the Company itself has established its own adequate
means of obtaining from Samsonite Europe on a continuing basis all
information desired by the Company concerning the financial condition
of Samsonite Europe and that the Company will look to Samsonite Europe
and not to any Agent or any Lender in order for the Company to keep
adequately informed of changes in Samsonite Europe's financial
condition.
8. REPRESENTATIONS AND WARRANTIES.
------------------------------
Each of the Borrowers represents and warrants to the Lenders and the Agents
as follows:
8.1. Corporate Authority.
-------------------
8.1.1. Incorporation; Good Standing. Each of the Borrowers
----------------------------
and their Non-Excluded Subsidiaries (a) is a corporation (or similar
business entity) duly organized, validly existing and in good standing
under the laws of its state or country of incorporation or formation,
(b) has all requisite corporate power to own its property and conduct
its business as now conducted and as presently contemplated, and (c)
is in good standing as a foreign corporation (or similar business
entity) and is duly authorized to do business in each jurisdiction
where such qualification is necessary except where a failure to be so
qualified would not have a Material Adverse Effect.
8.1.2. Authorization. The execution, delivery and performance
-------------
of this Credit Agreement and the other Loan Documents to which the
Borrowers or any of their Non-Excluded Subsidiaries is or is to become
a party and the transactions contemplated hereby and thereby (a) are
within the corporate (or similar) authority of such Person, (b) have
been duly authorized by all necessary corporate (or similar
organizational) proceedings, (c) do not conflict with or result in any
breach or contravention of any provision of law, statute, rule or
regulation to which the Borrowers or any of their Non-Excluded
Subsidiaries is subject or any judgment, order, writ, injunction,
license or permit applicable to the Borrowers
<PAGE>
-130-
or any of their Non-Excluded Subsidiaries and (d) do not conflict with
any provision of the corporate charter or bylaws of, or the
Subordinated Debt Documents or any material agreement or other
instrument binding upon, the Borrowers or any of their Non-Excluded
Subsidiaries.
8.1.3. Enforceability. The execution and delivery of this
--------------
Credit Agreement and the other Loan Documents to which the Borrowers
or any of their Non-Excluded Subsidiaries is or is to become a party
will result in valid and legally binding obligations of such Person
enforceable against it in accordance with the respective terms and
provisions hereof and thereof, except as enforceability is limited by
bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting generally the enforcement of creditors'
rights and except to the extent that availability of the remedy of
specific performance or injunctive relief is subject to the discretion
of the court before which any proceeding therefor may be brought.
8.2. Governmental Approvals. The execution, delivery and performance
----------------------
by the Borrowers and any of their Non-Excluded Subsidiaries of this Credit
Agreement and the other Loan Documents to which the Borrowers or any of
their Non-Excluded Subsidiaries is or is to become a party and the
transactions contemplated hereby and thereby (including, but not limited to
the making by the Borrowers of the borrowings contemplated by this Credit
Agreement or the obtaining of any Letters of Credit and Foreign Letters of
Credit) do not require the approval, consent, order, authorization or
license by, or giving notice to, or taking of any other action with respect
to, any governmental agency or authority of any jurisdiction, or other
fiscal, monetary or other authority, under any provisions of any laws or
governmental rules, regulations, orders or decrees of any jurisdiction or
the central bank of any jurisdiction or other fiscal monetary or other
authority, under any provision of any laws or governmental rules,
regulations, orders or decrees of any jurisdiction applicable to or binding
on any Borrower, other than those already obtained.
8.3. Title to Properties; Leases. Except as indicated on Schedule 8.3
--------------------------- ------------
hereto, the Borrowers and their Subsidiaries own or hold capital leases for
all of the assets reflected in the consolidated balance sheet of the
Borrowers and their Subsidiaries as at the Balance Sheet Date or acquired
since that date (except property and assets sold or otherwise disposed of,
or trademarks, patents or copyrights licensed, in each case in the ordinary
course of business since that date), subject to no rights of others,
including any mortgages, leases, conditional sales agreements, title
retention agreements, liens or other encumbrances except Permitted Liens
and the rights of licensees of patents, trademark and copyrights of the
Borrowers and their Subsidiaries existing on the date hereof or
<PAGE>
-131-
granted after the date hereof in the ordinary course of business as
provided in (S)10.5.2(a) hereof.
8.4. Financial Statements and Projections.
------------------------------------
8.4.1. Financial Statements. There has been furnished to each
--------------------
of the Lenders (a) a consolidated balance sheet of the Company and its
Subsidiaries as at the Balance Sheet Date, and a consolidated
statement of income and cash flows of the Company and its Subsidiaries
for the fiscal year then ended, certified by KPMG Peat Marwick LLP,
and (b) the unaudited consolidated balance sheet of the Company and
its Subsidiaries as at April 30, 1998 and an unaudited consolidated
statement of income and cash flows of the Company and its Subsidiaries
for the fiscal quarter ended April 30, 1998. Such balance sheets and
statements of income and cash flows have been prepared in accordance
with generally accepted accounting principles and fairly present the
financial condition of the Company and its Subsidiaries as at the
close of business on the date thereof and the results of operations
for the fiscal year and fiscal quarter, as the case may be, then
ended.
8.4.2. Projections. There has been furnished to each of the
-----------
Lenders the projections of the annual operating budgets of the Company
and its Subsidiaries on a consolidated basis, balance sheets and cash
flow statements for the fiscal years ending January 31, 1999 through
January 31, 2006, giving effect to the Related Transactions. To the
knowledge of the Company or any of its Subsidiaries, no facts exist
that (individually or in the aggregate) would result in any material
change in any of such projections. The projections were prepared based
upon management's best estimates and assumptions, have been prepared
on the basis of the assumptions stated therein and, as of the Closing
Date, continue to reflect management's present best estimates of the
results of operations and other information projected therein. The
aforesaid projected balance sheets are based on the historical
consolidated balance sheets of the Company and its Subsidiaries as of
January 31, 1998, as adjusted on a pro forma basis to give effect to
--- -----
the Related Transactions and the other transactions contemplated
thereby; and the Company and its Subsidiaries do not have, as of the
Closing Date, any material liabilities, secured or unsecured (whether
accrued, contingent, or otherwise), as determined in accordance with
generally accepted accounting principles which are not reflected in
such projected balance sheets, in the notes to the Balance Sheet Date
consolidated financial statements referred to in (S)8.4.1(a) hereof or
in Schedule 8.4 hereto.
------------
<PAGE>
-132-
8.4.3. Solvency. The Company and its Subsidiaries, taken as a
--------
whole are, and will be after giving effect to the Related Transactions
and the other transactions contemplated by the Loan Documents,
Solvent.
8.5. No Material Changes, etc. Since the Balance Sheet Date, there has
------------------------
occurred no materially adverse change in the financial condition,
operations, prospects or business of the Borrowers and their Non-Excluded
Subsidiaries, taken as a whole as shown on or reflected in the consolidated
balance sheet of the Company and its Subsidiaries as at the Balance Sheet
Date, referred to in (S)8.4.1, or the consolidated statement of income for
the fiscal year then ended, other than changes in the ordinary course of
business that have not had any Material Adverse Effect in the aggregate.
Since the Balance Sheet Date, none of the Borrowers have made any
Distributions, other than as otherwise permitted by (S)10.4.
8.6. Franchises, Patents, Copyrights, etc. Except as set forth on
------------------------------------
Schedules 8.6 and 8.7 hereto, the Borrowers and their Non-Excluded
Subsidiaries possess all franchises, patents, copyrights, trademarks, trade
names, licenses and permits, and rights in respect of the foregoing,
adequate for the conduct of their business substantially as now conducted
without known conflict with any rights of others, except for conflicts that
would not have a Material Adverse Effect.
8.7. Litigation. Except as set forth in Schedule 8.7 hereto, there are
---------- ------------
no actions, suits, proceedings or, to the best of the Borrowers' knowledge,
investigations of any kind pending or, to the best of the Borrowers'
knowledge, as to actions, suits, proceedings, or investigations, threatened
against any of the Borrowers or any of their Non-Excluded Subsidiaries
before any court, tribunal or administrative agency or board (including,
without limitation, any actions, suits, proceedings investigations or
claims asserted during, or arising out of, or in connection with, the
Reorganization) that could reasonably be expected to have a Material
Adverse Effect or materially impair the right of the Borrowers and their
Non-Excluded Subsidiaries, considered as a whole, to carry on business
substantially as now conducted by them, or result in any substantial
liability not adequately covered by insurance, or for which adequate
reserves are not maintained on the consolidated balance sheet of the
Borrowers and their Non-Excluded Subsidiaries, or which question the
validity of this Credit Agreement or any of the other Loan Documents, or
any action taken or to be taken pursuant hereto or thereto.
8.8. No Materially Adverse Contracts, etc. The Borrowers and their
------------------------------------
Non-Excluded Subsidiaries are not subject to any charter, corporate or
other legal restriction, or any judgment, decree, order, rule or regulation
that has or is expected in the future to have a
<PAGE>
-133-
Material Adverse Effect. The Borrowers and their Subsidiaries are not a
party to any contract or agreement that has or is expected, in the judgment
of the Borrowers' officers, to have any Material Adverse Effect.
8.9. Compliance with other Instruments, Laws, etc. Neither the
--------------------------------------------
Borrowers nor any of their Subsidiaries is in violation of any provision of
its charter documents, bylaws, or any agreement or instrument to which it
may be subject or by which it or any of its properties may be bound or any
decree, order, judgment, statute, license, rule or regulation, in any of
the foregoing cases in a manner that could result in the imposition of
substantial penalties or have a Material Adverse Effect.
8.10. Tax Status. Each of the Borrowers and their Subsidiaries (a)
----------
have made or filed all federal, state and foreign income and all other tax
returns, reports and declarations required by any jurisdiction to which any
of them is subject unless where the failure to so file would not have a
Material Adverse Effect, (b) have paid all taxes and other governmental
assessments and charges shown or determined to be due on such returns,
reports and declarations, except those being contested in good faith and by
appropriate proceedings and (c) have set aside on their books provisions
reasonably adequate for the payment of all taxes for periods subsequent to
the periods to which such returns, reports or declarations apply. There are
no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers of the Borrowers know of no
reasonable basis for any such claim.
8.11. No Event of Default. No Default or Event of Default has occurred
-------------------
and is continuing.
8.12. Holding Company and Investment Company Acts. Neither the
-------------------------------------------
Borrowers nor any of their Non-Excluded Subsidiaries is a "holding
company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company", as such terms are defined in the Public
Utility Holding Company Act of 1935; nor is it an "investment company", or
a "company" which is "controlled" by, or a "principal underwriter" of an
"investment company", as such terms are defined in the Investment Company
Act of 1940.
8.13. Absence of Financing Statements, etc. Except with respect to
------------------------------------
Permitted Liens, or as described on Schedule 8.13 hereto, or, as of the
-------------
Closing Date with respect to security interests or liens of record (but
no longer effective) with respect to assets with an aggregate fair market
value not exceeding $2,000,000, there is no financing statement, security
agreement, chattel mortgage, real estate mortgage or other document filed
or recorded with any filing records, registry
<PAGE>
-134-
or other public office, that purports to cover, affect or give notice of
any present or possible future lien on, or security interest in, any assets
or property of any of the Borrowers or any of their Non-Excluded
Subsidiaries or any rights relating thereto.
8.14. Perfection of Security Interest. All filings, assignments,
-------------------------------
pledges, deliveries, and deposits of documents or instruments have been
made and all other actions have been taken that are necessary or advisable,
under applicable law, or arrangements satisfactory to the Administrative
Agent have been made to establish and perfect the Administrative Agent's
security interest (for the benefit of itself and the Lenders) and the
security interests of the Lenders in the Collateral, to the extent such
perfection is contemplated pursuant to (S)7, (S)9.15, and (S)9.24 hereof.
The Collateral and the rights of the Administrative Agent and the Lenders
with respect to the Collateral are not subject to any setoff, claims,
withholdings or other defenses. Each of the Obligors party to any of the
Security Documents is the owner of the applicable Collateral purported to
be granted by such Obligor free from any lien, security interest,
encumbrance and any other claim or demand, except for Permitted Liens and
except for liens on assets having a fair market value (in the aggregate for
all such assets covered by such liens taken collectively) not exceeding
$2,000,000.
8.15. Certain Transactions. Except as set forth on Schedule 8.15 and
-------------------- -------- ----
except for arm's length transactions pursuant to which any of the Borrowers
or any of their Subsidiaries makes payments in the ordinary course of
business upon terms and conditions substantially as favorable to such
Borrower or such Subsidiary as would be obtainable at such time in a
comparable arm's length transaction with a Person other than an Affiliate,
employee, officer or director, none of the shareholders or other equity
owners, Affiliates, officers, directors, or employees of the Borrowers or
any of their Subsidiaries is presently a party to any material transaction
with the Borrowers or any of their Non-Excluded Subsidiaries (other than
for actual services rendered as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any
Affiliate, officer, director or such employee or, to the knowledge of the
Borrowers, any Person as to which any Affiliate, officer, director, or any
such employee has a substantial interest or is an Affiliate, officer,
director, trustee or partner.
8.16. Employee Benefit Plans
-----------------------
8.16.1. In General. Each Employee Benefit Plan has been
----------
maintained and operated in compliance in all material
<PAGE>
-135-
respects with the provisions of ERISA and, to the extent applicable, the
Code, including but not limited to the provisions thereunder respecting
prohibited transactions within the meaning of (S)406 of ERISA. The
Borrowers have heretofore made available to the Administrative Agent the
most recently completed annual report, Form 5500, with all required
attachments, and actuarial statement required to be submitted under
(S)103(d) of ERISA, with respect to each Guaranteed Pension Plan.
8.16.2. Terminability of Welfare Plans. Under each Employee Benefit
------------------------------
Plan which is an employee welfare benefit plan within the meaning of
(S)3(1) or (S)3(2)(B) of ERISA, no benefits are due unless the event giving
rise to the benefit entitlement occurs prior to plan termination (except as
required by Title I, Part 6 of ERISA). The Borrowers or their ERISA
Affiliates, as appropriate, may terminate each such employee welfare
benefit plan at any time (or at any time subsequent to the expiration of
any applicable bargaining agreement) in the discretion of the Borrowers or
such ERISA Affiliate without material liability to any Person.
8.16.3. Guaranteed Pension Plans. Each contribution required to be
------------------------
made to a Guaranteed Pension Plan, whether required to be made to avoid the
incurrence of an accumulated funding deficiency, the notice or lien
provisions of (S)302(f) of ERISA, or otherwise, has been timely made. No
waiver of an accumulated funding deficiency or extension of amortization
periods has been received with respect to any Guaranteed Pension Plan. With
respect to each Guaranteed Pension Plan, no liability or obligation to the
PBGC (other than the PBGC Letter and the required insurance premiums, all
of which have been paid) has been incurred by the Borrowers or any of their
ERISA Affiliates and there has not occurred any event or condition which
presents a material risk of termination of any such Guaranteed Pension Plan
by the PBGC. As of the Closing Date, based on the latest valuation of each
Guaranteed Pension Plan and on the actuarial methods and assumptions
employed for that valuation, the unfunded accrued liability or actuarial
reserve requirements of all such Guaranteed Pension Plans, disregarding for
this purpose any Guaranteed Pension Plan without unfunded accrued liability
or actuarial reserve requirements, did not exceed zero. The Unfunded
Termination Basis Benefit Liabilities as of June 5, 1998 did not exceed
$17,300,000.
8.16.4 Multiemployer Plans. Except as set forth in Schedule 8.16.4,
-------------------
neither of the Borrowers nor any ERISA Affiliate has incurred any material
liability (including
<PAGE>
-136-
secondary liability) to any Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan under
(S)4201 of ERISA or as a result of a sale of assets described in
(S)4204 of ERISA. Neither the Borrowers nor any ERISA Affiliate has
been notified that any Multiemployer Plan is in reorganization or
insolvent under and within the meaning of (S)4241 or (S)4245 of ERISA
or that any Multiemployer Plan intends to terminate or has been
terminated under (S)4041A of ERISA.
8.16.5. ERISA Reportable Event. No ERISA Reportable Event has
----------------------
occurred since the Closing Date with respect to any Guaranteed Pension
Plan nor is such an event reasonably expected to occur with respect to
any such Guaranteed Pension Plan.
8.16.6. Plan Agreements. As of the date hereof, there are no
---------------
agreements with another Person or with the PBGC (other than the PBGC
Letter) under which any Borrower or any of its ERISA Affiliates has
undertaken any material liability with respect to, or may assume
sponsorship (with resulting material liability) of, any Single
Employer Plan of any Person, other than (a) The Schenley Pension Plan
Final Settlement Agreement, dated as of June 20, 1996 among the PBGC,
"McCrory", "SCH", the "McCrory Principal Subsidiaries", "Astrum" and
the "Astrum Subsidiaries" (as such terms are defined therein), and (b)
The McCrory Pension Plan Final Settlement Agreement, dated as of June
20, 1996 between the PBGC, "McCrory", the "McCrory Principal
Subsidiaries", "Astrum" and the "Astrum Subsidiaries" (as such terms
are defined therein), which identified agreements have previously
terminated in accordance with their terms (other than provisions
expressly identified therein as surviving termination of the
agreements) as a result of the Company's due assumption of sponsorship
of and control over the retirement plans to which such agreements
related.
8.16.7. PBGC Letter. The Company has delivered to the
-----------
Administrative Agent an accurate and complete copy of the fully-
executed PBGC Letter prior to the Closing Date.
8.17. Use of Proceeds; Regulations U and X. The proceeds of the Loans
------------------------------------
shall be used (a) to refinance the outstanding Indebtedness under the Prior
Credit Agreement, (b) for working capital and general corporate purposes,
(c) for Permitted Acquisitions, (d) for funding the Recapitalization, and
(e) to repay a portion (equal to approximately $13.5 million) of existing
indebtedness of Samsonite Europe to the Company that was previously
incurred during the Company's 1999 fiscal year for the purchase by
Samsonite Europe of
<PAGE>
-137-
stock of certain Subsidiaries of the Company, and the purchase price and
other terms of each purchase referred to in this clause (e) were no less
favorable to Samsonite Europe than the purchase price and other terms that
would have been available from a seller that was not affiliated with
Samsonite Europe. The Company will obtain Letters of Credit solely to
support local borrowings in foreign jurisdictions and for working capital
and general corporate purposes. Samsonite Europe will obtain Foreign
Letters of Credit solely for working capital and general corporate
purposes. No portion of any Loan is to be used, and no portion of any
Letter of Credit or Foreign Letter of Credit is to be obtained, for the
purpose of purchasing or carrying any "margin security" or "margin stock"
as such terms are used in Regulations U and X of the Board of Governors of
the Federal Reserve System, 12 C.F.R. Parts 221 and 224 (except to the
limited extent provided as to so-called "going private" transactions in
(S)10.5.1(c) hereof). Any capital stock of the Company acquired in the
Recapitalization (pursuant to the Equity Tender Offer or otherwise) shall
be cancelled concurrently with the purchase thereof by the Company.
Following application of the proceeds of each Loan, not more than twenty-
five percent (25%) of the value of the assets (either of any Borrower only
or of such Borrower and its Subsidiaries on a consolidated basis) subject
to the provisions of (S)10.2 or (S)10.5.2 or subject to any restriction
contained in any agreement or instrument between a Borrower and any Lender
or any affiliate of any Lender relating to Indebtedness and within the
scope of (S)14.1(f) will be "margin stock".
8.18. Environmental Compliance. Except as set forth on Schedule 8.18
------------------------ -------------
hereto:
(a) none of the Borrowers, their Subsidiaries or, to the
Borrowers' knowledge, any operator of the Real Estate is in violation,
or alleged violation, of any and all applicable federal, state,
provincial, municipal, local and foreign laws, including common law
and civil law and regulations, as such laws and regulations may be
amended from time to time, as well as orders, decrees, judgments,
seizures or injunctions issued, promulgated, approved or entered
thereunder relating to pollution or protection of the public from
pollution or employee health and safety, including, but not limited to
laws and regulations relating to the Release or threatened Release of
Hazardous Substances into the environment or the presence,
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Substances (hereinafter
"Environmental Laws"), which violation would reasonably be expected to
have a Material Adverse Effect;
(b) neither the Borrowers nor any of their Subsidiaries has
received written notice from any third party including, without
limitation, any federal, state or local
<PAGE>
-138-
governmental authority, (i) that any one of them has been identified
by the United States Environmental Protection Agency ("EPA") as a
potentially responsible party under CERCLA with respect to a site
listed on the National Priorities List, 40 C.F.R. Part 300 Appendix B;
(ii) that any Hazardous Substances which any one of them has
generated, transported or disposed of has been found at any site at
which a federal, state or local agency or other third party has
conducted or has ordered that any Borrower or any of its Subsidiaries
conduct a remedial investigation, removal or other response action
pursuant to any Environmental Law; or (iii) that it is or shall be a
named party to any claim, action, cause of action, complaint, or legal
or administrative proceeding arising out of any third party's
incurrence of costs, expenses, losses or damages of any kind
whatsoever in connection with the release of Hazardous Substances;
(c) to the Borrowers' knowledge, (i) no portion of the Real
Estate has been used for the handling, processing, storage or disposal
of Hazardous Substances except in material compliance with applicable
Environmental Laws; and, no underground tank or other underground
storage receptacle for Hazardous Substances is located on any portion
of the Real Estate; (ii) in the course of any activities conducted by
or on behalf of the Borrowers or their Subsidiaries on their
properties, no Hazardous Substances have been generated or are being
used on the Real Estate except in material compliance with applicable
Environmental Laws; (iii) there have been no unpermitted Releases or
threatened Releases of Hazardous Substances on, upon, into or from the
properties of the Borrowers or their Subsidiaries, which Releases
would reasonably be expected to have a Material Adverse Effect; and
(iv) there have been no Releases on, upon, from or into any real
property in the vicinity of any of the Real Estate which, through soil
or groundwater contamination, may have come to be located on, and
which would reasonably be expected to have a Material Adverse Effect;
and
(d) The Borrowers have furnished the Lead Agents with copies of
all material environmental site assessment reports in their possession
with respect to the Real Estate.
8.19. Status of Loans as Senior Debt. All Indebtedness of each of the
------------------------------
Borrowers and their Non-Excluded Subsidiaries to the Lenders and the Agents
in respect of the Loans, the Reimbursement Obligations and the Foreign
Reimbursement Obligations constitutes "Senior Indebtedness" or "Senior
Debt" (or the analogous term used therein) under the terms of each of the
Subordinated Debt Documents or of any other instrument evidencing or
pursuant to which there is
<PAGE>
-139-
issued indebtedness which purports to be Subordinated Debt of any Obligor.
In addition, (a) this Credit Agreement would validly constitute the
"Original Credit Agreement" under the terms of the Subordinated Indenture
and (b) the Indebtedness of each of the Borrowers and their Non-Excluded
Subsidiaries to the Lenders and the Agents in respect of the Loans, the
Reimbursement Obligations and the Foreign Reimbursement Obligations
constitutes "Designated Senior Debt." In addition, without prejudice to
this Credit Agreement's status as the "Original Credit Agreement" referred
to in the Subordinated Indenture the Company expressly designates all
Obligations hereunder, and under each guarantee of the Obligations, as
"Senior Debt" for purposes of the Subordinated Indenture.
8.20. Fiscal Year. The Company and each of its Domestic Subsidiaries
-----------
has (a) a fiscal year which is the twelve (12) months ending on January 31
of each calendar year, and (b) fiscal quarters which end on the last day of
each January, April, July, and October. Each of Samsonite Europe and the
Company's Foreign Subsidiaries has (a) a fiscal year which is the twelve
(12) months ending on December 31 of each calendar year and (b) fiscal
quarters ending on the last day of each calendar quarter.
8.21. Significant Contracts. The Borrowers have heretofore furnished
---------------------
to the Administrative Agent true, complete and correct copies of all
Significant Contracts (including the schedules, exhibits and annexes
thereto). All such Significant Contracts have not subsequently been
amended, supplemented or modified in any material respect except as
permitted by this Credit Agreement and constitute the complete
understanding among the parties thereto in respect of the matters and
transactions covered thereby. The representation and warranties of the
Company, Samsonite Europe and any other Subsidiary party thereto, contained
in each such Significant Contract were true and correct in all material
respects when made.
8.22. Emerging Market Subsidiaries. Schedule 8.22 sets forth an
---------------------------- -------------
accurate and complete list of the Emerging Market Subsidiaries as of the
Closing Date. Such entities constitute "Emerging Market Subsidiaries" for
purposes of (and as defined in) the Subordinated Indenture.
8.23. Subsidiaries, etc. Schedule 8.23 sets forth an accurate and
------------------ -------------
complete list of the Subsidiaries of each of the Borrowers and the
Guarantors as of the Closing Date, and identifies which of such
Subsidiaries has assets with a value in excess of 2% of the Consolidated
Total Assets of the Company. Except as set forth on Schedule 8.23 hereto,
-------------
neither the Borrowers nor any Non-Excluded Subsidiary of such Borrower is
engaged in any joint venture or partnership with, or has any equity or
ownership interest in, any
<PAGE>
-140-
other Person. As of the Closing Date, none of the Borrowers or their
Subsidiaries is, or is required to be, a guarantor under any of the
Subordinated Debt Documents.
8.24. Significant Contracts. Schedule 8.24 sets forth a complete and
--------------------- -----------
accurate list as of the date hereof of all Significant Contracts of each
Borrower and its Non-Excluded Subsidiaries, showing the parties, subject
matter and term thereof as of the Closing Date. Each such Significant
Contract has been duly executed, authorized and delivered by all the
applicable Borrowers or their Non-Excluded Subsidiaries party thereto and
(to the best of the Borrowers' knowledge) the other parties thereto, has
not, except as permitted hereunder, been amended or otherwise modified and
is in full force and effect and is binding upon and enforceable against all
the applicable Borrowers or their Non-Excluded Subsidiaries party thereto
and (to the best of the Borrowers' knowledge) the other parties thereto, in
accordance with its terms, and there exists no default which would be
reasonably likely to have a Material Adverse Effect under any Significant
Contract by any Borrower or Non-Excluded Subsidiary party thereto, and to
the best of the knowledge of the Borrowers, any other party thereto.
8.25. No Other Senior Debt. The Company has not designated any
--------------------
Indebtedness of the Company or any of its Subsidiaries as, and has no,
"Designated Senior Debt" for purposes of (and as defined in) the
Subordinated Indenture and the other Subordinated Debt Documents, other
than the Obligations. Neither the Company nor any of its Non-Excluded
Subsidiaries has any "Senior Debt" (as that term is defined in the
Subordinated Indenture) or any Indebtedness incurred pursuant to any
"Credit Agreement" (as that term is defined in the Subordinated Indenture),
other than the Obligations.
8.26. No Withholding, etc. None of the Borrowers are required by the
-------------------
laws of any jurisdiction to make any deduction or withholding of any nature
whatsoever from any payment to be made by any of the Borrowers hereunder
unless disclosed to the Administrative Agent in writing prior to the
Closing Date (which may be in the form of legal opinions) and unless the
amount and likelihood such deductions or withholdings are not, in the
Administrative Agent's reasonable discretion, material. Neither this Credit
Agreement nor any of the other Loan Documents is subject to any
registration or stamp tax or any other similar or like taxes payable in any
jurisdiction.
8.27. No Filings Required. No filing, recording or enrolling of this
-------------------
Credit Agreement or any other Loan Document is required to ensure the
legality, validity, enforceability or admissibility in evidence of this
Credit Agreement or any other Loan Document.
<PAGE>
-141-
8.28. Related Transactions. The Company has delivered to the
--------------------
Administrative Agent, prior to the Closing Date, true, accurate and
complete copies of all documents evidencing the Related Transactions. The
Subordinated Debt Tender Offer was consummated in accordance with the terms
thereof during April of 1998; the modifications of the 1995 Subordinated
Indenture contemplated by the Subordinated Debt Tender Offer Documents have
been effected; the Company has purchased all of the outstanding 1995
Subordinated Notes (except for 1995 Subordinated Notes with an aggregate
principal amount remaining outstanding of not more than $532,000) pursuant
to the Subordinated Note Tender Offer; and the aggregate principal balance
of the 1995 Subordinated Notes remaining outstanding is $532,000 as of the
Closing Date.
8.29. Year 2000. The Company and its Non-Excluded Subsidiaires have
---------
reviewed the areas within their business and operations which could be
adversely affected by, and have developed or are developing a program to
address on a timely basis, the risk that certain computer applications used
by the Company and its Non-Excluded Subsidiaries may be unable to recognize
and perform properly date-sensitive functions involving dates on, prior to
and after December 31, 1999. Such risk will not have a Material Adverse
Effect on the business and operations of the Company and its Non-Excluded
Subsidiaries.
9. AFFIRMATIVE COVENANTS OF THE BORROWERS.
--------------------------------------
Each of the Borrowers covenants and agrees that, so long as any Loan,
Unpaid Reimbursement Obligation, Foreign Unpaid Reimbursement Obligation, Letter
of Credit, Foreign Letter of Credit or Note is outstanding or any Lender has any
obligation to make any Loans or any Issuing Bank or Foreign Issuing Bank has any
obligation to issue, amend, extend or renew any Letters of Credit or Foreign
Letters of Credit, as the case may be:
9.1. Punctual Payment. Subject to any applicable grace period set
----------------
forth in (S)14.1(b) hereto, (a) the Company will duly and punctually pay or
cause to be paid the principal and interest on the Loans, all Commitment
Fees, Reimbursement Obligations, Foreign Reimbursement Obligations, Letter
of Credit Fees, Foreign Letter of Credit Fees, Fronting Fees, Agent's Fee,
and all other amounts provided for in this Credit Agreement and the other
Loan Documents to which it or any of its Subsidiaries is a party, all in
accordance with the terms of this Credit Agreement and such other Loan
Documents and (b) Samsonite Europe will duly and punctually pay or cause to
be paid the principal and interest on its Multicurrency Loans,
Multicurrency Swing Line Loans, Foreign Reimbursement Obligations, Foreign
Letter of Credit Fees, Fronting Fees and all other amounts provided to be
paid by it in this Credit Agreement and the other Loan Documents to which
it or any of its Subsidiaries is a party,
<PAGE>
-142-
all in accordance with the terms of this Credit Agreement and such other
Loan Documents.
9.2. Maintenance of Office. The Company will maintain its chief
---------------------
executive office at 11200 East 45th Avenue, Denver, Colorado 80239, and
Samsonite Europe will maintain its chief executive office at Westerring 17
B-9700 Oudenaarde, Belgium, or at such other place in the United States of
America, in the case of the Company, or Belgium, in the case of Samsonite
Europe, as the Company or Samsonite Europe, as the case may be, shall
designate upon written notice to the Administrative Agent, where notices,
presentations and demands to or upon the Company or Samsonite Europe in
respect of the Loan Documents to which the Company or Samsonite Europe is a
party may be given or made.
9.3. Records and Accounts. Each Borrower will keep, and cause each of
--------------------
its Non-Excluded Subsidiaries to keep, true and accurate records and books
of account in which full, true and correct entries will be made in
accordance with generally accepted accounting principles.
9.4. Financial Statements, Certificates and Information. The Company
--------------------------------------------------
will deliver to each of the Lenders and to the Administrative Agent:
(a) as soon as practicable, but in any event not later than
ninety (90) days after the end of each fiscal year of the Company, the
consolidated balance sheet of the Company and its Subsidiaries, and
the Consolidating balance sheets, each as at the end of such year, and
the related consolidated and Consolidating statements of income and
statements of cash flow for such year, all such financial statements
to be in reasonable detail, prepared in accordance with generally
accepted accounting principles, and such consolidated financial
statements to be certified without qualification by KPMG Peat Marwick
LLP or by other nationally-recognized independent certified public
accounting firm that is currently known as a "Big Six" accounting
firm, together with a written statement from such accountants to the
effect that they have read a copy of this Credit Agreement, and that,
in making the examination necessary to said certification, they have
obtained no knowledge of any Default or Event of Default, or, if such
accountants shall have obtained knowledge of any then existing Default
or Event of Default they shall disclose in such statement any such
Default or Event of Default; provided that such accountants shall not
--------
be liable to the Lenders for failure to obtain knowledge of any
Default or Event of Default;
<PAGE>
-143-
(b) as soon as practicable, but in any event not later than
forty-five (45) days after the end of each of the first three (3)
fiscal quarters of the Company, copies of the unaudited consolidated
balance sheet of the Company and its Subsidiaries and the unaudited
Consolidating balance sheets, each as at the end of such quarter, and
the related consolidated and Consolidating statements of income and
statements of cash flow for the portion of the Company's fiscal year
then elapsed, all in reasonable detail and prepared in accordance with
generally accepted accounting principles, together with a
certification by the principal financial or accounting officer of the
Company that the information contained in such financial statements
fairly presents the financial position of the Company and its
applicable Subsidiaries on the date thereof (subject to year-end
adjustments);
(c) simultaneously with the delivery of the financial statements
referred to in subsections (a) and (b) above, and within forty-five
(45) days after the end of the last fiscal quarter of each fiscal
year, a statement certified by the principal financial or accounting
officer of the Company in substantially the form of Exhibit E hereto
---------
(the "Compliance Certificate"), which form of Compliance Certificate
may be modified with the written consent of the Company and the
Administrative Agent, and setting forth in reasonable detail
computations evidencing compliance with the covenants contained in
(S)11 (and, in addition, computations in reasonable detail of the
Leverage Ratio referred to in the definition of Applicable Margin) and
(if applicable) reconciliations to reflect any relevant changes in
generally accepted accounting principles since the Balance Sheet Date;
provided, however, the parties hereto hereby acknowledge and agree
-------- -------
that the Compliance Certificate delivered for the fourth fiscal
quarter shall be based only on then-applicable management best
estimates of such fiscal quarter's performance;
(d) as soon as practicable, but in any event not later than
thirty (30) days after the end of each fiscal year, the annual budget
for the Company and its Non-Excluded Subsidiaries for the next
succeeding fiscal year, such annual budget to be set forth in
reasonable detail on a month-to-month basis;
(e) (i) as soon as practicable, but in any event not later than
ninety (90) days after the end of each respective plan year applicable
to the Company's Guaranteed Pension Plans, a statement from the
principal financial or accounting officer of the Company describing in
reasonable detail any changes in actual or projected expense or
liability to the Company or any
<PAGE>
-144-
of its Subsidiaries with respect to any such Guaranteed Pension Plan,
and (ii) promptly after the periodic calculation thereof under the
PBGC Letter, a statement from the principal financial or accounting
officer of the Company setting forth in reasonable detail a
calculation of the Unfunded Termination Basis Benefit Liabilities as
of the relevant calculation date;
(f) within five (5) days after the filing or mailing thereof,
copies of all material of a financial nature filed with the Securities
and Exchange Commission or sent to the stockholders of the Company;
(g) from time to time upon request of the Administrative Agent,
projections of the Company and its Subsidiaries updating those
projections delivered to the Lenders and referred to in (S)8.4.2 or,
if applicable, updating any later such projections delivered in
response to a request pursuant to this (S)9.4(g);
(h) as soon as practicable, but in any event not later than
ninety (90) days after the end of each fiscal year of the Company,
copies of the unaudited consolidated balance sheet of the Emerging
Market Subsidiaries as at the end of such year and the related
consolidated statement of cash flow and income for such fiscal year,
and a description of the business of each such Emerging Market
Subsidiary;
(i) from time to time such other financial data or accounting and
information (including accountants management letters) as any Agent or
any Lender may reasonably request;
(j) no later than thirty-five (35) days after the end of each
fiscal quarter in each fiscal year, a certification by the Company
that, as of the end of such fiscal quarter, no violation of (S)11
hereof occurred or existed.
9.5. Notices.
-------
9.5.1. Defaults. The Borrowers will promptly notify the
--------
Administrative Agent and each of the Lenders in writing of the
occurrence of any Default or Event of Default. If any Person shall
give any notice or take any other action in respect of a claimed
default (whether or not constituting an Event of Default) under this
Credit Agreement or any other note, evidence of indebtedness,
indenture or other obligation in excess of $1,000,000 to which or with
respect to which the Borrowers or any of their Non-Excluded
Subsidiaries is a party or obligor (or any Excluded Subsidiary is a
party or obligor if
<PAGE>
-145-
such a default could give rise to a default in any obligation of any
Borrower or Non-Excluded Subsidiary), whether as principal, guarantor,
surety or otherwise, the Borrowers shall forthwith give written notice
thereof to the Administrative Agent and each of the Lenders,
describing the notice or action and the nature of the claimed default.
9.5.2. Environmental Events. The Borrowers will promptly give
--------------------
notice to the Administrative Agent and each of the Lenders in writing
of any of the following events: (a) upon any of the Borrowers'
obtaining knowledge of any violation of any Environmental Law
regarding the Real Estate or any of the Borrower's or Subsidiary's
operations which violation could reasonably be expected to have a
Material Adverse Effect; (b) upon any Borrower's obtaining knowledge
of any potential or known Release, or threat of Release, of any
Hazardous Substance at, from or into the Real Estate which could
reasonably be expected to result in a liability in excess of
$1,000,000; or (c) of any claim of liability or potential
responsibility under Environmental Laws from any third party
(including without limitation and federal, state or local governmental
officials) representing a claim which the Borrowers reasonably believe
will result in liability of at least $1,000,000.
9.5.3. Notification of Claim Against Collateral. The Borrowers
----------------------------------------
will, immediately upon becoming aware thereof, notify the
Administrative Agent and each of the Lenders in writing of any setoff,
claims (including, with respect to any Real Estate, environmental
claims), withholdings or other defenses to which any of the
Collateral, or the Administrative Agent's rights with respect to the
Collateral, are subject.
9.5.4. Notice of Litigation and Judgments. The Borrowers will,
----------------------------------
and will cause each of their Non-Excluded Subsidiaries to, give notice
to the Administrative Agent and each of the Lenders in writing within
fifteen (15) days of becoming aware of any litigation or proceedings
threatened in writing or any pending litigation and proceedings
affecting the Borrowers or any of their Non-Excluded Subsidiaries or
to which the Borrowers or any of their Non-Excluded Subsidiaries is or
becomes a party involving an uninsured claim against the Borrowers or
any of their Non-Excluded Subsidiaries that could reasonably be
expected to have a Material Adverse Effect and stating the nature and
status of such litigation or proceedings. The Borrowers will, and will
cause each of their Non-Excluded Subsidiaries to, give notice to the
Administrative Agent and each of the Lenders, in writing, in form and
detail satisfactory to the Administrative Agent, within ten (10) days
of
<PAGE>
-146-
any judgment not covered by insurance, final or otherwise, against the
Borrowers or any of their Non-Excluded Subsidiaries in an amount in
excess of $3,000,000.
9.5.5. ERISA Notices. The Company will, and will cause each of
-------------
its Subsidiaries to, give notice to the Administrative Agent and each
of the Lenders in writing promptly and in any event within fifteen
(15) days after the Company or any of its ERISA Affiliates knows or
has reason to know that any ERISA Reportable Event has or will occur
with respect to any Guaranteed Pension Plan, with a statement of the
chief financial officer of the Company describing such ERISA
Reportable Event and the action, if any, that the Company or such
ERISA Affiliate has taken or proposes to take with respect thereto.
9.5.6. Plan Terminations. The Company will, and will cause each
-----------------
of its Subsidiaries to, give notice to the Administrative Agent and
each of the Lenders in writing promptly and in any event within three
Business Days after receipt thereof by the Company or any of its ERISA
Affiliates, with copies of each notice from the PBGC stating its
intention to terminate any Guaranteed Pension Plan or to have a
trustee appointed to administer any such Guaranteed Pension Plan.
9.5.7. PBGC Letter, etc. The Company will, and will cause each
----------------
of its Subsidiaries to, give notice to the Administrative Agent and
each of the Lenders in writing promptly, and in any event within five
Business Days after receipt or dispatch thereof, as applicable, by the
Company or any of its ERISA Affiliates, regarding all written notices
or reports under the PBGC Letter, and each such notice from the
Company or its Subsidiaries shall be accompanied by a copy of such
notice or report under the PBGC Letter.
9.5.8. Underfunding Changes. The Company will, and will cause
--------------------
each of its Subsidiaries to, give notice to the Administrative Agent
and each of the Lenders in writing promptly, and in any event within
five Business Days, after the Company or any of its ERISA Affiliates
knows or has reason to know that, since the Closing Date, there has
occurred or is likely to occur any material change in the amount of
Unfunded Termination Basis Benefit Liabilities.
9.5.9. Material Changes. The Borrowers will promptly notify the
----------------
Administrative Agent and each of the Lenders in writing of the
occurrence of any materially adverse change in the financial
condition, operations, prospects or business of the Borrowers and
their Non-Excluded Subsidiaries, taken as a
<PAGE>
-147-
whole, other than changes in the ordinary course of business that
have not had any Material Adverse Effect in the aggregate.
9.5.10. Notice of Borrower or Affiliate of Borrower Becoming
----------------------------------------------------
Lender or Participant. The Borrowers will give notice to the
---------------------
Administrative Agent prior to any Borrower or Affiliate of a Borrower
becoming a Lender or acquiring any participating interest in any of
the Obligations (if a Borrower or Affiliate of a Borrower intends to
purport to become a Lender or participant of a Lender, notwithstanding
the restrictions within the definition of the term "Eligible
Assignee"), which notice will set forth the amount and nature of each
of the Obligations being acquired or to be participated in, and the
name of the assignor and assignee of each of such Obligations or
participating interests.
9.5.11. Notice of Debt Issuance or Asset Sale. The Borrowers
-------------------------------------
will give notice to the Administrative Agent within two (2) Business
Days after the consummation of any Debt Issuance or Asset Sale that
does not require the consent of the Majority Lenders hereunder, which
notice will set forth the material terms of such Debt Issuance or
Asset Sale.
9.6. Corporate Existence; Maintenance of Properties. Subject to
----------------------------------------------
(S)10.5 hereof, each of the Borrowers will do or cause to be done all
things necessary to preserve and keep in full force and effect its
corporate existence, rights and franchises and those of their Non-Excluded
Subsidiaries. Each (a) will cause all of its properties and those of its
Non-Excluded Subsidiaries used or useful in the conduct of its business or
the business of its Non-Excluded Subsidiaries to be maintained and kept in
good condition, repair and working order and supplied with all necessary
equipment, (b) will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment
of such Borrower may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all
times, and (c) will, and will cause each of its Non-Excluded Subsidiaries
to, continue to engage primarily in the businesses now conducted by them
and in Related Businesses; provided that nothing in this (S)9.6 shall
--------
prevent any of the Borrowers from discontinuing the operation and
maintenance of any of its properties or any of those of their Non-Excluded
Subsidiaries if such discontinuance is, in the judgment of such Borrower,
desirable in the conduct of its or their business and that do not in the
aggregate have a Material Adverse Effect.
9.7. Insurance.
---------
<PAGE>
-148-
9.7.1. General. The Borrowers will, and will cause each of their Non-
-------
Excluded Subsidiaries to, maintain with financially sound and reputable
insurers insurance with respect to its properties and business against such
casualties and contingencies as shall be in accordance with the general
practices of businesses engaged in similar activities in similar geographic
areas and in amounts, containing such terms, in such forms and for such
periods as may be reasonable and prudent, provided, however, that such
-------- -------
Borrower and its Non-Excluded Subsidiaries may self-insure, pursuant to
policies adopted by the senior management of the Company and reviewed at
least once annually, to the extent reasonably determined in good faith by
senior management of the Company to be consistent with prudent business
practice, and in the best interests of such Borrower and its Non-Excluded
Subsidiaries.
9.7.2. Insurance Proceeds. The Borrowers shall, and shall cause each
------------------
of their Non-Excluded Subsidiaries to, apply the Net Insurance Proceeds of
any casualty insurance in respect of any casualty loss of any of the
Collateral owned by any Borrower or Non-Excluded Subsidiary (each such
casualty loss being an "Insurance Event") as follows (subject to the
rights, if any, of other parties with a prior interest in the property
covered thereby): (a) subject to the provisions of clause (b) hereof, the
Borrowers shall pay (or cause to be paid) over to the Administrative Agent
on the date 270 days after each such casualty loss the amount (if any) by
which the Net Insurance Proceeds in respect of such casualty loss exceeds
the sum of Reinvested Insurance Proceeds with respect to such casualty
loss; any amount paid to the Administrative Agent pursuant to this clause
(a) will be applied to the mandatory prepayment of the Loans and reduction
of the Commitments in accordance with (S)3.3.3, provided that such
--------
undertaking to pay over to the Administrative Agent such Net Insurance
Proceeds if not constituting Reinvested Insurance Proceeds within the
applicable period set forth above shall not apply to an amount of up to
$10,000,000 of Net Insurance Proceeds generated in any fiscal year; (b) if
an Event of Default shall have occurred and be continuing, there shall be
paid over to the Administrative Agent, and the Administrative Agent will be
entitled to receive and apply, any and all such Net Insurance Proceeds to
the Obligations in the manner prescribed in the Security Documents and
(S)14.5 hereof for application of proceeds of Collateral (subject to the
provisions of the Collateral Agency Agreements with respect to the PBGC
Ratable Lien, which may apply in certain circumstances expressly set forth
therein).
<PAGE>
-149-
9.8. Taxes. The Borrowers will, and will cause each of their Non-
-----
Excluded Subsidiaries to, duly pay and discharge, or cause to be paid and
discharged, before the same shall become overdue, all taxes, assessments
and other governmental charges imposed upon it and its real properties,
sales and activities, or any part thereof, or upon the income or profits
therefrom, as well as all claims for labor, materials, or supplies that if
unpaid might by law become a lien or charge upon any of its property;
provided that any such tax, assessment, charge, levy or claim need not be
--------
paid if the validity or amount thereof shall currently be contested in good
faith by appropriate proceedings and if the Borrowers or such Non-Excluded
Subsidiary shall have set aside on its books adequate reserves with respect
thereto; and provided further that the Borrowers and each Non-Excluded
-------- -------
Subsidiary of the Borrowers will pay all such taxes, assessments, charges,
levies or claims forthwith upon the commencement of proceedings to
foreclose any lien that may have attached as security therefor.
9.9. Inspection of Properties and Books, etc.
---------------------------------------
9.9.1. General. The Borrowers shall permit the Lenders,
-------
through any Agent or any of the Lenders' other designated
representatives, at such Lender's own expense (unless a Default or
Event of Default has occurred and is continuing, in which case such
matter shall be at the Borrowers' expense) to visit and inspect any
of the properties of the Borrowers or any of their Non-Excluded
Subsidiaries, to examine the books of account of the Borrowers and
their Non-Excluded Subsidiaries (and to make copies thereof and
extracts therefrom), and to discuss the affairs, finances and
accounts of the Borrowers and their Non-Excluded Subsidiaries with,
and to be advised as to the same by, its and their officers, all upon
reasonable notice and at such reasonable times during normal business
hours and intervals as any Agent or Lender may reasonably request.
9.9.2. Communications with Accountants. Each of the Borrowers
-------------------------------
authorizes any Agent and, if accompanied by any Agent, the Lenders to
communicate directly with the Borrowers' independent certified public
accountants and authorizes such accountants to disclose to the Agents
and the Lenders any and all financial statements and other supporting
financial documents and schedules including copies of any management
letter with respect to the business, financial condition and other
affairs of the Borrowers or any of their Non-Excluded Subsidiaries.
The Administrative Agent shall provide the Borrowers with three (3)
Business Days prior notice of any such communication with such
accountants pursuant to this (S)9.9.2. At the request of the
Administrative Agent, the Borrowers shall deliver a letter addressed
to such accountants instructing them to comply with the provisions of
this (S)9.9.2
<PAGE>
-150-
9.10. Compliance with Laws, Contracts, Licenses, and Permits.
------------------------------------------------------
The Borrowers will, and will cause each of their Subsidiaries to, comply
with (a) the applicable laws and regulations wherever its business is
conducted, including all Environmental Laws, (b) the provisions of its
charter documents and by-laws, (c) all agreements and instruments by which
it or any of its properties may be bound and (d) all applicable decrees,
orders, and judgments except where noncompliance with the foregoing clauses
(a) through (d) would not have a Material Adverse Effect. If any
authorization, consent, approval, permit or license from any officer,
agency or instrumentality of any government shall become necessary or
required in order that the Borrowers or any of their Subsidiaries may
fulfill any of its obligations hereunder or any of the other Loan Documents
to which the Borrowers or such Subsidiary is a party, the Borrowers will,
or (as the case may be) will cause such Subsidiary to, immediately take or
cause to be taken all reasonable steps within the power of the Borrowers or
such Subsidiary to obtain such authorization, consent, approval, permit or
license and furnish the Administrative Agent and the Lenders with evidence
thereof.
9.11. Employee Benefit Plans. The Company will (a) promptly upon the
----------------------
request of any Agent, furnish to the Administrative Agent a copy of the
most recent actuarial statement required to be submitted under (S)103(d) of
ERISA and Annual Report, Form 5500, with all required attachments, in
respect of each Guaranteed Pension Plan and (b) promptly upon receipt or
dispatch, furnish to the Administrative Agent any notice, report or demand
sent or received in respect of a Guaranteed Pension Plan under (S)(S)302,
4041, 4042, 4043, 4063, 4065, 4066 and 4068 of ERISA, or in respect of a
Multiemployer Plan, under (S)(S)4041A, 4202, 4219, 4242, or 4245 of ERISA.
9.12. Use of Proceeds. The Borrowers will use the proceeds of the
---------------
Loans solely (a) to refinance outstanding Indebtedness existing pursuant to
the Prior Credit Agreement, (b) for working capital and general corporate
purposes, (c) for Permitted Acquisitions, (d) to finance the
Recapitalization, and (e) to repay a portion (as described in (S)8.17) of
existing indebtedness of Samsonite Europe to the Company previously
incurred during the Company's 1999 fiscal year for the purchase by
Samsonite Europe of stock of Subsidiaries of the Company, the purchase
price and other terms of which were no less favorable to Samsonite Europe
than the price and terms that would have been available from an
unaffiliated seller. The Company will obtain Letters of Credit solely to
support local borrowings in foreign countries and for working capital and
general corporate purposes. Samsonite Europe will obtain Foreign Letters of
Credit solely for working capital and general corporate purposes.
9.13. Guarantors. The Company will cause each Subsidiary created,
----------
acquired, or existing on or after the Closing Date to become a
<PAGE>
-151-
Guarantor immediately if such Subsidiary is a Significant Domestic
Subsidiary or a Significant Foreign Subsidiary (but only in the case of
such a Significant Foreign Subsidiary where its becoming a Guarantor is
permitted by applicable law, does not result in a material adverse tax
consequence to the Company and its Subsidiaries taken as a whole, and is
otherwise practicable), and will cause such Subsidiary to execute and
deliver to the Administrative Agent for the benefit of the Agents and the
Lenders (a) a Guarantee (which in the case of a Significant Foreign
Subsidiary becoming a Guarantor will be a guaranty of the Obligations of
Samsonite Europe only), and (b) in the case of each Significant Domestic
Subsidiary becoming a Guarantor, a Security Agreement and such further
Security Documents or other instruments and documents as the Administrative
Agent may require in order to grant to the Administrative Agent a first
priority perfected security interest in that portion of such Subsidiary's
assets which constitute the Collateral that is required by (S)7, (S)9.15,
and (S)9.24, together with (in the case of both clauses (a) and (b) of this
(S)9.13) legal opinions in form and substance reasonably satisfactory to
the Administrative Agent to be delivered to the Administrative Agent and
the Lenders opining (and accompanied by appropriate corporate documentation
and certificates relating thereto) as to the authorization, validity, and
enforceability of such Guarantee and Security Documents and (as to the
applicable Security Documents) the perfection of such security interests.
9.14. Syndication Efforts. The Borrowers shall continue to assist in
-------------------
the preparation and review of appropriate information memoranda for use in
connection with the syndication of the credit facilities hereunder, will
take all such action as the Administrative Agent, BARS, BSI, their
respective affiliates and the Lenders shall reasonably request to assist
with the presentation of such information, including the attendance of
senior executive and operating management personnel at meetings with groups
of prospective Lenders on reasonable prior notice, and will otherwise take
reasonable actions requested by the foregoing parties to cooperate with and
facilitate such syndication.
9.15. Pledge of Stock. Each of the Company and each Guarantor that is
---------------
a Domestic Subsidiary will at all times pledge and maintain the pledge, as
Collateral for all of the Obligations, of (i) sixty-six percent (66%) (or,
if higher than sixty-six percent (66%), the highest percentage that could
not result in a "deemed dividend" to the Company under (S)956 of the Code
and the regulations promulgated thereunder and would not result in a
material adverse tax consequence to the Company and its Subsidiaries taken
as a whole) of the capital stock or other equity interests of each of its
direct Significant Foreign Subsidiaries from time to time existing and (ii)
one hundred percent (100%) of the capital stock or other equity
<PAGE>
-152-
interests of each of its direct Significant Domestic Subsidiaries from time
to time existing. Samsonite Europe will at all times pledge and maintain
the pledge of one hundred percent (100%) of the capital stock or other
equity interests of each of its direct Significant Subsidiaries from time
to time existing, in each case in favor of the Administrative Agent for the
benefit of the Agents and the Lenders (and with respect to the Belgian
Pledge Agreement, in favor of the Agents and the Lenders) as security for
the Obligations of the applicable pledgor. To the extent any Obligor shall
be required pursuant to this (S)9.15 to pledge such capital stock or other
equity interests of a Subsidiary, such Obligor shall (a) immediately
execute and deliver to the Administrative Agent and the Lenders for the
benefit of the Agents and the Lenders a pledge agreement in form and
substance satisfactory to the Administrative Agent and the Lenders pledging
such shares of capital stock or other equity interests of such Subsidiary,
together with taking all such action which may be necessary or advisable in
the reasonable opinion of the Administrative Agent to vest in the
Administrative Agent (or in any representative of the Administrative Agent
designated by it) and the Lenders for the Agents and the Lenders a first
priority perfected security interest in such capital stock or other equity
interests (including, but not limited to, the delivery by such Obligor to
the Administrative Agent of the stock certificates representing those
shares of capital stock being pledged together with appropriate undated
stock powers, duly executed in blank), (b) immediately deliver to the
Administrative Agent a signed copy of a favorable legal opinion, addressed
to the Agents and the Lenders, of counsel for such Obligor reasonably
acceptable to the Administrative Agent (accompanied by appropriate
corporate documentation and certificates relating thereto) as to the
matters contained in clause (a) above, as to such pledge agreement being
the properly authorized, legal, valid and binding obligations of such
Obligor enforceable in accordance with its terms, and as to the perfection
of the applicable pledge, subject, however, to customary qualifications and
limitations, and as to such other matters as the Administrative Agent may
reasonably request and (c) at any time and from time to time, promptly
execute and deliver any and all future instruments and documents and take
all such other action as the Administrative Agent may reasonably deem
desirable in obtaining the full benefits of, or in preserving the liens of,
such pledge agreement.
9.16. Preparation of Environmental Reports. From time to time as the
------------------------------------
Administrative Agent may reasonably request as a result of changes in law
or other relevant circumstances identified with reasonable specificity by
the Administrative Agent, the Company shall provide to the Lenders as soon
as practicable after such request, at the expense of the Company, an
environmental site assessment report of any of the United States Real
Estate owned or operated by the Obligors described in such request,
prepared by an environmental
<PAGE>
-153-
consulting firm reasonably acceptable to the Administrative Agent,
indicating the presence or absence of Hazardous Substances and the
potential order of magnitude cost of any compliance, removal or remedial
action in connection with any Hazardous Substances on such properties;
without limiting the generality of the foregoing, if the Administrative
Agent determines at any time that a material risk exists that any such
report will not be provided within the time referred to above, the
Administrative Agent, upon reasonable notice to the Obligors may retain an
environmental consulting firm to prepare such report at the expense of the
Company, and the Company hereby grants and agrees to cause any Subsidiary
which owns any Real Estate described in such request to grant at the time
of such request, to the Agents, the Lenders, such firm and any agents or
representatives thereof a non-exclusive license, subject to the rights of
tenants and other third parties, to enter onto their respective properties
to undertake such an assessment. At the request of the Obligors, the
Administrative Agent shall provide a copy of any report of such an
assessment to the Obligors. The Administrative Agent shall not disclose the
contents or existence of any such report to third parties other than
participants and Eligible Assignees who agree to be bound by the
confidentiality provisions of this (S)9.16 unless the Administrative Agent
is required by law or legal process to disclose such reports or reasonably
deem it necessary or appropriate to disclose the contents of such reports
in connection with the enforcement of the Lenders' rights and remedies
under the Loan Documents.
9.17. Performance of Significant Contracts.The Borrowers will, and
------------------------------------
will cause each of their Non-Excluded Subsidiaries to, perform and observe
all the terms and provisions of each Significant Contract to be performed
or observed by it except to the extent that failure to perform and observe
any such term or provision would not be reasonably likely to have a
Material Adverse Effect, maintain each such Significant Contract in full
force and effect, except to the extent no longer necessary or desirable for
the operation of the business of such Borrower or Non-Excluded Subsidiary
as at the time conducted or contemplated to be conducted, enforce each such
Significant Contract substantially in accordance with its terms, except to
the extent no longer necessary or desirable for the operation of the
business of such Borrower or Non-Excluded Subsidiary as at the time
conducted or contemplated to be conducted, take all such action to such end
as may be from time to time reasonably requested by the Administrative
Agent and, upon the reasonable request of the Administrative Agent, make to
each other party to each such Significant Contract such demands and
requests for material information and reports or for action as such
Borrower or Subsidiary is entitled to make under such Significant Contract,
provided that the failure of such other party to provide material
--------
information or reports or take action upon the request of such Borrower or
Non-Excluded
<PAGE>
-154-
Subsidiary, as the case may be, shall not constitute a Default under this
(S)9.17.
9.18. Notification Regarding Significant Subsidiaries. The Company
------------------------------------------------
will, immediately upon any Subsidiary being or becoming a "Significant
Restricted Subsidiary" pursuant to the Subordinated Indenture (or a
designation having similar purpose or effect under any other Subordinated
Debt Documents) or otherwise being or becoming a Significant Domestic
Subsidiary or a Significant Foreign Subsidiary pursuant to the terms of
this Credit Agreement, notify the Administrative Agent and each Lender in
writing of the same.
9.19. Notification of Investments. The Company will, on a quarterly
----------------------------
basis at such time as the Borrowers deliver each Compliance Certificate to
the Lenders pursuant to (S)9.4, notify the Administrative Agent of any
Investments made in, or significant transactions effected by, Excluded
Entities and provide the Administrative Agent with reasonable details of
such Investments and other matters.
9.20. Emerging Market Subsidiaries. The Company shall at all times
----------------------------
designate persons constituting a majority of the directors (or members of
the governing body) of, and at all times have the power to direct the
management and policies of each Emerging Market Subsidiary, and shall at
all times comply and cause each Emerging Market Subsidiary to comply with
all covenants, if any, applicable to such Emerging Market Subsidiary
contained in the Subordinated Debt Documents.
9.21. Further Assurances.The Borrowers will, and will cause each of
------------------
their Subsidiaries to, cooperate with the Lenders and the Agents, and
execute such further instruments and documents as the Lenders and the
Agents shall reasonably request to carry out to their satisfaction the
transactions contemplated by this Credit Agreement and the other Loan
Documents.
9.22. Status of Loans as Senior Debt. The Company shall, on the
------------------------------
Closing Date and at such other times as may reasonably be requested by the
Administrative Agent, deliver to the Administrative Agent certificates and,
if requested, legal opinions, evidencing that the Indebtedness of each of
the Borrowers and their Non-Excluded Subsidiaries to the Lenders and the
Agents in respect of the Loans, the Reimbursement Obligations and the
Foreign Reimbursement Obligations constitutes "Senior Indebtedness" or
"Senior Debt" (or the analogous term used therein) under the terms of each
of the Subordinated Debt Documents or of any other instrument evidencing or
pursuant to which there is issued indebtedness which purports to be
Subordinated Debt of any Obligor and that (a) this Credit Agreement would
constitute the "Original Credit Agreement" under
<PAGE>
-155-
the terms of the Subordinated Indenture and (b) the Indebtedness of each of
the Borrowers and their Non-Excluded Subsidiaries to the Lenders and the
Agents in respect of the Loans, the Reimbursement Obligations and the
Foreign Reimbursement Obligations constitutes "Designated Senior Debt."
9.23. Subordinated Guarantees. The Borrowers will promptly advise the
-----------------------
Administrative Agent of any Subordinated Guarantee or Conforming
Subordinated Guarantee entered into in connection with the Subordinated
Indenture or any other Subordinated Debt Documents, identifying the
guarantor thereunder and providing the Administrative Agent with copies of
the relevant documentation.
9.24. Granting and Perfection of Liens. The Collateral consisting of
---------------------------------
pledges by the Obligors of capital stock or equity interests shall be
granted pursuant to the applicable Security Documents on the Closing Date
and such pledges shall at such time be perfected as further provided in
(S)12.5 hereof. As soon as practicable and in any event within 45 days
after the Closing Date (or, with respect to security interests in patents,
trademarks, copyrights and other intellectual property, as soon as
practicable and in any event within 60 days after the Closing Date), the
Company and the Guarantors that are Domestic Subsidiaries shall have
executed and delivered the Security Documents and such other documents, and
taken such other action, as may be reasonably requested by the
Administrative Agent in order for the Administrative Agent, in its capacity
as Collateral Agent for the Lenders, to have a legal, valid and enforceable
first priority (except for (a) Permitted Liens entitled to priority under
applicable law and (b) at such time as the Administrative Agent shall have
entered into the applicable Collateral Agency Agreement expressly relating
thereto, the PBGC Ratable Lien) perfected security interest in and lien
upon the Collateral as security for the Obligations of the applicable
grantor of such Collateral. Without limiting the generality of the
foregoing, within such 45 days (or, as applicable, 60 days) after the
Closing Date (i) all filings, recordings, deliveries of instruments and
other actions necessary or desirable in the opinion of the Administrative
Agent to perfect, protect and preserve such security interests shall have
been duly effected or there shall have been made arrangements for the same
which are satisfactory to the Administrative Agent, (ii) the Administrative
Agent shall have received evidence of the foregoing in form and substance
satisfactory to the Administrative Agent, (iii) the Administrative Agent
shall have received from each of the Company and the Guarantors that are
Domestic Subsidiaries a completed and fully executed Perfection Certificate
and the results of UCC, title, PTO, and other lien searches with respect to
the Collateral, indicating no liens other than Permitted Liens, or as
described on Schedule 9.24 hereto, and otherwise in form and substance
satisfactory to the Administrative Agent, and (iv) the Administrative
<PAGE>
-156-
Agent shall have received from the Company (x) evidence of corporate,
limited liability company, or other applicable organizational authority of
the Company and the Guarantors that are Domestic Subsidiaries with respect
to the granting of Collateral by them pursuant to the Security Documents,
(y) signed copies of favorable legal opinions, addressed to the
Administrative Agent, of counsel to the Borrowers and the applicable
Guarantors as to the matters referred to in clause (x) above; as to the
Collateral Agent holding valid, perfected, and subsisting liens in the
Collateral, enforceable against all third parties in accordance with their
terms (subject only to Permitted Liens); as to the Security Documents being
legal, valid and binding obligations of each applicable Obligor,
enforceable in accordance with their terms (subject to customary
qualifications and limitations); and as to such other matters as the
Administrative Agent may reasonably request (together with appropriate
corporate (or other applicable) documentation and certificates relating
thereto), and (z) a certificate of insurance, in form and substance
satisfactory to the Administrative Agent, from an independent insurance
broker, identifying insurers, types of insurance, insurance limits, policy
terms, identifying the Collateral Agent (on behalf of the Lenders) as
additional insured and loss payee and otherwise describing the insurance
obtained in accordance with the provisions of this Agreement and the
Security Agreements, and certified copies of all policies evidencing such
insurance (or certificates thereto signed by the insurer or an agent
authorized to bind the insurer).
9.25. Notes to Evidence Non-Ordinary Course Intercompany
--------------------------------------------------
Indebtedness. All Non-Ordinary Course Intercompany Indebtedness will be
------------
evidenced by promissory notes in form and substance satisfactory to the
Administrative Agent and will be pledged to the Collateral Agent, pursuant
to Security Documents in form and substance satisfactory to the
Administrative Agent, as additional Collateral for the Obligations.
9.26. Commercial Finance Examination. The Company shall cause a
------------------------------
"commercial finance" examination of accounts receivable and inventory to be
carried out by examiners chosen by the Administrative Agent, which
examination shall be commenced promptly after the Closing Date and shall be
conducted and completed as soon as practicable and in any event within 60
days after the Closing Date; the Company shall provide the examiners with
access to the relevant information and otherwise cooperate with such
examination, and shall pay the reasonable costs and expenses of such
examination.
9.27. Appraisal of Intellectual Property. The Company shall cause an
----------------------------------
appraisal of domestic trademarks, patents, and other intellectual
property to be carried out by appraisers selected and engaged by the
Administrative Agent, which appraisal shall be in progress on the
Closing Date and shall be completed as soon as
<PAGE>
-157-
practicable and in any event within 60 days after the Closing Date; the
Company confirms that it has heretofore consented to the Administrative
Agent's engaging such an appraiser and conducting such appraisal; the
Company shall provide the appraiser with access to the relevant information
and otherwise cooperate with such appraisal and shall pay the reasonable
costs and expenses of such appraisal.
9.28. Landlord Waivers. The Company shall use and shall cause each of
----------------
the Guarantors that are Domestic Subsidiaries to use, reasonable efforts to
obtain and deliver to the Administrative Agent such waivers of landlord
liens and consents of landlords, in form and substance satisfactory to the
Administrative Agent, as to those leased properties (manufacturing
facilities, warehouses, distribution centers, retail facilities, and other
sites) located in the United States that are listed and described on
Schedule 9.28 hereto, as may be required for the Administrative Agent to
-------- ----
have the right to enforce its security interest in any Collateral located
on such leased premises, free and clear of any lien of the applicable
landlord thereof, in each case as soon as reasonably practicable following
the Closing Date.
9.29. Funding of Equity Tender Offer. An amount sufficient to fund
------------------------------
the Equity Tender Offer will be deposited into an account with BKB on the
Closing Date; such amount will be maintained in its entirety in such
account (and will not be transferred, withdrawn, or debited) until the
funds are delivered to the depositary for the Equity Tender Offer; such
amount will be delivered to the depositary not later than June 29, 1998,
and applied not later than such date to the funding of the Equity Tender
Offer as contemplated by (S)10.4(e) hereof.
10. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS.
-------------------------------------------
Each of the Borrowers covenants and agrees that, so long as any Loan,
Unpaid Reimbursement Obligation, Foreign Unpaid Reimbursement Obligation, Letter
of Credit, Foreign Letter of Credit or Note is outstanding or any Lender has any
obligation to make any Loans or any Issuing Bank or Foreign Issuing Bank has any
obligations to issue, amend, extend or renew any Letters of Credit or Foreign
Letters of Credit, as the case may be:
10.1. Restrictions on Indebtedness. The Borrowers will not, and will
----------------------------
not permit any of their Non-Excluded Subsidiaries to, create, incur,
assume, guarantee or be or remain liable, contingently or otherwise, with
respect to any Indebtedness other than (to the extent not prohibited by the
Subordinated Debt Documents that are then in effect):
(a) Indebtedness to the Lenders and the Agents arising under any
of the Loan Documents;
<PAGE>
-158-
(b) current liabilities of the Borrowers or such Non-Excluded
Subsidiary incurred in the ordinary course of business not incurred
through (i) the borrowing of money, or (ii) the obtaining of credit
except for credit on an open account basis customarily extended and in
fact extended in connection with normal purchases of goods and
services;
(c) Indebtedness in respect of taxes, assessments, governmental
charges or levies and claims for labor, materials and supplies to the
extent that payment therefor shall not at the time be required to be
made in accordance with the provisions of (S)9.8;
(d) Indebtedness in respect of judgments or awards that have been
in force for less than the applicable period for taking an appeal so
long as execution is not levied thereunder or in respect of which the
Borrowers or such Non-Excluded Subsidiary shall at the time in good
faith be prosecuting an appeal or proceedings for review and in
respect of which a stay of execution shall have been obtained pending
such appeal or review;
(e) endorsements of checks and similar negotiable instruments for
collection, deposit or negotiation, and warranties of products or
services, in each case incurred in the ordinary course of business;
(f) unsecured Subordinated Debt;
(g) obligations incurred after the Closing Date under Capitalized
Leases not listed on Schedule 10.1 and Indebtedness incurred in
-------------
connection with the acquisition after such date of any real or
personal property by the Borrowers or such Non-Excluded Subsidiary,
and Indebtedness permitted by the Subordinated Debt Documents then in
effect, extending the maturity of, or refunding or refinancing, in
whole or in part, any such Indebtedness, provided that the terms of
--------
any such extending, refunding or refinancing Indebtedness, and of any
agreement or instrument relating thereto, are otherwise permitted by
the Loan Documents and further provided that the principal amount of
------- --------
such Indebtedness shall not be increased above the amount of such
Indebtedness outstanding on the date of such extension, refunding or
refinancing, and the direct (and any contingent) obligors therefor and
any collateral security in respect thereof shall not be changed (or
increased), as a result of or in connection with such extension,
refunding, or refinancing, and further provided that the aggregate
------- --------
principal amount of all such Capitalized Lease obligations and
Indebtedness of the Borrowers and their Non-Excluded
<PAGE>
-159-
Subsidiaries shall not exceed the aggregate amount of $15,000,000 at
any one time, and the foregoing must constitute "Purchase Money
Indebtedness" or "Capitalized Lease Obligations" under (and as defined
in) the Subordinated Indenture;
(h) Indebtedness existing on the Closing Date and listed and
described on Schedule 10.1 hereto, and Indebtedness permitted by the
-------------
Subordinated Debt Documents then in effect, constituting "Refinancing
Indebtedness" under (and as defined in) the Subordinated Indenture,
extending the maturity of, or refunding or refinancing, in whole or in
part, any such Indebtedness, provided that the terms of any such
--------
extending, refunding or refinancing Indebtedness, and of any agreement
or instrument relating thereto, are otherwise permitted by the Loan
Documents and further provided that the principal amount of such
------- --------
Indebtedness shall not be increased above the "Total Facility Amount"
of such Indebtedness as indicated on Schedule 10.1, except to the
-------------
extent that such increase is permitted pursuant to (S)10.1(k), (l) or
(n) hereof, and the direct (and any contingent) obligors therefor and
any collateral security in respect thereof shall not be changed (or
increased), (but any lien or encumbrance on such collateral may be
released or discharged) as a result of or in connection with such
extension, refunding, or refinancing;
(i) Indebtedness of (x) any Guarantor (other than McGregor and
its Subsidiaries) to any Borrower or to another Guarantor; or (y) any
Borrower to any Guarantor or to another Borrower; in the form of
intercompany loans or advances; so long as all such Indebtedness
referred to in this clause (i) is on a demand basis, such Indebtedness
is not prohibited by the Subordinated Debt Documents then in effect,
and such Indebtedness constitutes "Permitted Indebtedness" under
clause (v) or (vi) of the definition of such term in the Subordinated
Indenture;
(j) Indebtedness of the Company to Culligan under the Tax
Sharing Agreement and the Distribution Agreement;
(k) Indebtedness of the Borrowers or any Domestic Non-Excluded
Subsidiaries in a principal amount which does not exceed, in the
aggregate, $15,000,000 at any time outstanding, except that
------
Indebtedness of McGregor or any of its respective Subsidiaries is not
permitted under this clause (k);
(l) Indebtedness incurred in connection with any Permitted
Acquisitions, including Indebtedness of Persons acquired pursuant to
(S)10.5.1 hereof, so long as the aggregate
<PAGE>
-160-
principal amount of all such Indebtedness does not exceed $20,000,000
at any time outstanding;
(m) Indebtedness not exceeding $50,000,000 (less the amount of
any Investments in Joint Venture Subsidiaries made pursuant to
(S)10.3(f)(ii) hereof) in the aggregate at any time outstanding of
Wholly-Owned Non-Excluded Subsidiaries and Joint Venture Subsidiaries
to the Company or to another Wholly-Owned Non-Excluded Subsidiary in
the form of intercompany loans or advances so long as all such
Indebtedness is on a demand basis, such Indebtedness is not prohibited
by the Subordinated Debt Documents that are then in effect, and such
Indebtedness constitutes "Permitted Indebtedness" under clause (v) or
(vi) of the definition of such term in the Subordinated Indenture;
(n) Indebtedness of Foreign Non-Excluded Subsidiaries in the
principal amount which does not exceed, in the aggregate, $15,000,000
at any time outstanding;
(o) Indebtedness incurred for the purpose of making the
Investment in Samsonite Italia permitted under (S)10.3(n) hereof, in
an amount not in excess of the cash permitted to be, and actually paid
by the Borrowers or Non-Excluded Subsidiaries after the Closing Date
for such purpose;
(p) Indebtedness in the amounts listed on Schedule 10.1(p)
----------------
hereof that is existing on the Closing Date and additional
Indebtedness incurred pursuant to the loan facilities in effect on
the Closing Date, as listed on Schedule 10.1(p) hereof, owing by
----------------
Emerging Market Subsidiaries, to the extent that the Emerging Market
Subsidiary which is the obligor of such Indebtedness becomes a Non-
Excluded Subsidiary, provided that the principal amount of the
--------
Indebtedness of any such Emerging Market Subsidiary permitted by this
clause (p) shall not exceed the "Total Facility Amount" of such
Indebtedness, as indicated on Schedule 10.1(p) hereof;
----------------
(q) Indebtedness incurred by an Emerging Market Subsidiary
between the Closing Date and the date that such Emerging Market
Subsidiary becomes a Non-Excluded Subsidiary, so long as the aggregate
Indebtedness referred to in this clause (q) by all Emerging Market
Subsidiaries which become Non-Excluded Subsidiaries after the Closing
Date does not exceed $2,500,000 in the aggregate and so long as
neither of the Borrowers and none of the other Non-Excluded
Subsidiaries (nor any of the assets of any of them) are obligors (or
collateral) with respect to any such Indebtedness referred to in this
clause
<PAGE>
-161-
(q) (except to the extent that the obligations of (or collateral
granted by) a Borrower or other Non-Excluded Subsidiary in respect of
any such Indebtedness referred to in this clause (q) is otherwise
permitted by (S)10.1(k), 10.1(l), 10.1(n) or 10.2(i));
(r) Indebtedness of Samsonite Europe incurred and utilized to
refinance the Foreign Term Loan (the "Foreign Term Loan Refinancing
Debt"), subject to the conditions that (i) the amount of the Foreign
Term Loan Refinancing Debt does not exceed the initial principal
amount of the Foreign Term Loan, (ii) (x) the proceeds of the Foreign
Term Loan Refinancing Debt shall first be applied to (and must be
-----
sufficient to) repay the then outstanding principal balance of the
Foreign Term Loan in full, and (y) the amount by which the proceeds of
the Foreign Term Loan Refinancing Debt exceeds the then outstanding
principal balance of the Foreign Term Loan shall be subject to and
applied in accordance with (S)3.3.3, (iii) no principal payments are
due upon the Foreign Term Loan Refinancing Debt until the later to
occur of the date six (6) months after the Revolving Credit Loan
Maturity Date or, if any portion of the Domestic Term Loan remains
outstanding immediately after giving effect to the application of the
proceeds of such Foreign Term Loan Refinancing Debt, the date six (6)
months after the Domestic Term Loan Maturity Date, (iv) any guarantee
of such Foreign Term Loan Refinancing Debt by the Company is
subordinated, in a manner no less favorable to the Lenders and the
other applicable Persons benefited thereby than the subordination
provisions set forth in the Subordinated Indenture, to the Obligations
owed to the Lenders, (v) the Foreign Term Loan Refinancing Debt is
subordinated, in a manner no less favorable to the Lenders and the
other applicable Persons benefited thereby than the subordination
provisions set forth in the Subordinated Indenture, to the Obligations
owed to the Lenders by Samsonite Europe and to all current and future
obligations of Samsonite Europe and its Subsidiaries to pay any
license fees, royalties and similar amounts, however characterized, to
the Company, and (vi) the documents evidencing or executed in
connection with such Foreign Term Loan Refinancing Debt do not
directly or indirectly provide for an event of default to occur or for
the borrower thereunder to be obligated to pay, purchase or redeem
prior to the scheduled maturity thereof, any of such Foreign Term Loan
Refinancing Debt by reason of or based upon any event or circumstance
relating to the Company or the consolidated or separate financial
condition of the Company; and
(s) the issuance of the 1998 Preferred Stock, pursuant to the
1998 Preferred Stock Documents;
<PAGE>
-162-
provided, however, the provisions of this (S)10.1 shall be subject to the
-------- -------
provisions of (S)10.18 and (S)10.23 hereof.
10.2. Restrictions on Liens. The Borrowers will not, and will not
---------------------
permit any of their Non-Excluded Subsidiaries to, (a) create or incur or
suffer to be created or incurred or to exist any lien, encumbrance,
mortgage, pledge, charge, restriction or other security interest of any
kind upon any of its property or assets of any character whether now owned
or hereafter acquired, or upon the income or profits therefrom; (b)
transfer any of such property or assets or the income or profits therefrom
for the purpose of subjecting the same to the payment of Indebtedness or
performance of any other obligation in priority to payment of its general
creditors; (c) acquire, or agree or have an option to acquire, any property
or assets upon conditional sale or other title retention or purchase money
security agreement, device or arrangement; (d) suffer to exist for a period
of more than thirty (30) days after the same shall have been incurred any
Indebtedness or claim or demand against it that if unpaid might by law or
upon bankruptcy or insolvency, or otherwise, be given any priority
whatsoever over its general creditors; or (e) except as expressly provided
in (S)10.5.2 hereof, sell, assign, pledge or otherwise transfer any
accounts, contract rights, general intangibles, chattel paper or
instruments, with or without recourse; provided that the Borrowers and
--------
their Non-Excluded Subsidiaries may create or incur or suffer to be created
or incurred or to exist:
(a) liens to secure taxes, assessments and other government
charges in respect of obligations not overdue or liens on properties
to secure claims for labor, material or supplies in respect of
obligations not overdue, or which are being contested in good faith by
appropriate proceedings diligently conducted and with respect to which
adequate reserves are being maintained in accordance with generally
accepted accounting principles so long as such liens are not being
foreclosed;
(b) deposits or pledges made in connection with, or to secure
payment of, workmen's compensation, unemployment insurance, old age
pensions or other social security obligations;
(c) liens on properties in respect of judgments or awards, the
Indebtedness with respect to which is permitted by (S)10.1(d);
(d) liens of carriers, warehousemen, mechanics and materialmen,
and other like liens on properties in existence less than 180 days
from the date of creation thereof in respect of obligations not
overdue or which are being contested in good faith by appropriate
proceedings diligently conducted and with
<PAGE>
-163-
respect to which adequate reserves are being maintained in accordance
with generally accepted accounting principles so long as such liens
are not being foreclosed;
(e) encumbrances on Real Estate consisting of easements, rights
of way, zoning restrictions, restrictions on the use of real property
and defects and irregularities in the title thereto, landlord's liens
or lessor's liens under leases to which any of the Borrowers or a Non-
Excluded Subsidiary of such Borrower is a party, and other similar
minor liens or encumbrances none of which in the reasonable opinion of
the Borrowers interferes materially with the use of the property
affected in the ordinary conduct of the business of the Borrowers and
their Non-Excluded Subsidiaries, which defects do not individually or
in the aggregate have a Material Adverse Effect;
(f) liens existing on the Closing Date and listed and described
on Schedule 10.2 hereto; and liens existing in accordance with the
-------- ----
provisions of (S)10.1(h) securing permitted extensions, refundings,
and refinancings of the Indebtedness provided for therein;
(g) purchase money security interests in or purchase money
mortgages on real or personal property acquired after the Closing Date
to secure purchase money Indebtedness of the type and amount permitted
by (S)10.1(g), incurred in connection with the acquisition of such
property, which security interests or mortgages cover only the real or
personal property so acquired and liens in favor of lessors under
Capitalized Leases on assets subject to Capitalized Leases permitted
by (S)10.1(g) hereof; and liens existing in accordance with the
provisions of (S)10.1(g) securing extensions, refundings, and
refinancings of the Indebtedness provided for therein;
(h) liens in favor of the Administrative Agent for the benefit
of the Lenders and the Agents under the Loan Documents;
(i) liens on assets of Foreign Non-Excluded Subsidiaries to
secure up to an aggregate principal amount of $10,000,000 of
Indebtedness of Foreign Non-Excluded Subsidiaries incurred pursuant to
(S)10.1(n) hereof;
(j) liens on assets of Persons acquired pursuant to a Permitted
Acquisition (whether incurred prior to, or in connection with, such
Permitted Acquisition) securing up to an aggregate principal amount of
$10,000,000 of Indebtedness incurred or permitted to exist pursuant to
(S)10.1(l) hereof;
<PAGE>
-164-
(k) liens securing the performance of bids, trade contracts
(other than borrowed money), statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(l) liens on the assets of an Emerging Market Subsidiary arising
between the Closing Date and the date that such Emerging Market
Subsidiary becomes a Non-Excluded Subsidiary, to the extent that the
Indebtedness secured by such liens is permitted by (S)10.1(q); and
(m) liens granted to or for the benefit of the PBGC as
contemplated by and in accordance with (but only to the extent
required by) the PBGC Letter, which liens constitute PBGC Ratable
Liens that are governed by the Collateral Agency Agreements.
10.3. Restrictions On Investments. The Borrowers will not, and will
---------------------------
not permit any of their Non-Excluded Subsidiaries to, make or permit to
exist or to remain outstanding any Investment except Investments:
(a) in readily marketable direct or guaranteed obligations of
the United States of America or those other specific governments or
jurisdictions (if any) listed on Schedule 10.3(a) hereto that mature
----------------
within one (1) year from the date of purchase by such Person;
(b) in demand deposits, certificates of deposit, bankers
acceptances and time deposits of United States banks or banks
organized under the laws of those specific other jurisdictions (if
any) listed on Schedule 10.3(b) hereto having in each case total
----------------
capital and surplus in excess of $1,000,000,000;
(c) in securities commonly known as "commercial paper" issued by
a corporation organized and existing under the laws of the United
States of America or any state thereof or those specific other
jurisdictions (if any) listed on Schedule 10.3(c) hereto that at the
----------------
time of purchase have been rated and the ratings for which are not
less than "P 1" if rated by Moody's, and not less than "A 1" if rated
by Standard & Poor's;
(d) existing on the date hereof that are listed and described on
Schedule 10.3(d) hereto, including Investments in respect of the Tax
----------------
Sharing Agreement and the Distribution Agreement;
<PAGE>
-165-
(e) in Guarantors or Borrowers, consisting of Indebtedness
permitted by (S)10.1(i) (other than in McGregor and its Subsidiaries)
so long as, in the case of clauses (x) and (y) of (S)10.1(i), such
entities remain Guarantors or Borrowers, as the case may be;
(f) in Wholly-Owned Non-Excluded Subsidiaries (including any
Wholly-Owned Non-Excluded Subsidiary constituting a "conduit"
organized solely for the purpose of directly holding the Company's or
a Non-Excluded Subsidiary's equity interest in one or more Joint
Venture Subsidiaries; each such Wholly-Owned Non-Excluded Subsidiary
being referred to as a "JV Interest Holding Company") and Joint
Venture Subsidiaries consisting of (i) intercompany loans or advances
permitted by (S)10.1(m) hereof, in an aggregate principal amount
outstanding not to exceed that amount permitted by (S)10.1(m) (less
the amount of Investments pursuant to clause (ii) of this (S)10.3(f))
at any time, provided each such Investment complies with the
--------
requirements of (S)(S)10.1(m) and 10.21 hereof; or (ii) subject to the
provisions of (S)10.21, transfers of cash or non-cash property as
capital contributions to Joint Venture Subsidiaries (or to JV Interest
Holding Companies, provided such capital contributions are
--------
concurrently contributed by such JV Interest Holding Companies to
their applicable Joint Venture Subsidiaries), not to exceed $5,000,000
in the aggregate, on a cumulative basis after the date hereof plus the
----
amount of any Returned Investments (with respect to the return or
repayment of the "principal" or "capital" component of any prior
Investments under this (S)10.3(f)) received after the date hereof but
prior to the relevant time of determination hereunder and not
previously utilized to permit additional Investments under this
(S)10.3(f)(ii) in excess of such $5,000,000 amount, but in no event
--------
shall the total Investments made after the date hereof over the term
of this Credit Agreement under this (S)10.3(f)(ii) exceed $10,000,000
in the aggregate after giving effect to "utilizing" the amount of any
such Returned Investments after the date hereof over the term of this
Credit Agreement; for purposes hereof, the amount of any such non-cash
property capital contribution Investments shall be deemed to be the
fair market value of such non-cash property at the time of the
applicable transfer thereof to such Joint Venture Subsidiary (or JV
Interest Holding Company, as the case may be);
(g) consisting of the Loan Documents (including the Guarantees
hereof) or Investments by the Borrowers and their Non-Excluded
Subsidiaries in their Subsidiaries (other than Excluded Entities) but
only as (and to the extent) such Investments in such Subsidiaries
actually exist on the Closing Date;
<PAGE>
-166-
(h) in any Excluded Entity which is in a Related Business,
permitted under clause (iv) of the definition of "Permitted
Investments" in the Subordinated Indenture, which do not exceed, in
the aggregate, (i) in the fiscal period commencing on the Closing Date
under (and as defined in) the Prior Credit Agreement and ending on
July 31, 1998 or any fiscal period commencing on any August 1
thereafter and ending on July 31 of the subsequent year $10,000,000 of
Investments made in such fiscal period, plus the amount of any
----
Returned Investments (with respect to the return or repayment of the
"principal" or "capital" component of any prior Investments under this
(S)10.3(h)) that were received after the date hereof but prior to the
relevant time of determination hereunder, and not previously utilized
to permit additional Investments under this clause (i) of this
(S)10.3(h) in any such fiscal period in excess of the otherwise
applicable maximum amount limitation for such fiscal period; and (ii)
in the aggregate after the date hereof over the term of this Credit
Agreement $50,000,000 plus the amount of any Returned Investments
----
(with respect to the return or repayment of the "principal" or
"capital" component of any prior Investments under this (S)10.3(h))
received after the date hereof but prior to the relevant time of
determination hereunder and not previously utilized to permit
additional Investments under this clause (ii) of this (S)10.3(h) in
excess of such $50,000,000 amount, but in no event shall the total
--------
Investments made after the date hereof over the term of this Credit
Agreement under this (S)10.3(h) exceed $70,000,000 in the aggregate
after giving effect to "utilizing" the amount of any such Returned
Investments after the date hereof over the term of this Credit
Agreement (the Investments pursuant to this (S)10.3(h) being the
"Specified Investments"); for purposes hereof, in the case of any
Investment made by transfers of non-cash property, the amount of such
Investments shall be deemed to be the fair market value of such non-
cash property at the time of the applicable transfer, provided that,
--------
at the time that any Non-Excluded Subsidiary becomes an Emerging
Market Subsidiary and thereby an Excluded Subsidiary and an Excluded
Entity, the Company shall be deemed to make an Investment in such
Excluded Entity in an amount equal to the Company's Pro Rata Interest
in the fair market value of the net assets of such Excluded Entity;
(i) consisting of promissory notes payable to the Borrowers or
their Non-Excluded Subsidiaries received as proceeds of asset
dispositions permitted by (S)10.5.2 or acquired pursuant to Permitted
Acquisitions;
<PAGE>
-167-
(j) constituting trade credit extended pursuant to customer
accounts receivable in the ordinary course of business;
(k) customary prepaid expenses in the ordinary course of
business;
(l) acceptance and endorsements of checks or other negotiable
instruments for deposit or collection in the ordinary course of
business;
(m) acquired in the bona fide compromise, settlement, or other
---- ----
resolution of dispute with any Person (or of obligations or
Indebtedness);
(n) consisting of acquisitions permitted under (S)10.5.1 hereof,
of Persons (including, prior to the occurrence of any Default or Event
of Default that is continuing, any acquisition of the entire minority
interest in Samsonite Italia) that become, at the time of such
acquisitions, Wholly-Owned Non-Excluded Subsidiaries of the Company
(or, in the case of a new Foreign Subsidiary, Wholly-Owned Non-
Excluded Subsidiaries of Samsonite Europe);
(o) consisting of Distributions permitted by (S)10.4(c) or
(S)10.4(e) hereof;
(p) deemed to have been made as a result of a Permitted
Acquisition of a Person that, at the time of such Permitted
Acquisition, held Investments that were not acquired in contemplation
of the acquisition of such Person;
(q) consisting of loans or advances made in the ordinary course
of business to officers, directors or employees of the Borrowers or
any of the Non-Excluded Subsidiaries for travel, transportation,
entertainment, and moving and other relocation expenses;
(r) consisting of the Guarantees relating hereto and (to the
extent applicable) to the Subordinated Guarantees and the Conforming
Subordinated Guarantees;
(s) consisting of endorsements permitted by (S)10.1(e) hereof;
(t) consisting of obligations of the Company under the Tax
Sharing Agreement and the Distribution Agreement;
(u) by the Company for which the sole consideration provided by
the Company is the common stock of the Company
<PAGE>
-168-
pursuant to compensation arrangements with such officers and directors
of the Company as approved by the Board of Directors of the Company;
(v) consisting of guaranties by the Company or its Non-Excluded
Subsidiaries of Indebtedness of the Company or its Non-Excluded
Subsidiaries permitted by (S)10.1 hereof;
(w) [Intentionally Deleted];
(x) by the Company in any Person that is not a Subsidiary and
which is in a Related Business, which do not exceed, in the aggregate,
after the date hereof over the term of this Credit Agreement on a
cumulative basis $8,000,000, provided (i) such Investment is made by
--------
the Company to either (1) purchase capital stock of such Person or (2)
make a loan to such Person and (ii) the Company and such Person have
made arrangements satisfactory to the Company which limits the use of
the proceeds of such Investments by such Person for purposes
satisfactory to the Company; and
(y) by the Company consisting of any purchase of the 1995
Subordinated Notes, provided that (A) no Default or Event of Default
--------
has occurred and is continuing and none would exist after giving
effect thereto, and (B) the 1995 Subordinated Notes so purchased in
each case are promptly cancelled by the Company;
provided, however, notwithstanding anything to the contrary contained
-------- -------
herein, no Investments (other than those existing on the date hereof) shall
be made or permitted to exist in McGregor or its Subsidiaries.
10.4. Distributions. The Borrowers and their Non-Excluded Subsidiaries
-------------
will not make any Distributions (except for Distributions to the Company,
or to any of its Non-Excluded Subsidiaries, by (in each case) any of its
Non-Excluded Subsidiaries), provided, however, so long as each of the
-------- -------
Special Conditions is satisfied immediately prior to and immediately after
giving effect to such Distribution (other than Distributions under
(S)10.4(e) or (S)10.4(f) hereof, as to which the Special Conditions shall
not apply), the Borrowers and their Non-Excluded Subsidiaries shall be
permitted to make (a) Distributions to the minority shareholders of
Samsonite SpA (formerly known as Samsonite Italia, S.r.l.) ("Samsonite
Italia") which do not exceed the lesser of (i) in the aggregate, $1,000,000
for any fiscal year, plus, to the extent any such Distributions permitted
----
by this (S)10.4(a)(i) for any fiscal year were not made in any such fiscal
year, the amount of such Distributions permitted under this (S)10.4(a)(i)
and not previously made and (ii) the amount of
<PAGE>
-169-
Distributions permitted to be made to such minority shareholders in any
such applicable period pursuant to the Subordinated Indenture, provided the
--------
Company shall receive pro rata Distributions at the same time and in the
--- ----
same form and composition of consideration as the Distributions made to
such minority shareholders, (b) Distributions after January 31, 1999 by the
Company to holders of its Common Stock in an aggregate amount not to exceed
in any fiscal year 15% of the Company's Consolidated Net Income from the
beginning of such fiscal year through the fiscal quarter end date
immediately preceding the date of such Distribution; provided that no such
--------
Distribution will be permitted pursuant to this clause (b) unless the
Company's Leverage Ratio at the fiscal quarter end date immediately
preceding the Distribution was less than 3.75 to 1.00, (c) Distributions
permitted by the Subordinated Indenture to repurchase capital stock from
employees in an aggregate amount not to exceed $1,500,000 in any fiscal
year; (d) Distributions by Samsonite Italia to its minority shareholders to
effect a repurchase of all, but not less than all of such minority
shareholders' equity interest in Samsonite Italia, such that, after giving
effect thereto, Samsonite Italia is a Wholly-Owned Non-Excluded Subsidiary;
(e) to the extent not prohibited by the terms of the Subordinated Debt
Documents that are then in effect, Distributions in respect of the Equity
Tender Offer to consummate the Recapitalization on the Closing Date (or,
with respect to the funding of the Equity Tender Offer, promptly
thereafter, and in any event not later than June 29, 1998, in accordance
with the arrangements described in (S)12.12) in an aggregate cumulative
amount not to exceed $420,000,000; (f) the periodic dividends on the 1998
Preferred Stock in the form solely of additional shares of the 1998
Preferred Stock as provided in the 1998 Preferred Stock Documents, and (g)
commencing with the scheduled dividend payment dates under the terms of the
1998 Preferred Stock occurring subsequent to the fifth anniversary of the
Closing Date, the scheduled periodic cash dividends on the 1998 Preferred
Stock in the applicable amounts required to be paid in cash thereon, and
at the applicable times, provided for in the 1998 Preferred Stock
Documents.
Notwithstanding any other provision of this Agreement, (x) the Company
will not at any time exercise any right that it may have to exchange
debentures or other Indebtedness for any portion or all of the 1998
Preferred Stock, (y) the Company will not pay any dividend or other
Distribution in respect of the 1998 Preferred Stock except pursuant to, and
to the extent permitted by, clauses (f) and (g) of this (S)10.4 and (z) the
Company shall utilize its right to make the periodic dividends on the 1998
Preferred Stock "in-kind" (solely in the form of additional shares of 1998
Preferred Stock) in each case in which it has the right to do so under the
terms of the 1998 Preferred Stock Documents.
<PAGE>
-170-
10.5. Merger, Consolidation and Disposition of Assets.
-----------------------------------------------
10.5.1 Mergers and Acquisitions. The Borrowers will not, and will
------------------------
not permit any of their Non-Excluded Subsidiaries to, become a party to any
merger or consolidation, or agree to or effect any asset acquisition or
stock acquisition (other than the acquisition of assets in the ordinary
course of business consistent with past practices) except:
(a) the merger or consolidation of one or more of the Non-
Excluded Subsidiaries of such Borrower with and into the
Borrower;
(b) the merger or consolidation of a Non-Excluded
Subsidiary with one or more other Subsidiaries of a Borrower
(provided that, the surviving entity is a Non-Excluded Subsidiary;
--------
and further provided that if any such Person is a Guarantor, the
------- --------
surviving entity is also a Guarantor);
(c) acquisitions by the Company, Samsonite Europe, or any
direct Wholly-Owned Non-Excluded Subsidiary of the Company, of other
Persons which thereby become Wholly-Owned Non-Excluded Subsidiaries,
or divisions or business segments of other Persons (whether by way of
purchase of assets or capital stock, merger or otherwise),
provided, that (in each case under this clause (c) of this (S)10.5.1):
--------
(i) the Company has obtained the prior written consent
of the Majority Lenders for acquisitions involving cash
Investments and/or other monetary purchase consideration
(including for this purpose, without limitation, cash
outlays, deferred purchase price payment obligations and any
applicable Indebtedness acquired or assumed from such Person
and any applicable Indebtedness of such Person if such
Person is acquired as an entity or otherwise becomes a
Subsidiary of the Company) (the "Acquisition Consideration")
exceeding (1) in the aggregate for all acquisitions,
$150,000,000, or (2) $60,000,000 per acquisition transaction
(or series of related acquisition transactions);
(ii) in the case of a merger or consolidation to which
the Company is a party, the
<PAGE>
-171-
Company is the surviving entity, and in the case of a merger
or consolidation of a Non-Excluded Subsidiary with any other
Person, the surviving entity must also be a Non-Excluded
Subsidiary;
(iii) such Person is in the same line of business as
the Company or a Related Business;
(iv) no Default or Event of Default shall exist at the
time of, and none shall exist after giving effect to, such
merger, consolidation or acquisition and such transaction
shall not be prohibited by the Subordinated Debt Documents
that are then in effect;
(v) the Board of Directors and the shareholders (if
required by applicable law), or the equivalent, of each such
Person has approved such merger, consolidation or
acquisition;
(vi) the Company has delivered to the Administrative
Agent and the Lenders reasonable prior written notice of
such acquisition, which notice shall provide the
Administrative Agent and the Lenders with a reasonably
detailed description of the proposed acquisition;
(vii) immediately after giving effect to the
acquisition the Company's unused availability for borrowing
of Revolving Credit Loans under the Total Revolving
Commitment shall not be less than $25,000,000;
(viii) no portion of the Loans will be used to purchase
or carry margin securities or margin stock as defined in
Regulations U and X of the Board of Governors of the Federal
Reserve System, 12 C.F.R. Parts 221 and 224 (except in a so-
called "going private" transaction effected in compliance
with such Regulations, in which such securities or stock,
immediately upon such purchase, no longer constitute margin
securities or margin stock, such that the Loans will not at
any time be secured, directly or indirectly, by any margin
securities or margin stock);
(ix) the business to be acquired would not subject the
Agents or the Lenders to regulatory or third party approvals
in connection with the
<PAGE>
-172-
exercise of any of their rights and remedies under this
Credit Agreement or any other Loan Document;
(x) the business and assets so acquired shall be
acquired by the Company, Samsonite Europe, or such Wholly-
Owned Non-Excluded Subsidiary of the Company, as the case
may be, free and clear of all liens and encumbrances (other
than as permitted by (S)10.2(a)-(e) and (j), and
Indebtedness (other than as permitted by (S)10.1(k) or (l));
(xi) no contingent obligations or liabilities will be
incurred or assumed in connection with such acquisition
which could reasonably be expected to have a Material
Adverse Effect;
(xii) the Company or such other applicable Person
involved in the acquisition has taken or caused to be taken
all necessary actions to grant to the Administrative Agent a
first priority perfected lien (except for Permitted Liens
having priority under applicable law) in the capital stock
or other equity interests to be acquired in connection with
such acquisition to the extent required by (S)9.15 hereof;
(xiii) the Company has demonstrated to the
satisfaction of the Administrative Agent, based on a pro
---
forma Compliance Certificate, compliance with (S)11 hereof
-----
on a pro forma basis (and the satisfaction of each of the
--- -----
Special Conditions) immediately prior to and after giving
effect to such acquisition (provided, for purposes only of
--------
determining compliance (and only under this clause (xiii) of
this (S)10.5.1) by the Borrowers with (S)11.1 and 11.2,
EBITDA shall (without duplication) include the EBITDA for
the Person to be acquired for the four (4) full consecutive
fiscal quarters of such Person most recently ended
immediately preceding the acquisition and Consolidated Total
Interest Expense and Total Funded Indebtedness shall be
computed on a pro forma basis for (and as of the end of) the
---------
Reference Period most recently ended, giving effect to the
consolidated capital structure projected to be existing
immediately after such acquisition is to be
<PAGE>
-173-
Consummated, including any net changes in Indebtedness
levels resulting therefrom, and in the case of floating
interest rates, utilizing such applicable interest rates as
they are in effect at the time such pro forma calculation is
---------
performed) and assuming for the purpose of such pro forma
---------
computation that such projected consolidated capital
structure was in effect during the entire Reference Period;
and
(xiv) in the case of any acquisition of capital stock
or other equity interests, the issuer thereof must become a
Subsidiary; and any new Subsidiary formed or acquired as a
result of or in connection with any acquisition shall be or
then become a Wholly-Owned Subsidiary of the Company (or, in
the case of a new Foreign Subsidiary, a Wholly-Owned Non-
Excluded Subsidiary of Samsonite Europe) (the acquisitions
permitted under the foregoing clause (c) of this (S)10.5.1
being referred to as the "Permitted Acquisitions");
(d) acquisitions by either of the Borrowers or any Non-
Excluded Subsidiary of one hundred percent (100%) of the capital
stock of an Emerging Market Subsidiary owned by another Borrower
or any Non-Excluded Subsidiary so long as no Default or Event of
Default has occurred and is continuing or would exist as a result
thereof and so long as such an acquisition and disposition is not
prohibited by the Subordinated Debt Documents that are then in
effect;
(e) acquisition by either of the Borrowers or any Non-
Excluded Subsidiary, of the entire equity interest in Samsonite
Italia that is not currently owned by them, for a purchase price
not in excess of the fair market value thereof, such that they
will after such acquisition collectively own 100% of the equity
interests (and all rights appurtenant thereto) of Samsonite
Italia, so long as each of the Special Conditions is satisfied
immediately prior to and immediately after giving effect to such
transaction, and so long as such transaction is not prohibited by
the Subordinated Debt Documents that are then in effect; or
(f) subject to the Borrowers providing satisfactory
financial information to the Administrative Agent setting forth
the pro forma effect upon EBITDA
---------
<PAGE>
-174-
and compliance with the covenants contained in (S)11 on a
prospective basis of the acquisition thereof, the acquisition by
either of the Borrowers from an unaffiliated third party of the
entire equity interest in Ace, for a purchase price not exceeding
the fair market value thereof, such that the Borrowers will after
such acquisition collectively own, directly or indirectly, 100%
of the equity interests (and all rights relating to ownership of
such equity interests) of Ace, so long as (i) each of the Special
Conditions is satisfied immediately prior to and immediately
after giving effect to such transaction; (ii) the acquired
business is only in the same line of business as the Borrowers or
a Related Business; (iii) the conditions set forth in clauses
(ii) through (xiv) of (S)10.5.1(c) are satisfied in connection
therewith, (iv) the transaction preserves all now existing
obligations of Ace and its Affiliates with respect to license
fees, royalties, and similar amounts (however characterized)
owing to the Company and its Subsidiaries, on terms and with a
structure no less favorable to the Company than the terms and
structure thereof as of the date hereof, except for changes to
such terms and structure that are made in the ordinary course of
business on an arms-length basis prior to the date of such
acquisition, provided that any such changes in the identity of
--------
the Person to which such obligations are payable and any such
changes that are made in contemplation or anticipation of such
acquisition will in any event be deemed not to have been made in
the ordinary course of business, and further provided that,
------- --------
without limiting the generality of the immediately preceding
proviso, any changes that are made within the period of 6 months
immediately preceding the earlier of (a) the date that either of
the Borrowers enters into a binding agreement to make such
acquisition and (b) the date of the consummation of such an
acquisition, will be deemed to have been made in contemplation or
anticipation of such acquisition; (v) such transaction is not
prohibited by the Subordinated Debt Documents that are then in
effect; and (vi) such transaction constitutes the direct or
indirect acquisition of all or substantially all of the operating
businesses of Ace;
In the event any new Significant Subsidiary is formed, acquired
or exists as a result of or in connection with any acquisition, the
Loan Documents shall be amended and/or supplemented as to the
appropriate Persons as necessary to make the terms and conditions of
the Loan Documents (including but not limited to the Guarantees and
Security
<PAGE>
-175-
Documents) applicable to such Significant Subsidiary, and its capital
stock, in the manner and to the extent described in (S)(S)7, 9.13,
9.15, and 9.24 hereof.
10.5.2 Disposition of Assets. The Borrowers will not, and will
---------------------
not permit any of their Non-Excluded Subsidiaries to, and, during such
time as the Subordinated Indenture remains in effect (or any other
Subordinated Debt Documents are in effect which contain covenants
regarding the disposition of assets by any Excluded Subsidiary), will
not permit any of their Excluded Subsidiaries to, become a party to or
agree to or effect any Asset Sale or other disposition of assets,
other than:
(a) the sale of inventory or the sale or licensing of
trademarks, patents, copyrights and brand names in the ordinary
course of business, consistent with past practices;
(b) the disposition of (i) obsolete equipment in the
ordinary course of business; (ii) assets from any of the
Borrowers or any of the Non-Excluded Subsidiaries (subject,
however, to (S)10.21 hereof) to any of the Borrowers or to any of
the Non-Excluded Subsidiaries, to the extent permitted by any
Subordinated Debt Documents that are then in effect; (iii) the
manufacturing plant located at 753 Ontario Street, Stratford,
Ontario, Canada by Samsonite Canada, Inc., and (iv) the assets
listed on the January 31, 1998 consolidated balance sheet of the
Company as "held for sale," which assets are listed on Schedule
--------
10.5.2(b) hereof (the "Schedule 10.5.2(b) Assets") provided, with
--------- ------------------------- --------
respect to both clauses (iii) and (iv), that no Default or Event
of Default has occurred and is continuing or would exist as a
result thereof and that such disposition is not prohibited by any
Subordinated Debt Documents that are then in effect;
(c) other Asset Sales or dispositions, provided that (in
--------
each case under this clause (c) of this (S)10.5.2):
(i) no Default or Event of Default has occurred and
is continuing and none would exist after giving effect
thereto or as a result thereof;
(ii) the aggregate Net Asset Sale Proceeds from all
such Asset Sales or dispositions under this (S)10.5.2(c)
does not exceed $15,000,000 in any fiscal year;
<PAGE>
-176-
(iii) the purchase price shall be no less than the
fair market value of the applicable asset at the time of the
sale;
(iv) at least seventy-five percent (75%) of the
value of the purchase price for such assets shall consist of
cash, other than (to the extent permitted by the
Subordinated Indenture) with respect to (1) any Schedule
10.5.2(b) Assets; (2) any Asset Sale or series of related
Asset Sales as to which the aggregate Net Asset Sale
Proceeds do not exceed $1,000,000; (3) any Asset Sale
otherwise permitted pursuant to (S)10.3(f)(ii) or
(S)10.19.1(b) consisting of the issuance of equity interests
in Joint Venture Subsidiaries solely for, or the making of
capital contributions to Joint Venture Subsidiaries (or to
JV Interest Holding Companies for concurrent contributions
to Joint Venture Subsidiaries) solely of, non-cash property
relating to the operation of the business of such Joint
Venture Subsidiary; or (4) any Asset Sale otherwise
permitted pursuant to (S)10.19.1(e) or (S)10.19.2(e)
consisting of the sale of minority interests in Joint
Venture Subsidiaries to third parties in consideration of
non-cash operating assets or services relating to the
business of such Joint Venture Subsidiary; or (5) any Asset
Sale where the asset being sold (A) is the capital stock of
McGregor or any of its Subsidiaries while McGregor and its
Subsidiaries have no assets other than any assets of The 500
Fashion Group division of McGregor as such division
conducted its business on July 14, 1995, or other assets
with an aggregate fair market value not in excess of $5,000,
or (B) consists only of the assets of The 500 Fashion Group
division of McGregor as such division conducted its business
on July 14, 1995; and, in any event, at least twenty percent
(20%) of the value of the purchase price for any Scheduled
Assets shall consist of cash;
(v) the Borrowers shall pay over to the
Administrative Agent on the date 270 days after each Asset
Sale (each such date being an "Asset Sale Calculation Date")
the amount by which (A) (x) one hundred percent (100%) of
the applicable Net Asset Sale Proceeds generated in the
fiscal year in which any such Asset Sale was closed or in
the immediately preceding fiscal year (from all
<PAGE>
Asset Sales during such fiscal years that occurred more than
269 days before the relevant Asset Sale Calculation Date)
minus (y) the greater of (1) $10,000,000, and (2) the sum of
-----
Reinvested Net Asset Sale Proceeds with respect to all Asset
Sales that occurred during such fiscal years more than 269
days before the Asset Sale Calculation Date, exceeds (B) the
amount previously paid by the Borrowers to the
Administrative Agent pursuant to this clause (v) on account
of Asset Sales that occurred during the same fiscal year as
the Asset Sale that generated such Net Asset Sale Proceeds
or within the last 269 days of the immediately preceding
fiscal year; any amount paid to the Administrative Agent
pursuant to this clause (v) will be applied to the mandatory
prepayment of the Loans and reduction of the Commitments in
accordance with (S)3.3.3; provided, that Net Asset Sale
--------
Proceeds generated in a fiscal year prior to the fiscal year
in which such Asset Sale Calculation Date occurred shall
only be included in the amounts calculated pursuant to
clauses (A) and (B) of this clause (v) if such Net Asset
Sale Proceeds were generated less than 270 days before the
end of such prior fiscal year (or, with respect to the
calculation of Reinvested Net Asset Sale Proceeds, in the
case of Net Asset Sale Proceeds generated in any such prior
fiscal year, such Reinvested Net Asset Sale Proceeds shall
only be included if both the relevant Asset Sale and the
reinvestment occurred less than 270 days before the end of
such prior fiscal year or during the fiscal year in which
the relevant Asset Sale Calculation Date occurs);
(vi) in the event the asset being sold is the
capital stock of McGregor, and to the extent such a
disposition is otherwise permitted hereunder, prior to any
such disposition, McGregor shall have entered into an
agreement with the Company (which agreement shall be in form
and substance reasonably satisfactory to the Administrative
Agent) as to certain matters relating to the agreements
referred to in clauses (a) and (b) of (S)8.16.6 (and the
subject matter thereof) containing provisions substantially
similar to those contained in (S)7.1(c) of the Distribution
Agreement; and
<PAGE>
-178-
(d) the sale of certain accounts receivable, customer
drafts and similar rights of payment from customers of the
Company in the ordinary course of business on a non-recourse
basis pursuant to the terms of factoring agreements in form and
substance satisfactory to the Administrative Agent, to the extent
such sales are (while the Subordinated Indenture remains in
effect) permitted by (S) 4.09(d)(i) of the Subordinated Indenture
and are not, in any event, prohibited by the terms of any other
Subordinated Debt Documents that are then in effect.
Notwithstanding anything to the contrary contained in this (S)10.5,
(A) the Borrowers and their Subsidiaries shall not be permitted to
dispose of any assets or take (or omit to take) any action in
connection with an Asset Sale or other asset disposition or engage in
any other transaction which action (or omission) would require or
result in any repayment, prepayment, repurchase or redemption (or any
mandatory offer to repay, prepay, repurchase or redeem) by the Company
or any of its Subsidiaries of any Subordinated Debt pursuant to the
Subordinated Indenture or any other provision of the Subordinated Debt
Documents that are then in effect, or would violate the provisions of
the Subordinated Indenture or any other provision of the Subordinated
Debt Documents that are then in effect; (B) neither the Company nor
any other Obligor shall directly or indirectly sell or otherwise
dispose of all or substantially all of its assets; and (C) neither the
Borrowers nor their Subsidiaries shall sell or otherwise dispose of
any capital stock of any Person which is either an Obligor or is an
entity the capital stock of which is pledged under the Loan Documents
by any Obligor, except for transfers to an Obligor (with each such
transfer to an Obligor to be subject to the Administrative Agent's
then existing security interest therein for the benefit of the
Lenders) and the sale of the capital stock and other equity interests
of McGregor and its Subsidiaries, subject to the requirements and
restrictions in (S)10.5.2(c) hereof.
10.6. Sale And Leaseback. Except as otherwise expressly permitted by
------------------
(S)10.5.2(c) hereof, the Borrowers will not, and will not permit any of
their Subsidiaries to, enter into any arrangement, directly or indirectly,
whereby the Borrowers or any Subsidiary of such Borrower shall sell or
transfer any property owned by it in order then or thereafter to lease such
property or lease other property that such Borrower or any Subsidiary of
such Borrower intends to use for substantially the same purpose as the
property being sold or transferred.
<PAGE>
-179-
10.7. Compliance with Environmental Laws. The Borrowers will not, and
----------------------------------
will not permit any of their Non-Excluded Subsidiaries to, (a) use any of
the Real Estate or any portion thereof for the handling, processing,
storage or disposal of Hazardous Substances which acts would require a
permit under RCRA, (b) cause or permit to be located on any of the Real
Estate any underground tank or other underground storage receptacle for
Hazardous Substances, except in compliance with Environmental Laws, (c)
generate any Hazardous Substances on any of the Real Estate except in
compliance with Environmental Laws, (d) conduct any activity at any Real
Estate or use any Real Estate in any manner which would reasonably be
expected to pose a substantial risk of a Release or threatened Release of
Hazardous Substances on, upon or into any such Real Estate which would have
a Material Adverse Effect or (e) otherwise conduct any activity at any Real
Estate or use any Real Estate in any manner that would violate any
Environmental Law or bring such Real Estate in violation of any
Environmental Law, which violation would have a Material Adverse Effect .
10.8. Subordinated Debt. Except for purchases of the 1995
-----------------
Subordinated Notes in accordance with the provisions of (S)10.3(y) hereof
(but only to the extent such purchases are permitted by the Subordinated
Indenture), the Borrowers will not, and will not permit any of their
Subsidiaries to, amend, supplement or otherwise modify the terms of any of
the Subordinated Debt Documents or prepay, redeem or repurchase (or offer
to prepay, redeem or repurchase) any of the Subordinated Debt.
10.9. Employee Benefit Plans. Neither the Borrowers nor any ERISA
----------------------
Affiliate will:
(a) engage in any "prohibited transaction" within the meaning
of (S)406 of ERISA or (S)4975 of the Code which would reasonably be
expected to result in a material liability for the Borrowers or any of
their Subsidiaries; or
(b) permit any Guaranteed Pension Plan to incur an
"accumulated funding deficiency", as such term is defined in (S)302 of
ERISA, whether or not such deficiency is or may be waived; or
(c) fail to make any contribution required of it (by law or
contract) to any Guaranteed Pension Plan sponsored by it to an extent
which, or terminate any Guaranteed Pension Plan in a manner which,
could result in the imposition of a lien or encumbrance on the assets
of the Borrowers or any of its Subsidiaries pursuant to (S)302(f) or
(S)4068 of ERISA; or
<PAGE>
-180-
(d) permit, or take any action which would result in there
being, any unfunded accrued liability and/or actuarial reserve
requirements in any Guaranteed Pension Plans, determined on the same
basis as described in the fourth sentence of (S)8.16.3 (including the
disregard of any such plans without unfunded accrued liability or
actuarial reserve requirements), exceeding zero.
10.10. Fiscal Year. Neither the Borrowers nor their Non-Excluded
-----------
Subsidiaries will change the date of the end of their respective fiscal
quarters or fiscal years from that set forth in (S)8.20 hereof.
10.11. Modification of Documents. Neither the Borrowers nor any of
-------------------------
their Non-Excluded Subsidiaries will consent to or agree to any amendment,
supplement or other modification to (a) any intercompany agreement between
the Company (or any of its Non-Excluded Subsidiaries) and Culligan (or any
of its Subsidiaries), or (b) any Significant Contract, without the prior
written consent of the Administrative Agent and the Majority Lenders,
unless such amendment, supplement or modification, (i) in the case of the
Belgian License Agreement, is of an immaterial or ministerial nature, not
affecting any material economic terms thereof, and (ii) as to all other
documents, agreements or instruments referenced in this (S)10.11 will not
constitute a material change to any economic term contained therein which
is adverse to the rights and interests of any Borrower or Non-Excluded
Subsidiary party thereto.
10.12. Prohibition on Negative Pledges. Neither the Borrowers nor any
-------------------------------
of their Non-Excluded Subsidiaries will enter into, or become bound by or
subject to, any agreement (excluding this Credit Agreement and the Loan
Documents) prohibiting the creation or assumption of any lien or security
interest upon its properties, whether now owned or hereafter acquired,
other than agreements with Persons prohibiting any such lien or security
interest on assets in which such Person has a prior security interest which
is permitted by (S)10.2, or pursuant to the PBGC Letter, those other
existing arrangements (if any) which are described in reasonable detail on
Schedule 10.12 hereto, or pursuant to the Subordinated Indenture (if
--------------
applicable), or pursuant to other arrangements which would not restrict the
granting of liens and security interests in favor of the Administrative
Agent and the Lenders securing the Obligations.
10.13. Transactions with Affiliates. Except for matters otherwise
----------------------------
permitted hereunder or as set forth on Schedule 10.13, neither the
--------------
Borrowers nor any of their Subsidiaries will enter into, or cause, suffer
or permit to exist (a) any arrangement or contract with any of its other
Affiliates of a nature customarily entered into by Persons which are
Affiliates of each other (including management or
<PAGE>
-181-
similar contracts or arrangements relating to the allocation of revenues,
taxes and expenses or otherwise) requiring any payments to be made by the
Borrower or any of their Subsidiaries to any Affiliate unless such
arrangement is fair and equitable to the Borrowers or such Subsidiary; or
(b) any other transaction, arrangement, contract or commitment with any of
their other Affiliates which would not be entered into by a prudent Person
in the position of the Borrowers or such Subsidiary with, or which is on
terms which are less favorable than are obtainable from, any Person which
is not one of its Affiliates.
10.14. Prohibition on Subsidiary Being Subject to Distribution
-------------------------------------------------------
Limitations. Except (a) the existing restrictions (relating to the terms of
-----------
certain existing Indebtedness) as set forth on Schedule 10.14 hereto, (b)
--------------
for any agreement of a Person acquired pursuant to (S)10.5.1 containing
restrictions existing at the time of such acquisition and not put in place
in anticipation of such acquisition and not applicable to any Person or
property other than the Person or property so acquired, (c) leasing
agreements as in effect on the Closing Date, (d) customary provisions
restricting subletting or assignment of any lease or license entered into
in the ordinary course of business, consistent with past practices, (e) for
liens permitted pursuant to (S)10.2 hereof securing Indebtedness permitted
by (S)10.1 hereof, and (f) any restrictions existing under any refinancing
of Indebtedness as permitted by (S)10.1(h) hereof provided that such
--------
restrictions are no more restrictive than those contained in the
agreement(s) governing certain Indebtedness existing on the Closing Date
(as referred to in clause (a) of this (S)10.14) as such agreements are in
effect on the Closing Date, the Borrowers will not, nor will they permit
any Non-Excluded Subsidiary to, enter into or become subject to any
consensual agreement, contract or arrangement (other than the Credit
Agreement, the other Loan Documents, the Subordinated Indenture, the 1995
Subordinated Indenture, and any agreement, contract, or arrangement with a
minority shareholder of a Joint Venture Subsidiary which itself is not a
Significant Subsidiary regarding the business affairs of only such Joint
Venture Subsidiary) restricting the ability of any Non-Excluded Subsidiary
of the Company to pay or make dividends or distributions in cash or kind,
to make loans, advances or other payments of whatsoever nature or to make
transfers or distributions of all or any part of its assets to the Company
or to any other Borrower.
10.15. Change in Nature of Business. Neither the Borrowers nor any of
----------------------------
their Subsidiaries will make any material change in or addition to the
nature of its business as carried on at the date hereof, except to carry on
Related Businesses.
10.16. Charter Amendments. Neither the Borrowers nor any of their
------------------
Subsidiaries will amend or permit to be amended its certificate of
incorporation or bylaws, or similar organizational documents,
<PAGE>
-182-
except in a manner which would not be reasonably likely to have any
Material Adverse Effect; provided, however that neither the Borrowers nor
-------- -------
any of their Non-Excluded Subsidiaries shall permit to be outstanding any
"Disqualified Capital Stock" (as defined in the Subordinated Indenture) of
any such Person.
10.17. Accounting Changes. Neither the Borrowers nor any of their Non-
------------------
Excluded Subsidiaries will make any change in accounting policies or
reporting practices, except as required by generally accepted accounting
principles; provided, however, notwithstanding anything to the contrary
-------- -------
contained herein, the Company will not make any change in accounting
policies and practices in the determination of "EBIT" from those accounting
policies and practices existing on the Closing Date.
10.18. Senior Debt. The Company and its Subsidiaries will not (a) in
-----------
any manner designate or permit to exist any other Indebtedness of the
Company or any of its Subsidiaries as "Designated Senior Debt" (or any
terms similar thereto or having a similar purpose or effect) for purposes
of (and as defined in) the Subordinated Indenture or any other Subordinated
Debt Documents, other than the Indebtedness arising under this Credit
Agreement and the Guarantees, or (b) incur or permit to exist any "Senior
Debt" or Indebtedness incurred pursuant to any "Credit Agreement" (or any
terms similar thereto or having a similar purpose or effect) for purposes
of (and as defined in) the Subordinated Indenture or any other Subordinated
Debt Documents, other than the Indebtedness arising under this Credit
Agreement and the Guarantees and the other Obligations.
10.19. Limitation on Issuance of Shares of Subsidiaries; Disposition
-------------------------------------------------------------
of Shares and Indebtedness of Subsidiaries.
------------------------------------------
10.19.1. Subsidiaries Issuing or Selling Capital Stock.
---------------------------------------------
Except with respect to Samsonite SpA (formerly known as Samsonite
Italia, S.r.l.) of which forty percent (40%) of its capital stock is
held by a third party, the Borrowers will not permit any of their
respective Non-Excluded Subsidiaries to have outstanding, issue, sell
or otherwise dispose of any shares of the capital stock or other
equity interests of such Subsidiary, except (a) to the Company or a
Non-Excluded Subsidiary, (b) to the extent permitted by the
Subordinated Debt Documents that are then in effect, the issuance or
sale of such equity interests in connection with the formation or
capitalization, by way of Investments under (S)10.3(f) hereof, of a
Non-Excluded Subsidiary which, at the time of such issuance or sale
and after giving effect thereto, is a Joint Venture Subsidiary, (c)
the sale of all (but not less than all) of the outstanding equity
interests of any Non-Excluded Subsidiary in a single transaction or
series of substantially contemporaneous transactions if the
<PAGE>
-183-
provisions of (S)10.5.2 hereof are complied with in connection
therewith, (d) with respect to nominal amounts of shares of capital
stock or other equity interests issued to corporate directors,
executive officers or others for the purpose of qualifying corporate
directors (or complying with requirement of multiple stockholders)
under applicable law and (e) to the extent permitted by the
Subordinated Debt Documents that are then in effect, the sale or
issuance of minority interests by Joint Venture Subsidiaries to third
parties in consideration of non-cash operating assets or services
relating to the business of such Joint Venture Subsidiary, in
connection with its formation or capitalization, provided, that such
--------
entity is a Joint Venture Subsidiary at the time of such issuance or
sale and after giving effect thereto.
10.19.2. Disposition by Borrowers of Subsidiaries' Capital Stock. The
-------------------------------------------------------
Borrowers will not sell, transfer or otherwise dispose of any shares
of the capital stock or other equity interests of any of their
respective Non-Excluded Subsidiaries or any Indebtedness of any of
their respective Non-Excluded Subsidiaries, or permit any Non-Excluded
Subsidiary to sell, transfer or otherwise dispose of any shares of the
capital stock or other equity interests or any Indebtedness of any
other Subsidiary, except (a) to the Company or a Non-Excluded
Subsidiary, or (b) to the extent permitted by the Subordinated Debt
Documents that are then in effect, the issuance or sale of such equity
interests in connection with the formation or capitalization, by way
of Investments under (S)10.3(f) hereof, of a Non-Excluded Subsidiary
which, at the time of such issuance or sale and after giving effect
thereto, is a Joint Venture Subsidiary, (c) the sale of all (but not
less than all) of the outstanding equity interests of any Non-Excluded
Subsidiary in a single transaction or series of substantially
contemporaneous transactions if the provisions of (S)10.5.2 hereof are
complied with in connection therewith, (d) with respect to nominal
amounts of shares of capital stock or other equity interests issued to
corporate directors or executive officers for the purpose of
qualifying corporate directors (or complying with requirement of
multiple stockholders) under applicable law and (e) to the extent
permitted by the Subordinated Debt Documents that are then in effect,
the sale or issuance of minority interests by Joint Venture
Subsidiaries to third parties in consideration of non-cash operating
assets or services relating to the business of such Joint Venture
Subsidiary, in connection with its formation or capitalization,
provided, that such entity is a Joint Venture Subsidiary at the time
--------
of such issuance or sale and after giving effect thereto.
<PAGE>
-184-
10.20. Limitations on Hedging Arrangements. The Borrowers will not,
-----------------------------------
and will not permit any Non-Excluded Subsidiary to, enter into any interest
rate hedging or risk protection arrangements, foreign exchange risk
protection arrangements, or currency risk protection arrangements which are
for speculative purposes or which are not effected in the ordinary course
of business.
10.21. Limitation on Transfer of Operating Assets. The Company will
------------------------------------------
not transfer Operating Assets to any of its Subsidiaries; provided that
--------
notwithstanding the foregoing (but subject to the other provisions of this
Credit Agreement), the Company may transfer (i) assets in the ordinary
course of business and (ii) during any 12 consecutive months, assets
(without regard to assets referred to in clause (i) above) having an
aggregate book value of not more than $20,000,000. For purposes of this
(S)10.21, any transfer of assets shall be deemed to be in the ordinary
course of business if such transfer is consistent with the past practices
of the Company or necessary or appropriate to operate the business of the
Company and its Subsidiaries as an integrated enterprise based on sound
business practices, and shall include, without limitation, transfers of
tooling, molds, know-how, rights to patents, trademarks, tradenames,
designs and other intellectual property.
10.22. Preferred Stock Documents. The Borrowers will not, and will
-------------------------
not permit any of their Subsidiaries to, amend, supplement or otherwise
modify the terms of any of the 1998 Preferred Stock Documents or prepay,
redeem, repurchase, or retire (or offer to prepay, redeem, repurchase or
retire) any of the 1998 Preferred Stock.
10.23. Use of Subordinated Indenture Debt Provisions. The Borrowers
---------------------------------------------
will not permit the applicable remaining available and unused amount of
Indebtedness permitted to be incurred by the Borrowers (a) pursuant to
clause (xi) of the definition of "Permitted Indebtedness" in the
Subordinated Indenture (the general debt "basket") to be less than
$15,000,000 at any time (after application of all previous incurrences of
Indebtedness pursuant to such clause (xi)) or (b) pursuant to clause (xii)
of the definition of "Permitted Indebtedness" in the Subordinated Indenture
(the foreign debt "basket") to be less than $10,000,000 at any time (after
application of all previous incurrences of Indebtedness pursuant to such
clause (xii)).
10.24. Ineligible Securities. No portion of the proceeds of any Loans
---------------------
shall be used, and no portion of any Letter of Credit or Foreign Letter of
Credit shall be obtained, for the purpose of (i) knowingly purchasing, or
providing credit support for the purchase of, Ineligible Securities from a
Section 20 Subsidiary during any period in which such Section 20 Subsidiary
makes a market in such Ineligible Securities, (ii) knowingly purchasing, or
providing credit support for
<PAGE>
-185-
the purchase of, during the underwriting or placement period, any
Ineligible Securities being underwritten or privately placed by a Section
20 Subsidiary, or (iii) making, or providing credit support for the making
of, payments of principal or interest on Ineligible Securities underwritten
or privately placed by a Section 20 Subsidiary and issued by or for the
benefit of any Borrower or any Affiliate of any Borrower.
10.25 PBGC Letter. The Borrowers will not, and will not permit any of
-----------
their Subsidiaries to, (a) amend, supplement or otherwise modify the terms
of the PBGC Letter, except for changes which lessen, terminate or release
rights of the PBGC or any obligations of the Company and its ERISA
Affiliates, as to which changes the Company shall in any event be required
to provide written notice in reasonable detail to the Administrative Agent
concurrently therewith, (b) restate or replace the PBGC Letter, or (c)
enter into any agreement which, when effective, would constitute a PBGC
Letter unless such agreement is consistent in all respects with the terms
of the PBGC Letter that was approved by the Administrative Agent prior to
the Closing Date.
11. FINANCIAL COVENANTS OF THE BORROWERS.
------------------------------------
Each of the Borrowers covenants and agrees that, so long as any Loan,
Unpaid Reimbursement Obligation, Foreign Unpaid Reimbursement Obligation, Letter
of Credit, Foreign Letter of Credit or Note is outstanding or any Lender has any
obligation to make any Loans or any Issuing Bank or Foreign Issuing Bank has any
obligation to issue, amend, extend or renew any Letters of Credit or Foreign
Letters of Credit, as the case may be:
11.1. Senior Leverage Ratio. The Borrowers will not permit the Senior
---------------------
Leverage Ratio as determined for any Reference Period ending at any time
during any period described in the table set forth below to be greater than
the ratio set forth opposite such period in such table in which such
Reference Period ends:
<PAGE>
-186-
@@
<TABLE>
<CAPTION>
Period Maximum Ratio
------ -------------
<S> <C>
October 31, 1998 - January 30, 1999 3.00:1.00
January 31, 1999 - April 29, 1999 2.85:1.00
April 30, 1999 - July 30, 1999 2.75:1.00
July 31, 1999 - January 30, 2000 2.65:1.00
January 31, 2000 and thereafter 2.50:1.00
</TABLE>
@@
11.2. Interest Coverage Ratio. The Borrowers will not permit the
-----------------------
Interest Coverage Ratio as determined for any Reference Period ending at
any time during any period described in the table set forth below to be
less than the ratio set forth opposite such period in such table in which
such Reference Period ends:
@@
<TABLE>
<CAPTION>
Period Minimum Ratio
------ -------------
<S> <C>
October 31, 1998 - January 30, 1999 1.50:1.00
January 31, 1999 - April 29, 1999 1.60:1.00
April 30, 1999 - October 30, 1999 1.75:1.00
October 31, 1999 - July 30, 2000 2:00:1.00
July 31, 2000 - January 30, 2001 2.25:1.00
January 31, 2001 and thereafter 2.50:1.00
</TABLE>
@@
11.3. Capital Expenditures. The Borrowers will not make, or permit
--------------------
any Non-Excluded Subsidiary of a Borrower to make, Capital Expenditures in
any fiscal year of the Company ending on or after January 31, 1999 that
exceed in the aggregate (for the Borrowers and all Non-Excluded
Subsidiaries), $35,000,000; provided, however, that the foregoing
-------- -------
limitation on Capital Expenditures shall apply only with respect to each
fiscal year in which the Leverage Ratio, as determined for any Reference
Period ending as of the end of any fiscal quarter in such fiscal year,
exceeds 3.50:1.00, and further provided, if during any such fiscal year the
------- --------
permitted $35,000,000 of Capital Expenditures is not so utilized, such
unutilized amount (each being referred to as an "Unspent Amount") may be
utilized in (but only in) the immediately subsequent fiscal year, and not
thereafter; in any such subsequent fiscal year, actual Capital Expenditures
made from time to time in such fiscal year shall be deemed to have been
made first from (and to utilize) the applicable Unspent Amount carried over
into such fiscal year from the immediately prior fiscal year, and then to
have been made from (and to utilize) the $35,000,000 permitted by
<PAGE>
-187-
this (S)11.3; and in any event the applicable Unspent Amount to be carried
over into any fiscal year shall not exceed $35,000,000.
12. CLOSING CONDITIONS.
------------------
The obligations of the Lenders (including the Fronting Bank) to make the
initial Revolving Credit Loans, Swing Line Loans, Revolving Multicurrency Loans
and Multicurrency Swing Line Loans and the Term Loans and of any Issuing Bank or
Foreign Issuing Bank to issue any initial Letters of Credit or Foreign Letters
of Credit shall be subject to the satisfaction of the following conditions
precedent on or before June 24, 1998:
12.1. Loan Documents.
--------------
12.1.1. Loan Documents. Each of the Loan Documents (including
--------------
such Security Documents as shall then be required to be entered into
on the Closing Date under (S)(S)7, 9.13, 9.15, and 9.24) shall have
been duly executed and delivered by the respective parties thereto,
shall be in full force and effect and shall be in form and substance
satisfactory to each of the Lenders. Each Lender shall have received a
fully executed copy of each such document.
12.1.2 Documents for Related Transactions. Each Lender shall
----------------------------------
have received copies of the documents evidencing the Related
Transactions. The Subordinated Note Tender Offer Documents shall have
resulted in the modification of the 1995 Subordinated Indenture in
order to, among other things, effect the deletion in their entirety of
those covenants contained in (S)(S)4.3, 4.5, 4.6, 4.7, 4.9-4.13, 4.15-
4.20, and 4.22 of Article IV thereof, and to effect the modification
of (S)(S)4.8, 4.21 and 5.1 thereof, in each case as provided in the
Subordinated Note Tender Offer Documents. The Administrative Agent
shall have received a copy of the fully-executed Supplemental
Indenture relating to the 1995 Subordinated Indenture that is referred
to in the Subordinated Note Tender Offer Documents.
12.1.3 Significant Contracts. Each Significant Contract not
---------------------
previously delivered to the Administrative Agent shall have been duly
executed and delivered by the respective parties thereto, shall be in
full force and effect and shall be in form and substance satisfactory
to each of the Lenders. The Administrative Agent and the Lenders shall
have received a fully executed copy of each such document.
12.2. Certified Copies of Charter Documents. Each of the Lenders
-------------------------------------
shall have received from the Borrowers and each of their Non-Excluded
Subsidiaries party to any of the Loan Documents (or whose capital stock is
pledged as Collateral) a copy, certified by a
<PAGE>
-188-
duly authorized officer of such Person to be true and complete on the
Closing Date, of each of (a) its charter or other incorporation documents
as in effect on such date of certification, and (b) its by-laws as in
effect on such date.
12.3. Corporate Action. All corporate action necessary for the valid
----------------
execution, delivery and performance by the Borrowers and each of their Non-
Excluded Subsidiaries of this Credit Agreement and the other Loan Documents
to which it is or is to become a party shall have been duly and effectively
taken, and evidence thereof satisfactory to the Lenders shall have been
provided to each of the Lenders.
12.4. Incumbency Certificate. Each of the Lenders shall have received
----------------------
from the Borrowers and each of their Non-Excluded Subsidiaries party to any
of the Loan Documents (or whose capital stock is pledged as Collateral) an
incumbency certificate, dated as of the Closing Date, signed by a duly
authorized officer of the Borrowers or such Non-Excluded Subsidiary, and
giving the name and bearing a specimen signature of each individual who
shall be authorized: (a) to sign, in the name and on behalf of each of such
Borrowers of such Non-Excluded Subsidiary, each of the Loan Documents, and
any amendment, consent or waiver with respect thereto, to which such
Borrower or such Non-Excluded Subsidiary is or is to become a party; (b) in
the case of (i) the Company, to make Loan Requests, Notices of Swing Line
Borrowings, Conversion Requests and to apply for Letters of Credit and (ii)
Samsonite Europe, to make Revolving Multicurrency Loan Requests, Notices of
Multicurrency Swing Line Borrowings, Conversion Requests and to apply for
Foreign Letters of Credit; and (c) to give notices and to take other action
on its behalf under the Loan Documents.
12.5. Validity of Liens. Except as otherwise expressly provided
-----------------
herein, and to the extent required by (S)(S)7, 9.13, 9.15, and 9.24 hereof,
the Security Documents shall be effective to create in favor of the
Administrative Agent and the Lenders a legal, valid and enforceable first
priority (except for Permitted Liens entitled to priority under applicable
law, and, where applicable, except for the PBGC Ratable Lien but only to
the extent required by the PBGC Letter) perfected security interest in and
lien upon the Collateral. All filings, recordings, deliveries of
instruments and other actions necessary or desirable in the opinion of the
Administrative Agent to perfect, protect and preserve such security
interests shall have been duly effected or there shall have been made
arrangements for the same which are satisfactory to the Administrative
Agent. The Administrative Agent shall have received evidence thereof in
form and substance satisfactory to the Administrative Agent.
12.6. UCC Search Results. The Administrative Agent shall have
------------------
received the results of Uniform Commercial Code ("UCC"), PTO,
<PAGE>
-189-
title searches and other applicable lien searches indicating no liens other
than Permitted Liens, or as described on Schedule 8.13 hereto.
-------------
12.7. Solvency Opinion. Each of the Lenders shall have received a
----------------
copy of an opinion letter from Valuation Research, on which the Lenders
shall be entitled to rely, dated as of the Closing Date, as to the Solvency
of the Company, and the Solvency of the Company and its Subsidiaries, taken
as a whole, following the consummation of the transactions contemplated
herein, including, without limitation, the Recapitalization and the other
Related Transactions, and in form and substance satisfactory to the
Lenders.
12.8. Pro Forma Balance Sheet. The Borrowers shall have delivered to
-----------------------
each of the Lenders a pro forma balance sheet of the Company as of the end
---------
of the most recent month for which the Company's books have been closed
prior to the Closing Date, in form and substance satisfactory to the
Lenders, which pro forma balance sheet shall have been adjusted to give
---------
proper pro forma effect to the Loans to be made hereunder on the Closing
---------
Date, the repayment of any Indebtedness with the proceeds of such Loans,
and the consummation of the Related Transactions to be effected on the
Closing Date.
12.9. Opinion of Counsel. Each of the Lenders and the Agents shall
------------------
have received a favorable legal opinion addressed to the Lenders and the
Agents, dated as of the Closing Date, each in form and substance
satisfactory to the Lenders and the Administrative Agent, from:
(a) Skadden, Arps, Slate, Meagher & Flom LLP, special counsel
to the Company and its Subsidiaries and from Indiana special counsel
to certain of the Obligors satisfactory to the Administrative Agent;
(b) Fernand Keuleneer, Esq., as to Samsonite Europe, this
Credit Agreement, and the Belgian Pledge Agreement; and
(c) local counsel opinions with respect to matters involving
the laws of Canada, Mexico, and any other relevant foreign
jurisdictions, as to the other Foreign Pledge Agreements.
12.10. Payment of Fees. The Borrowers shall have paid to the
---------------
applicable Persons the fees provided for in (S)6.1, and all fees, costs,
and expenses as set forth in (S)17 hereof (including, without limitation,
all accrued and unpaid legal fees and disbursements).
12.11. Payout Letter. The Administrative Agent shall have received a
-------------
payout letter from each "Lender" or from the
<PAGE>
-190-
"Administrative Agent" under (and as each such term is defined in) the
Prior Credit Agreement, in form and substance satisfactory to the
Administrative Agent hereunder, indicating the amount of the loan and other
obligations under the Prior Credit Agreement to be discharged on the
Closing Date.
12.12. Closing of Related Transactions. The Related Transactions shall
-------------------------------
be duly consummated on the Closing Date (or, in the case of the funding of
the Equity Tender Offer, arrangements with respect thereto satisfactory to
the Administrative Agent shall have been effected on the Closing Date).
Each of the documents evidencing, governing or pursuant to which there is
incurred or assumed any obligations or liability for the 1998 Subordinated
Debt or the 1998 Preferred Stock shall have been duly executed and
delivered by the respective parties thereto, shall be in full force and
effect and shall be in form and substance consistent in all material
respects with the terms thereof delivered to the Lead Agents prior to the
Closing Date. The Administrative Agent shall have received appropriate
evidence that all of the closing conditions in the Subordinated Debt
Documents for the issuance and sale of the Subordinated Notes and all of
the documents evidencing or governing 1998 Preferred Stock have been
satisfied without recourse to any provision permitting the waiver by any
party thereto of any condition, obligation, covenant or other requirement,
and that the Company has received the proceeds of the issuance and sale of
such Subordinated Notes and 1998 Preferred Stock in amounts of $350,000,000
and $175,000,000, respectively, less reasonable underwriting discounts and
related fees and expenses.
12.13. Disbursement Instructions. The Administrative Agent shall have
-------------------------
received disbursement instructions from the Borrowers, indicating that a
portion of the proceeds of the initial Loans, in an amount equal to the
aggregate obligations of the Borrowers pursuant to the Prior Credit
Agreement, are to be paid to the lenders thereunder and providing for the
full funding of the Subordinated Note Tender Offer.
12.14. Consents and Approvals. The Administrative Agent shall have
----------------------
received evidence that there shall have been obtained and shall be in full
force and effect all consents and approvals necessary to complete the
transactions contemplated hereby.
12.15. Foreign Subsidiary Indebtedness. The terms and conditions of
-------------------------------
any Indebtedness of any of the Company's Foreign Subsidiaries which is
permitted pursuant to (S)10.1 hereof shall be acceptable to the
Administrative Agent, and any and all liens, security interests and
encumbrances previously granted to the lenders thereof securing such
Indebtedness (except to the extent expressly permitted by this Credit
Agreement) shall have, as of the Closing Date, been terminated.
<PAGE>
-191-
12.16. E-II Bankruptcy Matters. The Administrative Agent and the
-----------------------
Lenders shall be satisfied that arrangements satisfactory to the
Administrative Agent and the Lenders have been made with respect to (a) any
residual funding obligations relating to the E-II Settlement Trust and (b)
any other residual obligations in respect of periods prior to, or matters
left unresolved by, the Reorganization.
12.17. Delivery of Financial Information. The Administrative Agent has
---------------------------------
received the financial statements, projections and other information
referred to in (S)8.4 hereof, and the same shall be satisfactory to the
Administrative Agent and the Lenders in form and substance.
12.18. Senior Debt Assurances. The Administrative Agent shall have
----------------------
received such other certificates, opinions, and letters or agreements that
the Administrative Agent deems necessary to provide the Administrative
Agent and the Lenders with appropriate evidence and assurances that the
Obligations hereunder are "Senior Debt" and "Designated Senior Debt" under
the Subordinated Indenture and that this Credit Agreement is considered the
"Original Credit Agreement" and a "Credit Agreement" for purposes of the
Subordinated Indenture.
12.19. [Intentionally Deleted.]
12.20. Belgian Shareholder Approval. The Administrative Agent shall
----------------------------
have received evidence satisfactory to the Administrative Agent that (a) as
to certain provisions of (S)10 and (S)14 hereof, Samsonite Europe has
complied with the approval procedures of Article 17bis of the Belgian Law
of March 2, 1989 (on the publicity of major holdings in listed companies
and on the regulation of public take-over bids) regarding the decision by
the general meeting of shareholders pursuant to a resolution duly filed
with the Commercial Court, and (b) Samsonite Europe has obtained all
necessary or appropriate shareholder and other corporate approvals in
connection with the Belgian Pledge Agreement.
12.21. Transfer of Subsidiaries. The stock purchase transaction
------------------------
referred to in (S)8.17(e) shall have been completed prior to the Closing
Date, and the Administrative Agent shall have received such information
with respect thereto, and copies of such documentation evidencing or
relating to such transactions, as the Administrative Agent shall have
reasonably requestesd.
12.22. [Intentionally Deleted.]
12.23. PBGC Letter. The Company shall have entered into the PBGC
-----------
Letter, which PBGC Letter shall be substantially in the form delivered to
the Lead Agents prior to the Closing Date.
<PAGE>
-192-
13. CONDITIONS TO ALL BORROWINGS.
----------------------------
The obligations of the Lenders to make any Loan, including the Revolving
Credit Loans, Swing Line Loans, Multicurrency Swing Line Loans, Revolving
Multicurrency Loans and the Term Loans, and of any Issuing Bank or Foreign
Issuing Bank to issue, amend, extend or renew any Letter of Credit or Foreign
Letter of Credit, as the case may be, in each case whether on or after the
Closing Date, shall also be subject to the satisfaction of the following
conditions precedent:
13.1 Representations True; No Event of Default. Each of the
-------------------- --------------------
representations and warranties of any of the Borrowers and their
Subsidiaries contained in this Credit Agreement, the other Loan Documents
or in any document or instrument delivered pursuant to or in connection
with this Credit Agreement shall be true in all material respects as of the
date as of which they were made and shall also be true in all material
respects at and as of the time of the making of such Loan or the issuance,
amendment, extension or renewal of such Letter of Credit or Foreign Letter
of Credit, as the case may be, with the same effect as if made at and as of
that time (except to the extent of changes resulting from transactions
contemplated or permitted by this Credit Agreement and the other Loan
Documents and changes occurring in the ordinary course of business that
singly or in the aggregate are not materially adverse, and to the extent
that such representations and warranties relate expressly to an earlier
date) and no Default or Event of Default shall have occurred and be
continuing. The Administrative Agent shall have received a certificate of
the Borrowers signed by an authorized officer of each of the Borrowers to
such effect.
13.2. No Legal Impediment. No change shall have occurred in any law or
-------------------
regulations thereunder or interpretations thereof that in the reasonable
opinion of any Lender would make it illegal for such Lender to make such
Loan or to participate in the issuance, extension or renewal of such Letter
of Credit or Foreign Letter of Credit, as the case may be, or in the
reasonable opinion of the Issuing Bank or the Foreign Issuing Bank, as the
case may be, would make it illegal for the Issuing Bank or Foreign Issuing
Bank, as the case may be, to issue, amend, extend or renew such Letter of
Credit or Foreign Letter of Credit, as the case may be.
13.3. Governmental Regulation. Each Lender shall have received such
-----------------------
statements in substance and form reasonably satisfactory to such Lender as
such Lender shall require for the purpose of compliance with any applicable
regulations of the Comptroller of the Currency or the Board of Governors of
the Federal Reserve System.
<PAGE>
-193-
13.4. Proceedings and Documents. All proceedings in connection with
-------------------------
the transactions contemplated by this Credit Agreement, the other Loan
Documents and all other documents incident thereto shall be satisfactory in
substance and in form to the Lenders, the Administrative Agent and the
Administrative Agent's Special Counsel, and the Lenders, the Administrative
Agent and such counsel shall have received all information and such
counterpart originals or certified or other copies of such documents as the
Administrative Agent may reasonably request.
14. EVENTS OF DEFAULT; ACCELERATION; ETC.
----------------- ------------- ----
14.1. Events of Default and Acceleration. If any of the following
----------------------------------
events ("Events of Default" or, if the giving of notice or the lapse of
time or both is required, then, prior to such notice or lapse of time,
"Defaults") shall have occurred and be continuing:
(a) any of the Borrowers or any of their applicable
Subsidiaries shall fail to pay any principal of the Loans, any
Reimbursement Obligation or any Foreign Reimbursement Obligation when
the same shall become due and payable, whether at the stated date of
maturity or any accelerated date of maturity or at any other date
fixed for payment or otherwise;
(b) any of the Borrowers or any of their applicable
Subsidiaries shall fail to pay any interest on the Loans, the
Commitment Fees, any Letter of Credit Fee, any Foreign Letter of
Credit Fee, the Agent's Fee, the Fronting Fees, or other sums due
hereunder or under any of the other Loan Documents within three (3)
Business Days after the same shall become due and payable, whether at
the stated date of maturity or any accelerated date of maturity or at
any other date fixed for payment or otherwise;
(c) the Borrowers shall fail to comply with any of its
covenants contained in (S)(S)9.2, 9.3, 9.4(j), 9.5.1, 9.5.3-9.5.6,
9.5.10, 9.5.11, the first sentence of 9.6, 9.7, 9.9-9.29, 10, 11, or
20.10. In determining whether an event has occurred or will occur
which would result in the violation of the covenant set forth in
(S)11.2 hereof as of the applicable fiscal quarter end date set forth
in such covenant, the Lenders and the Agent may rely upon either the
Borrowers having stated in writing or having announced publicly that
such an event has occurred or will occur (including an announcement in
the form of a press release or a statement in a report filed with the
Securities and Exchange Commission), or the applicable financial
statements and/or Compliance Certificate in respect of such fiscal
period reflecting such event;
<PAGE>
-194-
(d) the Borrowers or any of their Subsidiaries shall fail to
perform any applicable term, covenant or agreement contained herein or
in any of the other Loan Documents (other than those specified
elsewhere in this (S)14.1) for fifteen (15) days after written notice
of such failure has been given to the Borrowers by the Administrative
Agent;
(e) any representation or warranty of the Borrowers or any of
their Subsidiaries in this Credit Agreement or any of the other Loan
Documents or in any other document or instrument delivered pursuant to
or in connection with this Credit Agreement shall prove to have been
false in any material respect upon the date when made or deemed to
have been made or repeated;
(f) the Obligors or any of their Non-Excluded Subsidiaries
shall fail to pay when due, or within any applicable period of grace,
any obligation for borrowed money or credit received, or in respect of
any Capitalized Leases, in an amount in excess of $1,000,000, or any
Subordinated Debt; or fail to observe or perform any material term,
covenant or agreement contained in any agreement by which it is bound,
evidencing or securing borrowed money or credit received, or in
respect of any Capitalized Leases, in an amount in excess of
$1,000,000, or any Subordinated Debt, for such period of time as would
permit (assuming the giving of appropriate notice if required) the
holder or holders thereof or of any obligations issued thereunder to
accelerate the maturity thereof;
(g) any of the Obligors, the Significant Domestic Subsidiaries,
the Significant Foreign Subsidiaries, the Significant Subsidiaries (as
defined in the Subordinated Indenture or in any other Subordinated
Debt Documents that are then in effect, including the "Significant
Restricted Subsidiaries", as such term is used and defined in the
Subordinated Indenture), or any Subsidiary the stock of which is
pledged under the Security Documents (whether all, or a portion, of
such capital stock is so pledged) (collectively, the "Applicable
Entities", and individually, an "Applicable Entity") shall make an
assignment for the benefit of creditors, or admit in writing its
inability to pay or generally fail to pay its debts as they mature or
become due, or shall petition or apply for the appointment of a
trustee or other custodian, liquidator or receiver of any of the
Applicable Entities or of any substantial part of the assets of any of
the Applicable Entities or shall commence any case or other proceeding
relating to any of the Applicable Entities under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation or similar law of any jurisdiction, now or
hereafter
<PAGE>
-195-
in effect, or shall take any action to authorize or in furtherance of
any of the foregoing; or if any such petition or application shall be
filed or any such case or other proceeding shall be commenced against
any of the Applicable Entities indicate its approval thereof, consent
thereto or acquiescence therein or such petition or application shall
not have been dismissed within forty-five (45) days following the
filing thereof;
(h) a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating any of the
Applicable Entities bankrupt or insolvent, or approving a petition in
any such case or other proceeding, or a decree or order for relief is
entered in respect of any of the Applicable Entities in an involuntary
case under federal bankruptcy laws as now or hereafter constituted;
(i) there shall remain in force, undischarged, unsatisfied and
unstayed, for more than thirty (30) days, whether or not consecutive,
any final judgment against any of the Applicable Entities that, with
other outstanding final judgments, undischarged, against the
Applicable Entities exceeds in the aggregate $1,000,000;
(j) the holders of all or any part of the Subordinated Debt
shall accelerate the maturity of all or any part of the Subordinated
Debt; or any of the Subordinated Debt or the 1998 Preferred Stock
shall be (or shall be required at such time to be) prepaid, redeemed,
repurchased, or retired in whole or in part, except as otherwise
expressly permitted (with respect to certain purchases of remaining
1995 Subordinated Notes) pursuant to (S)10.8 hereof; or the Company or
any of its Subsidiaries shall be or become required under the
Subordinated Debt Documents, the 1998 Preferred Stock Documents, or
otherwise to prepay, redeem, repurchase or retire (or shall be or
become required thereunder or otherwise to offer to prepay, redeem,
repurchase or retire) all or any part of the Subordinated Debt or the
1998 Preferred Stock;
(k) if any of the Loan Documents shall be cancelled,
terminated, revoked or rescinded or the Administrative Agent's
security interests, mortgages or liens in a substantial portion of the
Collateral shall cease to be perfected, or shall cease to have the
priority contemplated by the Security Documents, in each case
otherwise than in accordance with the terms thereof or with the
express prior written agreement, consent or approval of the Lenders,
or any action at law, suit or in equity or other legal proceeding to
cancel, revoke or rescind any of the Loan Documents shall be commenced
by or on behalf of any of the Borrowers or any of
<PAGE>
-196-
their Subsidiaries party thereto or any of their respective
stockholders, or any court or any other governmental or regulatory
authority or agency of competent jurisdiction shall make a
determination that, or issue a judgment, order, decree or ruling to
the effect that, any one or more of the Loan Documents is illegal,
invalid or unenforceable in accordance with the terms thereof;
(l) with respect to any Guaranteed Pension Plan, an ERISA
Reportable Event shall have occurred subsequent to the date hereof,
and the Majority Lenders shall have determined in their reasonable
discretion that such event reasonably could be expected to result in
liability of any of the Borrowers or any of their Subsidiaries to the
PBGC or such Guaranteed Pension Plan in an aggregate amount exceeding
$1,000,000 and such event in the circumstances so occurring then
reasonably could constitute grounds for the termination of such
Guaranteed Pension Plan by the PBGC or for the appointment by the
appropriate United States District Court of a trustee to administer
such Guaranteed Pension Plan; or a trustee shall have been appointed
by the United States District Court to administer any Guaranteed
Pension Plan; or the PBGC shall have instituted proceedings to
terminate any Guaranteed Pension Plan; or any of the Borrowers or any
ERISA Affiliate is assessed withdrawal liability pursuant to Title IV
of ERISA by a Multiemployer Plan, requiring aggregate annual payments
exceeding $500,000 per year in respect thereof;
(m) any of the Applicable Entities shall be enjoined,
restrained or in any way prevented by the order of any court or any
administrative or regulatory agency from conducting any material part
of its business and such order shall continue in effect for more than
thirty (30) days;
(n) there shall occur any strike, lockout, labor dispute,
embargo, condemnation, act of God or public enemy, or other casualty,
which in any such case causes, for more than fifteen (15) consecutive
days, the cessation or substantial curtailment of revenue producing
activities at any facility or location of any of the Applicable
Entities but only if such event or circumstance is not covered by
business interruption insurance, and which would have a Material
Adverse Effect;
(o) there shall occur the loss, suspension or revocation of, or
failure to renew, any license or permit now held or hereafter acquired
by any of the Applicable Entities if such loss, suspension, revocation
or failure to renew would have a Material Adverse Effect;
<PAGE>
-197-
(p) any of the Applicable Entities shall be indicted for a
state or federal crime, or any civil or criminal action shall
otherwise have been brought or threatened against any of the
Applicable Entities, a punishment for which in any such case could
include the forfeiture of any assets of such Applicable Entity having
a fair market value sufficient to constitute a Material Adverse
Effect;
(q) any one or more of the agreements referred to in clauses
(a) and (b) of (S)8.16.6 shall have been terminated, whether by its or
their terms or by notice given thereunder pursuant to its or their
terms, without substitution therefor of an agreement or agreements
reasonably expected to forestall any termination of the Single
Employer Plans covered by such specified agreements;
(r) (i) during any period of up to twenty-four (24) consecutive
months, individuals who, at the beginning of such twenty-four (24)
month period were directors of the Company shall cease, for any
reason, to constitute a majority of the board of directors of the
Company (except to the extent that individuals who at the beginning of
such twenty-four (24) month period were replaced by individuals (x)
elected by a majority of the remaining members of the board of
directors of the Company or (y) nominated for election by a majority
of the remaining members of the board of directors of the Company and
thereafter elected as directors by shareholders of the Company); or
(ii) a Change of Control (as defined in the Subordinated Indenture),
or a "change of control" or similar event as described in any other
Subordinated Debt Documents, or in the 1998 Preferred Stock Documents,
shall have occurred; or (iii) Samsonite Europe shall fail to be a
direct, Wholly-Owned Subsidiary of the Company (except for matters
referred to in (S)10.19.1(d) hereof);
(s) any default similar to those set forth in (S)14.1(f), (g),
(h) or (i) shall occur with respect to an Excluded Subsidiary, the
result of which would cause any obligation or arrangement or
commitment of the Borrower or any Non-Excluded Subsidiary described in
clauses (h) or (i) of the definition of Indebtedness (with respect to
Indebtedness exceeding $1,000,000 in principal amount) to become due
or matured;
then, and in any such event, so long as the same may be continuing, the
Administrative Agent may, and upon the request of the Majority Lenders
shall, by notice in writing to the Borrowers declare all amounts owing with
respect to this Credit Agreement, the Notes and the other Loan Documents
and all Reimbursement Obligations and
<PAGE>
-198-
Foreign Reimbursement Obligations to be, and they shall thereupon forthwith
become, immediately due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby expressly waived by the
Borrowers; provided that in the event of any Event of Default specified in
--------
(S)(S)14.1(g), 14.1(h) or 14.1(j) (other than solely pursuant to the 1995
Subordinated Indenture), all such amounts shall become immediately due and
payable automatically and without any requirement of notice from any of the
Agents or any Lender.
14.2. Termination of Commitments. If any one or more of the Events of
--------------------------
Default specified in (S)14.1(g), (S)14.1(h) or (S)14.1(j) (other than
solely pursuant to the 1995 Subordinated Indenture) shall occur, any unused
portion of the credit hereunder shall forthwith terminate and each of the
Lenders shall be relieved of all further obligations to make Loans to the
Borrowers and the Issuing Bank and the Foreign Issuing Bank shall be
relieved of all further obligations to issue, amend, extend or renew
Letters of Credit and Foreign Letters of Credit. If any other Event of
Default shall have occurred and be continuing, or if on any Drawdown Date
or other date for issuing, extending or renewing any Letter of Credit or
Foreign Letter of Credit the conditions precedent to the making of the
Loans to be made on such Drawdown Date or (as the case may be) to issuing,
amending, extending or renewing such Letter of Credit or such Foreign
Letter of Credit, as the case may be, on such other date are not satisfied,
the Administrative Agent may and, upon the request of the Majority
Revolving Lenders, shall, by notice to the Borrowers, terminate the unused
portion of the credit facilities provided hereunder, and upon such notice
being given such unused portion of the credit facilities provided hereunder
shall terminate immediately and each of the Lenders shall be relieved of
all further obligations to make Loans and the Issuing Bank and the Foreign
Issuing Bank shall be relieved of all further obligations to issue, amend,
extend or renew Letters of Credit and Foreign Letters of Credit. No
termination of the credit hereunder shall relieve the Borrowers or any of
their Subsidiaries of any of the Obligations.
14.3. Remedies. In case any one or more of the Events of Default shall
--------
have occurred and be continuing, and whether or not the Lenders shall have
accelerated the maturity of the Loans pursuant to (S)14.1, each Lender, if
owed any amount with respect to the Loans or the Reimbursement Obligations
or the Foreign Reimbursement Obligations, may, with the consent of the
Majority Lenders but not otherwise, proceed to protect and enforce its
rights by suit in equity, action at law or other appropriate proceeding,
whether for the specific performance of any covenant or agreement contained
in this Credit Agreement and the other Loan Documents or any instrument
pursuant to which the Obligations to such Lender are evidenced, including
as permitted by applicable law the obtaining of
<PAGE>
-199-
the ex parte appointment of a receiver, and, if such amount shall have
-- -----
become due, by declaration or otherwise, proceed to enforce the payment
thereof or any other legal or equitable right of such Lender. No remedy
herein conferred upon any Lender or the Administrative Agent or the holder
of any Note or purchaser of any Letter of Credit Participation or Foreign
Letter of Credit Participation is intended to be exclusive of any other
remedy and each and every remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing
at law or in equity or by statute or any other provision of law.
14.4. Exchange Rate. If, for the purpose of obtaining judgment in any
-------------
court or obtaining an order enforcing a judgment, it becomes necessary for
any Lender to convert any amount due to such Lender under this Credit
Agreement in Dollars or in any other currency (hereinafter in this (S)14.4
called the "first currency") into any other currency (hereinafter in this
(S)14.4 called the "second currency"), then the conversion shall be made at
such Lender's spot rate of exchange for buying the first currency with the
second currency prevailing at such Lender's close of business on the
Business Day next preceding the day on which the judgment is given or (as
the case may be) the order is made. Any payment made to any Lender pursuant
to this Credit Agreement in the second currency shall constitute a
discharge of the obligations of the respective Borrower to pay to such
Lender any amount originally due to such Lender in the first currency under
this Credit Agreement only to the extent of the amount of the first
currency which such Lender is able, on the date of the actual receipt by it
of such payment in any second currency, to purchase, in accordance with
such Lender's normal banking procedures, with the amount of such second
currency so received. If the amount of the first currency falls short of
the amount originally due to such Lender in the first currency under this
Credit Agreement, the Borrowers hereby agree that they will indemnify such
Lender against and save such Lender harmless from any shortfall so arising.
This indemnity shall const1itute an obligation of such Borrower separate
and independent from the other obligations contained in this Credit
Agreement, shall give rise to a separate and independent cause of action
and shall continue in full force and effect notwithstanding any judgment or
order for a liquidated sum or sums in respect of amounts due to such Lender
under this Credit Agreement or under any such judgment or order. Any such
shortfall shall be deemed to constitute a loss suffered by such Lender and
the Borrowers shall not be entitled to require any proof or evidence of any
actual loss. The covenant contained in this (S)14.4 shall survive the
payment in full of all of the other obligations of the Borrowers under this
Credit Agreement.
14.5. Distribution of Collateral Proceeds. In the event that following
-----------------------------------
the occurrence or during the continuance of any Default or Event of
Default, any of the Agents or any Lender, as the case may be,
<PAGE>
-200-
receives any monies in connection with the enforcement of any the Security
Documents, or otherwise with respect to the realization upon any of the
Collateral, such monies shall be distributed for application as follows
(subject to the provisions of the Collateral Agency Agreements with respect
to the PBGC Ratable Lien, which may be applicable in certain circumstances
expressly set forth therein):
(a) First, to the payment of, or (as the case may be) the
reimbursement of the Administrative Agent for or in respect of all
reasonable costs, expenses, disbursements and losses which shall have
been incurred or sustained by the Administrative Agent in connection
with the collection of such monies by the Administrative Agent, for
the exercise, protection or enforcement by the Administrative Agent of
all or any of the rights, remedies, powers and privileges of the
Administrative Agent under this Credit Agreement or any of the other
Loan Documents or in respect of the Collateral or in support of any
provision of adequate indemnity to the Administrative Agent against
any taxes or liens which by law shall have, or may have, priority over
the rights of the Administrative Agent to such monies;
(b) Second, to all other Obligations in such order or preference
as the Majority Lenders may determine; provided, however, that (i)
-------- -------
distributions in respect of such Obligations shall be made pari passu
---- -----
among Obligations with respect to the fees and compensation payable to
the Agents pursuant to (S)6.1 and all other Obligations, and (ii)
distributions in respect of Obligations owing to the Lenders with
respect to each type of Obligation such as interest, principal, fees
and expenses, shall be made among the Lenders pro rata; and provided,
--- ---- --------
further, that the Administrative Agent may in its discretion make
-------
proper allowance to take into account any Obligations not then due and
payable;
(c) Third, upon payment and satisfaction in full or other
provisions for payment in full satisfactory to the Lenders and the
Agents of all of the Obligations, to the payment of any obligations
required to be paid pursuant to (S)9-504(1)(c) of the Uniform
Commercial Code of the State of New York; and
(d) Fourth, the excess, if any, shall be returned to the
Borrowers or to such other Persons as are entitled thereto.
15. SETOFF.
------
Regardless of the adequacy of any collateral, during the continuance of any
Event of Default, any deposits or other sums credited by or due from any of the
Lenders to any of the Borrowers and any securities or other
<PAGE>
-201-
property of any of the Borrowers in the possession of such Lender may be applied
to or set off by such Lender against the payment of Obligations. Each of the
Lenders agrees with each other Lender that (a) if an amount to be set off is to
be (or is ever) applied to Indebtedness of any of the Borrowers to such Lender,
other than Indebtedness evidenced by the Notes held by such Lender, or Loan
Accounts maintained by any Lender or the Fronting Bank or constituting
Reimbursement Obligations or Foreign Reimbursement Obligations, as the case may
be, owed to such Lender, such amount shall be applied first to the Indebtedness
evidenced by all such Notes or Loan Accounts held by such Lender or constituting
Reimbursement Obligations or Foreign Reimbursement Obligations owed to such
Lender, and (b) if such Lender shall receive from any of the Borrowers, whether
by voluntary payment, exercise of the right of setoff, counterclaim, cross
action, enforcement of the claim evidenced by the Notes held by, or Loan
Accounts maintained by or constituting Reimbursement Obligations or Foreign
Reimbursement Obligations, as the case may be, owed to, such Lender by
proceedings against such Borrower at law or in equity or by proof thereof in
bankruptcy, reorganization, liquidation, receivership or similar proceedings, or
otherwise, and shall retain and apply to the payment of the Note or Notes held
by, or Loan Accounts maintained by or Reimbursement Obligations or Foreign
Reimbursement Obligations, as the case may be, owed to, such Lender any amount
in excess of its applicable ratable portion of the payments received by all of
the Lenders with respect to the Notes held by, or Loan Accounts maintained by
and Reimbursement Obligations or Foreign Reimbursement Obligations, as the case
may be, owed to, all of the Lenders, such Lender will make such disposition and
arrangements with the other Lenders with respect to such excess, either by way
of distribution, pro tanto assignment of claims, subrogation or otherwise as
--- -----
shall result in each Lender receiving in respect of the Notes held by it or Loan
Accounts maintained by it or Reimbursement Obligations or Foreign Reimbursement
Obligations, as the case may be, owed it, its applicable proportionate payment
as contemplated by this Credit Agreement; provided that if all or any part of
--------
such excess payment is thereafter recovered from such Lender, such disposition
and arrangements shall be rescinded and the amount restored to the extent of
such recovery, but without interest.
THE ADMINISTRATIVE AGENT, THE FOREIGN AGENT AND THE SYNDICATION AGENT.
---------------------------------------------------------------------
16.1. Appointment and Authorization; "Agent". Each Lender hereby
-------------------------------------
irrevocably (subject to (S)16.9) appoints and designates the Agents, and
authorizes the Agents to take such action on its behalf under the
provisions of this Credit Agreement and each other Loan Document and to
exercise such powers and perform such duties as are expressly delegated to
them by the terms of this Credit Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Credit Agreement or in any other Loan Document, the Agents shall not have
any duties or
<PAGE>
-202-
responsibilities, except those expressly set forth herein, nor shall the
Agents have or be deemed to have any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Credit Agreement or any
other Loan Document or otherwise exist against the Agents. Without limiting
the generality of the foregoing sentence, the use of the term "agent" in
this Credit Agreement with reference to the Agents is not intended to
connote any fiduciary or other implied (or express) obligations arising
under agency doctrine of any applicable law. Instead, such term is used
merely as a matter of market custom, and is intended to create or reflect
only an administrative relationship between independent contracting
parties.
16.2. Delegation of Duties. The Agents may execute any of their duties
--------------------
under this Credit Agreement or any other Loan Document by or through
agents, employees or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Agents shall
not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that any of them selects with reasonable care.
16.3. Liability of Agent. None of the Agent-Related Persons shall (i)
------------------
be liable for any action taken or omitted to be taken by any of them under
or in connection with this Credit Agreement or any other Loan Document or
the transactions contemplated hereby (except for its own gross negligence
or willful misconduct), or (ii) be responsible in any manner to any of the
Lenders for any recital, statement, representation or warranty made by the
Borrowers or any Subsidiary or Affiliate of the Borrowers, or any officer
thereof, contained in this Credit Agreement or in any other Loan Document,
or in any certificate, report, statement or other document referred to or
provided for in, or received by the Agents under or in connection with,
this Credit Agreement or any other Loan Document, or for the value of or
title to any Collateral, or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Credit Agreement or any other Loan
Document, or for any failure of the Borrowers or any other party to any
Loan Document to perform its obligations hereunder or thereunder. No Agent-
Related Person shall be under any obligation to any Lender to ascertain or
to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Credit Agreement or any other Loan
Document, or to inspect the properties, books or records of the Borrowers
or any of the Borrowers' Subsidiaries or Affiliates.
16.4. Reliance by Agent.
-----------------
(a) Each of the Agents shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile,
<PAGE>
-203-
telex or telephone message, statement or other document or
conversation believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons, and upon advice
and statements of legal counsel (including counsel to the Borrowers),
independent accountants and other experts selected by the Agents. Each
of the Agents shall be fully justified in failing or refusing to take
any action under this Credit Agreement or any other Loan Document
unless it shall first receive such advice or concurrence of the
Majority Lenders (or, if the action requires the consent of all
Lenders pursuant to (S)27 hereof, the advice or concurrence of all
Lenders) as it deems appropriate and, if it so requests, it shall
first be indemnified to its satisfaction by the Lenders against any
and all liability and expense which may be incurred by it by reason of
taking or continuing to take any such action. The Agents shall in all
cases be fully protected in acting, or in refraining from acting,
under this Credit Agreement or any other Loan Document in accordance
with a request or consent of the Majority Lenders and such request and
any action taken or failure to act pursuant thereto shall be binding
upon all of the Lenders.
(b) For purposes of determining compliance with the conditions
specified in (S)12, each Lender that has executed this Credit
Agreement shall be deemed to have consented to, approved or accepted
or to be satisfied with, each document or other matter either sent by
the Agents to such Lender for consent, approval, acceptance or
satisfaction, or required thereunder to be consented to or approved by
or acceptable or satisfactory to the Lender.
16.5. Notice of Default. None of the Agents shall be deemed to have
-----------------
knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest and
fees required to be paid to such Agent for the account of the Lenders,
unless such Agent shall have received written notice from a Lender or the
Borrowers referring to this Credit Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of default". The
Administrative Agent will notify the Lenders of its receipt of any such
notice. The Administrative Agent shall take such action with respect to
such Default or Event of Default as may be requested by the Majority
Lenders in accordance with (S)14; provided, however, that unless and until
-------- -------
the Administrative Agent has received any such request, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it
shall deem advisable or in the best interest of the Lenders.
16.6. Credit Decision. Each Lender acknowledges that none of the
---------------
Agent-Related Persons has made any representation or warranty
<PAGE>
-204-
to it, and that no act by the Agents hereinafter taken, including any
review of the affairs of the Borrowers and their Subsidiaries, shall be
deemed to constitute any representation or warranty by any Agent-Related
Person to any Lender. Each Lender represents to the Agents that it has,
independently and without reliance upon any Agent-Related Person and based
on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness of
the Borrowers and their Subsidiaries, the value of and title to any
Collateral, and all applicable bank regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into
this Credit Agreement and to extend credit to the Borrowers hereunder. Each
Lender also represents that it will, independently and without reliance
upon any Agent-Related Person and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
analysis, appraisals and decisions in taking or not taking action under
this Credit Agreement and the other Loan Documents, and to make such
investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Borrowers. Except for notices, reports and other
documents expressly herein required to be furnished to the Lenders by the
Agents, the Agents shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business,
prospects, operations, property, financial and other condition or
creditworthiness of the Borrowers which may come into the possession of any
of the Agent-Related Persons.
16.7. Indemnification of Agents. Whether or not the transactions
-------------------------
contemplated hereby are consummated, each of the Lenders shall indemnify
upon demand the Agent-Related Persons (to the extent not reimbursed by or
on behalf of the Borrowers and without limiting the obligation of the
Borrowers to do so), from and against such Lender's Total Percentage of any
and all Indemnified Liabilities; provided, however, that no Lender shall be
-------- -------
liable for the payment to the Agent-Related Persons of any portion of such
Indemnified Liabilities resulting solely from such Person's gross
negligence or willful misconduct. Without limitation of the foregoing, each
Lender shall reimburse the Agents upon demand for its Total Percentage of
any costs or out-of-pocket expenses (including Attorney Costs) incurred by
any Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Credit Agreement, any
other Loan Document, or any document contemplated by or referred to herein,
to the extent that the Agent that incurred such costs and expenses is not
reimbursed for such costs and expenses by or on behalf of the Borrowers.
The
<PAGE>
-205-
undertaking in this (S)16.7 shall survive the payment of all Obligations
hereunder and the resignation or replacement of any or all of the Agents.
16.8. Agents in Individual Capacity. Any of the Agents may make loans
-----------------------------
to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking,
trust, financial advisory, underwriting or other business with the
Borrowers and their Subsidiaries and Affiliates as though the Agents were
not Agents hereunder and without notice to or consent of the Lenders. The
Lenders acknowledge that, pursuant to such activities, the Agents or their
Affiliates may receive information regarding the Borrowers or their
Affiliates (including information that may be subject to confidentiality
obligations in favor of the Borrowers ) and acknowledge that the Agents
shall be under no obligation to provide such information to them. With
respect to their Loans, the Agents shall have the same rights and powers
under this Credit Agreement as any other Lender and may exercise the same
as though it were not the Agent, and the terms "Lender" and "Lenders"
include the Agents in its and their individual capacities, as applicable.
16.9. Successor Agents. The Agents may, and at the request of the
----------------
Majority Lenders shall, resign as Agents upon 30 days' notice to the
Lenders. If an Agent resigns under this Credit Agreement, the Majority
Lenders shall appoint from among the Lenders a successor agent for the
Lenders, which successor agent shall be approved by the Borrowers. If no
successor agent is appointed prior to the effective date of the resignation
of such Agent, the retiring Agent may appoint, after consulting with the
Lenders and the Borrowers, a successor agent from among the Lenders. Upon
the acceptance of its appointment as successor agent hereunder, such
successor agent shall succeed to all the rights, powers and duties of the
retiring Agent, the term "Agent" shall include such successor agent, and
the retiring Agent's appointment, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article 16 and shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Credit Agreement. If no successor agent has accepted appointment as Agent
by the date which is 30 days following a retiring Agent's notice of
resignation, the retiring Agent's resignation shall nevertheless thereupon
become effective and the Lenders shall perform all of the duties of such
Agent hereunder until such time, if any, as the Majority Lenders appoint a
successor agent as provided for above.
<PAGE>
-206-
16.10. Collateral Matters.
------------------
(a) The Administrative Agent is authorized on behalf of all the
Lenders, without the necessity of any notice to or further consent
from the Lenders, from time to time to take any action with respect to
any Collateral or the Security Documents which may be necessary to
perfect and maintain perfected the security interest in and liens upon
the Collateral granted pursuant to the Security Documents. Without
limitation of the generality of the foregoing, the Administrative
Agent, in its capacity as Collateral Agent, is hereby authorized to
enter into the Collateral Agency Agreements in connection with the
arrangements with the PBGC Ratable Lien as to certain Collateral (to
the extent required by the PBGC Letter).
(b) The Lenders irrevocably authorize the Administrative Agent,
at its option and in its discretion, to release any lien granted to or
held by the Administrative Agent upon any Collateral (i) upon
termination of the Commitments and payment in full of all Loans and
all other Obligations (as and to the extent further described in (S)29
hereof) known to the Administrative Agent and payable under this
Credit Agreement or any other Loan Document; (ii) constituting
property sold or to be sold or disposed of as part of or in connection
with any disposition permitted hereunder, including the circumstances
described in (S)29 hereof; (iii) constituting property in which the
Borrowers or any Subsidiary owned no interest at the time the lien was
granted or at any time thereafter; (iv) constituting property leased
to the Borrowers or any Subsidiary under a lease which has expired or
been terminated in a transaction permitted under this Credit Agreement
or is about to expire and which has not been, and is not intended by
the Borrowers or such Subsidiary to be, renewed or extended; (v)
consisting of an instrument evidencing Indebtedness or other debt
instrument, if the indebtedness evidenced thereby has been paid in
full; or (vi) if approved, authorized or ratified in writing by the
Majority Lenders or all the Lenders, as the case may be, as provided
herein. Upon request by the Administrative Agent at any time, the
Lenders will confirm in writing the Administrative Agent's authority
to release particular types or items of Collateral pursuant to this
(S)16.10(b), provided that the absence of any such confirmation for
--------
whatever reason shall not affect the Administrative Agent's rights
under this (S)16.10.
(c) In case one or more Events of Default have occurred and shall
be continuing, and whether or not acceleration of the Obligations
shall have occurred, the Administrative Agent shall, if (a) so
requested by the Majority Lenders and (b) the Lenders have provided to
the
<PAGE>
-207-
Administrative Agent such additional indemnities and assurances
against expenses and liabilities as the Administrative Agent may
reasonably request, proceed to enforce the provisions of the Security
Documents authorizing the sale or other disposition of all or any part
of the Collateral and exercise all or any such other legal and
equitable and other rights or remedies as it may have in respect of
such Collateral. The Majority Lenders may direct the Administrative
Agent in writing as to the method and the extent of any such sale or
other disposition, the Lenders hereby agreeing to indemnify and hold
the Administrative Agent harmless from all liabilities incurred in
respect of all actions taken or omitted in accordance with such
directions, provided that the Administrative Agent need not comply
with any such direction to the extent that the Administrative Agent
reasonably believes the Administrative Agent's compliance with such
direction to be unlawful or commercially unreasonable in any
applicable jurisdiction.
(d) As an independent contractor empowered by the Lenders to
exercise certain rights and perform certain duties and
responsibilities hereunder and under the other Loan Documents, the
Administrative Agent is nevertheless a "representative" of the
Lenders, as that term is defined in Article 1 of the Uniform
Commercial Code, for purposes of actions for the benefit of the
Lenders and the Agents with respect to all collateral security and
guaranties contemplated by the Loan Documents. Such actions include
the designation of the Administrative Agent as "secured party",
"mortgagee" or the like on all financing statements and other
documents and instruments, whether recorded or otherwise, relating to
the attachment, perfection, priority or enforcement of any security
interests, mortgages or deeds of trust in collateral security intended
to secure the payment or performance of any of the Obligations, all
for the benefit of the Lenders and the Agents. For the avoidance of
doubt, it is hereby understood and agreed by all parties hereto that
subject to the other terms of this Credit Agreement, the
Administrative Agent is also empowered to act in the name of and for
the account of each of the Lenders where it is, under applicable law,
necessary or advisable for the purpose of creating, filing, recording,
registering or otherwise perfecting the security interest granted in
any Collateral or the guarantees contemplated by the Loan Documents
for the benefit of the Lenders.
16.11. Delinquent Lenders. Notwithstanding anything to the contrary
------------------
contained in this Credit Agreement or any of the other Loan Documents, any
Lender that fails (a) to make available to the Administrative Agent or, in
the case of a Foreign Letter of Credit, the
<PAGE>
-208-
Foreign Agent, its applicable required pro rata share (if any) of any Loan
--- ----
or to purchase its applicable required amount (if any) of any Letter of
Credit Participation or Foreign Letter of Credit Participation, as the case
may be, (b) to make payment on the due date therefor of any amount due to
the Fronting Bank under (S)6.11.2, or (c) to comply with the provisions of
(S)15 with respect to making dispositions and arrangements with the other
Lenders, where such Lender's share of any payment received, whether by
setoff or otherwise, is in excess of its pro rata (based on all applicable
--- ----
outstanding Loans, Unpaid Reimbursement Obligations and Foreign Unpaid
Reimbursement Obligations) share of such payments due and payable to all of
the Lenders, in each case as, when and to the full extent required by the
provisions of this Credit Agreement, shall be deemed delinquent (a
"Delinquent Lender") and shall be deemed a Delinquent Lender until such
time as such delinquency is satisfied. A Delinquent Lender shall be deemed
to have assigned any and all payments due to it from the Borrowers, whether
on account of outstanding Loans, Unpaid Reimbursement Obligations, Foreign
Unpaid Reimbursement Obligations, interest, fees or otherwise, to the
remaining nondelinquent Lenders for application to, and reduction of, their
respective applicable pro rata shares of all outstanding Loans, Unpaid
--- ----
Reimbursement Obligations and Foreign Unpaid Reimbursement Obligations so
affected by such delinquency. The Delinquent Lender hereby authorizes the
Administrative Agent to distribute such payments to the nondelinquent
Lenders in proportion to their respective applicable pro rata shares of all
--- ----
applicable outstanding Loans, Unpaid Reimbursement Obligations and Foreign
Unpaid Reimbursement Obligations. A Delinquent Lender shall be deemed to
have satisfied in full a delinquency when and if, as a result of
application of the assigned payments to all outstanding Loans, Unpaid
Reimbursement Obligations and Foreign Unpaid Reimbursement Obligations of
the nondelinquent Lenders (so affected by such delinquency), the applicable
Lenders' respective pro rata shares of all applicable outstanding Loans,
--- ----
Unpaid Reimbursement Obligations and Foreign Unpaid Reimbursement
Obligations so affected by such delinquency have returned to those in
effect immediately prior to such delinquency and without giving effect to
the nonpayment causing such delinquency. The Administrative Agent, on
behalf of the Lenders, shall provide written notice (via registered mail)
to Samsonite Europe upon the occurrence of any Lender becoming a Delinquent
Lender hereunder and the possible assignment of such Lender's right to
receive payments hereunder to the other Lenders.
<PAGE>
-209-
16.12. Holders of Notes. The Agents may deem and treat the payee of
----------------
any Note, the holder of any Loan Account, or the purchaser of any Letter of
Credit Participation or Foreign Letter of Credit Participation as the
absolute owner or purchaser thereof for all purposes hereof until it shall
have been furnished in writing with a different name by such payee or by a
subsequent holder, assignee or transferee.
16.13. No Rights or Duties of Documentation Agent. The Documentation
------------------------------------------
Agent, as such, shall have no rights and no duties or responsibilities to
the other Agents, the Borrowers, the Guarantors, or any of the Lenders
hereunder.
16.14. Payments to Agent; Distribution of Funds by Agent.
-------------------------------------------------
(a) A payment by any of the Borrowers to any Agent hereunder or
under any of the other Loan Documents for the account of any Lender
shall constitute a payment to such Lender. Each Agent agrees promptly
to distribute to each Lender such Lender's applicable pro rata share
--------
(based on each Lender's applicable portion (if any) of the related
Loans, Unpaid Reimbursement Obligations and Foreign Unpaid
Reimbursement Obligations) of payments received by such Agent for the
ratable account of the Lenders except as otherwise expressly provided
herein or in any of the other Loan Documents.
(b) If in the opinion of such Agent the distribution of any
amount received by it in such capacity hereunder, under the Notes or
under any of the other Loan Documents might involve it in liability,
it may refrain from making distribution until its right to make
distribution shall have been adjudicated by a court of competent
jurisdiction. If a court of competent jurisdiction shall adjudge that
any amount received and distributed by such Agent is to be repaid,
each Person to whom any such distribution shall have been made shall
either repay to such Agent its proportionate share of the amount so
adjudged to be repaid or shall pay over the same in such manner and to
such Persons as shall be determined by such court.
17. EXPENSES.
--------
The Company agrees to pay (a) the reasonable costs of producing and
reproducing this Credit Agreement, the other Loan Documents and the other
agreements and instruments mentioned herein, (b) any taxes (including any
interest and penalties in respect thereto) payable by the Agents or any of the
Lenders (other than taxes based upon any Agent's or any Lender's net
<PAGE>
-210-
income) on or with respect to the transactions contemplated by this Credit
Agreement (the Borrowers hereby agreeing to indemnify the Agents and each Lender
with respect thereto), (c) the reasonable fees, expenses and disbursements of
the Administrative Agent's Special Counsel, or any special or local counsel of
any of the Agents incurred in connection with the preparation, negotiation,
administration or interpretation of the Loan Documents and other instruments
mentioned herein, each closing hereunder, and amendments, modifications,
approvals, consents or waivers hereto or hereunder, (d) the reasonable out-of-
pocket fees, expenses and disbursements of the Agents in connection with the
preparation, negotiation, administration or interpretation of the Loan Documents
and other instruments mentioned herein, (e) all reasonable out-of-pocket
expenses (including without limitation reasonable attorneys' fees and costs,
which attorneys may be employees of any Lender or the Agents, and reasonable
consulting, accounting, appraisal, investment banking and similar professional
fees and charges) incurred by any Lender or any Agent in connection with (i) the
enforcement of or preservation of rights or remedies under any of the Loan
Documents against any of the Borrowers or any of their Subsidiaries or the
administration thereof after the occurrence of a Default or Event of Default and
(ii) any litigation, proceeding or dispute whether arising hereunder or
otherwise, in any way related to any Lender's or any Agent's relationship with
any of the Borrowers or any of their Subsidiaries, (f) all reasonable fees,
expenses and disbursements of any Lender or any Agent incurred in connection
with UCC, PTO, title and any other applicable filings or recordings with respect
to any Security Documents or Collateral, and (g) all reasonable fees, expenses
and disbursements of the Agents (and their affiliates) associated with any
syndication of the Loans, and any Additional Commitment Amounts pursuant to
(S)20.12. The covenants of this (S)17 shall survive payment or satisfaction of
all other Obligations.
18. INDEMNIFICATION.
---------------
The Borrowers agree to indemnify and hold harmless the Agent-Related
Persons and the Lenders from and against any and all claims, actions and suits
whether groundless or otherwise, and from and against any and all liabilities,
losses, damages, expenses and any and all Indemnified Liabilities of every
nature and character arising out of this Credit Agreement or any of the other
Loan Documents or the Related Transactions or the other transactions
contemplated hereby including, without limitation, (a) any actual or proposed
use by any of the Borrowers or any of their Subsidiaries of the proceeds of any
of the Loans or Letters of Credit or Foreign Letters of Credit, (b) the
Borrowers or any of their Subsidiaries entering into or performing this Credit
Agreement or any of the other Loan Documents or (c) with respect to any of the
Borrowers and their Subsidiaries and their respective properties and assets, the
violation of any Environmental Law, the presence, disposal, escape, seepage,
leakage, spillage, discharge, emission, release or threatened release of any
Hazardous Substances or any action, suit, proceeding or investigation
<PAGE>
-211-
brought or threatened with respect to any Hazardous Substances (including, but
not limited to, claims with respect to wrongful death, personal injury or damage
to property), in each case including, without limitation, the reasonable fees
and disbursements of counsel and allocated costs of internal counsel incurred in
connection with any such investigation, litigation or other proceeding, and any
and all other Attorney Costs, except to the extent that any of the foregoing are
directly caused by the gross negligence or willful misconduct of the applicable,
otherwise indemnified party. In litigation, or the preparation therefor, the
Lenders and the Agents shall be entitled to select their own counsel and, in
addition to the foregoing indemnity, the Borrowers agree to pay promptly the
reasonable fees and expenses of such counsel. If, and to the extent that the
obligations of the Borrowers under this (S)18 are unenforceable for any reason,
each of the Borrowers hereby agrees to make the maximum contribution to the
payment in satisfaction of such obligations which is permissible under
applicable law. The covenants contained in this (S)18 shall survive payment or
satisfaction in full of all other Obligations.
19. SURVIVAL OF COVENANTS, ETC.
--------------------------
All covenants, agreements, representations and warranties made herein, in
the Notes, in any of the other Loan Documents or in any documents or other
papers delivered by or on behalf of any of the Borrowers or any of their
Subsidiaries pursuant hereto shall be deemed to have been relied upon by the
Lenders and the Agents, notwithstanding any investigation heretofore or
hereafter made by any of them, and shall survive the making by the Lenders of
any of the Loans and the issuance, extension or renewal of any Letters of Credit
or Foreign Letters of Credit, as the case may be, as herein contemplated, and
shall continue in full force and effect so long as any Letter of Credit, Foreign
Letter of Credit or any amount due under this Credit Agreement or the Notes or
any of the other Loan Documents remains outstanding or any Lender has any
obligation to make any Loans or the Issuing Bank or the Foreign Issuing Bank has
any obligation to issue, extend, amend, or renew any Letter of Credit or Foreign
Letter of Credit, as the case may be, and for such further time as may be
otherwise expressly specified in this Credit Agreement. All statements
contained in any certificate or other paper delivered to any Lender or any of
the Agents at any time by or on behalf of any of the Borrowers or any of their
Subsidiaries pursuant hereto or in connection with the transactions contemplated
hereby shall constitute representations and warranties by such Borrower or such
Subsidiary hereunder.
20. ASSIGNMENT AND PARTICIPATION; NEW LENDERS.
-----------------------------------------
20.1. Conditions to Assignment by Lenders. Except as provided herein,
-----------------------------------
each Lender may assign to one or more Eligible Assignees all or a portion
of its interests, rights and obligations under this Credit Agreement
(including (x) all or a portion of its Foreign Term Loan Commitment
Percentage and the same portion of the Foreign Term
<PAGE>
-212-
Loan owing to it and of the related Term Loan Account maintained by it and
its participating interest in the risk relating to the portion of the
Foreign Term Loan that is a Fronted Loan (collectively, such Lender's
"Foreign Term Obligations"); (y) all or a portion of its Domestic Term Loan
Commitment Percentage and the same portion of the Domestic Term Loan owing
to it and of the related Term Note held by it (collectively, such Lender's
"Domestic Term Obligations"), and/or (z) all or a portion of its Revolving
Commitment Percentage, Revolving Multicurrency Commitment Percentage, and
the same portion of the Loans (other than the Term Loans) at the time owing
to it, the Revolving Credit Notes held by it, the Multicurrency Loan
Accounts maintained by it and its participating interest in the risk
relating to any Letters of Credit, Foreign Letters of Credit or Fronted
Loans that are Multicurrency Revolving Loans (collectively, such Lender's
"Revolving Obligations")); it being understood that any assignment of any
applicable percentage portion of any Revolving Obligations held by any
Lender must cover the same percentage portion of all Revolving Obligations
held by such Lender; any assignment of any applicable percentage portion of
any Domestic Term Obligations held by any Lender must cover the same
percentage portion of all Domestic Term Obligations held by such Lender;
and any assignment of any applicable percentage portion of any Foreign Term
Obligations held by any Lender must cover the same percentage portion of
all Foreign Term Obligations held by such Lender; provided that (a) unless
--------
such assignment is to another Lender or to an affiliate of the transferor
Lender, each of the Administrative Agent, the Foreign Agent, the Swing Line
Lender, and the Multicurrency Swing Line Lender, the Issuing Bank, the
Foreign Issuing Bank, the Fronting Bank and, so long as no Event of Default
has occurred and is continuing, each of the Borrowers shall have given its
prior written consent to such assignment, which consent, in the case of the
Borrowers, will not be unreasonably withheld or delayed (except that in the
case of an assignment solely with respect to either or both of the Term
Loans, no such approval shall be required to be obtained from the Issuing
Bank, the Foreign Issuing Bank, the Swing Line Lender, or the Multicurrency
Swing Line Lender, and in the case of an assignment solely with respect to
the Domestic Term Loan, no approval shall be required to be obtained from
the Foreign Agent or the Fronting Bank), (b) prior to or concurrently with
any such assignment, each Eligible Assignee shall have complied with the
requirements of (S)6.2.3 hereof, (c) each such assignment shall be of a
constant, and not a varying or indeterminate, percentage of all the
assigning Lender's rights and obligations in respect of the Revolving
Credit Loans, Revolving Multicurrency Loans, Multicurrency Swing Line
Loans, Swing Line Loans, Letters of Credit, Foreign Letters of Credit and
Fronted Loans that are Revolving Multicurrency Loans (and related
Commitments), or the Domestic Term Loan, or the Foreign Term Loan and the
portion of the Foreign Term Loan that is a Fronted Loan, as applicable,
<PAGE>
-213-
under this Credit Agreement, subject to the requirement set forth above
regarding assignments covering all Revolving Obligations, or all Domestic
Term Obligations, or all Foreign Term Obligations, as the case may be, of a
particular Lender, (d) unless such assignment is to another Lender or to an
affiliate of the transferor Lender each assignment (if less than 100% of
such Lender's then existing interests in the Obligations) shall be in an
amount that is a whole multiple of $5,000,000 or a greater integral
multiple of $1,000,000 in excess thereof, (e) the parties to such
assignment shall execute and deliver to the Administrative Agent, for
recording in the Register (as hereinafter defined), an Assignment and
Acceptance, substantially in the form of Exhibit F hereto (an "Assignment
---------
and Acceptance"), together with any Notes subject to such assignment, and
(f) no Lender other than the Primary Syndication Parties (pursuant to
certain arrangements made among them) shall have the right to assign any of
its rights, interest or obligations hereunder or under the other Loan
Documents during the Primary Syndication Period. Upon such execution,
delivery, acceptance and recording, from and after the effective date
specified in each Assignment and Acceptance, which effective date shall be
at least five (5) Business Days after the execution thereof, (i) the
assignee thereunder shall be a party hereto and, to the extent provided in
such Assignment and Acceptance, have the rights and obligations of a Lender
hereunder, and (ii) the assigning Lender shall, to the extent provided in
such assignment and upon payment to the Administrative Agent of the
registration fee referred to in (S)20.3, be released from its obligations
under this Credit Agreement. The assignor and assignee shall also provide
Samsonite Europe with written notice (via registered mail) of any
assignment made hereunder.
20.2. Certain Representations and Warranties; Limitations; Covenants.
-------------------------------------- ------------ ----------
By executing and delivering an Assignment and Acceptance, the parties to
the assignment thereunder confirm to and agree with each other and the
other parties hereto as follows:
(a) other than the representation and warranty that it is the
legal and beneficial owner of the interest being assigned thereby free
and clear of any adverse claim, the assigning Lender makes no
representation or warranty, express or implied, and assumes and shall
have no responsibility with respect to any statements, warranties or
representations made in or in connection with this Credit Agreement or
the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Credit Agreement, the other Loan
Documents, the Collateral, or any other instrument or document
furnished pursuant hereto or the attachment, perfection or priority of
any security interest or mortgage,
<PAGE>
-214-
(b) the assigning Lender makes no representation or warranty and
assumes and shall have no responsibility with respect to the financial
condition of any of the Borrowers and their Subsidiaries or any other
Person primarily or secondarily liable in respect of any of the
Obligations, or the performance or observance by any of the Borrowers
and their Subsidiaries or any other Person primarily or secondarily
liable in respect of any of the Obligations of any of their
obligations under this Credit Agreement or any of the other Loan
Documents or any other instrument or document furnished pursuant
hereto or thereto;
(c) such assignee confirms that it has received a copy of this
Credit Agreement, together with copies of the most recent financial
statements referred to in (S)8.4 and (S)9.4 and such other documents
and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance;
(d) such assignee will, independently and without reliance upon
the assigning Lender, the Agents or any other Lender and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking
action under this Credit Agreement;
(e) such assignee represents and warrants that it is an Eligible
Assignee;
(f) such assignee appoints and authorizes each of the Agents to
take such action as agent on its behalf and to exercise such powers
under this Credit Agreement and the other Loan Documents as are
delegated to such Agent by the terms hereof or thereof, together with
such powers as are reasonably incidental thereto;
(g) such assignee agrees that it will perform in accordance with
their terms all of the obligations that by the terms of this Credit
Agreement are required to be performed by it as a Lender;
(h) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance; and
(i) such assignee acknowledges that it has made arrangements
with the assigning Lender satisfactory to such assignee with respect
to its applicable pro rata share (if any) of Letter of Credit Fees and
--- ----
Foreign Letter of Credit Fees in
<PAGE>
-215-
respect of outstanding Letters of Credit and Foreign Letters of
Credit.
20.3. Register. The Administrative Agent shall maintain a copy of each
--------
Assignment and Acceptance delivered to it and a register (the "Register")
for the recordation of the names and addresses of the Lenders and the
Revolving Commitment Percentage, Revolving Multicurrency Commitment
Percentage, Foreign Term Loan Commitment Percentage or, as applicable,
Domestic Term Loan Commitment Percentage of, and the principal amount of
the Loans owing to, the risk participation in any Fronted Loans, Letter of
Credit Participations and Foreign Letter of Credit Participations purchased
by, the Lenders from time to time. The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrowers, the Agents
and the Lenders may treat each Person whose name is recorded in the
Register as a Lender hereunder for all purposes of this Credit Agreement.
The Register shall be available for inspection by the Borrowers and the
Lenders at any reasonable time and from time to time upon reasonable prior
notice. Upon each such recordation, the assigning Lender agrees to pay to
the Administrative Agent a registration fee in the sum of $3,500, provided,
--------
that the Administrative Agent shall have the right to waive such fee.
20.4. New Notes. Upon its receipt of an Assignment and Acceptance
---------
executed by the parties to such assignment, together with each Note subject
to such assignment, the Administrative Agent shall (a) record the
information contained therein in the Register, (b) revise Schedule 1 to
----------
reflect appropriately such assignment and such Register notation, and (c)
give prompt notice thereof and distribute a copy of such revised Schedule 1
----------
to the Borrowers and the Lenders (other than, if the assigning Lender will
no longer be a Lender, the assigning Lender). Within five (5) Business Days
after receipt of such notice, the Borrowers, at their own expense, shall
execute and deliver to the Administrative Agent, in exchange for each
surrendered Note, a new Note to the order of such Eligible Assignee in an
amount equal to the amount assumed by such Eligible Assignee pursuant to
such Assignment and Acceptance and, if the assigning Lender has retained
some portion of its obligations hereunder evidenced by a Note, a new Note
to the order of the assigning Lender in an amount equal to the amounts
retained by it hereunder. Such new Notes shall be in an aggregate principal
amount equal to the aggregate principal amount of the surrendered Notes,
shall be dated the effective date of such Assignment and Acceptance and
shall otherwise be in substantially the form of the assigned Notes. The
surrendered Notes shall be cancelled and returned to the Borrowers.
20.5. Participations. Each Lender may sell participations to one or
--------------
more banks or other entities in all or a portion of such Lender's rights
and obligations (whether in respect of its Term Obligations or
<PAGE>
-216-
its Revolving Obligations) under this Credit Agreement and the other Loan
Documents; provided that (a) each such participation shall be in an amount
--------
of not less than $5,000,000, (b) any such sale or participation shall not
affect the rights and duties of the selling Lender hereunder to the
Borrowers and (c) the only rights granted to the participant pursuant to
such participation arrangements with respect to waivers, amendments or
modifications of the Loan Documents shall be the rights to approve waivers,
amendments or modifications that would reduce the principal of or the
interest rate on any Loans, extend the term or increase the amount of the
Commitment of such Lender as it relates to such participant, reduce the
amount of any Commitment Fees, Letter of Credit Fees or Foreign Letter of
Credit Fees to which such participant is entitled, or extend, or change the
applicable amount due on, any regularly scheduled or otherwise required
payment date for principal, interest or fees in which such participant is
to participate.
20.6. Disclosure. Each of the Borrowers agrees that in addition to
----------
disclosures made in accordance with standard and customary banking
practices any Lender may disclose information obtained by such Lender
pursuant to this Credit Agreement to assignees or participants and
potential assignees or participants hereunder and to the counterparties in
any applicable related swap transaction; provided that such assignees or
--------
participants or potential assignees or participants or counterparties shall
agree (a) to treat in confidence such information unless such information
otherwise becomes public knowledge, (b) not to disclose such information to
a third party, except as required by law or legal process and (c) not to
make use of such information for purposes of transactions unrelated to such
contemplated assignment or participation.
20.7. Assignee or Participant Affiliated with the Borrowers. If
-----------------------------------------------------
(notwithstanding the restrictions provided for in the definition of
Eligible Assignee) any assignee Lender or New Lender is a Borrower or an
Affiliate of any of the Borrowers, then any such assignee Lender or New
Lender shall have no right to vote as a Lender hereunder or under any of
the other Loan Documents for purposes of granting consents or waivers or
for purposes of agreeing to amendments or other modifications to any of the
Loan Documents or for purposes of making requests to the Agents pursuant to
(S)14.1 or (S)14.2, and the determination of the Majority Lenders shall for
all purposes of this Credit Agreement and the other Loan Documents be made
without regard to such assignee Lender's or New Lender's interest in any of
the Loans, Reimbursement Obligations or Foreign Reimbursement Obligations.
If any Lender sells to a participant a participating interest in any of the
Loans, Reimbursement Obligations, Foreign Reimbursement Obligations or
other obligations with respect to Letters of Credit or Foreign Letters of
Credit, and such participant is any of the Borrowers or an Affiliate of any
of the Borrowers, then such
<PAGE>
-217-
transferor Lender shall promptly notify the Administrative Agent of the
sale of such participation. A transferor Lender shall have no right to vote
as a Lender hereunder or under any of the other Loan Documents for purposes
of granting consents or waivers or for purposes of agreeing to amendments
or modifications to any of the Loan Documents or for purposes of making
requests to any of the Agents pursuant to (S)14.1 or (S)14.2 to the extent
that such participation is beneficially owned by such Borrower or any
Affiliate of such Borrower, and the determination of the Majority Lenders
shall for all purposes of this Credit Agreement and the other Loan
Documents be made without regard to the interest of such transferor Lender
in the Loans, Reimbursement Obligations, Foreign Reimbursement Obligations,
Letters of Credit or Foreign Letters of Credit to the extent of such
participation.
20.8. Miscellaneous Assignment Provisions. Any assigning Lender shall
-----------------------------------
retain its rights to be indemnified pursuant to (S)18 with respect to any
claims or actions arising prior to the date of such assignment. If any
assignee Lender is not incorporated under the laws of the United States of
America or any state thereof, it shall, prior to the date on which any
interest or fees are payable hereunder or under any of the other Loan
Documents for its account, deliver to the Borrowers and the Administrative
Agent certification as to its exemption from deduction or withholding of
any United States federal income taxes. If any Reference Bank transfers all
of its interest, rights and obligations under this Credit Agreement, the
Administrative Agent shall, in consultation with the Borrowers and with the
consent of the Borrowers (not to be unreasonably withheld or delayed by the
Borrowers) and the Majority Lenders, appoint another Lender to act as a
Reference Bank hereunder. Anything contained in this (S)20 to the contrary
notwithstanding, any Lender may at any time pledge all or any portion of
its interest and rights under this Credit Agreement (including all or any
portion of its Notes) to any of the twelve Federal Reserve Banks organized
under (S)4 of the Federal Reserve Act, 12 U.S.C. (S)341. No such pledge or
the enforcement thereof shall release the pledgor Lender from its
obligations hereunder or under any of the other Loan Documents.
20.9. Assignment by Borrowers. The Borrowers shall not assign or
-----------------------
transfer any of their rights or obligations under any of the Loan Documents
without the prior written consent of each of the Lenders.
20.10. Belgian Share Pledge Registration. In connection with each
---------------------------------
Assignment and Acceptance, and each Instrument of Adherence, concurrently
with the effectiveness thereof, Samsonite Europe shall take all such
actions as shall be necessary or advisable to register the names of any new
or additional Lender as a secured party and pledgee as to the Belgian
Pledge Agreement in the appropriate share
<PAGE>
-218-
registry of Samsonite Europe in accordance with the terms of the Belgian
Pledge Agreement.
20.11. Sharing of Information with Section 20 Subsidiary. Each of the
-------------------------------------------------
Borrowers acknowledges that from time to time financial advisory,
investment banking and other services may be offered or provided to one or
more of the Borrowers and/or their Subsidiaries in connection with this
Credit Agreement or otherwise, by a Section 20 Subsidiary. Each of the
Borrowers, for itself and each of its Subsidiaries, hereby authorizes (i)
such Section 20 Subsidiary to share with the Agents and each Lender any
information delivered to such Section 20 Subsidiary by any of the Borrowers
and/or their Subsidiaries, and (ii) the Agents and each Lender to share
with such Section Subsidiary any information delivered to the Agents or
such Lender by any of the Borrowers and/or their Subsidiaries pursuant to
this Credit Agreement, or in connection with the decision of such Lender to
enter into this Credit Agreement, it being understood, in each case, that
any such Section Subsidiary receiving such information shall be bound by
the confidentiality provisions of this Credit Agreement. Such authorization
shall survive the payment and satisfaction in full of all Obligations.
20.12. New Lenders. Upon joint written request from time to time after
-----------
the Closing Date by the Company and the applicable New Lender (as defined
below) to the Administrative Agent (an "Additional Commitment Request"),
any Person who would then qualify as an Eligible Assignee hereunder may,
prior to the Revolving Credit Loan Maturity Date, join this Agreement as an
additional Lender with Commitments (such Person, which may for the purposes
of this (S)20.12 be an existing Lender, being herein referred to (with
respect to its Additional Commitment Request) as the "New Lender") and be
entitled to all the rights and interests, and obligated to perform all of
the obligations and duties of, a Lender with respect to a specified
additional amount of Commitments hereunder, provided that (a) no Additional
--------
Commitment Request may be given unless the Additional Commitment Conditions
are satisfied, (b) the New Lender, the Administrative Agent, and the
Borrowers shall have executed and delivered an instrument of adherence (the
"Instrument of Adherence") in form and substance reasonably satisfactory to
the New Lender, the Administrative Agent and the Company pursuant to which
such New Lender shall agree to be bound as a Lender (as to the applicable
Additional Commitment Amounts and corresponding Commitments) by the terms
and conditions hereof and the other Loan Documents, and to make Revolving
Credit Loans and (to the extent such New Lender is a Multicurrency Lender)
Revolving Multicurrency Loans to the Borrowers (or to purchase risk
participations from the Fronting Bank for Fronted Loans that are Revolving
Multicurrency Loans made to Samsonite Europe, if such New Lender is not a
Multicurrency Lender, pursuant to (S)6.11.2 hereof), and to participate in
the
<PAGE>
-219-
issuance, extension, and renewal of Letters of Credit and Foreign Letters
of Credit, all in accordance with this Agreement, and which Instrument of
Adherence shall specify the maximum amount of additional Revolving
Commitments and Revolving Multicurrency Commitments that such New Lender
agrees to provide hereunder (the "Additional Commitment Amounts") and the
New Lender's address for notices, (c) the Additional Commitment Amounts
provided by any New Lender must total at least $5,000,000 (in integral
multiples of $1,000,000, if in excess of $5,000,000), (d) after giving
effect to such Additional Commitment Amounts, the Commitments shall not
exceed $150,000,000 (or, if less, the amount equal to the sum of the
Commitments as in existence immediately prior to giving effect to such
Additional Commitment Amounts, plus such Additional Commitment Amounts),
(e) such New Lender and the Administrative Agent shall have received such
opinions of counsel to the Borrowers, such evidence of proper corporate
organization, existence, authority, and appropriate corporate proceedings
with respect to the Borrowers, and such other certificates, instruments,
and documents, as they shall have reasonably requested in connection with
such Instrument of Adherence, (f) the Administrative Agent shall have
received from the Company or the New Lender a processing fee of $3500 in
connection with such Instrument of Adherence, (g) any applicable fees
provided for in the Fee Letters payable at such time shall be paid to the
applicable Persons entitled thereto, (h) prior to or currently with such
Instrument of Adherence, each New Lender shall have complied with the
requirements of (S)6.2.3 hereof, (i) unless the New Lender is also an
existing Lender, each of the Administrative Agent, the Foreign Agent, the
Swing Line Lenders, the Multicurrency Swing Line Lenders, the Issuing Bank,
the Foreign Issuing Bank, and the Fronting Bank shall have given their
prior written consent to such Instrument of Adherence, which consent is not
to be unreasonably withheld or delayed, (j) an appropriate Revolving Credit
Note shall be issued to the New Lender at such time in the applicable
amount provided in (S)2.5, and (k) such New Lender shall have confirmed to
and agreed with the Administrative Agent, for the benefit of the Agents,
the Issuing Bank, the Foreign Issuing Bank, the Fronting Bank, the Swing
Line Lenders, the Multicurrency Swing Line Lenders and the other Lenders,
and with the Borrowers, as follows:
(i) the Agents, the Issuing Bank, the Foreign Issuing Bank, the
Fronting Bank, the Swing Line Lenders, the Multicurrency Swing Line
Lenders, and the other Lenders have made no representation or warranty
and shall have no responsibility with respect to any statements,
warranties or representations made in or in connection with this
Agreement or the other Loan Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency, collectibility or
value of this Agreement, the other Loan Documents, any Collateral, or
any other instrument or document furnished pursuant hereto;
<PAGE>
-220-
(ii) the Agents, the Issuing Bank, the Foreign Issuing Bank,
the Fronting Bank, the Swing Line Lenders, the Multicurrency Swing
Line Lenders, and the other Lenders have made no representation or
warranty and shall have no responsibility with respect to the
financial condition of the Borrowers and their Subsidiaries or any
other Person primarily or secondarily liable in respect of any of the
Obligations, or the performance or observance by the Borrowers and
their Subsidiaries or any other Person primarily or secondarily liable
in respect of any of the Obligations or any of their other obligations
under this Agreement or any of the other Loan Documents or any other
instrument or document furnished pursuant hereto or thereto;
(iii) such New Lender confirms that it has received a copy of
this Agreement, and the other Loan Documents, together with copies of
the most recent financial statements referred to in (S)8.4 and (S)9.4
and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into such
Instrument of Adherence;
(iv) such New Lender will, independently and without reliance
upon the Agents or any other Lender or any other Lender and based on
such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not
taking action under this Agreement;
(v) such New Lender represents and warrants that it qualifies
as an Eligible Assignee;
(vi) such New Lender appoints and authorizes each of the Agents
to take such action as agent on its behalf and to exercise such powers
under this Agreement and the other Loan Documents as are delegated to
such Agents by the terms hereof or thereof, together with such powers
as are reasonably incidental thereto;
(vii) such New Lender agrees that it will perform in accordance
with their terms all of the obligations that by the terms of this
Agreement are required to be performed by it as a Lender having
Commitments; and
(vii) such New Lender represents and warrants that it is legally
authorized to enter into such Instrument of Adherence.
Upon the execution and delivery of an Instrument of Adherence with a
New Lender effected in accordance with all of the foregoing
<PAGE>
-221-
provisions of this (S)20.12, and the occurrence of the effective date of
such Instrument of Adherence, the Total Revolving Commitment and the Total
Revolving Multicurrency Commitment shall be increased by the applicable
Revolving Commitment and Revolving Multicurrency Commitment comprising the
relevant Additional Commitment Amounts, and the Revolving Commitment
Percentage and Revolving Multicurrency Commitment Percentage of each Lender
having Commitments shall be recalculated by the Administrative Agent, such
that (A) the Revolving Commitment Percentage of each Lender having non-zero
Commitments shall be recalculated so as to equal the quotient of the amount
of such Lender's Revolving Commitment divided by the resulting Total
Revolving Commitment after giving effect to the addition of the Revolving
Commitment of the New Lender, and (B) the Revolving Multicurrency
Commitment Percentage of each Lender having non-zero Commitments shall be
recalculated so as to equal the quotient of the amount of such Lender's
Revolving Multicurrency Commitment divided by the resulting Total Revolving
Multicurrency Commitment after giving effect to the addition of the
Revolving Multicurrency Commitment of the New Lender. Promptly thereafter,
the Administrative Agent shall prepare a revised Schedule 1 to this
----------
Agreement which sets forth the respective Commitments of the New Lender and
the other Lenders and the Revolving Commitment Percentages and Revolving
Multicurrency Commitment Percentages of each of the Lenders, and the
revised Total Revolving Commitment and Total Revolving Multicurrency
Commitment after giving effect to the Commitments of the New Lender, and
all references in this Agreement to Schedule 1 shall, thereafter, refer to
----------
Schedule 1 as revised in accordance with the provisions of this (S)20.12.
----------
Promptly thereafter, the Administrative Agent shall notify each of the
Lenders of the joinder hereunder of such New Lender, the resulting increase
in the Total Revolving Commitment and Total Revolving Multicurrency
Commitment, the amounts of the New Lender's Commitments, each Lender's new
Revolving Commitment Percentage and Revolving Multicurrency Commitment
Percentage, and the Administrative Agent shall provide to each of the
Agents, the Issuing Bank, the Foreign Issuing Bank, the Fronting Bank, the
Swing Line Lenders, the Multicurrency Swing Line Lenders, and the other
Lenders with a copy of the executed Instrument of Adherence and a copy of
Schedule 1 reflecting the necessary adjustments, and shall also make
----------
appropriate notations in the Register in accordance with (S)20.3 hereof.
Upon the effective date of any Instrument of Adherence effected in
accordance with all of the foregoing provisions of this (S)20.12, the New
Lender (or, with respect to Revolving Multicurrency Loans, if the New
Lender is not a Multicurrency Lender, the Fronting Bank, to the extent of
the payments under this paragraph to be made in respect of Revolving
Multicurrency Loans that would otherwise be required to be made by the New
Lender, in the manner set forth in (S)4.1) shall
<PAGE>
-222-
make all (if any) such payments to the other Lenders having Commitments and
to the Fronting Bank as may be necessary to result in the respective
Revolving Credit Loans held by such New Lender and the other Lenders having
Commitments being equal to such applicable Lender's Revolving Commitment
Percentage (as then in effect) of the aggregate principal amount of all
Revolving Credit Loans outstanding to the Company as of such date and to
result in the respective Revolving Multicurrency Loans held by such New
Lender (or, if the New Lender is not a Multicurrency Lender, by the
Fronting Bank for the New Lender), the Fronting Bank (as to other Non-
Multicurrency Lenders having Commitments), and those Multicurrency Lenders
having Commitments being equal to such applicable Lender's Revolving
Multicurrency Commitment Percentage (or, as to the Fronting Bank, the Non-
Multicurrency Lenders' Commitment Percentage) (in each case, as then in
effect) of the aggregate principal amount of all Revolving Multicurrency
Loans outstanding to Samsonite Europe as of such date. The Borrowers hereby
agree that any New Lender so paying (or causing the Fronting Bank to pay)
any such amount to the other Lenders and to the Fronting Bank pursuant to
this (S)20.12 shall be entitled to all the rights of a Lender having
Commitments hereunder in respect of such amounts and such payments to such
other Lenders and to the Fronting Bank shall constitute Revolving Credit
Loans and Revolving Multicurrency Loans, as applicable, held by such New
Lender (or, as applicable, the Fronting Bank in the case of any such
Revolving Multicurrency Loans that are Fronted Loans) hereunder and that
such New Lender may, to the fullest extent permitted by law, exercise all
of its right of payment (including the right of set-off) with respect to
such amounts as fully as if such New Lender (or the Fronting Bank, if
applicable) had initially advanced to the applicable Borrower directly the
amount of such payments.
If any such adjustment payments are made to a Lender or the Fronting
Bank pursuant to this (S)20.12 at a time other than the end of an Interest
Period in the case of all or any portion or portions of Revolving Credit
Loans constituting Eurodollar Rate Loans or any Revolving Multicurrency
Loans, the Borrowers shall pay to each of the Lenders and the Fronting Bank
at the time that such payments are made pursuant to this (S)20.12 the
amount that would be required to be paid by the Borrowers pursuant to
(S)6.9 hereof had such payments been made directly by the Borrowers.
The New Lender shall also provide Samsonite Europe with written notice
(via registered mail) of the relevant Additional Commitment Amounts, and
the transfers of funds among the Lenders, to the extent necessary or
advisable under Belgium law to assure the rights of such New Lender under
the Loan Documents with respect to Samsonite Europe.
<PAGE>
-223-
21. NOTICES, ETC.
------------
Except as otherwise expressly provided in this Credit Agreement, all
notices and other communications made or required to be given pursuant to this
Credit Agreement or the Notes or any Letter of Credit Applications or any
Foreign Letter of Credit Applications shall be in writing and shall be deemed to
have been duly made or given when delivered by hand to a responsible officer for
the party to which it is directed or sent, by registered or certified, first
class mail, postage prepaid, three (3) Business Days after posting thereof, or,
in the case of telecopied, facsimile transmission, or telexed notice, at the
time of dispatch thereof, if during normal business hours on a Business Day in
the country and city of receipt, or otherwise at the opening of business on the
following Business Day, addressed as follows:
(a) if to any of the Borrowers, at 11200 East 45th Avenue, Denver,
Colorado 80239, Attention: Richard H. Wiley, Chief Financial Officer, and
at Westerring 17, B-9700 Oudenaarde, Belgium Attention: Ms. Rita Seghers
or at such other address for notice as the Company shall last have
furnished in writing to the Person giving the notice;
(b) if to the Administrative Agent, at the following addresses, or (in
each case) such other address for notice as the Administrative Agent shall
last have furnished in writing to the Person giving the notice:
For notices of borrowing, payments and other administrative matters:
Bank of America National Trust and Savings Association
Agency Administrative Services #5596
1850 Gateway Boulevard
Concord, California 94520
Attention: Josephine T. Flores
Fax: (925) 675-8500
Tel: (925) 675-8387
Payment Instructions:
ABA No.:1210-0035-8
Account No.:12335-15380
Ref.: Samsonite/NYC130
For all other notices (including with respect to amendments and
waivers):
<PAGE>
-224-
Bank of America National Trust and Savings Association
1455 Market Street, 12th Floor
San Francisco, California 94103
Attention: Agency Management #10831
Fax: (415) 436-3425
Tel.:(415) 436-2769
(c) if to the Fronting Bank, Foreign Agent or the Syndication Agent,
as the case may be, at such Fronting Bank's, Foreign Agent's, or
Syndication Agent's address set forth on Schedule 21 hereto, or such other
-----------
address for notice as such Fronting Bank, Foreign Agent or Syndication
Agent shall have last furnished in writing to the Person giving the notice;
and
(d) if to any Lender, at such Lender's address set forth on Schedule 1
-------- -
hereto, or such other address for notice as such Lender shall have last
furnished in writing to the Person giving the notice.
22. GOVERNING LAW.
-------------
THIS CREDIT AGREEMENT AND, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED
THEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF THE
STATE OF NEW YORK AND SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE INTERNAL LAWS OF SAID STATE OF NEW YORK, APPLICABLE TO
TRANSACTIONS TO BE PERFORMED WHOLLY WITHIN SUCH STATE (WITHOUT REGARD TO THE
EFFECT TO LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). EACH OF THE BORROWERS
AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS CREDIT AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS OR THE STATE OF NEW YORK OR THE STATE OF CALIFORNIA OR ANY FEDERAL
COURT SITTING THEREIN AND CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF SUCH
COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWERS BY
MAIL AT THE ADDRESS SPECIFIED IN (S)21. EACH OF THE BORROWERS HEREBY WAIVES ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY
SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
23. HEADINGS.
--------
The captions in this Credit Agreement are for convenience of reference only
and shall not define or limit the provisions hereof.
<PAGE>
-225-
24. COUNTERPARTS.
------------
This Credit Agreement and any amendment hereof may be executed in several
counterparts and by each party on a separate counterpart, each of which when
executed and delivered shall be an original, and all of which together shall
constitute one instrument. In proving this Credit Agreement it shall not be
necessary to produce or account for more than one such counterpart signed by the
party against whom enforcement is sought.
25. ENTIRE AGREEMENT, ETC.
---------------------
The Loan Documents and any other documents executed in connection herewith
or therewith express the entire understanding of the parties with respect to the
transactions contemplated hereby. Neither this Credit Agreement nor any term
hereof may be changed, waived, discharged or terminated, except as provided in
(S)27.
26. WAIVER OF JURY TRIAL.
--------------------
Each of the Borrowers, the Agents and the Lenders hereby waives its right
to a jury trial with respect to any action or claim arising out of any dispute
in connection with this Credit Agreement, the Notes or any of the other Loan
Documents, any rights or obligations hereunder or thereunder or the performance
of which rights and obligations. Except as prohibited by law, each of the
Borrowers hereby waives any right it may have to claim or recover in any
litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. Each of the Borrowers (a) certifies that no representative,
Agent or attorney of any Lender or any Agent has represented, expressly or
otherwise, that such Lender or such Agent would not, in the event of litigation,
seek to enforce the foregoing waivers and (b) acknowledges that the Agents and
the Lenders have been induced to enter into this Credit Agreement, the other
Loan Documents to which it is a party by, among other things, the waivers and
certifications contained herein.
27. CONSENTS, AMENDMENTS, WAIVERS, ETC.
----------------------------------
Except as otherwise expressly provided in the Loan Documents, any consent
or approval required or permitted by this Credit Agreement to be given by all of
the Lenders may be given, and any term of this Credit Agreement, the other Loan
Documents or any other instrument related hereto or mentioned herein may be
amended, and the performance or observance by the Borrowers or any of their
Subsidiaries of any terms of this Credit Agreement, the other Loan Documents or
such other instrument or the continuance of any Default or Event of Default may
be waived (either generally or in a particular instance and either retroactively
or prospectively) with, but only with, the written consent of the Borrowers and
the written consent of the Majority Lenders.
<PAGE>
-226-
Notwithstanding the foregoing,
(a) the release of any security interest or lien as to Collateral
constituting all or substantially all of the Collateral (and any consent to
the disposition of Collateral constituting all or substantially all of the
Collateral) (except if the release or disposition of such Collateral is
permitted or provided for in the provisions of (S)10.5.2 hereof or
elsewhere in the Loan Documents), shall require the written consent of all
of the Lenders, provided that any such agreement that provides for or
--------
consents to the PBGC having an equal and ratable security interest in
certain of the Collateral as (and to the extent) contemplated by the PBGC
Letter (as such letter may be amended from time to time in a manner
permitted by this Agreement) and any documents executed in connection
therewith, shall require only the written consent of the Administrative
Agent (and not of any of the Lenders);
(b) except as set forth elsewhere in this (S)27 and in (S)20.12, the
amount of the Loans, Unpaid Reimbursement Obligations and Foreign Unpaid
Reimbursement Obligations, the provisions of (S)6.3.2, the regularly
scheduled or otherwise required payment dates for any amounts owing under
the Loan Documents to the Lenders, the amounts scheduled or otherwise
required to be due on any such date (other than the application of proceeds
pursuant to an Asset Sale or other asset disposition pursuant to (S)10.5.2
(or Insurance Event pursuant to (S)9.7.2) and (S)3.3.3 hereof, or with
respect to Debt Issuances pursuant to (S)3.3.3), and the scheduled tenor or
term of the Loans or the Notes (except, with respect to each of the
foregoing, as otherwise provided below in this clause (b) or in clause (f)
of this (S)27) may not be changed without the written consent of the
Borrowers and the written consent of all of the Lenders; and the
Commitments of any Lender may not be increased (or decreased except in
connection with a pro rata reduction of the Revolving Commitments and/or
--- ----
Revolving Multicurrency Commitments of the Lenders in accordance with the
terms hereof, or pursuant to and in accordance with the provisions of
(S)20.1 hereof) or extended without the written consent of such Lender;
provided, however, that (and notwithstanding the foregoing), although the
-------- -------
Commitments of any Lender may not be increased without the written consent
of such Lender, the Total Revolving Commitment and the Total Revolving
Multicurrency Commitment (and the resulting amounts of Revolving Credit
Loans and Revolving Multicurrency Loans) may be increased with the written
consent of the Borrowers and the written consent of the Majority Lenders
(or, if the increase of the Total Revolving Commitment and the Total
Multicurrency Commitment does not result in the sum thereof exceeding
$150,000,000, pursuant to and in accordance with the provisions of (S)20.12
hereof);
<PAGE>
-227-
(c) the rate of interest on the Notes and Loans (other than interest
accruing pursuant to (S)6.10 following the effective date of any waiver by
the Majority Lenders, or, as applicable, all of the Lenders, of the Default
or Event of Default relating thereto), the amount of the Commitment Fees,
the Fronting Fees, the Risk Participation Fees, the Letter of Credit Fees
or the Foreign Letter of Credit Fees hereunder may not be reduced without
the written consent of the Borrowers and the written consent of all of the
Lenders adversely affected thereby, and of each of the Fronting Bank, the
Issuing Bank, the Foreign Issuing Bank, the Swing Line Lender, the
Multicurrency Swing Line Lender, the Foreign Agent, the Administrative
Agent, and the Syndication Agent who are entitled to receive the fee or
interest that is proposed to be reduced;
(d) the provisions hereof governing the application of proceeds of
collection or of Collateral received hereunder (other than the application
of proceeds pursuant to an Asset Sale or other asset disposition pursuant
to (S)10.5.2 (or Insurance Event pursuant to (S)9.7.2) and (S)3.3.3
hereof), this (S)27, the definitions of the terms Total Percentage,
Majority Lenders, and, except as provided elsewhere in this (S)27, any
provision of the Loan Documents requiring the approval, direction, or
consent of a specified number or percentage of the Lenders (or of the
holders of a specified type, percentage or amount of Obligations or lending
commitments) may not be amended, and the monetary obligations under the
Loan Documents of the Borrowers may not be waived or released, without the
written consent of all of the Lenders;
(e) the provisions of (S)3.3.3 hereof may not be amended or waived
without the written consent of (i) the Majority Domestic Term Loan Lenders,
in the case of an amendment or waiver directly and adversely affecting the
Lenders holding the Domestic Term Loan; (ii) the Majority Foreign Term Loan
Lenders, in the case of an amendment or waiver directly and adversely
affecting the Lenders holding the Foreign Term Loan; and (iii) the Majority
Revolving Lenders, in the case of an amendment or waiver directly and
adversely affecting the Lenders having Commitments under this Agreement;
the definition of Majority Revolving Lenders may not be amended without the
consent of all Lenders having Commitments; the definition of Majority
Domestic Term Loan Lenders may not be amended without the consent of all
Lenders holding portions of the Domestic Term Loan; and the definition of
Majority Foreign Term Loan Lenders may not be amended without the consent
of all Lenders holding portions of the Foreign Term Loan (or a risk
participation in the portion thereof that is a Fronted Loan);
(f) the scheduled or otherwise required payment dates for any
principal, interest, fees or other amounts owing under the Loan Documents
to the Lenders may be extended only with the consent of
<PAGE>
-228-
both (i) the Majority Lenders and (ii) each Lender that is the holder of a
Loan (or a risk participation in such Loan) as to which any such payment
date is proposed to be extended;
(g) the amount and time for payment of any Agent's Fee, Letter of
Credit Fees, Foreign Letter of Credit Fees or any Fronting Fees that are
payable, as the case may be, for the Administrative Agent's account, the
Syndication Agent's account, the Foreign Agent's account, the Issuing
Bank's account, the Foreign Issuing Bank's account, or the Fronting Bank's
account, as applicable, may not be reduced or extended without the written
consent of, as the case may be, the Administrative Agent, the Syndication
Agent, the Foreign Agent, the Issuing Bank, the Foreign Issuing Bank, or
the Fronting Bank entitled thereto;
(h) no amendment, waiver or consent shall, unless in writing and
signed by each Swing Line Lender, Multicurrency Swing Line Lender, Fronting
Bank, Issuing Bank, Foreign Issuing Bank, Administrative Agent, Syndication
Agent, or Foreign Agent, as the case may be, in addition to the Lenders
required above to take such action, affect the rights or obligations of
such Swing Line Lender, Multicurrency Swing Line Lender, Fronting Bank,
Issuing Bank, Foreign Issuing Bank, Administrative Agent, Syndication
Agent, or Foreign Agent, as the case may be, under this Credit Agreement;
and
(i) the provisions of (S)16 may not be amended without the consent of
the Administrative Agent, the Syndication Agent, the Fronting Bank, and the
Foreign Agent.
No waiver shall extend to or affect any obligation not expressly waived or
impair any right consequent thereon. No course of dealing or delay or omission
on the part of any Agent or any Lender in exercising any right shall operate as
a waiver thereof or otherwise be prejudicial thereto. No notice to or demand
upon the Borrowers shall entitle the Borrower to other or further notice or
demand in similar or other circumstances.
28. SEVERABILITY.
------------
The provisions of this Credit Agreement are severable and if any one clause
or provision hereof shall be held invalid or unenforceable in whole or in part
in any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction, and shall not
in any manner affect such clause or provision in any other jurisdiction, or any
other clause or provision of this Credit Agreement in any jurisdiction.
<PAGE>
-229-
29. RELEASE OF COLLATERAL.
---------------------
The Agents and the Lenders agree that on the date on which (a) all
principal, interest, fees and expenses owing in respect of the Loans, and all
Reimbursement Obligations, Foreign Reimbursement Obligations, Unpaid
Reimbursement Obligations, Foreign Unpaid Reimbursement Obligations, fees and
expenses owing in respect of the Letters of Credit and Foreign Letters of Credit
(whether or not then due and payable) have been paid in full, in cash, (b) any
other accrued monetary Obligations required to be paid to any of the Agents or
the Lenders pursuant to the terms of this Credit Agreement or the other Loan
Documents (whether or not then due and payable) have been paid in full, in cash,
(c) all of the Commitments shall have expired and been terminated, (d) all of
the Letters of Credit and Foreign Letters of Credit shall have expired or been
terminated, and (e) all lending and other credit commitments of the Lenders in
respect thereof have terminated, the Administrative Agent shall, upon the
written request and at the expense of the Borrowers, release its liens and
security interests under the Loan Documents on the Collateral (which release, in
the case of liens and security interests subject to any Collateral Agency
Agreements, may be effected by appropriate modifications to such Collateral
Agency Agreements or other similar documentation, having the same substantive
effect, satisfactory to the Administrative Agent) and execute and deliver to the
Borrowers or the Guarantors, as the case may be, all such lien discharge
documents (all to be non-recourse to the Administrative Agent, the Lead Agents
and the Lenders) as may be reasonably necessary to effect such release of liens.
In the event of the permitted disposition of any assets, or the stock of any
Subsidiaries, pursuant to and in accordance with (S)10.5.2 hereof, the
Administrative Agent shall release only its security interest and liens on, as
the case may be, such permitted disposed assets, the Guarantee (if any) of such
permitted disposed Subsidiary (and the security interest and liens (if any) of
the Administrative Agent on the assets of such disposed Subsidiary securing any
such released Guarantee), all at the expense of the Borrowers.
30. TRANSITIONAL ARRANGEMENTS.
-------------------------
30.1. PRIOR CREDIT AGREEMENT SUPERSEDED. This Credit Agreement shall
---------------------------------
on the Closing Date supersede the Prior Credit Agreement in its entirety, except
as provided in this (S)30. On the Closing Date, the rights and obligations of
the parties evidenced by the Prior Credit Agreement shall be evidenced by this
Credit Agreement and the other Loan Documents, the "Loans" as defined in the
Prior Credit Agreement shall be paid in full by the Company (together with any
amounts payable pursuant to (S)6.9 of the Prior Credit Agreement) and may be
reborrowed in accordance with the terms and conditions hereof. All Existing
Letters of Credit and Existing Foreign Letters of Credit shall, for purposes of
this Credit Agreement, be Letters of Credit and Foreign Letters of Credit, as
applicable, hereunder.
<PAGE>
-230-
30.2. Return of Notes. As soon as reasonably practicable after its
---------------
receipt, on the Closing Date, of its Notes hereunder and payment in full of
any "Obligations" owed to it under the Prior Credit Agreement (some or all
of which may be paid with the proceeds of Loans made in accordance with the
terms and conditions hereof), each of the Lenders that was, immediately
prior to the Closing Date, a party to the Prior Credit Agreement will
promptly return to the Company any promissory notes of the Company that may
be held by such Lender pursuant to the Prior Credit Agreement. In addition,
BKB will request that any "Lender" under the Prior Credit Agreement which
is not a Lender hereunder promptly return to the Company any promissory
notes of the Company held by such Person pursuant to the Prior Credit
Agreement upon receipt by it of payment of all "Obligations" owed to it
under the Prior Credit Agreement.
30.3. Interest and Fees Under Superseded Agreement. All interest and
--------------------------------------------
fees and expenses, if any, owing or accruing under or in respect of the
Prior Credit Agreement through the Closing Date, including any amounts
payable pursuant to (S)6.9 of the Prior Credit Agreement, shall be
calculated as of the Closing Date (prorated in the case of any fractional
periods), and shall be paid on the Closing Date. Commencing on the Closing
Date, the Commitment Fees shall be payable by the Borrowers to the
Administrative Agent for the account of the Lenders, in accordance with
(S)2.3 and (S)4.3.
<PAGE>
-231-
IN WITNESS WHEREOF, the undersigned have duly executed this Second Amended
and Restated Multicurrency Revolving Credit and Term Loan Agreement as of the
date first set forth above.
SAMSONITE CORPORATION
By:_____________________________
Thomas R. Sandler
President Samsonite
The Americas, Secretary
and Senior Vice President
SAMSONITE EUROPE N.V.
By:_____________________________
Thomas R. Sandler
Director
<PAGE>
-232-
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as Administrative Agent
By:________________________________________
Name:
Title:
<PAGE>
-233-
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as Lender (including its capacity as
Issuing Bank)
By:________________________________________
Name:
Title:
<PAGE>
-234-
BANKBOSTON, N.A., individually
and as Syndication Agent
By:________________________________________
Name:
Title:
<PAGE>
-235-
GENERALE BANK N.V., individually
and as Foreign Agent, as Foreign
Issuing Bank and as Fronting Bank
By:________________________________________
Name:
Title:
By:________________________________________
Name:
Title:
<PAGE>
-236-
CANADIAN IMPERIAL BANK OF
COMMERCE, as Documentation Agent
By:________________________________________
Name:
Title:
<PAGE>
-237-
CIBC INC., as Lender
By:________________________________________
Name:
Title:
<PAGE>
EXHIBIT 10.18
AGREEMENT (this "Agreement") made as of June 11, 1998, by and between
SAMSONITE CORPORATION, a Delaware corporation (the "Company"), and LUC VAN NEVEL
(the "Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company and the Executive have entered into an agreement
(the "Original Agreement") as of May 15, 1996 with respect to the issuance to
the Executive of 38,889 shares of the Company's common stock, par value $.01 per
share ("Common Stock"), subject to the conditions contained therein; and
WHEREAS, the Executive Committee and the Compensation Committee of
the Board of Directors of the Company have approved certain amendments to the
Original Agreement in connection with the consummation of the tender offer (the
"Tender Offer") contemplated by the Plan to Recapitalize the Company, dated as
of May 12, 1998 and amended on June 8, 1998; and
WHEREAS, the Company and the Executive desire to amend and restate the
Original Agreement in order to reflect such amendments.
NOW, THEREFORE, in consideration of the foregoing and of the covenants
herein contained, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree that the Original Agreement is amended and restated
effective as of the date hereof to read in its entirety as follows:
1. Stay Bonus. (a) Promptly following the date hereof, but in no
----------
event later than June 17, 1998, the Company shall issue to the Executive
(subject to forfeiture as set forth herein), as a one-time bonus (the "Stay
Bonus"), 38,889 shares (the "Bonus Shares") of Common Stock. The Bonus Shares
shall be registered in the Executive's name, and the Executive shall be
permitted to tender the Bonus Shares into the Tender Offer. Following
consummation of the Tender Offer, the certificates representing the Bonus Shares
not purchased in the Tender Offer shall be held by the Company during the period
(the "Restricted Period") ending on the Stay Date (as defined below). The
Executive shall execute an undated stock power in favor of the
<PAGE>
Company with respect to the Bonus Shares not purchased in the Tender Offer and
shall deliver the same to the Company.
(b) Except as provided in Section 1(c) and 1(d) below, during the
Restricted Period, the Executive shall have all rights of a stockholder of the
Company with respect to the Bonus Shares not purchased in the Tender Offer,
including the right to receive dividends declared on the Common Stock and the
right to vote such shares.
(c) During the Restricted Period, the Executive may not sell, transfer,
pledge, hypothecate or otherwise encumber or dispose of the Bonus Shares not
purchased in the Tender Offer or any interest therein.
(d) If the Executive remains continually employed by the Company or its
subsidiaries from the date hereof through May 15, 1999 (the "Stay Date"), all of
the Bonus Shares not purchased in the Tender Offer shall vest, and the
restrictions imposed thereon shall lapse, on the Stay Date; provided that if the
--------
Executive's employment with the Company is terminated prior to the Stay Date (i)
by reason of death or (ii) by the Executive for Good Reason or (iii) by the
Company other than for Cause or Disability (as such terms are defined below),
then notwithstanding such termination of employment, the Bonus shares not
purchased in the Tender Offer shall vest, and the restrictions imposed thereon
shall lapse, on the thirtieth (30th) day following such termination of
employment (or such earlier date following such termination of employment as the
Company shall select). If the Executive's employment is terminated pursuant to
the foregoing proviso, then in lieu of the vesting of such Bonus Shares and
lapse of the restrictions thereon, the Company may, at its option by giving
written notice to the Executive at any time on or prior to the thirtieth
(30/th/) day following the date of such termination of employment, purchase such
shares from the Executive, and if such option is so exercised the Executive
shall sell such shares to the Company, for a cash purchase price in an amount
equal to the aggregate Fair Market Value (as defined below) of such Bonus Shares
as of the date of such termination of employment (the "Date of Termination").
For all purposes hereof, the Bonus Shares not purchased in the Tender Offer
shall include any securities or other property into which or for which such
Bonus Shares may hereafter be converted or exchanged by reason of merger,
consolidation or similar event.
(e) Upon the vesting of, and lapse of restrictions on, the Bonus Shares
not purchased in the Tender Offer, the certificates evidencing such shares shall
be delivered promptly to the Executive (unless the Company exercises its option
to purchase such shares as provided above). If the Bonus shares not purchased
in the
2
<PAGE>
Tender Offer do not vest and the restrictions thereon do not lapse in accordance
with this Agreement on or prior to May 15, 1999, then such shares shall ipso
----
facto become the property of the Company on the first date that the Executive
- -----
ceases to be employed by the Company.
2. Accelerated Vesting of Stock Options. If a Change of Control
------------------------------------
occurs, then all options to purchase common stock of the Company granted to the
Executive by the Company prior to May 15, 1996 shall vest on the first
anniversary of the date on which such Change of Control occurs (to the extent
such options shall not have otherwise vested as of such accelerated vesting
date), notwithstanding anything to the contrary contained in the Company's 1995
Stock Option Plan (the "Plan") or in any agreement (the "Stock Option
Agreement") between the Company and the Executive governing such options,
provided that the Executive remains continually employed by the Company or its
subsidiaries from the date hereof through such first anniversary date. The term
of such options and all other provisions of such options (including, but not
limited to, provisions governing vesting (to the extent such provisions would
result in earlier vesting), expiration, termination and exercisability) as set
forth in the Plan and the Stock Option Agreement shall remain in full force and
effect.
3. No Right to Continued Employment. Nothing contained in this
--------------------------------
Agreement shall confer upon the Executive the right to continue in the employ of
the Company or to be entitled to any right or benefit not set forth in this
Agreement or to interfere with or limit in any way the right of the Company to
terminate the Executive's employment with the Company.
4. Certain Definitions. As used in this Agreement, the following
-------------------
terms shall have the following meanings:
"Cause" means (a) the engaging by the Executive in willful misconduct
-----
that is materially injurious to the Company, (b) the embezzlement or
misap-propriation of funds or property of the Company by the Executive or the
conviction of the Executive of a felony or the entrance of a plea of guilty by
the Executive to a felony or (c) the failure or refusal by the Executive to
devote his full business time and attention to the performance of his duties and
responsibilities in connection with his employment with the Company or any other
breach by the Executive of the terms of his employment in any material respect
if such breach has not been cured by the Executive within thirty (30) days after
the Preliminary Notice (as defined below) has been given to the Executive. For
purposes of this definition, no act, or failure to act,
3
<PAGE>
on the Executive's part shall be considered "willful" unless done, or omitted to
be done, by him not in good faith and without reasonable belief that his action
or omission was in the best interest of the Company. The Executive shall not be
deemed to have been terminated for Cause, unless the Company shall have given
the Executive (i) notice (the "Preliminary Notice") setting forth, in reasonable
detail the facts and circumstances claimed to provide a basis for termination
for Cause, (ii) a reasonable opportunity for the Executive, together with his
counsel, to be heard before the Board of Directors of the Company (the "Board")
(or any duly authorized committee thereof) and (iii) a notice of termination
stating that, in the good faith judgement of the Board (or any duly authorized
committee thereof), the Executive was guilty of conduct set forth in clauses
(a), (b) or (c) above, and specifying the particulars thereof in reasonable
detail. Upon receipt of the Preliminary Notice, the Executive shall have thirty
(30) days in which to appear before the Board (or any duly authorized committee
thereof) with counsel, or take such other action as he may deem appropriate, and
such thirty (30) day period is hereby agreed to as a reasonable opportunity for
the Executive to be heard.
"Change of Control" means (a) any sale, transfer or other conveyance
-----------------
(whether directly, or indirectly through a merger, consolidation or similar
transaction), or series of related sales, transfers or other conveyances, of
the outstanding capital stock of the Company pursuant to which any person (or
group of affiliated persons) other than an Excluded Person, becomes the
beneficial owner of more than 50% of the outstanding common stock of the Company
or (b) any sale, transfer or other conveyance of all or substantially all of the
Company's assets to any person (or group of affiliated persons) other than to an
Excluded Person. For purposes of the foregoing definition, "Excluded Person"
means and includes (i) Apollo Investment Fund, L.P. ("Apollo"), any of its
affiliates, and, so long as Apollo or an affiliate of Apollo controls the right
to vote the securities in question, any partner, shareholder or trustee of any
of them, (ii) any corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their owner ship of
stock of the Company and (iii) the Company or any subsidiary of the Company.
"Disability" means the Board or any duly authorized committee there of
----------
determines in good faith, based on medical evidence acceptable to it, that the
Executive has become physically or mentally disabled or incapacitated for a
continuous period of ninety (90) days to such an extent that he shall be
unable to perform his duties in connection with his employment with the Company.
4
<PAGE>
"Fair Market Value" of the Common Stock (or other securities or
-----------------
property then constituting the Bonus Shares), as of the Date of Termination, (a)
in the case of Common Stock or any other security, shall be determined with
reference to (i) the closing sales price of such security on the national
securities exchange on which such security is principally traded, on the next
preceding date on which there was a sale of such stock on such exchange, or (ii)
if such security is not listed or admitted to trading on any such exchange, the
closing price as reported by the Nasdaq Stock Market for the last preceding date
on which there was a sale of such security on such exchange, or (iii) if such
security is not then listed on a national securities exchange or on the Nasdaq
Stock Market, the average of the highest reported bid and lowest reported asked
prices for such security as reported by the National Association of Securities
Dealers, Inc. Automated Quotations ("NASDAQ") system for the last preceding date
on which such bid and asked prices were reported, and (b) in the case of a
security that is not then listed on any securities exchange or prices therefor
are not then quoted in the NASDAQ system and in the case of any other property,
such value shall be determined in good faith by the Board (or any duly
authorized committee thereof).
"Good Reason" means, so long as the Executive has not been guilty of
-----------
the conduct set forth in clauses (a), (b) or (c) of the definition of "Cause",
(i) a failure by the Company to comply with any material term of the Executive's
employment with the Company that has not been cured within thirty (30) days
after written notice of such noncompliance has been given by the Executive to
the Company or (ii) the assignment to the Executive by the Company of duties
inconsistent with the Execu tive's position, duties and responsibilities as in
effect immediately prior to the date of execution of this Agreement including,
but not limited to, any material reduction in such position, duties or
responsibilities or material change in his title or (iii) a relocation by the
Company of the Executive's office to a location outside a 30 mile radius of the
location of the Executive's office on the date hereof, and, in the case of each
of clauses (ii) and (iii) above, without the consent of the Executive.
5. Registration Rights. If the Bonus Shares not purchased in the
-------------------
Tender Offer are not repurchased by the Company at its option as provided in
Section 1(d) hereof and the Company has not filed and caused to be effective a
registration statement on Form S-8 with respect to such shares of Common Stock,
then at the request of the Executive, the Company shall promptly file and cause
to be effective a registration statement on an appropriate form selected by the
Company (which may include Form S-8) in order to permit the public resale of
such shares of Common Stock by the Executive; provided that the Company shall
--------
have no such
5
<PAGE>
obligation to file and cause such registration statement to become effective if
in the opinion of counsel to the Company registration under the Securities Act
of 1933 is not then required in order to permit the public sale of such shares
by the Executive.
6. Taxes. The Company shall deduct from all amounts payable under
-----
this Agreement all federal, state, local and other taxes required by law to be
withheld with respect to such payments. In addition, the Company shall have the
right to require the Executive to pay to the Company in cash the amount of any
federal, state, local and foreign income and other taxes that the Company may be
required to with hold before delivering to the Executive a certificate or
certificates representing the Bonus Shares.
7. Confidentiality; Noncompetion. (a) In addition to any agreement
-----------------------------
between the Company and the Executive as to confidentiality, unless otherwise
required by law or judicial process, the Executive shall keep confidential and
not disclose to other persons (including Company employees) all confidential
informa tion known to the Executive concerning the Company and its businesses
during his employment with the Company and for the shorter of three (3) years
following the termination of the Executive's employment with the Company or
until such information is publicly disclosed by the Company or otherwise
becomes publicly disclosed other than through the Executive's actions; provided,
that the Executive shall provide notice to the Company in advance of any
disclosure required by law or judicial process in a timely manner to permit the
Company to oppose such compelled disclosure.
(b) The Executive agrees that during his employment with the Company
and for a period of one (1) year thereafter (unless such employment is
terminated by the Company without Cause or by the Executive for Good Reason,
provided that the Company does not contest that such termination was for Good
Reason), he shall not, directly or indirectly, as a principal, officer,
director, employee or in any other capacity whatsoever, without the prior
written consent of the Com pany, engage in, or be or become interested or
acquire any ownership of any kind in, or become associated with, or make loans
or advance property to any person engaged in or about to engage in, any business
activity that is competitive with any of the businesses then engaged in by the
Company in any of the geographic areas in which such businesses are then
conducted by the Company or have been conducted by the Company during the twelve
months preceding the termination of the Executive's employment. Nothing in this
Agreement shall prevent the Executive from making or holding any investment in
any amount in securities traded on any
6
<PAGE>
national securities exchange or traded in the over the counter market, provided
said investments do not exceed one percent (1%) of the issued and outstanding
stock of any one issuer of such securities.
8. Successors; Binding Agreement. (a) This Agreement shall be
-----------------------------
binding upon and inure to the benefit of the Company and any successor of the
Company, including, without limitation, any person acquiring directly or
indirectly all or substantially all of the assets of the Company, whether by
merger, consolidation, sale or otherwise (and such successor shall thereafter
be deemed the "Company" for the purposes of this Agreement).
(b) This Agreement and all rights of the Executive hereunder shall
inure to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
9. Notice. For purposes of this Agreement, notices, demands and all
------
other communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given (i) when hand delivered, (ii) when sent if
sent by overnight mail, overnight courier or facsimile transmission or (iii)
when mailed by United States certified mail, return receipt requested, postage
prepaid, addressed as follows: (a) if to the Executive, to the then current
address set forth in the employee payroll records of the Company and (b) if to
the Company, to Samsonite Corporation, 12000 East Forty-Fifth Avenue, Denver,
Colorado 80239-3018, Attention: Board of Directors c/o Corporate Secretary (in
each case, with a copy to: Gregory A. Fernicola, Esq., Skadden, Arps, Slate,
Meagher & Flom, 919 Third Avenue, New York, NY 10022) or to such other address
as any party may have furnished to the other in writing in accordance herewith,
except that notices of change of address shall be effective only upon receipt.
10. Miscellaneous. (a) The parties hereto agree that this Agreement
-------------
contains the entire understanding and agreement between them with respect to the
subject matter hereof, and supersedes all prior understandings and agreements
between the parties respecting such subject matter, and that the provisions of
this Agreement may not be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing signed by the parties hereto.
The Original Agreement is hereby superseded in its entirety and shall be of no
------
further force or effect from and after the date hereof. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof
7
<PAGE>
have been made by either party which are not set forth expressly in this
Agreement. The descriptive headings of the several sections and paragraphs
contained herein have been inserted for convenience of reference only and shall
in no way limit or otherwise affect the meaning hereof.
(b) No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agree ment to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
(c) Except as expressly provided in Section 2 hereof, nothing
con tained in this Agreement shall in any way affect the respective rights and
obligations of the parties hereto contained in any other agreement between the
parties hereto, including, but not limited to, any present or future employment
agreement between the Company and the Executive. Any Stay Bonus to which the
Executive is entitled hereunder is not in lieu of salary or other compensation
for services rendered by the Executive to the Company.
(d) The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of New York without giving
effect to the conflict of laws principles thereof.
(e) Any action required to be taken under this Agreement within a
certain number of days shall be taken within that number of calendar days;
provided that if the last day for taking such action falls on a weekend or a
- --------
holiday, the period during which such action may be taken shall be automatically
extended to the next business day.
(f) The invalidity or unenforceability of any provision or provisions
of this Agreement shall not affect the validity or enforceability of any other
provision or provisions of this Agreement, which shall remain in full force and
effect.
(g) This Agreement may be executed in more than one counterpart, each
of which shall be deemed to be an original but both of which together shall
constitute one and the same instrument.
8
<PAGE>
IN WITNESS WHEREOF, the Company has caused its name to be subscribed
to this Agreement by its duly authorized representative and the Executive has
executed this Agreement as of the date and the year first above written.
SAMSONITE CORPORATION
By: ___________________________________
Name:
Title:
_______________________________________
Luc Van Nevel
9
<PAGE>
EXHIBIT 10.19
AGREEMENT (this "Agreement") made as of June 11, 1998, by and between
SAMSONITE CORPORATION, a Delaware corporation (the "Company"), and THOMAS R.
SANDLER (the "Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company and the Executive have entered into an agreement
(the "Original Agreement") as of May 15, 1996 with respect to the issuance to
the Executive of 38,889 shares of the Company's common stock, par value $.01 per
share ("Common Stock"), subject to the conditions contained therein; and
WHEREAS, the Executive Committee and the Compensation Committee of
the Board of Directors of the Company have approved certain amendments to the
Original Agreement in connection with the consummation of the tender offer (the
"Tender Offer") contemplated by the Plan to Recapitalize the Company, dated as
of May 12, 1998 and amended on June 8, 1998; and
WHEREAS, the Company and the Executive desire to amend and restate the
Original Agreement in order to reflect such amendments.
NOW, THEREFORE, in consideration of the foregoing and of the covenants
herein contained, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree that the Original Agreement is amended and restated
effective as of the date hereof to read in its entirety as follows:
1. Stay Bonus. (a) Promptly following the date hereof, but in no
----------
event later than June 17, 1998, the Company shall issue to the Executive
(subject to forfeiture as set forth herein), as a one-time bonus (the "Stay
Bonus"), 38,889 shares (the "Bonus Shares") of Common Stock. The Bonus Shares
shall be registered in the Executive's name, and the Executive shall be
permitted to tender the Bonus Shares into the Tender Offer. Following
consummation of the Tender Offer, the certificates representing the Bonus Shares
not purchased in the Tender Offer shall be held by the Company during the period
(the "Restricted Period") ending on the Stay Date (as defined below). The
Executive shall execute an undated stock power in favor of the
<PAGE>
Company with respect to the Bonus Shares not purchased in the Tender Offer and
shall deliver the same to the Company.
(b) Except as provided in Section 1(c) and 1(d) below, during the
Restricted Period, the Executive shall have all rights of a stockholder of the
Company with respect to the Bonus Shares not purchased in the Tender Offer,
including the right to receive dividends declared on the Common Stock and the
right to vote such shares.
(c) During the Restricted Period, the Executive may not sell, transfer,
pledge, hypothecate or otherwise encumber or dispose of the Bonus Shares not
purchased in the Tender Offer or any interest therein.
(d) If the Executive remains continually employed by the Company or its
subsidiaries from the date hereof through May 15, 1999 (the "Stay Date"), all of
the Bonus Shares not purchased in the Tender Offer shall vest, and the
restrictions imposed thereon shall lapse, on the Stay Date; provided that if the
--------
Executive's employment with the Company is terminated prior to the Stay Date
(i) by reason of death or (ii) by the Executive for Good Reason or (iii) by the
Company other than for Cause or Disability, then notwithstanding such
termination of employment, the Bonus shares not purchased in the Tender Offer
shall vest, and the restrictions imposed thereon shall lapse, on the thirtieth
(30th) day following such termination of employment (or such earlier date
following such termination of employment as the Company shall select). If the
Executive's employment is terminated pursuant to the foregoing proviso, then in
lieu of the vesting of such Bonus Shares and lapse of the restrictions thereon,
the Company may, at its option by giving written notice to the Executive at any
time on or prior to the thirtieth (30/th/) day following the date of such
termination of employment, purchase such shares from the Executive, and if such
option is so exercised the Executive shall sell such shares to the Company, for
a cash purchase price in an amount equal to the aggregate Fair Market Value (as
defined below) of such Bonus Shares as of the Date of Termination (as defined in
the Employment Agreement (the "Employment Agreement"), effective as of May 1,
1995, between the Company and the Executive). For all purposes hereof, the
Bonus Shares not purchased in the Tender Offer shall include any securities or
other property into which or for which such Bonus Shares may hereafter be
converted or exchanged by reason of merger, consolidation or similar event.
(e) Upon the vesting of, and lapse of restrictions on, the Bonus Shares
not purchased in the Tender Offer, the certificates evidencing such shares shall
be delivered promptly to the Executive (unless the Company exercises its option
to purchase such shares as provided above). If the Bonus shares not purchased
in the
2
<PAGE>
Tender Offer do not vest and the restrictions thereon do not lapse in
accordance with this Agreement on or prior to May 15, 1999, then such shares
shall ipso facto become the property of the Company on the first date that the
---- -----
Executive ceases to be employed by the Company.
(f) As used herein, the terms "Good Reason" and "Cause" have the
respective meanings given to such terms in the Employment Agreement,
"Disability" means a determination of the Board of Directors of the Company (the
"Board") (or any duly authorized committee thereof) described in Section 5(b) of
the Employment Agreement and the "Fair Market Value" of the Common Stock (or
other securities or property then constituting the Bonus Shares), as of the
Date of Termination, (i) in the case of Common Stock or any other security,
shall be determined with reference to (1) the closing sales price of such
security on the national securities exchange on which such security is
principally traded, on the next preceding date on which there was a sale of such
stock on such exchange, or (2) if such security is not listed or admitted to
trading on any such exchange, the closing price as reported by the Nasdaq Stock
Market for the last preceding date on which there was a sale of such security on
such exchange, or (3) if such security is not then listed on a national
securities exchange or on the Nasdaq Stock Market, the average of the highest
reported bid and lowest reported asked prices for such security as reported by
the National Association of Securities Dealers, Inc. Automated Quotations
("NASDAQ") system for the last preceding date on which such bid and asked prices
were reported, and (ii) in the case of a security that is not then listed on any
securities exchange or prices therefor are not then quoted in the NASDAQ system
and in the case of any other property, such value shall be determined in good
faith by the Board (or any duly authorized committee thereof).
2. Accelerated Vesting of Stock Options. If a Change of Control
------------------------------------
occurs, then all options to purchase common stock of the Company granted to the
Executive by the Company prior to May 15, 1996 shall vest on the first
anniversary of the date on which such Change of Control occurs (to the extent
such options shall not have otherwise vested as of such accelerated vesting
date), notwithstanding anything to the contrary contained in the Company's 1995
Stock Option Plan (the "Plan") or in any agreement (the "Stock Option
Agreement") between the Company and the Executive governing such options,
provided that the Executive remains continually employed by the Company or its
subsidiaries from the date hereof through such first anniversary date. The term
of such options and all other provisions of such options (including, but not
limited to, provisions governing vesting (to the extent such provisions would
result in earlier vesting), expiration, termination and
3
<PAGE>
exercisability) as set forth in the Plan and the Stock Option Agreement shall
remain in full force and effect.
As used herein, "Change of Control" means (a) any sale, transfer or
other conveyance (whether directly, or indirectly through a merger,
consolidation or similar transaction), or series of related sales, transfers or
other conveyances, of the outstanding capital stock of the Company pursuant to
which any person (or group of affiliated persons) other than an Excluded Person,
becomes the beneficial owner of more than 50% of the outstanding common stock of
the Company or (b) any sale, transfer or other conveyance of all or
substantially all of the Company's assets to any person (or group of affiliated
persons) other than to an Excluded Person. For purposes of the foregoing
definition, "Excluded Person" means and includes (i) Apollo Investment Fund,
L.P. ("Apollo"), any of its affiliates, and, so long as Apollo or an affiliate
of Apollo controls the right to vote the securities in question, any partner,
shareholder or trustee of any of them, (ii) any corporation owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company and (iii) the Company or
any subsidiary of the Company.
3. No Right to Continued Employment. Nothing contained in this
--------------------------------
Agreement shall confer upon the Executive the right to continue in the employ of
the Company or to be entitled to any right or benefit not set forth in this
Agreement or to interfere with or limit in any way the right of the Company to
terminate the Executive's employment with the Company.
4. Registration Rights. If the Bonus Shares not purchased in the
-------------------
Tender Offer are not repurchased by the Company at its option as provided in
Section 1(d) hereof and the Company has not filed and caused to be effective a
registration statement on Form S-8 with respect to such shares of Common Stock,
then at the request of the Executive, the Company shall promptly file and cause
to be effective a registration statement on an appropriate form selected by the
Company (which may include Form S-8) in order to permit the public resale of
such shares of Common Stock by the Executive; provided that the Company shall
--------
have no such obligation to file and cause such registration statement to become
effective if in the opinion of counsel to the Company registration under the
Securities Act of 1933 is not then required in order to permit the public sale
of such shares by the Executive.
5. Taxes. The Company shall deduct from all amounts payable under
-----
this Agreement all federal, state, local and other taxes required by law to be
withheld with respect to such payments. In addition, the Company shall have the
4
<PAGE>
right to require the Executive to pay to the Company in cash the amount of any
federal, state, local and foreign income and other taxes that the Company may be
re quired to withhold before delivering to the Executive a certificate or
certificates representing the Bonus Shares.
6. Successors; Binding Agreement. (a) This Agreement shall be
-----------------------------
binding upon and inure to the benefit of the Company and any successor of the
Company, including, without limitation, any person acquiring directly or
indirectly all or substantially all of the assets of the Company, whether by
merger, consolidation, sale or otherwise (and such successor shall thereafter
be deemed the "Company" for the purposes of this Agreement).
(b) This Agreement and all rights of the Executive hereunder shall
inure to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
7. Notice. For purposes of this Agreement, notices, demands and all
------
other communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given (i) when hand delivered, (ii) when sent if
sent by overnight mail, overnight courier or facsimile transmission or (iii)
when mailed by United States certified mail, return receipt requested, postage
prepaid, addressed as follows: (a) if to the Executive, to the then current
address set forth in the employee payroll records of the Company and (b) if to
the Company, to Samsonite Corpora tion, 12000 East Forty-Fifth Avenue, Denver,
Colorado 80239-3018, Attention: Board of Directors c/o Corporate Secretary (in
each case, with a copy to: Gregory A. Fernicola, Esq., Skadden, Arps, Slate,
Meagher & Flom, 919 Third Avenue, New York, NY 10022) or to such other address
as any party may have furnished to the other in writing in accordance herewith,
except that notices of change of address shall be effective only upon receipt.
8. Miscellaneous. (a) The parties hereto agree that this Agreement
-------------
contains the entire understanding and agreement between them with respect to the
subject matter hereof, and supersedes all prior understandings and agreements
between the parties respecting such subject matter, and that the provisions of
this Agreement may not be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing signed by the parties hereto.
The Original Agreement is hereby superseded in its entirety and shall be of no
------
further force or effect from and after the date hereof. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been
5
<PAGE>
made by either party which are not set forth expressly in this Agreement. The
descriptive headings of the several sections and paragraphs contained herein
have been inserted for convenience of reference only and shall in no way limit
or otherwise affect the meaning hereof.
(b) No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agree ment to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
(c) Except as expressly provided in Section 2 hereof, nothing
contained in this Agreement shall in any way affect the respective rights and
obligations of the parties hereto contained in any other agreement between the
parties hereto, including, but not limited to, the Employment Agreement or any
future employment agreement between the Company and the Executive. Any Stay
Bonus to which the Executive is entitled hereunder is not in lieu of salary or
other compensation for services rendered by the Executive to the Company.
(d) The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of New York without
giving effect to the conflict of laws principles thereof.
(e) Any action required to be taken under this Agreement within a
certain number of days shall be taken within that number of calendar days;
provided that if the last day for taking such action falls on a weekend or a
- --------
holiday, the period during which such action may be taken shall be automatically
extended to the next business day.
(f) The invalidity or unenforceability of any provision or provisions
of this Agreement shall not affect the validity or enforceability of any other
provision or provisions of this Agreement, which shall remain in full force and
effect.
(g) This Agreement may be executed in more than one counterpart, each
of which shall be deemed to be an original but both of which together shall
constitute one and the same instrument.
6
<PAGE>
IN WITNESS WHEREOF, the Company has caused its name to be subscribed
to this Agreement by its duly authorized representative and the Executive has
executed this Agreement as of the date and the year first above written.
SAMSONITE CORPORATION
By:__________________________________
Name:
Title:
_____________________________________
Thomas R. Sandler
7
<PAGE>
Exhibit 12.1
<TABLE>
<CAPTION>
Samsonite Corporation
Ratio of Earnings to Fixed Charges
Seven Months
Ended Jan 31, Years Ended January 31,
1994 1995 1996 1997 1998
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Earnings:
Income (Loss) from Continuing Operations (26,019) (47,207) (51,154) (11,323) 56,877
Income Taxes 6,797 10,619 9,095 10,389 23,088
Minority Interest of Subsidiaries Which Have Fixed
Charges 0 1,385 1,043 1,315
Minority Interest in Subsidiaries Which Have Losses (93) (1,146)
Equity in Losses of Less Than 50% Owned Subsidiaries 33 547
(19,222) (36,588) (40,674) 49 80,681
Fixed Charges:
Interest 24,839 37,875 39,974 35,670 19,918
Interest Factor Portion of Rentals 1,098 2,671 3,027 3,774 3,887
Preferred Stock Dividend Requirement 161 0 0 0 0
Total Fixed Charges 26,098 40,546 43,001 39,444 23,805
Adjustment for Preferred Stock Dividend (161) 0 0 0 0
Earnings 6,715 3,958 2,327 39,493 104,486
Ratio of Earnings to Fixed Charges 0.26 0.10 0.05 1.00 4.39
Coverage Deficiency (19,383) (36,588) (40,674) N/A N/A
</TABLE>
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Year Ended Three Months
January 31, Three Months Ended April 30, Ended April 30
1998 1997 1998 1998
-----------------------------------------------------------
<S> <C> <C> <C> <C>
Earnings:
Income (Loss) from Continuing Operations 33,176 8,499 (4,703) (10,035)
Income Taxes 8,561 6,829 (2,924) (6,192)
Minority Interest of Subsidiaries Which Have Fixed
Charges 1,315 292 522 522
Minority Interest in Subsidiaries Which Have Losses (1,146) (108) (261) (261)
Equity in Losses of Less Than 50% Owned Subsidiaries 547 61 235 235
42,453 15,573 (7,131) (15,731)
Fixed Charges:
Interest 52,918 6,207 4,808 13,408
Interest Factor Portion of Rentals 3,887 972 972 972
Preferred Stock Dividend Requirement 37,423 10,155
Total Fixed Charges 94,228 7,179 5,780 24,535
Adjustment for Preferred Stock Dividend (37,423) 0 0 (10,155)
Earnings 99,258 22,752 (1,351) (1,351)
Ratio of Earnings to Fixed Charges 1.05 3.17 (0.23) (0.06)
Coverage Deficiency N/A N/A (7,131) (25,886)
</TABLE>
<PAGE>
Exhibit 23.1
CONSENT OF KPMG PEAT MARWICK LLP
THE BOARD OF DIRECTORS
SAMSONITE CORPORATION:
We consent to the use of our report dated March 17, 1998, except as to Note 19,
which is as of April 24, 1998, relating to the consolidated balance sheets of
Samsonite Corporation and subsidiaries as of January 31, 1998 and 1997, and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the years in the three-year period ended January 31, 1998,
included in the registration statement and incorporated by reference herein, and
the related financial statement schedule incorporated by reference herein, and
to the reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
Denver, Colorado
August 11, 1998
<PAGE>
EXHIBIT 23.2
CONSENT OF KPMG PEAT MARWICK LLP
The Board of Directors
Samsonite Holdings Inc.
We consent to the use of our report dated August 6, 1998 included herein and
to the reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
Denver, Colorado
August 11, 1998
<PAGE>
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
__________________________
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
__________________________
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) _______
__________________________
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-3818954
(Jurisdiction of incorporation (I. R. S. Employer
if not a U. S. national bank) Identification No.)
114 West 47th Street 10036-1532
New York, New York (Zip Code)
(Address of principal
executive offices)
__________________________
Samsonite Corporation Inc.
(Exact name of OBLIGOR as specified in its charter)
Delaware 36-3511556
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
11200 East 45th Avenue 80239
Denver Colorado (Zip code)
(Address of principal executive offices)
__________________________
13 7/8% Holdings Exchange Debentures due 2010
(Title of the indenture securities)
<PAGE>
- 2 -
GENERAL
1. GENERAL INFORMATION
-------------------
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Federal Reserve Bank of New York (2nd District), New York, New York
(Board of Governors of the Federal Reserve System)
Federal Deposit Insurance Corporation, Washington, D.C.
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. AFFILIATIONS WITH THE OBLIGOR
-----------------------------
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None
3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15:
Samsonite Holdings Inc. currently is not in default under any of its
outstanding securities for which United States Trust Company of New York is
Trustee. Accordingly, responses to Items 3, 4, 5, 6, 7, 8, 9, 10, 11, 12,
13, 14 and 15 of Form T-1 are not required under General Instruction B.
16. LIST OF EXHIBITS
----------------
T-1.1 -- Organization Certificate, as amended, issued by the State of
New York Banking Department to transact business as a Trust
Company, is incorporated by reference to Exhibit T-1.1 to Form
T-1 filed on September 15, 1995 with the Commission pursuant
to the Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990 (Registration No. 33-97056).
T-1.2 -- Included in Exhibit T-1.1.
T-1.3 -- Included in Exhibit T-1.1.
<PAGE>
- 3 -
16. LIST OF EXHIBITS
----------------
(cont'd)
T-1.4 -- The By-Laws of United States Trust Company of New York, as
amended, is incorporated by reference to Exhibit T-1.4 to
Form T 1 filed on September 15, 1995 with the Commission
pursuant to the Trust Indenture Act of 1939, as amended by
the Trust Indenture Reform Act of 1990 (Registration No. 33-
97056).
T-1.6 -- The consent of the trustee required by Section 321(b) of the
Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990.
T-1.7 -- A copy of the latest report of condition of the trustee
pursuant to law or the requirements of its supervising or
examining authority.
NOTE
====
As of August 5, 1998, the trustee had 2,999,020 shares of Common Stock
outstanding, all of which are owned by its parent company, U.S. Trust
Corporation. The term "trustee" in Item 2, refers to each of United States
Trust Company of New York and its parent company, U. S. Trust Corporation.
In answering Item 2 in this statement of eligibility as to matters peculiarly
within the knowledge of the obligor or its directors, the trustee has relied
upon information furnished to it by the obligor and will rely on information to
be furnished by the obligor and the trustee disclaims responsibility for the
accuracy or completeness of such information.
__________________
Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee,
United States Trust Company of New York, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York, and State of New York, on the 5th day
of August 1998.
UNITED STATES TRUST COMPANY
OF NEW YORK, Trustee
By: /s/ James E. Logan
---------------------
James E. Logan
Vice President
<PAGE>
EXHIBIT T-1.6
-------------
The consent of the trustee required by Section 321(b) of the Act.
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
September 1, 1995
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
/s/ Gerard F. Ganey
-------------------
By: Gerard F. Ganey
Senior Vice President
<PAGE>
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
MARCH 31, 1998
--------------
($ IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS
- ------
<S> <C>
Cash and Due from Banks $ 303,692
Short-Term Investments 325,044
Securities, Available for Sale 650,954
Loans 1,717,101
Less: Allowance for Credit Losses 16,546
----------
Net Loans 1,700,555
Premises and Equipment 58,868
Other Assets 120,865
----------
TOTAL ASSETS $3,159,978
==========
LIABILITIES
- -----------
Deposits:
Non-Interest Bearing $ 602,769
Interest Bearing 1,955,571
----------
Total Deposits 2,558,340
Short-Term Credit Facilities 293,185
Accounts Payable and Accrued Liabilities 136,396
----------
TOTAL LIABILITIES $2,987,921
==========
STOCKHOLDER'S EQUITY
- --------------------
Common Stock 14,995
Capital Surplus 49,541
Retained Earnings 105,214
Unrealized Gains on Securities
Available for Sale (Net of Taxes) 2,307
----------
TOTAL STOCKHOLDER'S EQUITY 172,057
----------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $3,159,978
==========
</TABLE>
I, Richard E. Brinkmann, Senior Vice President & Comptroller of the named bank
do hereby declare that this Statement of Condition has been prepared in
conformance with the instructions issued by the appropriate regulatory authority
and is true to the best of my knowledge and belief.
Richard E. Brinkmann, SVP & Controller
May 6, 1998
<PAGE>
EXHIBIT 25.2
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
__________________________
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
__________________________
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) _______
__________________________
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-3818954
(Jurisdiction of incorporation (I. R. S. Employer
if not a U. S. national bank) Identification No.)
114 West 47th Street 10036-1532
New York, New York (Zip Code)
(Address of principal
executive offices)
__________________________
Samsonite Corporation
(Exact name of OBLIGOR as specified in its charter)
Delaware 36-3511556
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
11200 East 45th Avenue 80239
Denver Colorado (Zip code)
(Address of principal executive offices)
__________________________
13 7/8% Holdings Exchange Debentures due 2010
(Title of the indenture securities)
<PAGE>
- 2 -
GENERAL
1. GENERAL INFORMATION
-------------------
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
Federal Reserve Bank of New York (2nd District), New York, New York
(Board of Governors of the Federal Reserve System)
Federal Deposit Insurance Corporation, Washington, D.C.
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. AFFILIATIONS WITH THE OBLIGOR
-----------------------------
If the obligor is an affiliate of the trustee, describe each such affiliation.
None
3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15:
Samsonite Corporation currently is not in default under any of its outstanding
securities for which United States Trust Company of New York is Trustee.
Accordingly, responses to Items 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15
of Form T-1 are not required under General Instruction B.
16. LIST OF EXHIBITS
----------------
T-1.1 -- Organization Certificate, as amended, issued by the State of
New York Banking Department to transact business as a Trust
Company, is incorporated by reference to Exhibit T-1.1 to Form
T-1 filed on September 15, 1995 with the Commission pursuant
to the Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990 (Registration No. 33-97056).
T-1.2 -- Included in Exhibit T-1.1.
T-1.3 -- Included in Exhibit T-1.1.
<PAGE>
- 3 -
16. LIST OF EXHIBITS
----------------
(cont'd)
T-1.4 -- The By-Laws of United States Trust Company of New York, as
amended, is incorporated by reference to Exhibit T-1.4 to Form
T-1 filed on September 15, 1995 with the Commission pursuant
to the Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990 (Registration No. 33-97056 ).
T-1.6 -- The consent of the trustee required by Section 321(b) of the
Trust Indenture Act of 1939, as amended by the Trust Indenture
Reform Act of 1990.
T-1.7 -- A copy of the latest report of condition of the trustee
pursuant to law or the requirements of its supervising or
examining authority.
NOTE
====
As of August 5, 1998, the trustee had 2,999,020 shares of Common Stock
outstanding, all of which are owned by its parent company, U.S. Trust
Corporation. The term "trustee" in Item 2, refers to each of United States
Trust Company of New York and its parent company, U. S. Trust Corporation.
In answering Item 2 in this statement of eligibility as to matters peculiarly
within the knowledge of the obligor or its directors, the trustee has relied
upon information furnished to it by the obligor and will rely on information to
be furnished by the obligor and the trustee disclaims responsibility for the
accuracy or completeness of such information.
__________________
Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee,
United States Trust Company of New York, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York, and State of New York, on the 5th day
of August 1998.
UNITED STATES TRUST COMPANY
OF NEW YORK, Trustee
By:/s/ James E. Logan
-------------------
James E. Logan
Vice President
<PAGE>
Exhibit T-1.6
-------------
The consent of the trustee required by Section 321(b) of the Act.
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
September 1, 1995
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
/s/Gerard F. Ganey
------------------
By: Gerard F. Ganey
Senior Vice President
<PAGE>
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
MARCH 31, 1998
--------------
($ IN THOUSANDS)
<TABLE>
<CAPTION>
<S> <C>
ASSETS
- ------
Cash and Due from Banks $ 303,692
Short-Term Investments 325,044
Securities, Available for Sale 650,954
Loans 1,717,101
Less: Allowance for Credit Losses 16,546
----------
Net Loans 1,700,555
Premises and Equipment 58,868
Other Assets 120,865
----------
TOTAL ASSETS $3,159,978
==========
LIABILITIES
- -----------
Deposits:
Non-Interest Bearing $ 602,769
Interest Bearing 1,955,571
----------
Total Deposits 2,558,340
Short-Term Credit Facilities 293,185
Accounts Payable and Accrued Liabilities 136,396
----------
TOTAL LIABILITIES $2,987,921
==========
STOCKHOLDER'S EQUITY
- --------------------
Common Stock 14,995
Capital Surplus 49,541
Retained Earnings 105,214
Unrealized Gains on Securities
Available for Sale (Net of Taxes) 2,307
----------
TOTAL STOCKHOLDER'S EQUITY 172,057
----------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $3,159,978
==========
</TABLE>
I, Richard E. Brinkmann, Senior Vice President & Comptroller of the named bank
do hereby declare that this Statement of Condition has been prepared in
conformance with the instructions issued by the appropriate regulatory authority
and is true to the best of my knowledge and belief.
Richard E. Brinkmann, SVP & Controller
May 6, 1998
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
SAMSONITE CORPORATION
Offer for all Outstanding
13 7/8% SENIOR REDEEMABLE EXCHANGEABLE PREFERRED STOCK
IN EXCHANGE FOR
13 7/8% SENIOR REDEEMABLE EXCHANGEABLE PREFERRED STOCK,
WHICH HAS BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933,
PURSUANT TO THE PROSPECTUS, DATED , 1998
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME, ON
1998, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE
WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
Delivery To: United States Trust Company of New York, Exchange Agent
<TABLE>
<S> <C>
By Mail: By Overnight Courier and By Hand after 4:30 p.m.
New York City Time on the Expiration Date:
United States Trust Company of New York United States Trust Company of New York
P.O. Box 843 - Cooper Station 770 Broadway, 13th Floor
New York, New York 10276 New York, New York 10003
Attention: Corporate Trust Services Attention: Corporate Trust Services
By Hand before 4:30 p.m. For Information Call
New York City Time: (800) 548-6565
United States Trust Company of New York By Facsimile Transmission
111 Broadway (for Eligible Institutions only):
Attention: Corporate Trust Window Lower Level (212) 780-0592
New York, New York 10006 Attention: Corporate Trust Services
Confirm by Telephone
(800) 548-6565
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL
NOT CONSTITUTE A VALID DELIVERY.
The undersigned acknowledges that he or she has received and reviewed the
Prospectus, dated , 1998 (the "Prospectus"), of Samsonite Corporation, a
Delaware corporation (the "Company"), and this Letter of Transmittal (the
"Letter"), which together constitute the Company's offer (the "Exchange Offer")
to exchange up to 175,000 shares of its 13 7/8% Senior Redeemable Exchangeable
Preferred Stock which has been registered under the Securities Act of 1933, as
amended (the "New Senior Preferred Stock"), for a like number of shares of its
issued and outstanding 13 7/8% Senior Redeemable Exchangeable Preferred Stock
(the "Old Senior Preferred Stock" and together with the New Senior Preferred
Stock, the "Senior Preferred Stock") from the registered holders thereof.
For each share of Old Senior Preferred Stock accepted for exchange, the
holder of such share of Old Senior Preferred Stock will receive a share of New
Senior Preferred Stock having a liquidation preference per share equal to that
of the surrendered share of Old Senior Preferred Stock. Stockholders of the New
Senior Preferred Stock are entitled to receive, when, as and if declared by the
Board of Directors of the Company out of funds legally available therefor,
dividends on the Senior Preferred Stock at a rate per annum of 13 7/8% of the
liquidation preference per share of Senior Preferred Stock, payable quarterly in
arrears on each March 15, June 15, September 15 and December 15, commencing
September 15, 1998. The New Senior Preferred Stock will accrue dividends from
the most recent date to which dividends have been paid on the Old Senior
Preferred Stock or, if no dividends have been paid on the Old Senior Preferred
Stock, from June 24, 1998. If the Company fails to comply with certain
registration obligations as set forth in the Registration Rights Agreement dated
as of June 24, 1998 (the "Registration Rights Agreement"), then the Company
shall pay Additional Dividends (as defined in the Registration Rights Agreement)
(up to a maximum of 100 basis points of the liquidation preference outstanding
per annum) to holders of Old Senior Preferred Stock affected thereby.
Holders of Old Senior Preferred Stock accepted in the exchange will be
deemed to have waived the right to receive any other payment or accrued
dividends on the Old Senior Preferred Stock. The Company reserves the right, at
any time or from time to time, to extend the Exchange Offer at its discretion,
in which event the term "Expiration Date" shall mean the latest time and date to
which the Exchange Offer is extended. The Company shall notify the holders of
the Old Senior Preferred Stock of any extension by means of a press release or
other public announcement prior to 9:00 a.m., New York City time, on the next
business day following the previously scheduled Expiration Date.
This Letter is to be completed by a holder of Old Senior Preferred Stock
either if certificates are to be forwarded herewith or if a tender for Old
Senior Preferred Stock, if available, is to be made by book-entry transfer to
the account maintained by the Exchange Agent at The Depository Trust Company
(the "Book-Entry Transfer Facility") pursuant to the procedures set forth in
"The Exchange
<PAGE>
Offer--Book-Entry Transfer" section of the Prospectus. Holders of Old Senior
Preferred Stock whose certificates are not immediately available, or who are
unable to deliver their certificates or confirmation of the book-entry tender of
their Old Senior Preferred Stock into the Exchange Agent's account at the Book-
Entry Transfer Facility (a "Book-Entry Confirmation") and all other documents
required by this Letter to the Exchange Agent prior to the Expiration Date, must
tender their Old Senior Preferred Stock according to the guaranteed delivery
procedures set forth in "The Exchange Offer--Guaranteed Delivery Procedures"
section of the Prospectus. See Instruction 1. Delivery of documents to the Book-
Entry Transfer Facility does not constitute delivery to the Exchange Agent.
The undersigned has completed the appropriate boxes below and signed this
Letter to indicate the action the undersigned desires to take with respect to
the Exchange Offer.
List below the Old Senior Preferred Stock to which this Letter relates. If
the space provided below is inadequate, the certificate numbers and liquidation
preference of Old Senior Preferred Stock should be listed on a separate signed
schedule affixed hereto.
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OLD SENIOR PREFERRED STOCK 1 2 3
- ---------------------------------------------------------------------------------------------------------------------
AGGREGATE
LIQUIDATION
PREFERENCE LIQUIDATION
NAME(S) AND ADDRESS(ES) OF REGISTERED CERTIFICATE OF OLD SENIOR PREFERENCE
HOLDER(S) (PLEASE FILL IN, IF BLANK) NUMBERS (S)* PREFERRED STOCK (S) TENDERED **
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
TOTAL
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed if Old Senior Preferred Stock is being tendered by
book-entry transfer.
** Unless otherwise indicated in this column, a holder will be deemed to have
tendered ALL of the Old Senior Preferred Stock represented by the Old
Senior Preferred Stock indicated in column 2. See Instruction 2. Old Senior
Preferred Stock tendered hereby must be in denominations of liquidation
preference per share of $1,000 and any integral multiple thereof. See
Instruction 1.
- --------------------------------------------------------------------------------
[_] CHECK HERE IF TENDERED OLD SENIOR PREFERRED STOCK IS BEING DELIVERED BY
BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT
WITH THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution _____________________________________________
Account Number __________________ Transaction Code Number__________________
[_] CHECK HERE IF TENDERED OLD SENIOR PREFERRED STOCK IS BEING DELIVERED
PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE
AGENT AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s) ________________________________________
Window Ticket Number (if any) ________________________________________
Date of Execution of Notice of Guaranteed Delivery ______________________
Name of Institution which guaranteed delivery ____________________________
IF DELIVERED BY BOOK-ENTRY TRANSFER, COMPLETE THE FOLLOWING:
Account Number __________________ Transaction Code Number__________________
[_] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name: _________________________________________________________________________
Address: _______________________________________________________________________
_______________________________________________________________________
2
<PAGE>
If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of New
Senior Preferred Stock. If the undersigned is a broker-dealer that will receive
shares of New Senior Preferred Stock for its own account in exchange for shares
of Old Senior Preferred Stock that were acquired as a result of market-making
activities or other trading activities, it acknowledges that it will deliver a
prospectus meeting the requirements of the Securities Act of 1933, as amended,
in connection with any resale of such New Senior Preferred Stock; however, by so
acknowledging and by delivering such a prospectus the undersigned will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act of 1933, as amended. If the undersigned is a broker-dealer that will receive
New Senior Preferred Stock, it represents that the Old Senior Preferred Stock to
be exchanged for the New Senior Preferred Stock was acquired as a result of
market-making activities or other trading activities.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the aggregate liquidation preference
of Old Senior Preferred Stock indicated above. Subject to, and effective upon,
the acceptance for exchange of the Old Senior Preferred Stock tendered hereby,
the undersigned hereby sells, assigns and transfers to, or upon the order of,
the Company all right, title and interest in and to such Old Senior Preferred
Stock as is being tendered hereby.
The undersigned hereby irrevocably constitutes and appoints the Exchange
Agent as the undersigned's true and lawful agent and attorney-in-fact with
respect to such tendered Old Senior Preferred Stock, with full power of
substitution, among other things, to cause the Old Senior Preferred Stock to be
assigned, transferred and exchanged. The undersigned hereby represents and
warrants that the undersigned has full power and authority to tender, sell,
assign and transfer the Old Senior Preferred Stock, and to acquire New Senior
Preferred Stock issuable upon the exchange of such tendered Old Senior Preferred
Stock, and that, when the same is accepted for exchange, the Company will
acquire good and unencumbered title thereto, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any adverse claim when
the same is accepted by the Company. The undersigned hereby further represents
that any New Senior Preferred Stock acquired in exchange for Old Senior
Preferred Stock tendered hereby will have been acquired in the ordinary course
of business of the person receiving such New Senior Preferred Stock, whether or
not such person is the undersigned, that neither the holder of such Old Senior
Preferred Stock nor any such other person is participating in, intends to
participate in or has an arrangement or understanding with any person to
participate in the distribution of such New Senior Preferred Stock and that
neither the holder of such Old Senior Preferred Stock nor any such other person
is an "affiliate," as defined in Rule 405 under the Securities Act of 1933, as
amended (the "Securities Act"), of the Company.
The undersigned acknowledges that this Exchange Offer is being made in
reliance on interpretations by the staff of the Securities and Exchange
Commission (the "SEC"), as set forth in no-action letters issued to third
parties, that the New Senior Preferred Stock issued pursuant to the Exchange
Offer in exchange for the Old Senior Preferred Stock may be offered for resale,
resold and otherwise transferred by holders thereof (other than any such holder
that is an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act), without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such New Senior
Preferred Stock is acquired in the ordinary course of such holders' business
and such holders have no arrangement with any person to participate in the
distribution of such New Senior Preferred Stock. However, the SEC has not
considered the Exchange Offer in the context of a no-action letter and there can
be no assurance that the staff of the SEC would make a similar determination
with respect to the Exchange Offer as in such other circumstances. If the
undersigned is not a broker-dealer, the undersigned represents that it is not
engaged in, and does not intend to engage in, a distribution of New Senior
Preferred Stock and has no arrangement or understanding to participate in a
distribution of New Senior Preferred Stock. If any holder is an affiliate of the
Company, is engaged in or intends to engage in or has any arrangement or
understanding with respect to the distribution of the New Senior Preferred Stock
to be acquired pursuant to the Exchange Offer, such holder (i) could not rely on
the applicable interpretations of the staff of the SEC and (ii) must comply with
the registration and prospectus delivery provisions of the Securities Act in
connection with any resale transaction. If the undersigned is a broker-dealer
that will receive New Senior Preferred Stock for its own account in exchange for
Old Senior Preferred Stock, it represents that the Old Senior Preferred Stock to
be exchanged for the New Senior Preferred Stock was acquired by it as a result
of market-making activities or other trading activities and acknowledges that it
will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such New Senior Preferred Stock; however, by so
acknowledging and by delivering a prospectus meeting the requirements of the
Securities Act, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Old Senior Preferred Stock tendered hereby.
All authority conferred or agreed to be conferred in this Letter and every
obligation of the undersigned hereunder shall be binding upon the successors,
assigns, heirs, executors, administrators, trustees in bankruptcy and legal
representatives of the undersigned and shall not be affected
3
<PAGE>
by, and shall survive, the death or incapacity of the undersigned. This tender
may be withdrawn only in accordance with the procedures set forth in "The
Exchange Offer--Withdrawal Rights" section of the Prospectus.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, please issue the New Senior Preferred Stock (and, if
applicable, substitute certificates representing Old Senior Preferred Stock for
any Old Senior Preferred Stock not exchanged) in the name of the undersigned or,
in the case of a book-entry delivery of Old Senior Preferred Stock, please
credit the account indicated above maintained at the Book-Entry Transfer
Facility. Similarly, unless otherwise indicated under the box entitled "Special
Delivery Instructions" below, please send the New Senior Preferred Stock (and,
if applicable, substitute certificates representing Old Senior Preferred Stock
for any Old Senior Preferred Stock not exchanged) to the undersigned at the
address shown above in the box entitled "Description of Old Senior Preferred
Stock."
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF OLD SENIOR
PREFERRED STOCK" ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED
THE OLD SENIOR PREFERRED STOCK AS SET FORTH IN SUCH BOX ABOVE.
<TABLE>
<CAPTION>
- ---------------------------------------------------------- ----------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4) (SEE INSTRUCTIONS 3 AND 4)
- ---------------------------------------------------------- ----------------------------------------------------------
<S> <C>
To be completed ONLY if certificates for Old Senior
Preferred Stock not exchanged and/or New Senior
Preferred Stock are to be issued in the name of and
sent to someone other than the person or persons
whose signature(s) appear(s) on this Letter above, To be completed ONLY if certificates for Old Senior
or if Old Senior Preferred Stock delivered by Preferred Stock not exchanged and/or New Senior
book-entry transfer which is not accepted for Preferred Stock are to be sent to someone
exchange is to be returned by credit to an account other than the person or persons whose signature(s)
maintained at the Book-Entry Transfer Facility other appear(s) on this Letter above or to such person or
than the account indicated above. persons at an address other than shown in the box
entitled "Description of Old Senior Preferred Stock on
Issue: New Senior Preferred Stock and/or Old Senior this Letter above.
Preferred Stock to:
Name(s):.................................................. Mail: New Senior Preferred Stock and/or Old Senior
(PLEASE TYPE OR PRINT) Preferred Stock to:
.......................................................... Name(s):..................................................
(PLEASE TYPE OR PRINT) (PLEASE TYPE OR PRINT)
Address:.................................................. ..........................................................
(PLEASE TYPE OR PRINT)
.......................................................... Address:..................................................
(ZIP CODE)
(COMPLETE SUBSTITUTE FORM W-9) ..........................................................
(ZIP CODE)
[_] Credit unexchanged Old Senior Preferred Stock delivered
by book-entry transfer to the Book-Entry Transfer
Facility account set forth below.
- ----------------------------------------------------------
(BOOK-ENTRY TRANSFER FACILITY
ACCOUNT NUMBER, IF APPLICABLE)
- ---------------------------------------------------------- ----------------------------------------------------------
</TABLE>
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF (TOGETHER WITH THE CERTIFICATES FOR
OLD SENIOR PREFERRED STOCK OR A BOOK-ENTRY CONFIRMATION AND ALL OTHER REQUIRED
DOCUMENTS OR THE NOTICE OF GUARANTEED DELIVERY) MUST BE RECEIVED BY THE EXCHANGE
AGENT PRIOR TO THE EXPIRATION DATE.
4
<PAGE>
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.
- --------------------------------------------------------------------------------
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9 ON REVERSE SIDE)
x ................................................... ..................., 1998
x ................................................... ..................., 1998
SIGNATURE(S) OF OWNER DATE
Area Code and Telephone Number: ......................................
If a holder is tendering any Old Senior Preferred Stock, this Letter must
be signed by the registered holder(s) as the name(s) appear(s) on the
certificate(s) for the Old Senior Preferred Stock or by any person(s) authorized
to become registered holder(s) by endorsements and documents transmitted
herewith. If signature is by a trustee, executor, administrator, guardian,
officer or other person acting in a fiduciary or representative capacity, please
set forth full title. See Instruction 3.
Name(s):.................................................................
.........................................................................
(PLEASE TYPE OR PRINT)
Capacity:................................................................
Address:.................................................................
.........................................................................
(INCLUDING ZIP CODE)
SIGNATURE GUARANTEE
(IF REQUIRED BY INSTRUCTION 3)
Signature(s) Guaranteed by
an Eligible Institution:.............................................
(AUTHORIZED SIGNATURE)
.........................................................................
(TITLE)
.........................................................................
(NAME AND FIRM)
Dated: ............................................................, 1998
- --------------------------------------------------------------------------------
5
<PAGE>
TO BE COMPLETED BY ALL TENDERING HOLDERS
(See Instruction 5)
PAYOR'S NAME: UNITED STATES TRUST COMPANY OF NEW YORK
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
PART 1--PLEASE PROVIDE YOUR TIN
IN THE BOX AT RIGHT AND CERTIFY TIN: _____________________________
BY SIGNING AND DATING BELOW. SOCIAL SECURITY NUMBER OR
SUBSTITUTE EMPLOYER IDENTIFICATION NUMBER
<S> <C> <C>
-------------------------------------------------------------------------------------------------
FORM W-9 PART 2--TIN APPLIED FOR [_]
-------------------------------------------------------------------------------------------------
DEPARTMENT OF THE TREASURY CERTIFICATION: UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
INTERNAL REVENUE SERVICE
(1) the number shown on this form is my correct Taxpayer Identification Number (or I am
PAYOR'S REQUEST FOR waiting for a number to be issued to me),
TAXPAYER (2) I am not subject to backup withholding either because: (a) I am exempt from backup
IDENTIFICATION NUMBER withholding or (b) I have not been notified by the Internal Revenue Service (the "IRS")
("TIN") AND that I am subject to backup withholding as a result of a failure to report all interest or
CERTIFICATION dividends or (c) the IRS has notified me that I am no longer subject to backup
withholding and
(3) any other information provided on this form is true and correct.
SIGNATURE ............................................... DATE............................
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
You must cross out item (2) of the above certification if you have been notified
by the IRS that you are subject to backup withholding because of underreporting
of interest or dividends on your tax return and you have not been notified by
the IRS that you are no longer subject to backup withholding.
- --------------------------------------------------------------------------------
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX
IN PART 2 OF SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (b) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of the exchange, 31 percent
of all reportable payments made to me thereafter will be withheld until I
provide a number.
__________________________________ __________________________________
SIGNATURE DATE
- --------------------------------------------------------------------------------
10
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER FOR THE
13 7/8% SENIOR REDEEMABLE EXCHANGEABLE PREFERRED STOCK OF SAMSONITE CORPORATION
IN EXCHANGE FOR THE 13 7/8% SENIOR REDEEMABLE EXCHANGEABLE PREFERRED STOCK OF
SAMSONITE CORPORATION, WHICH HAS BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933
1. DELIVERY OF THIS LETTER AND SENIOR PREFERRED STOCK; GUARANTEED DELIVERY
PROCEDURES.
This Letter is to be completed by holders of Old Senior Preferred Stock
either if certificates are to be forwarded herewith or if tenders are to be made
pursuant to the procedures for delivery by book-entry transfer set forth in "The
Exchange Offer--Book-Entry Transfer" section of the Prospectus. Certificates for
all physically tendered shares of Old Senior Preferred Stock, or Book-Entry
Confirmation, as the case may be, as well as a properly completed and duly
executed Letter (or manually signed facsimile hereof) and any other documents
required by this Letter, must be received by the Exchange Agent at the address
set forth herein prior to the Expiration Date, or the tendering holder must
comply with the guaranteed delivery procedures set forth below. Old Senior
Preferred Stock tendered hereby must be in denominations of liquidation
preference per share of $1,000 and any integral multiple thereof.
Holders whose certificates for Old Senior Preferred Stock are not
immediately available or who cannot deliver their certificates and all other
required documents to the Exchange Agent prior to the Expiration Date, or who
cannot complete the procedure for book-entry transfer on a timely basis, may
tender their shares of Old Senior Preferred Stock pursuant to the guaranteed
delivery procedures set forth in "The Exchange Offer--Guaranteed Delivery
Procedures" section of the Prospectus. Pursuant to such procedures, (i) such
tender must be made through an Eligible Institution, (ii) prior to the
Expiration Date, the Exchange Agent must receive from such Eligible Institution
a properly completed and duly executed Letter (or a facsimile thereof) and
Notice of Guaranteed Delivery, substantially in the form provided by the Company
(by facsimile transmission, mail or hand delivery), setting forth the name and
address of the holder of Old Senior Preferred Stock and the liquidation
preference of Old Senior Preferred Stock tendered, stating that the tender is
being made thereby and guaranteeing that within three New York Stock Exchange
trading days after the Expiration Date, the certificates for all physically
tendered shares of Old Senior Preferred Stock, in proper form for transfer, or a
Book-Entry Confirmation, as the case may be, and any other documents required by
this Letter will be deposited by the Eligible Institution with the Exchange
Agent and (iii) the certificates for all physically tendered shares of Old
Senior Preferred Stock, in proper form for transfer, or a Book-Entry
Confirmation, as the case may be, and all other documents required by this
Letter, are received by the Exchange Agent within three New York Stock Exchange
trading days after the Expiration Date.
The method of delivery of this Letter, the shares of Old Senior Preferred
Stock and all other required documents is at the election and risk of the
tendering holders, but the delivery will be deemed made only when actually
received or confirmed by the Exchange Agent. If shares of Old Senior Preferred
Stock are sent by mail, it is suggested that the mailing be registered mail,
properly insured, with return receipt requested, made sufficiently in advance of
the Expiration Date to permit delivery to the Exchange Agent prior to 5:00 P.M.,
New York City time, on the Expiration Date.
See "The Exchange Offer" section of the Prospectus.
2. PARTIAL TENDERS (NOT APPLICABLE TO HOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER).
If less than all of the shares of Old Senior Preferred Stock evidenced by a
submitted certificate are to be tendered, the tendering holder(s) should fill in
the liquidation preference of Old Senior Preferred Stock to be tendered in the
box above entitled "Description of Old Senior Preferred Stock--Liquidation
Preference Tendered." A reissued certificate representing the balance of non-
tendered shares of Old Senior Preferred Stock will be sent to such tendering
holder, unless otherwise provided in the appropriate box on this Letter,
promptly after the Expiration Date. ALL OF THE SHARES OF OLD SENIOR PREFERRED
STOCK DELIVERED TO THE EXCHANGE AGENT WILL BE DEEMED TO HAVE BEEN TENDERED
UNLESS OTHERWISE INDICATED.
3. SIGNATURES ON THIS LETTER; BOND POWERS AND ENDORSEMENTS; GUARANTEE OF
SIGNATURES.
If this Letter is signed by the registered holder of the Old Senior
Preferred Stock tendered hereby, the signature must correspond exactly with the
name as written on the face of the certificates without any change whatsoever.
If any tendered shares of Old Senior Preferred Stock are owned of record by
two or more joint owners, all of such owners must sign this Letter.
If any tendered shares of Old Senior Preferred Stock are registered in
different names on several certificates, it will be necessary to complete, sign
and submit as many separate copies of this Letter as there are different
registrations of certificates.
6
<PAGE>
When this Letter is signed by the registered holder or holders of the Old
Senior Preferred Stock specified herein and tendered hereby, no endorsements of
certificates or separate bond powers are required. If, however, the shares of
New Senior Preferred Stock are to be issued, or any untendered shares of Old
Senior Preferred Stock are to be reissued, to a person other than the registered
holder, then endorsements of any certificates transmitted hereby or separate
bond powers are required. Signatures on such certificate(s) must be guaranteed
by an Eligible Institution.
If this Letter is signed by a person other than the registered holder or
holders of any certificate(s) specified herein, such certificate(s) must be
endorsed or accompanied by appropriate bond powers, in either case signed
exactly as the name or names of the registered holder or holders appear(s) on
the certificate(s) and signatures on such certificate(s) must be guaranteed by
an Eligible Institution.
If this Letter or any certificates or bond powers are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must be
submitted.
ENDORSEMENTS ON CERTIFICATES FOR SHARES OF OLD SENIOR PREFERRED STOCK OR
SIGNATURES ON BOND POWERS REQUIRED BY THIS INSTRUCTION 3 MUST BE GUARANTEED BY A
FIRM WHICH IS A FINANCIAL INSTITUTION (INCLUDING MOST BANKS, SAVINGS AND LOAN
ASSOCIATIONS AND BROKERAGE HOUSES) THAT IS A PARTICIPANT IN THE SECURITIES
TRANSFER AGENTS MEDALLION PROGRAM, THE NEW YORK STOCK EXCHANGE MEDALLION
SIGNATURE PROGRAM OR THE STOCK EXCHANGES MEDALLION PROGRAM (EACH AN "ELIGIBLE
INSTITUTION").
SIGNATURES ON THIS LETTER NEED NOT BE GUARANTEED BY AN ELIGIBLE
INSTITUTION, PROVIDED THE SHARES OF OLD SENIOR PREFERRED STOCK ARE TENDERED: (I)
BY A REGISTERED HOLDER OF SHARES OF OLD SENIOR PREFERRED STOCK (WHICH TERM, FOR
PURPOSES OF THE EXCHANGE OFFER, INCLUDES ANY PARTICIPANT IN THE BOOK-ENTRY
TRANSFER FACILITY SYSTEM WHOSE NAME APPEARS ON A SECURITY POSITION LISTING AS
THE HOLDER OF SUCH OLD SENIOR PREFERRED STOCK) WHO HAS NOT COMPLETED THE BOX
ENTITLED "SPECIAL ISSUANCE INSTRUCTIONS" OR "SPECIAL DELIVERY INSTRUCTIONS" ON
THIS LETTER OR (II) FOR THE ACCOUNT OF AN ELIGIBLE INSTITUTION.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS.
Tendering holders of Old Senior Preferred Stock should indicate in the
applicable box the name and address to which shares of New Senior Preferred
Stock issued pursuant to the Exchange Offer and or substitute certificates
evidencing Old Senior Preferred Stock not exchanged are to be issued or sent, if
different from the name or address of the person signing this Letter. In the
case of issuance in a different name, the employer identification or social
security number of the person named must also be indicated. Holders tendering
shares of Old Senior Preferred Stock by book-entry transfer may request that Old
Senior Preferred Stock not exchanged be credited to such account maintained at
the Book-Entry Transfer Facility as such holder may designate hereon. If no such
instructions are given, such shares of Old Senior Preferred Stock not exchanged
will be returned to the name and address of the person signing this Letter.
5. TAXPAYER IDENTIFICATION NUMBER.
Federal income tax law generally requires that a tendering holder whose Old
Senior Preferred Stock is accepted for exchange must provide the Company (as
payor) with such holder's correct Taxpayer Identification Number ("TIN") on
Substitute Form W-9 above, which in the case of a tendering holder who is an
individual, is his or her social security number. If the Company is not provided
with the current TIN or an adequate basis for an exemption from backup
withholding such tendering holder may be subject to a $50 penalty imposed by the
Internal Revenue Service. In addition, the Exchange Agent may be required to
withhold 31% of the amount of any reportable payments made after the exchange to
such holder of New Senior Preferred Stock. If withholding results in an
overpayment of taxes, a refund may be obtained.
Exempt holders of Old Senior Preferred Stock (including, among others,
all corporations and certain foreign individuals) are not subject to these
backup withholding and reporting requirements. See the enclosed Guidelines of
Certification of Taxpayer Identification Number on Substitute Form W-9 (the "W-9
Guidelines") for additional instructions.
To prevent backup withholding, each tendering holder of Old Senior
Preferred Stock must provide its correct TIN by completing the Substitute Form
W-9 set forth below, certifying, under penalties of perjury, that the TIN
provided is correct (or that such holder is awaiting a TIN) and that (i) the
holder is exempt from backup withholding or (ii) the holder has not been
notified by the Internal Revenue Service that such holder is subject to backup
withholding as a result of a failure to report all interest or dividends or
(iii) the Internal Revenue Service has notified the holder that such holder is
no longer subject to backup withholding. If the tendering holder of Old Senior
Preferred Stock is a nonresident alien or foreign entity not subject to backup
withholding, such holder must give the Exchange Agent a completed Form W-8,
Certificate of Foreign Status. These forms may be obtained
7
<PAGE>
from the Exchange Agent. If the shares of Old Senior Preferred Stock are in more
than one name or are not in the name of the actual owner, such holder should
consult the W-9 Guidelines for information on which TIN to report. If such
holder does not have a TIN, such holder should consult the W-9 Guidelines for
instructions on applying for a TIN, check the box in Part 2 of the Substitute
Form W-9 and write "applied for" in lieu of its TIN. Note: Checking this box and
writing "applied for" on the form means that such holder has already applied for
a TIN or that such holder intends to apply for one in the near future. If the
box in Part 2 of the Substitute Form W-9 is checked, the Exchange Agent will
retain 31% of reportable payments made to a holder during the sixty (60) day
period following the date of the Substitute Form W-9. If the holder furnishes
the Exchange Agent with his or her TIN within sixty (60) days of filing the
Substitute Form W-9 with the Internal Revenue Service, the Exchange Agent will
remit such amounts retained during such sixty (60) day period to such holder and
no further amounts will be retained or withheld from payments made to the holder
thereafter. If, however, such holder does not provide its TIN to the Exchange
Agent within such sixty (60) day period, the Exchange Agent will remit such
previously withheld amounts to the Internal Revenue Service as backup
withholding and will withhold 31% of all reportable payments to the holder
thereafter until such holder furnishes its TIN to the Exchange Agent.
6. TRANSFER TAXES.
The Company will pay all transfer taxes, if any, applicable to the transfer
of Old Senior Preferred Stock to it or its order pursuant to the Exchange Offer.
If, however, New Senior Preferred Stock and/or substitute Old Senior Preferred
Stock not exchanged are to be delivered to, or are to be registered or issued in
the name of, any person other than the registered holder of the Old Senior
Preferred Stock tendered hereby, or if tendered Old Senior Preferred Stock is
registered in the name of any person other than the person signing this Letter,
or if a transfer tax is imposed for any reason other than the transfer of Old
Senior Preferred Stock to the Company or its order pursuant to the Exchange
Offer, the amount of any such transfer taxes (whether imposed on the registered
holder or any other persons) will be payable by the tendering holder. If
satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted herewith, the amount of such transfer taxes will be billed directly to
such tendering holder.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE OLD SENIOR PREFERRED STOCK SPECIFIED IN
THIS LETTER.
7. WAIVER OF CONDITIONS.
The Company reserves the absolute right to waive satisfaction of any or all
conditions enumerated in the Prospectus.
8. NO CONDITIONAL TENDERS.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders of Old Senior Preferred Stock, by execution of
this Letter, shall waive any right to receive notice of the acceptance of their
Old Senior Preferred Stock for exchange.
Neither the Company, the Exchange Agent nor any other person is obligated
to give notice of any defect or irregularity with respect to any tender of Old
Senior Preferred Stock nor shall any of them incur any liability for failure to
give any such notice.
9. MUTILATED, LOST, STOLEN OR DESTROYED OLD SENIOR PREFERRED STOCK.
Any holder whose shares of Old Senior Preferred Stock have been mutilated,
lost, stolen or destroyed should contact the Exchange Agent at the address
indicated above for further instructions.
10. WITHDRAWAL RIGHTS
Tenders of Old Senior Preferred Stock may be withdrawn at any time prior to
the Expiration Date.
For a withdrawal of a tender of Old Senior Preferred Stock to be effective,
a written notice of withdrawal must be received by the Exchange Agent at the
address set forth above prior to the Expiration Date. Any such notice of
withdrawal must (i) specify the name of the person having tendered the Old
Senior Preferred Stock to be withdrawn (the "Depositor"), (ii) identify the Old
Senior Preferred Stock to be withdrawn (including certificate number or numbers
and the liquidation preference of such Old Senior Preferred Stock), (iii)
contain a statement that such holder is withdrawing his election to have
such Old Senior Preferred Stock exchanged, (iv) be signed by the holder in
the same manner as the original signature on the Letter by which such Old Senior
Preferred Stock was tendered (including any required signature guarantees) and
(v) specify the name in which such Old Senior Preferred Stock is registered, if
different from that of the Depositor. If Old Senior Preferred Stock has been
tendered pursuant to the procedure for book-entry transfer set
8
<PAGE>
forth in "The Exchange Offer--Book-Entry Transfer" section of the Prospectus,
any notice of withdrawal must specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Old Senior
Preferred Stock and otherwise comply with the procedures of such facility. All
questions as to the validity, form and eligibility (including time of receipt)
of such notices will be determined by the Company, whose determination shall be
final and binding on all parties. Any Old Senior Preferred Stock so withdrawn
will be deemed not to have been validly tendered for exchange for purposes of
the Exchange Offer and no New Senior Preferred Stock will be issued with respect
thereto unless the Old Senior Preferred Stock so withdrawn is validly
retendered. Any Old Senior Preferred Stock that has been tendered for exchange
but which is not exchanged for any reason will be returned to the holder thereof
without cost to such holder (or, in the case of Old Senior Preferred Stock
tendered by book-entry transfer into the Exchange Agent's account at the Book-
Entry Transfer Facility pursuant to the book-entry transfer procedures set forth
in "The Exchange Offer--Book-Entry Transfer" section of the Prospectus, such Old
Senior Preferred Stock will be credited to an account maintained with the Book-
Entry Transfer Facility for the Old Senior Preferred Stock) as soon as
practicable after withdrawal, rejection of tender or termination of the Exchange
Offer. Properly withdrawn Old Senior Preferred Stock may be retendered by
following the procedures described above at any time prior to the Expiration
Date.
11. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering, as well as requests for
additional copies of the Prospectus and this Letter, and requests for Notices of
Guaranteed Delivery and other related documents may be directed to the Exchange
Agent, at the address and telephone number indicated above.
9
<PAGE>
Exhibit 99.2
NOTICE OF GUARANTEED DELIVERY
FOR
SAMSONITE CORPORATION
This form or one substantially equivalent hereto must be used to accept the
Exchange Offer of Samsonite Corporation (the "Company") made pursuant to the
Prospectus, dated , 1998 (the "Prospectus"), if certificates for the outstanding
13 7/8% Senior Redeemable Exchangeable Stock of the Company (the "Old Senior
Preferred Stock") are not immediately available or if the procedure for book-
entry transfer cannot be completed on a timely basis or time will not permit all
required documents to reach United States Trust Company of New York, as exchange
agent (the "Exchange Agent") prior to the Expiration Date of the Exchange Offer.
Such form may be delivered or transmitted by facsimile transmission, mail or
hand delivery to the Exchange Agent as set forth below. In addition, in order to
utilize the guaranteed delivery procedure to tender shares of Old Senior
Preferred Stock pursuant to the Exchange Offer, a completed, signed and dated
Letter of Transmittal (or facsimile thereof) must also be received by the
Exchange Agent prior to the Expiration Date. Capitalized terms not defined
herein are defined in the Prospectus.
Delivery To: United States Trust Company of New York, Exchange Agent
By Mail: By Overnight Courier and By Hand after 4:30 p.m.
New York City Time on the Expiration Date:
United States Trust Company of New York United States Trust Company of New York
P.O. Box 843 - Cooper Station 770 Broadway, 13th Floor
New York, New York 10276 New York, New York 10003
Attention: Corporate Trust Services Attention: Corporate Trust Services
By Hand before 4:30 p.m New York City time: For Information Call:
(800) 548-6565
United States Trust Company of New York
111 Broadway By Facsimile Transmission
Attention: Corporate Trust Window Lower Level (for Eligible Institutions only):
New York, New York 10006 (212) 780-0592
Attention: Corporate Trust Services
Confirm by Telephone:
(800) 548-6565
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL
NOT CONSTITUTE A VALID DELIVERY.
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus and the
accompanying Letter of Transmittal, the undersigned hereby tenders to the
Company the liquidation preference of Old Senior Preferred Stock set forth below
pursuant to the guaranteed delivery procedures described in "The Exchange
Offer--Guaranteed Delivery Procedures" section of the Prospectus.
<PAGE>
Liquidation Preference of Old Senior
Preferred Stock Tendered:
$_____________________________________
Certificate No(s). (if available): If Old Senior Preferred Stock will be
delivered by book-entry transfer to
The Depository Trust Company, provide
- -------------------------------------- account number.
Total Liquidation Preference Repre-
sented by Old Senior Preferred
Stock Certificate(s):
$_____________________________________ Account Number _______________________
____________
*Must be in denominations of $1,000 liquidation preference per share and any
integral multiple thereof.
- -------------------------------------------------------------------------------
ALL AUTHORITY HEREIN CONFERRED OR AGREED TO BE CONFERRED SHALL SURVIVE THE
DEATH OR INCAPACITY OF THE UNDERSIGNED AND EVERY OBLIGATION OF THE UNDERSIGNED
HEREUNDER SHALL BE BINDING UPON THE HEIRS, PERSONAL REPRESENTATIVES, SUCCESSORS
AND ASSIGNS OF THE UNDERSIGNED.
- --------------------------------------------------------------------------------
PLEASE SIGN HERE
X ________________________ ____________
X ________________________ ____________
Signature(s) of Owner(s) Dated
or Authorized Signatory
Area Code and Telephone Number: ______________________
Must be signed by the holder(s) of Old Senior Preferred Stock as their name(s)
appear(s) on certificates for Old Senior Preferred Stock or on a security
position listing, or by person(s) authorized to become registered holder(s) by
endorsement and documents transmitted with this Notice of Guaranteed Delivery.
If signature is by a trustee, executor, administrator, guardian, attorney-in-
fact, officer or other person acting in a fiduciary or representative capacity,
such person must set forth his or her full title below.
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s): ______________________________________________________________
______________________________________________________________
______________________________________________________________
Capacity: ______________________________________________________________
Address(es): ______________________________________________________________
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a financial institution (including most banks, savings and
loan associations and brokerage houses) that is a participant in the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Program or the Stock Exchanges Medallion Program, hereby guarantees
that the certificates representing the liquidation preference of Old Senior
Preferred Stock tendered hereby in proper form for transfer, or timely
confirmation of the book-entry transfer of such Old Senior Preferred Stock into
the Exchange Agent's account at The Depository Trust Company pursuant to the
procedures set forth in "The Exchange Offer--Guaranteed Delivery Procedures"
section of the Prospectus, together with any required signature guarantee and
any other documents required by the Letter of Transmittal, will be received by
the Exchange Agent at the address set forth above, no later than three New York
Stock Exchange trading days after the Expiration Date.
<PAGE>
- --------------------------------- ----------------------------------
Name of Firm Authorized Signature
- --------------------------------- ----------------------------------
Address Title
_________________________________ Name: ____________________________
Zip Code (Please Type or Print)
Area Code and Tel. No. _________ Dated: ___________________________
NOTE: DO NOT SEND CERTIFICATES FOR OLD SENIOR PREFERRED STOCK WITH THIS FORM.
CERTIFICATES FOR OLD SENIOR PREFERRED STOCK SHOULD BE SENT ONLY WITH A
COPY OF YOUR PREVIOUSLY EXECUTED LETTER OF TRANSMITTAL.
<PAGE>
Exhibit 99.3
SAMSONITE CORPORATION
OFFER FOR ALL OUTSTANDING
13 7/8% SENIOR REDEEMABLE EXCHANGEABLE PREFERRED STOCK
IN EXCHANGE FOR
13 7/8% SENIOR REDEEMABLE EXCHANGEABLE PREFERRED STOCK,
WHICH HAS BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933
TO OUR CLIENTS:
Enclosed for your consideration is a Prospectus, dated , 1998 (the
"Prospectus"), and the related Letter of Transmittal (the "Letter of
Transmittal"), relating to the offer (the "Exchange Offer") of Samsonite
Corporation (the "Company") to exchange its 13 7/8% Senior Redeemable
Exchangeable Preferred Stock, which has been registered under the Securities
Act of 1933, as amended (the "New Senior Preferred Stock"), for its outstanding
13 7/8% Senior Redeemable Exchangeable Preferred Stock (the "Old Senior
Preferred Stock"), upon the terms and subject to the conditions described in the
Prospectus and the Letter of Transmittal. The Exchange Offer is being made in
order to satisfy certain obligations of the Company contained in the
Registration Rights Agreement dated as of June 24, 1998, between the Company,
and the initial purchaser referred to therein.
This material is being forwarded to you as the beneficial owner of the Old
Senior Preferred Stock held by us for your account but not registered in your
name. A TENDER OF SUCH OLD SENIOR PREFERRED STOCK MAY ONLY BE MADE BY US AS THE
HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS.
Accordingly, we request instructions as to whether you wish us to tender on
your behalf the Old Senior Preferred Stock held by us for your account,
pursuant to the terms and conditions set forth in the enclosed Prospectus and
Letter of Transmittal.
Your instructions should be forwarded to us as promptly as possible in
order to permit us to tender the Old Senior Preferred Stock held on your behalf
in accordance with the provisions of the Exchange Offer. The Exchange Offer will
expire at 5:00 P.M., New York City time, on , 1998, unless extended by the
Company (the "Expiration Date"). Any Old Senior Preferred Stock tendered
pursuant to the Exchange Offer may be withdrawn at any time before the
Expiration Date.
Your attention is directed to the following:
1. The Exchange Offer is for any and all Old Senior Preferred Stock.
2. The Exchange Offer is subject to certain conditions set forth in the
Prospectus in the section captioned "The Exchange Offer--Certain Conditions to
the Exchange Offer."
3. Any transfer taxes incident to the transfer of Old Senior Preferred
Stock from the holder to the Company will be paid by the Company, except as
otherwise provided in the Instructions in the Letter of Transmittal.
4. The Exchange Offer expires at 5:00 P.M., New York City time, on
, 1998, unless extended by the Company.
<PAGE>
If you wish to have us tender your Old Senior Preferred Stock, please
so instruct us by completing, executing and returning to us the instruction form
on the back of this letter. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR
INFORMATION ONLY AND MAY NOT BE USED DIRECTLY BY YOU TO TENDER OLD SENIOR
PREFERRED STOCK.
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE EXCHANGE OFFER
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Exchange Offer made by Samsonite
Corporation with respect to its Old Senior Preferred Stock.
This will instruct you to tender the Old Senior Preferred Stock held by you
for the account of the undersigned, upon and subject to the terms and conditions
set forth in the Prospectus and the related Letter of Transmittal.
Please tender the Old Senior Preferred Stock held by you for my account as
indicated below:
LIQUIDATION PREFERENCE OF OLD
SENIOR PREFERRED STOCK
-----------------------------
13 7/8% Senior Redeemable Exchangeable
Preferred Stock ......................
[_] Please do not tender any Old Senior
Preferred Stock held by you for my
account.
Dated: 1998
----------------------------- _______________________________________
_______________________________________
Signature(s)
_______________________________________
_______________________________________
_______________________________________
Please print name(s) here
_______________________________________
_______________________________________
_______________________________________
_______________________________________
Address(es)
_______________________________________
Area Code and Telephone Number
_______________________________________
Tax Identification or
Social Security No(s).
None of the Old Senior Preferred Stock held by us for your account will be
tendered unless we receive written instructions from you to do so. Unless a
specific contrary instruction is given in the space provided, your signature(s)
hereon shall constitute an instruction to us to tender all the Old Senior
Preferred Stock held by us for your account.
<PAGE>
Exhibit 99.4
SAMSONITE CORPORATION
OFFER FOR ALL OUTSTANDING
13 7/8% SENIOR REDEEMABLE EXCHANGEABLE PREFERRED STOCK
IN EXCHANGE FOR
13 7/8% SENIOR REDEEMABLE EXCHANGEABLE PREFERRED STOCK
WHICH HAS BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933
To: BROKERS, DEALERS, COMMERCIAL BANKS,
TRUST COMPANIES AND OTHER NOMINEES:
Samsonite Corporation (the "Company") is offering, upon and subject to the
terms and conditions set forth in the Prospectus, dated , 1998
(the "Prospectus"), and the enclosed Letter of Transmittal (the "Letter of
Transmittal"), to exchange (the "Exchange Offer") its 13 7/8% Senior Redeemable
Exchangeable Preferred Stock, which has been registered under the Securities Act
of 1933, as amended, for its outstanding 13 7/8% Senior Redeemable Exchangeable
Preferred Stock (the "Old Senior Preferred Stock"). The Exchange Offer is being
made in order to satisfy certain obligations of the Company contained in the
Registration Rights Agreement dated as of June 24, 1998, between the Company and
the initial purchaser referred to therein.
We are requesting that you contact your clients for whom you hold Old
Senior Preferred Stock regarding the Exchange Offer. For your information and
for forwarding to your clients for whom you hold Old Senior Preferred Stock
registered in your name or in the name of your nominee, or who hold Old Senior
Preferred Stock registered in their own names, we are enclosing the following
documents:
1. Prospectus dated , 1998;
2. The Letter of Transmittal for your use and for the information of your
clients;
3. A Notice of Guaranteed Delivery to be used to accept the Exchange Offer
if certificates for Old Senior Preferred Stock are not immediately available or
time will not permit all required documents to reach the Exchange Agent prior to
the Expiration Date (as defined below) or if the procedure for book-entry
transfer cannot be completed on a timely basis;
4. A form of letter which may be sent to your clients for whose account you
hold Old Senior Preferred Stock registered in your name or the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Exchange Offer;
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
6. Return envelopes addressed to United States Trust Company of New York,
the Exchange Agent for the Exchange Offer.
<PAGE>
YOUR PROMPT ACTION IS REQUESTED. THE EXCHANGE OFFER WILL EXPIRE AT 5:00
P.M., NEW YORK CITY TIME, ON , 1998, UNLESS EXTENDED BY THE COMPANY (THE
"EXPIRATION DATE"). OLD SENIOR PREFERRED STOCK TENDERED PURSUANT TO THE
EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME BEFORE THE EXPIRATION DATE.
To participate in the Exchange Offer, a duly executed and properly
completed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees and any other required documents, should be sent to the
Exchange Agent and certificates representing the Old Senior Preferred Stock
should be delivered to the Exchange Agent, all in accordance with the
instructions set forth in the Prospectus and the related Letter of Transmittal.
If a registered holder of Old Senior Preferred Stock desires to tender, but
such Old Senior Preferred Stock is not immediately available, or time will not
permit such holder's Old Senior Preferred Stock or other required documents to
reach the Exchange Agent before the Expiration Date, or the procedure for book-
entry transfer cannot be completed on a timely basis, a tender may be effected
by following the guaranteed delivery procedures described in the Prospectus
under "The Exchange Offer--Guaranteed Delivery Procedures."
The Company will, upon request, reimburse brokers, dealers, commercial
banks and trust companies for reasonable and necessary costs and expenses
incurred by them in forwarding the Prospectus and the related documents to the
beneficial owners of Old Senior Preferred Stock held by them as nominee or in a
fiduciary capacity. The Company will pay or cause to be paid all stock transfer
taxes applicable to the exchange of Old Senior Preferred Stock pursuant to the
Exchange Offer, except as set forth in Instruction 6 of the Letter of
Transmittal.
Any inquiries you may have with respect to the Exchange Offer, or requests
for additional copies of the enclosed materials, should be directed to United
States Trust Company of New York, the Exchange Agent for the Exchange Offer, at
its address and telephone number set forth on the front page of the Letter of
Transmittal.
Very truly yours,
SAMSONITE CORPORATION
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
PERSON AS AN AGENT OF THE COMPANY OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF EITHER OF
THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN
THE PROSPECTUS OR THE LETTER OF TRANSMITTAL.
Enclosures
2
